What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-08-02 · 326 added, 223 removed, 814 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

September 30,

Real estate assets

25 unchanged sentences

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

Common stock $ 0.10 par value authorized – 350,000 shares, issued and outstanding – 254,023 shares as of June 30, 2024 and 245,282 shares as of December 31, 2023

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

Additional paid-in capital

12 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Rental income

11 unchanged sentences

Other income (expense)

Other income – net

Other (expense) income – net

Loss on debt extinguishment

Gain on assets sold – net

Total other income

Income before income tax expense and income from unconsolidated joint ventures

(Loss) gain on assets sold – net

Total other (expense) income

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

Income tax expense

Income from unconsolidated joint ventures

Income (loss) from unconsolidated joint ventures

Net income attributable to noncontrolling interest

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Other comprehensive income (loss)

1 unchanged sentence

Cash flow hedges

Total other comprehensive income

Total other comprehensive income (loss)

Comprehensive income

4 unchanged sentences

CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended June 30, 2024 and 2023

Three Months Ended September 30, 2024 and 2023

(in thousands, except per share amounts)

2 unchanged sentences

Noncontrolling

Balance at March 31, 2024

Income (Loss)

Balance at June 30, 2024

( 7,161,897 )

3 unchanged sentences

Vesting/exercising of Omega OP Units

Exchange and redemption of Omega OP Units for common stock

Omega OP Units distributions

Net change in noncontrolling interest holder in consolidated JV

Other comprehensive income

Balance at June 30, 2024

Balance at September 30, 2024

( 7,335,238 )

Balance at March 31, 2023

Balance at June 30, 2023

( 6,501,899 )

3 unchanged sentences

Vesting/exercising of Omega OP Units

Exchange and redemption of Omega OP Units for common stock

Omega OP Units distributions

Net change in noncontrolling interest holder in consolidated JV

Other comprehensive income

Balance at June 30, 2023

Other comprehensive loss

Balance at September 30, 2023

( 6,666,439 )

See notes to consolidated financial statements.

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

Six Months Ended June 30, 2024 and 2023

Nine Months Ended September 30, 2024 and 2023

(in thousands, except per share amounts)

2 unchanged sentences

Noncontrolling

Income (Loss)

Balance at December 31, 2023

8 unchanged sentences

Other comprehensive income

Balance at June 30, 2024

Balance at September 30, 2024

( 7,335,238 )

9 unchanged sentences

Other comprehensive income

Balance at June 30, 2023

Balance at September 30, 2023

( 6,666,439 )

3 unchanged sentences

Unaudited (in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

11 unchanged sentences

Interest paid-in-kind

Loss from unconsolidated joint ventures

(Income) loss from unconsolidated joint ventures

Change in operating assets and liabilities – net:

18 unchanged sentences

Payments of long-term borrowings

( 1,142,788 )

Payments of financing related costs

7 unchanged sentences

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

Decrease in cash, cash equivalents and restricted cash

(Decrease) Increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

8 unchanged sentences

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

As of June 30, 2024, Parent owned 97 % of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and other investors owned 3 % of the outstanding Omega OP Units.

As of September 30, 2024, Parent owned 97 % of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and other investors owned 3 % of the outstanding Omega OP Units.

Basis of Presentation and Principles of Consolidation

33 unchanged sentences

NOTE 2 – REAL ESTATE ASSETS

At June 30, 2024, our leased real estate properties included 588 SNFs, 221 ALFs, 19 ILFs, 19 specialty facilities and one medical office building.

At September 30, 2024, our leased real estate properties included 587 SNFs, 282 ALFs, 19 ILFs, 19 specialty facilities and one medical office building.

The following table summarizes the Company’s rental income:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

6 unchanged sentences

Asset Acquisitions

The following table summarizes the asset acquisitions that occurred during the six months ended June 30, 2024:

The following table summarizes the asset acquisitions that occurred during the nine months ended September 30, 2024:

Total Real Estate

7 unchanged sentences

See Note 13 - Taxes for additional information.

(3) Relates to our acquisition of the remaining 51 % ownership interest in the Cindat Joint Venture, discussed below under “Cindat Portfolio Acquisition.” Total costs to be allocated for this acquisition was $ 461.9 million, inclusive of our previously held equity interest of $ 97.0 million.

We allocated $ 53.8 million of the costs to be allocated to other assets acquired in the transaction and we allocated $ 13.0 million of the costs to be allocated to other liabilities assumed in the transaction.

(4) Reflects the yield based on cash consideration, the assumption of a mortgage loan, deferred contingent consideration and the previously held equity interest in the unconsolidated real estate joint venture.

See “Cindat Portfolio Acquisition” below for additional information.

Cindat Portfolio Acquisition

As of December 31, 2023, we held a 49 % interest in an unconsolidated real estate joint venture owning 63 facilities in the U.K.

(the “Cindat Joint Venture”) accounted for using the equity method of accounting.

As of December 31, 2023, our equity interest was $ 97.6 million.

The 63 facilities are subject to leases with two operators that have contractual rent of $ 43.6 million per annum with minimum escalators between 1.0 % to 2.0 % that can escalate further based on certain inflationary measures.

In July 2024, we acquired the remaining 51 % interest in the Cindat Joint Venture for total consideration of $ 364.9 million inclusive of:

(i) $ 98.9 million of cash consideration including direct transaction costs, (ii) the assumption of a £ 188.6 million ($ 243.2 million) mortgage loan with an estimated fair value of $ 264.0 million and (iii) deferred contingent consideration with an estimated fair value of $ 2.0 million.

The fair market value of the mortgage debt assumed was determined by discounting the remaining contractual cash flows using a current market rate of interest of comparable debt instruments.

The deferred contingent consideration payment, which will be between zero and $ 3.0 million, becomes payable to the sellers in December 2024 if certain contingencies are satisfied.

Following the acquisition, we own 100 % of the equity interests in the entity that owns the Cindat portfolio, and accordingly, we will consolidate its results in our consolidated financial statements going forward.

The acquired interest will be accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in a group of similar identifiable assets.

Under our existing accounting policy election, we follow the asset acquisition cost accumulation and allocation model.

Accordingly, we did not remeasure our previously held $ 97.0 million equity interest, as of the acquisition date, at fair value.

The following table summarizes the fair value of the assets and liabilities recorded as part of the acquisition as of the date of the acquisition:

(in thousands)

Costs to be allocated:

49 % equity method investment in Cindat Joint Venture

Consideration for additional 51 % interest in Cindat Joint Venture

Fair market value of debt assumed

Total acquisition cost to be allocated

Fair value of net assets acquired:

Real estate assets

Non-real estate loans receivable

Cash and cash equivalents

Restricted cash

Contractual receivables

Accrued expenses and other liabilities

Fair value of net assets acquired

Construction in Progress and Capital Expenditure Investments

We invested $ 34.8 million and $ 56.2 million under our construction in progress and capital improvement programs during the three and six months ended June 30, 2024, respectively.

We invested $ 17.8 million and $ 27.9 million under our construction in progress and capital improvement programs during the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, construction in progress included two projects consisting of the development of a SNF in Virginia and an ALF in Washington D.C.

We invested $ 25.4 million and $ 81.6 million under our construction in progress and capital improvement programs during the three and nine months ended September 30, 2024, respectively.

We invested $ 24.5 million and $ 52.4 million under our construction in progress and capital improvement programs during the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, construction in progress included three projects consisting of the development of a SNF in Virginia, a SNF in Florida and an ALF in Washington D.C.

NOTE 3 – ASSETS HELD FOR SALE, DISPOSITIONS AND IMPAIRMENTS

1 unchanged sentence

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

September 30,

Number of facilities held for sale

Amount of assets held for sale (in thousands)

During the three and six months ended June 30, 2024, we sold five SNFs and nine SNFs subject to operating leases for $ 34.8 million and $ 44.9 million in net cash proceeds, respectively.

As a result of these sales, we recognized a net gain of $ 12.9 million and $ 11.5 million, respectively.

During the three and six months ended June 30, 2023, we sold ten facilities ( nine SNFs and one ILF) and 12 facilities ( ten SNFs, one ILF and one medical office building) subject to operating leases, for approximately $ 44.7 million and $ 62.3 million in net cash proceeds, respectively.

During the three and nine months ended September 30, 2024, we sold six facilities ( four ALFs and two SNFs) and 15 facilities ( 11 SNFs and four ALFs) subject to operating leases for $ 23.9 million and $ 68.8 million in net cash proceeds, respectively.

As a result of these sales, we recognized a net loss of $ 0.2 million and a net gain of $ 11.3 million, respectively.

During the three and nine months ended September 30, 2023, we sold 25 facilities ( 25 SNFs) and 37 facilities ( 35 SNFs, one ILF and one medical office building) subject to operating leases, for approximately $ 199.0 million and $ 261.3 million in net cash proceeds, respectively.

As a result of these sales, we recognized net gains of approximately $ 44.1 million and $ 70.0 million, respectively.

During the three and six months ended June 30, 2024, we received interest of $ 0.3 million and $ 0.6 million, respectively, related to seller financing provided in connection with sales that did not meet the contract criteria to be recognized under ASC 610-20.

