Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

August 5, 2013

10-Q: Quarterly report pursuant to Section 13 or 15(d)

Published on August 5, 2013

 
 
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 


FORM 10-Q
(Mark One)
x              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013
 
or
 
o              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number 1-11316

OMEGA HEALTHCARE
INVESTORS, INC.
(Exact name of Registrant as specified in its charter)
     
Maryland
 
38-3041398
 
(State of incorporation)
 
(IRS Employer
Identification No.)
 
200 International Circle, Suite 3500, Hunt Valley, MD 21030
(Address of principal executive offices)
 
(410) 427-1700
(Telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes   x                                           No   o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes    x                                           No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one:)

Large accelerated filer    x                        Accelerated filer    o                        Non-accelerated filer    o                        Smaller reporting company    o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes   o                                                      No   x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of July 29, 2013.                    
 
Common Stock, $.10 par value   117,155,264
(Class)   (Number of shares)

 
 

 


OMEGA HEALTHCARE INVESTORS, INC.
FORM 10-Q
June 30, 2013

TABLE OF CONTENTS
       
     
Page
No.
   
       
   
   
2
       
   
3
       
   
4
       
   
5
       
   
6
       
 
22
       
 
33
       
 
33
       
   
       
 
34
       
 
34
       
 
36
 
 
 

 




OMEGA HEALTHCARE INVESTORS, INC.
(in thousands, except per share amounts)

   
June 30,
   
December 31,
 
   
2013
   
2012
 
   
(Unaudited)
       
ASSETS
           
Real estate properties
           
Land and buildings
  $ 3,051,363     $ 3,038,553  
Less accumulated depreciation
    (643,514 )     (580,373 )
Real estate properties – net
    2,407,849       2,458,180  
Mortgage notes receivable – net
    241,254       238,621  
      2,649,103       2,696,801  
Other investments – net
    74,646       47,339  
      2,723,749       2,744,140  
Assets held for sale – net
    1,020       1,020  
Total investments
    2,724,769       2,745,160  
                 
Cash and cash equivalents
    7,039       1,711  
Restricted cash
    40,127       36,660  
Accounts receivable – net
    138,059       125,180  
Other assets
    69,802       73,294  
Total assets
  $ 2,979,796     $ 2,982,005  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Revolving line of credit
  $ 5,000     $ 158,000  
Term loan
  200,000     100,000  
Secured borrowings
    301,526       366,538  
Unsecured borrowings – net
    1,200,139       1,200,394  
Accrued expenses and other liabilities
    135,835       145,744  
Total liabilities
    1,842,500       1,970,676  
                 
Stockholders’ equity:
               
Common stock $.10 par value 200,000 shares authorized –– 117,152 shares as of June 30, 2013 and 112,393 as of December 31, 2012 issued and outstanding
        11,715           11,239  
Common stock – additional paid-in capital
    1,807,201       1,664,855  
Cumulative net earnings
    841,306       754,128  
Cumulative dividends paid
    (1,522,926 )     (1,418,893 )
Total stockholders’ equity 
    1,137,296       1,011,329  
Total liabilities and stockholders’ equity 
  $ 2,979,796     $ 2,982,005  
 
See notes to consolidated financial statements.

2
 

 


OMEGA HEALTHCARE INVESTORS, INC.
Unaudited
(in thousands, except per share amounts)

   
Three Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
 
   
2013
   
2012
   
2013
   
2012
 
Revenue
                       
Rental income
  $ 93,069     $ 75,228     $ 186,178     $ 151,203  
Mortgage interest income
    7,435       7,404       14,781       14,740  
Other investment income – net
    1,860       1,165       3,166       2,295  
Miscellaneous
    151       28       151       102  
Total operating revenues
    102,515       83,825       204,276       168,340  
                                 
Expenses
                               
Depreciation and amortization
    32,225       27,199       64,184       54,346  
General and administrative
    5,483       4,954       10,680       10,480  
Acquisition costs
    9       98       143       203  
Impairment loss on real estate properties
    -       -       -       272  
Provisions for uncollectible mortgages, notes and accounts receivable
    65       -       65       -  
Total operating expenses
    37,782       32,251       75,072       65,301  
                                 
Income before other income and expense
    64,733       51,574       129,204       103,039  
Other income (expense)
                               
Interest income
    14       9       17       16  
Interest expense
    (24,952 )     (24,009 )     (50,624 )     (46,976 )
Interest – amortization of deferred financing costs
    (698 )     (668 )     (1,380 )     (1,297 )
Interest – refinancing gain (costs)
    11,112       1,698       11,112       (5,410 )
Total other expense
    (14,524 )     (22,970 )     (40,875 )     (53,667 )
                                 
Income before gain on assets sold
    50,209       28,604       88,329       49,372  
(Loss) gain on assets sold – net
    (1,151 )     1,968       (1,151 )     7,284  
Net income available to common stockholders
  $ 49,058     $ 30,572     $ 87,178     $ 56,656  
                                 
Income per common share available to common shareholders:
                               
Basic:
                               
Net income
  $ 0.42     $ 0.29     $ 0.76     $ 0.54  
Diluted:
                               
Net income
  $ 0.42     $ 0.29     $ 0.76     $ 0.54  
                                 
Dividends declared and paid per common share
  $ 0.46     $ 0.42     $ 0.91     $ 0.83  
                                 
Weighted-average shares outstanding, basic
    116,199       105,717       114,491       104,736  
Weighted-average shares outstanding, diluted
    117,022       106,033       115,273       105,023  
 
See notes to consolidated financial statements.

