Omega Healthcare Investors

2021
Annual Report

OUR COMMITMENT TO THE ENVIRONMENT

Omega Healthcare Investors, Inc. (“Omega”) believes in working to keep our environment cleaner and healthier. Each and
every day, we take steps to preserve the natural beauty of the surroundings that we are privileged to enjoy. In an effort to
further reduce our carbon footprint, we are asking our investors to enroll in voluntary electronic delivery of our shareholder
communications. In addition, we are also asking you to vote your shares on line. This not only reduces the costs
associated with printing and mailing, it also supports our corporate sustainability initiatives. Please see the instructions
below.

VOTE BY INTERNET —
WWW.PROXYVOTE.COM

ELECTRONIC DELIVERY OF FUTURE
PROXY MATERIALS

Use the Internet to transmit your voting instructions and for
electronic delivery of
information up until 11:59 P.M.
Eastern Time the day before the cut-off date or meeting
date. Have your proxy card in hand when you access the
web site and follow the instructions to obtain your records
and to create an electronic voting instruction form.

If you would like to reduce the costs incurred by our
company in mailing proxy materials, you can consent to
receiving all
future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet. To
sign up for electronic delivery, please follow the instructions
above to vote using the Internet and, when prompted,
indicate that you agree to receive or access proxy materials
electronically in future years.

Omega’s initiative in reducing its carbon footprint by promoting electronic delivery of shareholder materials has had a
positive effect on the environment. Based upon 2021 statistics, voluntary receipt of e-delivery resulted in the following
environmental savings:

Using approximately 131 fewer tons of wood, or 785 fewer trees

Using approximately 836 million fewer BTUs, or the equivalent amount of energy used to operate
995 residential refrigerators per year

Using approximately 589,000 fewer pounds of CO2 gases, or the equivalent of 53.5 automobiles per
year

Saving approximately 701,000 gallons of water

Saving approximately 38,600 pounds of solid waste

Reducing hazardous air pollutants by approximately 52.3 pounds

Environmental impact estimates calculated using the Environmental Paper Network Paper Calculator.
For more information visit www.papercalculator.org.

2022 ANNUAL MEETING OF STOCKHOLDERS

Friday, June 3, 2022

3

10:00 AM EDT, Virtual

Omega Healthcare Investors
303 International Circle, Suite 200
Hunt Valley, MD 21030

OMEGA HEALTHCARE INVESTORS, INC.

We are a self-administered real estate investment
trust (“REIT”), providing financing and capital to
the long-term healthcare industry with a particular
focus on skilled nursing facilities located in the
United States and the United Kingdom. Operating
in accordance with federal tax laws and regulations
governing REITs,
to
income
stockholders without federal tax liability to our
company.

distributed

is

31,

investments

2021, our domestic
of
consisted

and
At December
international
960
healthcare facilities containing approximately 95,703
in 42 states and the United
operating beds
Kingdom, operated by 63 third-party healthcare
operating companies. The table below sets forth the
portion of our total investments (excluding other
investments) represented by facilities operated by
each operator.

INVESTMENT BY OPERATOR
(in thousands)

Consulate Health Care
10.0% . . . . . . . . . . . . . . . . . . . . . .
Florida, Louisiana, Mississippi,
North Carolina, Pennsylvania, Virginia

Ciena Healthcare
9.4% . . . . . . . . . . . . . . . . . . . . . . .
Indiana, Michigan, North Carolina, Ohio,
Virginia

Maplewood Real Estate Holdings, LLC
9.1% . . . . . . . . . . . . . . . . . . . . . . .
Connecticut, Massachusetts, New Jersey,
New York, Ohio, Washington D.C.

Saber Health Group
5.6% . . . . . . . . . . . . . . . . . . . . . . .
Florida, North Carolina, Ohio, Pennsylvania,
Virginia

CommuniCare Health Services, Inc.
5.4% . . . . . . . . . . . . . . . . . . . . . . .
Indiana, Maryland, Ohio, Pennsylvania,
Virginia, West Virginia

Brookdale Senior Living, Inc.
5.2% . . . . . . . . . . . . . . . . . . . . . . .
Arizona, California, Florida, Illinios, New
Jersey, Oregon, Pennsylvania, Tennessee,
Texas, Virginia, Washington

$1,012,754

951,736

918,852

567,777

545,279

525,471

Agemo Holdings, LLC
4.8% . . . . . . . . . . . . . . . . . . . . . . .
Florida, Georgia, Kentucky, Maryland,
Tennessee

Genesis HealthCare, Inc.
3.3% . . . . . . . . . . . . . . . . . . . . . . .
Alabama, Arizona, Colorado, Massachusetts,
New Hampshire, New Mexico, North Carolina,
Rhode Island, Tennessee, Vermont,
West Virginia

Nexion Health Inc.
3.2% . . . . . . . . . . . . . . . . . . . . . . .
Louisana, Mississippi, Texas

Healthcare Homes
3.1% . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom

Other Investments
40.9% . . . . . . . . . . . . . . . . . . . . . .
53 operators with operations in 32 states and
the United Kingdom

488,130

338,781

327,182

317,137

4,137,846

Grand Total 100.00% . . . . . . . . . . . . . .

$10,130,945

Dear Stockholders,

TO OUR STOCKHOLDERS

2021 proved to be a challenging year for the senior healthcare industry, as the global pandemic, and its
impact on both occupancy and labor, continued to impinge on the financial capacity of many of our
operators. This was compounded by the limited federal financial support the industry received during the
year. As a result, a few of our operators were unable to pay rent in the second half of the year. While in
2021 we were able to offset much of this rent shortfall through the application of operator collateral, with
occupancy still near record lows and labor pressures remaining elevated, we expect the near-term financial
environment for our operators to remain challenging.

Thankfully, we believe Omega Healthcare Investors, Inc. is well-positioned to weather these issues. Our
decades of experience in dealing with operator workouts have demonstrated our ability to navigate such
issues, often with limited diminution to the long-term economics of the business. The current workout
environment is aided by the strong demand for senior healthcare assets from long-term investors, who
understand the secular drivers behind this industry. This demand allows Omega, in some situations, to
enhance operator credit by selling non-core assets at solid prices and redeploying those proceeds to achieve
rent equivalents materially in line with prior rents.

At the same time, Omega entered this pandemic with the strongest balance sheet in the Company’s
history. We further enhanced our balance sheet in 2021 by closing on a new $1.45 billion unsecured credit
facility with improved terms, as well as extending the maturity of our debt obligations by issuing
$700 million in Senior Notes due in 2033 at 3.25%, the lowest coupon in the Company’s history.

This balance sheet strength, along with our deep relationships within the industry, allowed Omega to
continue to accretively deploy capital in 2021. We closed on over $800 million of investments, most notably
the $511 million acquisition of 24 Senior Housing facilities leased to Brookdale Senior Living at an initial
yield of 8.4%.

While 2022 is expected to remain challenging for many of our operators, barring a new spike in
COVID-19 caseloads, we believe the operating environment will likely improve as the year progresses. Both
occupancy and labor constraints were showing signs of improving prior to the Omicron variant. To the
extent that society continues to open up throughout 2022, we would expect to see similar trends return.
Additionally, we believe that the 2022 Medicare reimbursement rate hike, which should come into effect in
October, will likely be strong, reflecting the inflationary pressures that have beset the industry over the past
year.

Furthermore, we continue to believe that the long-term secular demographic tailwinds in our industry
remain intact. The pandemic has reaffirmed the importance of a robust and well-funded healthcare offering
to support the elderly and frail, and we believe that, as low-cost, non-discretionary service providers, skilled
nursing and assisted living facilities will continue to play a vital role in this continuum of care.

Finally, we would like to thank our operators, our employees and you, our capital partners.
Throughout this pandemic, our operators and their brave staff have worked tirelessly to protect and care for
their residents. We are proud to be their partner. Our employees are the life blood of our business and their
diligent efforts throughout this pandemic have been remarkable. We are very grateful that they have
remained safe and we welcomed their return to the office in early March. Lastly, we are thankful for the
continued support of our capital providers during this demanding period in our Company’s history. We will
continue to work diligently to be prudent stewards of your capital and to reward your faith in Omega
Healthcare Investors.

Very truly,

C. Taylor Pickett
Chief Executive Officer
April 19, 2022

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

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

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

For the fiscal year ended December 31, 2021

For the transition period from

to

OMEGA HEALTHCARE INVESTORS, INC.
(Exact Name of Registrant as Specified in its Charter)

Maryland
(Omega Healthcare Investors, Inc.)
(State or other jurisdiction of incorporation or
organization)

1-11316
(Omega Healthcare Investors, Inc.)
(Commission file number)

38-3041398
(Omega Healthcare Investors, Inc.)
(IRS Employer Identification No.)

303 International Circle, Suite 200, Hunt Valley, MD 21030
(Address of principal executive offices)

(410) 427-1700
(Telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

Registrant
Omega Healthcare Investors, Inc.

Title of Each Class
Common Stock, $.10 Par Value

Trading Symbol (s)
OHI

Name of Exchange on Which Registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
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 twelve 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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted
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 such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one:)

Large accelerated filer ☒
Smaller reporting company ☐

Accelerated filer ☐
Emerging growth company ☐

Non-accelerated filer ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for

complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

Yes ☐ No ☒
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.

Yes ☒ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☒
The aggregate market value of the common stock Omega Healthcare Investors, Inc. held by non-affiliates was $8,621,397,772 as of
June 30, 2021, the last business day of the registrant’s most recently completed second fiscal quarter. The aggregate market value was
computed using the $36.29 closing price per share for such stock on the New York Stock Exchange on such date.

As of February 11, 2022, there were 239,112,249 shares of Omega Healthcare Investors, Inc. common stock outstanding.

Proxy Statement for the registrant’s 2022 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission

no later than 120 days after December 31, 2021, is incorporated by reference in Part III herein.

DOCUMENTS INCORPORATED BY REFERENCE

TABLE OF CONTENTS

Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

Page

PART I

Item 1.

Business

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1A. Risk Factors

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 2.

Item 3.

Item 4.

Item 5.

Item 6.

Item 7.

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mine Safety Disclosures

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[Reserved]

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . .

Item 8.

Item 9.

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

Item 10. Directors, Executive Officers of the Registrant and Corporate Governance . . . . . . . . . .

Item 11.

Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 13.

Certain Relationships and Related Transactions, and Director Independence . . . . . . . . .

Item 14.

Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 15.

Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 16.

Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV

4

18

34

35

35

35

36

37

37

53

54

54

54

55

56

56

56

57

57

58

58

1

Forward-Looking Statements

Unless otherwise indicated or except where the context otherwise requires, the terms “we,” “us” and “our”
and other similar terms in this Annual Report on Form 10-K refer to Omega Healthcare Investors, Inc. and its
consolidated subsidiaries.

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

Our actual results may differ materially from those reflected in the forward-looking statements

contained herein as a result of a variety of factors, including, among other things:

(1)

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

(2) uncertainties relating to the business operations of the operators of our assets, including those

relating to reimbursement by third-party payors, regulatory matters and occupancy levels;

(3)

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

(4)

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

(5) our ability to re-lease, otherwise transition, or sell underperforming assets or assets held for sale

on a timely basis and on terms that allow us to realize the carrying value of these assets;

(6)

the availability and cost of capital to us;

(7) changes in our credit ratings and the ratings of our debt securities;

(8) competition in the financing of healthcare facilities;

(9) competition in the long-term healthcare industry and shifts in the perception of various types of

long-term care facilities, including SNFs and ALFs;

(10) additional regulatory and other changes in the healthcare sector;

(11) changes in the financial position of our operators;

(12) the effect of economic and market conditions generally and, particularly,

in the healthcare

industry;

(13) changes in interest rates;

(14) the timing, amount and yield of any additional investments;

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

2

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

(17) our ability to maintain our status as a REIT; and

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

3

PART I

Item 1 — Business

Overview

Omega Healthcare Investors, Inc. (“Parent”) is a Maryland corporation that, together with its
consolidated subsidiaries (collectively, “Omega” or “Company”) has elected to be taxed as a REIT for
federal income tax purposes. Omega is structured as an umbrella partnership REIT (“UPREIT”) under
which all of Omega’s assets are owned directly or indirectly by, and all of Omega’s operations are conducted
directly or indirectly through, its operating partnership subsidiary, OHI Healthcare Properties Limited
Partnership (collectively with subsidiaries, “Omega OP”). As of December 31, 2021, Parent owned
approximately 97% of the issued and outstanding units of partnership interest in Omega OP (“Omega OP
Units”), and other investors owned approximately 3% of the outstanding Omega OP Units. Omega became
a publicly traded company listed on the New York Stock Exchange in 1992.

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

Our goal is to provide strong returns to our investors, while serving as the preferred capital partner to

our operators so they can concentrate on providing a high level of care for their resident-patients.

