Supplemental Information Q2 2014

Transcription

1 OMEGA HEALTHCARE INVESTORS, INC. Supplemental Information Q Omega Healthcare Investors, Inc. is a Real Estate Investment Trust ("REIT") providing financing and capital to the longterm healthcare industry with a particular focus on skilled nursing facilities located in the United States. At June 30, 2014, the Company owned or held mortgages on 563 skilled nursing facilities, assisted living facilities and other specialty hospitals with approximately 63,733 licensed beds (61,353 available beds) located in 37 states and operated by 49 third-party healthcare operating companies. As a source of capital to the healthcare industry, Omega continually evaluates the opportunities, trends and challenges affecting the industry. Our goal is to identify long-term investments in quality healthcare properties with outstanding operators that provide the most favorable risk/reward ratio to our investors. Portfolio TABLE OF CONTENTS Page Summary by Asset and Property Type... 3 Revenue Summary... 3 Payor Mix Summary... 3 Investment Concentration by Operator... 4 Lease and Mortgage Expirations... 4 Diversification U. S. Map of Properties... 5 Investment Concentration by State... 5 Selected Metrics Occupancy by State... 5 EBITDARM & EBITDAR Coverage Stratification... 6 EBITDAR Coverages less than 1.0x... 6 Investment Activity... 7 Capitalization Capital Structure and Rates... 8 Debt Maturity Schedule... 8 Senior Unsecured Debt Ratings... 8 Selected Covenants and Ratios... 9 Equity Issuance Summary Book and Market Capitalization Financial Performance Historical AFFO, FAD and Dividends Revised AFFO & FAD Guidance Quarterly Financials Income Statement Balance Sheet Statement of Cash Flow Non-GAAP Reconciliations FFO, Adjusted FFO and FAD EBITDA and Debt Coverage Ratios EBITDA and FC and Interest Coverage Ratios Executive Officers Taylor Pickett, President and Chief Executive Officer Daniel J. Booth, Chief Operating Officer Robert O. Stephenson, Chief Financial Officer Michael D. Ritz, Chief Accounting Officer Lee Crabill, SVP of Nursing Home Operations Board of Directors Bernard J. Korman, Chairman Craig R. Callen Barbara A. Hill Thomas F. Franke Analysts Harold J. Kloosterman Edward Lowenthal Stephen Plavin Taylor Pickett Hilliard Lyons... John Roberts Goldman Sachs... Andrew Rosivach JMP Securities... Peter Martin Jeffries... Tayo Okusanya Stifel Nicolaus... Dan Bernstein Janney Montgomery... Michael Gorman UBS... Nicholas Yulico Wells Fargo... Todd Stender Green Street Advisors... Conor Wagner Stock Symbol: OHI Shares Outstanding at June 30, 2014: 126,712,640 Exchange: NYSE CUSIP Number: Contact Information Omega Healthcare Investors, Inc. Transfer Agent 200 International Circle Registrar and Transfer Company Suite Commerce Drive Hunt Valley, MD Cranford, NJ (410) (Main) (800) (866) (Investor Relations) 1

2 Disclaimers Forward-Looking Statements This supplement includes forward-looking statements, including without limitation the information and guidance under the heading 2014 Revised Guidance. Actual results may differ materially from those reflected in such forward-looking statements as a result of a variety of factors, including, among other things: (i) uncertainties relating to the business operations of the operators of Omega s properties, including those relating to reimbursement by thirdparty payors, regulatory matters and occupancy levels; (ii) regulatory and other changes in the healthcare sector; (iii) changes in the financial position of Omega s operators; (iv) the ability of any of Omega s operators in bankruptcy to reject unexpired lease obligations, modify the terms of Omega s mortgages and impede the ability of Omega to collect unpaid rent or interest during the pendency of a bankruptcy proceeding and retain security deposits for the debtor's obligations; (v) the availability and cost of capital; (vi) changes in Omega s credit ratings and the ratings of its debt securities; (vii) competition in the financing of healthcare facilities; (viii) Omega s ability to maintain its status as a real estate investment trust; (ix) Omega s ability to manage, re-lease or sell any owned and operated facilities; (x) Omega s ability to sell closed or foreclosed assets on a timely basis and on terms that allow Omega to realize the carrying value of these assets; (xi) the effect of economic and market conditions generally, and particularly in the healthcare industry; and (xii) other factors identified in Omega s most recent Form 10-K, Form 10-Q and other filings with the Securities and Exchange Commission. Statements regarding future events and developments and Omega s future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements. Operator Information This supplement includes information regarding the operators of our facilities such as EBITDAR and EBITDARM coverage ratios. The information related to operators that is provided in this supplement has been provided by the operators. We have not independently verified this information. We are providing this data for informational purposes only. Non-GAAP Information This supplement also contains certain non-gaap financial information including EBITDA, Adjusted Total Debt (or Funded Debt), Adjusted Book Capitalization, Adjusted FFO, Total Cash Fixed Charges and certain related ratios. A reconciliation of these non-gaap disclosures is available in the Financial Performance section of this supplement. Information is provided as of June 30, 2014, unless specifically stated otherwise. We assume no duty to update or supplement the information provided. 2