3
 

 


OMEGA HEALTHCARE INVESTORS, INC.
Unaudited
(in thousands, except per share amounts)

   
Common
Stock Par
Value
   
Additional
Paid-in Capital
   
Cumulative
Net Earnings
   
Cumulative
Dividends
   
Total
 
                               
Balance at December 31, 2012 (112,393 common shares)
  $ 11,239     $ 1,664,855     $ 754,128     $ (1,418,893 )   $ 1,011,329  
Issuance of common stock:
                                       
Grant of restricted stock to company directors (15 shares at $30.33 per share)
    2       (2 )                  
Amortization of restricted stock
          2,883                   2,883  
Dividend reinvestment plan (1,462 shares at $28.46 per share)
    146       41,442                   41,588  
Grant of stock as payment of directors fees (3 shares at an average of $32.17 per share)
          87                   87  
Equity Shelf Program (3,279 shares at $30.69 per share, net of issuance costs)
    328       97,936                   98,264  
Net income
                87,178             87,178  
Common dividends ($0.91 per share)
                      (104,033 )     (104,033 )
Balance at June 30, 2013 (117,152 common shares)
  $ 11,715     $ 1,807,201     $ 841,306     $ (1,522,926 )   $ 1,137,296  
 
See notes to consolidated financial statements.
 
4
 

 


OMEGA HEALTHCARE INVESTORS, INC.
Unaudited (in thousands)
 
   
Six Months Ended
June 30,
 
   
2013
   
2012
 
Cash flows from operating activities
           
Net income
  $ 87,178     $ 56,656  
Adjustment to reconcile net income to cash provided by operating activities:
               
Depreciation and amortization
    64,184       54,346  
Impairment on real estate properties
          272  
Provision for uncollectible mortgages, notes and accounts receivable
    65        
Amortization of deferred financing and debt extinguishment (gain)/costs
    (9,732 )     6,707  
Restricted stock amortization expense
    2,924       2,971  
Loss (gain) on assets sold – net
    1,151       (7,284 )
Amortization of acquired in-place leases - net
    (2,503 )     (2,852 )
Other
          (75 )
Change in operating assets and liabilities – net of amounts assumed/acquired:
               
  Accounts receivable, net
    147       370  
  Straight-line rent
    (13,702 )     (13,120 )
  Lease inducement
    1,685       1,684  
  Effective yield receivable on mortgage notes
    (1,074 )     (1,113 )
  Other operating assets and liabilities
    (8,995 )     (4,138 )
Net cash provided by operating activities
    121,328       94,424  
Cash flows from investing activities
               
Acquisition of real estate – net of liabilities assumed and escrows acquired
          (26,922 )
Placement of mortgage loans
    (2,869 )     (4,955 )
Proceeds from sale of real estate investments
    2,288       22,006  
Capital improvements to real estate investments
    (17,307 )     (14,207 )
Proceeds from other investments
    2,942       10,040  
Investments in other investments
    (30,248 )     (3,558 )
Collection of mortgage principal
    237       243  
Net cash used in investing activities
    (44,957 )     (17,353 )
Cash flows from financing activities
               
Proceeds from credit facility borrowings
    201,000       92,000  
Payments on credit facility borrowings
    (254,000 )     (362,500 )
Receipts of other long-term borrowings
    59,355       400,000  
Payments of other long-term borrowings
    (112,208 )     (188,674 )
Payments of financing related costs
    (1,032 )     (12,920 )
Receipts from dividend reinvestment plan
    41,588       68,976  
Net proceeds from issuance of common stock
    98,264       15,574  
Dividends paid
    (104,010 )     (87,017 )
Net cash used in financing activities
    (71,043 )     (74,561 )
                 
Increase in cash and cash equivalents
    5,328       2,510  
Cash and cash equivalents at beginning of period
    1,711       351  
Cash and cash equivalents at end of period
  $ 7,039     $ 2,861  
Interest paid during the period, net of amounts capitalized
  $ 51,397     $ 46,323  

See notes to consolidated financial statements.

5
 

 


OMEGA HEALTHCARE INVESTORS, INC.
Unaudited
June 30, 2013

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Business Overview

 Omega Healthcare Investors, Inc. (“Omega” or the “Company”) has one reportable segment consisting of investments in healthcare-related real estate properties.  Our core business is to provide financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities (“SNFs”) located in the United States.  Our core portfolio consists of long-term leases and mortgage agreements.  All of our leases are “triple-net” leases, which require the tenants to pay all property-related expenses.  Our mortgage revenue derives from fixed-rate mortgage loans, which are secured by first mortgage liens on the underlying real estate and personal property of the mortgagor.

Basis of Presentation

The accompanying unaudited consolidated financial statements for Omega have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements.  In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  The results of operations for the interim periods reported herein are not necessarily indicative of results to be expected for the full year.  We have evaluated all subsequent events through the date of the filing of this Form 10-Q. These unaudited consolidated financial statements should be read in conjunction with the financial statements and the footnotes thereto included in our latest Annual Report on Form 10-K.

Our consolidated financial statements include the accounts of (i) Omega, (ii) all direct and indirect wholly owned subsidiaries of Omega, and (iii) TC Healthcare, a variable interest entity (“VIE”) that we consolidate as the primary beneficiary.  All inter-company accounts and transactions have been eliminated in consolidation of the financial statements.

Accounts Receivable

Accounts receivable includes: contractual receivables, effective yield interest receivables, straight-line rent receivables and lease inducements, net of an estimated provision for losses related to uncollectible and disputed accounts.  Contractual receivables relate to the amounts currently owed to us under the terms of our lease and loan agreements.  Effective yield interest receivables relate to the difference between the interest income recognized on an effective yield basis over the term of the loan agreement and the interest currently due to us according to the contractual agreement. Straight-line receivables relate to the difference between the rental revenue recognized on a straight-line basis and the amounts currently due to us according to the contractual agreement.  Lease inducements result from value provided by us to the lessee at the inception or renewal of the lease and will be amortized as a reduction of rental revenue over the non cancellable lease term. 