Portfolio and Investments

As of December 31, 2021, our portfolio of real estate investments included 960 healthcare facilities
located in 42 states and the U.K. and operated by 63 third-party operators and was made up of the
following:

•

•

•

real estate assets that include 685 SNFs, 133 ALFs, 20 ILFs, 16 specialty facilities and two MOBs;

fixed rate mortgages on 59 SNFs, two ALFs and two specialty facilities; and

41 facilities held for sale.

4

Included below is a summary of our total investment assets, excluding accumulated depreciation, as of

December 31, 2021 and 2020 (dollars in thousands):

As of December 31,

2021

2020

Real estate assets:

Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7,448,126

$ 7,269,596

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Furniture and equipment

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

916,328

511,271

74,062

883,765

518,664

30,129

Total real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,949,787

8,702,154

Investments in direct financing leases – net . . . . . . . . . . . . . . . . . . . . . . .

Mortgage notes receivable – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,873

835,086

261,151

10,764

885,313

81,452

Total real estate investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10,056,897

9,679,683

Other investments – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investments in unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . .

469,884

194,687

467,442

200,638

Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10,721,468

$10,347,763

Revenues

The following table summarizes our revenues by investment category for 2021, 2020 and 2019 (dollars

in thousands):

Real estate related income:

Year Ended December 31,

2021

2020

2019

Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 923,677

$753,427

$804,076

Income from direct financing leases . . . . . . . . . . . . . . . . . . . . . . .

Mortgage interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,029

91,661

1,033

89,422

1,036

76,542

Total real estate related revenues . . . . . . . . . . . . . . . . . . . . . . . .

1,016,367

843,882

881,654

Other investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

44,721

1,721

44,864

3,635

43,400

3,776

Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,062,809

$892,381

$928,830

Investment Strategy

We maintain a portfolio of long-term healthcare facilities and mortgages on healthcare facilities
located in the U.S. and the U.K. Our investments are generally geographically diverse and operated by a
diverse group of established, middle-market healthcare operators that we believe meet our standards for
quality and experience of management and creditworthiness. Our criteria for evaluating potential
investments includes but is not limited to:

•

•

•

•

the quality and experience of management and the creditworthiness of the operator of the facility;

the facility’s historical and forecasted cash flow and its ability to meet operational needs, capital
expenditure requirements and lease or debt service obligations;

the construction quality, condition and design of the facility and its environmental impact;

the location of the facility;

5

•

•

•

the tax, growth, regulatory and reimbursement environment of the applicable jurisdiction;

the occupancy rate for the facility and demand for similar healthcare facilities in the same or
nearby communities; and

the payor mix of private, Medicare and Medicaid patients at the facility.

As healthcare delivery continues to evolve, we continuously evaluate potential investments, as well as
our assets, operators and markets to position our portfolio for long-term success. Our strategy includes
applying data analytics to our investment underwriting and asset management, as well as selling or
transitioning assets that do not meet our portfolio criteria.

We prefer to invest

in fee simple ownership of properties. Due to regulatory,

tax or other
considerations, we may pursue alternative investment structures, such as mortgages and investments in joint
ventures. While the market for long-term care real estate acquisitions in the U.S. remained competitive in
2021, we continued to seek and identify selective investments that are accretive to our portfolio. In addition
to our U.S.-based investments, we expect to continue to pursue investments in alternative jurisdictions such
as the U.K. As part of our continuous evaluation of our portfolio and in connection with certain operator
workout transactions, we expect to continue to opportunistically sell assets, or portfolios of assets, from
time to time. In addition, as the long-term care industry evolves and adapts to new protocols, we have made
and may continue to make select ancillary investments in companies that enhance the technology and
infrastructure of long-term care providers and our operators.

The following summarizes our primary investment structures. The average annualized yields described
below reflect obligations under existing contractual arrangements. However, due to the nature of the
long-term care industry, we cannot assure that the operators of our facilities will meet their payment
obligations in full or when due. Therefore, the annualized yields as of December 31, 2021, set forth below,
are not necessarily indicative of future yields, which may be lower.

We seek to obtain (i) contractual rent escalations under long-term, non-cancelable, “triple-net” leases
and (ii) fixed-rate mortgage loans. We also typically seek to obtain substantial liquidity deposits, covenants
regarding minimum working capital and net worth, liens on accounts receivable and other operating assets,
and various provisions for cross-default, cross-collateralization and corporate and/or personal guarantees,
when appropriate.

Triple-Net Operating Leases

Our triple-net operating leases typically range from 5 to 15 years, plus renewal options and require the
operator to pay rent and all additional charges incurred in the operation of the leased facility. Our leases
generally provide for minimum annual rents that are subject to annual escalators. Leases with fixed annual
rental escalators are generally recognized on a straight-line basis over the initial lease period, subject to a
collectibility assessment. At December 31, 2021, our average annualized yield from operating leases was
approximately 9.8%. At December 31, 2021, approximately 94% of our operating leases have initial lease
terms expiring after 2026. The majority of our leased real estate properties are leased under provisions of
master lease agreements that govern more than one facility and to a lesser extent we lease facilities under
single facility leases. Under our master leases, our operators are required to make one monthly payment
that represents rent on all the properties that are subject to the master lease.

Some of our leases provide our operators with advances for the construction of facilities or capital
expenditures for strategic facility enhancements. Typically, these advances require the operator to pay a
fixed percentage of the advances funded as capital expenditure rent under the lease. Construction and
upgrades made under these lease clauses are capitalized within our real estate assets. Because we direct a
significant amount of our capital back into existing assets, we believe this sets the stage for our long-term
strategic success.

6

Fixed-Rate Mortgages

Our mortgages typically have a fixed interest rate for the mortgage term and are secured by first
mortgage liens on the underlying real estate and personal property of the mortgagor. We enter into
mortgages for existing facilities and for the construction of facilities. At December 31, 2021, our average
annualized yield on these investments was approximately 10.5%. At December 31, 2021, approximately 89%
of our mortgages have primary terms that expire after 2026.

The table set forth in Item 2 — Properties contains information regarding our properties and

investments as of December 31, 2021.

Borrowing Policies

We generally attempt to match the maturity of our indebtedness with the maturity of our investment
assets and employ long-term, fixed-rate debt to the extent practicable in view of market conditions in
existence from time to time.

We may use the proceeds of new indebtedness to finance our investments in additional healthcare
facilities. In addition, we may invest in properties subject to existing loans, secured by mortgages, deeds of
trust or similar liens on properties.

Policies With Respect To Certain Activities

With respect to our capital requirements, we typically rely on equity offerings, debt financing and
retention of cash flow (subject to provisions in the Internal Revenue Code of 1986, as amended (the
“Code”) concerning taxability of undistributed REIT taxable income), or a combination of these methods.
Our financing alternatives include bank borrowings, publicly or privately placed debt instruments, purchase
money obligations to the sellers of assets or securitizations, any of which may be issued as secured or
unsecured indebtedness. We have the authority to issue our common stock or other equity or debt securities
in exchange for property and to repurchase or otherwise reacquire our securities. Subject to the percentage
of ownership limitations and gross income and asset tests necessary for REIT qualification, we may invest
in securities of other REITs, other entities engaged in real estate activities or securities of other issuers,
including for the purpose of exercising control over such entities. We may engage in the purchase and sale of
investments. We do not underwrite the securities of other issuers. Our officers and directors may change any
of these policies without a vote of our stockholders. In the opinion of our management, our properties are
adequately covered by insurance.

Competition

The healthcare industry is highly competitive and will likely become more competitive in the future. We
face competition in making and pricing new investments from other public and private REITs, investment
companies, private equity and hedge fund investors, healthcare operators, lenders, developers and other
institutional investors, some of whom may have greater resources and lower costs of capital than us. We
believe our use of data analytics to underwrite investments and manage our portfolio may provide us a
competitive advantage. In addition, a significant amount of our rental and mortgage income is generally
derived from facilities in states that require state approval for development and expansion of healthcare
facilities. We believe that such state approvals may reduce competition for our operators and enhance the
value of our properties. Our operators compete on a local and regional basis with operators of facilities that
provide comparable services. The basis of competition for our operators includes, amongst other factors,
the quality of care provided, reputation, the physical appearance of a facility, price, the range of services
offered, family preference, alternatives for healthcare delivery, the supply of competing properties,
physicians, staff, referral sources,
the population and
surrounding areas.

location and the size and demographics of

Increased competition makes it more challenging for us to identify and successfully capitalize on
opportunities that meet our objectives. Our ability to compete is also impacted by national and local
economic trends, availability of investment alternatives, availability and cost of capital, construction and
renovation costs, existing laws and regulations, new legislation and population trends.

7

Taxation of Omega

Omega elected to be taxed as a REIT, under Sections 856 through 860 of the Code, beginning with our
taxable year ended December 31, 1992. To continue to qualify as a REIT, we must continue to meet certain
tests that, among other things, generally require that our assets consist primarily of real estate assets, our
income be derived primarily from real estate assets, and that we distribute at least 90% of our REIT taxable
income (other than net capital gains) to our stockholders annually. Provided we maintain our qualification
as a REIT, we generally will not be subject to U.S. federal income taxes at the corporate level on our net
income to the extent such net income is distributed to our stockholders annually. Even if we continue to
qualify as a REIT, we will continue to be subject to certain federal, state and local taxes on our income and
property. We believe that we were organized and have operated in such a manner as to qualify for taxation
as a REIT. We intend to continue to operate in a manner that will allow us to maintain our qualification as
a REIT, but no assurance can be given that we have operated or will be able to continue to operate in a
manner so as to qualify or remain qualified as a REIT.

We have utilized, and may continue to utilize, one or more taxable REIT subsidiary (“TRS”) to engage
in activities that REITs may be prohibited from performing, including the provision of management and
other services to third parties and the conduct of certain nonqualifying real estate transactions. Our TRSs
generally are taxable as regular corporations, and therefore, subject to federal, foreign, state and local
income taxes.

To the extent that we do not distribute all of our net capital gain or do distribute at least 90%, but less
than 100% of our “REIT taxable income,” as adjusted, we will be subject to tax thereon at regular ordinary
and capital gain corporate tax rates. If we were to fail to qualify as a REIT in any taxable year, as a result of
a determination that we failed to meet the annual distribution requirement or otherwise, we would be
subject to federal and state income tax, and any applicable alternative minimum tax on our taxable income
at regular corporate rates with respect to each such taxable year for which the statute of limitations remains
open. In addition, even if we continue to qualify as a REIT, we could become subject to certain excise taxes.
Moreover, unless entitled to relief under certain statutory provisions, we also would be disqualified from
treatment as a REIT for the four taxable years following the year during which qualification is lost. This
treatment would significantly reduce our net earnings and cash flow because of our additional tax liability
for the years involved, which could significantly impact our financial condition.

All of our investments are held directly or through entities owned by Omega OP. Omega OP is a pass
through entity for U.S. federal income tax purposes, and therefore we are required to take into account our
allocable share of each item of Omega OP’s income, gain, loss, deduction, and credit for any taxable year of
Omega OP ending within or with our taxable year, without regard to whether we have received or will
receive any distribution from Omega OP. Although a partnership agreement for pass through entities
generally will determine the allocation of income and losses among partners, such allocations will be
disregarded for tax purposes if they do not comply with the provisions of the Code and Treasury
Regulations governing partnership allocations. If an allocation is not recognized for federal income tax
purposes, the item subject to the allocation will be reallocated in accordance with the partners’ interests in
the partnership, which will be determined by considering all the facts and circumstances relating to the
economic arrangement of the partners with respect to such item. While Omega OP should generally not be
a taxable entity for federal income tax purposes, any state or local revenue, excise or franchise taxes that
result from the operating activities of the Omega OP may be incurred at the entity level.

Investors are strongly urged to consult their own tax advisors regarding the potential tax consequences of

an investment in us based on such investor’s particular circumstances.

Government Regulation and Reimbursement

The healthcare industry is heavily regulated. Our operators, which are primarily based in the U.S., are
subject to extensive and complex federal, state and local healthcare laws and regulations; we also have
several U.K.-based operators that are impacted by a variety of laws and regulations in their jurisdiction.
These laws and regulations are subject to frequent and substantial changes resulting from the adoption of
new legislation, rules and regulations, and administrative and judicial interpretations of existing law. The
ultimate timing or effect of these changes, which may be applied retroactively, cannot be predicted. Changes

8

in laws and regulations impacting our operators,
in addition to regulatory non-compliance by our
operators, can have a significant effect on the operations and financial condition of our operators, which in
turn may adversely impact us. There is the potential that we may be subject directly to healthcare laws and
regulations because of the broad nature of some of these regulations, such as the Anti-kickback Statute
and False Claims Act, among others.