3 Portfolio: Summary by Asset and Property Type Investment Summary (in thousands) Revenue Summary (in thousands) As of June 30, 2014 Balance Sheet Data No. of No. of Op Properties Beds Investment % Investment Real Property (1) ,919 $ 3,144,109 73% Capital Lease 56 5, ,209 12% Loans Receivable 56 5, ,336 15% Total Investments ,353 $ 4,330, % Investment Data No. of No. of Op Investment Properties Beds Investment % Investment Per Bed Skilled Nursing Facilities (1) ,414 $ 4,143,524 96% $70 Assisted Living Facilities 21 1, ,659 3% 89 Specialty Hospitals ,471 1% ,353 $ 4,330, % $71 Note: table above excludes one facility classified as held-for sale. (1) Includes $19.2 million for lease inducement. Revenue by Investment Type Three Months Ended Six Months Ended 6/30/2014 6/30/2014 Rental Property (1) $ 96,242 79% $ 192,160 79% Capital Lease Income 14,146 12% 28,230 12% Mortgage Notes 9,923 8% 19,249 8% Other Investment Income 1,481 1% 2,902 1% $ 121, % $ 242, % Revenue by Facility Type Three Months Ended Six Months Ended 6/30/2014 6/30/2014 Skilled Nursing Facilities (1) $ 115,160 95% $ 229,487 95% Assisted Living Facilities 3,202 2% 6,277 2% Specialty Hospitals 1,949 2% 3,875 2% Other 1,481 1% 2,902 1% $ 121, % $ 242, % 1) 2nd quarter revenue includes $0.8 million reduction for lease inducement and $1.6 million year-to-date. Payor Mix Summary Medicaid % Revenue Mix Medicare / Insurance Private / Other Three-months ended March 31, % 39.3% 7.6% Three-months ended December 31, % 37.5% 8.3% Three-months ended September 30, % 37.6% 8.3% Three-months ended June 30, % 38.8% 8.0% Three-months ended March 31, % 40.2% 7.9% 3

4 Portfolio: Operator Diversification and Lease Maturities Investment Concentration by Operator (in thousands) No. of Properties Investment % Investment New ARK Investments, Inc. 58 $ 551,509 13% Ciena Healthcare ,169 10% CommuniCare Health Services, Inc ,958 8% Genesis HealthCare ,489 8% Health and Hospital Corporation ,719 7% Guardian LTC Management Inc. (1) ,671 6% Airamid Health Management ,124 6% Signature Holdings II, LLC ,101 5% S&F Management Company, LLC ,073 5% Gulf Coast Master Tenant I, LLC ,936 4% Remaining 39 Operators 208 1,230,905 28% 563 $ 4,330, % Note: table above excludes one facility classified as held-for sale. (1) Includes $19.2 million for lease inducement. As of June 30, 2014 Lease and Mortgage Expirations (in thousands) Investment Amounts Facilities Licensed Beds Year Total Revenue % Lease Direct Financing Mortgage Total % No. % No. % $ % $ - $ - $ 5,000 $ 5, % 1 0.2% % , % 40, , % 6 1.1% % , % 264, , % % 4, % , % 76, , % % 1, % , % 274, , % % 7, % % % 0 0.0% 0 0.0% , % 16, , % 3 0.5% % , % 261, , % % 3, % , % 494,281-7, , % % 8, % , % 577,826-69, , % % 9, % Thereafter 210, % 1,083, , ,549 2,223, % % 27, % Total $ 455, % $3,089,109 $551,509 $ 670,836 $ 4,311, % % 63, % Percent Expirations by Year 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 0.1% 0.8% 5.8% 1.7% 8.8% 0.4% 6.7% 13.0% 16.5% 46.3% Lease Direct Financing 4 Mortgage

5 Portfolio: Operator Diversification by State at June 30, 2014 Investment Concentration by State (in thousands) As of June 30, 2014 No. of Properties Investment % Investment % Occupancy (2) Florida 86 $ 620,060 14% 88.6% Michigan ,169 10% 80.6% Ohio ,556 9% 84.3% Indiana ,799 8% 84.5% Pennsylvania ,554 7% 92.5% Mississippi ,959 5% 80.6% Texas ,103 4% 71.7% California ,032 4% 91.4% South Carolina ,875 4% 93.9% Maryland ,077 4% 88.4% Tennessee ,478 3% 79.3% Arkansas ,321 3% 73.9% Arizona ,714 2% 83.1% Remaining 24 States (1) ,957 21% 79.5% 563 $ 4,330, % 83.7% Note: table above excludes one facility classified as held-for sale (1) Includes $19.2 million for lease inducement (2) Occupancy as of March 31,