During the three and six months ended June 30, 2023, we received interest of $ 2.3 million and $ 4.4 million, respectively, related to seller financing provided in connection with sales that did not meet the contract criteria to be recognized under ASC 610-20.

The $ 44.1 million of net gains includes a $ 50.2 million gain related to the sale of 11 facilities that occurred in December 2022 but that did not meet the contract criteria to be recognized under ASC 610-20 at the legal sale date.

We recognized the sale during the third quarter of 2023 following the early payoff of the $ 104.8 million senior seller financing that was provided to the buyer as part of the sale of the 11 facilities .

As of September 30, 2024 and December 31, 2023, we had two and one facility sales, respectively, that were not recognized as a result of not meeting the contract criteria under ASC 610-20 at the legal sale date.

During the three and nine months ended September 30, 2024, we received interest of $ 0.3 million and $ 0.9 million, respectively, related to seller financing provided in connection with sales that were not recognized.

During the three and nine months ended September 30, 2023, we received interest of $ 1.8 million and $ 6.2 million, respectively, related to seller financing provided in connection with sales that were not recognized.

The interest received was deferred and recorded as a contract liability within accrued expenses and other liabilities on our Consolidated Balance Sheets.

As of June 30, 2024, we have one sale that has not been recognized.

Real Estate Impairments

During the three and six months ended June 30, 2024, we recorded impairments on four and seven facilities of $ 8.2 million and $ 13.5 million, respectively.

Of the $ 13.5 million, $ 8.1 million related to five held for use facilities (of which $ 4.0 million relates to three closed facilities) for which the carrying value exceeded the fair value and $ 5.4 million related to two facilities that were classified as held for sale for which the carrying values exceeded the estimated fair value costs to sell .

During the three and six months ended June 30, 2023, we recorded impairments on four and six facilities of $ 21.1 million and $ 60.1 million, respectively.

Of the $ 60.1 million, $ 57.5 million related to four held for use facilities (of which $ 48.0 million relates to three facilities that were closed during the year) for which the carrying value exceeded the fair value and $ 2.6 million related to two facilities that were classified as held for sale for which the carrying values exceeded the estimated fair value costs to sell.

During the three and nine months ended September 30, 2024, we recorded impairments on five and 12 facilities of $ 8.6 million and $ 22.1 million, respectively.

Of the $ 22.1 million, $ 13.0 million related to eight held for use facilities (of which $ 7.2 million related to four closed facilities) for which the carrying value exceeded the fair value and $ 9.1 million related to four facilities that were classified as held for sale for which the carrying values exceeded the estimated fair value less costs to sell .

During the three and nine months ended September 30, 2023, we recorded impairments on 19 and 25 facilities of $ 27.9 million and $ 88.0 million, respectively.

Of the $ 88.0 million, $ 85.4 million related to 23 held for use facilities (of which $ 48.0 million relates to three facilities that were closed during the year) for which the carrying value exceeded the fair value and $ 2.6 million related to two facilities that were classified as held for sale for which the carrying values exceeded the estimated fair value less costs to sell.

To estimate the fair value of the facilities for the impairments noted above, we utilized a market approach that considered binding sale agreements (a Level 1 input) or non-binding offers from unrelated third parties and/or broker quotes (a Level 3 input).

5 unchanged sentences

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

September 30,

(in thousands)

6 unchanged sentences

We review our collectibility assumptions related to rental income from our operator leases on an ongoing basis.

During the six months ended June 30, 2024, we placed one new operator on a cash basis of revenue recognition.

During the nine months ended September 30, 2024, we placed one new operator on a cash basis of revenue recognition.

In the first quarter of 2024, we entered into a lease with the new operator as part of the transition of facilities from another operator.

As we had no previous relationship with this new operator and collection of substantially all contractual lease payments due from the new operator was not deemed probable, we placed the new operator on a cash basis of revenue recognition.

During the three and six months ended June 30, 2023, we placed two new operators, which Omega has not previously had relationships with prior to the second quarter of 2023, on a cash basis of revenue recognition as collection of substantially all contractual lease payments due from them was not deemed probable.

We placed this operator on a cash basis concurrent with the lease commencement date, so there was no straight-line rent write-off associated with moving the operator to a cash basis.

During the nine months ended September 30, 2023, we placed two new operators, which Omega had not previously had relationships with prior to the second quarter of 2023, on a cash basis of revenue recognition as collection of substantially all contractual lease payments due from them was not deemed probable.

Our new lease agreements with each of these operators were executed in the second quarter of 2023 as part of transitions of facilities from other operators .

We placed these operators on a cash basis concurrent with the respective lease commencement dates, so there were no straight-line rent write-offs associated with moving these operators to a cash basis.

We did no t have any straight-line receivable write-offs through rental income as a result of placing operators on a cash basis during either of the three and six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, we had 18 operators on a cash basis for revenue recognition, which represent 18.6 % and 22.3 % of our total revenues for the six months ended June 30, 2024 and 2023, respectively.

We did no t have any straight-line receivable write-offs through rental income as a result of placing operators on a cash basis during either of the three and nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had 18 operators on a cash basis for revenue recognition, which represent 18.6 % and 22.0 % of our total revenues for the nine months ended September 30, 2024 and 2023, respectively.

Rent Deferrals and Application of Collateral

During each of the six months ended June 30, 2024 and 2023, we allowed three and nine operators to defer $ 1.8 million and $ 33.6 million, respectively, of contractual rent and interest.

The deferrals during the six months ended June 30, 2024 primarily related to Maplewood Senior Living (along with affiliates, “Maplewood”) ($ 1.5 million).

The deferrals during the six months ended June 30, 2023 primarily related to the following operators:

During the nine months ended September 30, 2024 and 2023, we allowed four and nine operators to defer $ 3.0 million and $ 35.0 million, respectively, of contractual rent and interest.

The deferrals during the nine months ended September 30, 2024 primarily related to Maplewood Senior Living (along with affiliates, “Maplewood”) ($ 2.5 million).

The deferrals during the nine months ended September 30, 2023 primarily related to the following operators:

LaVie Care Centers, LLC (“LaVie”) ($ 19.0 million), Healthcare Homes Limited ($ 8.2 million), Agemo Holdings, LLC (“Agemo”) ($ 1.9 million) and Maplewood ($ 1.3 million).

During each of the six months ended June 30, 2024 and 2023, we received repayments of deferred rent of $ 1.0 million and $ 0.3 million, respectively.

Additionally, we allowed four and four operators to apply collateral, such as security deposits or letters of credit, to contractual rent and interest during the six months ended June 30, 2024 and 2023, respectively.

The total collateral applied to contractual rent and interest was $ 0.6 million and $ 5.5 million for the six months ended June 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024 and 2023, we received repayments of deferred rent of $ 1.2 million and $ 1.3 million, respectively.

Additionally, we allowed five and six operators to apply collateral, such as security deposits or letters of credit, to contractual rent and interest during the nine months ended September 30, 2024 and 2023, respectively.

The total collateral applied to contractual rent and interest was $ 1.7 million and $ 11.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Operator Collectibility Updates

1 unchanged sentence

As of December 31, 2022, Omega had 17 operating facilities subject to a lease agreement with Maplewood, a construction in progress project in Washington D.C., and a $ 250.0 million secured revolving credit facility.

In view of Maplewood liquidity concerns, Omega and Maplewood entered into a comprehensive restructuring of Maplewood’s lease and loan agreements on January 31, 2023 that, among other things, fixed rent at $ 69.3 million per annum through December 2025, increased the capacity of the secured revolving credit facility to $ 320.0 million, converted portions of interest on the secured revolving credit facility from cash to paid-in-kind (“PIK”) for certain periods and provided Maplewood a one-time option termination fee of $ 12.5 million.

In view of Maplewood liquidity concerns, Omega and Maplewood entered into a comprehensive restructuring of Maplewood’s lease and loan agreements on January 31, 2023 that, among other things, fixed rent at $ 69.3 million per annum through December 2025, increased the capacity of the secured revolving credit facility to $ 320.0 million, converted portions of interest on the secured revolving credit facility from cash to paid-in-kind (“PIK”) for certain periods, provided Maplewood a one-time option termination fee of $ 12.5 million, and reduced Maplewood’s share of any future potential sales proceeds.

Shortly after the restructuring was completed, on March 31, 2023, Greg Smith, the principal and chief executive officer of Maplewood, passed away.

Smith had been a guarantor of Maplewood’s contractual obligations pursuant to a $ 40.0 million limited unconditional guaranty agreement.

Maplewood began to short pay contractual rent under its lease agreement during the second quarter of 2023, which continued through the end of the second quarter of 2024 as discussed further below.

Maplewood began to short pay contractual rent under its lease agreement during the second quarter of 2023, which continued through the end of the third quarter of 2024 as discussed further below.

Smith’s passing in 2023, Omega has been in discussions with the Greg Smith estate (the “Estate”) in order to protect our interests, including Mr.

2 unchanged sentences

Under the proposed transition, the Key Principals would become the new majority equity holders in the Maplewood entities.

In order to accelerate a negotiated transition process, in May 2024, Omega sent a demand letter to Maplewood and the Estate notifying them of multiple events of default under Maplewood’s lease, loan, and related agreements, including Mr.