On a quarterly basis, we review our accounts receivable to determine their collectability.  The determination of collectability of these assets requires significant judgment and is affected by several factors relating to the credit quality of our operators that we regularly monitor, including (i) payment history, (ii) the age of the contractual receivables, (iii) the current economic conditions and reimbursement environment, (iv) the ability of the tenant to perform under the terms of their lease and/or contractual loan agreements and (v) the value of the underlying collateral of the agreement.  If we determine collectability of any of our contractual receivables is at risk, we estimate the potential uncollectible amounts and provide an allowance.  In the case of a lease recognized on a straight-line basis or existence of lease inducements, we generally provide an allowance for straight-line accounts receivable and/or the lease inducements when certain conditions or indicators of adverse collectability are present.
 
6
 

 


 
A summary of our net receivables by type is as follows:
       
   
June 30,
   
December 31,
 
   
2013
   
2012
 
   
(in thousands)
 
       
Contractual receivables
  $ 3,757     $ 3,963  
Effective yield interest receivables
    4,650       3,576  
Straight-line receivables
    112,610       98,973  
Lease inducements
    17,622       19,307  
Allowance
    (580 )     (639 )
Accounts receivable – net
  $ 138,059     $ 125,180  

We continuously evaluate the payment history and financial strength of our operators and have historically established allowance reserves for straight-line rent adjustments for operators that do not meet our requirements.  We consider factors such as payment history and the operator’s financial condition as well as current and future anticipated operating trends when evaluating whether to establish allowance reserves.
 
NOTE 2 – PROPERTIES AND INVESTMENTS

In the ordinary course of our business activities, we periodically evaluate investment opportunities and extend credit to customers.  We also regularly engage in lease and/or loan extensions and modifications. Additionally, we actively monitor and manage our investment portfolio with the objectives of improving credit quality and increasing investment returns.  In connection with our portfolio management, we may engage in various collection and foreclosure activities.

If we acquire real estate pursuant to a foreclosure or bankruptcy proceeding, the assets will initially be included on the consolidated balance sheet at the lower of cost or estimated fair value.

Leased Property

Our leased real estate properties, represented by 417 SNFs, 16 assisted living facilities (“ALFs”) and 11 specialty facilities at June 30, 2013, are leased under provisions of single or master leases with initial terms typically ranging from 5 to 15 years, plus renewal options.  Substantially all of our leases contain provisions for specified annual increases over the rents of the prior year and are generally computed in one of three methods depending on specific provisions of each lease as follows: (i) a specific annual percentage increase over the prior year’s rent, generally 2.5%; (ii) an increase based on the change in pre-determined formulas from year to year (i.e., such as increases in the Consumer Price Index (“CPI”)); or (iii) specific dollar increases over prior years.  Under the terms of the leases, the lessee is responsible for all maintenance, repairs, taxes and insurance on the leased properties.
 
7
 

 

 
The facilities acquired in 2012 are included in our results of operations from the date of acquisition.  The following unaudited pro forma results of operations reflect the impact of the transactions as if they occurred on January 1, 2012.  In the opinion of management, all significant necessary adjustments to reflect the effect of the acquisitions have been made.  The following pro forma information is not indicative of future operations.

   
Pro Forma
 
   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2013
   
2012
   
2013
   
2012
 
   
(in thousands, except per share amount, unaudited)
 
                         
Revenues
  $ 102,515     $ 97,331     $ 204,276     $ 195,352  
Net income available to common stockholders
  $ 49,058     $ 36,178     $ 87,178     $ 67,868  
                                 
Earnings per share – diluted:
                               
Net income available to common stockholders – as reported
  $ 0.42     $ 0.29     $ 0.76     $ 0.54  
Net income available to common stockholders – pro forma
  $ 0.42     $ 0.34     $ 0.76     $ 0.65  

Assets Sold or Assets Held for Sale

Assets Sold

In the three-month period ended June 30, 2013, we sold one facility in Texas for total cash proceeds of $2.2 million, resulting in a $1.2 million loss.  Also, in April 2013, we sold a parcel of undeveloped land to a third party for approximately $0.1 million.

Assets Held for Sale

At June 30, 2013, we had two SNFs and one parcel of land classified as held-for-sale with an aggregate net book value of approximately $1.0 million.

Mortgage Notes Receivables

Our mortgage notes receivables relate to 14 fixed-rate mortgages on 33 long-term care facilities.  The mortgage notes are secured by first mortgage liens on the borrowers’ underlying real estate and personal property.  The mortgage notes receivable relate to facilities located in five (5) states, which are operated by five (5) independent healthcare operating companies.  We monitor compliance with mortgages and when necessary have initiated collection, foreclosure and other proceedings with respect to certain outstanding loans.  As of June 30, 2013, none of our mortgages were in default or in foreclosure proceedings.  Where appropriate, the mortgage properties are generally cross-collateralized with the master lease agreement with the same operator.

Mortgage interest income is recognized as earned over the terms of the related mortgage notes, using the effective yield method.  Allowances are provided against earned revenues from mortgage interest when collection of amounts due becomes questionable or when negotiations for restructurings of troubled operators lead to lower expectations regarding ultimate collection.  When collection is uncertain, mortgage interest income on impaired mortgage loans is recognized as received after taking into account application of security deposits.

8
 

 


NOTE 3 – OTHER INVESTMENTS

A summary of our other investments is as follows:

   
June 30,
   
December 31,
 
   
2013
   
2012
 
   
(in thousands)
 
             
Other Investment note due 2015
  $ 2,418     $ 2,518  
Other Investment notes due 2021 - 2023
    12,061       9,775  
Other Investment note due 2013
    559       1,018  
Other Investment note due 2014
    438       812  
$28.0 Million Other Investment note due 2017
    25,250       26,500  
$6.0 Million Other Investment note due 2013
    5,439       3,450  
Other Investment note due 2013
    -       261  
$1.3 Million Other Investment note due 2017
    965       425  
$25.0 Million Other Investment note due 2017
    24,936       -  
Notes receivable, gross(1) 
    72,066       44,759  
Allowance for loss on notes receivable
    (1,977 )     (1,977 )
Notes receivable, net
    70,089       42,782  
                 
Marketable securities and other
    4,557       4,557  
Total other investments
  $ 74,646     $ 47,339  
 
(1)
The majority of these notes bear interest at approximately 10% annually.

