Omega Announces Fourth Quarter 2012 Financial Results; Adjusted FFO of $0.58 Per Share and $250 Million of New Investments for

  Omega Announces Fourth Quarter 2012 Financial Results; Adjusted FFO of $0.58
  Per Share and $250 Million of New Investments for the Fourth Quarter

Business Wire

HUNT VALLEY, Md. -- February 11, 2013

Omega Healthcare Investors, Inc. (NYSE:OHI) (the “Company” or “Omega”) today
announced its results of operations for the three- and twelve-month period
ended December 31, 2012. The Company also reported Funds From Operations
(“FFO”) available to common stockholders for the three-month period ended
December 31, 2012 of $61.4 million or $0.55 per common share. The $61.4
million of FFO available to common stockholders for the fourth quarter of 2012
includes $2.5 million of interest refinancing costs, $1.5 million of non-cash
stock-based compensation expense, $0.8 million of one-time revenue and $0.2
million of acquisition related costs. FFO is presented in accordance with the
guidelines for the calculation and reporting of FFO issued by the National
Association of Real Estate Investment Trusts (“NAREIT”). Normalized or
Adjusted FFO was $0.58 per common share for the three-month period ended
December 31, 2012. FFO and Adjusted FFO are non-GAAP financial measures.
Normalized or Adjusted FFO is calculated as FFO available to common
stockholders excluding the impact of certain non-cash items and certain items
of revenue or expense, including, but not limited to: interest refinancing
cost, acquisitions and stock-based compensation expense and one-time revenue
items. For more information regarding FFO and Adjusted FFO, see the “Fourth
Quarter 2012 Results – Funds From Operations” section below.

GAAP NET INCOME

For the three-month period ended December 31, 2012, the Company reported net
income and net income available to common stockholders of $33.9 million, or
$0.30 per diluted common share, on operating revenues of $95.0 million. This
compares to net income and net income available to common stockholders of
$19.3 million, or $0.19 per diluted common share, on operating revenues of
$76.3 million, for the same period in 2011.

For the twelve-month period ended December 31, 2012, the Company reported net
income and net income available to common stockholders of $120.7 million, or
$1.12 per diluted common share, on operating revenues of $350.5 million. This
compares to net income of $52.6 million and net income available to common
stockholders of $47.5 million, or $0.46 per diluted common share, on operating
revenues of $292.2 million, for the same period in 2011.

The year-to-date increase in net income was primarily due to: (i) additional
rental income and mortgage interest income associated with approximately $510
million of new investments made throughout 2012; (ii) $10.1 million in
incremental gains on asset sales; (iii) $26.1 million net decrease in real
estate impairments; and (iv) $6.4 million net decrease in provision for
uncollectible accounts receivable. These increases to net income were
partially offset by increased expenses primarily associated with the new
investments, including: (i) $12.6 million in increased depreciation expense;
(ii) $14.4 million in increased interest expense; and (iii) $2.0 million in
incremental general and administrative expenses. In addition, interest
refinancing costs increased $4.8 million over 2011. The $4.8 million increase
in refinancing costs resulted from a December 2012 $2.5 million charge
associated with the termination of the Company’s 2011 credit facility and a
March 2012 $7.1 million charge associated with the tender and redemption of
all of the Company’s outstanding $175 million of 7% Senior Notes due 2016.
These two charges were partially offset by a June 2012 $1.7 million gain
related to the write-off of the unamortized premium on four HUD mortgage loans
the Company prepaid and an August 2011 $3.1 million write-off of deferred cost
associated with the termination of the Company’s 2010 credit facility.

2012 HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS

  *In January 2013, the Company increased its quarterly common stock dividend
    to $0.45 per share.

  *In Q4 2012, the Company completed $250 million of new investments.
  *In Q4 2012, the Company entered into a new $700 million unsecured credit
    facility.
  *In Q4 2012,  the Company increased its quarterly common stock dividend to
    $0.44 per  share.

  *In Q3 2012, the Company completed $214 million of new investments.
  *In Q3 2012, Fitch Ratings initiated a BBB- rating on the Company’s senior
    unsecured notes.

  *In Q2 2012, the Company completed $35 million of new investments.
  *In Q2 2012, the Company established a $245 million 2012 Equity Shelf
    Program for a continuous at-the-market offering of common stock.
  *In Q2 2012, the Company increased its quarterly common dividend per share
    to $0.42.

  *In Q1 2012, the Company completed $11 million of new investments.
  *In Q1 2012, the Company tendered and/or redeemed all of its $175 million
    of 7% Senior Notes due 2016.
  *In Q1 2012, the Company issued $400 million aggregate principal amount of
    its 5.875% Senior Notes due 2024.

FOURTH QUARTER 2012 RESULTS

Operating Revenues and Expenses – Operating revenues for the three-month
period ended December 31, 2012 were $95.0 million. Operating expenses for the
three-month period ended December 31, 2012 totaled $36.2 million and were
comprised of $30.3 million of depreciation and amortization expense, $4.2
million of general and administrative expense, $1.5 million of stock-based
compensation expense and $0.2 million of expense associated with acquisitions.