6 Portfolio: Operator EBITDARM and EBITDAR Coverage Stratification Operator EBITDARM Coverage Distribution as a percentage of Rent/Debt Service Based on 3/31/2014 TTM Actual Results 60.0% 50.0% 46.1% (13 Operators) $175.9M Rent/DS 40.0% 30.0% 20.0% 28.7% (9 Operators) $109.7M Rent/DS 21.9% (19 Operators) $83.8M Rent/DS 10.0% 0.0% 1.4% (3 Operators) $5.2M Rent/DS 1.9% (2 Operators) $7.3M Rent/DS <=1.0x x x x >2.0x % of Rent Operator EBITDAR Coverage Distribution as a percentage of Rent/Debt Service Based on 3/31/2014 TTM Actual Results 70.0% 60.0% 58.8% (22 Operators) $224.5M Rent/DS 50.0% 40.0% 30.0% 24.3% (6 Operators) $92.8M Rent/DS 20.0% 10.0% 0.0% 3.3% (6 Operators) $12.8M Rent/DS <=1.0x x x x >2.0x % of Rent 4.0% (3 Operators) $15.3M Rent/DS 9.6% (9 Operators) $36.5M Rent/DS Note: Represents 98% of current rent; excludes re-leases which occurred after 9/1/13 and new acquisitions after 1/1/14 Master Leases with Operator EBITDAR Coverage < 1.0x Investm ent Type EBITDARM Coverage EBITDARM Coverage % of Total Rent Current on Rent (1) Subordinated Managem ent F ees G uaranty SNF X X X SNF X X X SNF X X X X SNF X X X X SNF X X X X SNF X X X X Letter of Credit / Security Deposit ( 1) Rent is current if < 30 days outstanding 6

7 Portfolio: Investment Activity Last Five Years ($ in Thousands) Closing Investment Facility Types Totals Date Amount State(s) SNF Beds ALF Beds Rehab Beds ILU Units Facilities Beds 2010 Acquisition 6/9/2010 $ 318, States 63 6, ,607 Acquisition 6/29/ ,397 (HUD Facilities) 40 4, ,882 Mortgage 12/28/ ,900 FL Total Acq. & Mtgs. $ 604, , ,729 Cons. Mrtg. various 4,756 CAPEX Funding 28, Total Investments $ 637, Mortgage 7/19/2011 $ 5,000 TX Acquisition 10/31/ ,000 MD Mortgage 10/31/ ,000 MD Mortgage 11/14/ ,000 MI 13 1, ,421 Acquisition 12/30/ ,696 WV Acquisition 12/23/ ,000 AR, CO, FL, MI, WI 17 1, ,820 Total Acq. & Mtgs. $ 309, , ,299 Constr. Mtg. various 8,041 CAPEX Funding 18, Total Investments $ 336, Acquisition 6/29/2012 $ 21,670 IN Acquisition 6/29/2012 3,400 IN Acquisition 8/31/ ,818 IN 17 2, ,892 Acquisition 10/31/2012 2,650 TX Acquisition 11/30/ ,000 MI Mortgage 11/30/2012 1,500 MI Acquisition 11/30/ ,000 AZ Acquisition 11/30/ ,231 CA Acquisition 12/31/ ,156 CA Acquisition 12/31/2012 9,500 IN Total Acq. & Mtgs. $ 466, , ,692 Constr. Mtg. various 11,968 CAPEX Funding 29, Total Investments $ 508, Mezz Note 5/2/2013 $ 24, Acquisition 10/2/ ,032 FL Acquisition 10/31/ ,251 IN Acquisition 11/27/ , States (1) 55 5, ,440 Total Acq. & Mtgs. $ 585, , ,921 Cons. Mrtg. various 3,378 CAPEX Funding 31, Total Investments $ 620, Mortgage 1/17/2014 $ 112,500 OH, PA Acquisition 1/30/2014 4,200 AZ Acquisition 6/27/ ,300 GA, SC Mortgage 6/30/ ,690 MI 14 1, ,510 Acquisition 7/1/2014 8,161 TX Acquisition 7/31/ ,300 SC Total Acq. & Mtgs. $ 456, , ,722 Cons. Mrtg. various 843 CAPEX Funding 8, Total Investments $ 465,356 1) 39 facilities in the Southeast, 7 facilities in the Northwest, 9 facilities in Texas and 1 in Indiana 7

8 Capitalization: Capital Structure and Rates Capital Structure 6/30/2014 Weighted 2Q 2014 ( 4 ) Secured Debt Capacity Ending Fixed or Borrowed as of Avg. Rate on Debt/Ann. Financial Instrument (Y/N) 6/30/2014 Rate Variable Maturity 6/30/2014 Borrowed EBITDA Credit Facility: Revolver N 1,000,000, % (1) V 6/27/18 (2) 270,000,000 Credit Facility: Term Loan N 200,000, % V 6/27/19 200,000,000 $200M 7.50% Notes N 200,000, % (3) F 2/15/20 200,000,000 $20M Sub-Notes N 20,000, % F 12/21/21 20,000,000 $575M 6.75% Notes N 575,000, % F 10/15/22 575,000,000 $400M 5.875% Notes N 400,000, % F 3/15/24 400,000,000 $400M 4.95% Notes N 400,000, % F 4/1/24 400,000,000 HUD (41 Loan Summary) Y 277,934, % F Feb ,934,846 Total Debt $ 3,072,934,846 $ 2,342,934, % 4.7 x Weighted Average Rate: 4.28% Common Stock 2,760 registered shareholders with 126,712,640 shares at $36.86 per share: 4,670,627,910 Total Market Capitalization $ 7,013,562,756 Note: At June 30, 2014, Om ega held $28.7MM of net cash & ST investm ents 1) Excludes a 0.25% annual Facility Fee on the full commitment 3) Callable Feb. 15, % 2) Can be extended for an additional year 4) See page 19 for detail Debt Maturities Total (in thousands) Secured Debt Unsecured Debt HUD Mortgages (1) Line of Credit (2)(3) Senior Notes (4) Sub Notes (5) Debt Year ,000, ,000,000 Thereafter 277, ,000 1,575,000 20,000 2,072, ,935 1,200,000 1,575,000 20,000 3,072,935 (1) Excludes $17.6 million of FMV (adjustments). (4) Excludes net discount of $1.7 million. (2) Reflected at 100% borrowing capacity. (5) Excludes $0.8 million of fair market valuation (adjustments) (3) Comprised of a $1 billion revolver due 2018 and a $200 million term loan due Senior Unsecured Credit Ratings Common Stock Rating Information CUSIP # S& P Moody' s Fitc h Senior Unsec ured Debt $200M, 7.50% 2020 Notes AV 2 BBB- Ba1 BBB- $575M, 6.75% 2022 Notes AX 8 BBB- Ba1 BBB- $400M, 5.875% 2024 Notes AY 6 BBB- Ba1 BBB- $400M, 4.95% 2024 Notes BA 7 BBB- Ba1 BBB- Corporate Rating... Outlook... Analyst(s)... BB+ Stable Stable Stable Matt Lynam Lori Marks Britton O. Costa (212) (212) (212) George Skoufis Philip Kibel Thomas Stone 8