Smith’s guaranty, with Omega, including failure to pay full contractual rent and interest for periods in 2023 and 2024.

Omega exercised its contractual rights in connection with these defaults and demanded immediate repayment of past due contractual rent and replenishment of the security deposit, and accelerated all principal and accrued interest due to Omega under the revolving credit facility, which had $ 291.2 million outstanding as of June 30, 2024, including PIK interest that is not recorded for accounting purposes.

Smith’s guaranty, including failure to pay full contractual rent and interest for periods in 2023 and 2024.

Omega exercised its contractual rights in connection with these defaults and demanded immediate repayment of past due contractual rent and replenishment of the security deposit, and accelerated all principal and accrued interest due to Omega under the revolving credit facility, which had $ 296.4 million outstanding as of September 30, 2024, including PIK interest that is not recorded for accounting purposes.

We also filed a lawsuit during the second quarter of 2024 to, among other things, foreclose on the pledged equity and assets of Maplewood.

After sending the demand letter, in June 2024, Omega executed a non-binding term sheet with the Key Principals outlining the terms of the proposed transition, which includes maintaining the Maplewood lease agreement and the secured revolving credit facility provided by Omega.

We are currently working with the Estate and the Key Principals to take the steps necessary to complete the transition of Mr.

Smith’s equity through a settlement agreement (the “Settlement Agreement”), which will require approval of the probate court overseeing administration of the Estate, as well as regulatory approvals in connection with licensure of the operating assets.

On July 31, 2024, we entered into the Settlement Agreement with the Estate subject to the approvals noted above, which formalizes the proposed settlement, including the right in favor of Omega to direct the assignment of Mr.

Smith’s equity to the Key Principals, and Omega’s agreement to forbear from exercising contractual rights or remedies in connection with the defaults, and submitted it to the probate court for approval.

There is no certainty that the court will approve the Settlement Agreement, or that this transition will be completed as intended, on a timely basis, or at all.

While pursuing negotiations with the Estate, we have filed suit to, among other things, foreclose on the pledged equity and assets of Maplewood in the event that the Settlement Agreement is not consummated and/or approved by the probate court or following any appeal therefrom.

We anticipate terminating the suit once a final, non-appealable order is entered approving the settlement with the Estate.

In the second quarter of 2024, Maplewood paid $ 11.8 million of contractual rent, a short pay of $ 6.2 million of the $ 18.0 million (consisting of $ 17.3 million of contractual rent and $ 0.7 million of contractual interest) due under its lease and loan agreements.

Maplewood’s $ 4.8 million security deposit was fully exhausted in the fourth quarter of 2023, so we were unable to apply collateral to unpaid rent and interest during the first six months of 2024.

Maplewood is on a cash basis of revenue recognition for lease purposes, and we recorded rental income of $ 11.8 million and $ 16.3 million for the three months ended June 30, 2024 and 2023, respectively.

We recorded rental income of $ 23.1 million and $ 33.6 million for the six months ended June 30, 2024 and 2023, respectively.

On July 31, 2024, we entered into a settlement agreement (the “Settlement Agreement”) with the Estate and submitted it to the probate court for approval.

The Settlement Agreement, among other things, grants Omega the right to direct the assignment of Mr.

Smith’s equity to the Key Principals or their designee(s), with the Estate remaining liable under Mr.

Smith’s guaranty until the transition is complete or one year from the court’s approval date, if earlier, and requires Omega to refrain from exercising contractual rights or remedies in connection with the defaults.

On August 26, 2024, the probate court approved the Settlement Agreement, and in October 2024, following the probate court’s final and non-appealable order approving the Settlement Agreement, we requested and were granted a dismissal without prejudice of our lawsuit against, among others, the Estate.

We are still awaiting regulatory approvals related to licensure of the operating assets before the transition will be completed.

In the third quarter of 2024, Maplewood paid $ 12.1 million of contractual rent, a short pay of $ 6.0 million of the $ 18.1 million (consisting of $ 17.3 million of contractual rent and $ 0.8 million of contractual interest) due under its lease and loan agreements.

Maplewood’s $ 4.8 million security deposit was fully exhausted in the fourth quarter of 2023, so we were unable to apply collateral to unpaid rent and interest in 2024.

Maplewood is on a cash basis of revenue recognition for lease purposes, and we recorded rental income of $ 12.1 million and $ 17.3 million for the three months ended September 30, 2024 and 2023, respectively.

We recorded rental income of $ 35.2 million and $ 50.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Rental income in all periods was limited to payments that were received from Maplewood or the application of available collateral held by Omega.

The $ 12.5 million option termination fee payment made in the first quarter of 2023 in connection with the restructuring agreement was recorded as a reduction to the $ 33.6 million of gross rental income recognized for the six months ended June 30, 2023.

As discussed further in Note 5 – Real Estate Loans Receivable, we recorded interest income of zero and $ 1.5 million on the Maplewood secured revolving credit facility during the three and six months ended June 30, 2023, respectively.

No interest income was recorded during the three and six months ended June 30, 2024.

In July 2024, Maplewood short-paid the contractual rent and interest amounts due under its lease and loan agreements by $ 2.0 million.

The $ 12.5 million option termination fee payment made by Omega in the first quarter of 2023 in connection with the restructuring agreement was recorded as a reduction to the $ 50.9 million of gross rental income recognized for the nine months ended September 30, 2023.

No interest income was recorded during the three and nine months ended September 30, 2024.

In October 2024, Maplewood short-paid the contractual rent and interest amounts due under its lease and loan agreements by $ 1.9 million.

We began restructuring our facilities and agreements with LaVie in the fourth quarter of 2022, as a result of on-going liquidity issues at LaVie, and these activities have continued into 2023 and 2024.

2 unchanged sentences

In the first quarter of 2024, we sold two facilities and transitioned two facilities to another operator, all of which were previously subject to the master lease with LaVie.

On June 2 and 3, 2024, LaVie commenced voluntary cases under Chapter 11 of the U.S.

In June 2024, LaVie commenced voluntary cases under Chapter 11 of the U.S.

Bankruptcy Code in the U.S.

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Following the bankruptcy filing, LaVie paid contractual rent of $ 2.9 million in June 2024, which reflects full contractual rent prorated for the period after LaVie entered bankruptcy and a $ 0.1 million short pay for the several days prior to the filing.

As LaVie is on a cash basis of revenue recognition for lease purposes, rental income recorded was equal to cash received of $ 5.9 million and $ 16.9 million during the three months ended June 30, 2024 and 2023, respectively and $ 10.3 million and $ 24.3 million during the six months ended June 30, 2024 and 2023, respectively.

We did no t recognize any interest income related to LaVie during the six months ended June 30, 2024 and 2023 as the three loans outstanding have PIK interest and are on non-accrual status.

In July 2024, LaVie paid full contractual rent of $ 3.0 million due under its lease agreement.

In the third quarter of 2024, LaVie resumed making full contractual rent payments of $ 9.2 million due under its lease agreement.

As LaVie is on a cash basis of revenue recognition for lease purposes, rental income recorded was equal to cash received of $ 9.2 million and $ 7.4 million during the three months ended September 30, 2024 and 2023, respectively and $ 19.5 million and $ 31.7 million during the nine months ended September 30, 2024 and 2023, respectively.

We did no t recognize any interest income related to LaVie during the nine months ended September 30, 2024 and 2023 as the three loans outstanding have PIK interest and are on non-accrual status.

In October 2024, LaVie paid full contractual rent of $ 3.0 million due under its lease agreement.

In August 2023, Guardian Healthcare (“Guardian”) failed to make the contractual rent payment due under its lease agreement and subsequently did not make any required contractual rent payments due under its lease agreement through the end of the first quarter of 2024.

In April 2024, we transitioned the remaining six facilities previously included in Guardian’s master lease to a new operator for minimum initial contractual rent of $ 5.5 million per annum with the potential to increase contractual rent dependent on revenue received by the operator.

We recorded rental income of $ 2.9 million related to our lease with the new operator for the three months ended June 30, 2024.

We recorded rental income of $ 2.9 million and $ 5.8 million related to our lease with the new operator for the three and nine months ended September 30, 2024, respectively.

Agemo failed to pay contractual rent and interest during the first quarter of 2023.

Following the execution of a restructuring agreement between Omega and Agemo in the first quarter of 2023, Agemo resumed making contractual rent and interest payments during the second quarter of 2023 and has made all required contractual rent and interest payments through the second quarter of 2024.

Rental income includes $ 6.0 million and $ 5.8 million related to our lease with Agemo for the three months ended June 30, 2024 and 2023, and $ 11.9 million and $ 5.8 million for the six months ended June 30, 2024 and 2023, respectively.

Rental income includes $ 6.0 million and $ 5.8 million related to our lease with Agemo for the three months ended September 30, 2024 and 2023, respectively, and $ 17.9 million and $ 11.6 million for the nine months ended September 30, 2024 and 2023, respectively.

As Agemo is a cash basis operator, rental income is limited to the contractual rent payments that were received during the respective periods.

We did no t recognize interest income on our loans with Agemo during the six months ended June 30, 2024 and 2023.