Other Income and Expense – Other income and expense for the three-month period
ended December 31, 2012 was a net expense of $27.7 million, which was
comprised of $24.5 million of interest expense, $0.7 million of amortized
deferred financing costs and $2.5 million of interest refinancing costs.

Funds From Operations – For the three-month period ended December 31, 2012,
reportable FFO available to common stockholders was $61.4 million, or $0.55
per common share on 112 million weighted-average common shares outstanding,
compared to $46.3 million, or $0.45 per common share on 103 million
weighted-average common shares outstanding, for the same period in 2011.

The $61.4 million of FFO for the three-month period ended December 31, 2012
includes $2.5 million of interest refinancing costs, $1.5 million of
stock-based compensation expense, $0.8 million of one-time miscellaneous
revenue and $0.2 million of expense associated with 2012 acquisitions.

The $46.3 million of FFO for the three-month period ended December 31, 2011
includes a $2.3 million provision on uncollectible notes receivable, $1.5
million of stock-based compensation expense, $1.2 million of expense
associated with the 2011 acquisitions and a $50 thousand net loss associated
with the run-off of owned and operated assets.

Adjusted FFO was $64.9 million, or $0.58 per common share, for the three
months ended December 31, 2012, compared to $51.3 million, or $0.50 per common
share, for the same period in 2011. The Company had 9 million additional
weighted-average shares for the three months ended December 31, 2012 compared
to the same period in 2011. For further information see “Funds From
Operations” below.

2012 ANNUAL RESULTS

Operating Revenues and Expenses – Operating revenues for the twelve-month
period ended December 31, 2012 were $350.5 million. Operating expenses for the
twelve-month period ended December 31, 2012, totaled $135.5 million and were
composed of: (i) $113.0 million of depreciation and amortization expense; (ii)
$15.4 million of general and administrative expense; (iii) $5.9 million of
stock-based compensation expense; (iv) $0.9 million of expense associated with
2012 acquisitions; and (v) $0.3 million of provision for impairments on real
estate assets.

Other Income and Expense – Other income and expense for the twelve-month
period ended December 31, 2012 was a net expense of $106.1 million, which was
composed of: (i) $95.5 million of interest expense; (ii) $7.9 million of
interest refinancing costs to write-off deferred financing costs associated
with (a) the tender and redemption of the Company’s $175 million of 7% Senior
Notes due 2016 and (b) the termination of the Company’s 2011 credit facility;
and (iii) $2.6 million of amortized deferred financing costs.

Funds From Operations – For the twelve-month period ended December 31, 2012,
reportable FFO available to common stockholders was $222.2 million, or $2.06
per common share on 108 million weighted-average common shares outstanding,
compared to $172.5 million, or $1.69 per common share on 102 million
weighted-average common shares outstanding, for the same period in 2011.

The $222.2 million of FFO for the twelve-month period ended December 31, 2012
includes: (i) $7.9 million of interest refinancing costs; (ii) $5.9 million of
non-cash stock-based compensation expense; (iii) $0.9 million of 2012
acquisition related expenses; and (iv) $0.8 million of one-time revenue
associated with the collection of former owned and operated receivables and
one-time deferred mortgage interest income.

The $172.5 million of FFO for the twelve-month period ended December 31, 2011
includes: (i) $6.4 million in provision for uncollectible accounts and notes
receivable; (ii) $6.0 million of non-cash stock-based compensation expense;
(iii) $3.5 million in non-cash preferred stock redemption charges; (iv) $3.1
million to write-off deferred financing costs associated with the termination
of the Company’s 2010 credit facility; (v) $1.2 million of 2011 acquisition
related expenses; and (vi) a $0.7 million net loss associated with the run-off
of owned and operated assets.

Adjusted FFO was $236.2 million, or $2.19 per common share, for the
twelve-month period ended December 31, 2012, compared to $193.3 million, or
$1.89 per common share, for the same period in 2011. The Company had 5.8
million additional weighted-average shares for the twelve months ended
December 31, 2012 compared to the same period in 2011. For further information
see “Funds From Operations” below.

2012 FINANCING ACTIVITIES

$700 Million Unsecured Credit Facility – Effective December 6, 2012, the
Company entered into a new $700 million unsecured credit facility, comprised
of a $500 million senior unsecured revolving credit facility (the “Revolving
Credit Facility”) and a $200 million unsecured, deferred draw term loan
facility (the “Term Loan Facility” and, collectively, the “2012 Credit
Facilities”).

The 2012 Credit Facilities replaces the Company’s previous $475 million senior
unsecured revolving credit facility (the “2011 Credit Facility”). The
Revolving Credit Facility includes an “accordion feature” that permits the
Company to expand its borrowing capacity by an additional $300 million, for a
maximum aggregate commitment of $1 billion.

The Revolving Credit Facility is priced at LIBOR plus an applicable percentage
(beginning at 150 basis points, with a range of 100 to 190 basis points) based
on the Company’s ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings,
plus a facility fee based on the same ratings (initially 30 basis points, with
a range of 15 to 45 basis points). At December 31, 2012, the Company had $158
million in borrowings outstanding under the Revolving Credit Facility. The
Revolving Credit Facility matures in four years, on December 6, 2016, with an
option by the Company to extend the maturity one additional year.

