During the first quarter of 2022, we did 0t recognize any interest income related to loans on non-accrual status as of March 31, 2022.

NOTE 78 – VARIABLE INTEREST ENTITIES

~~As of June 30, 2021 and December 31, 2020, Agemo Holdings, LLC (“Agemo”) and Maplewood Real Estate Holdings, LLC (“Maplewood”) are both~~Unconsolidated Variable Interest Entities

We hold variable interests in several variable interest entities (“VIEs”)~~. As of June 30, 2021, we have~~ through our investing and financing activities, which are not consolidated, ~~any VIEs,~~ as we have concluded that we are not the primary ~~beneficiary. This conclusion is based on the fact that~~beneficiary of these entities as we do not have the power to direct ~~the~~ activities ~~of any VIEs~~ that most significantly impact ~~their~~the VIE’s economic performance ~~and~~and/or the variable interest we dohold does not ~~have the obligation~~obligate us to absorb losses or provide us with the right to receive benefits offrom the ~~VIEs that~~VIE which could potentially be ~~significant to the entities.~~ significant.

Below is a summary of our assets, liabilities and collateral associated with these ~~operators~~unconsolidated VIEs as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:

June 30, 2021

December 31, 2020

Agemo
Maplewood

Agemo
Maplewood

(in thousands)

(in thousands)

Assets

Real estate investments – net

$
338,291

750,953

$
371,010
$
750,488

Assets held for sale

14,710

—

—

—

Other investments

34,253

174,988

34,253

147,148

Contractual receivables

475

1,021

346

887

Straight-line rent receivables

—

(49,119)

—

(56,664)

Lease inducement

—

66,987

—

69,666

Total Assets

387,729

944,830

405,609

911,525

Liabilities

Net in-place lease liability

—

(318)

—

(331)

Security deposit

(343)

(4,609)

—

—

Contingent liability

—

(43,915)

—

(43,915)

Total Liabilities

(343)

(48,842)

—

(44,246)

Collateral









Letters of credit

(9,253)

—

(9,253)

—

Personal guarantee

(8,000)

(40,000)

(8,000)

(40,000)

Other collateral

(353,001)

(750,953)

(371,010)

(750,488)

Total Collateral

(370,254)

(790,953)

(388,263)

(790,488)

Maximum exposure to loss

$
17,132
$
105,035

$
17,346
$
76,791


	March 31,		December 31,
	2022		2021

	(in thousands)
Assets
Real estate assets – net	$	1,136,095	$	1,144,851
Assets held for sale		—		191,016
Other investments – net		236,334		230,768
Contractual receivables – net		1,310		1,227
Straight-line rent receivables		(37,888)		(41,512)
Lease inducement		62,967		64,307
Other assets		732		—
Total assets		1,399,550		1,590,657

Liabilities
Net in-place lease liability		(299)		(305)
Security deposit		(4,743)		(4,715)
Contingent liability		(43,915)		(43,915)
Other liabilities		(732)		—
Total liabilities		(49,689)		(48,935)

Collateral
Letters of credit		—		—
Personal guarantee		(48,000)		(48,000)
Other collateral⁽¹⁾		(1,136,095)		(1,335,867)
Total collateral		(1,184,095)		(1,383,867)

Maximum exposure to loss	$	165,766	$	157,855

(1)

Amount excludes accounts receivable that Omega has a security interest in as collateral under the two working capital loans with operators that are unconsolidated VIEs. The fair value of the accounts receivable available to Omega was $23.7 million and $29.2 million as of March 31, 2022 and December 31, 2021, respectively.

~~Table of Contents~~

In determining our maximum exposure to loss from the ~~VIE,~~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.

In May 2018, we reached an out-of-court restructuring agreement with Agemo that, among other terms, provided for the deferral of rent up to $6.3 million per annum through April 2021. During the second quarter of 2021, the Agemo lease was amended to allow for the deferral of ~~four~~ additional months of rent, representing $2.1 million, through August 2021. As a result of concerns of our ability to collect all future rent payments, the Company had begun recognizing rental income related to Agemo on a cash basis in September 2020 and had written off all remaining contractual rent receivables, straight-line rent receivables, and lease inducements. Our conclusion on collectibility was based on information the Company received from Agemo regarding substantial doubt as to their ability to continue as a going concern.

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

��

Three Months Ended June 30,

Six Months Ended June 30,

2021

2021

2020

2020

2021

2021

2020

2020

Agemo

Maplewood

Agemo

Maplewood

Agemo

Maplewood

Agemo

Maplewood

(in thousands)

(in thousands)

Revenue

















Rental income

$
12,282

$
19,093

$
14,814

$
10,041

$
23,774

$
38,125

$
30,101

$
20,182

Other investment income

1,178

3,052

1,297

1,202

2,335

5,840

2,538

2,404

Total⁽¹⁾

$
13,460

$
22,145

$
16,111

$
11,243

$
26,109

$
43,965

$
32,639

$
22,586

~~(1)~~

For the three months ended June 30, 2021 and 2020, we received cash from Agemo of approximately $14.0 million and $13.1 million, respectively, pursuant to our lease and other investment agreements. For the six months ended June 30, 2021 and 2020, we received cash from Agemo of approximately $28.0 million and $26.8 million, respectively, pursuant to our lease and other investment agreements. For the three months ended June 30, 2021 and 2020, we received cash from Maplewood of approximately $19.7 million and $17.2 million, respectively, pursuant to our lease and other investment agreements. For the six months ended June 30, 2021 and 2020, we received cash from Maplewood of approximately $39.0 million and $33.9 million, respectively, pursuant to our lease and other investment agreements.

1716

Table of Contents

The table below reflects our total revenues from the operators that are considered unconsolidated VIEs for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
	2022		2021

	(in thousands)
Revenue
Rental income	$	20,863	$	30,524
Other investment income		3,766		3,945
Total	$	24,629	$	34,469

Consolidated VIEs

During the first quarter of 2022, we entered into a joint venture, which owns 2 ALFs, for a $3.2 million cash contribution, representing 52.4% of the outstanding equity of the joint venture. Concurrent with entering the joint venture, we sold 1 of the ALFs to the joint venture for $7.7 million in net proceeds. The joint venture is a VIE and we have concluded that we are the primary beneficiary of this VIE based on a combination of the ability to direct the activities that most significantly impact the joint venture’s economic performance and the rights to receive residual returns or the obligation to absorb losses arising from the joint venture. Accordingly, this joint venture has been consolidated. Omega is not required to make any additional capital contributions to the joint venture, and it is expected to be funded from the ongoing operations of the underlying properties. As of March 31, 2022, this joint venture has $25.6 million of total assets and $19.6 million of total liabilities, which are included in our Consolidated Balance Sheets. As a result of consolidating the joint venture, in the first quarter of 2022, we recorded a $2.9 million noncontrolling interest to reflect the contributions of the minority interest holder of the joint venture. No gain or loss was recognized on the initial consolidation of the VIE or upon the sale of the ALF to the joint venture.

NOTE 89 – INVESTMENTS IN JOINT VENTURES

Unconsolidated Joint Ventures

Omega owns an interest in a number of joint ventures that are accounted for under the equity method. These entities and their subsidiaries are not consolidated by the Company because it does not control, through voting rights or other means, the joint venture. The following is a summary of our investments in unconsolidated joint ventures (dollars in thousands):


							Carrying Amount										Carrying Amount
	Ownership	Initial Investment			Facility	Facilities at	June 30,		December 31,		Ownership	Initial Investment			Facility	Facilities at	March 31,		December 31,
Entity	%	Date		Investment⁽¹⁾	Type	6/30/2021	2021		2020		%	Date		Investment⁽¹⁾	Type	3/31/2022	2022		2021
Second Spring Healthcare Investments⁽²⁾	15%	11/1/2016	$	50,032	SNF	—	$	10,916	$	17,700	15%	11/1/2016	$	50,032	SNF	—	$	11,565	$	11,355
Second Spring II LLC⁽³⁾	15%	3/10/2021		10,330	SNF	1		2,279		—	15%	3/10/2021		10,330	SNF	—		5		8
Lakeway Realty, L.L.C.	51%	5/17/2019		73,834	Specialty facility	1		71,831		72,318	51%	5/17/2019		73,834	Specialty facility	1		71,014		71,286
Cindat Joint Venture	49%	12/18/2019		105,688	ALF	66		112,656		110,360	49%	12/18/2019		105,688	ALF	65		109,381		111,792
OMG Senior Housing, LLC	50%	12/6/2019		—	Specialty facility	1		—		—	50%	12/6/2019		—	Specialty facility	1		—		—
OH CHS SNP, Inc.	9%	12/20/2019		900	N/A	N/A		230		260	9%	12/20/2019		900	N/A	N/A		273		246
			$	240,784			$	197,912	$	200,638			$	240,784			$	192,238	$	194,687

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

~~(2)~~

During the first quarter of 2021, this joint venture sold 16 SNFs to an unrelated third party for approximately $328 million in net proceeds and recognized a gain on sale of approximately $102.2 million ($14.9 million of which represents the Company’s share of the gain). During the first quarter of 2021, this joint venture also sold 5 SNFs to Second Spring II LLC for approximately $70.8 million in net proceeds.

~~(3)~~

We acquired a 15% interest in Second Spring II LLC for approximately $10.3 million. During the first quarter of 2021, this joint venture acquired 5 SNFs from Second Spring Healthcare Investments for approximately $70.8 million. During the second quarter of 2021, this joint venture sold 4 SNFs to an unrelated third party for approximately $50 million in net proceeds and recognized a loss on sale of approximately $0.3 million ($0.1 million of which represents the Company’s share of the loss).

Table of Contents

The following table reflects our income (loss) from unconsolidated joint ventures for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
Entity	2021		2020		2021		2020		2022		2021

��	(in thousands)
									(in thousands)
Second Spring Healthcare Investments⁽¹⁾	$	293	$	712	$	11,704	$	1,281	$	285	$	11,411
Second Spring II LLC		(299)		—		(756)		—		(2)		(457)
Lakeway Realty, L.L.C.		641		613		1,286		1,223		661		645
Cindat Joint Venture		646		244		1,132		891		735		486
OMG Senior Housing, LLC		(103)		(118)		(204)		(279)		(83)		(101)
OH CHS SNP, Inc.		9		(49)		(145)		(154)		27		(154)
Total	$	1,187	$	1,402	$	13,017	$	2,962	$	1,623	$	11,830

(1)

The income from this unconsolidated joint venture for the ~~six~~three months ended ~~June 30,~~March 31, 2021 includes a $14.9 million gain on sale of real estate investments.

Asset Management Fees

We receive asset management fees from certain joint ventures for services provided. For each of the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we recognized approximately ~~$0.3~~$0.2 million ~~and $0.5 million, respectively, of asset management fees. For each of the six months ended June 30, 2021 and 2020, we recognized approximately $0.5 million and $0.7 million, respectively,~~ of asset management fees. These fees are included in miscellaneous income in the accompanying Consolidated Statements of Operations.

~~Table of Contents~~

~~NOTE 9 – ASSETS HELD FOR SALE~~

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

Facilities Held For Sale

Number of Facilities

(in thousands)
December 31, 2020
22

$
81,452
Facilities sold/other⁽¹⁾
(21)

(81,252)
Facilities added⁽²⁾
5

7,722
March 31, 2021
6

$
7,922
Facilities sold/other⁽¹⁾
(5)

(1,795)
Facilities added⁽²⁾⁽³⁾
8

29,208
June 30, 2021⁽³⁾
9

$
35,335

~~(1)~~

In the first quarter of 2021, we sold 21 facilities for approximately $187.6 million in net cash proceeds recognizing a net gain on sale of approximately $100.3 million. In the second quarter of 2021, we sold 4 facilities for approximately $3.5 million in net cash proceeds recognizing a net gain on sale of approximately $1.9 million. NaN facility classified as held for sale at March 31, 2021 was no longer considered held for sale during the second quarter of 2021 and was reclassified to leased property at approximately $0.2 million which represents the facility’s carrying value.

~~(2)~~

In the first quarter of 2021, we recorded approximately $16.9 million of impairment expense to reduce 3 facilities’ book value to their estimated fair value less costs to sell before they were reclassified to assets held for sale. In the second quarter of 2021, we recorded approximately $8.8 million of impairment expense to reduce 3 facilities’ book value to their estimated fair value less costs to sell before they were reclassified to assets held for sale.

~~(3)~~

~~Number of facilities excludes one parcel of land.~~

NOTE 10 – GOODWILL AND OTHER INTANGIBLES

The following is a summary of our goodwill as of ~~June 30,~~March 31, 2022 and December 31, 2021:

(in thousands)
Balance as of December 31, 2020

$
651,737
Add: foreign currency translation

(40)
Balance as of June 30, 2021

$
651,697


	(in thousands)
Balance as of December 31, 2021	$	651,417
Foreign currency translation		(393)
Balance as of March 31, 2022	$	651,024

The following is a summary of our intangibles as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


	June 30,		December 31,		March 31,		December 31,
	2021			2020	2022			2021

	(in thousands)				(in thousands)
Assets:
Above market leases	$	22,410	$	22,822	$	5,929	$	5,929
Accumulated amortization		(20,638)		(20,882)		(4,365)		(4,313)
Net above market leases	$	1,772	$	1,940	$	1,564	$	1,616

Liabilities:
Below market leases	$	139,069	$	139,515	$	71,072	$	66,324
Accumulated amortization		(108,508)		(100,996)		(45,060)		(38,091)
Net below market leases	$	30,561	$	38,519	$	26,012	$	28,233

Above market leases, net of accumulated amortization, are included in other assets on our Consolidated Balance Sheets. Below market leases, net of accumulated amortization, are included in accrued expenses and other liabilities on our Consolidated Balance Sheets. 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.

1918

Table of Contents

For the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ our net amortization related to intangibles was ~~$1.1~~$1.6 million and ~~$3.5 million, respectively. For the six months ended June 30, 2021 and 2020, our net amortization related to intangibles was $7.3 million and $4.8~~$6.2 million, respectively. The estimated net amortization related to these intangibles for the remainder of ~~2021~~2022 and the subsequent four years is as follows: remainder of ~~2021 – $2.2 million;~~ 2022 – ~~$4.2~~$3.0 million; 2023 – ~~$4.0~~$3.9 million; 2024 – $3.8 million; 2025 – $3.5 million and ~~2025~~2026 – ~~$3.6~~$2.8 million. As of ~~June 30, 2021,~~March 31, 2022, the weighted average remaining amortization period of above market lease assets is approximately ten years and below market lease liabilities is approximately ~~eight~~seven years.

NOTE 11 – CONCENTRATION OF RISK

As of ~~June 30, 2021,~~March 31, 2022, our portfolio of real estate investments (including properties associated with mortgages, direct financing leases, ~~and~~ assets held for ~~sale)~~sale and consolidated joint ventures) consisted of ~~970~~962 healthcare facilities, located in 42 states and the U.K. and operated by 65 third-party operators. Our investment in these facilities, net of impairments and allowances, totaled approximately ~~$10.1~~$9.9 billion at ~~June 30, 2021,~~March 31, 2022, with approximately 97% of our real estate investments related to long-term healthcare facilities. Our portfolio is made up of (i) ~~729~~675 SNFs, ~~132~~163 ALFs, 3520 ILFs, 16 specialty facilities and 2 medical office buildings, (ii) fixed rate mortgages on 5856 SNFs, 32 ALFs and 2 specialty facilities, and (iii) 926 facilities that are held for sale. At ~~June 30, 2021,~~March 31, 2022, we also held other investments of approximately ~~$458.7~~$506.9 million, consisting primarily of secured loans to third-party operators of our facilities and ~~$197.9~~$192.2 million of investments in 6 unconsolidated joint ventures.

At ~~June 30, 2021~~March 31, 2022 we had investments with ~~1 operator/~~2 operators or ~~manager~~managers that approximated or exceeded 10% of our total investments: ~~Consulate Health Care (“Consulate”~~Maplewood Senior Living (along with affiliates, “Maplewood”)~~. Consulate also~~ and LaVie. Maplewood generated approximately ~~10%~~9.0% and 7.5% of our total revenues for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, respectively. LaVie generated approximately 11.3% and ~~2020,~~9.1% of our total revenues for the three months ended March 31, 2022 and 2021, respectively.

At ~~June 30, 2021,~~March 31, 2022, the three states in which we had our highest concentration of investments were Florida ~~(15%~~(13%), Texas (10%) and Michigan ~~(6%~~(7%).

NOTE 12 – STOCKHOLDERS’ EQUITY

~~Dividends~~$500 Million Stock Repurchase Program

~~The Board~~On January 27, 2022, the Company authorized the repurchase of ~~Directors has declared cash dividends on common stock as set forth below:~~

Record

Payment

Dividend per
Date

Date

Common Share
February 8, 2021

February 16, 2021

$
0.67
May 3, 2021

May 17, 2021

0.67
August 2, 2021

August 13, 2021

0.67

~~Dividend Reinvestment and Common Stock Purchase Plan~~

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

Shares issued
Gross Proceeds

Period Ended
(in millions)
(in millions)
Three Months Ended
June 30, 2020
-
$
-
Three Months Ended
June 30, 2021
1.6

61.8
Six Months Ended
June 30, 2020
0.1

3.7
Six Months Ended
June 30, 2021
2.0

77.3

~~Table of Contents~~

~~At-The-Market Offering Programs~~

~~During the third quarter of 2015, Omega entered into Equity Distribution Agreements with several financial institutions~~up to ~~sell $500.0~~$500 million of ~~shares of~~our outstanding common stock from time to time through ~~an “at-the-market” (“ATM”) offering program (the “2015 ATM Program”).~~

March 2025. The Company is authorized to repurchase shares of its common stock in open market and privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or in any other manner as determined by the Company’s management and in accordance with applicable law. The timing and amount of stock repurchases will be determined, in management’s discretion, based on a variety of factors, including but not limited to market conditions, other capital management needs and opportunities and corporate and regulatory considerations. The Company has no obligation to repurchase any amount of its common stock, and such repurchases, if any, may be discontinued at any time. During the ~~second~~first quarter of ~~2021, we terminated~~2022, the 2015 ATM Program and entered into a new ATM Equity Offering Sales Agreement pursuant to which shares of common stock having an aggregate gross sales price of up to $1.0 billion (the “2021 ATM Program”) may be sold from time to time (i) by Omega through several financial institutions acting as a sales agent or directly to the financial institutions as principals, or (ii) by several financial institutions acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement. Under the 2021 ATM Program, compensation for sales of the shares will not exceed 2% of the gross sales price per share for shares sold through each financial institution. The use of forward sales under the 2021 ATM Program generally allows Omega to lock in a price on the sale of shares of common stock when sold by the forward sellers but defer receiving the net proceeds from such sales until theCompany repurchased 980,530 shares of our outstanding common stock ~~are issued~~ at ~~settlement~~an average price of $27.84 per share. Under Maryland law, shares repurchased become authorized but unissued shares. The Company reduced the common stock at par value and to the extent the cost acquired exceeds par value, it is recorded through additional paid-in capital on ~~a later date. We did not utilize the forward provisions under the 2021 ATM Program during the three months ended June 30, 2021.~~our Consolidated Balance Sheets and Consolidated Statements of Changes in Equity.

Dividends

The ~~table below presents information regarding the shares issued under the 2021 and 2015 ATM Programs for the three and six months ended June 30, 2020 and 2021:~~following is a summary of our declared cash dividends on common stock:

Shares issued
Average Net Price
Gross Proceeds
Commissions
Net Proceeds

Period Ended
(in millions)
Per Share⁽¹⁾
(in millions)
Three Months Ended
June 30, 2020
-
$
-
$
-
$
-
$
-
Three Months Ended
June 30, 2021
2.5

36.23

92.4

1.9

90.5
Six Months Ended
June 30, 2020
0.1

36.18

2.0

0.2

1.8
Six Months Ended
June 30, 2021
4.1

36.60

153.8

3.2

150.6

~~(1)~~

~~Represents the average price per share after commissions.~~


Record	Payment	Dividend per
Date	Date	Common Share
February 7, 2022	February 15, 2022	$	0.67
May 2, 2022	May 13, 2022		0.67

2119

Table of Contents

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 months ended March 31, 2022 and 2021 (in millions):


Three Months Ended	Shares issued	Gross Proceeds
March 31, 2021	0.4	$	15.5
March 31, 2022	0.1		2.3

At-The-Market Offering Programs

The following is a summary of the shares issued under our former $500 million 2015 At-The-Market Offering Program (“2015 ATM Program”) and our current $1.0 billion 2021 At-The-Market Offering Program (“2021 ATM Program”) for the three months ended March 31, 2022 and 2021 (in millions except average price per share):


		Average Net Price
Three Months Ended	Shares issued	Per Share⁽¹⁾		Gross Proceeds		Commissions		Net Proceeds
March 31, 2021	1.6	$	37.16	$	61.4	$	1.3	$	60.1
March 31, 2022	—		—		—		—		—

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

We did not utilize the forward provisions under the 2021 ATM Program during the first quarter of 2022.