We did no t recognize interest income on our loans with Agemo during the nine months ended September 30, 2024 and 2023.

See Note 6 – Non-Real Estate Loans Receivable for discussion regarding our loans and interest with Agemo.

During the six months ended June 30, 2023, we re-leased 48 facilities that were previously subject to leases with four cash basis operators to other operators.

During the nine months ended September 30, 2023, we re-leased 48 facilities that were previously subject to leases with four cash basis operators to other operators.

Following the transition, we have no remaining relationships with these four cash basis operators.

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Real estate loans consist of mortgage notes and other real estate loans which are primarily collateralized by a first, second or third mortgage lien or a leasehold mortgage on, or an assignment of the partnership interest in the related properties.

As of June 30, 2024, our real estate loans receivable consists of 15 fixed rate mortgage notes on 65 long-term care facilities and 16 other real estate loans.

As of September 30, 2024, our real estate loans receivable consists of 17 fixed rate mortgage notes on 68 long-term care facilities and 15 other real estate loans.

The facilities subject to the mortgage notes are operated by 14 independent healthcare operating companies and are located in 11 U.S.

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A summary of our real estate loans receivable by loan type and by borrower and/or guarantor is as follows:

September 30,

(in thousands)

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Total real estate loans receivable – net

(1) Approximates the weighted average interest rate on facilities as of June 30, 2024.

(1) Approximates the weighted average interest rate on facilities as of September 30, 2024.

(2) All mortgage notes mature in 2030 with the exception of two mortgage notes with an aggregate outstanding principal balance of $ 52.8 million that mature in 2024.

(3) Other mortgage notes outstanding consists of nine loans to multiple borrowers that have a weighted average interest rate of 9.72 % as of June 30, 2024, with maturity dates ranging from 2024 through 2027 (with $ 8.5 million maturing in 2024).

(3) Other mortgage notes outstanding consists of 10 loans to multiple borrowers that have a weighted average interest rate of 10.44 % as of September 30, 2024, with maturity dates ranging from 2024 through 2027 (with $ 8.7 million maturing in 2024).

Two of the mortgage notes with an aggregate principal balance of $ 12.9 million are past due and have been written down, through our allowance for credit losses, to the estimated fair value of the underlying collateral of $ 1.5 million.

(4) During the first quarter of 2024, the maturity dates of these loans were further extended from March 29, 2024 to June 28, 2024 .

During the second quarter of 2024, the maturity dates of these loans were again extended from June 28, 2024 , to June 30, 2025 .

(5) Other real estate loans outstanding consists of eight loans to multiple borrowers that have a weighted average interest rate of 11.21 % as of June 30, 2024, with maturity dates ranging from 2027 through 2033 .

(4) During the third quarter of 2024, we modified the priority of collateral available to use under the loan agreements for two loans with aggregate principal balances of $ 113.6 million and $ 106.8 million as of September 30, 2024 and December 31, 2023, respectively.

As a result of these modifications, we adjusted the presentation of the loans from real estate loans receivable to non-real estate loans receivable as of September 30, 2024.

See Note 6 – Non-Real Estate loans Receivable for additional information.

Additionally, we issued a new $ 13.0 million other real estate loan to the same borrower during the third quarter of 2024.

(5) Other real estate loans outstanding consists of nine loans to multiple borrowers that have a weighted average interest rate of 10.9 % as of September 30, 2024, with maturity dates ranging from 2027 through 2033 .

Interest income on real estate loans is included within interest income on the Consolidated Statements of Operations and is summarized as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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Total real estate loans interest income

We funded $ 112.9 million and $ 154.1 million under eleven new real estate loans with weighted average interest rates of 11.5 % and 10.2 % during the three and six months ended June 30, 2024, respectively.

We also advanced $ 0.6 million and $ 3.4 million under existing real estate loans during the three and six months ended June 30, 2024, respectively.

During the three and nine months ended September 30, 2024, we funded $ 54.9 million and $ 209.0 million under 10 and 19 real estate loans, respectively, that were originated during 2024 with weighted average interest rates of 10.2 %.

We also advanced $ 0.4 million and $ 3.8 million under existing real estate loans during the three and nine months ended September 30, 2024, respectively.

Included below is additional discussion on any significant new loans issued and significant updates to any existing loans.

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Smith’s equity in Maplewood to the Key Principals and maintaining the existing Maplewood lease agreement and the secured revolving credit facility (without reflecting the acceleration of the maturity) provided by Omega.

We are currently working with the Estate and the Key Principals to take the steps necessary to complete the transition, which will, in part, require approval of the probate court overseeing distribution of the Estate’s assets and regulatory approvals related to licensures.

On July 31, 2024, we entered into an agreement with the Estate formalizing the transition plan, including the right to direct the assignment of Mr.

Smith’s equity in Maplewood to the Key Principals, and submitted it to the probate court for approval.

There is no certainty that court or regulatory approvals will be received or that this transition will be completed as intended, on a timely basis, or at all.

On July 31, 2024, we entered into the Settlement Agreement with the Estate and submitted it to the probate court for approval.

The Settlement Agreement, among other things, grants Omega the right to direct the assignment of Mr.

Smith’s equity to the Key Principals or their designee(s), with the Estate remaining liable under Mr.

We are still awaiting regulatory approvals related to licensure of the operating assets before the transition will be completed.

There is no certainty that the regulatory approvals will be received or that this transition will be completed as intended, on a timely basis, or at all.

If the proposed transition plan is not completed, we may incur a substantial loss on the revolving loan with Maplewood up to the amortized cost basis of the loan.

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In the first quarter of 2024, we again adjusted the internal risk rating from a 4 to 5 to reflect the increased risk of the loan as a result of the missed interest payments in the first quarter of 2024, discussed below, and due to the status of the on-going negotiations with the Estate.

We believe the internal risk rating of a 5 appropriately reflects the risks as of June 30, 2024.

We believe the internal risk rating of a 5 appropriately reflects the risks as of September 30, 2024.

See the allowance for credit losses attributable to real estate loans with a 5 internal risk rating within Note 7 – Allowance for Credit Losses.

As of June 30, 2024, the amortized cost basis of this loan was $ 263.6 million, which represents 18.0 % of the total amortized cost basis of all real estate loan receivables.

During the six months ended June 30, 2024, Maplewood failed to make aggregate cash interest payments of $ 1.2 million that were required under the loan agreement.

As of September 30, 2024, the amortized cost basis of this loan was $ 263.6 million, which represents 18.9 % of the total amortized cost basis of all real estate loan receivables.

During the nine months ended September 30, 2024, Maplewood failed to make aggregate cash interest payments of $ 2.0 million that were required under the loan agreement.

During the three months ended March 31, 2023, we recorded interest income of $ 1.5 million on the secured revolving credit facility for the contractual interest payment received related to December 2022, as the loan was placed on non-accrual status for interest recognition during the fourth quarter of 2022.

We did no t record any interest income related to the PIK interest during the three and six months ended June 30, 2024 and 2023.

We did no t record any interest income related to the PIK interest during the three and nine months ended September 30, 2024 and 2023.

Omega and Maplewood previously entered into a restructuring agreement and a loan amendment during the first quarter of 2023 that modified Maplewood’s secured revolving credit facility.

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This amendment was treated as a loan modification provided to a borrower experiencing financial difficulty.

Other real estate loans outstanding

In July 2024, we made a $ 27.3 million preferred equity investment in a new real estate joint venture that was formed to acquire a facility in Massachusetts, which is treated as a real estate loan receivable for accounting purposes.

Omega’s preferred equity investment bears a 10.0 % return per annum and provides for mandatory redemption by the joint venture at the earlier of July 2030 or the occurrence of certain significant events within the joint venture.

We have determined that the joint venture is a VIE, but we are not the primary beneficiary as we do not have the power to direct the activities that most significantly impact the joint venture’s economic performance, so this $ 27.3 million preferred equity investment is included in the unconsolidated VIE table presented in Note 8 – Variable Interest Entities.

NOTE 6 – NON-REAL ESTATE LOANS RECEIVABLE

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These loans may be either unsecured or secured by the collateral of the borrower, which may include the working capital of the borrower.

As of June 30, 2024, we had 42 loans with 23 different borrowers.

As of September 30, 2024, we had 47 loans with 27 different borrowers.

A summary of our non-real estate loans by borrower and/or guarantor is as follows:

September 30,

(in thousands)

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interest at 11.00 % (1)

Notes due 2024 - 2029 ;

interest at 12.00 % (1)(2)

Note due 2025 ;

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Total non-real estate loans receivable – net

(1) Approximates the weighted average interest rate as of June 30, 2024.

(1) Approximates the weighted average interest rate as of September 30, 2024.

(2) During the second quarter of 2024, two working capital loans with maturity dates of June 30, 2024 were repaid in full.

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The interest rate remains at 7.5 % for borrowings that do not exceed $ 15.0 million.

The interest rate above represents the weighted average interest rate as of June 30, 2024.

(4) Other notes outstanding have a weighted average interest rate of 8.58 % as of June 30, 2024, with maturity dates ranging from 2024 through 2030 (with $ 0.4 million maturing in 2024 ).