The Term Loan Facility is also priced at LIBOR plus an applicable percentage
(beginning at 175 basis points, with a range of 110 to 230 basis points) based
on the Company’s ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings.
At December 31, 2012, the Company had $100 million in borrowings outstanding
under the Term Loan Facility. The Company has until April 5, 2013 to borrow
the full $200 million under the Term Loan Facility. The Term Loan Facility
matures in five years, on December 6, 2017.

The Company and its subsidiaries terminated the 2011 Credit Facility in
connection with the effectiveness of the 2012 Credit Facilities. The Company
did not experience any material early termination penalties due to the
termination of the 2011 Credit Facility. For the three month period ending
December 31, 2012, the Company recorded a one-time charge of approximately
$2.5 million relating to the write-off of deferred financing costs associated
with the termination of the 2011 Credit Facility.

$11.8 Million HUD Mortgage Payoffs – On June 29, 2012, the Company paid $11.8
million to retire four mortgage loans guaranteed by the Department of Housing
and Urban Development (“HUD”). The loans were assumed as part of a December
2011 purchase of 17 skilled nursing facilities (“SNFs”) and had a blended
interest rate of 6.49% per annum with maturities between October 2029 and
September 2042. The payoff resulted in a $1.7 million gain on the
extinguishment of the debt and was recorded in second quarter of 2012.

$245 Million Equity Shelf Program – On June 19, 2012, the Company entered into
separate Equity Distribution Agreements (collectively, the “2012 Agreements”)
with several financial institutions, each as a sales agent and/or principal
(collectively, the “Managers”) to establish a $245 million Equity Shelf
Program. Under the terms of the 2012 Agreements, the Company may sell shares
of its common stock, from time to time, through or to the Managers having an
aggregate gross sales price of up to $245 million. Sales of the shares will be
made by means of ordinary brokers’ transactions on the New York Stock Exchange
at market prices, or as otherwise agreed with the applicable Manager. The
Company will pay each Manager compensation for sales of the shares equal to 2%
of the gross sales price per share of shares sold through such Manager.

$140 Million Equity Shelf Program Termination – Also on June 19, 2012, the
Company terminated its $140 million Equity Shelf Program (“2010 ESP”). Since
inception of the 2010 ESP, the Company sold a total of 5.3 million shares of
common stock generating total net proceeds of $112.6 million, net of $2.3
million in commissions.

$400 Million 5.875% Senior Notes Issuance – On March 19, 2012, the Company
issued $400 million aggregate principal amount of its 5.875% Senior Notes due
2024 (the “2024 Notes”). The 2024 Notes were sold at a price equal to 100% of
their face value. The Company used the net proceeds of the offering to fund
its cash tender and redemption of its then outstanding $175 million aggregate
principal amount of 7% Senior Notes due 2016 (the “2016 Notes”) and used the
balance to repay a portion of its outstanding borrowings under its 2011 Credit
Facility.

$175 Million 7% Senior Notes Tender and Redemption – On March 5, 2012, the
Company commenced a tender offer to purchase for cash any and all of its
outstanding 2016 Notes. Pursuant to the terms of the tender offer, on March
19, 2012, the Company purchased $168.9 million aggregate principal amount of
the 2016 Notes. The Company paid holders of the tendered 2016 Notes consent
payments aggregating approximately $4.5 million over the face amount of the
2016 Notes.

On March 27, 2012, the Company redeemed the remaining $6.1 million aggregate
principal amount of the 2016 Notes at a redemption price of 102.333% of the
principal amount thereof, plus accrued and unpaid interest on the 2016 Notes
up to the redemption date.

In connection with the tender offer and redemption, the Company wrote-off
approximately $2.6 million of deferred financing costs and other related
expenses in connection with the repurchase. The consideration for the tender
and redemption of the 2016 Notes was paid from the proceeds from the sale of
the 2024 Notes.

Equity Shelf Program and Dividend Reinvestment and Common Stock Purchase Plan
– During the twelve-month period ended December 31, 2012, the Company sold the
following shares of its common stock under its Equity Shelf Program and its
Dividend Reinvestment and Common Stock Purchase Plan:


Equity Shelf (At-The-Market) Program for 2012
(in thousands, except price per share)
                                                            
                          Q1        Q2         Q3         Q4      Year
                          Total     Total      Total      Total   To Date
                                                                  
Number of shares            249       510        2,639       -      3,398
Average price per share   $ 21.38   $ 21.21    $ 24.10    $  -    $ 23.47
Gross Proceeds            $ 5,318   $ 10,818   $ 63,614   $  -    $ 79,750
                                                                  


Dividend Reinvestment and Direct Common Stock Purchase Program for 2012
(in thousands, except price per share)
                                                               
                          Q1         Q2         Q3         Q4        Year
                          Total      Total      Total      Total     To Date
                                                                     
Number of shares            665        2,541      1,585      271       5,062
Average price per share   $ 21.42    $ 21.54    $ 23.46    $ 21.31   $ 22.11
Gross Proceeds            $ 14,242   $ 54,754   $ 37,161   $ 5,784   $ 111,941
                                                                     

2012 PORTFOLIO AND RECENT DEVELOPMENTS

$237 Million New Investments in Q4 2012 – For the three-month period ended
December 31, 2012, the Company completed five separate acquisitions with three
different operators totaling $237 million of new investments. The new
investments were comprised of 17 SNFs and two assisted living facilities
(“ALFs”) totaling 2,050 operating beds and 268 units, respectively. The 19
facilities are located in California (10), Arizona (4), Michigan (2), Indiana
(2) and Texas (1).