Accumulated Other Comprehensive Income (Loss)

The following is a summary of our accumulated other comprehensive income (loss), net of tax where applicable:


	As of and for the				As of and for the
	Three Months Ended				Six Months Ended				As of and for the
	June 30,				June 30,				Three Months Ended March
	2021		2020		2021		2020		2022		2021

	(in thousands)								(in thousands)
Foreign Currency Translation:
Beginning balance	$	(14,231)	$	(67,058)	$	(18,427)	$	(35,100)	$	(24,012)	$	(18,427)
Translation gain (loss)		601		(1,738)		4,131		(33,626)
Realized gain (loss)		22		1		688		(69)
Translation (loss) gain										(14,630)		3,530
Realized (loss) gain										(26)		666
Ending balance		(13,608)		(68,795)		(13,608)		(68,795)		(38,668)		(14,231)

Derivative Instruments:
Cash flow hedges:
Beginning balance		53,519		(10,213)		17,718		(2,369)		30,407		17,718
Unrealized (loss) gain		(20,900)		1,704		14,291		(5,823)
Realized gain (loss)⁽¹⁾		733		(1,190)		1,343		(1,507)
Unrealized gain										18,612		35,191
Realized gain⁽¹⁾										966		610
Ending balance		33,352		(9,699)		33,352		(9,699)		49,985		53,519
Net investment hedges:
Beginning balance		(16,341)		8,767		(13,331)		(4,420)		(9,588)		(13,331)
Unrealized gain (loss)		317		766		(2,693)		13,953		3,847		(3,010)
Ending balance		(16,024)		9,533		(16,024)		9,533		(5,741)		(16,341)
Total accumulated other comprehensive income (loss) before noncontrolling interest		3,720		(68,961)		3,720		(68,961)
Total accumulated other comprehensive income before noncontrolling interest										5,576		22,947
Add: portion included in noncontrolling interest		803		2,726		803		2,726		742		283
Total accumulated other comprehensive income (loss) for Omega	$	4,523	$	(66,235)	$	4,523	$	(66,235)
Total accumulated other comprehensive income for Omega									$	6,318	$	23,230

(1)	Recorded in interest expense on the Consolidated Statements of Operations.

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NOTE 13 – TAXES

Omega was organized, has operated and intends to continue to operate in a manner that enables Omega to qualify for taxation as a REIT under Sections 856 through 860 of the Code. On a quarterly and annual basis, we perform several analyses to test our compliance within the REIT taxation rules. If we fail to meet the requirements for qualification as a REIT in any tax year, we will be subject to federal income tax on our taxable income at regular corporate rates and may not be able to qualify as a REIT for the four subsequent years, unless we qualify for certain relief provisions that are available in the event we fail to satisfy any of the requirements.

We are also subject to federal taxation of 100% of the net income derived from the sale or other disposition of property, other than foreclosure property, that we held primarily for sale to customers in the ordinary course of a trade or business. We believe that we do not hold assets for sale to customers in the ordinary course of business and that none of the assets currently held for sale or that have been sold would be considered a prohibited transaction within the REIT taxation rules.

As a REIT under the Code, we generally will not be subject to federal income taxes on the REIT taxable income that we distribute to stockholders, subject to certain exceptions. In ~~2020, 2019, and 2018,~~2021, we distributed dividends in excess of our taxable income.

We currently own stock in ~~entities that have elected to be taxed as a REIT.~~certain subsidiary REITs. These ~~subsidiary REITs~~subsidiaries are required to individually satisfy all of the rules for qualification as a REIT.

~~Table~~If we fail to meet the requirements for qualification as a REIT for any of ~~Contents~~these subsidiaries, it may cause Omega to fail the requirements for qualification as a REIT also.

We have elected to treat certain of our active subsidiaries as taxable REIT subsidiaries (“TRSs”). Our domestic TRSs are subject to federal, state and local income taxes at the applicable corporate rates. Our foreign TRSs are subject to foreign income taxes and may be subject to current-year income inclusion relating to ownership of a controlled foreign corporation for U.S. income tax purposes.

As of ~~June 30, 2021,~~March 31, 2022, 1 of our domestic TRSs that is subject to income taxes at the applicable corporate rates had a net operating loss (“NOL”) carry-forward of approximately ~~$6.5~~$10.3 million. Our domestic NOL carry-forward was fully reserved as of ~~June 30, 2021,~~March 31, 2022, 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. We do not anticipate that such changes will materially impact the computation of Omega’s taxable income, or the taxable income of any Omega entity, including our TRSs.

As discussed in Note 2 – Real Estate Assets, in connection with the acquisition of one U.K. entity in the first quarter of 2022, we acquired foreign net operating losses of $55.0 million resulting in a NOL deferred tax asset of $13.4 million. The NOLs have no expiration date and may be available to offset future taxable income. We believe these foreign NOLs are realizable under a “more likely than not” measurement and have not recorded a valuation allowance against the deferred tax asset.

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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, respectively, in our Consolidated Balance Sheets):


	March 31,		December 31,
	2022		2021

	(in thousands)
Deferred tax assets:
U.S. Federal net operating loss carryforward	$	2,156	$	2,221
Foreign net operating loss carryforward		13,374		—
		15,530		2,221
Deferred tax liability:
Foreign deferred tax liability ⁽¹⁾		(7,883)		(8,200)
Valuation allowance on deferred tax asset		(2,156)		(2,221)
Net deferred tax asset (liability)	$	5,491	$	(8,200)

(1)	The deferred tax liability primarily resulted from inherited basis differences resulting from our acquisition of entities in the U.K. Subsequent adjustments to these accounts result from GAAP to tax differences related to depreciation, indexation and revenue recognition.

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


	Three Months Ended				Six Months Ended				Three Months Ended
	June 30,				June 30,				March 31,
	2021		2020		2021		2020		2022		2021

	(in millions)								(in millions)
Provision for federal, state and local income taxes	$	0.3	$	0.2	$	0.6	$	0.6	$	0.3	$	0.3
Provision for foreign income taxes		0.6		0.7		1.3		1.3		0.9		0.7
Total provision for income taxes⁽¹⁾	$	0.9	$	0.9	$	1.9	$	1.9	$	1.2	$	1.0

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

NOTE 14 – STOCK-BASED COMPENSATION

~~The following is a summary of our stock-based~~Stock-based compensation expense was $6.9 million and $5.4 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, respectively. Stock-based compensation expense is included within general and ~~2020, respectively.~~

Three Months Ended

Six Months Ended

June 30,

June 30,


2021

2020

2021

2020


(in thousands)

Stock-based compensation expense

$
5,811

$
4,623

$
11,207

$
9,258

administrative expenses on our Consolidated Statements of Operations.

We granted ~~22,051~~31,685 time-based restricted stock units (“RSUs”) and ~~142,719~~170,294 time-based profits interest units (“PIUs”) during the first quarter of ~~2021~~2022 to certain officers and key employees, and those units vest on December 31, ~~2023~~2024 (three years after the grant date), subject to continued employment and vesting in certain other events.

We also granted ~~1,232,178 performance based~~1,545,070 performance-based PIUs during the first quarter of ~~2021~~2022 to certain officers and key employees, which are earned based on the level of performance over the performance period (normally three years) and vest quarterly in the fourth year, subject to continued employment and vesting in certain other events.

Time-based and performance-based grants made to named executive officers and key employees that meet certain conditions under the Company’s retirement policy (length of service, age, etc.) vest on an accelerated basis pursuant to the 2018 Stock Incentive Plan.

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NOTE 15 – BORROWING ACTIVITIES AND ARRANGEMENTS

The following is a summary of our borrowings:

Annual




Interest Rate

as of

June 30,

June 30,

December 31,

Net Proceeds

Maturity

2021

2021

2020

(in millions)





(in thousands)

Secured borrowings











HUD mortgages⁽¹⁾⁽²⁾

2046-2052

3.01
%
$
363,556

$
367,249

Term loan⁽³⁾

2022

3.75
%

2,275

2,275

Total secured borrowings

365,831

369,524

Unsecured borrowings









Revolving borrowings:

2017 Revolving credit facility⁽⁴⁾

N/A

N/A

—

101,158

Revolving credit facility⁽⁴⁾

2025

1.30
%

—

—

Total revolving borrowings

—

101,158

Senior notes and other unsecured borrowings:

2023 notes⁽⁴⁾⁽⁵⁾
$
692.0

2023

4.375
%

350,000

700,000

2024 notes⁽⁴⁾

394.3

2024

4.950
%

400,000

400,000

2025 notes⁽⁴⁾

397.7

2025

4.500
%

400,000

400,000

2026 notes⁽⁴⁾

594.4

2026

5.250
%

600,000

600,000

2027 notes⁽⁴⁾

683.0

2027

4.500
%

700,000

700,000

2028 notes⁽⁴⁾

540.8

2028

4.750
%

550,000

550,000

2029 notes⁽⁴⁾

487.8

2029

3.625
%

500,000

500,000

2031 notes⁽⁴⁾

680.5

2031

3.375
%

700,000

700,000

2033 notes⁽⁴⁾⁽⁶⁾

689.3

2033

3.250
%

700,000

—

Subordinated debt⁽²⁾

2021

9.000
%

20,000

20,000

Sterling term loan⁽⁴⁾⁽⁷⁾

N/A

N/A

—

136,700

2017 OP term loan⁽⁸⁾

N/A

N/A

—

50,000

OP term loan⁽⁸⁾

2025

3.29
%

50,000

—

Deferred financing costs – net





(29,326)

(26,421)

Discount – net







(33,940)

(31,709)

Total senior notes and other unsecured borrowings – net







4,906,734

4,698,570

Total unsecured borrowings – net







4,906,734

4,799,728

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







$
5,272,565

$
5,169,252


		Annual
		Interest Rate
		as of
		March 31,		March 31,		December 31,
	Maturity	2022		2022		2021

				(in thousands)
Secured borrowings:
HUD mortgages⁽¹⁾⁽²⁾	2046-2052	3.01	%	$	357,910	$	359,806
2022 term loan⁽³⁾	2022	4.00	%		2,275		2,275
2024 term loan⁽⁴⁾	2024	6.00	%		19,459		—
Total secured borrowings					379,644		362,081

Unsecured borrowings:
Revolving credit facility⁽⁵⁾⁽⁶⁾	2025	1.82	%		354,888		—

Senior notes and other unsecured borrowings:
2023 notes⁽⁵⁾	2023	4.375	%		350,000		350,000
2024 notes⁽⁵⁾	2024	4.950	%		400,000		400,000
2025 notes⁽⁵⁾	2025	4.500	%		400,000		400,000
2026 notes⁽⁵⁾	2026	5.250	%		600,000		600,000
2027 notes⁽⁵⁾	2027	4.500	%		700,000		700,000
2028 notes⁽⁵⁾	2028	4.750	%		550,000		550,000
2029 notes⁽⁵⁾	2029	3.625	%		500,000		500,000
2031 notes⁽⁵⁾	2031	3.375	%		700,000		700,000
2033 notes⁽⁵⁾	2033	3.250	%		700,000		700,000
OP term loan⁽⁷⁾⁽⁸⁾	2025	1.91	%		50,000		50,000
Deferred financing costs – net					(25,804)		(26,980)
Discount – net					(30,357)		(31,565)
Total senior notes and other unsecured borrowings – net					4,893,839		4,891,455

Total unsecured borrowings – net					5,248,727		4,891,455

Total secured and unsecured borrowings – net^(9)(10)				$	5,628,371	$	5,253,536

(1)	Reflects the weighted average annual contractual interest rate on the mortgages at ~~June 30, 2021.~~March 31, 2022. Secured by real estate assets with a net carrying value of ~~$558.0~~$537.8 million as of ~~June 30, 2021.~~March 31, 2022.

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

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

(4)	Borrowing is the debt of the consolidated joint venture discussed in Note 8 – Variable Interest Entities which was formed in the first quarter of 2022. The borrowing is secured by 2 ALFs which are owned by the joint venture.

(5)	Guaranteed by Omega OP.

~~(5)~~

In March 2021, we used a portion of the proceeds from the 2033 Senior Notes offering to fund the tender offer to purchase $350 million of the 4.375% Senior Notes due 2023. In connection with this transaction, we recorded approximately $29.7 million in related fees, premiums, and expenses which were recorded as Loss on debt extinguishment in our Consolidated Statement of Operations.

(6)

~~We used~~As of March 31, 2022, borrowings under Omega’s $1.45 billion senior unsecured multicurrency revolving credit facility consisted of $110.0 million U.S. dollars (“USD”) and £186.0 million British Pounds Sterling (“GBP”). The interest rate presented reflects the ~~proceeds from this offering to pay down outstanding borrowings~~weighted average interest rate on the ~~2017 Revolving Credit Facility, repay~~borrowings under the ~~Sterling term loan,~~revolving credit facility denominated in USD and ~~fund the tender offer to purchase $350 million of the 4.375% Senior Notes due 2023 and the payment of accrued interest and related fees, premiums and expenses.~~GBP.

(7)	~~Actual borrowing is in GBP and remeasured to USD. The Sterling term loan was settled in March 2021 using proceeds from the 3.250% 2033 Senior Notes offering.~~

~~(8)~~

Omega OP is the obligor on this borrowing.

(8)	The interest rate swaps, that were cash flow hedges of Omega OP’s $50.0 million senior unsecured term loan facility (the “OP term loan”) interest payments and that effectively fixed the interest rate at 3.29%, matured on February 10, 2022.

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

(10)

Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we were in compliance with all ~~affirmative and negative covenants, including financial~~applicable covenants for our ~~secured and unsecured~~ borrowings.

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~~Unsecured Borrowings~~

~~Revolving Credit Facility~~

On April 30, 2021, Omega entered into a credit agreement (the “2021 Omega Credit Agreement”) providing us with a new $1.45 billion senior unsecured multicurrency revolving credit facility (the “Revolving Credit Facility”), replacing our previous $1.25 billion senior unsecured 2017 multicurrency revolving credit facility (the “2017 Revolving Credit Facility”). The 2021 Omega Credit Agreement contains an accordion feature permitting us, subject to compliance with customary conditions, to increase the maximum aggregate commitments thereunder to $2.5 billion, by requesting an increase in the aggregate commitments under the Revolving Credit Facility or by adding term loan tranches.

The Revolving Credit Facility bears interest at LIBOR (or in the case of loans denominated in GBP, the Sterling overnight index average reference rate plus an adjustment of 0.1193% per annum) plus an applicable percentage (with a range of 95 to 185 basis points) based on our credit ratings. The Revolving Credit Facility matures on April 30, 2025, subject to Omega’s option to extend such maturity date for 2 six-month periods. The Revolving Credit Facility may be drawn in Euros, GBP, Canadian Dollars (collectively, “Alternative Currencies”) or USD, with a $1.15 billion tranche available in USD and a $300 million tranche available in Alternative Currencies. For purposes of the Revolving Credit Facility, references to LIBOR include the Canadian dealer offered rates for amounts offered in Canadian Dollars and any other Alternative Currency rate approved in accordance with the terms of the 2021 Omega Credit Agreement for amounts offered in any other non-London interbank offered rate quoted currency, as applicable.

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

~~OP Term Loan~~

On April 30, 2021, Omega OP entered into a credit agreement (the “2021 Omega OP Credit Agreement”) providing it with a new $50 million senior unsecured term loan facility (the “OP Term Loan”). The OP Term Loan replaces the $50 million senior unsecured term loan obtained in 2017 (the “2017 OP Term Loan”) and the related credit agreement. The OP Term Loan bears interest at LIBOR plus an applicable percentage (with a range of 85 to 185 basis points) based on our credit ratings. The OP Term Loan matures on April 30, 2025, subject to Omega OP’s option to extend such maturity date for 2, six-month periods.

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

~~$400~~ ~~Million Forward Starting Swaps~~

On March 27, 2020, we entered into 5 forward starting swaps totaling $400 million. We designated the forward starting swaps as cash flow hedges of interest rate risk associated with interest payments on a forecasted issuance of fixed rate long-term debt, initially expected to occur within the next five years. The swaps are effective on August 1, 2023 and expire on August 1, 2033 and were issued at a fixed rate of approximately 0.8675%. In March 2021, in conjunction with the issuance of $700 million aggregate principal amount of our 3.25% Senior Notes due 2033, we discontinued hedge accounting for these 5 forward starting swaps. Amounts reported in AOCI related to these discontinued cash flow hedging relationships will be reclassified to interest expense over a ten-year term. Simultaneously, we re-designated these swaps in new cash flow hedging relationships of interest rate risk associated with interest payments on another forecasted issuance of long-term debt. We are hedging our exposure to the variability in future cash flows for forecasted transactions over a maximum period of 46 months (excluding forecasted transactions related to the payment of variable interest on existing financial instruments).

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~~£174~~ ~~Million Foreign Exchange Forward Starting Swaps~~

From the issuance date of our GBP borrowings through the prepayment date in March 2021, we used a nonderivative, GBP-denominated term loan and line of credit totaling £174 million to hedge a portion of our net investments in foreign operations. During March 2021 and concurrent with the settlement of our GBP-denominated term loan and repayment of our GBP-denominated borrowings under our line of credit, we entered into 4 foreign currency forwards, that mature on March 8, 2024, to hedge a portion of our net investments in foreign operations, effectively replacing the terminated net investment hedge. For these derivatives that are designated and qualify as net investment hedges, the gain or loss on the derivative is reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.

NOTE 16 – DERIVATIVES AND HEDGING

We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a result of our investments in the U.K. and interest rate risk related to our capital structure. As a matter of policy, we do not use derivatives for trading or speculative purposes. 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 March 31, 2022, we have 5 forward starting swaps with $400.0 million in notional value designated as cash flow hedges and 4 forward currency forwards with £174.0 million in notional value designated as net investment hedges.

NaN of our interest rate swaps that were entered into in May 2019 with aggregate notional amounts of $50.0 million matured on February 10, 2022. These interest rate swap contracts were designated as hedges against our exposure to changes in interest payment cash flow fluctuations in the variable interest rates on the OP term loan.

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


	March 31,		December 31,
	2022		2021

Cash flow hedges:	(in thousands)
Other assets	$	53,394	$	32,849
Accrued expenses and other liabilities	$	—	$	96

Net investment hedges:
Other assets	$	10,601	$	6,754

The fair value of the interest rate swaps and foreign currency forwards is derived from observable market data such as yield curves and foreign exchange rates and represents a Level 2 measurement on the fair value hierarchy.