Three of the other notes outstanding with an aggregate principal balance of $ 10.1 million are past due and have been written down to the estimated fair value of the underlying collateral of zero , through our allowance for credit losses.

For the three and six months ended June 30, 2024, non-real estate loans generated interest income of $ 7.1 million and $ 14.2 million, respectively.

For the three and six months ended June 30, 2023, non-real estate loans generated interest income of $ 5.3 million and $ 10.3 million, respectively.

The interest rate above represents the weighted average interest rate as of September 30, 2024.

(4) Other notes outstanding have a weighted average interest rate of 8.61 % as of September 30, 2024, with maturity dates ranging from 2024 through 2030 (with $ 5.3 million maturing in 2024 ).

Four of the other notes outstanding with an aggregate principal balance of $ 10.8 million are past due, three of which have been written down to the estimated fair value of the underlying collateral of zero , through our allowance for credit losses.

The one other past due other note outstanding has sufficient collateral to support the principal balance outstanding of $ 1.1 million as of September 30, 2024.

For the three and nine months ended September 30, 2024, non-real estate loans generated interest income of $ 6.3 million and $ 20.5 million, respectively.

For the three and nine months ended September 30, 2023, non-real estate loans generated interest income of $ 5.7 million and $ 16.0 million, respectively.

Interest income on non-real estate loans is included within interest income on the Consolidated Statements of Operations.

During the three and six months ended June 30, 2024, we funded $ 10.4 million under five new non-real estate loans with a weighted average interest rate of 10.0 %.

We advanced $ 9.6 million and $ 13.7 million under existing working capital loans during the three and six months ended June 30, 2024, respectively.

We received principal repayments of $ 45.9 million and $ 52.8 million on non-real estate loans during the three months and six months ended June 30, 2024, respectively.

During the three and nine months ended September 30, 2024, we funded $ 23.5 million and $ 33.9 million, respectively, under four and seven non-real estate loans that were originated during 2024 with a weighted average interest rate of 9.9 %.

We advanced $ 0.4 million and $ 14.1 million under non-real estate loans during the three and nine months ended September 30, 2024, respectively.

We received principal repayments of $ 37.4 million and $ 90.2 million on non-real estate loans during the three months and nine months ended September 30, 2024, respectively.

Included below is additional discussion on any significant new loans issued and/or significant updates to any existing loans.

Notes due 2026

Notes due in 2026 consists of two term loans with Genesis Healthcare Inc., (“Genesis”) with principal balances of $ 91.4 million and $ 22.2 million as of September 30, 2024, respectively, that previously were included as real estate loans receivables within our Consolidated Balance Sheets.

The $ 91.4 million term loan bore interest at a fixed rate of 14 % per annum, of which 9 % per annum was permitted to be paid-in-kind.

The $ 22.2 million term loan bore interest at a fixed rate of 10 % per annum, of which 5 % per annum was permitted to be paid-in-kind.

As amended, both loans had a maturity date of June 30, 2025 .

On September 30, 2024, the loans were amended to (i) modify the priority of certain real estate collateral securing the loans, (ii) extend the maturity date to June 30, 2026 and (iii) keep the existing interest rates but reduce the portion of contractual interest permitted to be paid in kind to 3.5 % per annum on the $ 91.4 million term loan and to 2.5 % per annum on the $ 22.2 million term loan beginning September 1, 2025.

Following the modification to the priority of certain real estate collateral available to us under the loan agreements, we adjusted our presentation of these loans from real estate loans receivable to non-real estate loans receivable as of September 30, 2024.

Notes due 2036 ;

interest at 5.63 %

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The Agemo Replacement Loans are on non-accrual status, and we are utilizing the cost recovery method, under which any payments we receive are applied against the principal amount.

During the three months and six months ended June 30, 2024, we received $ 1.2 million and $ 2.4 million of interest payments from Agemo that we applied against the outstanding principal of the loans, and we recognized a recovery for credit loss equal to the amount of payments applied against principal.

During the three months and six months ended June 30, 2023, we received $ 0.8 million of interest payments from Agemo that we applied against the outstanding principal of the loans, and we recognized a recovery for credit loss equal to the amount of payments applied against principal.

As of June 30, 2024, the amortized cost basis of these loans was $ 75.5 million, which represents 21.0 % of the total amortized cost basis of all non-real estate loan receivables.

The total reserve as of June 30, 2024 related to the Agemo Replacement Loans was $ 73.2 million, which reserves the loan down to the fair value of the underlying collateral, consisting of a second lien on the accounts receivable of Agemo.

During the three months and nine months ended September 30, 2024, we received $ 1.2 million and $ 3.6 million, respectively, of interest payments from Agemo that we applied against the outstanding principal of the loans, and we recognized a recovery for credit loss equal to the amount of payments applied against principal.

During the three months and nine months ended September 30, 2023, we received $ 1.2 million and $ 2.0 million, respectively, of interest payments from Agemo that we applied against the outstanding principal of the loans, and we recognized a recovery for credit loss equal to the amount of payments applied against principal.

As of September 30, 2024, the amortized cost basis of these loans was $ 74.3 million, which represents 16.1 % of the total amortized cost basis of all non-real estate loan receivables.

The total reserve as of September 30, 2024 related to the Agemo Replacement Loans was $ 72.0 million, which reserves the loan down to the fair value of the underlying collateral, consisting of a second lien on the accounts receivable of Agemo.

Notes due 2024 and 2036 ;

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As a result of the issuance of the DIP loans discussed above, Omega’s collateral position under the $ 25.0 million secured term loan decreased from second to third priority.

We estimate there will be insufficient collateral available for this loan following the decrease in priority and therefore recognized a $ 3.6 million provision for credit losses in the second quarter of 2024 to fully reserve the $ 25.0 million secured term loan.

We did no t record any interest income for any LaVie loans for the three and six months ended June 30, 2024 and 2023.

We estimated that there will be insufficient collateral available for this loan following the decrease in priority and therefore recognized a $ 3.6 million provision for credit losses in the second quarter of 2024 to fully reserve the $ 25.0 million secured term loan.

We did no t record any interest income for any LaVie loans for the three and nine months ended September 30, 2024 and 2023.

NOTE 7 – ALLOWANCE FOR CREDIT LOSSES

A rollforward of our allowance for credit losses for the six months ended June 30, 2024 is as follows:

A rollforward of our allowance for credit losses for the nine months ended September 30, 2024 is as follows:

Financial Statement Line Item

Allowance for Credit Loss as of December 31, 2023

Provision (Recovery) for Credit Loss for the six months ended June 30, 2024 (1)

Write-offs charged against allowance for the six months ended June 30, 2024

Allowance for Credit Loss as of June 30, 2024

Provision (Recovery) for Credit Loss for the nine months ended September 30, 2024 (1)

Write-offs charged against allowance for the nine months ended September 30, 2024

Allowance for Credit Loss as of September 30, 2024

(in thousands)

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Unfunded non-real estate loan commitments

(1) During the six months ended June 30, 2024, we received proceeds of $ 3.3 million from the liquidating trust related to the $ 25.0 million debtor in possession facility to Gulf Coast Health Care LLC, which resulted in a recovery for credit losses of $ 3.3 million that is not included in the rollforward above since we had previously written-off the loan balance and related reserves.

(1) During the nine months ended September 30, 2024, we received proceeds of $ 5.0 million from the liquidating trust related to the $ 25.0 million debtor in possession facility to Gulf Coast Health Care LLC, which resulted in a recovery for credit losses of $ 5.0 million that is not included in the rollforward above since we had previously written-off the loan balance and related reserves.

(2) Amount reflects the movement of reserves associated with Maplewood’s secured revolving credit facility due to an adjustment to the internal risk rating on the loan from a 4 to a 5 during the first quarter of 2024.

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This amount also includes $ 0.6 million related to principal payments received on loans that were fully reserved.

A rollforward of our allowance for credit losses for the six months ended June 30, 2023 is as follows:

A rollforward of our allowance for credit losses for the nine months ended September 30, 2023 is as follows:

Financial Statement Line Item

Allowance for Credit Loss at December 31, 2022

Provision (Recovery) for Credit Loss for the six months ended June 30, 2023

Write-offs charged against allowance for the six months ended June 30, 2023

Other additions to the allowance for the six months ended June 30, 2023

Allowance for Credit Loss as of June 30, 2023

Provision (Recovery) for Credit Loss for the nine months ended September 30, 2023

Write-offs charged against allowance for the nine months ended September 30, 2023

Other additions to the allowance for the nine months ended September 30, 2023

Allowance for Credit Loss as of September 30, 2023

(in thousands)

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Non-real estate loans receivable

Unfunded real estate loan commitments

Unfunded non-real estate loan commitments

1 unchanged sentence

Unfunded non-real estate loan commitments

Unfunded real estate loan commitments

(1) This amount relates to the write-off of the allowance for the Guardian mortgage note in connection with the settlement and partial forgiveness of the note in the second quarter of 2023.

5 unchanged sentences

Revolving Loans

Balance as of June 30, 2024

Balance as of September 30, 2024

(in thousands)

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

As of June 30, 2024 and December 31, 2023, we have excluded $ 10.3 million and $ 10.2 million, respectively, of contractual interest receivables and $ 1.6 million and $ 3.1 million, respectively, of effective yield interest receivables from our allowance for credit losses.