The new investments were financed with a combination of credit facility
borrowings and the assumption of $72 million of HUD indebtedness. The $72
million of assumed HUD debt is comprised of 8 HUD mortgage loans with a
blended interest rate of 5.50% and maturities between April 2031 and February
2045.

In addition to the $237 million of new investments, the Company also invested
$13 million under its capital renovation program.

$203 Million of New Investments in Q3 2012 – For the three-month period ended
September 30, 2012, the Company purchased 27 facilities (17 SNFs, 4 ALFs and 6
independent living facilities) from an unrelated third party for $203 million.
Simultaneous with the transaction, the Company also purchased one parcel of
land for $2.8 million. The 27 facilities and land parcel were added to an
existing master lease with a current operator. The 27 facilities located in
Indiana total 2,892 beds (2,340 skilled nursing, 293 assisted living and 259
independent living).

$25 Million of New Investments in Q2 2012 – For the three-month period ending
June 30, 2012, the Company completed two separate acquisitions with two
existing operators totaling $25 million. The acquisitions consisted of five
SNFs located in Indiana totaling 463 beds. These facilities were added to
existing master leases.

$45 Million of Capital Renovation Projects in 2012 – For the twelve-month
period ending December 31, 2012, the Company invested $45 million under its
capital renovation program.

Other Portfolio Transactions

Genesis Healthcare – On December 1, 2012, Genesis Healthcare (“Genesis”), an
existing operator of the Company, completed the purchase of Sun Healthcare
Group (“Sun”), also an existing operator of the Company. At September 30,
2012, Sun was the Company’s second largest tenant with $235 million in leased
assets (40 facilities in 10 states). The Company leased the 40 facilities to
Sun under a master lease with expiration dates in 2013 and 2018. At September
30, 2012, the Company had a master lease with Genesis covering $122 million in
leased assets (13 facilities) located in 5 states.

In connection with the acquisition, on December 1, 2012, the Company entered
into a new 53 facility master lease with Genesis expiring on December 31,
2025. At December 31, 2012, Genesis was the Company’s largest tenant with $357
million in leased assets (approximately 11% of the Company’s total
investments) located in 13 states.

Mortgage Payoff – On October 31, 2012, the Company received $12.2 million for
the payoff of a first mortgage loan on two Florida SNFs. As a result of the
payoff, in the fourth quarter, the Company recorded one-time deferred mortgage
interest income.

Facility Sales – For the three-month period ended December 31, 2012, the
Company sold two facilities (one of which was closed) for total cash proceeds
of $4.8 million, generating approximately a $2.8 million accounting gain. For
the year ended December 31, 2012, the Company sold nine facilities for total
cash proceeds of $29.0 million, generating approximately an $11.8 million
accounting gain.

DIVIDENDS

On January 16, 2013, the Company’s Board of Directors announced a common stock
dividend of $0.45 per share, increasing the quarterly common dividend by $0.01
per share over the prior quarter, to be paid February 15, 2013 to common
stockholders of record on January 31, 2013.

2013 ADJUSTED FFO AND ADJUSTED FAD GUIDANCE

The Company currently expects its 2013 Adjusted FFO available to common
stockholders to be between $2.45 and $2.50 per diluted share. In addition, it
expects its 2013 Adjusted Funds Available For Distribution (“FAD”) available
to common stockholders to be between $2.20 and $2.25 per diluted share.

The Company's Adjusted FFO and Adjusted FAD guidance for 2013 includes
approximately $200 million of new investments; however, it excludes the impact
of gains and losses from the sale of assets, additional divestitures, certain
revenue and expense items, interest refinancing expense, capital transactions
and restricted stock amortization expense. A reconciliation of the Adjusted
FFO and FAD guidance to the Company's projected GAAP earnings is provided on
schedules attached to this press release. The Company may, from time to time,
update its publicly announced Adjusted FFO and FAD guidance, but it is not
obligated to do so.

The Company's Adjusted FFO and FAD guidance is based on a number of
assumptions, which are subject to change and many of which are outside the
Company’s control. If actual results vary from these assumptions, the
Company's expectations may change. Without limiting the generality of the
foregoing, the timing and completion of acquisitions, divestitures, capital
and financing transactions, and variations in restricted stock amortization
expense may cause actual results to vary materially from our current
expectations. There can be no assurance that the Company will achieve its
projected results.

TAX TREATMENT FOR 2012 DIVIDENDS

On February 15, 2012, May 15, 2012, August 15, 2012 and November 15, 2012, the
Company paid dividends to its common stockholders in the per share amounts of
$0.41, $0.42, $0.42 and $0.44, for stockholders of record on January 31, 2012,
April 30, 2012, July 31, 2012 and October 31, 2012, respectively. The Company
has determined that 47.70% of the common dividends paid in 2012 should be
treated for tax purposes as a return of capital, with the balance of 52.30%
treated as an ordinary dividend.