$25 million Other Investment note due 2017

On May 2, 2013, we invested $24.9 million in a mezzanine loan with a third party.  The loan bears interest at 12% per annum and matures in December 2017.
 
NOTE 4 – CONCENTRATION OF RISK

As of June 30, 2013, our portfolio of real estate investments consisted of 480 healthcare facilities, located in 34 states and operated by 47 third-party operators.  Our gross investment in these facilities, net of impairments and before reserve for uncollectible loans, totaled approximately $3.3 billion at June 30, 2013, with approximately 99% of our real estate investments related to long-term care facilities.  Our portfolio is made up of 417 SNFs, 16 ALFs, 11 specialty facilities, fixed rate mortgages on 33 SNFs and three SNFs that are closed/held-for-sale.  At June 30, 2013, we also held miscellaneous investments of approximately $74.6 million, consisting primarily of secured loans to third-party operators of our facilities.

At June 30, 2013, we had investments with two operators and/or managers that exceeded 10% of our total investment: (i) Genesis Healthcare (“Genesis”) (11%), and (ii) CommuniCare Health Services, Inc. (“CommuniCare”) (10%).  The three states in which we had our highest concentration of investments were Florida (18%), Ohio (11%) and Indiana (10%) at June 30, 2013.

For the three-month period ended June 30, 2013, our revenues from operations totaled $102.5 million, of which approximately $13.8 million were from Genesis (13%) and $11.1 million were from CommuniCare (11%).  No other operator generated more than 10% of our revenues from operations for the three-month period ended June 30, 2013.
 
9
 

 

 
For the six-month period ended June 30, 2013, our revenues from operations totaled $204.3 million, of which approximately $27.6 million were from Genesis (14%) and $22.2 million were from CommuniCare (11%).  No other operator generated more than 10% of our revenues from operations for the six-month period ended June 30, 2013.
 
NOTE 5 – DIVIDENDS

Common dividends

On July 16, 2013, the Board of Directors declared a common stock dividend of $0.47 per share, increasing the quarterly common dividend by $0.01 per share over the prior quarter.  The common dividends are to be paid August 15, 2013 to common stockholders of record on July 31, 2013.

On April 16, 2013, the Board of Directors declared a common stock dividend of $0.46 per share, increasing the quarterly common dividend by $0.01 per share over the prior quarter, which was paid May 15, 2013 to common stockholders of record on April 30, 2013.

On January 16, 2013, the Board of Directors declared a common stock dividend of $0.45 per share, increasing the quarterly common dividend by $0.01 per share over the prior quarter, which was paid February 15, 2013 to common stockholders of record on January 31, 2013.
 
NOTE 6 – TAXES

So long as we qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code (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.  On a quarterly and annual basis, we test our compliance within the REIT taxation rules to ensure that we were in compliance with the rules.

Subject to the limitation under the REIT asset test rules, we are permitted to own up to 100% of the stock of one or more taxable REIT subsidiaries (“TRSs”).  Currently, we have one TRS that is taxable as a corporation and that pays federal, state and local income tax on its net income at the applicable corporate rates.  As of June 30, 2013, the TRS had a net operating loss carry-forward of $1.1 million.  The loss carry-forward is fully reserved with a valuation allowance as of June 30, 2013.
 
NOTE 7 – STOCK-BASED COMPENSATION

On June 6, 2013, at our Company’s Annual Meeting, our stockholders approved the 2013 Stock Incentive Plan (the “2013 Plan”), which amended and restated the Company’s 2004 Stock Incentive Plan. The 2013 Plan is a comprehensive incentive compensation plan that allows for various types of equity-based compensation, including restricted stock units (including performance-based restricted stock units), stock awards, deferred restricted stock units, incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights and certain cash-based awards (including performance-based cash awards).  The 2013 Plan increased the number of shares reserved for issuance for compensation purposes by 3,000,000.


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The following is a summary of our stock-based compensation expense for the three- and six- month periods ended June 30, 2013 and 2012, respectively:

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2013
   
2012
   
2013
   
2012
 
   
(in thousands)
 
                         
Stock-based compensation expense
  $ 1,472     $ 1,486     $ 2,924     $ 2,971  

Stock Awards

Effective January 2011, we granted 428,503 shares of restricted stock and 496,977 performance restricted stock units (“PRSUs”) to six employees. In each of January 2012 and 2013, we granted an additional 124,244 PRSUs to six employees.

Restricted Stock Awards

The restricted stock awards vest 100% on December 31, 2013, subject to continued employment on the vesting date and subject to certain exceptions for certain qualifying terminations of employment or a change in control of the Company.  As of June 30, 2013, no shares of restricted stock have vested under these restricted stock awards.

Performance Restricted Stock Units

Effective January 1, 2011, we awarded three types of PRSUs to the six employees: (i) 124,244 annual total shareholder return (“TSR”) PRSUs for the year ended December 31, 2011 (“2011 Annual TSR PRSUs”); (ii) 279,550 multi-year absolute TSR PRSUs and (iii) 93,183 multi-year relative TSR PRSUs.  On January 1, 2012 and 2013, we awarded to the six employees 124,244 annual TSR PRSUs for the year ended December 31, 2012 and 2013 (the “2012 Annual TSR PRSUs” and the “2013 Annual TSR PRSUs”).

Annual TSR PRSUs

The number of shares earned under the annual TSR PRSUs depends generally on the level of achievement of TSR for the year.  The annual TSR PRSUs vest on December 31 of the year, subject to continued employment on the vesting date and subject to certain exceptions for certain qualifying terminations of employment or a change in control of the Company.  The 2011 Annual TSR PRSUs were forfeited because the required TSR for 2011 was not achieved.  The performance requirement for the 2012 Annual TSR PRSUs was achieved and the 124,244 shares vested and were distributed to the employees at December 31, 2012.  As of June 30, 2013, the 2013 annual TSR PRSUs have not been earned.