The U.S. Department of Health and Human Services (“HHS”) declared a public health emergency on
January 31, 2020 following the World Health Organization’s decision to declare COVID-19 a public health
emergency of international concern. This declaration, which has been extended through April 14, 2022,
allows HHS to provide temporary regulatory waivers and new reimbursement rules designed to equip
providers with flexibility to respond to the COVID-19 pandemic by suspending various Medicare patient
coverage criteria and documentation and care requirements, including, for example, suspension of the
three-day prior hospital stay coverage requirement and expanding the list of approved services which may
be provided via telehealth. These regulatory actions have contributed, and may continue to contribute, to a
change in census volumes and skilled nursing mix that may not otherwise have occurred. It remains
uncertain when federal and state regulators will resume enforcement of those regulations which are waived
or otherwise not being enforced during the public health emergency due to the exercise of enforcement
discretion.

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

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

9

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

and in certain cases, to us.

Reimbursement Changes Related to COVID-19:

U.S. Federal Stimulus Funds and Financial Assistance for Healthcare Providers.

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

In further response to the pandemic, in 2020, the CARES Act authorized approximately $178 billion
to be distributed through the Provider Relief Fund to reimburse eligible healthcare providers for healthcare
related expenses or lost revenues that are attributable to coronavirus. In addition, in September 2021, HHS
announced the release of $25.5 billion in provider funding, including $17 billion of the $178 billion
previously authorized through the CARES Act and $8.5 billion for rural providers through the American
Rescue Plan Act. The Provider Relief Fund is administered under the broad authority and discretion of
HHS and recipients are not required to repay distributions received to the extent they are used in
compliance with applicable requirements.

HHS began distributing Provider Relief Fund grants in April 2020 and has made grants available to
various provider groups in four general phases. In May 2020, HHS announced that approximately
$9.5 billion in targeted distributions would be made available to eligible SNFs, approximately $2.5 billion of
which were composed of performance-based incentive payments tied to a facility’s infection rate.
Approximately $8.5 billion in additional funds were added to the Provider Relief Fund through the
American Rescue Plan Act enacted on March 11, 2021; however, these funds are limited to rural providers
and suppliers. In September 2021, HHS announced the release of $25.5 billion of funding, including
$17 billion in Phase 4 Provider Relief Fund payments for a broad range of healthcare providers who can
document revenue loss and expenses associated with the pandemic between July 1, 2020 and March 31,
2021, as well as release of the $8.5 billion in funding for rural providers, including those with Medicaid and
in September 2021, the Centers for Disease Control and Prevention
Medicare patients. In addition,
(“CDC”) announced it would allocate $500 million to staffing, training and deployment of state-based
nursing home and long-term care “strike teams” to assist facilities with known or suspected COVID-19
outbreaks.

HHS continues to evaluate and provide allocations of, and issue regulation and guidance regarding,
grants made under the CARES Act. There are substantial uncertainties regarding the extent to which our
operators will receive additional funding from HHS.

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

Additionally, CMS suspended Medicare sequestration payment adjustments, which would have
otherwise reduced payments to Medicare providers by 2%, from May 1, 2020 through December 31, 2020,
but also extended sequestration through 2030. The Bipartisan-Bicameral Omnibus COVID Relief Deal
passed in December 2020 further extended the suspension of the Medicare sequestration until March 31,
2021, and it most recently has been further extended from December 31, 2021 through March 31, 2022.

10

While not limited to healthcare providers, the CARES Act additionally provided payroll tax relief for
employers, allowing them to defer payment of employer Social Security taxes that are otherwise owed for
wage payments made after March 27, 2020 through December 31, 2020 to December 31, 2021 with respect
to 50% of the payroll taxes owed, with the remaining 50% deferred until December 31, 2022.

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

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

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

Reimbursement Generally:

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

11

Medicare. On July 29, 2021, CMS issued a final rule regarding the government fiscal year 2022
Medicare payment rates and quality payment programs for SNFs, with aggregate Medicare Part A
payments projected to increase by $410 million, or 1.2%, for fiscal year 2022 compared to fiscal year 2021.
This estimated reimbursement increase is attributable to a 2.7% market basket increase factor less a
0.8 percentage point forecast error adjustment and a 0.7 percentage point productivity adjustment, and a
$1.2 million decrease due to the proposed reduction to the SNF prospective payment system rates to
account for the recent blood-clotting factors exclusion. The annual update is reduced by two percentage
points for SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting
Program. CMS has indicated that these impact figures did not incorporate the SNF Value-Based Program
reductions that are estimated to be $184.25 million in fiscal year 2022.

Payments to providers continue to be increasingly tied to quality and efficiency. The Patient Driven
Payment Model (“PDPM”), which was designed by CMS to improve the incentives to treat the needs of the
whole patient, became effective October 1, 2019. Prior to COVID-19, we believed that certain of our
operators could realize efficiencies and cost savings from increased concurrent and group therapy under
PDPM and some had reported early positive results. Given the ongoing impacts of COVID-19, many
operators are and may continue to be restricted from pursuing concurrent and group therapy and unable to
realize these benefits. Additionally, our operators continue to adapt to the reimbursement changes and
other payment reforms resulting from the value based purchasing programs applicable to SNFs under the
2014 Protecting Access to Medicare Act. These reimbursement changes have had and may, together with
any further reimbursement changes to PDPM or value-based purchasing models, in the future have an
adverse effect on the operations and financial condition of some operators and could adversely impact the
ability of operators to meet their obligations to us.

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

Other Regulation:

Office of the Inspector General Activities. The Office of Inspector General (“OIG”) of HHS has
provided long-standing guidance for SNFs regarding compliance with federal fraud and abuse laws. More
recently, the OIG has conducted increased oversight activities and issued additional guidance regarding its
findings related to identified problems with the quality of care and the reporting and investigation of
potential abuse or neglect at group homes, nursing homes and SNFs. The OIG has additionally reviewed the
staffing levels reported by SNFs as part of its August 2018 and February 2019 Work Plan updates, and
included a review of involuntary transfers and discharges from nursing homes in the June 2019 Work Plan
updates. In August 2020, the OIG released its findings regarding its review of staffing levels in SNFs from
2018. The OIG recommended that CMS enhance efforts to ensure nursing homes meet daily staffing
requirements and explore ways to provide consumers with additional information on nursing homes’ daily
staffing levels and variability. The OIG indicated that while the review was initiated before the COVID-19
pandemic emerged, the pandemic reinforces the importance of sufficient staffing for nursing homes, as
inadequate staffing can make it more difficult for nursing homes to respond to infectious disease outbreaks
like COVID-19. It is unknown what impact, if any, enhanced scrutiny of staffing levels by OIG and CMS
will have on our operators.

Department of Justice and Other Enforcement Actions. SNFs are under intense scrutiny for ensuring
the quality of care being rendered to residents and appropriate billing practices conducted by the facility.
The Department of Justice (“DOJ”) has historically used the False Claims Act to civilly pursue nursing
homes that bill the federal government for services not rendered or care that is grossly substandard. For
example, California prosecutors announced in March 2021 an investigation into a skilled nursing provider
that is affiliated with one of our operators, alleging the chain manipulated the submission of staffing level
data in order to improve its Five Star rating. In 2020, the DOJ launched a National Nursing Home
Initiative to coordinate and enhance civil and criminal enforcement actions against nursing homes with

12

grossly substandard deficiencies. Such enforcement activities are unpredictable and may develop over
lengthy periods of time. An adverse resolution of any of these enforcement activities or investigations
incurred by our operators may involve injunctive relief and/or substantial monetary penalties, either or both
of which could have a material adverse effect on their reputation, business, results of operations and cash
flows.

Medicare and Medicaid Program Audits. Governmental agencies and their agents, such as the
Medicare Administrative Contractors, fiscal intermediaries and carriers, as well as the OIG, CMS and state
Medicaid programs, conduct audits of our operators’ billing practices from time to time. CMS contracts
with Recovery Audit Contractors on a contingency basis to conduct post-payment reviews to detect and
correct improper payments in the fee-for-service Medicare program, to managed Medicare plans and in the
Medicaid program. Regional Recovery Audit Contractor program auditors along with the OIG and DOJ
are expected to continue their efforts to evaluate SNF Medicare claims for any excessive therapy charges.
CMS also employs Medicaid Integrity Contractors to perform post-payment audits of Medicaid claims and
identify overpayments. In addition, the state Medicaid agencies and other contractors have increased their
review activities. To the extent any of our operators are found out of compliance with any of these laws,
regulations or programs, their financial position and results of operations can be adversely impacted, which
in turn could adversely impact us.

Fraud and Abuse. There are various federal and state civil and criminal

laws and regulations
governing a wide array of healthcare provider referrals, relationships and arrangements, including laws and
regulations prohibiting fraud by healthcare providers. Many of these complex laws raise issues that have not
been clearly interpreted by the relevant governmental authorities and courts.

These laws include: (i) federal and state false claims acts, which, among other things, prohibit providers
from filing false claims or making false statements to receive payment from Medicare, Medicaid or other
federal or state healthcare programs; (ii) federal and state anti-kickback and fee-splitting statutes, including
the Medicare and Medicaid Anti-kickback statute, which prohibit the payment or receipt of remuneration
to induce referrals or recommendations of healthcare items or services, such as services provided in a SNF;
(iii) federal and state physician self-referral laws (commonly referred to as the Stark Law), which generally
prohibit referrals by physicians to entities for designated health services (some of which are provided in
SNFs) with which the physician or an immediate family member has a financial relationship; (iv) the federal
Civil Monetary Penalties Law, which prohibits, among other things, the knowing presentation of a false or
fraudulent claim for certain healthcare services and (v) federal and state privacy laws, including the privacy
and security rules contained in the Health Insurance Portability and Accountability Act of 1996, which
provide for the privacy and security of personal health information.

Violations of healthcare fraud and abuse laws carry civil, criminal and administrative sanctions,
including punitive sanctions, monetary penalties,
imprisonment, denial of Medicare and Medicaid
reimbursement and potential exclusion from Medicare, Medicaid or other federal or state healthcare
programs. Additionally, there are criminal provisions that prohibit filing false claims or making false
statements to receive payment or certification under Medicare and Medicaid, as well as failing to refund
overpayments or improper payments. Violation of the Anti-kickback statute or Stark Law may form the
basis for a federal False Claims Act violation. These laws are enforced by a variety of federal, state and local
agencies and can also be enforced by private litigants through, among other things, federal and state false
claims acts, which allow private litigants to bring qui tam or whistleblower actions, which have become
more frequent in recent years.

Several of our operators have responded to subpoenas and other requests for information regarding
their operations in connection with inquiries by the DOJ or other regulatory agencies. In addition,
MedEquities Realty Trust, Inc., which we acquired in May 2019, has responded to a Civil Investigative
Demand from the DOJ in connection with Lakeway Regional Medical Center. See Note 20 —
Commitments and Contingencies to the Consolidated Financial Statements.

Privacy. Our operators are subject to various federal, state and local laws and regulations designed to
protect the confidentiality and security of patient health information,
including the federal Health
Insurance Portability and Accountability Act of 1996, as amended, the Health Information Technology for
(“HITECH”), and the corresponding regulations promulgated
Economic and Clinical Health Act

13

thereunder (collectively referred to herein as “HIPAA”). The HITECH Act expanded the scope of these
provisions by mandating individual notification in instances of breaches of protected health information,
providing enhanced penalties for HIPAA violations, and granting enforcement authority to states’
Attorneys General in addition to the HHS Office for Civil Rights (“OCR”). Additionally, in a final rule
issued in January 2013, HHS modified the standard for determining whether a breach has occurred by
creating a presumption that any non-permitted acquisition, access, use or disclosure of protected health
information is a breach unless the covered entity or business associate can demonstrate through a risk
assessment that there is a low probability that the information has been compromised.

Various states have similar laws and regulations that govern the maintenance and safeguarding of
patient records, charts and other information generated in connection with the provision of professional
medical services. These laws and regulations require our operators to expend the requisite resources to
secure protected health information, including the funding of costs associated with technology upgrades.
Operators found in violation of HIPAA or any other privacy law or regulation may face significant
monetary penalties. In addition, compliance with an operator’s notification requirements in the event of a
breach of unsecured protected health information could cause reputational harm to an operator’s business.

Licensing and Certification. Our operators and facilities are subject to various federal, state and local
including laws and regulations under Medicare and
licensing and certification laws and regulations,
Medicaid requiring operators of SNFs and ALFs to comply with extensive standards governing operations.
Governmental agencies administering these laws and regulations regularly inspect our operators’ facilities
and investigate complaints. Our operators and their managers receive notices of observed violations and
deficiencies from time to time, and sanctions have been imposed from time to time on facilities operated by
them. In addition, many states require certain healthcare providers to obtain a certificate of need, which
requires prior approval for the construction, expansion or closure of certain healthcare facilities, which has
the potential to impact some of our operators’ abilities to expand or change their businesses.