CONFERENCE CALL

The Company will be conducting a conference call on Tuesday, February 12,
2013, at 10 a.m. Eastern to review the Company’s 2012 fourth quarter results
and current developments. Analysts and investors within the United States
interested in participating are invited to call (888) 317-6016. The Canadian
toll-free dial-in number is (855) 669-9657. All other international
participants can use the dial-in number (412) 317-6016. Ask the operator to be
connected to the "Omega Healthcare Fourth Quarter 2012 Earnings Call."

To listen to the conference call via webcast, log on to
www.omegahealthcare.com and click the “earnings call” icon on the Company’s
home page. Webcast replays of the call will be available on the Company’s
website for two weeks following the call.

The Company is a real estate investment trust investing in and providing
financing to the long-term care industry. At December 31, 2012, the Company
owned or held mortgages on 476 skilled nursing facilities, assisted living
facilities and other specialty hospitals with approximately 55,279 licensed
beds (53,104 available beds) located in 33 states and operated by 46
third-party healthcare operating companies.

This announcement includes forward-looking statements, including without
limitation the information under the heading “2013 Adjusted FFO and Adjusted
FAD Guidance.” Actual results may differ materially from those reflected in
such forward-looking statements as a result of a variety of factors,
including, among other things: (i) uncertainties relating to the business
operations of the operators of the Company’s properties, including those
relating to reimbursement by third-party payors, regulatory matters and
occupancy levels; (ii) regulatory and other changes in the healthcare sector;
(iii) changes in the financial position of the Company’s operators; (iv) the
ability of any of the Company’s operators in bankruptcy to reject unexpired
lease obligations, modify the terms of the Company’s mortgages and impede the
ability of the Company to collect unpaid rent or interest during the pendency
of a bankruptcy proceeding and retain security deposits for the debtor's
obligations; (v) the availability and cost of capital; (vi) changes in the
Company’s credit ratings and the ratings of its debt securities; (vii)
competition in the financing of healthcare facilities; (viii) the Company’s
ability to maintain its status as a real estate investment trust; (ix) the
Company’s ability to manage, re-lease or sell any owned and operated
facilities; (x) the Company’s ability to sell closed or foreclosed assets on a
timely basis and on terms that allow the Company to realize the carrying value
of these assets; (xi) the effect of economic and market conditions generally,
and particularly in the healthcare industry; and (xii) other factors
identified in the Company’s filings with the Securities and Exchange
Commission. Statements regarding future events and developments and the
Company’s future performance, as well as management's expectations, beliefs,
plans, estimates or projections relating to the future, are forward-looking
statements. The Company undertakes no obligation to update any forward-looking
statements contained in this announcement.


OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                             
                                               December 31,     December 31,
                                               2012            2011
                                               (Unaudited)
ASSETS
Real estate properties
Land and buildings                             $ 3,038,553      $ 2,537,039
Less accumulated depreciation                   (580,373   )   (470,420   )
Real estate properties – net                     2,458,180        2,066,619
Mortgage notes receivable – net                 238,621       238,675    
                                                 2,696,801        2,305,294
Other investments – net                         47,339        52,957     
                                                 2,744,140        2,358,251
Assets held for sale – net                      1,020         2,461      
Total investments                                2,745,160        2,360,712
                                                                
Cash and cash equivalents                        1,711            351
Restricted cash                                  36,660           34,112
Accounts receivable – net                        125,180          100,664
Other assets                                    73,294        61,473     
Total assets                                   $ 2,982,005    $ 2,557,312  
                                                                
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit                       $ 258,000        $ 272,500
Secured borrowings                               366,538          303,610
Unsecured borrowings – net                       1,200,394        975,290
Accrued expenses and other liabilities          145,744       127,428    
Total liabilities                               1,970,676     1,678,828  
                                                                
Stockholders’ equity:
Common stock $.10 par value authorized –
200,000 shares issued and outstanding           11,239          10,341
112,393 shares as of December 31, 2012 and
103,410 as of December 31, 2011
Common stock – additional paid-in-capital        1,664,855        1,471,381
Cumulative net earnings                          754,128          633,430
Cumulative dividends paid                       (1,418,893 )   (1,236,668 )
Total stockholders’ equity                      1,011,329     878,484    
Total liabilities and stockholders’ equity     $ 2,982,005    $ 2,557,312  
                                                                             


OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(in thousands, except per share amounts)
                                                 
                        Three Months Ended          Twelve Months Ended
                        December 31,                December 31,
                        2012         2011         2012          2011
Revenue                                                         
Rental income           $ 85,219      $ 70,071      $ 314,592      $ 273,517
Mortgage interest         8,029         5,726         30,446         16,274
income
Other investment          1,227         429           4,760          2,070
income – net
Miscellaneous            537         78          662          343     
Total operating           95,012        76,304        350,460        292,204
revenues
                                                                   
Expenses
Depreciation and          30,332        25,489        112,983        100,337
amortization
General and               4,191         3,364         15,388         13,395
administrative
Stock-based               1,486         1,519         5,942          6,037
compensation expense
Acquisition costs         223           1,159         909            1,204
Impairment loss on
real estate               -             1,373         272            26,344
properties
Provisions for
uncollectible             -             2,300         -              6,439
mortgages, notes and
accounts receivable
Nursing home expenses
of owned and operated    -           50          -            653     
assets
Total operating           36,232        35,254        135,494        154,409
expenses
                                                                   