9 Capitalization: Selected Covenants and Ratios Selected Credit Facility Covenants (1) Consolidated Leverage Ratio Secured Leverage Ratio Unsecured Leverage Ratio F ixed Charge Cov. Ratio Unsecured Interest Cov. Ratio Required <= 60% <=30% <= 60% >=1.75 to 1 >=2.00 to 1 12/ 31/ 13 Actual 45.5% 6.4% 43.7% Status Pass Pass Pass Pass Pass Required <= 60% <=30% <= 60% >=1.75 to 1 >=2.00 to 1 3/ 31/ 14 Actual 45.5% 6.1% 44.1% Status Pass Pass Pass Pass Pass Required <= 60% <=30% <= 60% >=1.50 to 1 >=2.00 to 1 6/ 30/ 14 Actual 47.4% 5.6% 46.3% Status Pass Pass Pass Pass Pass Selected Unsecured Note Covenants (1) Interest Coverage Debt / Adj. Total Assets Unencum bered Assets / Unsecured Debt Secured Debt / Adj. Total Assets Req. >= 1.5x <= 60% >= 150% <= 40% 12/31/13 Actual 4.1x 49% 206% 0% Status Pass Pass Pass Pass Req. >= 1.5x <= 60% >= 150% <= 40% 3/31/14 Actual 4.2x 49% 206% 0% Status Pass Pass Pass Pass Req. >= 1.5x <= 60% >= 150% <= 40% 6/30/14 Actual 3.9x 52% 192% 0% Status Pass Pass Pass Pass 1) Covenants are based on terms as defined in the Company s Credit Agreement and Senior Note Indentures. Selected Credit Statistics Q 1Q Total Funded Debt / Adj. EBITDA Secured Debt / Adj. EBITDA Adj. EBITDA / Interest Fixed Charge Coverage Cash Fixed Charge Coverage Balance Sheet Cash ($ 000) $28,689 $20,374 2) EBITDA is adjusted for non-cash and one-time items, and for leverage ratios includes proforma revenue for investments made in quarter/ year; Total Debt & Interest excludes outstanding L/C's, if any, premium on bonds & FIN46 consolidations. EBITDA for "Qtr. Ending" periods are annualized and for "Year Ending" periods are actual. 3) Includes preferred stock, deferred financing charges and scheduled amortizations 9

10 Capitalization: Equity Issuance Summary Equity Issuance Summary (in thousands, except per share data) At- the- Market Equity Shelf Program Q1 Q2 YTD Number of Shares (000s) 6,864 1,419 3,398 6, ,716 Avg. Gross Price per Share $ $ $ $ $ $ $ Gross Proceeds (000s) $ 139,131 $ 32,094 $ 79,749 $ 198,220 $ 28,452 $ 30,000 $ 58,452 DRIP & Direct Purchase Program Q1 Q2 YTD Number of Shares (000s) 2,960 2,853 5,062 1, ,399 Avg. Gross Price per Share $ $ $ $ $ $ $ Gross Proceeds (000s) $ 60,539 $ 59,269 $ 111,941 $ 55,872 $ 31,543 $ 14,270 $ 45,813 Follow- On Offerings Q1 Q2 YTD Number of Shares (000s) , Avg. Gross Price per Share $ - $ - $ - $ $ - $ - $ - Gross Proceeds (000s) $ - $ - $ - $ 84,755 $ - $ - $ - Totals Q1 Q2 YTD Number of Shares (000s) 9,824 4,272 8,460 11,309 1,856 1,258 3,115 Avg. Gross Price per Share $ $ $ $ $ $ $ Gross Proceeds (000s) $ 199,670 $ 91,363 $ 191,690 $ 338,847 $ 59,995 $ 44,270 $ 104,265 10