Other Laws and Regulations. Additional federal, state and local laws and regulations affect how our
operators conduct their operations, including laws and regulations protecting consumers against deceptive
practices and otherwise generally affecting our operators’ management of their property and equipment
and the conduct of their operations (including laws and regulations involving fire, health and safety; the
Americans with Disabilities Act (the “ADA”), which imposes certain requirements to make facilities
accessible to persons with disabilities, the costs for which we may be directly or indirectly responsible; the
U.S. Patient Protection and Affordable Care Act, as amended by the Health Care and Education
Reconciliation Act of 2010 (collectively referred to as the “Healthcare Reform Law”), which amended
infection prevention and control programs, and
requirements for staff
pharmacy services, among others; staffing; quality of services, including care and food service; residents’
rights,
including those set by the federal
Occupational Safety and Health Administration (in the U.S.). It is anticipated that our operators will
continue to face additional federal and state regulatory requirements related to the operation of their
facilities in response to the COVID-19 pandemic. These requirements may continue to evolve and develop
over lengthy periods of time.

including abuse and neglect laws; and health standards,

training, discharge planning,

General and Professional Liability. Although arbitration agreements have been effective in limiting
general and professional liabilities for SNF and long-term care providers, there have been numerous lawsuits
in recent years challenging the validity of arbitration agreements in long-term care settings. On July 16,
2019, CMS issued a final rule lifting the prohibition on pre-dispute arbitration agreements offered to
residents at the time of admission provided that certain requirements are met. The rule prohibits providers
from requiring residents to sign binding arbitration agreements as a condition for receiving care and
requires that the agreements specifically grant residents the explicit right to rescind the agreement within
thirty calendar days of signing. A number of professional liability and employment related claims have been
filed or are threatened to be filed against long-term care providers related to COVID-19. While such claims
may be subject to liability protection provisions within various state executive orders or legislation and/or
federal legislation, an adverse resolution of any of legal proceeding or investigations against our operators
may involve injunctive relief and/or substantial monetary penalties, either or both of which could have a
material adverse effect on our operators’ reputation, business, results of operations and cash flows.

14

U.K. Regulations. The U.K. also imposes very high levels of regulation on our U.K.-based operators.
In England, where all of our operators are based, the Care Quality Commission has regulatory oversight
authority over the health and social care sectors and is responsible for approving, registering and inspecting
our operators and the properties where they provide services. There is also a detailed legislative and
regulatory framework in the U.K. designed to protect the vulnerable (whether by virtue of age or physical
and/or mental impairment) and to prevent abuse. Each of these regulatory regimes carries significant
enforcement powers, including the ability to criminally prosecute offending operators and facilities, impose
fines or revoke registrations. Additionally, under the purview of the Competition and Markets Authority,
local authorities are tasked with providing and funding the care needs of eligible residents within the
applicable local authority area. There is ongoing debate and uncertainty within the U.K. as to how growing
care needs will be met and funded in the future, and it is not clear at this stage what, if any, or the extent of
such, impact will be on our U.K-based operators.

Additionally, there has been significant legislation passed and guidance issued in the U.K. in respect of
the COVID-19 pandemic. Much of the legislation or guidance set out the additional precautions, measures
or restrictions which were required in the care sector, including infection control measures and vaccination
requirements for care sector workers. In addition, the U.K. government provided certain support to the care
sector, including the provision of free testing and personal protective equipment (“PPE”) in certain settings.
The U.K. government also provided some financial support to the sector, predominantly to publicly-funded
services but also relation to infection control and testing measures it had introduced. This additional
legislation has significantly increased the regulatory burdens under which our U.K. operators must
currently deliver services and continues to have a significant impact on the operations and financial
condition of our U.K. operators, which has been somewhat offset by the level of stimulus provided.

Environmental, Social and Governance (“ESG”)

We prioritize environmental, social and governance initiatives that matter most to our business and
shareholders. Our Nominating and Corporate Governance Committee of our Board of Directors has been
charged with primary oversight of our sustainability efforts. The Company has established an ESG Steering
Committee, with senior representation from all divisions of the company, that is responsible for advancing
the Company’s governance, sustainability, and social programs, including diversity and inclusion. The
Nominating and Corporate Governance Committee exercises oversight of the ESG Steering Committee.

As a triple-net landlord, our third-party operators maintain operational control and responsibility for
our real estate on a day-to-day basis. While our ability to mandate environmental changes to their
operations is limited, our tenants are contractually bound to preserve and maintain our properties in good
working order and condition. In connection with this, they are required to meet or exceed annual
expenditure thresholds on capital improvements and enhancements of our properties, which in some cases
may facilitate improvements in the environmental performance of our properties and reduces energy usage,
water usage, and direct and indirect greenhouse gas emissions. Beginning in 2021, we have also implemented
a capital expenditure sustainability initiative to encourage operators to invest in financially beneficial and
environmentally enhancing investment projects. The goal is to incentivize operators to invest in sustainable
capital projects that provide a favorable return on investment while reducing the environmental footprint of
these operations. Our due diligence on real estate acquisitions generally includes environmental assessments
as part of our analysis to understand the environmental condition of the property, and to determine
whether the property meets certain environmental standards. Similarly, during the due diligence process, we
seek to evaluate the risk of physical, natural disaster or extreme weather patterns on the properties we are
looking to acquire and to assess their compliance with building codes, which often results in remediations
that incorporate sustainable improvements into our properties.

We are committed to providing a positive and engaging work environment for our employees and
taking an active role in the betterment of the communities in which our employees live and work. See also
“Human Capital Management” immediately below.

Additional information regarding our ESG programs and initiatives is available in the ESG section of
including our Corporate

our website at www.omegahealthcare.com. Information on our website,
ESG Report or sections thereof, is not incorporated by reference into this Annual Report.

15

Human Capital Management

Our success is based on the focused passion and dedication of our people. We believe our employees’
commitment to Omega provides better service to our tenants and stakeholders, supports an inclusive and
collegial working environment and generates long-term value for our shareholders and the communities
which we serve. As of February 1, 2022, we had 70 employees including the executive officers listed below,
none of whom is subject to a collective bargaining agreement. Due to the size and nature of our business,
our future performance depends to a significant degree upon the continued contributions of our executive
management team and other key employees. As such, the ability to attract, develop and retain qualified
personnel will continue to be important to the Company’s long-term success.

We have a long-standing commitment to being an equal opportunity employer. In 2021, Omega was
included in the Bloomberg Gender-Equality Index — one of only 380 companies worldwide, and fewer than
15 U.S. REITs, to be included in the 2021 index. In January 2022, Omega was included in the Bloomberg
in 2021, we reinforced our
2022 Gender-Equality Index for the third consecutive year. Additionally,
diversity and inclusion commitment by signing the CEO Action for Diversity and Inclusion Pledge, one of
the largest CEO-driven business commitments to act on and advance diversity, equity and inclusion in the
workplace. The Company has expanded its recruitment practices to reach more diverse candidates for
employment and Board positions and has developed an internship program with a focus on increasing
diversity in the pipeline of eligible employees. The Company requires employees and Board members to
certify its Code of Business Conduct & Ethics periodically, and from time to time, conducts compliance
training for all employees and Directors, including diversity and inclusion training. As of February 1, 2022,
at the executive level, one of the Company’s four executive officers is a woman and brings ethnic diversity to
the team, and on the senior management team, 25% are women and 25% bring ethnic diversity to the team.

We are committed to providing a positive and engaging work environment for our employees and
taking an active role in the betterment of the communities in which our employees live and work. Our
full-time employees are provided a competitive benefits program, including comprehensive healthcare
benefits and a 401(k) plan with a matching contribution from the Company, the opportunity to participate
in our employee stock purchase program, bonus and incentive pay opportunities, competitive paid time-off
benefits and paid parental leave, wellness programs, continuing education and development opportunities,
and periodic engagement surveys. In addition, we believe that giving back to our community is an extension
of our mission to improve the lives of our stockholders, our employees, and their families. The Company
has implemented a matching program for charitable contributions of employees.

Information about our Executive Officers

Biographical information regarding our executive officers and their ages as of February 1, 2022 are set

forth below:

C. Taylor Pickett (60) is our Chief Executive Officer and has served in this capacity since June 2001.
Mr. Pickett has also served as Director of the Company since May 30, 2002. Mr. Pickett has also been a
member of the board of trustees of Corporate Office Properties Trust, an office REIT focusing on U.S.
government agencies and defense contractors, since November 2013. From January 1993 to June 2001,
Mr. Pickett served as a member of the senior management team of Integrated Health Services, Inc., most
recently as Executive Vice President and Chief Financial Officer. Prior to joining Integrated Health
Services, Inc. Mr. Pickett held various positions at PHH Corporation and KPMG Peat Marwick.

Daniel J. Booth (58) is our Chief Operating Officer and has served in this capacity since October 2001.
From 1993 to October 2001, Mr. Booth served as a member of the management team of Integrated Health
Services, Inc., most recently serving as Senior Vice President, Finance. Prior to joining Integrated Health
Services, Inc., Mr. Booth served as a Vice President in the Healthcare Lending Division of Maryland
National Bank (now Bank of America).

Robert O. Stephenson (58) is our Chief Financial Officer and has served in this capacity since
August 2001. From 1996 to July 2001, Mr. Stephenson served as the Senior Vice President and Treasurer of
Integrated Health Services, Inc. Prior to joining Integrated Health Services, Inc., Mr. Stephenson held
various positions at CSX Intermodal, Inc., Martin Marietta Corporation and Electronic Data Systems.

16

Gail D. Makode (46) is our Chief Legal Officer, General Counsel and has served in this capacity since
September 2019. Previously, she served as Senior Vice President, General Counsel and Corporate Secretary
of IES Holdings, Inc., from October 2012 to September 2019. Prior to IES, she served in various legal
capacities at MBIA Inc., including as General Counsel and Member of the Board at MBIA Insurance
Corporation and Chief Compliance Officer of MBIA Inc., from 2006 to 2012. Earlier in her career, she
served as Vice President and Counsel for Deutsche Bank AG, and as an associate at Cleary, Gottlieb, Steen,
& Hamilton, where she specialized in public and private securities offerings and mergers and acquisitions.

Available Information

Our website address is www.omegahealthcare.com. Our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)
are available on our website, free of charge, as soon as reasonably practicable after we electronically file such
materials with, or furnish them to, the U.S. Securities and Exchange Commission (“SEC”). Additionally,
the SEC maintains a website that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC, including us, at www.sec.gov.

17

Item 1A — Risk Factors

This section discusses material risk factors that may affect our business, operations and financial
condition. It does not describe all risks and uncertainties applicable to us, our industry or ownership of our
securities. If any of the following risks, or any other risks and uncertainties that are not addressed below or
that we have not yet identified, actually occur, we could be materially adversely affected and the value of our
securities could decline.

Risks Related to the Operators of Our Facilities

Our financial position could be weakened and our ability to make distributions and fulfill our
obligations with respect to our indebtedness could be limited if our operators, or a portion thereof, become
unable to meet their obligations to us or fail to renew or extend their relationship with us as their lease
terms expire or their mortgages mature, or if we become unable to lease or re-lease our facilities or make
mortgage loans on economically favorable terms. We have no operational control over our operators.

The bankruptcy or insolvency of our operators could limit or delay our ability to recover on our investments.

We are exposed to the risk that a distressed or insolvent operator may not be able to meet its lease,
loan, mortgage or other obligations to us or other third parties. This risk is heightened during a period of
economic or political instability. Although each of our lease and loan agreements typically provides us with
the right to terminate, evict an operator, foreclose on our collateral, demand immediate payment and
exercise other remedies upon the bankruptcy or insolvency of an operator, title 11 of the U.S. Code (the
“Bankruptcy Code”) would limit or, at a minimum, delay our ability to collect unpaid pre-bankruptcy rents
and mortgage payments and to pursue other remedies against a bankrupt operator. While we sometimes
have third-party guarantees of an operator’s lease or loan obligations, such guarantees can be expensive to
enforce, and have their own risks of collection as against the guarantors.

Leases. A bankruptcy filing by one of our lessee operators would typically prevent us from collecting
unpaid pre-bankruptcy rents or evicting the operator, absent approval of the bankruptcy court. The
Bankruptcy Code provides a lessee with the option to assume or reject an unexpired lease within certain
specified periods of time. Generally, a lessee is required to pay all rent that becomes payable between the
date of its bankruptcy filing and the date of the assumption or rejection of the lease (although such
payments will likely be delayed as a result of the bankruptcy filing). If one of our lessee operators chooses
to assume its lease with us, the operator must promptly cure all monetary defaults existing under the lease
(including payment of unpaid pre-bankruptcy rents) and provide adequate assurance of its ability to
perform its future lease obligations. Even where a lessee operator assumes its lease with us, it will first often
threaten to reject that lease to obtain better lease terms from us, and we sometimes have to consider
making, or we do make, such economic concessions to avoid rejection of the lease and our taking a closed
facility back. If one of our lessee operators opts to reject its lease with us, we would have a claim against
such operator for unpaid and future rents payable under the lease, but such claim would be subject to a
statutory “cap” under the Bankruptcy Code, and would likely result in a recovery substantially less than the
face value of such claim. Although the operator’s rejection of the lease would permit us to recover
possession of the leased facility, we would likely face losses, costs and delays associated with repairs and/or
maintenance of the facility and then re-leasing the facility to a new operator, or costs associated with selling
the facility. In any event, re-leasing a facility or selling it could take a material amount of time, and the pool
of interested and qualified tenants or buyers will be limited due to the unique nature of our properties,
which may depress values and our eventual recovery. Finally, whether a lease operator in bankruptcy ends
up assuming or rejecting our lease, we will incur legal and collection costs, which can be difficult or
impossible to recover.