NOTE 1617 – FINANCIAL INSTRUMENTS

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

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At ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the net carrying amounts and fair values of our other financial instruments were as follows:


	June 30, 2021				December 31, 2020				March 31, 2022				December 31, 2021
	Carrying		Fair		Carrying		Fair		Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value		Amount		Value		Amount		Value

	(in thousands)								(in thousands)
Assets:
Investments in direct financing leases – net	$	10,807	$	10,807	$	10,764	$	10,764	$	10,849	$	10,849	$	10,873	$	10,873
Mortgage notes receivable – net		857,162		897,342		885,313		924,353		819,577		841,432		835,086		869,715
Other investments – net		458,664		466,690		467,442		474,552		506,942		516,639		469,884		476,664
Total	$	1,326,633	$	1,374,839	$	1,363,519	$	1,409,669	$	1,337,368	$	1,368,920	$	1,315,843	$	1,357,252
Liabilities:
2017 Revolving credit facility	$	—	$	—	$	101,158	$	101,158
Revolving credit facility		—		—		—		—	$	354,888	$	354,888	$	—	$	—
Term loan		2,275		2,275		2,275		2,275
Sterling term loan		—		—		136,453		136,700
2017 OP term loan		—		—		49,896		50,000
OP Term loan		49,616		50,000		—		—
2022 term loan										2,275		2,275		2,275		2,275
2024 term loan										19,459		19,750		—		—
OP term loan										49,686		50,000		49,661		50,000
4.375% notes due 2023 – net		348,816		379,284		696,981		770,635		349,242		355,534		349,100		365,243
4.95% notes due 2024 – net		397,219		442,023		396,714		441,194		397,978		408,984		397,725		427,184
4.50% notes due 2025 – net		397,305		444,675		396,924		444,652		397,875		406,980		397,685		427,440
5.25% notes due 2026 – net		596,790		697,838		596,437		697,993		597,319		622,896		597,142		667,524
4.50% notes due 2027 – net		691,642		790,201		690,909		794,294		692,739		714,903		692,374		766,003
4.75% notes due 2028 – net		543,404		627,615		542,899		633,950		544,160		559,916		543,908		607,249
3.625% notes due 2029 – net		490,076		538,108		489,472		532,248		490,983		472,485		490,681		519,430
3.375% notes due 2031 – net		682,697		721,067		681,802		731,541		684,040		641,347		683,592		705,810
3.25% notes due 2033 – net		689,128		698,804		—		—		689,817		610,575		689,587		683,151
HUD mortgages – net		363,556		396,266		367,249		409,004		357,910		344,769		359,806		394,284
Subordinated debt – net		20,041		20,799		20,083		21,599
Total	$	5,272,565	$	5,808,955	$	5,169,252	$	5,767,243	$	5,628,371	$	5,565,302	$	5,253,536	$	5,615,593

Fair value estimates are subjective in nature and are dependent on a number of important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument (see Note 2 – Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, ~~2020)~~2021). The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts.

~~Table of Contents~~

The following methods and assumptions were used in estimating fair value disclosures for financial instruments.

●

Direct financing leases: The fair value of the investments in direct financing leases are estimated using a discounted cash flow analysis, using interest rates being offered for similar leases to borrowers with similar credit ratings (Level 3).

●

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

●

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

●

Revolving ~~line of~~ credit ~~secured borrowing~~facility, OP term loan, 2022 term loan and 2024 term loan: 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 ~~our borrowings under variable rate agreements are estimated using a present value technique based on expected cash flows discounted using~~deferred financing costs in the ~~current market rates (Level 3).~~carrying value.

●

Senior notes: The fair value of the senior unsecured notes ~~and subordinated~~payable was estimated based on (Level 1) publicly available trading prices.

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●

Subordinated debt: The fair value of our borrowings under ~~fixed rate~~these agreements are estimated using a present value technique based on inputs from trading activity provided by a third-party (Level 2).

●

HUD mortgages: The fair value of our borrowings under HUD debt agreements are estimated using an expected present value technique based on quotes obtained by HUD debt brokers (Level 2).

NOTE 1718 – COMMITMENTS AND CONTINGENCIES

Litigation

Shareholder Litigation

The Company and certain of its officers, C. Taylor Pickett, Robert O. Stephenson, and Daniel J. Booth, are defendants in a purported securities class action lawsuit pending in the U.S. District Court for the Southern District of New York (the “Securities Class Action”). Brought by lead plaintiff Royce Setzer and additional plaintiff Earl Holtzman, the Securities Class Action purports to assert claims for violations of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act, and seeks an unspecified amount of monetary damages, interest, fees and expenses of attorneys and experts, and other relief. The Securities Class Action alleges that the defendants violated the Exchange Act by making materially false and/or misleading statements, and by failing to disclose material adverse facts about the Company’s business, operations, and prospects, including the financial and operating results of one of the Company’s operators, the ability of such operator to make timely rent payments, and the impairment of certain of the Company’s leases and the uncollectibility of certain receivables. The initial complaint was dismissed with prejudice by the U.S. District Court, but the dismissal was overturned by the ~~U.S~~U.S. Court of Appeals for the Second Circuit in 2020. Thereafter, the plaintiffs filed a Second Consolidated Amended Complaint in August 2020. In November 2020, the Company and the officers named in the Securities Class Action filed a Motion to Dismiss the Second Consolidated Amended ~~Complaint, which is fully briefed~~Complaint. On September 28, 2021, the Court issued an order denying the motion to dismiss insofar as it requested dismissal of the entire action on grounds of loss causation, and ~~pending before~~granting it insofar as it sought dismissal of any claims arising out of defendants’ statements in February 2017. Because the ~~District Court.~~dismissed claims were the basis for defendants’ efforts to begin the alleged class period in February 2017, the decision means that the alleged class period runs from May 3, 2017 to October 31, 2017.

Certain derivative actions have also been brought against the officers named in the Securities Class Action, and certain current and former directors of the Company, alleging claims relating to the matters at issue in the Securities Class Action. These derivative actions are currently stayed pending certain developments in the Securities Class Action.

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In 2018, Stourbridge Investments LLC, a purported stockholder of the Company, filed a derivative action purportedly on behalf of the Company in the U.S. District Court for the Southern District of New York, alleging violations of Section 14(a) of the Exchange Act and state-law claims including breach of fiduciary duty. The complaint alleges, among other things, that the named defendants are responsible for the Company’s failure to disclose the financial condition of Orianna Health Systems, the alleged non-disclosures that are also the subject of the Securities Class Action described above. The plaintiff did not make a demand on the Company to bring the action prior to filing it, but rather alleges that demand would have been futile. The case has been stayed pending the entry of judgment or a voluntary dismissal with prejudice in the Securities Class Action.

In 2019, purported stockholder Phillip Swan by his counsel, and stockholders Tom Bradley and Sarah Smith by their counsel, filed derivative actions in the Baltimore City Circuit Court of Maryland, purportedly on behalf of the Company, asserting claims for breach of fiduciary duty, waste of corporate assets and unjust enrichment against the named defendants. Those actions have been consolidated and stayed in the Maryland court pending completion of fact discovery in the Securities Class Action. Prior to filing suit, each of these stockholders had made demands on the Board of Directors in 2018 that the Company bring such lawsuits. After an investigation and due consideration, and in the exercise of its business judgment, the Board of Directors determined that it is not in the best interests of the Company to commence litigation against any current or former officers or directors based on the matters raised in the demands.

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In addition, in late 2020, Robert Wojcik, a purported shareholder of the Company, filed a derivative action in the U.S. District Court for the District of Maryland, purportedly on behalf of the Company, asserting violations of Section 14(a) of the Exchange Act, Sections 10(b) and 21D of the Exchange Act, as well as claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. Wojcik also did not make a demand on the Company prior to filing suit. The case has been stayed pending the entry of judgment or a voluntary dismissal with prejudice in the Securities Class Action.

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

Other

Gulf Coast Subordinated Debt

In August 2021, we filed suit in the Circuit Court for Baltimore County (the “Court”) against the holders of certain Subordinated Debt associated with our Gulf Coast master lease agreement, following an assertion by the holders that our prior exercise of offset rights in connection with Gulf Coast’s non-payment of rent had resulted in defaults under the terms of the Subordinated Debt. The suit seeks a declaratory judgment to, among other items, declare that the aggregate amount of unpaid rent due from Gulf Coast under the master lease agreement exceeds all amounts which otherwise would be due and owing by a subsidiary of Omega (“Omega Obligor”) under the Subordinated Debt, and that all principal and interest due and owing under the Subordinated Debt may be (and was) offset in full as of December 31, 2021. In October 2021, the defendants in the case filed a motion to dismiss for lack of personal jurisdiction. A hearing was held on such motion on February 25, 2022, but the decision was taken under advisement. While Omega believes Omega Obligor is entitled to the enforcement of the offset rights sought in the action, the outcome of litigation is unpredictable, and Omega cannot predict the outcome of the declaratory judgment action, irrespective of whether it is litigated in the Court or, if the motion to dismiss for lack of personal jurisdiction is granted, in another court.

Lakeway Realty, L.L.C.

In September 2016, MedEquities received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice (“DOJ”), which indicates that it is conducting an investigation regarding alleged violations of the False Claims Act, Stark Law and Anti-Kickback Statute in connection with claims that may have been submitted to Medicare and other federal payors for services rendered to patients at Lakeway Hospital or by providers with financial relationships with Lakeway Hospital. As a result of the acquisition of MedEquities, the Company owns a 51% interest in an unconsolidated partnership that owns Lakeway Hospital, ~~(the “Lakeway~~Lakeway Realty, L.L.C.~~”).~~ The CID requested certain documents and information related to the acquisition and ownership of Lakeway Hospital through Lakeway Realty, L.L.C. The Company has learned that the DOJ is investigating MedEquities’ conduct in connection with its investigation of financial relationships related to Lakeway Hospital, including allegations by the DOJ that these relationships violate and continue to violate the Anti-Kickback Statute and, as a result, related claims submitted to federal payors violated and continue to violate the False Claims Act. The Company is cooperating fully with the DOJ in connection with the CID and has produced all of the information that has been requested to date.

On September 29, 2020, the Department of Justice announced it had reached a settlement of a False Claims Act case with Lakeway Regional Medical Center wherein Lakeway Regional Medical Center agreed to pay $1.1 million for inducing certain physicians to refer patients by offering a low risk and high return investment in the form of a joint venture to purchase and then lease back the hospital to Lakeway Regional Medical Center. A MedEquities subsidiary was a party to this transaction but was not included in settlement ~~discussions.~~discussions, and we understand that the settlement did not fully resolve the investigation referenced in the CID. The documents relating to the settlement are not publicly available.

The Company believes that the acquisition, ownership and leasing of Lakeway Hospital through the Lakeway Partnership was and is in compliance with all applicable laws. However, due to the uncertainties surrounding this matter and its ultimate outcome, we are unable to determine whether it is probable that any loss has been incurred.

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In addition, we are subject to various other legal proceedings, claims and other actions arising out of the normal course of business. While any legal proceeding or claim has an element of uncertainty, management believes that the outcome of each lawsuit, claim or legal proceeding that is pending or threatened, or all of them combined, will not have a material adverse effect on our consolidated financial position or results of operations.

Indemnification Agreements

In connection with certain facility transitions, we have agreed to indemnify certain operators in certain events. As of ~~June 30, 2021,~~March 31, 2022, our maximum funding commitment under these indemnification agreements was approximately ~~$8.6~~$5.6 million. Claims under these indemnification agreements may be made within 18 months to 72 months of the transition date. These indemnification agreements were provided to certain operators in connection with facility transitions and generally would be applicable in the event that the prior operators do not perform under their transition agreements. ~~The Company does not expect to fund a material amount under these indemnification agreements.~~

Commitments

We have committed to fund the construction of new leased and mortgaged facilities, capital improvements and other commitments. We expect the funding of these commitments to be completed over the next several years. Our remaining commitments at ~~June 30, 2021,~~March 31, 2022, are outlined in the table below (in thousands):



Total commitments	$	539,528	$	752,891
Amounts funded to date⁽¹⁾		(415,281)		(532,002)
Remaining commitments ⁽²⁾	$	124,247	$	220,889

(1)

Includes finance costs.

(2)

This amount excludes our remaining commitments to fund under our other investments of approximately ~~$67.6~~$41.2 million.

NOTE 1819 – EARNINGS PER SHARE

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,				Three Months Ended March
	2021		2020		2021		2020		2022		2021

	(in thousands, except per share amounts)								(in thousands, except per share amounts)
Numerator:
Net income	$	86,863	$	101,960	$	251,229	$	194,239	$	195,156	$	164,366
Deduct: net income attributable to noncontrolling interests		(2,340)		(2,653)		(6,728)		(5,017)		(5,549)		(4,388)

Net income available to common stockholders	$	84,523	$	99,307	$	244,501	$	189,222	$	189,607	$	159,978
Denominator:
Denominator for basic earnings per share		236,229		227,411		234,401		227,336		239,527		232,572
Effect of dilutive securities:
Common stock equivalents		1,130		1,030		1,037		1,146		963		944
Noncontrolling interest – Omega OP Units		6,549		6,082		6,470		6,033		7,066		6,391
Denominator for diluted earnings per share		243,908		234,523		241,908		234,515		247,556		239,907

Earnings per share - basic:
Net income available to common stockholders	$	0.36	$	0.44	$	1.04	$	0.83	$	0.79	$	0.69
Earnings per share – diluted:
Net income	$	0.36	$	0.43	$	1.04	$	0.83	$	0.79	$	0.69

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NOTE 1920 – SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS

The following are supplemental disclosures to the ~~consolidated statements~~Consolidated Statements of ~~cash flows~~Cash Flows for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


	Six Months Ended June 30,				Three Months Ended March 31,
	2021		2020		2022		2021

	(in thousands)				(in thousands)
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	100,824	$	37,022	$	491,247	$	51,376
Restricted cash		3,736		4,543		3,534		4,522
Cash, cash equivalents and restricted cash at end of period	$	104,560	$	41,565	$	494,781	$	55,898

Supplemental information:
Interest paid during the period, net of amounts capitalized	$	105,634	$	112,035	$	60,478	$	67,538
Taxes paid during the period	$	3,072	$	4,497	$	1,716	$	1,509

Non cash investing activities
Non cash proceeds from sale of real estate investments	$	—	$	83,910
Non cash placement of mortgages	$	(1,000)	$	(86,936)
Non cash proceeds from other investments	$	1,000	$	3,026
Non-cash investing activities:
Non-cash acquisition of real estate					$	(11,133)	$	—

Non cash financing activities
Non cash borrowing of other long-term borrowings	$	—	$	6,459
Non-cash financing activities:
Non-cash contribution from noncontrolling interest holder in consolidated joint venture					$	2,903	$	—
Change in fair value of cash flow hedges	$	17,869	$	(7,329)	$	24,489	$	36,672
Remeasurement of debt denominated in a foreign currency	$	3,010	$	(13,953)	$	(320)	$	3,010

~~NOTE 20 – SUBSEQUENT EVENTS~~

On July 1, 2021, we financed 6 SNFs in Ohio and amended an existing $6.4 million mortgage to include the 6 facilities in a consolidated $72.4 million mortgage for 8 Ohio facilities bearing interest at an initial rate of 10.5% per annum. In conjunction with this transaction, we also acquired 3 Maryland facilities that were previously subject to a mortgage issued by Omega bearing interest at 13.75% per annum with a principal balance of $36.0 million. The purchase price for these 3 facilities was equal to the remaining mortgage principal amount, and the 3 acquired Maryland facilities were subsequently leased back to the seller for a term expiring on December 31, 2032, assuming Omega exercises the options under the agreement. The base rent in the initial year is approximately $5.0 million and includes annual escalators of 2.5%. On July 1, 2021, we also entered into a $12.0 million revolving credit facility agreement with this operator for working capital expenses for the 8 Ohio facilities discussed above with a maturity date of June 30, 2022. The credit facility bears interest at 10% per annum.

On July 14, 2021, we acquired 2 U.K. facilities for $9.5 million and entered into a lease with an existing operator with an initial term expiring on April 23, 2027. The base rent in the initial year is approximately $0.8 million and includes annual escalators of 2.5%.

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements and Factors Affecting Future Results

Unless ~~stated~~ otherwise indicated or except where the context otherwise requires, the terms ~~“Omega”, the “Company,~~“we,” ~~“we,”~~“us” and “our” and ~~“us”~~other similar terms in this Quarterly Report on Form 10-Q refer to Omega Healthcare Investors, Inc. and its consolidated subsidiaries including Omega OP, references to “Parent” refer to Omega Healthcare Properties, Inc. without regard to its consolidated subsidiaries, and references to “Omega OP” mean OHI Healthcare Properties Limited Partnership and its consolidated subsidiaries..

~~Forward-Looking Statements and Factors Affecting Future Results~~

The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this document. This document contains “forward-looking statements” within the meaning of the federal securities laws. These statements relate to our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, performance and underlying assumptions and other statements other than statements of historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology including, but not limited to, terms such as “may,” “will,” “anticipates,” “expects,” “believes,” “intends,” “should” or comparable terms or the negative thereof. These statements are based on information available on the date of this filing and only speak as to the date hereof and no obligation to update such forward-looking statements should be assumed.

Our actual results may differ materially from those reflected in the forward-looking statements contained herein as a result of a variety of factors, including, among other things:

~~(i)~~(1)

those items discussed under “Risk Factors” in Part I, Item 1A to our ~~annual report~~Annual Report on Form 10-K;

~~(ii)~~(2)

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

~~(iii)~~(3)

the impact of the ~~novel coronavirus (“COVID-19”)~~COVID-19 pandemic on our business and the business of our operators, including without limitation, the extent and duration of the COVID-19 pandemic, increased costs, staffing shortages and decreased occupancy levels experienced by operators of skilled nursing facilities (“SNFs”) and assisted living facilities (“ALFs”) in connection therewith, the ability of operators to comply with ~~new~~ infection control and vaccine protocols, the long-term impact of vaccination on facility infection rates, and the extent to which continued government support may be available to operators to offset such costs and the conditions related thereto;

~~(iv)~~(4)

the ability of ~~any of Omega’s~~our operators in bankruptcy to reject unexpired lease obligations, modify the terms of ~~Omega’s~~our mortgages and impede ~~the~~our ability ~~of Omega~~ to collect unpaid rent or interest during the pendency of a bankruptcy proceeding and retain security deposits for the debtor’s obligations, and other costs and uncertainties associated with operator bankruptcies;

~~(v)~~(5)

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

~~(vi)~~(6)

the availability and cost of capital to us;

~~(vii)~~(7)

changes in our credit ratings and the ratings of our debt securities;

~~(viii)~~(8)

competition in the financing of healthcare facilities;

~~(ix)~~(9)

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

~~(x)~~(10)

additional regulatory and other changes in the healthcare sector;

~~(xi)~~(11)

changes in the financial position of our operators;

~~(xii)~~(12)

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

~~(xiii)~~(13)

changes in interest ~~rates;~~rates and the impact of inflation;

~~(xiv)~~(14)

the timing, amount and yield of any additional investments;

~~(xv)~~(15)

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

~~(xvi)~~(16)

the potential impact of changes in the SNF and ALF markets or local real estate conditions on our ability to dispose of assets held for sale for the anticipated proceeds or on a timely basis, or to redeploy the proceeds therefrom on favorable terms;

~~(xvii)~~(17)

our ability to maintain our status as a REIT; and

~~(xviii)~~(18)

the effect of other factors affecting our business or the businesses of our operators that are beyond our or their control, including natural disasters, other health crises or pandemics and governmental action; particularly in the healthcare industry.

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Overview

Omega ~~was incorporated in the State of~~Healthcare Investors, Inc. (“Parent”) is a Maryland ~~on March 31, 1992 and~~corporation that, together with its consolidated subsidiaries (collectively, “Omega,” or “Company,” “we,” “our,” or “us”) has elected to be taxed as a REIT for federal income tax purposes. Omega is structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega’s assets are owned directly or indirectly by, and all of Omega’s operations are conducted directly or indirectly through, its operating partnership subsidiary, ~~Omega OP.~~OHI Healthcare Properties Limited Partnership (collectively with its subsidiaries, “Omega OP”). As of ~~June 30, 2021, Omega~~March 31, 2022, Parent owned approximately 97% of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and other investors owned approximately 3% of the outstanding Omega OP Units.

Omega has one reportable segment consisting of investments in healthcare-related real estate properties located in the United States (“U.S.”) and the United Kingdom (“U.K.”). Our core business is to provide financing and capital to the long-term healthcare industry with a particular focus on SNFs, ~~and~~ ALFs, and to a lesser extent, independent living facilities (“ILFs”), rehabilitation and acute care facilities (“specialty facilities”) and medical office buildings. Our core portfolio consists of our long-term leases and mortgage ~~agreements.~~loans with healthcare operating companies and affiliates (collectively, our “operators”). All of our leases are “triple-net” leases, which require the operators (we use the term “operator” to refer to our tenants and mortgagors and their affiliates who manage and/or operate our properties) to pay all property-related expenses. Our mortgage revenue derives from fixed rate mortgage loans, whichmortgages are secured by first ~~mortgage~~ liens on the underlying real estate and personal property of the ~~mortgagor. Our other investment income derives from fixed and variable rate~~operators. In addition to our core investments, we selectively make loans to ~~our~~ operators ~~and/or their principals to fund~~for working capital and capital expenditures. These loans, which may be either unsecured or secured by the collateral of the borrower, are classified as other investments. From time to time, we also acquire equity interests in joint ventures or entities that support the long-term healthcare industry and our operators.