Income before other       58,780        41,050        214,966        137,795
income and expense
Other income
(expense)
Interest income           7             5             29             40
Interest expense          (24,501 )     (20,981 )     (95,527  )     (81,154 )
Interest –
amortization of           (679    )     (648    )     (2,649   )     (2,674  )
deferred financing
costs
Interest –               (2,510  )    -           (7,920   )    (3,071  )
refinancing costs
Total other expense       (27,683 )     (21,624 )     (106,067 )     (86,859 )
                                                                   
Income before gain on     31,097        19,426        108,899        50,936
assets sold
Gain (loss) on assets    2,826       (133    )    11,799       1,670   
sold – net
Net income                33,923        19,293        120,698        52,606
Preferred stock           -             -             -              (1,691  )
dividends
Preferred stock          -           -           -            (3,456  )
redemption
Net income available
to common               $ 33,923     $ 19,293     $ 120,698     $ 47,459  
stockholders
                                                                   
Income per common
share available to
common stockholders:
Basic:
Net income              $ 0.30       $ 0.19       $ 1.12        $ 0.46    
Diluted:
Net income              $ 0.30       $ 0.19       $ 1.12        $ 0.46    
                                                                   
Dividends declared
and paid per common     $ 0.44       $ 0.40       $ 1.69        $ 1.55    
share
                                                                   
Weighted-average
shares outstanding,      111,756     103,311     107,591      102,119 
basic
Weighted-average
shares outstanding,      112,329     103,389     108,011      102,177 
diluted
                                                                             


OMEGA HEALTHCARE INVESTORS, INC.
FUNDS FROM OPERATIONS
Unaudited
(in thousands, except per share amounts)
                                                  
                           Three Months Ended        Twelve Months Ended
                           December 31,              December 31,
                           2012         2011        2012         2011
                                                                
Net income available to    $ 33,923      $ 19,293    $ 120,698     $ 47,459
common stockholders
(Deduct gain) add back
loss from real estate       (2,826  )    133        (11,799 )    (1,670  )
dispositions
Sub-total                    31,097        19,426      108,899       45,789
Elimination of non-cash
items included in net
income:
Depreciation and             30,332        25,489      112,983       100,337
amortization
Add back non-cash
provision for               —           1,373      272         26,344  
impairments on real
estate properties
Funds from operations
available to common        $ 61,429     $ 46,288    $ 222,154    $ 172,470 
stockholders
                                                                   
Weighted-average common
shares outstanding,          111,756       103,311     107,591       102,119
basic
Restricted stock and         551           64          401           45
PRSUs
Deferred stock              22          14         19          13      
Weighted-average common
shares outstanding,         112,329     103,389    108,011     102,177 
diluted
                                                                   
Funds from operations
per share available to     $ 0.55       $ 0.45      $ 2.06       $ 1.69    
common stockholders
                                                                   
Adjusted funds from
operations:
Funds from operations
available to common        $ 61,429      $ 46,288    $ 222,154     $ 172,470
stockholders
Deduct one-time cash         (536    )     —           (536    )     —
revenue
Deduct one-time non-cash
deferred mortgage            (236    )     —           (236    )     —
interest income
Add back non-cash
preferred stock              —             —           —             3,456
redemption charges
Add back non-cash
provision for                —             2,300       —             6,439
uncollectible accounts
receivable
Add back nursing home        —             50          —             653
expenses
Add back interest            2,510         —           7,920         3,071
refinancing expense
Add back acquisition         223           1,159       909           1,204
costs
Add back non-cash
stock-based compensation    1,486       1,519      5,942       6,037   
expense
Adjusted funds from
operations available to    $ 64,876     $ 51,316    $ 236,153    $ 193,330 
common stockholders
                                                                   

This press release includes Funds From Operations, or FFO, which is a non-GAAP
financial measure. For purposes of the Securities and Exchange Commission’s
Regulation G, a non-GAAP financial measure is a numerical measure of a
company’s historical or future financial performance, financial position or
cash flows that excludes amounts, or is subject to adjustments that have the
effect of excluding amounts, that are included in the most directly comparable
financial measure calculated and presented in accordance with GAAP in the
statement of operations, balance sheet or statement of cash flows (or
equivalent statements) of the company, or includes amounts, or is subject to
adjustments that have the effect of including amounts, that are excluded from
the most directly comparable financial measure so calculated and presented. As
used in this press release, GAAP refers to generally accepted accounting
principles in the United States of America. Pursuant to the requirements of
Regulation G, the Company has provided reconciliations of the non-GAAP
financial measures to the most directly comparable GAAP financial measures.