Several other factors could impact our rights under leases with bankrupt operators. First, the operator
could seek to assign its lease with us to a third party. The Bankruptcy Code disregards anti-assignment
provisions in leases to permit the assignment of unexpired leases to third parties (provided all monetary
defaults under the lease are promptly cured and the assignee can demonstrate its ability to perform its
obligations under the lease). Second, in instances in which we have entered into a master lease agreement
with an operator that operates more than one facility, the bankruptcy court could determine that the master
lease was comprised of separate, divisible leases (each of which could be separately assumed or rejected),

18

rather than a single, integrated lease (which would have to be assumed or rejected in its entirety). Finally,
the bankruptcy court could re-characterize our lease agreement as a disguised financing arrangement,
which could require us to receive bankruptcy court approval to foreclose or pursue other remedies with
respect to the facility.

Mortgages. A bankruptcy filing by an operator to which we have made a loan secured by a mortgage
would typically prevent us from collecting unpaid pre-bankruptcy mortgage payments and foreclosing on
our collateral, absent approval of the bankruptcy court. As an initial matter, we could ask the bankruptcy
court to order the operator to make periodic payments or provide other financial assurances to us during
the bankruptcy case (known as “adequate protection”), but the ultimate decision regarding “adequate
protection” (including the timing and amount of any “adequate protection” payments) rests with the
bankruptcy court. In addition, we would need bankruptcy court approval before commencing or continuing
any foreclosure action against the operator’s collateral (including a facility). The bankruptcy court could
withhold such approval, especially if the operator can demonstrate that the facility or other collateral is
necessary for an effective reorganization and that we have a sufficient “equity cushion” in the facility or that
we are otherwise protected from any diminution in value of the collateral. If the bankruptcy court does not
either grant us “adequate protection” or permit us to foreclose on our collateral, we may not receive any
loan payments until after the bankruptcy court confirms a plan of reorganization for the operator. In
addition, in any bankruptcy case of an operator to which we have made a loan, the operator may seek
bankruptcy court approval to pay us (i) over a longer period of time than the terms of our loan, (ii) at a
different interest rate, and/or (iii) for only the value of the collateral, instead of the full amount of the loan.
Finally, even if the bankruptcy court permits us to foreclose on the facility, we would still be subject to the
losses, costs and other risks associated with a foreclosure sale, including possible successor liability under
government programs,
indemnification obligations and suspension or delay of third-party payments.
Should such events occur, our income and cash flow from operations would be adversely affected.

Failure by our operators to comply with government regulations may adversely impact their ability to make
debt or lease payments to us.

Our operators are subject to numerous federal, state and local laws and regulations in the U.S. and, for
certain operators, in the U.K., including those described in Item 1. Business — Government Regulation and
Reimbursement. Laws and regulations impacting our operators include, without limitation, those relating to
reimbursement (including Medicare and Medicaid reimbursement programs in the US), quality of care
initiatives, licensing and certification of our operators, fraud and abuse laws and regulations, privacy and
security laws. Other federal, state and local laws and regulations also affect how our operators conduct their
operations. We cannot predict the effect that the costs of complying with these laws may have on the
revenues of our operators, and thus their ability to meet their obligations to us. In addition, requirements
applicable to our operators are subject
to frequent and substantial changes (sometimes applied
retroactively) resulting from new legislation, adoption of rules and regulations, and administrative and
judicial interpretations of existing law, and any changes in the regulatory framework could have a material
adverse effect on our tenants, operators, guarantors and managers. Any of these changes may be more
pronounced following federal and state leadership changes and particularly following a change in
presidential administrations. The ultimate timing or effect of these changes cannot be predicted. These
changes may have a dramatic effect on our operators’ costs of doing business and on the amount of
reimbursement by both government and other third-party payors. The failure of any of our operators to
comply with these laws, requirements and regulations could adversely affect their ability to meet their
obligations to us. If we fail to effectively implement or appropriately adjust our operational and strategic
initiatives with respect to the implementation of new laws and regulations, or do not do so as effectively as
our competitors, our results of operations may be materially adversely affected.

Our U.S. operators depend on reimbursement
from governmental and other third-party payors, and
reimbursement rates from such payors may be reduced or modified, including through reductions to the
Medicare and Medicaid programs.

Changes in the reimbursement rate or methods of payment from governmental and other third-party
payors, including the Medicare and Medicaid programs, or the implementation of other measures to reduce
reimbursements for services provided by our operators has in the past, and could in the future, result in a

19

substantial reduction in our operators’ revenues and operating margins. Reimbursement from governmental
and other third-party payors could be reduced as part of spending cuts and tax reform initiatives that
impact Medicare, Medicaid or Medicare Advantage Plans, or as part of retroactive adjustments during
claims settlement processes or as a result of post-payment audits. Further, alternative payment models, as
well as other legislative initiatives, have the potential to affect Medicare payments to SNFs, including, but
not limited to, provisions changing the payment methodology, setting reimbursement caps, implementing
value based purchasing and payment bundling, and studying the appropriateness of restrictions on
payments for healthcare acquired conditions. In some cases, states have enacted or are considering enacting
measures designed to reduce Medicaid expenditures or freeze Medicaid rates and to make changes to
private healthcare insurance, and several commercial payors have expressed an intent to pursue certain
value-based purchasing models and initiatives. Since our operators’ profit margins on Medicaid patients are
generally relatively low, more than modest reductions in Medicaid reimbursement and an increase in the
number of Medicaid patients could place some operators in financial distress, which in turn could adversely
affect us. If funding for Medicare and/or Medicaid is reduced, it could have a material adverse effect on our
operators’ results of operations and financial condition, which could adversely affect our operators’ ability
to meet their obligations to us. Significant limits on the scope of services reimbursed and on reimbursement
rates, as well as changes in reimbursement policies or other measures altering payment methodologies for
services provided by our operators, could have a material adverse effect on our operators’ results of
operations and financial condition, which could cause the revenues of our operators to decline and
negatively impact their ability to meet their obligations to us.

We may be unable to find a replacement operator for one or more of our leased properties.

From time to time, we need to find a replacement operator for one or more of our leased properties for
a variety of reasons, including upon the expiration of the lease term or the occurrence of an operator
default. While we are attempting to locate one or more replacement operators, we sometimes experience
and may in the future experience a decrease or cessation of rental payments on the applicable property or
properties. We cannot assure you that any of our current or future operators will elect to renew their
respective leases with us upon expiration of the terms thereof. Similarly, we cannot assure you that we will
be able to locate a suitable replacement operator or, if we are successful in locating a replacement operator,
that the rental payments from the new operator would not be significantly less than the existing rental
payments. Our ability to locate a suitable replacement operator may be significantly delayed or limited by
various state licensing, receivership, certificate of need or other laws, as well as by Medicare and Medicaid
change-of-ownership rules. We also may incur substantial additional expenses in connection with any such
licensing, receivership or change-of-ownership proceedings. Any such delays, limitations and expenses could
materially delay or impact our ability to collect rent, obtain possession of leased properties or otherwise
exercise remedies for default.

Our operators may be subject to significant legal actions that could result in their increased operating costs and
substantial uninsured liabilities, which may affect their ability to meet their obligations to us; and we may
become party to such legal actions.

Our operators may be subject to claims for damages relating to the services that they provide. While we
are unable to predict the scope of future federal, state and local regulations and legislation, including the
Medicare and Medicaid statutes and regulations, we believe that long-term care providers will continue to
be the focus of governmental investigations, particularly in the area of Medicare/Medicaid false claims and
in the use of COVID-19 related funds and compliance with infection control and quality standards. We can
give no assurance that the insurance coverage maintained by our operators will cover all claims made
against them or continue to be available at a reasonable cost, if at all. In some states, insurance coverage for
the risk of punitive damages arising from professional and general liability claims and/or litigation may not,
in certain cases, be available to operators due to state law prohibitions or limitations of availability. As a
result, our operators operating in these states may be liable for punitive damage awards that are either not
covered or are in excess of their insurance policy limits.

20

Any adverse determination in a legal proceeding or governmental investigation, whether currently
asserted or arising in the future, could have a material adverse effect on an operator’s financial condition
and its ability to meet its obligations to us, which, in turn, could have a material adverse effect on our
business, financial condition, results of operations and ability to make distributions to our stockholders.

In addition, we may in some circumstances be named as a defendant in litigation involving the services
provided by our operators. In the past, we and several of our wholly-owned subsidiaries have been named
as defendants in professional liability and general liability claims related to our owned and operated
facilities, and we could be named as defendants in similar suits in the future. In these suits, patients of our
operators have alleged significant damages, including punitive damages, against the defendants. Although
we generally have no involvement in the services provided by our operators, and our standard lease and loan
agreements generally require our operators to indemnify us and carry insurance to cover us in certain cases,
a significant judgment against us in such litigation could exceed our and our operators’ insurance coverage,
which would require us to make payments to cover the judgment.

Increased competition as well as increased operating costs result in lower revenues for some of our operators
and may affect the ability of our operators to meet their obligations to us.

The long-term healthcare industry is highly competitive and we expect that it may become more
competitive in the future. Our operators are competing with numerous other companies providing similar
healthcare services or alternatives such as home health agencies, life care at home, community-based service
programs, retirement communities and convalescent centers. Our operators compete on a number of
different levels including the quality of care provided, reputation, the physical appearance of a facility,
price, the range of services offered, family preference, alternatives for healthcare delivery, the supply of
competing properties, physicians, staff, referral sources, location and the size and demographics of the
population in the surrounding areas. Our operators may encounter increased competition in the future that
could limit their ability to attract residents or expand their businesses and therefore affect their ability to
pay their lease or mortgage payments and meet their obligations to us.

In addition, the market for qualified personnel is highly competitive and our operators may experience
difficulties in attracting and retaining such personnel, in particular due to labor constraints and, in some
cases, wage increases imposed by the COVID-19 pandemic. Increases in labor costs could affect our
operators’ ability to meet their obligations to us, which could be particularly acute in certain states that have
established minimum staffing requirements.

We may be unable to successfully foreclose on the collateral securing our mortgage loans, and even if we are
successful in our foreclosure efforts, we may be unable to successfully find a replacement operator, or operate
or occupy the underlying real estate, which may adversely affect our ability to recover our investments.

If an operator defaults under one of our mortgage loans, we may foreclose on the loan or otherwise
protect our interest by acquiring title to the property. In such a scenario, we may be required to make
substantial improvements or repairs to maximize the facility’s investment potential. Operators may contest
enforcement of
foreclosure or other remedies, seek bankruptcy protection against our exercise of
enforcement or other remedies and/or bring claims for lender liability in response to actions to enforce
mortgage obligations. Even if we are able to successfully foreclose on the collateral securing our mortgage
loans, we may be unable to expeditiously find a replacement operator, if at all, or otherwise successfully
operate or occupy the property, which could adversely affect our ability to recover our investment.

Uninsured losses or losses in excess of our operators’ insurance coverage could adversely affect our financial
position and our cash flow.

Under the terms of our leases, our operators are generally required to maintain comprehensive general
liability, fire, flood, earthquake, boiler and machinery, nursing home or long-term care professional liability
and extended coverage insurance with respect to our properties with policy specifications set forth in the
leases or other written agreements between us and the operator. However, our properties may be adversely
affected by casualty losses which exceed insurance coverages and reserves. In addition, we cannot provide
any assurances that our tenants will maintain the required coverages, that we will continue to require the
same levels of insurance under our leases, or that such insurance will be available at a reasonable cost in the

21

future or that the policies maintained will fully cover all losses on our properties upon the occurrence of a
catastrophic event. We also cannot make any guaranty as to the future financial viability of the insurers that
underwrite the policies maintained by our tenants, or, alternatively if our tenants utilize captive or
self-insurance programs, that such programs will be adequately funded.

Should an uninsured loss or a loss in excess of insured limits occur, we could lose both our investment
in, and anticipated profits and cash flows from, the property and disputes over insurance claims could arise.
Even if it were practicable to restore the property to its condition prior to the damage caused by a major
casualty, the operations of the affected property would likely be suspended for a considerable period of
time.