Multi-year Absolute TSR PRSUs

The number of shares earned under the multi-year absolute TSR PRSUs depends generally on the level of achievement of TSR for the three-years ending December 31, 2013.  The multi-year absolute TSR PRSUs vest 25% on the last day of each calendar quarter in 2014, subject to continued employment on the vesting date and subject to certain exceptions for certain qualifying terminations of employment or a change in control of the Company.
 
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Multi-year Relative TSR PRSUs

The number of shares earned under the multi-year relative TSR PRSUs depends generally on the level of achievement of TSR relative to other real estate investment trusts in the MSCI U.S. REIT Index for the three-years ending December 31, 2013.  The multi-year relative TSR PRSUs vest 25% on the last day of each calendar quarter in 2014, subject to continued employment on the vesting date and subject to certain exceptions for certain qualifying terminations of employment or a change in control of the Company.

The PRSU awards have varying degrees of performance requirements to achieve vesting, and each PRSU award represents the right to a variable number of shares of common stock and related dividend equivalents based on dividends paid to stockholders during the applicable performance period.

As of June 30, 2013, none of the PRSUs are vested or earned.

The following table summarizes our total unrecognized compensation cost as of June 30, 2013 associated with outstanding restricted stock and PRSU awards to employees:
                               
   
Shares/
Units
   
Grant Date
Average Fair
Value Per
Unit/ Share
   
Total
Compensation
Cost
(in millions)
   
Weighted
Average
Period of
Expense
Recognition
(in months)
   
Unrecognized
Compensation
Cost
(in millions)
 
       
Restricted stock
    428,503     $ 22.44     $ 9.6       36     $ 1.6  
2013 Annual PRSUs
    124,244     $ 8.92       1.1       12       0.6  
Multi-year absolute TSR PRSUs
    279,550     $ 11.06       3.1       44       0.9  
Multi-year relative TSR PRSUs
    93,183     $ 12.26       1.1       44       0.3  
Total
    925,480     $ 14.93     $ 14.9             $ 3.4  

We used a Monte Carlo model to estimate the fair value for PRSUs granted to the employees.

Director Restricted Stock Grants

As of June 30, 2013, we had 43,457 shares of restricted stock outstanding to directors.  The directors’ restricted shares are scheduled to vest over the next three years.  As of June 30, 2013, the unrecognized compensation cost associated with outstanding director restricted stock grants is approximately $0.6 million.
 
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NOTE 8 – FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS

Secured and Unsecured Borrowings

The following is a summary of our long-term borrowings:

         
Current
   
June 30,
   
December 31,
 
   
Maturity
   
Rate
   
2013
   
2012
 
               
(in thousands)
 
Secured borrowings:
                       
HUD Berkadia mortgages assumed June 2010
  2036 - 2040       -     $     $ 62,921  
HUD Capital Funding mortgages assumed June 2010 (1)
  2040 - 2045       4.85 %     129,773       130,887  
HUD mortgages assumed October 2011 (1)
  2036 - 2040       4.87 %     31,571       31,991  
HUD mortgages assumed December 2011(1)
  2044       3.06 %     59,166       58,884  
HUD mortgages assumed December 2012(1)
  2031 - 2045       5.50 %     81,016       81,855  
Total secured borrowings
                  301,526       366,538  
                               
Unsecured borrowings:
                             
Revolving line of credit
  2016       1.69 %   $ 5,000     $ 158,000  
Term Loan
  2017       1.94 %     200,000       100,000  
                    205,000       258,000  
                               
2020 Notes
  2020       7.50 %     200,000       200,000  
2022 Notes
  2022       6.75 %     575,000       575,000  
2024 Notes
  2024       5.875 %     400,000       400,000  
Subordinated debt
  2021       9.00 %     20,969       21,049  
                    1,195,969       1,196,049  
Premium - net
                  4,170       4,345  
Total unsecured borrowings
                  1,405,139       1,458,394  
Totals – net
                $ 1,706,665     $ 1,824,932  
 
(1)
Reflects the weighted average annual interest rate on the mortgages.

Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants.  As of December 31, 2012 and June 30, 2013, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings.

Bank Credit Agreements

We have a $700 million unsecured credit facility that we entered into on December 6, 2012, comprised of a $500 million unsecured revolving credit facility  (the “2012 Revolving Credit Facility”) and a $200 million unsecured, term loan (the “2012 Term Loan Facility” and, together with the 2012 Revolving Credit Facility, collectively, the “2012 Credit Facilities”).

The 2012 Credit Facilities include an “accordion feature” that permits us to expand our borrowing capacity thereunder by a combined $300 million, to a total of $1 billion.

At June 30, 2013, we had $5.0 million outstanding under the 2012 Revolving Credit Facility, and no letters of credit outstanding, leaving availability of $495 million.  The 2012 Revolving Credit Facility matures on December 6, 2016, with an option by us to extend the maturity one additional year.  The 2012 Revolving Credit Facility is priced at LIBOR plus an applicable percentage (beginning at 150 basis points, with a range of 100 to 190 basis points) based on our ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings, plus a facility fee based on the same ratings (initially 30 basis points, with a range of 15 to 45 basis points).
 
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At June 30, 2013, the full $200 million was outstanding under the 2012 Term Loan Facility.  The 2012 Term Loan Facility is also priced at LIBOR plus an applicable percentage (beginning at 175 basis points, with a range of 110 to 230 basis points) based our ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings.  The 2012 Term Loan Facility matures on December 6, 2017.