As of September 30, 2024 and December 31, 2023, we have excluded $ 10.3 million and $ 10.2 million, respectively, of contractual interest receivables and $ 1.7 million and $ 3.1 million, respectively, of effective yield interest receivables from our allowance for credit losses.

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

During the three months ended June 30, 2024 and 2023, we recognized $ 1.2 million and $ 0.1 million, respectively, of interest income related to loans on non-accrual status as of June 30, 2024.

During the three months ended June 30, 2024 and 2023, we recognized $ 2.2 million and $ 1.6 million, respectively, of interest income related to loans on non-accrual status as of June 30, 2024.

During the three months ended September 30, 2024 and 2023, we recognized $ 0.6 million and $ 47 thousand, respectively, of interest income related to loans on non-accrual status as of September 30, 2024.

During the nine months ended September 30, 2024 and 2023, we recognized $ 2.8 million and $ 1.6 million, respectively, of interest income related to loans on non-accrual status as of September 30, 2024.

NOTE 8 – VARIABLE INTEREST ENTITIES

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We hold variable interests in several VIEs through our investing and financing activities, which are not consolidated, as we have concluded that we are not the primary beneficiary of these entities as we do not have the power to direct activities that most significantly impact the VIE’s economic performance and/or the variable interest we hold does not obligate us to absorb losses or provide us with the right to receive benefits from the VIE which could potentially be significant.

Below is a summary of our assets, liabilities, collateral and maximum exposure to loss associated with these unconsolidated VIEs as of June 30, 2024 and December 31, 2023:

Below is a summary of our assets, liabilities, collateral and maximum exposure to loss associated with these unconsolidated VIEs as of September 30, 2024 and December 31, 2023:

September 30,

(in thousands)

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(1) Amount excludes accounts receivable that Omega has a security interest in as collateral under the three loans with operators that are unconsolidated VIEs.

The fair value of the accounts receivable available to Omega was $ 5.9 million and $ 8.9 million as of June 30, 2024 and December 31, 2023, respectively.

The fair value of the accounts receivable available to Omega was $ 5.8 million and $ 8.9 million as of September 30, 2024 and December 31, 2023, respectively.

In determining our maximum exposure to loss from the unconsolidated VIEs, 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 the operators that are considered unconsolidated VIEs, following the date they were determined to be VIEs, for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30,

Six Months Ended June 30,

The table below reflects our total revenues from the operators that are considered unconsolidated VIEs, following the date they were determined to be VIEs, for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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We have consolidated this VIE because we have concluded that we are the primary beneficiary of this VIE based on a combination of our ability to direct the activities that most significantly impact the joint venture’s economic performance and our rights to receive residual returns and obligation to absorb losses arising from the joint venture.

As of June 30, 2024 and December 31, 2023, this joint venture has $ 24.9 million and $ 27.9 million, respectively, of total assets, and $ 20.8 million and $ 20.7 million, respectively, of total liabilities.

Of the $ 20.8 million of total liabilities held by the joint venture at June 30, 2024, $ 20.5 million relates to a mortgage loan advanced by Omega during the second quarter 2024 to pay-off an existing third-party mortgage loan of the joint venture, as discussed in Note 15 – Borrowing Activities and Arrangements.

As of September 30, 2024 and December 31, 2023, this joint venture has $ 24.6 million and $ 27.9 million, respectively, of total assets, and $ 20.8 million and $ 20.7 million, respectively, of total liabilities.

Of the $ 20.8 million of total liabilities held by the joint venture at September 30, 2024, $ 20.5 million relates to a mortgage loan advanced by Omega during the second quarter 2024 to pay-off an existing third-party mortgage loan of the joint venture, as discussed in Note 15 – Borrowing Activities and Arrangements.

The $ 20.5 million Omega mortgage loan is eliminated in consolidation and is not reflected in our Consolidated Balance Sheets.

3 unchanged sentences

Carrying Amount

September 30,

Second Spring Healthcare Investment

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CHS OHI Insight Holdings, LLC

(1) Ownership percentages and facility counts are as of June 30, 2024.

(2) As of June 30, 2024 and December 31, 2023, we had an aggregate of $ 79.4 million and $ 79.6 million, respectively, of loans outstanding with these joint ventures.

(3) In July 2024, we acquired the remaining 51 % ownership interest in the Cindat Joint Venture, as discussed in Note 21 – Subsequent Events.

(1) Ownership percentages and facility counts are as of September 30, 2024.

(2) As of September 30, 2024 and December 31, 2023, we had an aggregate of $ 79.1 million and $ 79.6 million, respectively, of loans outstanding with these joint ventures.

(3) As of June 30, 2024, we held a 49 % interest in an unconsolidated joint venture owning 63 facilities in the U.K.

(the “Cindat Joint Venture”).

In July 2024, we acquired the remaining 51 % ownership interest in the Cindat Joint Venture, such that we now own 100 % of the ownership interest in the entity that owns the Cindat portfolio.

See Note 2 – Real Estate Assets for additional information.

(4) During the third quarter of 2024, this joint venture sold one specialty facility to an unrelated third party for approximately $ 40.7 million in net cash proceeds and recognized a gain on sale of approximately $ 12.9 million ( $ 6.5 million of which represents the Company’s share of the gain).

(5) These joint ventures are unconsolidated VIEs and therefore are included in the tables in Note 8 – Variable Interest Entities.

The following table reflects our income (loss) from unconsolidated joint ventures for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30,

Six Months Ended June 30,

The following table reflects our income (loss) from unconsolidated joint ventures for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

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OMG-Form Senior Holdings, LLC

(1) The income from this unconsolidated joint venture for the three and nine months ended September 30, 2024 includes a $ 6.5 million gain on sale of real estate investments.

NOTE 10 – GOODWILL AND OTHER INTANGIBLES

The following is a summary of our goodwill as of June 30, 2024 and December 31, 2023:

The following is a summary of our goodwill as of September 30, 2024 and December 31, 2023:

(in thousands)

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Foreign currency translation

Balance as of June 30, 2024

The following is a summary of our intangible assets and liabilities as of June 30, 2024 and December 31, 2023:

Balance as of September 30, 2024

The following is a summary of our intangible assets and liabilities as of September 30, 2024 and December 31, 2023:

September 30,

(in thousands)

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Net below market leases

(1) As of September 30, 2024, includes $ 30.6 million of intangible assets related to above market leases assumed in connection with the acquisition of the remaining 51 % interest in the Cindat Joint Venture during the third quarter of 2024 (see Note 2 – Real Estate Assets for additional information).

Above market leases, net of accumulated amortization, are included in other assets on our Consolidated Balance Sheets.

1 unchanged sentence

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 June 30, 2024 and 2023, our net amortization related to intangibles was $ 0.6 million and $ 0.7 million, respectively.

For the six months ended June 30, 2024 and 2023, our net amortization related to intangibles was $ 1.1 million and $ 6.8 million, respectively.

The estimated net amortization related to these intangibles for the remainder of 2024 and the next four years is as follows:

For the three months ended September 30, 2024 and 2023, our net amortization related to intangibles was $ 1.2 million and $ 2.1 million, respectively.

For the nine months ended September 30, 2024 and 2023, our net amortization related to intangibles was $ 2.3 million and $ 8.9 million, respectively.

The 2024 and 2023 net amortization amounts for the three and nine months ended resulted in an increase to rental income.

The estimated net amortization expense related to these intangibles for the remainder of 2024 and the next four years is as follows:

remainder of 2024 – ($ 0.7 ) million;

2 unchanged sentences

2027 – ($ 1.4 ) million and 2028 – ($ 2.0 ) million.

As of June 30, 2024, the weighted average remaining amortization period of above market lease assets is 13 years and below market lease liabilities is seven years .

As of September 30, 2024, the weighted average remaining amortization period of above market lease assets is 11 years and below market lease liabilities is seven years .

NOTE 11 – CONCENTRATION OF RISK

As of June 30, 2024, our portfolio of real estate investments (including properties associated with mortgages, direct financing leases, assets held for sale and consolidated joint ventures) consisted of 928 healthcare facilities, located in 42 states and the U.K.

As of September 30, 2024, our portfolio of real estate investments (including properties associated with mortgages, direct financing leases, assets held for sale and consolidated joint ventures) consisted of 991 healthcare facilities, located in 42 states and the U.K.

and operated by 83 third-party operators.

Our investment in these facilities, net of impairments and allowances, totaled $ 9.4 billion at June 30, 2024, with 97 % of our real estate investments related to long-term healthcare facilities.

Our investment in these facilities, net of impairments and allowances, totaled $ 9.9 billion at September 30, 2024, with 97 % of our real estate investments related to long-term healthcare facilities.

Our portfolio is made up of (i) 587 SNFs, 282 ALFs, 19 ILFs, 19 specialty facilities and one medical office building, (ii) fixed rate mortgages on 52 SNFs, 13 ALFs, two specialty facilities and one ILF, and (iii) 15 facilities that are held for sale.