Our development and redevelopment projects may not yield anticipated returns.

We consider and, when appropriate, invest in various development and redevelopment projects. In
deciding whether to make an investment in a particular project, we make certain assumptions regarding the
expected future performance of the property. Our assumptions are subject to risks generally associated with
development and redevelopment projects, including, among others, that:

•

•

•

•

Our operators may not be able to complete the project on schedule or within budgeted amounts;

Our operators may encounter delays in obtaining or fail to obtain all necessary zoning, land use,
building, occupancy, environmental and other governmental permits and authorizations, or
underestimate the costs necessary to develop or redevelop the property to market standards;

Volatility in the price of construction materials or labor may increase project costs;

The builders may fail to perform or satisfy the expectations of our operators;

• We may incorrectly forecast risks associated with development in new geographic regions;

•

•

Demand for our project may decrease prior to completion, due to competition from other
developments; and

New facilities may take longer than expected to reach stabilized operating levels, if at all.

If any of the risks described above occur, our development and redevelopment projects may not yield

anticipated returns, which could have a material adverse effect on us.

Risks Related to Us and Our Operations

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

The COVID-19 pandemic has significantly and adversely impacted, and may continue to impact SNFs
and long-term care providers due to higher rates of virus transmission and fatality among the elderly and
frail populations these facilities serve. As a result, many of our operators have been, and may continue to
be, significantly impacted by the pandemic. See Item 2 — Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Overview. During 2021, four of our operators have
either missed contractual payments for a period or have informed us that they would be unable to pay us
rent for the foreseeable future. We also placed six operators, including three of the non-paying operators, on
a cash basis of revenue recognition during 2021, as collection of substantially all contractual lease payments
with these six operators was no longer probable. We believe these operators were impacted by, among other
things, reduced revenue as a result of
lower occupancy and increased expenses resulting from the
COVID-19 pandemic, as well as uncertainties regarding the availability of sufficient government support.
In connection with these developments, we have written off approximately $36.0 million in aggregate of
straight-line receivables to rental income for the year ended December 31, 2021 (in connection with the six
operators placed on a cash basis during the year). We have also taken impairments of $83.4 million for the
year ended December 31, 2021 in connection with loans outstanding with Agemo Holdings, LLC, Gulf

22

Coast Health Care LLC and Guardian Healthcare, all of whom are non-paying operators. The six operators
that were placed on a cash basis of revenue recognition in 2021 collectively represent 6.6% and 7.3% of our
total revenue, respectively, for the year ended December 31, 2021 and 2020 (excluding the impact of
write-offs in 2021 and 2020).

Continued uncertainty exists relating to our other operators’ ability to meet their payments obligations
generally or meet their payment obligations to us, including due to continued uncertainty regarding the
availability of sufficient government support, the persistence of staffing shortages that have impacted, and
may continue to impact, our operators’ occupancy levels and profitability, the impact of governmental
vaccine mandates for staff on ongoing staffing shortages, and other factors that may impact virus
transmission in our facilities, including the impact of genetic mutations of the virus into new variants, as
well as the commencement in April 2021 for many of our operators of the repayment of accelerated
payments of Medicare funds that were previously received as Advanced Medicare payments in 2020, and
the commencement in December 2021 of repayment of deferred FICA obligations. To the extent our
operators are unable to meet their payment obligations, we may record additional impairment charges with
respect to straight-line rent receivables associated with any such operator or with respect to outstanding
loans and our financial condition could be adversely impacted. See “Our assets, including our real estate
and loans, are subject to impairment charges, and our valuation and reserve estimates are based on
assumptions and may be subject to adjustment” in Item 1A contained in Part I of this Annual Report on
Form 10-K.

Our operators have been, and continue to be, impacted by the pandemic in numerous ways. In addition
to experiencing outbreaks of positive cases and deaths of residents and employees during the pandemic, our
operators have been required to, and continue to, adapt their operations rapidly throughout the pandemic
to manage the spread of the COVID-19 virus as well as the implementation of new treatments and vaccines,
and to implement new requirements relating to infection control, staffing levels, PPE, quality of care,
visitation protocols, and reporting, among other regulations, throughout the pandemic while facing staffing
shortages that have accelerated during the pandemic and that may impede the delivery of care. The federal
government announced in August and September 2021 that it would be requiring SNF and healthcare
workers to be vaccinated against COVID-19 and has issued an emergency implementing regulation effective
November 5, 2021 requiring covered healthcare facilities to ensure eligible staff have received a first vaccine
dose as of December 5, 2021 and a second dose of a two-dose vaccine as of January 4, 2022, with certain
permitted exemptions in alignment with federal
law; these vaccination deadlines were subsequently
extended by CMS by between one to two months depending on the applicable state. Significant uncertainty
remains regarding the potential impact such mandates may have on ongoing staffing shortages in our
facilities, which have caused some operators to limit admissions. In addition, it remains uncertain when and
to what extent vaccination programs for COVID-19, which have been implemented in most of our facilities,
will continue to mitigate the effects of COVID-19 in our facilities, or how effective existing vaccines and
booster doses will be against the variants of the COVID-19 virus; the impact of these programs will depend
in part on the continued speed, distribution, efficacy and delivery of the vaccine and booster doses in our
facilities, compliance with staff vaccination requirements as well as participation levels in vaccination
programs among the residents and employees of our operators. Our operators have continued to report
considerable variation in participation levels among both employees and residents, which we believe may
change over time with additional vaccination education efforts for residents and implementation of vaccine
mandates for staff.

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

23

suspension or postponement of elective hospital procedures, fewer discharges from hospitals to SNFs and
higher hospital readmittances from SNFs. We continue to monitor the impact of occupancy levels at many
of our operators, and it remains uncertain whether and when demand and occupancy levels will return to
pre-COVID-19 levels.

Federal relief efforts for SNFs and ALFs was limited in 2021 as have been relief efforts in certain
states, and further government support will likely be needed to continue to offset these impacts. It is unclear
whether and to what extent such government support has been and will continue to be sufficient and timely
to offset these impacts. In particular, it remains unclear whether relief will be distributed to our operators in
any meaningful way or whether additional Medicaid funds will ultimately support reimbursement to our
operators. Further, to the extent the impacts of the pandemic continue or accelerate and are not offset by
continued government relief that is sufficient and timely, we anticipate that the operating results of certain
of our operators would be materially and adversely affected, some may be unwilling or unable to pay their
contractual obligations to us in full or on a timely basis and we may be unable to restructure such
obligations on terms as favorable to us as those currently in place. Even if operators are able to avail
themselves of government relief to offset some of these costs, they may face challenges in complying with
the terms and conditions of government support and may face longer-term adverse impacts to their
personnel and business operations from the COVID-19 pandemic, including potential patient litigation and
decreased demand for their services, loss of business due to an interruption in their operations, workforce
challenges, new regulatory restrictions, or other liabilities related to gathering restrictions, quarantines,
reopening plans, vaccine distribution or delivery, spread of infection or other related factors.

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

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

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

There are no assurances of our ability to pay dividends in the future.

Our ability to pay dividends may be adversely affected upon the occurrence of any of the risks
described herein. Our payment of dividends is subject to compliance with restrictions contained in our

24

credit agreements, the indentures governing our senior notes and any preferred stock that our Board may
from time to time designate and authorize for issuance. All dividends will be paid at the discretion of our
Board and will depend upon our earnings, our financial condition, maintenance of our REIT status and
such other factors as our Board may deem relevant from time to time. There are no assurances of our
ability to pay dividends in the future. In addition, our dividends in the past have included, and may in the
future include a return of capital.

We rely on external sources of capital to fund future capital needs, and if we encounter difficulty in obtaining
such capital, we may not be able to make future investments necessary to grow our business or meet maturing
commitments.

As a REIT under the Code, we are required to, among other things, distribute at least 90% of our
REIT taxable income each year to our stockholders. Because of this distribution requirement, we may not
be able to fund, from cash retained from operations, all future capital needs, including capital needed to
make investments and to satisfy or refinance maturing commitments. As a result, we rely on external
sources of capital, including debt and equity financing. If we are unable to obtain needed capital at all or
only on unfavorable terms from these sources, we might not be able to make the investments needed to grow
our business, or to meet our obligations and commitments as they mature, which could negatively affect the
ratings of our debt and even, in extreme circumstances, affect our ability to continue operations. We may
not be in a position to take advantage of future investment opportunities in the event that we are unable to
access the capital markets on a timely basis or we are only able to obtain financing on unfavorable terms.

Our ability to raise capital through equity sales is dependent, in part, on the market price of our common
stock, and our failure to meet market expectations with respect to our business, or other factors we do not
control, could negatively impact such market price and availability of equity capital.

As with other publicly-traded companies, the availability of equity capital will depend, in part, on the
market price of our common stock which, in turn, will depend upon various market conditions and other
factors, some of which we cannot control, that may change from time to time including:

•

•

•

•

•

•

•

•

•

the extent of investor interest;

the general reputation of REITs and the attractiveness of their equity securities in comparison to
other equity securities, including securities issued by other real estate-based companies;

the financial performance of us and our operators;

concentrations in our investment portfolio by tenant and facility type;

concerns about our tenants’ financial condition due to uncertainty regarding reimbursement from
governmental and other third-party payor programs;

our credit ratings and analyst reports on us and the REIT industry in general,
recommendations, and our ability to meet our guidance estimates or analysts’ estimates;

including

general economic, global and market conditions, including changes in interest rates on fixed
income securities, which may lead prospective purchasers of our common stock to demand a
higher annual yield from future distributions;

our failure to maintain or increase our dividend, which is dependent, to a large part, on the
increase in funds from operations, which in turn depends upon increased revenues from additional
investments and rental increases; and

other factors such as governmental regulatory action and changes in REIT tax laws, as well as
changes in litigation and regulatory proceedings.

The market value of the equity securities of a REIT is generally based upon the market’s perception of
the REIT’s growth potential and its current and potential future earnings and cash distributions. Our failure
to meet the market’s expectation with regard to future earnings and cash distributions would likely
adversely affect the market price of our common stock and, as a result, the availability of equity capital to
us.

25

We are subject to risks associated with debt financing, including changes in our credit ratings, which could
negatively impact our business and limit our ability to make distributions to our stockholders and to repay
maturing debt.

The financing required to make future investments and satisfy maturing commitments may be provided
by borrowings under our credit facilities, private or public offerings of debt or equity, the assumption of
secured indebtedness, mortgage financing on a portion of our owned portfolio or through joint ventures. To
the extent we must obtain debt financing from external sources to fund our capital requirements, we cannot
guarantee such financing will be available on favorable terms, if at all. In addition, if we are unable to
refinance or extend principal payments due at maturity or pay them with proceeds from other capital
transactions, our cash flow may not be sufficient to make distributions to our stockholders and repay our
maturing debt. Furthermore, if prevailing interest rates, changes in our debt credit ratings or other factors
at the time of refinancing result in higher interest rates upon refinancing, the interest expense relating to
that refinanced indebtedness would increase, which could reduce our profitability and the amount of
dividends we are able to pay. Factors that may affect our credit ratings include, among other things, our
financial performance, our success in raising sufficient equity capital, adverse changes in our debt and fixed
charge coverage ratios, our capital structure and level of indebtedness and pending or future changes in the
regulatory framework applicable to our operators and our industry. Further, additional debt financing
increases the amount of our leverage. The degree of leverage could have important consequences to
stockholders, including affecting our investment grade ratings and our ability to obtain additional financing
in the future, and making us more vulnerable to a downturn in our results of operations or the economy
generally.

The interest rate of our credit facilities, term loan facilities and derivatives contracts are priced using LIBOR
and are subject to risks associated with the transition from LIBOR to an alternative reference rate.

London Inter-bank Offered Rate (“LIBOR”) is the basic rate of interest used in lending between banks
on the London interbank market and is widely used as a reference for setting the interest rate on loans
globally. We typically use LIBOR as a reference rate in credit facilities, term loan facilities and derivative
contracts. In July 2017, the U.K.’s Financial Conduct Authority (“FCA”) that regulates LIBOR announced
that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021, and while
the transition period for many LIBOR tenors has been extended to June 2023, the U.S. Federal Reserve
advised banks to stop new LIBOR issuances by the end of 2021. At this time, no consensus exists as to
which reference rate or rates or benchmarks may become acceptable alternatives to LIBOR. The Alternative
Reference Rates Committee, a steering committee comprised of U.S. financial market participants, has
identified the secured overnight financing rate, or SOFR, as the recommended alternative rate for all
LIBOR. At this time, it is impossible to predict whether the SOFR or another reference rate will become an
accepted alternative to LIBOR. Any changes in the methods by which LIBOR is determined or regulatory
activity related to LIBOR’s phaseout could cause LIBOR to perform differently than in the past or cease to
exist. Further, the consequences of these developments, or any alternative reference rate that is adopted,
cannot be entirely predicted but could include an increase in the cost of our variable rate borrowings, of
which we had $50 million of borrowings outstanding as of December 31, 2021 and $450 million notional
value derivative instruments that are indexed to LIBOR. For some instruments, the method of transitioning
to an alternative rate may be challenging, as this may require negotiation with the respective counterparty.