HUD Loans Payoff

On May 31, 2013, we paid approximately $51.0 million to retire 11 mortgages guaranteed by U.S. Department of Housing and Urban Development (“HUD”) that were assumed in connection with our acquisition of certain subsidiaries of CapitalSource in June 2010. The retirement of the 11 HUD mortgages resulted in a net gain of approximately $11.1 million. The net gain included the write-off of approximately $11.3 million related to the premium for recording the debt at fair value at the time of the transaction offset by a prepayment fee of approximately $0.2 million.
 
HUD Mortgage Debt Refinancing

On March 26, 2013, we refinanced existing HUD mortgage debt on 12 properties in Arkansas for approximately $59.4 million including closing costs that were added to the outstanding balance.  The annual interest rate for the refinanced debt decreased from 5.55% to approximately 3.06%, with the term of the refinanced mortgages remaining unchanged.  For the three months ended March 31, 2013, we paid off a total of $58.9 million, including routine principal payments on the 12 Arkansas mortgage debts.

$250 Million Equity Shelf Program

On March 18, 2013, we entered into separate Equity Distribution Agreements (collectively, the “2013 Agreements”) to sell shares of our common stock having an aggregate gross sales price of up to $250 million (the “2013 ESP”) with several financial institutions, each as a sales agent and/or principal (collectively, the “Managers”).  Under the terms of the 2013 Agreements, we may sell shares of our common stock, from time to time, through or to the Managers having an aggregate gross sales price of up to $250 million.  Sales of the shares will be made by means of ordinary brokers’ transactions on the New York Stock Exchange at market prices, or as otherwise agreed with the applicable Manager.  We will pay each Manager compensation for sales of the shares equal to 2% of the gross sales price per share of shares sold through such Manager under the applicable 2013 Agreement.  We are not obligated to sell and the Managers are not obligated to buy or sell any shares under the 2013 Agreements.  No assurance can be given that we will sell any shares under the 2013 Agreements, or, if we do, as to the price or amount of shares that we sell, or the dates when such sales will take place.

For the three months ended June 30, 2013, we sold 0.8 million shares under the 2013 ESP, at an average price of $35.74 per share, generating gross proceeds of approximately $30.0 million, before $0.6 million of commissions.  For the six months ended June 30, 2013, we sold approximately 2.3 million shares under the 2013 ESP, at an average price of $31.72 per share, generating gross proceeds of approximately $72.8 million, before $1.5 million of commissions.

Termination of $245 Million Equity Shelf Program

On March 18, 2013, we terminated our $245 million Equity Shelf Program (the “2012 ESP”) that we entered into with several financial institutions on June 19, 2012.  For the three months ended March 31, 2013, we issued approximately 1.0 million shares under the 2012 ESP at an average price of $28.29 per share, generating gross proceeds of approximately $27.8 million, before $0.6 million of commissions.

Since inception of the 2012 ESP, we have sold a total of 3.6 million shares of common stock generating total gross proceeds of $91.4 million under the program, before $1.9 million of commissions.  As a result of the termination of the 2012 ESP, no additional shares were issued under the 2012 ESP.

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Dividend Reinvestment and Common Stock Purchase Plan

For the three-month period ended June 30, 2013, approximately 0.1 million shares of our common stock at an average price of $35.89 per share were issued through our Dividend Reinvestment and Common Stock Purchase Program for net proceeds of approximately $5.3 million.  For the six-month period ended June 30, 2013, approximately 1.5 million shares of our common stock at an average price of $28.46 per share were issued through our Dividend Reinvestment and Common Stock Purchase Program for net proceeds of approximately $41.6 million.

NOTE 9 – FINANCIAL INSTRUMENTS

At June 30, 2013 and December 31, 2012, the carrying amounts and fair values of our financial instruments were as follows:

   
June 30, 2013
   
December 31, 2012
 
   
Carrying
Amount
   
Fair
Value
   
Carrying
Amount
   
Fair
Value
 
Assets:
 
(in thousands)
 
Cash and cash equivalents
  $ 7,039     $ 7,039     $ 1,711     $ 1,711  
Restricted cash
    40,127       40,127       36,660       36,660  
Mortgage notes receivable – net
    241,254       239,346       238,621       235,705  
Other investments – net
    74,646       71,596       47,339       44,077  
Totals
  $ 363,066     $ 358,108     $ 324,331     $ 318,153  
Liabilities:
                               
Revolving line of credit
  $ 5,000     $ 5,000     $ 158,000     $ 158,000  
Term loan
    200,000       200,000       100,000       100,000  
7.50% Notes due 2020 – net
    197,718       228,267       197,546       252,363  
6.75% Notes due 2022 – net
    581,452       648,030       581,799       724,240  
5.875% Notes due 2024 – net
    400,000       424,311       400,000       441,761  
HUD debt
    301,526       304,041       366,538       433,803  
Subordinated debt
    20,969       25,118       21,049       27,896  
Totals
  $ 1,706,665     $ 1,834,767     $ 1,824,932     $ 2,138,063  

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 2012 Annual Report on Form 10-K).  The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts.

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

 
Cash and cash equivalents and restricted cash:  The carrying amount of cash and cash equivalents and restricted cash reported in the balance sheet approximates fair value because of the short maturity of these instruments (i.e., less than 90 days).

 
Mortgage notes receivable:  The fair values 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: (i) notes receivable and (ii) an investment in a redeemable non-convertible preferred security of an unconsolidated business accounted for using the cost method of accounting.  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).  The fair value of the investment in the unconsolidated business is estimated using quoted market value and considers the terms of the underlying arrangement (Level 3).
 
15
 

 

 
 
Revolving line of credit:  The fair value of our borrowings under variable rate agreements are estimated using an expected present value technique based on expected cash flows discounted using the current market rates (Level 2).

 
Senior notes and other long-term borrowings:  The fair value of our borrowings under fixed rate agreements are estimated based on open market trading activity provided by a third party (Level 2).

NOTE 10 – LITIGATION

We are subject to various 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.
 