11 Capitalization: Book and Market Capitalization with Ratios Percentages of total debt to book capitalization, adjusted total debt to adjusted book capitalization and adjusted total debt to total market capitalization at June 30, 2014 were 63.0%, 62.9% and 33.4%, respectively. Adjusted total debt is total debt plus the discount or less the premium derived from the sale of unsecured borrowings and fair market value adjustment of assumed debt. Book capitalization is defined as total debt plus stockholders' equity. Adjusted book capitalization is defined as adjusted total debt plus stockholders' equity. Adjusted total debt, adjusted book capitalization and related ratios are non-gaap financial measures. Total market capitalization is the total market value of our securities as of June 30, 2014 plus adjusted total debt. Unaudited (In thousands) At At June 30, 2014 June 30, 2013 Revolving line of credit... $ 270,000 $ 5,000 Term loan , ,000 Secured borrowings , ,858 Unsecured borrowings... 1,595,000 1,195,000 FMV adjustment of assumption of debt... 18,373 19,637 (Discount)/premium on unsecured borrowings (net)... (1,695) 4,170 Total debt... $ 2,359,613 $ 1,706,665 Deduct FMV adjustment of assumption of debt... (18,373) (19,637) Add back discount (deduct premium) on unsecured borrowings (net)... 1,695 (4,170) Adjusted total debt... $ 2,342,935 $ 1,682,858 BOOK CAPITALIZATION Total debt... $ 2,359,613 $ 1,706,665 Stockholders' equity... 1,383,795 1,137,296 Book capitalization... $ 3,743,408 $ 2,843,961 Deduct FMV adjustment of assumption of debt... (18,373) (19,637) Add back discount (deduct premium) on unsecured borrowings (net)... 1,695 (4,170) Adjusted book capitalization... $ 3,726,730 $ 2,820,154 MARKET CAPITALIZATION Common shares outstanding , ,152 Market price of common stock... $ $ Market capitalization of common stock... 4,670,641 3,634,055 Market capitalization of publicly traded securities... 4,670,641 3,634,055 Add adjusted total debt... 2,342,935 1,682,858 Total market capitalization... $ 7,013,576 $ 5,316,913 Total debt / book capitalization % 60.0% Adjusted total debt / adjusted book capitalization % 59.7% Adjusted total debt / total market capitalization % 31.7% 11

12 Financial Performance: Historical AFFO, FAD and Dividends Quarterly Ending AFFO/Div FAD Omega Share Div. * Adjusted Payout Payout AFFO Quarter Ended Price Yield FFO/Share Dividend Ratio FAD/Share Ratio Guidance /31/2003 $2.30 n/a $ 0.24 $ - n/a 6/30/2003 $5.25 n/a /30/2003 $7.68 n/a % Actual Adj. FFO/Share % Change Annually Annual Dividend 12/31/2003 $ % % $0.85 $ /31/2004 $ % $ 0.23 $ % $ $0.94 6/30/2004 $ % % 9/30/2004 $ % % $ % 12/31/2004 $ % % % $ % $ % /31/2005 $ % $ 0.27 $ % $ % $ $1.07 6/30/2005 $ % % % 9/30/2005 $ % % % 12/31/2005 $ % % % $ % $ % /31/2006 $ % $ 0.30 $ % $ % $ $1.17 6/30/2006 $ % % % 9/30/2006 $ % % % 12/31/2006 $ % % % $ % $ % /31/2007 $ % $ 0.34 $ % $ % $ $1.36 6/30/2007 $ % % % 9/30/2007 $ % % % 12/31/2007 $ % % % $ % $ % /31/2008 $ % $ 0.36 $ % $ % $ $1.43 6/30/2008 $ % % % 9/30/2008 $ % % % 12/31/2008 $ % % % $ % $ % /31/2009 $ % $ 0.37 $ % $ % $ $1.50 6/30/2009 $ % % % 9/30/2009 $ % % % 12/31/2009 $ % % % $ % $ % /31/2010 $ % $ 0.38 $ % $ % $ $1.68 6/30/2010 $ % % % 9/30/2010 $ % % % 12/31/2010 $ % % % $ % $ % /31/2011 $ % $ 0.44 $ % $ % $ $1.86 6/30/2011 $ % % % 9/30/2011 $ % % % 12/31/2011 $ % % % $ % $ % /31/2012 $ % $ 0.55 $ % $ % $ $2.12 6/30/2012 $ % % % 9/30/2012 $ % % % 12/31/2012 $ % % % $ % $ % /31/2013 $ % % % $ $2.50 6/30/2013 $ % % % 9/30/2013 $ % % % 12/31/2013 $ % % % $ % $ % /31/2014 $ % % % $ $2.72 6/30/2014 $ % % % 1. Reflects December 2006 restated financials for straight-line rent 2. Annualized dividend for Guidance provided at the beginning of each fiscal year * Based on the annualized dividend announced the previous quarter % Change 12