The Company calculates and reports FFO in accordance with the definition and
interpretive guidelines issued by the National Association of Real Estate
Investment Trusts ("NAREIT"), and consequently, FFO is defined as net income
available to common stockholders, adjusted for the effects of asset
dispositions and certain non-cash items, primarily depreciation and
amortization and impairments on real estate assets. The Company believes that
FFO is an important supplemental measure of its operating performance. Because
the historical cost accounting convention used for real estate assets requires
depreciation (except on land), such accounting presentation implies that the
value of real estate assets diminishes predictably over time, while real
estate values instead have historically risen or fallen with market
conditions. The term FFO was designed by the real estate industry to address
this issue. FFO described herein is not necessarily comparable to FFO of other
real estate investment trusts, or REITs, that do not use the same definition
or implementation guidelines or interpret the standards differently from the
Company.

The Company uses FFO as one of several criteria to measure the operating
performance of its business. The Company further believes that by excluding
the effect of depreciation, amortization, impairments on real estate assets
and gains or losses from sales of real estate, all of which are based on
historical costs and which may be of limited relevance in evaluating current
performance, FFO can facilitate comparisons of operating performance between
periods and between other REITs. The Company offers this measure to assist the
users of its financial statements in analyzing its performance; however, this
is not a measure of financial performance under GAAP and should not be
considered a measure of liquidity, an alternative to net income or an
indicator of any other performance measure determined in accordance with GAAP.
Investors and potential investors in the Company’s securities should not rely
on this measure as a substitute for any GAAP measure, including net income.

Adjusted FFO is calculated as FFO available to common stockholders excluding
the impact of non-cash stock-based compensation and certain revenue and
expense items identified above. The Company believes that Adjusted FFO
provides an enhanced measure of the operating performance of the Company’s
core portfolio as a REIT. The Company’s computation of Adjusted FFO is not
comparable to the NAREIT definition of FFO or to similar measures reported by
other REITs, but the Company believes it is an appropriate measure for this
Company.

The Company currently expects its 2013 Adjusted FFO available to common
stockholders to be between $2.45 and $2.50 per diluted share. The Company also
expects its 2013 Adjusted FAD available to common stockholders to be between
$2.20 and $2.25 per diluted share. The following table presents a
reconciliation of our guidance regarding 2013 FFO and Adjusted FFO and FAD and
Adjusted FAD to net income available to common stockholders:

                                                       
                                                         2013 Projected
                                                         Adjusted FFO and FAD
Per diluted share:
Net income available to common stockholders              $ 1.30    − $ 1.35
Adjustments:
Depreciation and amortization                              1.10    −   1.10
Provision for impairment on real estate assets            0.00   −  0.00  
Funds from operations available to common stockholders   $ 2.40    − $ 2.45
                                                                     
Adjustments:
Acquisition costs                                          0.00    −   0.00
Stock-based compensation expense                          0.05   −  0.05  
Adjusted funds from operations available to common       $ 2.45    − $ 2.50
stockholders
                                                                     
Adjustments:
Non-cash interest expense                                  0.01    −   0.01
Non-cash revenue                                          (0.26 ) −  (0.26 )
Funds available for distributions                        $ 2.20    − $ 2.25
                                                                     

The following tables present selected portfolio information, including
operator and geographic concentrations, and revenue maturities for the period
ended December 31, 2012:

                                                                
               As of December 31, 2012
                           # of        Investment 
                             Operating
Balance        # of         Beds        ($000’s)    %
Sheet Data     Properties                              Investment
Real                                      $
Property       445           49,612       3,057,753    93%
^(1)
Loans          31           3,492       238,621     7%
Receivable
Total          476           53,104       $            100%
Investments                               3,296,374
               
                            # of         Investment                Investment
                             Operating
Investment     # of         Beds        ($000’s)    %           per Bed
Data           Properties                              Investment
Skilled
Nursing        449           51,471       $            95%          $ 61
Facilities                                3,141,941
^(1)
Assisted
Living         16            1,081        91,504       3%           85
Facilities
Specialty
Hospitals      11           552         62,929      2%          114
and Other
               476           53,104       $            100%         $ 62
                                          3,296,374
                                                                    
Note: table above excludes two facilities classified as held-for-sale.
(1) Includes $19.2 million for lease inducement.
               

                                                                
Revenue Composition
($000's)
                                                                 
Revenue by              Three Months Ended             Twelve Months Ended
Investment Type
                        December 31, 2012             December 31, 2012
Rental Property         $   85,219       90    %       $   314,592     90   %
^(1)
Mortgage Notes              8,029        9     %           30,446      9    %
Other Investment           1,227       1     %         4,760      1    %
Income
                        $   94,475       100   %       $   349,798     100  %
                                                                 
Revenue by Facility     Three Months Ended             Twelve Months Ended
Type
                        December 31, 2012             December 31, 2012
Skilled Nursing         $   89,554       95    %       $   335,246     96   %
Facilities ^(1)
Assisted Living             1,729        2     %           4,096       1    %
Facilities
Specialty Hospitals         1,965        2     %           5,696       2    %
Other                      1,227       1     %         4,760      1    %
                        $   94,475       100   %       $   349,798     100  %
                                                                       
(1) 4th quarter revenue includes $1.0 million reduction for lease inducement
and $3.5 million year-to-date.