NOTE 11 – EARNINGS PER SHARE

The computation of basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average number of shares of common stock outstanding during the relevant period.  Diluted EPS is computed using the treasury stock method, which is net income available to common stockholders divided by the total weighted-average number of common outstanding shares plus the effect of dilutive common equivalent shares during the respective period.  Dilutive common shares reflect the assumed issuance of additional common shares pursuant to certain of our share-based compensation plans, including stock options, restricted stock and performance restricted stock units.
 
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The following tables set forth the computation of basic and diluted earnings per share:

   
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2013
   
2012
   
2013
   
2012
 
   
(in thousands, except per share amounts)
 
Numerator:
                       
Net income
  $ 49,058     $ 30,572     $ 87,178     $ 56,656  
Numerator for net income available to common per share - basic and diluted
  $ 49,058     $ 30,572     $ 87,178     $ 56,656  
                                 
Denominator:
                               
Denominator for basic earnings per share
    116,199       105,717       114,491       104,736  
Effect of dilutive securities:
                               
Restricted stock
    786       299       750       270  
Deferred stock
    37       17       32       17  
Denominator for diluted earnings per share
    117,022       106,033       115,273       105,023  
                                 
Earnings per share – basic:
                               
Net income – basic
  $ 0.42     $ 0.29     $ 0.76     $ 0.54  
Earnings per share – diluted:
                               
Net income – diluted
  $ 0.42     $ 0.29     $ 0.76     $ 0.54  
 
NOTE 12 – CONSOLIDATING FINANCIAL STATEMENTS

As of June 30, 2013, we had outstanding (i) $200 million 7.5% Senior Notes due 2020, (ii) $575 million 6.75% Senior Notes due 2022 and (iii) $400 million 5.875% Senior Notes due 2024, which we collectively refer to as the Senior Notes.  The Senior Notes are fully and unconditionally guaranteed, jointly and severally, by each of our subsidiaries that guarantee other indebtedness of Omega or any of the subsidiary guarantors.  Any subsidiary that we properly designate as an “unrestricted subsidiary” under the indentures governing the Senior Notes will not provide guarantees of the Senior Notes.

As of and prior to March 31, 2010, the non-subsidiary guarantors were minor and insignificant.  On June 29, 2010, we designated as “unrestricted subsidiaries” the 39 subsidiaries we acquired from CapitalSource subject to HUD indebtedness.  During the fourth quarter of 2011, we designated as “unrestricted subsidiaries” 20 subsidiaries we acquired subject to HUD indebtedness, of which five (5) subsidiaries were removed in July 2012 due to the retirement of the HUD related mortgages.  During the fourth quarter of 2012, we designated as “unrestricted subsidiaries” eight (8) subsidiaries we acquired subject to HUD indebtedness.

For the six months ended June 30, 2013 and 2012, the operating cash flow of the non-guarantor subsidiaries approximated net income of the non-guarantor subsidiaries, adjusted for depreciation and amortization expense. On March 26, 2013, the non-guarantor subsidiaries refinanced existing HUD mortgage debt on 12 properties in Arkansas for approximately $59.4 million. The refinanced amount included $58.9 million related to retiring the old HUD debt and $0.5 million of closing costs that were added to the new (refinanced) HUD debt.  On May 31, 2013, we retired 11 HUD mortgages of $62.3 million ($51.0 million related to the outstanding principal of the 11 HUD mortgages and $11.3 million related to the unamortized premium for marking the debt to market on the date the debt was assumed and $0.2 million in prepayment fees).   In addition, the non-guarantor subsidiaries also made $2.5 million of routine principal payments during the six months ended June 30, 2013.  For the six-month period ended June 30, 2012, the non-guarantor subsidiaries have not engaged in investing or financing activities other than the principal payment of $2.0 million for the HUD mortgages on the facilities owned by the non-guarantor subsidiaries.  All of the subsidiary and non-subsidiary guarantors of our outstanding senior notes are 100% owned by Omega.
  
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                The following summarized condensed consolidating financial information segregates the financial information of the non-guarantor subsidiaries from the financial information of Omega Healthcare Investors, Inc. and the subsidiary guarantors under the Senior Notes.  The results and financial position of acquired entities are included from the dates of their respective acquisitions.
 
OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATING BALANCE SHEETS
Unaudited
(in thousands, except per share amounts)
 
   
June 30, 2013
 
   
Issuer & Subsidiary
Guarantors
   

Non-Guarantor
Subsidiaries
   
Elimination
Company
   
Consolidated
 
                         
ASSETS
                       
Real estate properties
                       
Land and buildings                                                        
  $ 2,479,752     $ 571,611     $ -     $ 3,051,363  
Less accumulated depreciation                                                        
    (585,589 )     (57,925 )     -       (643,514 )
Real estate properties – net                                                      
    1,894,163       513,686       -       2,407,849  
Mortgage notes receivable – net                                                        
    241,254       -       -       241,254  
      2,135,417       513,686       -       2,649,103  
Other investments – net                                                           
    74,646       -       -       74,646  
      2,210,063       513,686       -       2,723,749  
Assets held for sale – net                                                           
    1,020       -       -       1,020  
Total investments                                                        
    2,211,083       513,686       -       2,724,769  
                                 
Cash and cash equivalents                                                           
    7,039       -       -       7,039  
Restricted cash                                                           
    6,677       33,450       -       40,127  
Accounts receivable – net                                                           
    129,141       8,918       -       138,059  
Investment in affiliates                                                           
    222,047       -       (222,047 )     -  
Other assets                                                           
    35,234       34,568       -       69,802  
Total assets                                                        
  $ 2,611,221     $ 590,622     $ (222,047 )   $ 2,979,796  
                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                               
Revolving line of credit                                                           
  $ 5,000     $ -     $ -     $ 5,000  
Term loan                                                           
    200,000       -       -       200,000  
Secured borrowings                                                           
    -       301,526       -       301,526  
Unsecured borrowings – net                                                           
    1,179,170       20,969       -       1,200,139  
Accrued expenses and other liabilities
    89,755       46,080       -       135,835  
Intercompany payable                                                           
    -       181,624       (181,624 )     -  
Total liabilities                                                        
    1,473,925       550,199       (181,624 )     1,842,500  
                                 