13 Financial Performance: 2014 Revised Guidance (at June 30, 2014) 2014 REVISED GUIDANCE The Company currently expects its 2014 Adjusted FFO available to common stockholders to be a range of $2.82 to $2.85 per diluted share. The Company also expects its 2014 FAD to be a range of $2.58 and $2.61 per diluted share. The following table presents a reconciliation of our guidance regarding Adjusted FFO and FAD to net income available to common stockholders: 2014 Projected Adjusted FFO and FAD Per diluted share: Net income available to common stockholders $ 1.71 $ 1.74 Less gain from real estate dispositions (0.02) (0.02) Sub total Elimination of non-cash items included in net income: Depreciation and amortization Provision for impairments on real estate assets Provision for uncollectible mortgage, note and accounts receivable Funds from operations available to common stockholders $ 2.71 $ 2.74 Adjustments: Acquisition costs Interest refinancing costs Stock-based compensation expense Adjusted funds from operations available to common stockholders $ 2.82 $ 2.85 Adjustments: Non-cash interest expense Non-cash revenue (0.27) (0.27) Adjusted Funds available for distribution $ 2.58 $ 2.61 Note: All per share numbers rounded to 2 decimals. The Company's FAD and Adjusted FFO guidance for 2014 includes the $450 million of new investments completed to-date and planned capital renovation projects; however, it excludes the impact of gains and losses from the sale of assets, additional acquisitions and divestitures, certain revenue and expense items, interest refinancing expense, capital transactions and stock-based compensation expense. The Company's guidance is based on a number of assumptions, which are subject to change and many of which are outside the Company s control. If actual results vary from these assumptions, the Company's expectations may change. Without limiting the generality of the foregoing, the timing and completion of acquisitions, divestitures and capital and financing transactions may cause actual results to vary materially from our current expectations. There can be no assurance that the Company will achieve its projected results. 13

14 Financial Performance: Income Statement (in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, Revenues Rental income... $ 96,242 $ 93,069 $ 192,160 $ 186,178 Capital lease income... 14,146-28,230 - Mortgage interest income... 9,923 7,435 19,249 14,781 Other investment income - net... 1,489 2,011 3,162 3,317 Total operating revenues , , , ,276 Expenses Depreciation and amortization... 31,301 32,225 62,745 64,184 General and administrative... 4,012 4,011 8,246 7,756 Restricted stock expense... 2,285 1,472 4,548 2,924 Acquisition costs Provision for impairment on real estate properties... 1,558-1,558 - Provision for uncollectible mortgages, notes and accounts receivable... 2, , Total operating expenses... 41,962 37,782 79,982 75,072 Income before other income and expense... 79,838 64, , ,204 Other income (expense): Interest and other investment income Interest expense... (29,447) (24,952) (56,528) (50,624) Interest - amortization of deferred financing costs... (946) (698) (1,868) (1,380) Interest - refinancing costs... (2,645) 11,112 (4,685) 11,112 Total other expense... (33,021) (14,524) (63,056) (40,875) Income before gain (loss) on assets sold... 46,817 50,209 99,763 88,329 Gain (loss) on assets sold - net... - (1,151) 2,883 (1,151) Net income (loss) available to common... $ 46,817 $ 49,058 $ 102,646 $ 87,178 Income per common share: Basic: Net income... $ 0.37 $ 0.42 $ 0.82 $ 0.76 Diluted: Net income... $ 0.37 $ 0.42 $ 0.81 $ 0.76 Dividends declared and paid per common share... $ 0.50 $ 0.46 $ 0.99 $ 0.91 Weighted-average shares outstanding, basic , , , ,491 Weighted-average shares outstanding, diluted , , , ,273 14

15 Financial Performance: Balance Sheet (in thousands) ASSETS Real estate properties Land and buildings at cost... $ 3,124,909 $ 3,099,547 Less accumulated depreciation... (768,276) (707,410) Real estate properties - net... 2,356,633 2,392,137 Capital lease - net , ,445 Mortgage notes receivable - net , ,515 3,543,178 3,163,097 Other investments - net... 56,112 53,054 3,599,290 3,216,151 Assets held for sale - net ,356 Total investments... 3,600,110 3,217,507 Cash and cash equivalents... 28,689 2,616 Restricted cash... 34,781 31,759 Accounts receivable - net , ,504 Other assets... 72,034 62,830 Total assets... $ 3,889,359 $ 3,462,216 LIABILITIES AND STOCKHOLDERS' EQUITY Revolving line of credit... $ 270,000 $ 326,000 Term loan , ,000 Secured borrowings , ,531 Unsecured borrowings... 1,595,818 1,195,892 Premium/Discount on unsecured borrowings (net)... (1,695) 3,995 Accrued expenses and other liabilities , ,695 Total liabilities... 2,505,564 2,162,113 Stockholders' equity: Common stock $0.10 par value authorized - 200,000 shares: Issued and outstanding - 126,713 shares in June 30, 2014 and 123,530 shares in December 31, ,671 12,353 Additional paid-in capital... 2,104,430 1,998,169 Cumulative net earnings... 1,029, ,649 Cumulative dividends paid... (1,762,601) (1,637,068) Total stockholders' equity... 1,383,795 1,300,103 Total liabilities and stockholders' equity... $ 3,889,359 $ 3,462,216 15