COVID-19 Pandemic Update

~~For~~The COVID-19 pandemic has continued to significantly and adversely impact SNFs and long-term care providers due to the ~~year ended December 31, 2020~~higher rates of virus transmission and fatality among the elderly and frail populations that these facilities serve. As a result, many of our operators have been and may continue to be significantly impacted by the pandemic. Agemo Holdings, LLC (“Agemo”), Guardian Healthcare (“Guardian”) and Gulf Coast Health Care LLC (together with certain affiliates, “Gulf Coast”), three operators that failed to make contractual payments under their lease and loan agreements for periods of 2021, continued to not make payments during the first quarter of ~~2021, we collected substantially all~~2022. During the first quarter of ~~the contractual rents and mortgage interest payments owed to us from our~~2022, two new operators, ~~(other than operators under a forbearance agreement prior to the pandemic). However, in June 2021, we were informed by~~representing an ~~operator, which represents approximately 3%~~aggregate of ~~our~~6.1% of total revenue ~~for the six months ended June 30, 2021 and 2020~~ (excluding the impact of write-offs) for the ~~straight-line write-offs~~three months ended March 31, 2022, missed contractual rent payments during the period, and we have agreed to short term deferrals with these two operators, as well as allowed one of these operators to apply its security deposit to pay rent, as discussed further in ~~2021), that it would be unable~~“Collectibility Issues” below. Additionally, we allowed three other operators, representing an aggregate 2.5% of total revenue (excluding the impact of write-offs) for the three months ended March 31, 2022, to apply $1.3 million of their security deposits to pay rent to us in the foreseeable future. As of June 30, 2021, we have been unable to collect approximately $2.5 million of contractual rents due from this operator, which represents one month of contractual rent under the lease agreement, and have applied $2.5 million of the operator’s security deposit funds against their uncollected receivables. As such, we placed the operator on a cash basis for revenue recognition based on our evaluation of the collectibility of futureaccommodate short term liquidity issues, with regular rent payments ~~due under its lease agreement, and in connection with this, we wrote off approximately $17.4 million of straight-line receivables~~required to ~~rental income during the quarter.~~ resume shortly thereafter.

We believe ~~this operator was~~these operators were impacted by, among other things, reduced revenue as a result of lower occupancy and increased expenses ~~both as a result of~~resulting from the COVID-19 ~~pandemic. As discussed in Note 2 – Contractual Receivables~~pandemic and ~~Other Receivables, we also placed a smaller operator on a cash basis in~~uncertainties regarding the ~~first quarter due to collectability concerns as a result~~continuing availability of the impacts of the COVID-19 pandemic. With respect to our other operators, we collected substantially all contractual rents and mortgage interest payments due to us from our operators during the second quarter of 2021; however, wesufficient government support. We remain cautious as the COVID-19 pandemic continues to have a significant impact on our operators and their financial conditions, particularly given continued uncertainty regarding the availability of sufficient government support and trend of reduced federal support to our operators beginning in 2021, the persistence of staffing shortages that continue to impact our operators’ occupancy levels and profitability, ~~and~~the impact of governmental vaccine mandates for staff on these ongoing staffing shortages, other factors that may impact virus transmission in our facilities, including genetic mutations of the virus into new variants, the commencement in April 2021 for many of our operators of the repayment of accelerated payments of Medicare funds that were previously received as Advanced Medicare payments in ~~2020.~~2020 and the commencement in December 2021 of repayment of deferred FICA obligations.

As of April 27, 2022, our operators have reported a decline in cases of COVID-19 involving employees and residents from the high caseload experienced in January 2022 driven by the Omicron variant. Our operators reported, as of April 27, 2022, cases of COVID-19 within 151, or 16.1%, of our 939 operating facilities as of December 31, 2021, which includes cases involving employees and residents.

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As of July 27, 2021, our operators reported cases of COVID-19 within 153, or 16%, of our 949 operating facilities as of December 31, 2020, which includes cases involving employees and residents. This represents a meaningful decline in cases from the 614 facilities with cases, or 64% of our 959 operating facilities, that our operators reported as of December 22, 2020, and from the 212 facilities with cases, or 22%, of our 949 operating facilities, that our operators reported as of April 27, 2021. We caution that we have not independently validated any such facility virus incidence information, itwhich may be reported on an inconsistent basis by our operators, and we can provide no assurance regarding ~~its~~the information’s accuracy or that there have not been any changes since the time ~~the information~~it was obtained from our operators; we also undertake no duty to update this information. ~~While we believe the declines in reported cases noted above is due in large part~~It remains uncertain to what extent vaccination programs for COVID-19 ~~which have been implemented in most of our facilities, it remains uncertain when~~ and ~~to what extent these vaccination programs~~any booster doses will ~~continue to~~ mitigate the effects of COVID-19 in our facilities, ~~or how effective existing vaccines will be against~~particularly with regard to new variants of the ~~COVID-19 virus.~~virus, the impact of governmental vaccine mandates for staff on ongoing staffing shortages in our facilities and other factors that impact virus transmission in our facilities. The impact of these programs will depend in part on the continued ~~speed, distribution,~~ efficacy and delivery of the vaccine and booster doses in our facilities, ~~as well as~~compliance with staff vaccination requirements and participation levels in vaccination programs among the residents and employees of our ~~operators. Our~~ operators ~~have continued to report considerable variation~~and in ~~participation levels among both employees and residents,~~the communities in which ~~we believe may change over time with additional vaccination education efforts.~~they operate.

In addition to experiencing outbreaks of positive cases and deaths of residents and employees during the pandemic, our operators have been required to, and continue to, adapt their operations ~~rapidly throughout the pandemic~~ to manage the spread of the COVID-19 virus as well as the implementation of new treatments and vaccines, and to implement new requirements relating to infection control, staffing levels, personal protective equipment (“PPE”), testing mandates, quality of care, visitation protocols and reporting, among other regulations, throughout the pandemic while facing staffing shortages that have accelerated during the pandemic and that may impede the delivery of care. Many of our operators have reported incurring significant cost increases as a result of the COVID-19 pandemic, with dramatic increases for facilities with positive cases. These increases have been offset to some extent by increases in reimbursements due to increased skilling in place, which has been necessitated by pandemic-related protocols and may decrease when such protocols subside. We believe these increases primarily stem from elevated labor costs, including increased use of overtime and bonus pay and reliance on agency staffing due to staffing shortages, as well as a significant increase in both the cost and usage of PPE, testing equipment and processes and supplies, as well as implementation of new infection control protocols and vaccination programs. ~~In addition, many~~

The federal government announced in August and September 2021 that it would be requiring SNF and healthcare workers to be vaccinated against COVID-19 and issued an emergency implementing regulation effective November 5, 2021 requiring covered healthcare facilities to ensure eligible staff have received a first vaccine dose as of ~~our~~December 5, 2021 and a second dose of a two-dose vaccine as of January 4, 2022, with certain permitted exemptions in alignment with federal law, which were subsequently extended by the U.S. Centers for Medicare and Medicaid Services by between one to two months depending on the applicable state. Our operators have reported ~~experiencing~~increases in staff vaccination rates during the first quarter of 2022; however, we expect that such mandates may exacerbate ongoing staffing shortages in skilled nursing and senior housing facilities. In addition, operators who do not achieve full compliance with the requirements may face potential survey issues and penalties. At this time, there is significant uncertainty regarding the impact of such developments.

In addition, our facilities, on average, have experienced declines, in some cases that are material, in occupancy levels as a result of the pandemic. ~~While these declines~~Occupancy in our facilities has generally improved on average ~~appear~~since early 2021, with a slight reduction in growth in late 2021 and early 2022 due to ~~be stabilizing and even marginally improving in recent months, it~~the impact of new variants; however, average occupancy has not returned to pre-pandemic levels. It remains unclear when and the extent to which demand and occupancy levels will return to pre-COVID-19 levels. We believe these challenges to occupancy ~~declines~~recovery may be in part due to staffing shortages, which in some cases have required operators to limit admissions, as well as COVID-19 related fatalities at the facilities, the delay of SNF placement and/or utilization of alternative care settings for those with lower level of care needs, the suspension and/or postponement of elective hospital procedures, fewer discharges from hospitals to SNFs and higher hospital readmittances from SNFs.

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While substantial government support, primarily through the federal CARES Act in the U.S. and distribution of PPE, vaccines and testing equipment by federal and state governments, ~~has been~~was allocated to SNFs and to a lesser extent to ALFs in 2020, federal relief efforts were limited in 2021 as have been relief efforts in certain states. We believe further government support will ~~likely~~ be needed to continue to offset these ~~impacts.~~impacts, which may take the form of stimulus or reimbursement rate adjustments to reflect sustained cost changes experienced by operators. It is unclear whether and to what extent such government support will continue to be sufficient and timely to offset these impacts. In particular, while $25.5 billion in federal funding for healthcare providers impacted by COVID-19 was announced in September 2021 with distributions beginning in late 2021, it remains unclear asthe extent to ~~whether~~which these funds or remaining unallocated funds under the Public Health and Social Services Emergency Fund (“Provider Relief Fund”) will be distributed to our operators in any meaningful way, whether additional funds will be added to the Provider Relief Fund or otherwise allocated to ~~health care~~healthcare operators or our operators, or whether additional Medicaid funds under the ~~recently enacted~~ American Rescue Plan Act of 2021 (the “American Rescue Plan Act”) or other Medicare or Medicaid reimbursement rates changes in the U.S. will ultimately support reimbursement to our operators. Further, to the extent the cost and occupancy impacts on our operators continue or accelerate and are not offset by continued government relief that is sufficient and timely, we anticipate that the operating results of ~~certain of our~~additional operators ~~would~~may be materially and adversely affected, some may be unwilling or unable to pay their contractual obligations to us in full or on a timely basis and we may be unable to restructure such obligations on terms as favorable to us as those currently in place. Citing in part the impact of the COVID-19 pandemic and uncertainties regarding the continuing availability of sufficient government support, during the third and fourth quarters of 2020, four of our operators indicated in their financial statements substantial doubt regarding their ability to continue as going concerns.

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There are a number of uncertainties we face as we consider the ~~potential~~continuing impact of COVID-19 on our business, including how long census disruption and elevated COVID-19 costs will last, the impact of vaccination programs, including booster doses, and participation levels in those programs in reducing the spread of COVID-19 in our facilities, the impact of genetic mutations of the virus into new variants on our facilities, the impact of vaccine mandates on ongoing staffing shortages in our facilities, and the extent to which funding support from the federal government and the states will continue to offset these incremental costs as well as lost revenues. Notwithstanding vaccination programs, we expect that heightened clinical protocols for infection control within facilities will continue for some period; however, we do not know if future reimbursement rates or equipment provided by governmental agencies will be sufficient to cover the increased costs of enhanced infection control and monitoring.

While we continue to believe that longer term demographics will drive increasing demand for needs-based skilled nursing care, we expect the uncertainties to our business described above to persist at least for the near term until we can gain more information as to the level of costs our operators will continue to experience and for how long, and the level of additional governmental support that will be available to them, the potential support our operators may request from us and the future demand for needs-based skilled nursing care and senior living facilities. We continue to monitor the ~~impact~~rate of occupancy ~~declines~~recovery at many of our operators, and it remains uncertain whether and when demand, staffing availability and occupancy levels will return to pre-COVID-19 levels.

We continue to monitor the impacts of other regulatory changes, as discussed below, including any significant limits on the scope of services reimbursed and on reimbursement rates and fees, which could have a material adverse effect on an operator’s results of operations and financial condition, which could adversely affect the operator’s ability to meet its obligations to us.

Other Trends and Conditions

In addition to the impacts of COVID-19 discussed above, our operators have been and are likely to continue to be adversely affected by labor shortages and increased labor costs. In addition, our operations have also been and are likely to continue to be impacted by increased competition for the acquisition of facilities in the U.S., which has decreased the number of investment opportunities that would be accretive to our portfolio. As part of our continuous evaluation of our portfolio and in connection with certain operator restructuring transactions, we expect to continue to opportunistically sell assets, or portfolios of assets, from time to time.

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Government Regulation and Reimbursement

The following information supplements and updates, and should be read in conjunction with, the information contained under the caption Item 1. Business – Government Regulation and Reimbursement in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

The healthcare industry is heavily regulated. Our operators, which are primarily based in the U.S., are subject to extensive and complex federal, state and local healthcare laws and regulations; we also have several U.K.-based operators ~~that~~which are ~~impacted by~~subject to a variety of laws and regulations in their jurisdiction. These laws and regulations are subject to frequent and substantial changes resulting from the adoption of new legislation, rules and regulations, and administrative and judicial interpretations of existing law. The ultimate timing or effect of these changes, which may be applied retroactively, cannot be predicted. Changes in laws and regulations impacting our operators, in addition to regulatory non-compliance by our operators, can have a significant effect on the operations and financial condition of our operators, which in turn may adversely impact us. There is the potential that we may be subject directly to healthcare laws and regulations because of the broad nature of some of these regulations, such as the Anti-kickback Statute and False Claims Act, among others.

The U.S. Department of Health and Human Services (“HHS”) declared a public health emergency on January 31, 2020 following the World Health Organization's decision to declare COVID-19 a public health emergency of international concern. This declaration, which has been extended through ~~October 17, 2021,~~July 15, 2022, allows HHS to provide temporary regulatory waivers and new reimbursement rules designed to equip providers with flexibility to respond to the COVID-19 pandemic by suspending various Medicare patient coverage criteria and documentation and care requirements, including, for example, suspension of the three-day prior hospital stay coverage requirement and expanding the list of approved services which may be provided via telehealth. These regulatory actions ~~could~~have contributed, and may continue to contribute, to a change in census volumes and skilled nursing mix that may not otherwise have occurred. It remains uncertain when federal and state regulators will resume enforcement of those regulations which are waived or otherwise not being enforced during the public health emergency due to the exercise of enforcement discretion.

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These temporary changes to regulations and reimbursement, as well as emergency legislation, including the CARES Act enacted on March 27, 2020 and discussed below, continue to have a significant impact on the operations and financial condition of our operators. The extent of the COVID-19 pandemic’s effect on the Company’s and our operators’ operational and financial performance will depend on future developments, including the sufficiency and timeliness of additional governmental relief, the duration, spread and intensity of the outbreak, the impact of genetic mutations of the virus into new variants, the impact of vaccine distributions and booster doses on our operators and their populations, the impact of vaccine mandates on staffing shortages at our operators, as well as the difference in how the pandemic may impact SNFs in contrast to ALFs, all of which developments and impacts are uncertain and difficult to predict. Due to these uncertainties, we are not able at this time to estimate the effect of these factors on our business; however, the adverse impact on our business, results of operations, financial condition and cash flows could be material.

A significant portion of our operators’ revenue is derived from government-funded reimbursement programs, consisting primarily of Medicare and Medicaid. As federal and state governments continue to focus on healthcare reform initiatives, efforts to reduce costs by government payors will likely continue. Significant limits on the scope of services reimbursed and/or reductions of reimbursement rates could therefore have a material adverse effect on our operators’ results of operations and financial condition. Additionally, new and evolving payor and provider programs that are tied to quality and efficiency could adversely impact our tenants’ and operators’ liquidity, financial condition or results of operations, and there can be no assurance that payments under any of these government ~~health care~~healthcare programs are currently, or will be in the future, sufficient to fully reimburse the property operators for their operating and capital expenses. In addition to quality and value based reimbursement reforms, the U.S. Centers for Medicare and Medicaid Services (“CMS”) has implemented a number of initiatives focused on the reporting of certain facility specific quality of care indicators that could affect our operators, including publicly released quality ratings for all of the nursing homes that participate in Medicare or Medicaid under the CMS “Five Star Quality Rating System.” Facility rankings, ranging from five stars (“much above average”) to one star (“much below average”) are updated on a monthly basis. SNFs are required to provide information for the CMS Nursing Home Compare website regarding staffing and quality measures. These rating changes have impacted referrals to SNFs, and it is possible that changes to this system or other ranking systems could lead to future reimbursement policies that reward or penalize facilities on the basis of the reported quality of care parameters.

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The following is a discussion of certain U.S. laws and regulations generally applicable to our operators, and in certain cases, to us.

Reimbursement Changes Related to COVID-19:

U.S. Federal Stimulus Funds ~~through the CARES Act~~ and ~~Provider Relief Fund, Appropriating $178 billion to Health Care Providers.~~ Financial Assistance for Healthcare Providers. In response to the pandemic, Congress has enacted a series of economic stimulus and relief ~~measures throughout 2020.~~measures. On March 18, 2020, the Families First Coronavirus Response Act was enacted in the U.S., providing a temporary 6.2% increase to each qualifying state and territory’s Medicaid Federal Medical Assistance Percentage (“FMAP”) effective January 1, 2020. The temporary FMAP increase will extend through the last day of the calendar quarter in which the public health emergency terminates. States will make individual determinations about how this additional Medicaid reimbursement will be applied to SNFs, if at all.

In a further response to the pandemic, the CARES Act authorized approximately $178 billion to be distributed through the Provider Relief Fund to reimburse eligible healthcare providers for ~~health care~~healthcare related expenses or lost revenues that ~~are~~were attributable to coronavirus. As part of the $178 billion, in May 2020, HHS announced that approximately $9.5 billion in targeted distributions would be made available to eligible SNFs, approximately $2.5 billion of which were composed of performance-based incentive payments tied to a facility’s infection rate. Further, in September 2021, HHS announced the release of $25.5 billion in provider funding, including $17 billion of the $178 billion previously authorized through the CARES Act and $8.5 billion for rural providers, including those with Medicaid and Medicare patients, through the American Rescue Plan Act. The Provider Relief Fund is administered under the broad authority and discretion of HHS and recipients are not required to repay distributions received to the extent they are used in compliance with applicable requirements. Also in September 2021, the Centers for Disease Control and Prevention (“CDC”) announced it would allocate $500 million to staffing, training and deployment of state-based nursing home and long-term care “strike teams” to assist facilities with known or suspected COVID-19 outbreaks.

HHS began distributing Provider Relief Fund grants in April 2020 and has made grants available to various provider groups in three general phases. In May 2020, HHS announced that approximately $9.5 billion in targeted distributions would be made available to eligible skilled nursing facilities, approximately $2.5 billion of which were composed of performance-based incentive payments tied to a facility’s infection rate. Approximately $8.5 billion in additional funds were added to the Provider Relief Fund through the American Rescue Plan Act enacted on March 11, 2021; however, these funds are limited to rural providers and suppliers.

As of March 15, 2021, based on data published by HHS, it appears that less than $29 billion of the Provider Relief Fund remains unallocated. HHS continues to evaluate and provide allocations of, and issue regulations and guidance regarding, grants made under the CARES Act and related legislation. There are substantial uncertainties regarding the extent to which our operators will receive funds which have not been allocated, whether additional funds will be allocated to the Provider Relief Fund, health care providers or senior care providers and whether additional payments will be distributed to providers, the financial impact of receiving any of these funds on their operations or financial condition, and whether operators will be able to meet the compliance requirements associated with the funds. HHS continues to evaluate and provide allocations of, and issue regulation and guidance regarding, grants made under the CARES Act. There are substantial uncertainties regarding the extent to which our operators will receive additional funding from HHS.

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The CARES Act and related legislation also made other forms of financial assistance available to healthcare providers, which have the potential to impact our operators to varying degrees. This assistance includes Medicare and Medicaid payment adjustments and an expansion of the Medicare Accelerated and Advance Payment Program, which made available accelerated payments of Medicare funds in order to increase cash flow to providers. These payments are loans that providers are scheduled to repay beginning one year from the issuance date of each provider’s or supplier’s accelerated or advance payment, with repayment made through automatic recoupment of 25% of Medicare payments otherwise owed to the provider or supplier for eleven months, followed by an increase to 50% for another six months, after which any outstanding balance would be repaid subject to an interest rate of 4%. We believe these repayments commenced for many of our operators in April 2021 and have adversely impacted, and will continue to adversely impact, operating cash flows of these operators.