Stockholders’ equity:
                               
Common stock                                                           
    11,715       -       -       11,715  
Common stock – additional paid-in capital
    1,807,201       -       -       1,807,201  
Cumulative net earnings                                                           
    841,306       40,423       (40,423 )     841,306  
Cumulative dividends paid                                                           
    (1,522,926 )     -       -       (1,522,926 )
Total stockholders’ equity                                                        
    1,137,296       40,423       (40,423 )     1,137,296  
Total liabilities and stockholders’ equity
  $ 2,611,221     $ 590,622       (222,047 )   $ 2,979,796  
 
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OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATING BALANCE SHEETS
 (in thousands, except per share amounts)

   
December 31, 2012
 
   

Issuer & Subsidiary
Guarantors
   
Non – Guarantor
Subsidiaries
   
Elimination
Company
   
 
Consolidated
 
                         
ASSETS
                       
Real estate properties
                       
Land and buildings
  $ 2,466,866     $ 571,687     $     $ 3,038,553  
Less accumulated depreciation
    (535,223 )     (45,150 )           (580,373 )
Real estate properties – net
    1,931,643       526,537             2,458,180  
Mortgage notes receivable – net
    238,621                   238,621  
      2,170,264       526,537             2,696,801  
Other investments – net
    47,339                   47,339  
      2,217,603       526,537             2,744,140  
Assets held for sale – net
    1,020                   1,020  
Total investments
    2,218,623       526,537             2,745,160  
                                 
Cash and cash equivalents
    1,711                   1,711  
Restricted cash
    7,078       29,582             36,660  
Accounts receivable – net
    118,473       6,707             125,180  
Investment in affiliates
    163,610             (163,610 )      
Other assets
    38,224       35,070             73,294  
Total assets
  $ 2,547,719     $ 597,896       (163,610 )   $ 2,982,005  
                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                               
Revolving line of credit
  $ 158,000     $     $     $ 158,000  
Term loan
  100,000               100,000  
Secured borrowings
          366,538             366,538  
Unsecured borrowings – net
    1,179,345       21,049             1,200,394  
Accrued expenses and other liabilities
    99,045       46,699             145,744  
Intercompany payable
          143,158       (143,158 )      
Total liabilities
    1,536,390       577,444       (143,158 )     1,970,676  
                                 
Stockholders’ equity:
                               
Common stock
    11,239                   11,239  
Common stock – additional paid-in-capital
    1,664,855                   1,664,855  
Cumulative net earnings
    754,128       20,452       (20,452 )     754,128  
Cumulative dividends paid
    (1,418,893 )                 (1,418,893 )
Total stockholders’ equity
    1,011,329       20,452       (20,452 )     1,011,329  
Total liabilities and stockholders’ equity
  $ 2,547,719     $ 597,896     $ (163,610 )   $ 2,982,005  
 
19
 

 

 
OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
Unaudited
(in thousands, except per share amounts)

   

Three Months Ended June 30, 2013
   
Six Months Ended June 30, 2013
 
   

Issuer &
Subsidiary
Guarantors
   
Non –
Guarantor
Subsidiaries
   
 
 
Elimination
   
Consolidated
   
Issuer &
Subsidiary
Guarantors
   
Non –
Guarantor
Subsidiaries
   
 
 
Elimination
   
Consolidated
 
Revenue
                                               
Rental income
  $ 77,602     $ 15,467     $ -     $ 93,069     $ 155,243     $ 30,935     $ -     $ 186,178  
Mortgage interest income
    7,435       -       -       7,435       14,781       -       -       14,781  
Other investment income – net
    1,860       -       -       1,860       3,166       -       -       3,166  
Miscellaneous
    151       -       -       151       151       -       -       151  
Total operating revenues
    87,048       15,467       -       102,515       173,341       30,935       -       204,276  
                                                                 
Expenses
                                                               
Depreciation and amortization
    25,834       6,391       -       32,225       51,409       12,775       -       64,184  
General and administrative
    5,400       83       -       5,483       10,482       198       -       10,680  
Acquisition costs
    9       -       -       9       143       -       -       143  
Provision for uncollectible mortgages, notes and accounts receivable
    65       -       -       65       65       -       -       65  
Total operating expenses
    31,308       6,474       -       37,782       62,099       12,973       -       75,072  
                                                                 
Income before other income and expense
    55,740       8,993       -       64,733       111,242       17,962       -       129,204  
Other income (expense):
                                                               
Interest income
    6       8       -       14       1       16       -       17  
Interest expense
    (20,736 )     (4,216 )     -       (24,952 )     (41,510 )     (9,114 )     -       (50,624 )
Interest – amortization of deferred financing costs
    (693 )     (5 )     -       (698 )     (1,375 )     (5 )     -       (1,380 )
Interest – refinancing gain (costs)
    -       11,112       -       11,112       -       11,112       -       11,112  
Equity in earnings
    15,892       -       (15,892 )     -       19,971       -       (19,971 )     -  
Total other expense
    (5,531 )     6,899       (15,892 )     (14,524 )     (22,913 )     2,009       (19,971 )     (40,875 )
                                                                 
Income before gain on assets sold
    50,209       15,892       (15,892 )     50,209       88,329       19,971       (19,971 )     88,329  
Loss on assets sold – net
    (1,151 )     -       -       (1,151 )     (1,151 )     -       -       (1,151 )
Net income available to common stockholders
  $ 49,058     $ 15,892     $ (15,892 )   $ 49,058     $ 87,178     $ 19,971     $ (19,971 )</