16 Financial Performance: Statement of Cash Flow (in thousands) Six Months Ended June 30, Operating activities Net income... $ 102,646 $ 87,178 Adjustment to reconcile net income to cash provided by operating activities: Depreciation and amortization... 62,745 64,184 Provisions for impairment on real estate properties... 1,558 - Provisions for uncollectible mortgages, notes and accounts receivable... 2, Refinancing costs... 4,685 (11,112) Amortization for deferred finance costs... 1,868 1,380 Accretion of direct financing leases... (4,764) - Loss (gain) on assets sold- net... (2,883) 1,151 Restricted stock amortization expense... 4,548 2,924 Amortization of in-place lease-net... (2,571) (2,503) Amortization of other non-cash interest charges Change in operating assets and liabilities: Accounts receivable Straight - line rent... (10,701) (13,702) Lease inducement... 1,362 1,685 Effective yield receivable on mortgage notes... (584) (1,074) Other assets and liabilities... 5,189 (8,995) Net cash provided by operating activities... $ 166,755 $ 121,328 Cash flows from investing activities Acquisition of real estate... (22,000) - Placement of mortgage loans... (528,343) (2,869) Proceeds from sale of real estate investments... 3,924 2,288 Capital improvements and funding of other investments... (8,362) (17,307) Proceeds from other investments - net... 2,345 2,942 Investments in other investments - net... (5,379) (30,248) Collection of mortgage principal , Net cash used in investing activities... $ (440,293) $ (44,957) Cash flow from financing activities Proceeds from credit facility borrowings , ,000 Payments on credit facility borrowings... (646,000) (254,000) Receipts from other long-term borrowings, net of discount ,320 59,355 Payments of other long-term borrowings... (202,490) (112,208) Payment of financing related costs... (12,740) (1,032) Receipts/(payments) from dividend reinvestment plan -net... 45,804 41,588 Receipts/(payments) from Equity Share Program -net... 57,152 98,264 Payments of exercised options and tax on restricted stocks - net... (943) - Dividends paid... (125,492) (104,010) Net cash (used in) provided by financing activities... $ 299,611 $ (71,043) Increase (decrease) in cash and cash equivalents... 26,073 5,328 Cash and cash equivalents at beginning of period... 2,616 1,711 Cash and cash equivalents at end of period... $ 28,689 $ 7,039 NOTE: See our 10-Q for the quarter ending June 30, 2014 for additional details and support. 16

17 Financial Performance: Non-GAAP Reconciliations FFO, Adjusted FFO and FAD (in thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, Net loss(income) available to common stockholders... 46,817 49, ,646 87,178 (Deduct gain)/add back loss from real estate dispositions ,151 (2,883) 1,151 Sub-total 46,817 50,209 99,763 88,329 Elimination of non-cash items included in net income: Depreciation and amortization... 31,301 32,225 62,745 64,184 Add back non-cash provision for impairment on real estate properties... 1,558-1,558 - Funds from operations available to common stockholders... 79,676 82, , ,513 Weighted-average common shares outstanding, basic , , , ,523 Restricted stock and PRSUs Weighted-average common shares outstanding, diluted , , , ,273 Funds from operations per share available to common stockholders Adjusted funds from operations: Funds from operations available to common stockholders... 79,676 82, , ,513 (Deduct)/add back non-cash provision for uncollectible AR, mortgages and notes... 2, , Add back one-time interest refinancing expense... 2,645 (11,112) 4,685 (11,112) Add back acquisition deal related costs Add back stock-based compensation expense... 2,285 1,472 4,548 2,924 Adjusted funds from operations available to common stockholders... 87,412 72, , ,533 Adjustments: Non-Cash Interest Expense ,972 1,066 Non-Cash Revenues (Net)... (8,663) (7,780) (17,207) (14,753) Funds Available for Distribution (FAD)... 79,743 65, , ,846 Adjusted FFO per share, diluted Adjusted FAD per share, diluted See definitions of FFO, Adjusted FFO and FAD on the following page. 17

18 Financial Performance: Non-GAAP Reconciliations Funds From Operations, ("FFO"), adjusted FFO, EBITDA, adjusted EBITDA, adjusted fixed charges, adjusted total debt, Funds Available for Distribution ("FAD"), adjusted book capitalization and related ratios are non-gaap financial measures. For purposes of the Securities and Exchange Commission s ( SEC ) Regulation G, a non-gaap financial measure is a numerical measure of a company s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows (or equivalent statements) of the company, or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. As used herein, GAAP refers to generally accepted accounting principles in the United States of America. Pursuant to the requirements of Regulation G, the Company has provided reconciliations of the non-gaap financial measures to the most directly comparable GAAP financial measures. The Company calculates and reports FFO in accordance with the definition and interpretive guidelines issued by the National Association of Real Estate Investment Trusts ("NAREIT"), and consequently, FFO is defined as net income (loss) available to common stockholders, adjusted for the effects of asset dispositions and certain non-cash items, primarily depreciation and amortization and impairments on real estate assets. The Company believes that FFO is an important supplemental measure of its operating performance. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time, while real estate values instead have historically risen or fallen with market conditions. The term FFO was designed by the real estate industry to address this issue. FFO herein is not necessarily comparable to FFO of other real estate investment trusts, or REITs, that do not use the same definition or implementation guidelines or interpret the standards differently from the Company. The Company uses FFO as one of several criteria to measure operating performance of its business. The Company further believes that by excluding the effect of depreciation, amortization, impairments on real estate assets and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods. The Company offers this measure to assist the users of its financial statements in analyzing its performance; however, this is not a measure of financial performance under GAAP and should not be considered a measure of liquidity, an alternative to net income or an indicator of any other performance measure determined in accordance with GAAP. Investors and potential investors in the Company s securities should not rely on non-gaap financial measures as a substitute for any GAAP measure, including net income. Adjusted FFO is calculated as FFO available to common stockholders excluding the impact of certain non-cash items and certain items of revenue and expense specified in the schedule above. The Company believes that adjusted FFO provides an enhanced measure of the operating performance of the Company s core portfolio as a REIT. FAD is calculated as Adjusted FFO less non-cash interest expense and non-cash revenue, such as straight-line rent. FAD provides a supplemental measure of the Company's ability to incur and service debt and to distribute dividends to shareholders. The Company's computation of adjusted FFO and FAD are not comparable to the NAREIT definition of FFO or to similar measures reported by other REITs, but the Company believes they are appropriate measures for this Company. For information regarding Adjusted Total Debt and Adjusted Book Capitalization, see Book and Market Capitalization with Ratios section of this supplement. 18