At June 30, 2024, we also held other real estate loans receivable (excluding mortgages) of $ 532.2 million, non-real estate loans receivable of $ 234.6 million and $ 185.3 million of investments in nine unconsolidated joint ventures.

As of June 30, 2024 and December 31, 2023, we had investments with one operator or manager that approximated or exceeded 10% of our total investments:

Maplewood generated 4.7 % and 6.5 % of our total revenues for the three months ended June 30, 2024 and 2023, respectively and 4.7 % and 4.8 % of our total revenues for the six months ended June 30, 2024 and 2023, respectively.

The revenue associated with Maplewood for the six months ended June 30, 2023 reflects a reduction of revenue of $ 12.5 million related to a termination fee payment made by Omega as discussed in Note 4 – Contractual Receivables and Other Receivables and Lease Inducements.

During the three and six months ended June 30, 2024, we also have one operator with total revenues that exceeded 10% of our total revenues:

At September 30, 2024, we also held other real estate loans receivable (excluding mortgages) of $ 453.3 million, non-real estate loans receivable of $ 335.7 million and $ 92.6 million of investments in eight unconsolidated joint ventures.

As of September 30, 2024 and December 31, 2023, we had investments with one operator or manager that approximated or exceeded 10% of our total investments:

Maplewood generated 4.4 % and 7.2 % of our total revenues for the three months ended September 30, 2024 and 2023, respectively and 4.6 % and 5.6 % of our total revenues for the nine months ended September 30, 2024 and 2023, respectively.

The revenue associated with Maplewood for the nine months ended September 30, 2023 reflects a reduction of revenue of $ 12.5 million related to a termination fee payment made by Omega as discussed in Note 4 – Contractual Receivables and Other Receivables and Lease Inducements.

During the three and nine months ended September 30, 2024, we also have one operator with total revenues that exceeded 10% of our total revenues:

CommuniCare Health Services, Inc.

(“CommuniCare”).

CommuniCare generated 12.5 % and 11.5 % of our total revenues for the three months ended June 30, 2024 and 2023, respectively and 12.7 % and 10.6 % of our total revenues for the six months ended June 30, 2024 and 2023.

As of June 30, 2024, CommuniCare represented 8.7 % of our total investments.

As of June 30, 2024, the three states in which we had our highest concentration of investments were Texas ( 10.2 %), Indiana ( 6.7 %) and California ( 6.0 %).

CommuniCare generated 11.1 % and 12.5 % of our total revenues for the three months ended September 30, 2024 and 2023, respectively and 12.1 % and 11.2 % of our total revenues for the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, CommuniCare represented 8.3 % of our total investments.

As of September 30, 2024, the three states in which we had our highest concentration of investments were Texas ( 9.7 %), Indiana ( 6.4 %) and California ( 5.7 %).

In addition, our concentration of investments in the U.K.

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August 15, 2024

November 4, 2024

November 15, 2024

Dividend Reinvestment and Common Stock Purchase Plan

The following is a summary of the shares issued under the Dividend Reinvestment and Common Stock Purchase Plan for the three and six months ended June 30, 2024 and 2023 (in thousands):

The following is a summary of the shares issued under the Dividend Reinvestment and Common Stock Purchase Plan for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Shares issued

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Three Months Ended

June 30, 2023

September 30, 2023

Three Months Ended

June 30, 2024

Six Months Ended

June 30, 2023

Six Months Ended

June 30, 2024

September 30, 2024

Nine Months Ended

September 30, 2023

Nine Months Ended

September 30, 2024

At-The-Market Offering Programs

The following is a summary of the shares issued under our $ 1.0 billion At-The-Market Offering Program for the three months and six ended June 30, 2024 and 2023 (in thousands except average price per share):

During the second quarter of 2021, Omega entered into an “at-the-market” (“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”) could be sold from time to time.

During the third quarter of 2024, we terminated the 2021 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 $ 1.25 billion (the “2024 ATM Program,” and together with the 2021 ATM Program, the “ATM Programs”) 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 2024 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 2024 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 2024 ATM Program during the three months ended September 30, 2024.

The following is a summary of the shares issued under our ATM Programs for the three months and nine ended September 30, 2024 and 2023 (in thousands except average price per share):

Average Net Price

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Gross Proceeds

Three and Six Months Ended

June 30, 2023

Three Months Ended

June 30, 2024

Six Months Ended

June 30, 2024

September 30, 2023

Three Months Ended

September 30, 2024

Nine Months Ended

September 30, 2023

Nine Months Ended

September 30, 2024

(1) Represents the average price per share after issuance costs.

Accumulated Other Comprehensive Income (Loss)

The following is a summary of our accumulated other comprehensive income (loss), net of tax as of June 30, 2024 and December 31, 2023:

The following is a summary of our accumulated other comprehensive income (loss), net of tax as of September 30, 2024 and December 31, 2023:

September 30,

(in thousands)

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Total accumulated other comprehensive income for Omega

During the three months ended June 30, 2024 and 2023, we reclassified $ 2.6 million and $ 1.1 million, respectively, of realized gains out of accumulated other comprehensive income into interest expense on our Consolidated Statements of Operations associated with our cash flow hedges.

During the six months ended June 30, 2024 and 2023, we reclassified $ 5.2 million and $ 2.1 million, respectively, of realized gains out of accumulated other comprehensive income into interest expense on our Consolidated Statements of Operations associated with our cash flow hedges.

During the three months ended September 30, 2024 and 2023, we reclassified $ 2.7 million and $ 1.1 million, respectively, of realized gains out of accumulated other comprehensive income into interest expense on our Consolidated Statements of Operations associated with our cash flow hedges.

During the nine months ended September 30, 2024 and 2023, we reclassified $ 7.9 million and $ 3.2 million, respectively, of realized gains out of accumulated other comprehensive income into interest expense on our Consolidated Statements of Operations associated with our cash flow hedges.

NOTE 13 – TAXES

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

As of June 30, 2024, one of our TRSs that is subject to income taxes at the applicable corporate rates had a net operating loss (“NOL”) carry-forward of $ 9.8 million.

Our NOL carry-forward was partially reserved as of June 30, 2024, with a valuation allowance due to uncertainties regarding realization.

As of September 30, 2024, 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 $ 9.8 million.

Our NOL carry-forward was partially reserved as of September 30, 2024, 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 taxable years ended after December 31, 2017, may be carried forward indefinitely.

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REIT regime with an effective date of April 1, 2023.

As of June 30, 2024, we have aggregate NOL carryforwards of $ 81.9 million associated with two U.K.

As of September 30, 2024, we have aggregate NOL carryforwards of $ 83.8 million associated with two U.K.

subsidiaries.

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The following is a summary of deferred tax assets and liabilities (which are recorded in other assets and accrued expenses and other liabilities in our Consolidated Balance Sheets):

September 30,

(in thousands)

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Net deferred tax liability

(1) As discussed in Note 2 – Real Estate Assets, in connection with the acquisition of one U.K.

(1) As discussed in Note 2 – Real Estate Assets, in connection with our acquisition of one U.K.

entity in the second quarter of 2024, we acquired foreign net operating losses of $ 47.8 million resulting in a NOL deferred tax asset of $ 11.9 million.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in millions)

Federal, state and local income tax expense

Foreign income tax expense (benefit) (1)

Foreign income tax expense

Total income tax expense (1)

(1) The benefit for the six months ended June 30, 2023 primarily relates to adjustments made to our deferred tax assets and liabilities as a result of the majority of our U.K.

portfolio electing to enter into the U.K.

REIT regime effective April 1, 2023.

(1) The above amounts do not include gross income 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 and six months ended June 30, 2024 and 2023, respectively.

The following is a summary of our Stock-based compensation expense for the three and nine months ended September 30, 2024 and 2023, respectively.

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Interest Rate

September 30,

(in thousands)

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2024 term loan (3)

2026 mortgage loan (1)

Deferred financing costs – net

Premium – net

Total secured borrowings

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Total secured and unsecured borrowings – net (10)(11)

(1) Wholly owned subsidiaries of Omega OP were the obligors on these borrowings.

(1) Wholly owned subsidiaries of Omega OP are or were the obligors on these borrowings.

(2) During the first quarter of 2024, the remaining nine HUD mortgages with outstanding principal of $ 41.6 million were paid off.

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(4) Guaranteed by Omega OP.

(4) As of June 30, 2024, borrowings under Omega’s Revolving Credit Facility consisted of $ 50 million U.S.

Dollars (“USD”) and £ 16.0 million British Pounds Sterling (“GBP”).

The applicable interest rate on the USD tranche and on the GBP borrowings under the alternative currency tranche of the credit facility were 6.66 % and 6.52 % as of June 30, 2024, respectively.

(5) As of September 30, 2024, there were no borrowings outstanding under Omega’s Revolving Credit Facility.

The applicable interest rate on the USD tranche and on the GBP borrowings under the alternative currency tranche of the credit facility were 6.16 % and 6.27 % , respectively, as of September 30, 2024.

(6) The Company repaid the $ 400 million of 4.95 % senior notes on the April 1, 2024 maturity date using available cash and proceeds from our Revolving Credit Facility.