                                
Operator Concentration by         As of December 31, 2012
Investment ($000's)
                                  # of Properties  Investment   % Investment
Genesis Healthcare                53               $ 356,683    11      %
CommuniCare Health Services,      36                  332,622     10      %
Inc.
Health & Hospital Corporation     40                  279,475     8       %
Airamid Health Management         38                  263,560     8       %
Signature Holdings II, LLC        31                  226,062     7       %
S&F Management Company, LLC       14                  212,448     7       %
Advocat Inc.                      36                  148,408     5       %
Gulf Coast Master Tenant I, LLC   17                  146,636     4       %
Guardian LTC Management Inc.      23                  145,171     4       %
^(1)
Affiliates of Capital Funding     17                  129,697     4       %
Group, Inc^.
Remaining 36 Operators            171               1,055,612  32      %
                                  476               $ 3,296,374   100     %
                                                                  
Note: table above excludes two facilities classified as held-for-sale.
(1) Investment amount includes a $19.2 million lease inducement.


                                                    
Concentration by State    # of Properties  Investment   % Investment
Florida                   85               $ 604,849    18%
Ohio                      50                365,536       11%
Indiana                   50                318,570       10%
California                22                187,108       6%
Pennsylvania              25                175,728       5%
Maryland                  16                174,076       5%
Texas                     32                171,080       5%
Michigan                  19                152,221       5%
Arkansas                  23                125,912       4%
Tennessee                 16                118,913       4%
Arizona                   10                98,014        3%
West Virginia ^(1)        11                94,996        3%
Colorado                  12                79,659        2%
Kentucky                  15                67,252        2%
North Carolina            10                59,296        2%
Massachusetts             8                 57,347        2%
Remaining 17 States       72               445,817      13%
                          476               $ 3,296,374   100%

Note: table above excludes two facilities classified as held-for-sale.
(1) Investment amount includes a $19.2 million lease inducement.


                         
Revenue Maturities         As of December 31, 2012
($000's)
                                              Current       Lease and 
Operating Lease                  Current
Expirations & Loan                Lease          Interest       Interest    
Maturities                 Year
                                 Revenue ^(1)  Revenue ^(1)  Revenue    %
                           2013   3,454          550            4,004       1%
                           2014   1,323          -              1,323       1%
                           2015   3,216          -              3,216       1%
                           2016   30,014         -              30,014      8%
                           2017   7,192          -              7,192       2%
                                                                            
(1) Based on 2012 contractual rents and interest (without giving effect to
annual escalators).


The following tables present operator revenue mix, census and coverage data
based on information provided by our operators:

                                     
Operator Revenue Mix                   % Revenue Mix
                                                 Medicare /  
                                       Medicaid  Insurance   Private / Other
                                                               
Three-months ended September 30,       53.3  %    38.3   %     8.4      %
2012
Three-months ended June 30, 2012       52.6  %    39.1   %     8.3      %
Three-months ended March 31, 2012      52.2  %    39.6   %     8.2      %
Three-months ended December 31, 2011   52.9  %    38.4   %     8.7      %
Three-months ended September 30,       50.5  %    40.9   %     8.6      %
2011
                                                               

                                          
Operator Census and Coverage               Coverage Data
                                             Before           After
                               Census ^(1)  Management Fees  Management Fees
                                                               
Twelve-months ended            83.6    %     2.0x              1.5x
September 30, 2012
Twelve-months ended June 30,   83.7    %     2.0x              1.6x
2012
Twelve-months ended March      83.7    %     2.1x              1.7x
31, 2012
Twelve-months ended December   84.0    %     2.2x              1.8x
31, 2011
Twelve-months ended            84.0    %     2.3x              1.8x
September 30, 2011
                                                               
(1) Based on available beds.
                                                               

The following table presents a debt maturity schedule as of December 31, 2012:

                                                            
Debt            Secured                                         
Maturities      Debt          Unsecured Debt
($000’s)                    
                HUD           Line of     Senior        Sub
Year            Mortgages    Credit     Notes ^(4)   Notes     Total Debt
                ^(1)          ^(2)(3)                   ^(5)
2013            $  -          $ -        $ -          $ -        $ -
2014               -            -           -             -          -
2015               -            -           -             -          -
2016               -            500,000     -             -          500,000
2017               -            200,000     -             -          200,000
Thereafter        335,711     -          1,175,000    20,000    1,530,711
                $  335,711    $ 700,000   $ 1,175,000   $ 20,000   $ 2,230,711
                                                                   
(1) Excludes $30.8 million of fair market valuation (adjustments).
(2) Reflected at 100% borrowing capacity.
(3) Comprised of a $500 million revolver due 2016 and a $200 million term loan
due 2017.
(4) Excludes net premium of $4.3 million
(5) Excludes $1.0 million of fair market valuation (adjustments).


The following table presents investment activity for the three- and twelve -
month period ended December 31, 2012:

                                                
Investment Activity ($000's)   Three Months Ended  Twelve Months Ended
                               December 31, 2012   December 31, 2012
Funding by Investment Type:    $ Amount    %      $ Amount     %
                                                               
Real Property                  $  235,492   94  %   $  468,153    92  %
Mortgages                         4,843     2   %      11,969     2   %
Other                            9,330    4   %    29,436    6   %
Total                          $  249,665   100 %   $  509,558    100 %
                                                                  

Contact:

Omega Healthcare Investors, Inc.
Bob Stephenson, CFO, 410-427-1700
 
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