Additionally, ~~the Centers for Medicare and Medicaid Services (“CMS”)~~CMS suspended Medicare sequestration payment adjustments, which would have otherwise reduced payments to Medicare providers by 2%, from May 1, 2020 through December 31, ~~2021,~~2020, but also extended sequestration through 2030. The Bipartisan-Bicameral Omnibus COVID Relief Deal that passed in December 2020 further extended the suspension of the Medicare sequestration until March 31, 2021, and it most recently has been further extended from December 31, 2021 through March 31, 2022, resulting in a 1% cut in Medicare reimbursement for the three months starting April 1, 2022 and the full 2% sequester resuming July 1, 2022. While not limited to healthcare providers, the CARES Act additionally provided payroll tax relief for employers, allowing them to defer payment of employer Social Security taxes that are otherwise owed for wage payments made after March 27, 2020 through December 31, 2020 to December 31, 2021 with respect to 50% of the payroll taxes owed, with the remaining 50% deferred until December 31, 2022.

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Quality of Care Initiatives and Additional Requirements Related to ~~COVID-19:~~

COVID-19.

In addition to COVID-19 reimbursement changes, several regulatory initiatives announced in 2020 and ~~the first quarter of~~ 2021 focused on addressing quality of care in long-term care facilities, including those related to COVID-19 testing and infection control protocols, vaccine protocols, staffing levels, reporting requirements, and visitation policies, as well as increased inspection of nursing homes. ~~For example,~~In August 2021, CMS announced it was developing an emergency regulation requiring staff vaccinations within the nation’s more than 15,000 Medicare and Medicaid-participating nursing homes, and in September 2021, CMS further announced that the scope of the regulation will be expanded to include workers in hospitals, dialysis facilities, ambulatory surgical settings, and home health agencies. In addition, recent updates to the Nursing Home Care website and the Five Star Quality Rating System include revisions to the inspection process, adjustment of staffing rating thresholds, ~~and~~ the implementation of new quality ~~measures.~~measures and the inclusion of a staff turnover percentage (over a 12-month period). Additionally, the Biden Administration announced a focus on implementing minimum staffing requirements and increased inspections as part of the nursing home reforms announced in the 2022 State of the Union Address. Although the American Rescue Plan Act did not allocate specific funds to SNF or ~~assisted living facility~~ALF providers, approximately $200 million was allocated to quality improvement organizations to provide infection control and vaccination uptake support to ~~SNFs.~~SNFs and $500 million has been allocated by the CDC to staffing, training and deployment of state-based nursing home and long-term care “strike teams” to assist facilities with known or suspected COVID-19 outbreaks.

On June 16, 2020, the U.S. House of Representatives Select Subcommittee on the Coronavirus Crisis announced the launch of an investigation into the COVID-19 response of nursing homes and the use of federal funds by nursing homes during the pandemic. The Select Subcommittee continued to be active throughout the remainder of 2020 and ~~the first quarter of~~ 2021. In March 2021, the Oversight Subcommittee of the House Ways and Means Committee held a hearing on examining the impact of private equity in the U.S. ~~health care~~healthcare system, including the impact on quality of care provided within the skilled nursing industry. The Biden Administration additionally announced in March 2022 a focus on reviewing private equity investment specifically in the skilled nursing sector. These ~~hearings,~~initiatives, as well as additional calls for government review of the role of private equity in the U.S. healthcare industry, could result in legislation imposing additional requirements on our operators.

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Reimbursement Generally:

~~Medicaid.~~Medicaid. The American Rescue Plan Act contains several provisions designed to increase coverage, expand benefits, and adjust federal financing for state Medicaid programs. For example, the American Rescue Plan Act increases the FMAP by 10 percentage points for state home and community-based services expenditures beginning April 1, 2021 through March 30, 2022 in an effort to assist seniors and people with disabilities to receive services safely in the community rather than in nursing homes and other congregate care settings. As a condition for receiving the FMAP increase, states must enhance, expand, or strengthen their Medicaid home and community-based services program during this period. These potential enhancements to Medicaid reimbursement funding may be offset in certain states by state budgetary concerns, the ability of the state to allocate matching funds and to comply with the new requirements, the potential for increased enrollment in Medicaid due to unemployment and declines in family incomes resulting from the COVID-19 pandemic, and the potential allocation of state Medicaid funds available for reimbursement away from SNFs in favor of home and community-based programs. These challenges may particularly impact us in states where we have a larger presence, including Florida and Texas. In Texas in particular, several of our operators have historically experienced lower operating margins on their SNFs, as compared to other states, as a result of lower Medicaid reimbursement rates and higher labor costs. Our operators in Texas may also be adversely impacted by the expected expiration ~~upon expiration of the federally declared public health emergency,~~ of an add-on by the state to the daily reimbursement rate for Medicaid patients ~~during~~that will terminate upon expiration of the ~~pandemic.~~federally declared public health emergency. In Florida, while added support to our operators during the pandemic has generally been limited, ~~and~~approximately $100 million in additional FMAP funds for nursing homes was approved by the State in November 2021, with the funds to be distributed through increased Medicaid payment rates over a three-month period. In addition, on April 6, 2022, the State of Florida enacted staffing reforms for SNFs that may provide additional flexibility to our operators in ~~the state may be additionally adversely impacted~~meeting minimum staffing requirements by ~~the scheduled expiration in December 2021 of a three-year temporary Medicaid reimbursement rate increase by the state.~~using supplemental staff. Since our operators’ profit margins on Medicaid patients are generally relatively low, more than modest reductions in Medicaid reimbursement or an increase in the percentage of Medicaid patients has in the past and may in the future adversely affect our operators’ results of operations and financial condition, which in turn could adversely impact us.

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~~Medicare.~~Medicare. On July 29, 2021, CMS issued a final rule regarding the government fiscal year 2022 Medicare payment rates and quality payment programs for SNFs, with aggregate Medicare Part A payments projected to increase by $410 million, or 1.2%, for fiscal year 2022 compared to fiscal year 2021. This estimated reimbursement increase is attributable to a 2.7% market basket increase factor less a 0.8 percentage point forecast error adjustment and a 0.7 percentage point productivity adjustment, and a $1.2 million decrease due to the proposed reduction to the SNF prospective payment system rates to account for the recent blood-clotting factors exclusion. The annual update is reduced by two percentage points for SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program. CMS has indicated that these impact figures did not incorporate the SNF Value-Based Program reductions that are estimated to be $184.25 million in fiscal year 2022. While Medicare reimbursement rate setting, which takes effect annually each October, has historically included forecasted inflationary adjustments, the degree to which those forecasts accurately reflect current inflation rates remains uncertain. Additionally, it remains uncertain whether these adjustments will ultimately be offset by non-inflationary factors, including any adjustments related to the impact of various payment models, such as those described below.

Payments to providers continue to be increasingly tied to quality and efficiency. The Patient Driven Payment Model (“PDPM”), which was designed by CMS to improve the incentives to treat the needs of the whole patient, became effective October 1, 2019. CMS intended PDPM to be revenue-neutral to operators, with future Medicare reimbursement reductions possible if that was not the case. In April 2022, CMS put out a proposal for comment, which included an adjustment to obtain that revenue neutrality as early as the 2023 rate setting period; however, that proposal may change significantly prior to adoption. Prior to COVID-19, we believed that certain of our operators could realize efficiencies and cost savings from increased concurrent and group therapy under PDPM and some had reported early positive results. Given the ongoing impacts of COVID-19, many operators are and may continue to be restricted from pursuing concurrent and group therapy and unable to realize these benefits. Additionally, our operators continue to adapt to the reimbursement changes and other payment reforms resulting from the ~~value based~~value-based purchasing programs applicable to SNFs under the 2014 Protecting Access to Medicare ~~Act, which became effective on October 1, 2018.~~Act. These reimbursement changes have had and may, together with any further reimbursement changes to PDPM or value-based purchasing models, in the future have an adverse effect on the operations and financial condition of some operators and could adversely impact the ability of operators to meet their obligations to us.

~~Table~~On May 27, 2020, CMS added physical therapy, occupational therapy and speech-language pathology to the list of ~~Contents~~approved telehealth Providers for the Medicare Part B programs provided by a SNF as a part of the COVID-19 1135 waiver provisions. The COVID-19 1135 waiver provisions also allow for the facility to bill an originating site fee to CMS for telehealth services provided to Medicare Part B beneficiary residents of the facility when the services are provided by a physician from an alternate location, effective March 6, 2020 through the end of the public health emergency.

Other Regulation:

Department of Justice and Other Enforcement ~~Actions:~~

Actions. SNFs are under intense scrutiny for ensuring the quality of care being rendered to residents and appropriate billing practices conducted by the facility. The Department of Justice (“DOJ”) has historically used the False Claims Act to civilly pursue nursing homes that bill the federal government for services not rendered or care that is grossly substandard. For example, California prosecutors announced in March 2021 an investigation into a skilled nursing provider that is affiliated with one of our operators, alleging the chain manipulated the submission of staffing level data in order to improve its Five Star rating. In 2020, the DOJ launched a National Nursing Home Initiative to coordinate and enhance civil and criminal enforcement actions against nursing homes with grossly substandard deficiencies. Such enforcement activities are unpredictable and may develop over lengthy periods of time. An adverse resolution of any of these enforcement activities or investigations incurred by our operators may involve injunctive relief and/or substantial monetary penalties, either or both of which could have a material adverse effect on their reputation, business, results of operations and cash flows.

~~Critical Accounting Policies~~37

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2022 and ~~Estimates~~Recent Highlights

~~Our financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. Our preparation~~Investments

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We acquired $108.5 million of real estate assets which included 30 facilities during the three months ended March 31, 2022. The initial cash yield (the initial annual contractual cash rent divided by the purchase price) on these asset acquisitions was between 8% and 9.5%.

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We invested $18.2 million under our construction-in-progress and capital improvement programs during the three months ended March 31, 2022.

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In the first quarter of 2022, we advanced $2.8 million under existing mortgage loans.

Dispositions and Impairments

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In the first quarter of 2022, we sold 27 facilities for approximately $332.6 million in net cash proceeds, recognizing a net gain of approximately $113.6 million. One of these facilities was sold to the joint venture that was consolidated in the first quarter of 2022. The proceeds and gain primarily relate to the sale of 22 facilities that were previously leased and operated by Gulf Coast Health Care LLC (together with certain affiliates “Gulf Coast”) and were included in assets held for sale as of December 31, 2021. The net cash proceeds from the sale, including certain costs accrued as of the end of the first quarter, were $304.0 million, and we recognized a net gain of approximately $113.5 million.

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In the first quarter of 2022, we recorded impairments on real estate properties of approximately $3.5 million on two facilities primarily as a result of reclassifying facilities to held for sale.

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In March 2022, we reclassified seven facilities leased to Guardian Healthcare (“Guardian”) to held for sale in connection with the planned restructuring. We also entered into agreements to sell seven of these held for facilities in March and April 2022 for estimated gross proceeds of $36.5 million. As of March 31, 2022, the remaining 19 facilities in held for sale are all under sales agreements which provide for estimated proceeds of $83.1 million, subject to terms and conditions of such agreements.

Financing Activities

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In January 2022, our Board authorized the repurchase of up to $500 million of our outstanding common stock, from time to time, through March 2025. During the first quarter of 2022, the Company repurchased 980,530 shares of our outstanding common stock at an average price of $27.84 per share. In April 2022, the Company repurchased 3.9 million of our outstanding common stock for $106.1 million.

Other Highlights

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During the first quarter of 2022, we made $25.8 million of new other investment loans with a weighted average interest rate of 8.5%. Of the $25.8 million, $25 million relates to a term loan entered into with LaVie Care Centers, LLC (“LaVie,” f/k/a Consulate Health Care) that bears interest at a fixed rate of 8.5% per annum and matures on March 31, 2032. During the first quarter of 2022, we also advanced $72.2 million under existing other investment loans. Of the $72.2 million, $47.4 million related to a revolving working capital loan which also had repayments of $48.1 million during the first quarter of 2022.

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In 2022, Omega was again included in the Bloomberg Gender-Equality Index (GEI) – one of only 418 companies worldwide, and fewer than 15 U.S. REITs, to be included in the 2022 index.

Table of the financial statements requires us to make estimates and assumptions about future events that affect the amounts reported in our financial statements and accompanying footnotes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determinationContents

Collectibility Issues

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During the first quarter of 2022, Agemo Holdings, LLC (“Agemo”) continued to not pay contractual rent and interest due under its lease and loan agreements. As Agemo was already placed on a cash basis of revenue recognition during the third quarter of 2020, no revenue was recorded during the three months ended March 31, 2022. In the first quarter of 2022, we recorded a provision for credit losses of $4.7 million related to the $25.0 million secured working capital loan as a result of a reduction in the fair value of the underlying collateral assets supporting the current carrying values.

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During the first quarter of 2022, Guardian Healthcare (“Guardian”) continued to not make contractual rent and interest payments under its lease and loan agreements. As Guardian was already placed on a cash basis of revenue recognition in the fourth quarter of 2021, no revenue was recorded during the three months ended March 31, 2022. We recorded a $5.1 million recovery for credit losses in the first quarter of 2022 on the Guardian mortgage loan in connection with a $21.7 million principal repayment on the loan from the proceeds of the sale of three of the mortgage facilities. We also transitioned or sold 10 facilities that were previously leased to Guardian in the first quarter of 2022 in connection with on-going restructuring activities. In April 2022, we agreed to a formal restructuring agreement, master lease amendment and mortgage loan amendment with Guardian. As part of the restructuring agreement and amendments, Omega and Guardian agreed to, among other things, allow for the deferral of up to $18.0 million of aggregate rent and interest, effective retrospectively, with repayment required after September 30, 2024 and to reduce the combined rent and mortgage interest to an aggregate $24.0 million following the completion of the sale of those seven facilities. Guardian made a partial payment in April 2022 after exhausting the maximum allowable deferral of $18.0 million under the restructuring agreement.

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From January through March 2022, an operator, representing 3.8% and 3.3%, respectively, of total revenue (excluded the impact of write-offs) for the three months ended March 31, 2022 and 2021, did not pay its contractual amounts due under its lease agreement. In March 2022, the lease with this operator was amended to allow for a short-term rent deferral for January through March 2022. This operator paid the contractual amount due under its lease agreement in April 2022. Omega holds a $1.0 million letter of credit and a $150 thousand security deposit from this operator. The operator remains current on its loan obligations, which are secured by a first lien on the accounts receivable of the operator.

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In March 2022, another operator representing 2.3% and 2.1%, respectively, of total revenue (excluding the impact of write-offs) for the three months ended March 31, 2022 and 2021, did not pay its contractual amounts due under its lease agreement. In April 2022, the lease with this operator was amended to allow the operator to apply its $2.0 million security deposit in order to pay March 2022 rent and to allow for a short-term rent deferral for April 2022, with regular rent payments required to resume in May 2022.

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During the first quarter of 2022, we allowed three other operators, each representing 2.5% and 2.7%, respectively, of total revenue (excluding the impact of write-offs) for the three months ended March 31, 2022 and 2021 to apply $1.3 million of their security deposits to pay rent in order to accommodate short term liquidity issues, with regular rent payments required to resume shortly thereafter. As of April 30, 2022, all of these operators are current on their lease obligations. These operators are required to begin replenishing their security deposits in 2023.

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During the first quarter of 2022, we wrote off straight-line rent receivable balances of $3.2 million through rental income as a result of transitioning six facilities to another existing operator.

Dividends

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On April 21, 2022, the Board of Directors declared a cash dividend for the quarter ended March 31, 2022 of $0.67 per share.

Table of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the consolidated financial statements. We have described our accounting policies in Note 2 – Summary of Significant Accounting Policies to our Annual Report on ~~Form 10-K~~Contents ~~for the year ended December 31, 2020. There have been no material changes to our critical accounting policies or estimates since December 31, 2020.~~

Results of Operations

The following is our discussion of the consolidated results of operations, financial position and liquidity and capital resources, which should be read in conjunction with our unaudited consolidated financial statements and accompanying notes.

Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~

Revenues

Our revenues for the three months ended ~~June 30, 2021~~March 31, 2022 totaled ~~$257.4~~$249.3 million, ~~an increase~~a decrease of approximately ~~$1.0~~$24.5 million over the same period in ~~2020. The $1.0~~2021. Included below is a description of the material changes in revenues for three months ended March 31, 2022 compared to the same period in 2021:

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Rental income was $216.9 million, a decrease of $20.9 million over the same period in 2021. The decrease was primarily the result of (i) a $17.4 million decrease relating to two cash basis operators, Agemo and Guardian, from which we received no rental payments and recorded no revenue for in the first quarter of 2022; (ii) a $7.3 million decrease as a result of recognizing no rental income associated with the 24 facilities previously leased to Gulf Coast in the first quarter of 2022, as 23 of the facilities were temporarily transitioned to another operator in December 2021 that was not required to pay contractual rent during the transition period, as a part of the chapter 11 bankruptcy process; and (iii) a $4.6 million decrease resulting from the acceleration of certain in-place lease liabilities due to facility transitions. The overall decrease in rental income was partially offset by (i) a $6.4 million increase due to additional rental income in the first quarter of 2022 from acquisitions and construction in progress facilities being placed in service and (ii) a net increase of $1.8 million due to lease extensions, facility transitions and sales.

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Mortgage interest income was $20.5 million, a decrease of $3.1 million over the same period in 2021. The decrease was primarily the result of recognizing no interest income in the first quarter of 2022 on the Guardian mortgage loan with $82.0 million of principal outstanding as of March 31, 2022. The loan was placed on non-accrual status in the fourth quarter of 2021, with all payments received (none in the first quarter of 2022) applied directly to principal under the cost recovery method.

Expenses

Our expenses for the three months ended March 31, 2022 totaled $167.7 million, ~~increase was primarily~~a decrease of approximately $23.4 million over the ~~result~~same period in 2021. Included below is a description of ~~(i) a $30.4 million increase~~the material changes in ~~rental income resulting from facility acquisitions, facilities placed~~expenses for three months ended March 31, 2022 compared to the same period in service, and facility transitions and (ii) a $3.2 million increase in mortgage interest income and other investment income primarily related to new and refinanced mortgages or notes and additional funding to existing operators offset by principal payments. These increases were partially offset by (i) a $21.5 million decrease in rental income primarily resulting from placing certain operators on a cash basis for revenue recognition, (ii) a $2.4 million decrease in rental income resulting from the acceleration of certain in-place lease liabilities, (iii) a $6.8 million decrease in rental income resulting from facility sales and facility transitions and (iv) a $1.6 million decrease in miscellaneous income which is primarily related to an operator’s late fees and reduced management fees.2021:

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Our depreciation and amortization expense was $82.8 million, a $2.1 million decrease over the same period in 2021. The decrease primarily relates to facility sales and facilities reclassified to assets held for sale, such as the 22 Gulf Coast facilities that were sold in the first quarter of 2022, partially offset by facility acquisitions and capital additions.

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Our impairment on real estate properties was $3.5 million, a decrease of $25.2 million over the same period in 2021. The 2022 impairments were recognized in connection with reclassifying two facilities to held for sale in the first quarter to reduce their net book value to the estimated fair value less costs to sell. The 2021 impairments related to four facilities, three of which were recognized in connection with reclassifying the facilities to assets held for sale.

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~~Expenses~~

Expenses for the three months ended June 30, 2021 totaled $175.1 million, an increase of approximately $7.1 million over the same period in 2020. The $7.1 million increase was primarily due to: (i) a $3.5 million increase in provision for credit losses primarily resulting from a $4.5 million reserve related to a term loan, (ii) a $3.6 million increase in interest expense primarily resulting from the issuance during the fourth quarter of 2020 of the $700 million of Senior Notes due 2031 and the issuance during the first quarter of 2021 of the $700 million of Senior Notes due 2033, partially offset by the retirement of term loans in the fourth quarter of 2020 and (iii) a $2.2 million increase in depreciation expense primarily resulting from facility acquisitions and capital additions, offset by facility sales and facilities reclassified to assets held for sale. These increases were partially offset by a $3.2 million decrease in impairment on real estate properties related to three facilities in the second quarter of 2021 compared to 10 facilities during the same period in 2020.