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

As of June 30, 2024 and December 31, 2023, we were in compliance with all applicable covenants for our borrowings .

As of September 30, 2024 and December 31, 2023, we were in compliance with all applicable covenants for our borrowings .

2026 Mortgage Loan

As discussed in Note 2 – Real Estate Assets, we assumed a £ 188.6 million mortgage loan (“2026 Mortgage Loan”) as part of our acquisition of the remaining 51 % interest in the Cindat Joint Venture.

The 2026 Mortgage Loan matures in August 2026 but can be repaid without a prepayment penalty beginning November 2025.

The 2026 Mortgage Loan bears interest at SONIA plus an applicable margin of 5.38 %.

As part of the transaction, we assumed four interest rate cap contracts that ensure the annual interest rate on the 2026 Mortgage Loan does not exceed 10.38 %.

The fair value adjustment on the 2026 Mortgage Loan was $ 20.7 million and is being amortized into interest expense over the remaining contractual term of the loan.

The net premium of $ 19.7 million in the table above relates to the fair value adjustment on the 2026 Mortgage Loan.

We incurred $ 4.9 million of deferred costs in connection with the assumption of the 2026 Mortgage Loan included in the table above.

NOTE 16 – DERIVATIVES AND HEDGING

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Our risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes foreign currency forward contracts, interest rate swaps and debt issued in foreign currencies to offset a portion of these risks.

As of June 30, 2024, we have 12 interest rate swaps with $ 478.5 million in notional value.

The swaps are designated as cash flow hedges of the interest payments on two of Omega’s variable interest loans.

As of September 30, 2024, we have 12 interest rate swaps with $ 478.5 million in notional value and four interest rate caps with £ 190.0 million in notional value.

The swaps and the majority of the caps are designated as cash flow hedges of the interest payments on three of Omega’s variable interest loans.

Additionally, we have 11 foreign currency forward contracts with £ 258.0 million in notional value issued at a weighted average GBP-USD forward rate of 1.2899 that are designated as net investment hedges.

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The new currency forward contracts hedge an intercompany loan between a U.S.

As discussed in Note 2 – Real Estate Assets, we assumed four interest rate cap contracts as a part of our acquisition of the remaining 51 % interest in the Cindat Joint Venture.

The interest rate caps terminate on August 26, 2026.

The interest rate cap contracts ensure that the annual interest rate on the 2026 Mortgage Loan does not exceed 10.38 %.

The location and fair value of derivative instruments designated as hedges, at the respective balance sheet dates, were as follows:

September 30,

Cash flow hedges:

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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 June 30, 2024 and December 31, 2023, the net carrying amounts and fair values of our other financial instruments were as follows:

June 30, 2024

At September 30, 2024 and December 31, 2023, the net carrying amounts and fair values of our other financial instruments were as follows:

September 30, 2024

December 31, 2023

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Revolving credit facility

2026 mortgage loan

2024 term loan

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The carrying amount of these approximate fair value because the borrowings are interest rate adjusted.

Differences between carrying value and the fair value in the table above are due to the inclusion of deferred financing costs and discounts in the carrying value.

● 2026 mortgage loan:

The 2026 mortgage loan was recorded at fair market value in July 2024, as of the date we assumed it as part of our acquisition of the remaining 51 % interest in the Cindat Joint Venture.

The fair market value was determined by discounting the remaining contractual cash flows using a current market rate of interest of comparable debt instruments.

Differences between carrying value and the fair value in the table above are due to the inclusion of deferred financing costs in the carrying value.

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The court overseeing the Swan Matter issued an order in May 2024 granting final approval to a proposed settlement reached with the plaintiffs in the Stourbridge Matter and the Swan Matter, which order became final and non-appealable as of June 20, 2024.

In April 2024, the court overseeing the Wojcik Matter issued an order granting preliminary approval to the proposed settlement reached with the plaintiff in the Wojcik Matter.

A hearing is scheduled for August 6, 2024 regarding final approval of the proposed settlement.

The court overseeing the Wojcik Matter issued an order as of August 8, 2024 granting final approval to a proposed settlement reached with the plaintiff in the Wojcik Matter, which order became final and non-appealable as of September 9, 2024.

The proposed settlements are without any admission of the allegations in the complaints, which the defendants deny.

While the Company believes that it was and is in compliance with all applicable laws, in the fourth quarter of 2023, the Company recorded a $ 2.8 million legal reserve related to the derivative actions which was included within accrued expenses and other liabilities on the Consolidated Balance Sheets.

As the settlement amounts are to be paid by insurance, the Company concurrently recorded a receivable for $ 2.8 million within other assets on the Consolidated Balance Sheet, and consequently there was no impact to the Consolidated Statements of Operations related to these matters.

As the settlement amounts were to be paid by insurance, the Company concurrently recorded a receivable for $ 2.8 million within other assets on the Consolidated Balance Sheet, and consequently there was no impact to the Consolidated Statements of Operations related to these matters.

In the second quarter of 2024, the Company’s insurers funded $ 2.8 million to an escrow account established for the purpose of paying the settlement amounts in accordance with the terms of the applicable settlement, and the Company reversed the previously recorded $ 2.8 million legal reserve within accrued expenses and other liabilities and the related $ 2.8 million receivable within other assets on the Consolidated Balance Sheets.

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

As of June 30, 2024, our maximum funding commitment under these indemnification agreements was $ 6.5 million.

As of September 30, 2024, our maximum funding commitment under these indemnification agreements was $ 13.5 million.

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

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

Our remaining commitments at June 30, 2024, are outlined in the table below (in thousands):

Our remaining commitments at September 30, 2024, are outlined in the table below (in thousands):

Lessor construction and capital commitments under lease agreements

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(1) Includes finance costs.

In the second quarter of 2024, we exercised an option that committed Omega to buy the remaining 51 % interest in the Cindat Joint Venture, an unconsolidated joint venture that Omega held a 49 % equity interest in as of June 30, 2024.

The acquisition of the remaining 51 % interest in the Cindat Joint Venture closed in July 2024, as discussed further in Note 21 – Subsequent Events.

During the third quarter of 2024, we amended the existing master lease with Brookdale Senior Living Inc.

(“Brookdale”) to extend the maturity date from December 2027 to December 2037.

As part of the amendment, we agreed to provide up to $ 80.0 million in funding for capital expenditures on the facilities subject to the master lease (included in the table above).

The annual rent under the lease will not be adjusted for fundings of capital expenditures in the aggregate amount of up to $ 30.0 million of the $ 80.0 million commitment.

With respect to the remaining $ 50.0 million of the $ 80.0 million commitment, the annual rent under the lease will increase by the amount of each capital expenditure multiplied by 9.5 %.

NOTE 19 – EARNINGS PER SHARE

The following tables set forth the computation of basic and diluted earnings per share:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per share amounts)

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NOTE 20 – SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS

The following are supplemental disclosures to the Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

The following are supplemental disclosures to the Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

(in thousands)

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Taxes paid during the period

Non-cash investing activities:

Non-cash acquisition of real estate (see Note 2)

Non-cash investment in non-real estate loans receivable (see Note 2)

Non-cash financing activities:

Assumption of debt (see Note 2 and Note 15)

Change in fair value of hedges

1 unchanged sentence

NOTE 21 – SUBSEQUENT EVENTS

As of June 30, 2024, we held a 49 % interest in the Cindat Joint Venture, an unconsolidated joint venture accounted for using the equity method of accounting that owns 63 facilities in the U.K.

In July 2024, we acquired the remaining 51 % interest in the Cindat Joint Venture, for a cash consideration of $ 97.4 million, excluding transaction costs, and deferred contingent consideration between zero and $ 3.0 million, which becomes payable to the sellers in December 2024, if certain contingencies are satisfied.

As part of the acquisition, we assumed a $ 243.2 million mortgage loan that matures in August 2026 but can be repaid without a prepayment penalty beginning November 2025.

The mortgage loan bears interest at SONIA plus an applicable margin of 5.38 %.

As part of the transaction, we assumed interest rate cap contracts that ensure the annual interest rate does not exceed 10.38 %.

Following the acquisition, we own 100 % of the entity and will consolidate its results in our consolidated financial statements going forward.

The acquired interest will be accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in a group of similar identifiable assets.

Under our existing accounting policy election, we follow the asset acquisition cost accumulation and allocation model.

In July 2024, we acquired one facility in the U.K.

for consideration of $ 5.1 million and leased it to an existing operator.

In October 2024, we funded $ 79.6 million in real estate loans to three operators.

The loans have a weighted average interest rate of 10.8 % and maturity dates ranging from October 2025 through September 2029 .

In October 2024, we acquired three facilities in the U.K.

for aggregate consideration of $ 39.7 million and leased them to an existing operator.

The facility has a weighted average initial annual cash yield of 10.0 % with annual escalators of 2.5 % .

In July 2024, we made a $ 27.3 million preferred equity investment, treated as a real estate loan receivable for accounting purposes, in a new real estate joint venture that was formed to acquire a facility in Massachusetts.

Omega’s preferred equity investment bears a 10.0 % return per annum and must be mandatorily redeemed by the joint venture at the earlier of July 2030 or the occurrence of certain significant events within the joint venture.

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