We may be subject to additional risks in connection with our acquisitions of long-term care facilities.

We may be subject to additional risks in connection with our acquisitions of long-term care facilities,

including but not limited to the following:

•

•

our limited prior business experience with certain of the operators of the facilities we have recently
acquired or may acquire in the future;

including unfavorable terms and
the facilities may underperform due to various factors,
conditions of the lease agreements that we assume, disruptions caused by the management of the
operators of the facilities or changes in economic conditions impacting the facilities and/or the
operators;

26

•

•

•

•

large acquisitions or investments could place significant additional demands on, and require us to
expand, our management, resources and personnel, as well as to adapt our administrative,
accounting and operational systems to integrate and manage the long-term care facilities we have
acquired or may acquire in a timely manner;

diversion of our management’s attention away from other business concerns;

exposure to any undisclosed or unknown potential liabilities relating to the facilities; and

potential underinsured losses on the facilities.

We cannot assure you that we will be able to manage our recently acquired facilities, or the future
growth in our business, without encountering difficulties or that any such difficulties will not have a
material adverse effect on us. Our growth could also increase our capital requirements, which may require us
to issue potentially dilutive equity securities and incur additional debt.

Our assets, including our real estate and loans, are subject to impairment charges, and our valuation and
reserve estimates are based on assumptions and may be subject to adjustment.

Our asset portfolio primarily consists of real estate and mortgage loans, which are subject to
write-downs in value. From time to time, we close facilities and actively market such facilities for sale. To the
extent we are unable to sell these properties for our book value, we may be required to take a non-cash
impairment charge or loss on the sale, either of which would reduce our net income. In addition, we
periodically, but not less than annually, evaluate our real estate investments and other assets for impairment
indicators, and we establish general and specific reserves for our issued loans at least quarterly. The
quarterly evaluation of our investments for impairment may result in significant fluctuations in our
provision for credit losses or real estate impairments from quarter to quarter, impacting our results of
operations. Judgments regarding the existence of impairment indicators or loan reserves are based on a
number of factors, including market conditions, operator performance and legal structure, and these factors
may involve estimates. If we determine that a significant impairment has occurred, we are required to make
an adjustment to the net carrying value of the asset, which could have a material adverse effect on our
results of operations. Our estimates of loan reserves, and other accounting estimates, are inherently
uncertain and may be subject to future adjustment, leading potentially to an increase in reserves.

Our indebtedness could adversely affect our financial condition.

We have a material amount of indebtedness and we may increase our indebtedness in the future. Our
level and type of indebtedness could have important consequences for our stockholders. For example, it
could:

•

•

•

•

•

•

•

increase our vulnerability to adverse changes in general economic, industry and competitive
conditions;

limit our ability to borrow additional funds, on satisfactory terms or at all, for working capital,
capital expenditures, acquisitions, debt service requirements, execution of our business plan or
other general corporate purposes;

increase our cost of borrowing;

require us to dedicate a substantial portion of our cash flow from operations to make payments
on our indebtedness, thereby reducing the availability of our cash flow to fund working capital,
capital expenditures and other general corporate purposes;

limit our ability to make material acquisitions or take advantage of business opportunities that
may arise;

limit our ability to make distributions to our stockholders, which may cause us to lose our
qualification as a REIT under the Code or to become subject to federal corporate income tax on
any REIT taxable income that we do not distribute;

expose us to fluctuations in interest rates, to the extent our borrowings bear variable rates of
interest;

27

•

•

limit our flexibility in planning for, or reacting to, changes in our business and the industry in
which we operate; and

place us at a competitive disadvantage compared to our competitors that have less debt.

Further, we have the ability to incur substantial additional debt, including secured debt, which could
intensify the risks above. In addition, if we are unable to refinance any of our floating rate debt, we would
continue to be subject to interest rate risk. The short-term nature of some of our debt also subjects us to the
risk that market conditions may be unfavorable or may prevent us from refinancing our debt at or prior to
their existing maturities. In addition, our cash flow from operations may not be sufficient to repay all of our
outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise
funds on acceptable terms, if at all, to refinance our debt.

Covenants in our debt documents limit our operational flexibility, and a covenant breach could materially
adversely affect our operations.

The terms of our credit agreements and note indentures require us to comply with a number of
customary financial and other covenants that may limit our management’s discretion by restricting our
ability to, among other things,
incur additional debt, redeem our capital stock, enter into certain
transactions with affiliates, pay dividends and make other distributions, make investments and other
restricted payments, engage in mergers and consolidations, create liens, sell assets or engage in new lines of
business. In addition, our credit facilities require us to maintain compliance with specified financial
covenants, including those relating to maximum total leverage, maximum secured leverage, maximum
unsecured leverage, minimum fixed charge coverage, minimum consolidated tangible net worth and
minimum unsecured interest coverage. Any additional financing we may obtain could contain similar or
more restrictive covenants. Our continued ability to incur indebtedness, conduct our operations, and take
advantage of business opportunities as they arise is subject to compliance with these financial and other
covenants. Breaches of these covenants could result in defaults under the instruments governing the
applicable indebtedness, in addition to any other indebtedness cross-defaulted against such instruments.
Any such breach could materially adversely affect our business, results of operations and financial
condition.

We are subject to particular risks associated with real estate ownership, which could result in unanticipated
losses or expenses.

Our business is subject to many risks that are associated with the ownership of real estate. For example,
if our operators do not renew their leases, we may be unable to re-lease the facilities at favorable rental rates,
if at all. Other risks that are associated with real estate acquisition and ownership include, without
limitation, the following:

•

•

•

•

•

•

•

•

general liability, property and casualty losses, some of which may be uninsured;

the inability to purchase or sell our assets rapidly to respond to changing economic conditions,
due to the illiquid nature of real estate and the real estate market;

leases that are not renewed or are renewed at lower rental amounts at expiration;

contingent rent escalators tied to changes in the Consumer Price Index or other parameters;

the exercise of purchase options by operators resulting in a reduction of our rental revenue;

costs relating to maintenance and repair of our facilities and the need to make expenditures due to
changes in governmental regulations, including the Americans with Disabilities Act;

environmental hazards created by prior owners or occupants, existing tenants, mortgagors or
other persons for which we may be liable; and

acts of God or terrorism affecting our properties.

28

Our real estate investments are relatively illiquid.

Real estate investments are relatively illiquid and generally cannot be sold quickly. The real estate
market is affected by many factors which are beyond our control, including general economic conditions,
availability of financing, interest rates and supply and demand. Additional factors that are specific to our
industry also tend to limit our ability to vary our portfolio promptly in response to changes in economic or
other conditions. For example, all of our properties are “special purpose” properties that cannot be readily
converted into general residential, retail or office use. In addition, transfers of operations of nursing homes
and other healthcare-related facilities are subject to extensive regulatory approvals. We cannot predict
whether we will be able to sell any property for the price or on the terms set by us or whether any price or
other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length
of time needed to find a willing purchaser and to close the sale of a property, or that we will have funds
available to make necessary repairs and improvements to a property held for sale. To the extent we are
unable to sell any properties for our book value, we may be required to take a non-cash impairment charge
or loss on the sale, either of which would reduce our net income.

We face possible risks and costs associated with severe weather conditions, natural disasters or the physical
effects of climate change.

A large number of our properties are located in areas particularly susceptible to revenue loss, cost
increase or damage caused by severe weather conditions or natural disasters such as hurricanes,
earthquakes, tornadoes, fires and floods, as well as the effects of climate change. To the extent that climate
change impacts changes in weather patterns, our markets could experience more frequent and severe natural
disasters. Operationally, such events could cause a major power outage, leading to a disruption of our
operators’ operations or require them to incur additional cost associated with evacuation plans. Over time,
any of these conditions could result in increased operator costs, delays in construction, resulting in
increased construction costs, or in the inability of our operators to operate our facilities at all. Climate
change and severe weather may also have indirect effects on our business by increasing the cost to our
operators of, or decreasing the availability to our operators of, property insurance on terms they find
acceptable, and by increasing the cost of energy, maintenance, repair of water and/or wind damage, and
snow removal at our properties. In the event of a loss in excess of insured limits, we could lose our
incremental capital invested in the affected property.

Although Congress has not yet enacted comprehensive federal legislation to address climate change,
numerous states and municipalities have adopted laws and policies on climate change and emission
reduction targets. Changes in federal, state and local legislation and regulation based on concerns about
climate change could result in increased capital expenditures on our existing properties and our new
development properties (for example, to improve their energy efficiency and/or resistance to severe weather)
without a corresponding increase in revenue, resulting in adverse impacts to our net income. There can be
no assurance that climate change and severe weather will not have a material adverse effect on our
properties, operations, or business.

As an owner or lender with respect to real property, we may be exposed to possible environmental liabilities.

Under various federal, state and local environmental laws, ordinances and regulations, a current or
previous owner of real property or a secured lender may be liable in certain circumstances for the costs of
investigation, removal or remediation of certain hazardous or toxic substances at such property, as well as
certain other potential related costs, including government fines and damages for injuries to persons and
adjacent property. Such laws often impose liability without regard to whether the owner knew of, or was
responsible for, the presence or disposal of such substances. As a result, liability may be imposed on the
owner in connection with the activities of an operator of the property, and the owner’s liability could exceed
the value of the property and/or the assets of the owner. In addition, the presence of such substances, or the
failure to properly dispose of or remediate such substances, may adversely affect an operators’ ability to
attract additional residents and our ability to sell or rent such property or to borrow using such property as
collateral which, in turn, could negatively impact our revenues.

29

Although our leases and mortgage loans generally require the lessee and the mortgagor to indemnify
us for certain environmental liabilities, they may be unable to fulfill their indemnification obligations to us,
and the scope of such obligations may be limited. For instance, most of our leases do not require the lessee
to indemnify us for environmental liabilities arising before the lessee took possession of the premises.

The industry in which we operate is highly competitive. Increasing investor interest in our sector and
consolidation at the operator level or REIT level could increase competition and reduce our profitability.

Our business is highly competitive and we expect that it may become more competitive in the future.
We compete for healthcare facility investments with other healthcare investors, including other REITs, some
of which have greater resources and lower costs of capital than we do. Increased competition makes it more
challenging for us to identify and successfully capitalize on opportunities that meet our business goals. If we
cannot capitalize on our development pipeline, identify and purchase a sufficient quantity of healthcare
facilities at favorable prices, or are unable to finance such acquisitions on commercially favorable terms, our
business, results of operations and financial condition may be materially adversely affected. In addition, if
our cost of capital should increase relative to the cost of capital of our competitors, the spread that we
realize on our investments may decline if competitive pressures limit or prevent us from charging higher
lease or mortgage rates.

Our charter and bylaws contain significant anti-takeover provisions which could delay, defer or prevent a
change in control or other transactions that could provide our stockholders with the opportunity to realize a
premium over the then-prevailing market price of our common stock.

Our charter and bylaws contain various procedural and other requirements which could make it
difficult for stockholders to effect certain corporate actions. Our Board of Directors (“Board”) has the
authority to issue additional shares of preferred stock and to fix the preferences, rights and limitations of
the preferred stock without stockholder approval. In addition, our charter contains limitations on the
ownership of our capital stock intended to ensure we continue to meet the requirements for qualification as
a REIT. For example, our charter, among other restrictions, prohibits the beneficial or constructive
ownership (as defined for federal income tax purposes) by any person of more than 9.8% in value or in
number of shares of the outstanding shares of any class or series of our capital stock, unless our Board
grants an exemption or modifies the ownership limit for such person and certain conditions are satisfied.
These provisions could discourage unsolicited acquisition proposals or make it more difficult for a third
party to gain control of us, which could adversely affect the market price of our securities and/or result in
the delay, deferral or prevention of a change in control or other transactions that could provide our
stockholders with the opportunity to realize a premium over the then-prevailing market price of our
common stock.

Ownership of property outside the U.S. may subject us to different or greater risks than those associated with
our U.S. investments, including currency fluctuations.