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Our provision for credit losses was $1.8 million, a $2.8 million increase over the same period in 2021. The increase was primarily as a result of additional reserves taken against a loan outstanding to Agemo (see Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Collectibility Issues), increases in loan balances and increases in loss rates in the first quarter of 2022 compared to the same period in 2021 partially offset by recoveries for cash collections and paydowns received on the Guardian mortgage (see Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Collectibility Issues).

Other Income (Expense)

For the three months ended ~~June 30, 2021,~~March 31, 2022, total other income was ~~$4.3~~$113.2 million, ~~a decrease~~an increase of approximately ~~$8.7~~$42.3 million over the same period in ~~2020.~~2021. The decrease was mainly due ~~to an $8.7 million decrease in gain on assets sold related to the sale of six facilities in the second quarter of 2021 compared to the sale of 15 facilities during the same period in 2020.~~

~~Six Months Ended June 30, 2021 and 2020~~

~~Revenues~~

Our revenues for the six months ended June 30, 2021 totaled $531.2 million, an increase of approximately $21.8 million over the same period in 2020. The $21.8 million increase was primarily the result of (i) a $54.7 million increase in rental income resulting from facility acquisitions, facilities placed in service, and facility transitions and (ii) an $8.2 million increase in mortgage interest income and other investment income primarily related to new and refinanced mortgages or notes and additional funding to existing operators. These increases were partially offset by (i) a $29.4 million decrease in rental income resulting from operators placed on a cash basis for revenue recognition, (ii) a $5.3 million decrease in rental income resulting from facility sales and facility transitions, and (iii) a $2.1 million decrease in miscellaneous income which is primarily related to an operator’s late fees and reduced management fees.

~~Expenses~~

~~Expenses for the six months ended June 30, 2021 totaled $366.3 million, an increase of approximately $36.0 million over the same period in 2020. The $36.0 million increase was primarily due~~ to: (i) a ~~$21.9~~$29.7 million ~~increase~~loss on debt extinguishment in impairment on real estate properties related to seven facilities compared to 13 facilities during the same period in 2020, (ii) a $6.9 million increase in interest expense primarily resulting from the issuance during the fourth quarter of 2020 of the $700 million of Senior Notes due 2031 and the issuance during the first quarter of 2021 of the $700 million of Senior Notes due 2033, partially offset by the retirement of term loans in the fourth quarter of 2020, (iii) a $4.4 million increase in depreciation expense primarily resulting from facility acquisitions and capital additions, offset by facility sales and facilities reclassified to assets held for sale (discussed in further detail below), (iv) a $1.8 million increase in acquisition, merger and transition related costs primarily resulting from the Daybreak transition, and (v) a $1.0 million increase in provision for credit losses primarily resulting from a $4.5 million reserve related to a term loan, increases in loan balances and increases in average time to maturity offset by decreases in loss rates compared to the same period in 2020.

~~Other Income (Expense)~~

For the six months ended June 30, 2021, total other income was $75.2 million, an increase of approximately $61.2 million over the same period in 2020. The increase was mainly due to a $89.8 million increase in gain on assets sold related to the sale of 30 facilities compared to the sale of 21 facilities during the same period in 2020 offset by a $30.1 million increase in loss on debt extinguishment primarily related to fees, premiums and expenses related to the purchase of $350 million of the 4.375% Senior Notes due 2023 during the first quarter of 2021 and (ii) $13.3 million increase in gain on assets sold related to the sale of 27 facilities in the first quarter of 2022 compared to the sale of 24 facilities during the same period in 2021.

~~Table of Contents~~

National Association of Real Estate Investment Trusts Funds From Operations

~~Our~~We use funds from operations (“Nareit FFO”) ~~for~~, a non-GAAP financial measure, as one of several criteria to measure the three months ended June 30, 2021 was $180.8 million compared to $186.5 million for the same period in 2020. Our Nareit FFO for the six months ended June 30, 2021 was $351.1 million compared to $367.5 million for the same period in 2020.

operating performance of our business. We calculate and report Nareit FFO in accordance with the definition of Funds from Operations and interpretive guidelines issued by the National Association of Real Estate Investment Trusts (“Nareit”)~~, and, consequently,~~. Nareit FFO is defined as net income (computed in accordance with GAAP), adjusted for the effects of asset dispositions and certain non-cash items, primarily depreciation and amortization and impairment on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures and changes in the fair value of warrants. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. Revenue recognized based on the application of security deposits and letters of credit or based on the ability to offset against other financial instruments is included within Nareit FFO. We believe that Nareit FFO is an important supplemental measure of our operating performance. ~~Because the historical cost accounting convention used for~~As real estate assets ~~requires depreciation~~ (except on land), are depreciated under GAAP, such accounting presentation implies that the value of real estate assets diminishes predictably over time, while real estate values instead have historically risen or fallen with market conditions. Nareit FFO was designed by the real estate industry to address this issue. Nareit FFO herein is not necessarily comparable to Nareit FFO of other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us.

~~Nareit FFO is a non-GAAP financial measure. We use Nareit FFO as one of several criteria to measure the operating performance of our business.~~ We further believe that by excluding the effect of depreciation, amortization, impairment on real estate assets and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, Nareit FFO can facilitate comparisons of operating performance between periods and between other REITs. We offer this measure to assist the users of our financial statements in evaluating our financial performance under GAAP, and Nareit FFO should not be considered a measure of liquidity, an alternative to net income or an indicator of any other performance measure determined in accordance with GAAP. Investors and potential investors in our securities should not rely on this measure as a substitute for any GAAP measure, including net income. ~~The following table presents our Nareit FFO results for the three and six months ended June 30, 2021 and 2020:~~

Three Months Ended

Six Months Ended

June 30,

June 30,


2021

2020

2021

2020


(in thousands)

Net income

$
86,863

$
101,960

$
251,229

$
194,239

Deduct gain from real estate dispositions

(4,123)

(12,843)

(104,465)

(14,681)

Add back loss (deduct gain) from real estate dispositions - unconsolidated joint ventures

177

(1,838)

(14,747)

(1,955)

82,917

87,279

132,017

177,603

Elimination of non-cash items included in net income:





Depreciation and amortization

85,799

83,586

170,648

166,229

Depreciation – unconsolidated joint ventures

3,067

3,550

6,428

7,182

Add back impairments on real estate properties

8,822

11,988

37,511

15,627

Add back impairments on real estate properties - unconsolidated joint ventures

252

—

4,430

—

(Deduct) add back unrealized (gain) loss on warrants

(29)

65

43

840

Nareit FFO

$
180,828

$
186,468

$
351,077

$
367,481

~~Table of Contents~~

~~Portfolio and Recent Developments~~

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

Number of

Total

Initial


Facilities

Country/

Investment

Annual

Period

SNF
ALF
Specialty

State

(in millions)

Cash Yield⁽¹⁾

Q1

—
17
7

AZ, CA, FL, IL, NJ, OR, PA, TN, TX, VA, WA

$
511.3
⁽²⁾
8.43
%
Q1

6
—
—

FL

83.1

9.25
%
Total

6
17
7



$
594.4

~~(1)~~

~~The initial annual cash yield reflects the initial cash rent divided by the purchase price.~~

~~(2)~~

~~On January 20, 2021, we acquired 24 facilities from Healthpeak Properties, Inc. The acquisition involved the assumption of an in-place master lease with Brookdale Senior Living Inc.~~

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

~~Other Recent Developments~~

On July 1, 2021, the Company financed six SNFs in Ohio and amended an existing $6.4 million mortgage to include the six facilities in a consolidated $72.4 million mortgage for eight Ohio facilities bearing interest at an initial rate of 10.5% per annum. In conjunction with this transaction, the Company also acquired three Maryland facilities that were previously subject to a mortgage issued by the Company bearing interest at 13.75% per annum with a principal balance of $36.0 million. The purchase price for these three facilities was equal to the remaining mortgage principal amount, and the three acquired Maryland facilities were subsequently leased back to the seller for a term expiring on December 31, 2032, assuming Omega exercises the options under the agreement. The base rent in the initial year is approximately $5.0 million and includes annual escalators of 2.5%. On July 1, 2021, the Company also entered into a $12.0 million revolving credit facility agreement with this operator for working capital expenses for the eight Ohio facilities discussed above with a maturity date of June 30, 2022. The credit facility bears interest at 10% per annum.

On July 14, 2021, the Company acquired two U.K. facilities for $9.5 million and entered into a lease with an existing operator with an initial term expiring on April 23, 2027. The base rent in the initial year is approximately $0.8 million and includes annual escalators of 2.5%.

~~Asset Sales, Impairments, Contractual Receivables and Other Receivables and Lease Inducements~~

~~Asset Sales~~

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

During the second quarter of 2021, we sold six facilities subject to operating leases for approximately $12.9 million in net cash proceeds, recognizing a net gain of approximately $4.1 million. As of June 30, 2021, we have nine facilities and one parcel of land, totaling $35.3 million, classified as assets held for sale. We expect to sell these facilities over the next twelve months.

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~~Impairments~~The following table presents our Nareit FFO results for the three months ended March 31, 2022 and 2021:


	Three Months Ended
	March 31,
	2022		2021

	(in thousands)
Net income	$	195,156	$	164,366
Deduct gain from real estate dispositions		(113,637)		(100,342)
Deduct gain from real estate dispositions - unconsolidated joint ventures		—		(14,924)
		81,519		49,100
Elimination of non-cash items included in net income:
Depreciation and amortization		82,752		84,849
Depreciation – unconsolidated joint ventures		2,896		3,361
Add back impairments on real estate properties		3,511		28,689
Add back impairments on real estate properties - unconsolidated joint ventures		—		4,178
Add back unrealized loss on warrants		—		72
Nareit FFO	$	170,678	$	170,249

~~During~~Liquidity and Capital Resources

Sources and Uses

Our primary sources of cash include rental income and interest receipts, existing availability under our revolving credit facility, proceeds from our DRSPP and the ~~first quarter of~~$1.0 billion 2021 ~~we recorded impairments on~~At-The-Market Offering Program (“2021 ATM Program”), facility sales, and proceeds from mortgage and other investment payoffs. We anticipate that these sources will be adequate to fund our cash flow needs through the next twelve months, which include common stock dividends, debt service payments (including principal and interest), real estate ~~properties~~investments (including facility acquisitions, capital improvement programs and other capital expenditures), mortgage and other investment loan advances and normal recurring G&A expenses (primarily consisting of ~~approximately $28.7 million on four facilities (three were subsequently reclassified~~employee payroll and benefits and expenses relating to assets held for sale in the first quarter of 2021). During the second quarter of 2021, we recorded impairments on real estate properties of approximately $8.8 million on three facilities (all three were subsequently reclassified to assets held for sale in the second quarter of 2021). Our recorded impairments were primarily the result of decisions to exit certain non-strategic facilities and/or operators. We reduced the net book value of the impaired facilities to their estimated fair values or, with respect to the facilities reclassified to held for sale, to their estimated fair values less costs to sell. To estimate the fair value of the facilities, we utilized a market approach which considered binding sale agreements (a Level 1 input) and/or non-binding offers from unrelated third parties ~~and/or broker quotes (a Level 3 input)~~for legal, consulting and audit services).

~~Contractual Receivables, Other Receivables~~Capital Structure

At March 31, 2022, we had total assets of $10.0 billion, total equity of $4.1 billion and ~~Lease Inducements~~total debt of $5.7 billion in our consolidated financial statements, with such debt representing approximately 57.9% of total capitalization.

~~A summary~~Debt

At March 31, 2022, the weighted-average annual interest rate of our ~~net receivables by type is~~debt was 3.96%. Additionally, as ~~follows:~~

June 30,

December 31,


2021

2020


(in thousands)

Contractual receivables – net

$
10,948

$
10,408

Effective yield interest receivables

$
11,554

$
12,195

Straight-line rent receivables

138,449

139,046

Lease inducements

79,506

83,425

Other receivables and lease inducements

$
229,509

$
234,666

~~During the first and second quarters~~ of ~~2021, we wrote-off approximately $2.7~~March 31, 2022, 92% of our debt with outstanding principal balances has fixed interest payments.

Two of our interest rate swaps that were entered into in May 2019 with aggregate notional amounts of $50.0 million ~~and $17.4 million, respectively, of straight-line rent receivables to rental income~~matured on February 10, 2022. These interest rate swap contracts were designated as ~~a result of transitioning one facility and placing two operators on a cash basis due~~hedges against our exposure to changes in interest payment cash flow fluctuations in the variable interest rates on the OP term loan.

As of March 31, 2022, we had long-term credit ratings of Baa3 from Moody’s and BBB- from S&P Global and Fitch. Credit ratings impact our ~~evaluation~~ability to access capital and directly impact our cost of capital as well. For example, our revolving credit facility accrues interest and fees at a rate per annum equal to LIBOR plus a margin that depends upon our credit rating. A downgrade in credit ratings by Moody’s and S&P Global may have a negative impact on the ~~collectibility of future rent payments due under the lease agreements.~~interest rates and fees for our revolving credit facility.

Based on our evaluation of the collectibility of future rent payments due under the lease agreements for the two operators discussed above, we do not believe it is probable that we will be able to collect substantially all rents due. These two operators generated approximately 3%Certain of our ~~total revenues (excluding the impact~~other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants. As of ~~straight-line rent receivable write-offs in 2021) for the six months ended June 30, 2021~~March 31, 2022 and ~~2020. For the six months ended June 30,~~December 31, 2021, we have been unable to collect approximately $3.5 million of contractual rents due from these operators. We have applied $2.5 million of one of the operator’s security deposit funds against their uncollected receivables, which represents one month of contractual rent under the lease agreement. We have subordinated debt to a third partywere in compliance with ~~an outstanding principal balance of $20 million that matures in December 2021 (see Note 13 – Borrowing Arrangements in~~all affirmative and negative covenants, including financial covenants, for our ~~Annual Report on~~ ~~Form 10-K~~ ~~for the year ended December 31, 2020). However, that indebtedness (interest~~secured and ~~under some circumstances, principal) is subject to offset if contractual rent is not paid when due by one of the subject operators.~~

~~Other Investments~~

~~Genesis~~

On March 6, 2018, we amended certain terms of our $48.0 million secured term loan with Genesis Healthcare, Inc. (“Genesis”). The $48.0 million term loan bears interest at a fixed rate of 14% per annum, of which 9% per annum is paid-in-kind and was initially scheduled to mature on July 29, 2020. The maturity date of this loan was extended during the first quarter of 2021 to January 1, 2024. This term loan (and the $16.0 million term loan discussed below) is secured by a first priority lien on and security interest in certain collateral of Genesis. As of June 30, 2021, approximately $68.2 million is outstanding on this term loan. unsecured borrowings.

Table of Contents

Also on March 6, 2018, we provided Genesis an additional $16.0 million secured term loan bearing interest at a fixed rate of 10% per annum, of which 5% per annum is paid-in-kind, and was initially scheduled to mature on July 29, 2020. The maturity date of this loan was extended during the first quarter of 2021 to January 1, 2024. As of June 30, 2021, approximately $18.9 million is outstanding on this term loan.

~~Daybreak~~

During the first quarter of 2021, we transitioned 14 Daybreak Ventures, LLC (“Daybreak”) facilities to existing operators and sold two Daybreak facilities. During the second quarter of 2021, we sold the two remaining Daybreak facilities. The total annual rent or rent equivalents achieved through transitioning the Daybreak portfolio equal $16.6 million. On April 6, 2021, we terminated the Daybreak master lease and exited that relationship.

~~We continue to closely monitor the performance of all of our operators, as well as industry trends and developments generally.~~

~~Liquidity and Capital Resources~~

~~At June 30, 2021, we had total assets of $9.8 billion, total equity of $4.2 billion and debt of $5.3 billion, representing approximately 55.9% of total capitalization.~~

~~Financing Activities and Borrowing Arrangements~~

~~Revolving Credit Facility~~

The Revolving Credit Facility bears interest at LIBOR (or in the case of loans denominated in GBP, the Sterling overnight index average reference rate plus an adjustment of 0.1193% per annum) plus an applicable percentage (with a range of 95 to 185 basis points) based on our credit ratings. The Revolving Credit Facility matures on April 30, 2025, subject to Omega’s option to extend such maturity date for two six-month periods. The Revolving Credit Facility may be drawn in Euros, GBP, Canadian Dollars (collectively, “Alternative Currencies”) or U.S. Dollars (“USD”), with a $1.15 billion tranche available in USD and a $300 million tranche available in Alternative Currencies. For purposes of the Revolving Credit Facility, references to LIBOR include the Canadian dealer offered rates for amounts offered in Canadian Dollars and any other Alternative Currency rate approved in accordance with the terms of the 2021 Omega Credit Agreement for amounts offered in any other non-London interbank offered rate quoted currency, as applicable.

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

~~OP Term Loan~~

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

~~Table of Contents~~

~~$700 Million 3.250% Senior Notes due 2033~~

In March 2021, we issued $700 million aggregate principal amount of our 3.250% Senior Notes due 2033 (the “2033 Senior Notes”). The 2033 Senior Notes mature on April 15, 2033. The 2033 Senior Notes were sold at an issue price of 99.304% of their face value before the underwriters’ discount. We used the proceeds from this offering to pay down outstanding borrowings on the Revolving Line of Credit, repay the Sterling term loan, and fund the tender offer to purchase $350 million of the 4.375% Senior Notes due 2023 and the payment of accrued interest and related fees, premiums and expenses. In connection with this transaction, we recorded approximately $29.7 million in related fees, premiums, and expenses which were recorded as Loss on debt extinguishment in our Consolidated Statement of Operations.

~~$400 Million Forward Starting Swaps~~

On March 27, 2020, we entered into five forward starting swaps totaling $400 million. We designated the forward starting swaps as cash flow hedges of interest rate risk associated with interest payments on a forecasted issuance of fixed rate long-term debt, initially expected to occur within the next five years. The swaps are effective on August 1, 2023 and expire on August 1, 2033 and were issued at a fixed rate of approximately 0.8675%. In March 2021, in conjunction with the issuance of $700 million aggregate principal amount of our 3.25% Senior Notes due 2033, we discontinued hedge accounting for these five forward starting swaps. Amounts reported in Accumulated Other Comprehensive Income (“AOCI”) related to these discontinued cash flow hedging relationships will be reclassified to interest expense over a ten year term. Simultaneously, we re-designated these swaps in new cash flow hedging relationships of interest rate risk associated with interest payments on another forecasted issuance of long-term debt. We are hedging our exposure to the variability in future cash flows for forecasted transactions over a maximum period of 46 months (excluding forecasted transactions related to the payment of variable interest on existing financial instruments).

~~£174 Million Foreign Exchange Forward Starting Swaps~~

From the issuance date of our GBP borrowings through the prepayment date in March 2021, we used a nonderivative, GBP-denominated term loan and line of credit totaling £174 million to hedge a portion of our net investments in foreign operations. During March 2021 and concurrent with the settlement of our GBP-denominated term loan and repayment of our GBP-denominated borrowings under our line of credit, we entered into four foreign currency forwards that mature on March 8, 2024 to hedge a portion of our net investments in foreign operations, effectively replacing the terminated net investment hedge. For these derivatives that are designated and qualify as net investment hedges, the gain or loss on the derivative is reported in AOCI as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.

Supplemental Guarantor Information

Parent has issued approximately $4.9 billion aggregate principal of senior notes outstanding at ~~June 30, 2021~~March 31, 2022 that were registered under the Securities Act of 1933, as amended. The senior notes are guaranteed by Omega OP.

The SEC adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities, such as our senior notes. As a result of these amendments, registrants are permitted to provide certain alternative financial and non-financial disclosures, to the extent material, in lieu of separate financial statements for subsidiary issuers and guarantors of registered debt securities. Accordingly, separate consolidated financial statements of Omega OP have not been presented. Parent and Omega OP, on a combined basis, have no material assets, liabilities or operations other than financing activities (including borrowings under the outstanding senior notes, the ~~Revolving Credit Facility~~revolving credit facility and the OP ~~Term Loan)~~term loan) and their investments in non-guarantor subsidiaries.