19 Financial Performance: Non-GAAP Reconciliations EBITDA Reconciliation and Debt Coverage Ratio Calculation Unaudited (in thousands) Our ratios of adjusted total debt to annualized EBITDA, adjusted total debt to adjusted annualized EBITDA and adjusted total debt to adjusted pro forma annualized EBITDA as of June 30, 2014 were 5.3x, 5.0x and 4.7x, respectively. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA eliminates items such as acquistion deal related costs and stock-based compensation expense and adds back certain non-cash expenses, if any, to EBITDA. Adjusted pro forma EBITDA adds to adjusted EBITDA the incremental EBITDA from new investments made during the 2nd quarter assuming an April 1 purchase date. EBITDA, adjusted EBITDA, adjusted pro forma EBITDA and related ratios are non-gaap financial measures. Annualized EBITDA, adjusted annualized EBITDA and adjusted pro forma annualized EBITDA assume the current quarter results multiplied by four, and are not projections of future performance. Below is the reconciliation of EBITDA and adjusted EBITDA to net income. Three Months Ended June 30, 2014 June 30, 2013 Net income... $ 46,817 $ 49,058 (Gain) / loss on assets sold - net ,151 Depreciation and amortization... 31,301 32,225 Interest... 33,038 14,538 EBITDA... $ 111,156 $ 96,972 (Deduct)/add back non-cash provision for uncollectible AR, mortgages and notes... 2, Add back acquisition deal related costs Add back non-cash provision for impairments on real estate properties... 1,558 - Add back stock-based compensation expense... 2,285 1,472 Adjusted EBITDA... $ 117,805 $ 98,518 Add incremental proforma EBITDA from new investments... 7, Adjusted proforma EBITDA... $ 125,243 $ 98,638 DEBT Revolving line of credit... $ 270,000 $ 5,000 Term loan , ,000 Secured borrowings , ,858 Unsecured borrowings... 1,595,000 1,195,000 FMV adjustment of assumption of debt... 18,373 19,637 (Discount)/premium on unsecured borrowings (net)... (1,695) 4,170 Total debt... 2,359,613 1,706,665 Deduct FMV adjustment of assumption of debt... $ (18,373) $ (19,637) Add back discount (deduct premium) on unsecured borrowings (net)... 1,695 (4,170) Adjusted total debt (aka Funded Debt)... $ 2,342,935 $ 1,682,858 Adjusted total debt / annualized EBITDA ratio x 4.3 x Adjusted total debt / adjusted annualized EBITDA ratio x 4.3 x Adjusted total debt / adjusted pro forma annualized EBITDA ratio x 4.3 x 19

20 Financial Performance: Non-GAAP Reconciliations EBITDA Reconciliation and Fixed Charge and Interest Coverage Ratio Calculation Unaudited (in thousands) Our annualized EBITDA to total interest expense ratio, annualized adjusted EBITDA to total interest expense ratio and annualized adjusted EBITDA to fixed charges as of June 30, 2014 were 3.4x, 3.6x and 3.9x, respectively. Fixed charge coverage is the ratio determined by dividing annualized EBITDA by our fixed charges. Annualized EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Annualized adjusted EBITDA eliminates items such as acquisition deal related costs and stockbased compensation expense and adds back certain non-cash expenses, if any, to annualized EBITDA. Fixed charges consist of interest expense, amortization of other non-cash interest charges, amortization of deferred financing costs and refinancing costs. EBITDA, adjusted EBITDA and interest expense ratio are non-gaap measures. Below is the reconciliation of EBITDA to net income. Three Months Ended June 30, 2014 June 30, 2013 Net income... $ 46,817 $ 49,058 (Gain) / loss on assets sold - net ,151 Depreciation and amortization... 31,301 32,225 Interest... 33,038 14,538 EBITDA... $ 111,156 $ 96,972 Add back non-cash provision for uncollectible AR, mortgages and notes... 2, Add back acquisition deal related costs Add back non-cash provision for impairment on real estate properties... 1,558 - Add back stock-based compensation expense... 2,285 1,472 Adjusted EBITDA... $ 117,805 $ 98,518 FIXED CHARGES Cash interest... $ 29,399 $ 25,038 Amortization mortgage insurance premium Amortization HUD fair market value adjustment... (311) (453) Amortization of non-cash deferred financing charges Refinancing costs... 2,645 (11,112) Total interest expense... 33,038 14,538 Add (less) refinancing costs... (2,645) 11,112 Total fixed charges... $ 30,393 $ 25,650 Annualized EBITDA / total interest expense ratio x 6.7 x Annualized adjusted EBITDA / total interest expense ratio x 6.8 x Annualized adjusted EBITDA / fixed charge coverage ratio x 3.8 x 20