~~Table of Contents~~

Omega OP is currently the sole guarantor of our senior notes. The guarantees by Omega OP of our senior notes are full and unconditional and joint and several with respect to the payment of the principal and premium and interest on our senior notes. The guarantees of Omega OP are senior unsecured obligations of Omega OP that rank equal with all existing and future senior debt of Omega OP and are senior to all subordinated debt. However, the guarantees are effectively subordinated to any secured debt of Omega OP. As of ~~June 30, 2021,~~March 31, 2022, there were no significant restrictions on the ability of Omega OP to make distributions to Omega.

~~At-The-Market Offering Programs~~Equity

~~During the third quarter of 2015, Omega entered into Equity Distribution Agreements with several financial institutions to sell $500.0~~At March 31, 2022, we had approximately 238.2 million of shares of common stock ~~from time to time through an “at-the-market” (“ATM”) offering program (the “2015 ATM Program”).~~

~~During the second quarter~~outstanding, and our shares had a market value of ~~2021, the we terminated the 2015 ATM Program and entered into~~$7.4 billion. The following is a ~~new ATM Equity Offering Sales Agreement pursuant to which shares~~summary of common stock having an aggregate gross sales price of up to $1.0 billion (the “2021 ATM Program”) may be sold from time to time (i) by Omega through several financial institutions acting as a sales agent or directly to the financial institutions as principals, or (ii) by several financial institutions acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement. Under the 2021 ATM Program, compensation for sales of the shares will not exceed 2% of the gross sales price per share for shares sold through each financial institution. The use of forward salesactivity under the 2021 ATM Program generally allows Omega to lock in a price on the sale of shares of common stock when sold by the forward sellers but defer receiving the net proceeds from such sales until the shares of our ~~common stock are issued at settlement on a later date. We did not utilize the forward provisions under the 2021 ATM Program~~equity programs during the three months ended ~~June 30, 2021.~~March 31, 2022:

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

●

~~(1)~~●

~~Represents~~We did not issue any shares of common stock under our 2021 ATM Program during the ~~average price per share after commissions.~~three months ended March 31, 2022.

~~Dividend Reinvestment and Common Stock Purchase Plan~~

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

~~Table of Contents~~

~~Commitments~~

We have committed to fund the construction of new leased and mortgaged facilities, capital improvements and other commitments. We expect the funding of these commitments to be completed over the next several years. Our remaining commitments at June 30, 2021, are outlined in the table below (in thousands):

Total commitments

$
539,528

Amounts funded to date⁽¹⁾

(415,281)

Remaining commitments ⁽²⁾

$
124,247

~~(1)~~

~~Includes finance costs.~~We did not utilize the forward provisions under the 2021 ATM Program during the three months ended March 31, 2022. We have $929.9 million of sales remaining under the 2021 ATM Program as of March 31, 2022.

~~(2)~~

●

~~This amount excludes our remaining commitments to fund~~We issued 79.9 thousand shares of common stock under ~~our other investments~~DRSPP during the three months ended March 31, 2022. Aggregate gross proceeds from these sales were $2.3 million during the first quarter of ~~approximately $67.6 million.~~ 2022.

Dividends

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

Table of Contents

For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we paid dividends of approximately ~~$316.5~~$160.6 million to our common stockholders. On February ~~16, 2021,~~15, 2022, we paid dividends of $0.67 per outstanding common share to the common stockholders of record as of the close of business on February ~~8, 2021. On May 17,~~7, 2022.

Material Cash Requirements

During the three months ended March 31, 2022, there were no significant changes to our material cash requirements from those disclosed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report.

As of March 31, 2022, we ~~paid dividends~~had $220.9 million of ~~$0.67 per outstanding common share~~commitments to fund the construction of new leased and mortgaged facilities, capital improvements and other commitments. Additionally, we have commitments to fund $41.2 million of advancements under existing other investment loans. These commitments are expected to be funded over the next several years and are dependent upon the operators’ election to use the commitments.

Other Arrangements

We own interests in certain unconsolidated joint ventures as described in Note 9 to the ~~common stockholders~~Consolidated Financial Statements – Investments in Joint Ventures. Our risk of ~~record as of the close of business on May 3, 2021.~~

~~Liquidity~~

~~We believe~~loss is generally limited to our liquidity and various sources of available capital, including cash from operations, our existing availability under our credit facilities, existing equity sales programs, facility sales and expected proceeds from mortgage and other investment ~~payoffs are adequate to finance operations, meet recurring debt service requirements and fund future investments through the next twelve months.~~

We regularly review our liquidity needs, the adequacy of cash flow from operations, and other expected liquidity sources to meet these needs. We believe our principal short-term liquidity needs are to fund:

●

~~normal recurring expenses;~~

●

~~debt service payments;~~

●

~~capital improvement programs;~~

●

~~common stock dividends; and~~

●

~~growth through acquisitions of additional properties.~~

~~Table of Contents~~

The primary source of liquidity is our cash flows from operations. Operating cash flows have historically been determined by: (i) the number of facilities we lease or have mortgages on; (ii) rental and mortgage rates; (iii) our debt service obligations; (iv) general and administrative expenses and (v) our operators’ ability to pay amounts owed. The timing, source and amount of cash flows provided by or used in financing activities and in investing activities are sensitive to the capital markets environment, especially to changes in interest rates. Changes in the ~~capital markets environment may impact~~joint venture and any outstanding loans receivable. We use derivative instruments to hedge interest rate and foreign currency exchange rate exposure as discussed in Note 15 – Derivatives and Hedging in our Annual Report on Form 10-K for the ~~availability of cost-effective capital and affect our plans for acquisition and disposition activity.~~year ended December 31, 2021.

Cash Flow Summary

Cash, cash equivalents and restricted cash totaled ~~$104.6~~$494.8 million as of ~~June 30, 2021, a decrease~~March 31, 2022, an increase of ~~$63.0~~$470.4 million as compared to the balance at December 31, ~~2020.~~2021. The following is a discussion of changes in cash, cash equivalents and restricted cash due to operating, investing and financing activities, which are presented in our Consolidated Statements of Cash Flows.

Operating Activities – Operating activities generated ~~$378.3~~$132.2 million of net cash flow for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, as compared to ~~$329.4~~$176.0 million for the same period in ~~2020, an increase~~2021, a decrease of ~~$48.9~~$43.8 million, which is primarily driven by ~~an increase~~a decrease of ~~$45.9~~$30.2 million of net income, adjusted for non-cash items, primarily due to a year over year reduction in rental income and mortgage revenue ~~growth~~related to three operators, as ~~a result~~discussed in our material changes analysis under Results of ~~facility acquisitions and transitions, investments in mortgages and other investments.~~Operations above. A ~~$3.0~~$13.6 million change in the net movements of the operating assets and liabilities, primarily driven by ~~a reduction~~an increase in ~~lease inducements provided to our operators,~~receivables, also contributed to the overall ~~increase~~decrease in cash provided by operating activities.

Investing Activities – Net cash flow from investing activities was an ~~outflow~~inflow of ~~$387.1~~$177.3 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, as compared to an outflow of ~~$96.7~~$396.3 million for the same period in ~~2020.~~2021. The ~~$290.4~~$573.6 million change in cash flow from investing activities related primarily to (i) a ~~$579.0~~$481.3 million ~~increase~~decrease in real estate acquisitions ~~and~~driven by the acquisition of 24 senior living facilities from Healthpeak Properties, Inc. for $511.3 million in the first quarter of 2021, (ii) a ~~$8.5 million increase in investments in unconsolidated joint ventures, offset by (i) a $145.1~~$144.3 million increase in proceeds from the sales of real estate investments ~~(ii)~~largely driven by the sale of 22 facilities previously leased to Gulf Coast for net proceeds of $310.3 million in the first quarter of 2022, (iii) a ~~$79.6~~$23.8 million increase in ~~mortgages~~mortgage collections, net of placements driven by a $21.7 million partial principal paydown on the Guardian mortgage loan in the first quarter of 2022 and (iv) a $10.4 million decrease in investments in unconsolidated joint ventures driven by our $10.3 million investment in Second Spring II LLC in the first quarter of 2021, offset by (i) a $68.3 million increase in new other investments, net of other investments proceeds driven by the new $25.0 million term loan to LaVie and additional draws on existing loans, (ii) a $7.4 million decrease in distributions from unconsolidated joint venture in excess of earnings primarily related to the Second Spring Healthcare Investments joint venture due to significant facility sales in the first quarter of 2021, (iii) a ~~$38.5~~$4.4 million ~~decrease~~increase in investment in construction in progress and capital expenditures, (iv) a ~~$27.4~~$3.0 million ~~increase in other investment proceeds, net of new investments, (v) a $3.1 million increase~~decrease in receipts from insurance proceeds and ~~(vi)~~(v) a $2.5 million ~~refund of an~~decrease in acquisition related ~~deposit in the first quarter~~deposits.

Table of ~~2021.~~Contents

Financing Activities – Net cash flow from financing activities was an ~~outflow~~inflow of ~~$54.3~~$161.2 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, as compared to an ~~outflow~~inflow of ~~$224.1~~$108.6 million for the same period in ~~2020.~~2021. The ~~$169.8~~$52.6 million change in cash ~~provided by~~flow from financing activities was primarily related to (i) a $148.9 million increase in cash proceeds from the issuance of common stock in 2021, as compared to the same period in 2020, (ii) a $73.5 million increase in net proceeds from our dividend reinvestment plan in 2021, as compared to the same period in 2020 and (iii) $7.8$115.9 million increase in proceeds from other long-term borrowings, net of repayments ~~offset by (i)~~as we had increased borrowings on our revolving credit facility in connection with funding acquisitions and loans, (ii) a ~~$48.1~~$33.8 million ~~increase~~decrease in payment of financing related costs due to fees and premiums paid in the first quarter of 2021 related to the early redemption of $350 million of principal of the 4.375% senior notes due 2023 and (iii) a $4.6 million decrease in distributions to Omega OP Unit holders. The overall increase in financing inflows was partially offset by (i) a $72.0 million decrease in cash proceeds from the issuance of common stock in 2022 due to decreased issuances under our DRSPP and our ATM Programs, as compared to the same period in 2021, (ii) $27.3 million of repurchases of shares of common stock in the first quarter of 2022 and (iii) a ~~$9.4~~$2.3 million increase in dividends paid.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in the U.S. Our preparation of the financial statements requires us to make estimates and assumptions about future events that affect the amounts reported in our financial statements and accompanying footnotes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the consolidated financial statements. We have described our accounting policies in Note 2 – Summary of Significant Accounting Policies to our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to our critical accounting policies or estimates since December 31, 2021.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

During the quarter ended ~~June 30, 2021,~~March 31, 2022, there were no material changes in our primary market risk exposures or how those exposures are managed from the information disclosed under Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4 – Controls and Procedures

Disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

~~Table of Contents~~

In connection with the preparation of our Form 10-Q as of and for the quarter ended ~~June 30, 2021,~~March 31, 2022, management evaluated the effectiveness of the design and operation of the disclosure controls and procedures of the Company as of ~~June 30, 2021.~~March 31, 2022. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures of the Company were effective at a reasonable assurance level as of ~~June 30, 2021.~~March 31, 2022.

Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended ~~June 30, 2021~~March 31, 2022 identified in connection with the evaluation of our disclosure controls and procedures described above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

See Note 1718 – Commitments and Contingencies into the Consolidated Financial Statements - Part I, Item 1 hereto, which is hereby incorporated by reference in response to this ~~item.~~Item.

Item 1A – Risk Factors

In addition to the risk factors previously disclosed in Item 1A contained in Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, investors should carefully consider the following additional risk factor, which should be read in conjunction with the risk factors set forth in such Form 10-K and Form 10-Q and the other information contained in this report and our other filings with the Securities and Exchange Commission.

The COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations, cash flows and financial condition.

The COVID-19 pandemic has continued to significantly and adversely ~~impacted,~~impact, and may continue to so impact SNFs and ~~long term~~long-term care providers ~~generally, with~~due to higher rates of virus transmission and fatality among the elderly and frail populations these facilities serve. As a result, many of our operators have been, and may continue to be, significantly impacted by the pandemic. ~~In June 2021, we were informed by an operator, which represents approximately 3%~~See Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview.

Continued uncertainty exists relating to our ~~revenue for the six months ended June 30, 2021 and 2020 (excluding the impact of the straight-line write-offs in 2021), that it would be unable~~other operators’ ability to ~~pay rent~~meet their payments obligations generally or meet their payment obligations to us, ~~in the foreseeable future. As of June 30, 2021, we have been unable~~including due to collect approximately $2.5 million of contractual rents due from this operator, which represents one month of contractual rent under the lease agreement, and have applied $2.5 million of the operator’s security deposit funds against their uncollected receivables. As such, we placed the operator on a cash basis for revenue recognition based on our evaluation of the collectibility of future rent payments due under its lease agreement, and in connection with this, we wrote off approximately $17.4 million of straight-line receivables to rental income during the quarter. We believe this operator was impacted by, among other things, reduced revenue as a result of lower occupancy and increased expenses, both as a result of the COVID-19 pandemic. Continuedcontinued uncertainty regarding the availability of sufficient government support, the persistence of staffing shortages that have impacted, and may continue to impact, our operators’ occupancy levels and profitability, the impact of governmental vaccine mandates for staff on ongoing staffing shortages, and other factors that may impact virus transmission in our facilities, including the impact of genetic mutations of the virus into new variants, as well as the commencement in April 2021 for many of our operators of the repayment of accelerated payments of Medicare funds that were previously received as Advanced Medicare payments in 2020, ~~could result~~and the commencement in ~~other~~December 2021 of repayment of deferred FICA obligations. To the extent our operators ~~having difficulty meeting their payments obligations generally or meeting~~are unable to meet their payment obligations, ~~to us. In the latter such event,~~ we may record additional impairment charges with respect to straight-line rent receivables associated with any such operator or with respect to outstanding loans and our financial condition could be adversely impacted. See “Our assets, including our real estate and loans, are subject to impairment charges, and our valuation and reserve estimates are based on assumptions and may be subject to adjustment” in Item 1A contained in Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

~~Table of Contents~~

Our operators have been, and continue to be, impacted by the pandemic in numerous ways. In addition to experiencing outbreaks of positive cases and deaths of residents and employees during the pandemic, our operators have been required to, and continue to, adapt their operations rapidly throughout the pandemic to manage the spread of the COVID-19 virus as well as the implementation of new treatments and vaccines, and to implement new requirements relating to infection control, staffing levels, PPE, quality of care, visitation protocols, and reporting, among other regulations, throughout the pandemic while facing staffing shortages that have accelerated during ~~from~~ the pandemic and that may impede the delivery of care. ItSignificant uncertainty remains regarding the impact of vaccine mandates for SNF and healthcare workers on ongoing staffing shortages in our facilities, which have caused some operators to limit admissions. In addition, it remains uncertain ~~when and~~ to what extent vaccination programs for COVID-19, which have been implemented in most of our facilities, will continue to mitigate the effects of COVID-19 in our facilities, or how effective existing vaccines and booster doses will be against the variants of the COVID-19 virus; the impact of these programs will depend in part on the continued speed, distribution, efficacy and delivery of the vaccine and booster doses in our facilities, compliance with staff vaccination requirements as well as participation levels in vaccination programs among the residents and employees of our operators. Our operators have continued to report considerable variation in participation levels among both employees and residents, which we believe may change over time with additional vaccination education ~~efforts.~~efforts for residents and implementation of vaccine mandates for staff.

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In addition to the risks associated with managing the spread of the virus, delivery of the vaccines and care of their patients and residents, many of our operators reported incurring, and may continue to incur, significant cost increases as a result of the COVID-19 pandemic, with dramatic increases for facilities with positive cases. We believe these increases primarily stem from elevated labor costs, in part as a result of staffing shortages, including the increased use of overtime and bonus pay and reliance on agency staffing, as well as a significant increase in both the cost and usage of PPE, testing equipment and processes and supplies, as well as implementation of new infection control protocols and delivery of the vaccine. In addition, many of our operators have ~~reported experiencing~~experienced declines in occupancy levels as a result of the pandemic. We believe these declines may be in part due to staffing shortages, which in some cases have required operators to limit admissions, as well as COVID-19-induced fatalities at the facilities, the delay of SNF placement and/or utilization of alternative care settings for those with lower level of care needs, the suspension or postponement of elective hospital procedures, fewer discharges from hospitals to SNFs and higher hospital readmittances from SNFs. We continue to monitor the impact of occupancy ~~declines~~levels at many of our operators, and it remains uncertain whether and when demand and occupancy levels will return to pre-COVID-19 levels.

~~While substantial government support, primarily through the federal CARES Act in the U.S. and distribution of PPE and testing equipment by federal and state governments, has been allocated to~~Federal relief efforts for SNFs and ~~to a lesser extent to~~ ALFs have been limited since 2021 as have been relief efforts in certain states, and further government support will likely be needed to continue to offset these ~~impacts and it~~impacts. It is unclear whether and to what extent such government support, which may take the form of stimulus or reimbursement rate adjustments to reflect sustained cost changes experienced by operators, has been and will continue to be sufficient and timely to offset these impacts. In particular, it remains unclear ~~as to~~ whether ~~unallocated funds under the Provider Relief Fund~~relief will be distributed to our operators in any meaningful way ~~whether additional funds will be added to the Provider Relief Fund or otherwise allocated to health care operators or our operators,~~ or whether additional Medicaid or Medicare funds ~~under the federal American Rescue Plan Act~~ will ultimately support reimbursement to our operators. Further, to the extent the impacts of the pandemic continue or accelerate and are not offset by continued government relief that is sufficient and timely, we anticipate that the operating results of certain of our operators would be materially and adversely affected, some may be unwilling or unable to pay their contractual obligations to us in full or on a timely basis and we may be unable to restructure such obligations on terms as favorable to us as those currently in place. Even if operators are able to avail themselves of government relief to offset some of these costs, they may face challenges in complying with the terms and conditions of government support and may face longer-term adverse impacts to their personnel and business operations from the COVID-19 pandemic, including potential patient litigation and decreased demand for their services, loss of business due to an interruption in their operations, workforce challenges, new regulatory restrictions, or other liabilities related to gathering restrictions, quarantines, reopening plans, vaccine distribution or delivery, spread of infection or other related factors.

Numerous state and local governments and the federal government have initiated efforts that may also affect landlords’ and/or mortgagees’ ability to collect payments due or enforce remedies for the failure to pay amounts due. Additionally, a ~~growing~~ number of professional liability and employment related claims have been filed or are threatened to be filed against long-term care providers related to the COVID-19 pandemic. While such claims may be subject to liability protection provisions within various state executive orders or legislation and/or federal legislation, an adverse resolution of any of legal proceeding or investigations against our operators may involve injunctive relief and/or substantial monetary penalties, either or both of which could have a material adverse effect on our reputation, business, results of operations and cash flows.

~~Table of Contents~~

The COVID-19 pandemic has from time to time also caused, and may continue to cause, severe economic, market and other disruptions worldwide. The pandemic has led governments and other authorities in the U.S., U.K. and around the world to impose measures intended to control its spread, including but not limited to, restrictions on freedom of movement and business operations which may remain in place or be reinstated along with continuing uncertainty around the potential duration of the pandemic. We cannot assure you that conditions in the bank lending, capital and other financial markets will not deteriorate or fluctuate as a result of the COVID-19 pandemic, or that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancing. In addition, our employees may be impacted directly or indirectly by the pandemic and we may be required to make changes to our internal controls as a result of changes in our business processes or personnel; any such changes may increase our operational and financial reporting risks.

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The extent of the COVID-19 pandemic’s effect on our and our operators’ operational and financial performance will depend on future developments, including the ability to control the spread of the outbreak generally and in our facilities, and the delivery and efficacy of and participation in vaccination programs and other treatments for COVID-19, government funds and other support for the senior care sector and the efficacy of other policies and measures that may mitigate the impact of the pandemic, as well as the future demand for needs-based skilled nursing care and senior living facilities, all of which are uncertain and difficult to predict. Due to these uncertainties, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material.

Inflation could adversely impact our operators and our results of operations.

Inflation, both real or anticipated as well as any resulting governmental policies, could adversely affect the economy and the costs of labor, goods and services to our operators or borrowers. Our long-term leases and loans typically contain provisions such as rent and interest escalators that are designed to mitigate the adverse impact of inflation on Omega’s results of operations. However, these provisions may have limited effectiveness at mitigating the risk of high levels of inflation due to contractual limits on escalation which exist on substantially all of our escalation provisions. Our leases are triple-net and typically require the operator to pay all property operating expenses and, therefore, increases in property-level expenses at our leased properties generally do not directly affect us. However, increased operating costs resulting from inflation could have an adverse impact on our operators and borrowers if increases in their operating expenses exceed increases in their revenue, which may adversely affect our operators’ or borrowers’ ability to pay rent or other obligations owed to us.

An increase in our operators’ expenses and a failure of their revenues to increase at least with inflation could adversely impact our operators’ and our financial condition and our results of operations.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter ended ~~June 30, 2021,~~March 31, 2022, Omega ~~issued an aggregate of 7,539~~did not issue any shares of Omega common stock in exchange for ~~an equivalent number of~~ Omega OP Units tendered to Omega OP for redemption in accordance with the provisions of its partnership agreement. The Company issued these shares of Omega common stock in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, based upon factual representations received from the limited partners who received the Omega common stock.Units.

Issuer Purchases of Equity Securities

On January 27, 2022, the Company authorized the repurchase of up to $500 million of our outstanding common stock from time to time through March 2025. The Company is authorized to repurchase shares of its common stock in open market and privately negotiated transactions or in any other manner as determined by the Company’s management and in accordance with applicable law. The timing and amount of stock repurchases will be determined, in management’s discretion, based on a variety of factors, including but not limited to market conditions, other capital management needs and opportunities, and corporate and regulatory considerations. The Company has no obligation to repurchase any amount of its common stock, and such repurchases, if any, may be discontinued at any time.

During the ~~second~~first quarter of ~~2021,~~2022, we ~~did not purchase any~~repurchased shares of our outstanding common ~~stock.~~

~~Item 5 – Other Information~~

~~On July 22, 2021, the Board of Directors revised the Company’s compensation program for non-employee directors to consist of the following components effective~~stock as ~~of June 4, 2021:~~follows:

●

annual cash retainer of $75,000 payable in quarterly installments of $18,750 on or about August 15, November 15, February 15 and May 15; provided, however, that each director may elect each year to receive the retainer in common stock (or at the director’s option, a number of profits interest units with equivalent value) to be included in the annual equity grant described below;

●

annual grant as of the date of the annual meeting of a number of shares of restricted common stock determined by dividing $150,000 by the fair market value per share of common stock on the date of grant (or at the director’s option, a number of profits interest units with equivalent value), vesting based on the director’s continuing service until the date of the next succeeding annual meeting of stockholders (subject to 100% acceleration upon death, disability, change in control or any other event that in the discretion of the Compensation Committee of the Board of Directors is deemed to be an appropriate basis for acceleration);

●

~~Chair of the Board of Directors: $120,000 annual payment, of which 50% will be added to, and treated as part of, the annual equity grant;~~

~~Table of Contents~~

●

~~Additional annual cash payments for committee service:~~

Committee
Chair
Member
Audit Committee
$25,000
$12,500
Compensation Committee
$20,000
$9,000
Nominating and Corporate Governance Committee
$20,000
$7,500
Investment Committee
$20,000
$7,500

●

~~$1,500 per meeting for attendance at each meeting of the Board of Directors or committee of the Board of Directors in excess of the following number of meetings during the year of a director’s term:~~


~~Board/Committee~~	~~Number of Meetings~~
~~Board of Directors~~	10
~~Audit Committee~~	6
~~Compensation Committee~~	6
~~Nominating and Corporate Governance Committee~~	5
~~Investment Committee~~	5

The non-employee directors may elect to have all annual cash retainers (i.e., the annual cash retainer paid quarterly, the Chair of the Board of Directors cash fee, the committee chair fee and the committee member fees described above): (a) paid in cash, (b) added to the annual equity grant that is normally subject to one-year vesting, or (c) deferred and paid in cash in the future.


					Maximum
				Total Number of	Number (or
				Shares	Approximate
				Purchased as	Dollar Value) of
				Part of Publicly	Shares that may
	Total Number			Announced	yet be Purchased
	of Shares	Average Price		Plans or	Under these Plans
Period	Purchased	Paid per Share		Programs	or Programs
January 1, 2022 to January 31, 2022	—	$	—	—	$	—
February 1, 2022 to February 28, 2022	—		—	—		—
March 1, 2022 to March 31, 2022	980,530		27.84	980,530		472,698,431
Total	980,530	$	27.84	980,530	$	472,698,431

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Item 6–Exhibits


Exhibit No.
~~3.1~~		~~Amended and Restated Bylaws of Omega Healthcare Investors, Inc. as of April 8, 2021 (incorporated by reference to Exhibit 3.1 on the Company’s Form 8-K, filed on April 14, 2021).~~
~~10.1~~		Credit Agreement, dated as of April 30, 2021, among Omega Healthcare Investors, Inc., certain subsidiaries of Omega Healthcare Investors, Inc. identified therein as guarantors, the lenders named therein and Bank of America, N.A., as administrative agent for such lenders (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 4, 2021).
~~10.2~~		Credit Agreement, dated as of April 30, 2021, among OHI Healthcare Properties Limited Partnership, the lenders named therein and Bank of America, N.A., as administrative agent for such lenders (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on May 4, 2021).
~~22.1~~		~~Subsidiary guarantors of guaranteed securities (incorporated by reference to Exhibit 22.1 to the Company’s Form 10-Q for the quarter ended March 31, 2021).~~
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Omega Healthcare Investors, Inc.*
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Omega Healthcare Investors, Inc.*
32.1		Section 1350 Certification of the Chief Executive Officer of Omega Healthcare Investors, Inc.*
32.2		Section 1350 Certification of the Chief Financial Officer of Omega Healthcare Investors, Inc.*
101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2021,~~March 31, 2022, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104		Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101).

* Exhibits that are filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

OMEGA HEALTHCARE INVESTORS, INC.

Registrant

Date: ~~August~~May 3, ~~2021~~2022	By:	/S/ C. TAYLOR PICKETT
		C. Taylor Pickett
		Chief Executive Officer

Date: ~~August~~May 3, ~~2021~~2022	By:	/S/ ROBERT O. STEPHENSON
		Robert O. Stephenson
		Chief Financial Officer

5350


Maryland	1-11316	38-3041398
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(IRS Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 par value	OHI	New York Stock Exchange


Large accelerated filer ⌧	Accelerated filer ◻	Non-accelerated filer ◻	Smaller reporting company ☐	Emerging growth company ☐


TABLE OF CONTENTS
		Page No.
PART I	Financial Information

Item 1.	Financial Statements of Omega Healthcare Investors, Inc.:
	Consolidated Balance Sheets	2
	~~June 30, 2021~~March 31, 2022 (unaudited) and December 31, ~~2020~~2021	2
	Consolidated Statements of Operations (unaudited)
	Three ~~and Six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	3
	Consolidated Statements of Comprehensive Income (unaudited)
	Three ~~and Six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	4
	Consolidated Statements of Changes in Equity (unaudited)
	Three ~~and Six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	5
	Consolidated Statements of Cash Flows (unaudited)
	~~Six~~Three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	76
	Notes to Consolidated Financial Statements
	~~June 30, 2021~~March 31, 2022 (unaudited)	87

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3130

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4745

Item 4.	Controls and Procedures	4745

PART II	Other Information

Item 1.	Legal Proceedings	4846

Item 1A.	Risk Factors	4846

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

~~Item 5.~~	~~Other Information~~	5048

Item 6.	Exhibits	5249


	June 30,		December 31,
	2021		2020
	(Unaudited)
ASSETS
Real estate properties
Real estate investments	$	9,228,332	$	8,702,154
Less accumulated depreciation		(2,139,100)		(1,996,914)
Real estate investments – net		7,089,232		6,705,240
Investments in direct financing leases – net		10,807		10,764
Mortgage notes receivable – net		857,162		885,313
		7,957,201		7,601,317
Other investments – net		458,664		467,442
Investments in unconsolidated joint ventures		197,912		200,638
Assets held for sale		35,335		81,452
Total investments		8,649,112		8,350,849

Cash and cash equivalents		100,824		163,535
Restricted cash		3,736		4,023
Contractual receivables – net		10,948		10,408
Other receivables and lease inducements		229,509		234,666
Goodwill		651,697		651,737
Other assets		113,228		82,231
Total assets	$	9,759,054	$	9,497,449

LIABILITIES AND EQUITY
Revolving credit facility	$	—	$	101,158
Secured borrowings		365,831		369,524
Senior notes and other unsecured borrowings – net		4,906,734		4,698,570
Accrued expenses and other liabilities		266,818		280,824
Deferred income taxes		9,645		10,766
Total liabilities		5,549,028		5,460,842

Equity:
Preferred stock $1.00 par value authorized – 20,000 shares, issued and outstanding - none		—		—
Common stock $.10 par value authorized – 350,000 shares, issued and outstanding – 237,570 shares as of June 30, 2021 and 231,199 as of December 31, 2020		23,756		23,119
Additional paid-in capital		6,377,238		6,152,887
Cumulative net earnings		2,839,236		2,594,735
Cumulative dividends paid		(5,232,692)		(4,916,097)
Accumulated other comprehensive income (loss)		4,523		(12,768)
Total stockholders’ equity		4,012,061		3,841,876
Noncontrolling interest		197,965		194,731
Total equity		4,210,026		4,036,607
Total liabilities and equity	$	9,759,054	$	9,497,449


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


									Accumulated
	Common		Additional		Cumulative				Other		Total
	Stock		Paid-in		Net		Cumulative		Comprehensive		Stockholders’		Noncontrolling		Total
	Par Value		Capital		Earnings		Dividends Paid		Income (Loss)		Equity		Interest		Equity
Balance at March 31, 2021	$	23,338	$	6,226,543	$	2,754,713	$	(5,074,432)	$	23,230	$	3,953,392	$	194,938	$	4,148,330
Stock related compensation		—		5,847		—		—		—		5,847		—		5,847
Issuance of common stock		418		151,180		—		—				151,598		—		151,598
Common dividends declared ($0.67 per share)		—		—		—		(158,260)		—		(158,260)		—		(158,260)
Vesting/exercising of Omega OP Units		—		(6,603)		—		—		—		(6,603)		6,603		—
Conversion and redemption of Omega OP Units to common stock		—		271		—		—		—		271		(271)		—
Omega OP Units distributions		—		—		—		—		—		—		(5,125)		(5,125)
Other comprehensive loss		—		—		—		—		(18,707)		(18,707)		(520)		(19,227)
Net income		—		—		84,523		—		—		84,523		2,340		86,863
Balance at June 30, 2021	$	23,756	$	6,377,238	$	2,839,236	$	(5,232,692)	$	4,523	$	4,012,061	$	197,965	$	4,210,026


Balance at March 31, 2020	$	22,686	$	5,997,561	$	2,525,323	$	(4,458,207)	$	(65,788)	$	4,021,575	$	197,070	$	4,218,645
Stock related compensation		—		4,623		—		—		—		4,623		—		4,623
Issuance of common stock		5		(200)		—		—		—		(195)		—		(195)
Common dividends declared ($0.67 per share)		—		—		—		(152,621)		—		(152,621)		—		(152,621)
Vesting/exercising of Omega OP Units		—		(2,825)		—		—		—		(2,825)		2,825		—
Conversion and redemption of Omega OP Units to common stock		3		813		—		—		—		816		(816)		—
Omega OP Units distributions		—		—		—		—		—		—		(4,561)		(4,561)
Other comprehensive loss		—		—		—		—		(447)		(447)		(12)		(459)
Net income		—		—		99,307		—		—		99,307		2,653		101,960
Balance at June 30, 2020	$	22,694	$	5,999,972	$	2,624,630	$	(4,610,828)	$	(66,235)	$	3,970,233	$	197,159	$	4,167,392


	Number of				Total			Initial		Number of				Total Real Estate			Initial
	Facilities			Country/	Investment			Annual		Facilities				Assets Acquired			Annual
Period	SNF	ALF	Specialty	State	(in millions)			Cash Yield⁽¹⁾		SNF	ALF	Specialty	Country/State	(in millions)			Cash Yield⁽¹⁾
Q1	—	17	7	AZ, CA, FL, IL, NJ, OR, PA, TN, TX, VA, WA	$	511.3	⁽²⁾	8.43	%	—	1	—	U.K.	$	8.7	⁽²⁾	8.0	%
Q1	6	—	—	FL		83.1		9.25	%	—	1	—	U.K.		5.0		8.0	%
Q1										—	27	—	U.K.		86.6	⁽²⁾	8.0	%
Q1										1	—	—	MD		8.2	⁽³⁾	9.5	%
Total	6	17	7		$	594.4				1	29	—		$	108.5


Rating	Financial Statement Line Item	Allowance for Credit Loss as of December 31, 2021		Provision (recovery) for Credit Loss for the three months ended March 31, 2022			Write-offs charged against allowance for the three months ended March 31, 2022		Allowance for Credit Loss as of March 31, 2022
		(in thousands)
2	Mortgage Notes Receivable	$	15	$	47		$	—	$	62
3	Mortgage Notes Receivable		1,973		126			—		2,099
4	Mortgage Notes Receivable		19,461		610			—		20,071
5	Mortgage Notes Receivable		135		(23)			—		112
6	Mortgage Notes Receivable		52,017		(5,135)	⁽¹⁾		—		46,882
	Sub-total		73,601		(4,375)			—		69,226

3	Investment in Direct Financing Leases		530		5			—		535
	Sub-total		530		5			—		535

2	Other Investments		29		53			—		82
3	Other Investments		4,600		1,063			—		5,663
4	Other Investments		1,172		1,499			—		2,671
5	Other Investments		7,861		4,704	⁽²⁾		—		12,565
6	Other Investments		55,732		(731)	⁽³⁾		—		55,001
	Sub-total		69,394		6,588			—		75,982

2	Off-Balance Sheet Note Commitments		7		3			—		10
3	Off-Balance Sheet Note Commitments		458		(132)			—		326
4	Off-Balance Sheet Note Commitments		216		(78)			—		138
4	Off-Balance Sheet Mortgage Commitments		117		(106)			—		11
6	Off-Balance Sheet Note Commitments		143		(81)			—		62
	Sub-total		941		(394)			—		547

	Total	$	144,466	$	1,824		$	—	$	146,290


Segment	Financial Statement Line Item	Allowance for Credit Loss as of December 31, 2020		Provision (recovery) for Credit Loss for the three months ended June 30, 2021		Write-offs charged against allowance for the three months ended June 30, 2021		Provision (recovery) for Credit Loss for the six months ended June 30, 2021		Write-offs charged against allowance for the six months ended June 30, 2021		Allowance for Credit Loss as of June 30, 2021
		(in thousands)
Segment A-4	Mortgage Notes Receivable	$	26,865	$	793	$	-	$	(120)	$	-	$	26,745
Segment B-3	Mortgage Notes Receivable		954		61		-		23		-		977
Segment C-5	Mortgage Notes Receivable		433		(108)		-		(215)		-		218
Segment E-6	Mortgage Notes Receivable		4,905		-		-		-		-		4,905
Segment F-2	Mortgage Notes Receivable		88		(8)		-		(53)		-		35
	Sub-total		33,245		738		-		(365)		-		32,880

Segment A-3	Investment in Direct Financing Leases		694		(62)		-		(68)		-		626
	Sub-total		694		(62)		-		(68)		-		626

Segment A-4	Other Investments		24,397		4,076	⁽¹⁾	-		4,489	⁽¹⁾	-		28,886
Segment B-3	Other Investments		5,113		(483)		-		(266)		-		4,847
Segment C-2	Other Investments		94		(18)		-		(58)		-		36
Segment D-5	Other Investments		1,853		(57)		-		(67)		(95)		1,691
	Sub-total		31,457		3,518		-		4,098		(95)		35,460

Segment A-4	Off-Balance Sheet Mortgage Commitments		24		(31)		-		7		-		31
Segment B-3	Off-Balance Sheet Note Commitments		2,305		(585)		-		(1,123)		-		1,182
Segment C-2	Off-Balance Sheet Note Commitments		116		(42)		-		(37)		-		79
	Sub-total		2,445		(658)		-		(1,153)		-		1,292

	Total	$	67,841	$	3,536	$	-	$	2,512	$	(95)	$	70,258


Segment	Financial Statement Line Item	Allowance for Credit Loss at December 31, 2019		Allowance for Credit Loss on January 1, 2020		Provision (recovery) for Credit Loss for the three months ended June 30, 2020		Write-offs charged against allowance for the three months ended June 30, 2020		Provision (recovery) for Credit Loss for the six months ended June 30, 2020		Write-offs charged against allowance for the six months ended June 30, 2020		Allowance for Credit Loss as of June 30, 2020
		(in thousands)
Segment A-4	Mortgage Notes Receivable	$	-	$	19,293	$	2,704	$	-	$	3,774		-	$	23,067
Segment B-3	Mortgage Notes Receivable		-		901		(106)		-		(74)		-		827
Segment C-5	Mortgage Notes Receivable		-		829		(396)		-		(409)		-		420
Segment E-6	Mortgage Notes Receivable		4,905		363		(93)		-		(27)		-		5,241
Segment F-2	Mortgage Notes Receivable		-		-		133		-		133		-		133
	Sub-total		4,905		21,386		2,242		-		3,397		-		29,688

Segment A-3	Investment in Direct Financing Leases		217		611		(26)		(217)		(5)		(217)		606
	Sub-total		217		611		(26)		(217)		(5)		(217)		606

Segment A-4	Other Investments		-		3,158		(983)		-		(826)		-		2,332
Segment B-3	Other Investments		-		1,434		(441)		-		(412)		-		1,022
Segment C-2	Other Investments		-		195		(61)		-		(71)		-		124
Segment D-5	Other Investments		-		1,901		(705)		-		(545)		-		1,356
	Sub-total		-		6,688		(2,190)		-		(1,854)		-		4,834

Segment A-4	Off-Balance Sheet Commitments		-		100		(11)		-		(37)		-		63
	Sub-total		-		100		(11)		-		(37)		-		63

	Total	$	5,122	$	28,785	$	15	$	(217)	$	1,501	$	(217)	$	35,191


	June 30, 2021				December 31, 2020
	Agemo		Maplewood		Agemo		Maplewood
	(in thousands)				(in thousands)
Assets
Real estate investments – net	$	338,291		750,953	$	371,010	$	750,488
Assets held for sale		14,710		—		—		—
Other investments		34,253		174,988		34,253		147,148
Contractual receivables		475		1,021		346		887
Straight-line rent receivables		—		(49,119)		—		(56,664)
Lease inducement		—		66,987		—		69,666
Total Assets		387,729		944,830		405,609		911,525

Liabilities
Net in-place lease liability		—		(318)		—		(331)
Security deposit		(343)		(4,609)		—		—
Contingent liability		—		(43,915)		—		(43,915)
Total Liabilities		(343)		(48,842)		—		(44,246)

Collateral
Letters of credit		(9,253)		—		(9,253)		—
Personal guarantee		(8,000)		(40,000)		(8,000)		(40,000)
Other collateral		(353,001)		(750,953)		(371,010)		(750,488)
Total Collateral		(370,254)		(790,953)		(388,263)		(790,488)

Maximum exposure to loss	$	17,132	$	105,035	$	17,346	$	76,791


	Facilities Held For Sale
	Number of Facilities	(in thousands)
December 31, 2020	22	$	81,452
Facilities sold/other⁽¹⁾	(21)		(81,252)
Facilities added⁽²⁾	5		7,722
March 31, 2021	6	$	7,922
Facilities sold/other⁽¹⁾	(5)		(1,795)
Facilities added⁽²⁾⁽³⁾	8		29,208
June 30, 2021⁽³⁾	9	$	35,335


	(in thousands)
Balance as of December 31, 2020	$	651,737
Add: foreign currency translation		(40)
Balance as of June 30, 2021	$	651,697


		Shares issued	Gross Proceeds
	Period Ended	(in millions)	(in millions)
Three Months Ended	June 30, 2020	-	$	-
Three Months Ended	June 30, 2021	1.6		61.8
Six Months Ended	June 30, 2020	0.1		3.7
Six Months Ended	June 30, 2021	2.0		77.3


Committee	Chair	Member
Audit Committee	$25,000	$12,500
Compensation Committee	$20,000	$9,000
Nominating and Corporate Governance Committee	$20,000	$7,500
Investment Committee	$20,000	$7,500