We have investments in the U.K., and may from time to time may seek to acquire other properties in
the U.K. or otherwise outside the U.S. Although we currently have investments in the U.K., we have limited
experience investing in healthcare properties or other real estate-related assets located outside the U.S.
International development, investment, ownership and operating activities involve risks that are different
from those we face with respect to our U.S. properties and operations. These risks include, but are not
limited to, any international currency gain recognized with respect to changes in exchange rates may not
qualify under the income tests that we must satisfy annually in order to qualify and maintain our status as a
REIT; fluctuations in the exchange rates between USD and the British Pound Sterling (“GBP”), or other
foreign currencies in which we may transact in the future, which we may be unable to protect against
through hedging; changes in foreign political, regulatory, and economic conditions; challenges in managing
international operations; challenges of complying with a variety of foreign laws and regulations, including
those relating to real estate, healthcare operations, taxes, employment and legal proceedings; differences in
lending practices and the willingness of domestic or foreign lenders to provide financing; regional or
country-specific business cycles and economic instability; and changes in applicable laws and regulations in

30

the U.S. that affect foreign operations. In addition, we have limited investing experience in international
markets. If we are unable to successfully manage the risks associated with international expansion and
operations, our results of operations and financial condition may be adversely affected.

On January 31, 2020, the U.K. withdrew from the European Union (“E.U.”), commonly referred to as
“Brexit”. Changes in economic conditions in the U.K. relating to Brexit may subject the operators of our
facilities in the U.K. to increased risk, including potential disruptions in supply, increases in costs, or
difficulty staffing. In addition, the uncertainty related to Brexit has caused foreign exchange rate
fluctuations in the past, including the strengthening of the USD relative to the Euro and GBP immediately
following the announcement of Brexit, and may continue to do so in the future. Furthermore, Brexit could
lead to legal uncertainty or the imposition of additional legal or regulatory requirements on the Company,
which could have adverse consequences on our business, financial condition and results of operations. The
implementation of, or further developments with respect to, Brexit could further impact foreign exchange
rates, which could materially adversely affect our business, financial condition and results of operations. To
date, one of the key effects of Brexit on the U.K. market is increased difficulty recruiting suitably qualified
staff members within properties, as historically the E.U. and freedom of movement provided a reliable
personnel resource for the U.K. market. The employment pool within the U.K. is further impacted by
vaccination requirements for those working in the sector, meaning that those in certain roles who refuse to
be vaccinated may not be employed (unless exempt from the requirement).

Our assets are concentrated in the long-term care industry and face geographic and operator concentration
risk.

Our assets are generally not diversified by industry and face risks associated with the long-term care
industry. In addition, at December 31, 2021, two operators each represented greater than 10% of our
investments, and the three states in which we had our highest concentration of investments were Florida
(15%), Texas (10%) and Michigan (6%). As a result, we are subject to increased exposure to adverse
conditions affecting these operators and regions, with regional risks including unfavorable Medicaid
reimbursements rates for SNFs, downturns in the local economies, local real estate conditions, increased
competition or decreased demand for our facilities, regional climate events, and unfavorable legislative or
regulatory developments, which could adversely affect our business and results of operations.

Our primary assets are the units of partnership interest in Omega OP and, as a result, we will depend on
distributions from Omega OP to pay dividends and expenses.

The Company is a holding company and has no material assets other than units of partnership interest
in Omega OP. We intend to cause the partnership to make distributions to its partners, including the
Company, in an amount sufficient to allow us to qualify as a REIT for U.S. federal income tax purposes
and to pay all of our expenses. To the extent we need funds and the partnership is restricted from making
distributions under applicable law or otherwise, or if the partnership is otherwise unable to provide such
funds, the failure to make such distributions could materially adversely affect our liquidity and financial
condition.

Members of our management and Board are holders of units of partnership interest in Omega OP, and their
interests may differ from those of our public stockholders.

Some members of our management and Board hold partnership interest in Omega OP. Those
unitholders may have conflicting interests with holders of the Company’s common stock. For example, such
unitholders of Omega OP Units may have different tax positions from the Company or holders of our
common stock, which could influence their decisions in their capacities as members of management
regarding whether and when to dispose of assets, whether and when to incur new or refinance existing
indebtedness and how to structure future transactions.

31

Our investments in joint ventures could be adversely affected by shared decision-making authority, our joint
venture partners’ financial condition, and our exposure to potential losses from the actions of our joint venture
partners.

As of December 31, 2021, we have ownership interest in one consolidated joint venture and several

unconsolidated joint ventures. These joint ventures involve additional risks, including the following:

• We may be unable to take actions that are opposed by our joint venture partners under
arrangements that require us to share decision-making authority over major decisions affecting
the ownership or operation of the joint venture and any property owned by the joint venture, such
as the sale or financing of the property, our ability to sell or transfer our interest in a joint venture
or the making of additional capital contributions for the benefit of the property;

•

•

•

•

For joint ventures in which we have a noncontrolling interest, our joint venture partners may take
actions that we oppose;

Our joint venture partners may become bankrupt or fail to fund their share of required capital
contributions, which could delay construction or development of a property or increase our
financial commitment to the joint venture;

Our joint venture partners may have business interests or goals with respect to a property that
conflict with our business interests and goals, including with respect to the timing, terms and
strategies for investment, which could increase the likelihood of disputes regarding the ownership,
management or disposition of the property;

Disagreements with our joint venture partners could result in litigation or arbitration that
increases our expenses, distracts our officers and directors, and disrupts the day-to-day operations
of the property, including by delaying important decisions until the dispute is resolved; and

• We may suffer losses resulting from actions taken by our joint venture partners with respect to our

joint venture investments.

Risks Related to Taxation

Qualifying as a REIT involves highly technical and complex provisions of the Code; failure to qualify as a
REIT would subject us to increased taxes and impair our ability to expand our business and make
distributions; and complying with REIT requirements may affect our profitability.

We were organized to qualify for taxation as a REIT under Sections 856 through 860 of the Code. See
Item 1. Business — Taxation of Omega. Qualification as a REIT involves the application of technical and
intricate Code provisions for which there are only limited judicial and administrative interpretations, and
which involve the determination of various factual matters and circumstances not entirely within our
control. We cannot assure that we will at all times satisfy these rules and tests. Even a technical or
inadvertent violation could jeopardize our REIT qualification.

If we were to fail to qualify as a REIT in any taxable year, as a result of a determination that we failed
to meet the annual distribution requirement or otherwise, we would be subject to federal corporate income
tax, and any applicable alternative minimum tax with respect to each such taxable year for which the statute
of limitations remains open, as well certain excise taxes on nonqualified REIT income, or disqualification
from treatment as a REIT for the four taxable years following the year during which qualification is lost.
This treatment would significantly reduce our net earnings and cash flow because of our additional tax
liability for the years involved, which could significantly impact our financial condition. We generally must
distribute annually at least 90% of our taxable income to our stockholders to maintain our REIT status. To
the extent that we do not distribute all of our net capital gain or do distribute at least 90%, but less than
100% of our “REIT taxable income,” as adjusted, we will be subject to tax thereon at regular ordinary and
capital gain corporate tax rates. As a result of all these factors, our failure to maintain our qualification as a
REIT could impair our ability to expand our business and raise capital, and would substantially reduce our
ability to make distributions to you.

32

To qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning,
among other things, the nature and diversification of our assets, the sources of our income and the
amounts we distribute to our stockholders. Thus, we may be required to liquidate otherwise attractive
investments from our portfolio or be unable to pursue investments that would be otherwise advantageous to
us, to satisfy the asset and income tests or to qualify under certain statutory relief provisions. We may also
be required to make distributions to stockholders at disadvantageous times or when we do not have funds
readily available for distribution (e.g., if we have assets which generate mismatches between taxable income
and available cash). Having to comply with the distribution requirement could cause us to: (i) sell assets in
adverse market conditions; (ii) borrow on unfavorable terms; or (iii) distribute amounts that would
otherwise be invested in future acquisitions, capital expenditures or repayment of debt. As a result,
satisfying the REIT requirements could have an adverse effect on our business results and profitability.

There is a risk of changes in the tax law applicable to REITs.

The Internal Revenue Service, the U.S. Treasury Department and Congress frequently review U.S.
federal income tax legislation, regulations and other guidance. We cannot predict whether, when or to what
extent new U.S. federal tax laws, regulations, interpretations or rulings will be adopted. Any legislative
action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect
taxation of us, our properties, or our shareholders.

Risks Related to Our Stock and Capital Structure

Our issuance of additional capital stock, warrants or debt securities, whether or not convertible, may reduce the
market price for our outstanding securities, including our common stock, and dilute the ownership interests of
existing stockholders, and we may issue securities with greater dividend, liquidation and other rights than our
common stock.

We cannot predict the effect, if any, that future sales of our capital stock, warrants or debt securities, or
the availability of our securities for future sale, will have on the market price of our securities, including our
common stock. Sales of substantial amounts of our common stock or preferred shares, warrants or debt
securities convertible into or exercisable or exchangeable for common stock in the public market, or the
perception that such sales might occur, could negatively impact the market price of our stock and the terms
upon which we may obtain additional equity financing in the future. Our Board has the authority to
designate and issue preferred stock that may have dividend, liquidation and other rights that are senior to
those of our common stock.

Any debt securities, preferred shares, warrants or other rights to acquire shares or convertible or
exchangeable securities that we issue in the future may have some rights, preferences and privileges more
favorable than those of our common stock and may result in dilution to owners of our common stock.
Holders of our common stock are not entitled to preemptive rights or other protections against dilution.
Our preferred shares, if issued, could have a preference on liquidating distributions or a preference on
dividend payments that could limit our ability pay dividends or other distributions to the holders of our
common stock. Because our decision to issue securities in any future offering will depend on market
conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or
nature of our future offerings. Thus, our stockholders bear the risk that our future offerings could reduce
the per share trading price of our common stock and dilute their interest in us.

General Risk Factors

Our success depends in part on our ability to retain key personnel and our ability to attract or retain other
qualified personnel.

Our future performance depends to a significant degree upon the continued contributions of our
executive management team and other key employees, the loss of whom could have an adverse impact on
our operations. Although we have entered into employment agreements with the members of our executive
management team, these agreements may not assure their continued service. In addition, our failure to
successfully attract, hire, retain and train the people we need may impede our ability to implement our
business strategy.

33

We rely on information technology in our operations, and any material failure, inadequacy, interruption or
security failure of that technology could harm our business.

We rely on information technology networks and systems, including the Internet, to process, transmit
and store electronic information, and to manage or support a variety of business processes, including
financial transactions and records, personal identifying information, tenant and lease data. In addition, we
may from time to time offer technology services to tenants, which may involve storage of customer or
resident data. We purchase some of our information technology from vendors, on whom our systems
depend. We generally rely on third-party systems, software, tools and monitoring to provide security for
processing, transmission and storage of confidential tenant and other customer information, such as
individually identifiable information, including information relating to financial accounts. It is possible that
our safety and security measures will not be able to prevent the systems’ improper functioning or the
improper access or disclosure of personally identifiable information such as in the event of cyber-attacks.
Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and
similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential
information. Any failure to maintain proper function, security and availability of our information systems,
and the privacy of the data we store, or failure to comply with related regulations, could interrupt our
operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a
material adverse effect on our business, financial condition and results of operations. The regulatory
environment related to cyber and information security, data collection and privacy is increasingly rigorous,
with new and constantly changing requirements applicable to our business or to which we may become
subject, including E.U. data protection legislation, such as they General Data Protection Regulation, or the
GDPR, and the U.K.’s Data Protection Act, which impose significant data protection requirements and
penalties for noncompliance. Compliance with any of these requirements may result in additional costs and
could impact how we conduct in business in new jurisdictions.

Failure to maintain effective internal control over financial reporting could have a material adverse effect on
our business, results of operations, financial condition and stock price.

We are required to provide a report by management on internal control over financial reporting,
including management’s assessment of the effectiveness of such control. Changes to our business will
necessitate ongoing changes to our internal control systems and processes, and internal control over
financial reporting may not prevent or detect misstatements due to inherent limitations, including the
possibility of human error, the circumvention or overriding of controls, or fraud. Therefore, even effective
internal controls can provide only reasonable assurance with respect to the preparation and fair
presentation of financial statements. If we fail to maintain the adequacy of our internal controls or to
implement required new or improved controls, our business, results of operations and financial condition
could be materially adversely harmed, we could fail to meet our reporting obligations and there could be a
material adverse effect on our stock price. In addition, we may be adversely impacted by new accounting
pronouncements which change our lease recognition or other accounting practices or otherwise alter how
we report our financial results, or which require that we change our internal control and operating
procedures, which we may be unable to do in a timely manner.

Item 1B — Unresolved Staff Comments

None.

34

Item 2 — Properties

At December 31, 2021, our real estate investments include SNFs and ALFs and to a lesser extent ILFs,
specialty facilities and MOBs, in the form of (i) owned facilities that are leased to operators or their
affiliates, (ii) investments in direct financing leases to operators or their affiliates and (iii) mortgages on
facilities that are operated by the mortgagors or their affiliates. The properties are located in 42 states and
the U.K.

The following table presents the concentration of our real estate investments by state and the U.K. as

of December 31, 2021:

Location

Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . .

United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . .

Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Remaining States . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Operating Beds

Number of
Facilities

16,345

11,190

4,833

6,941

4,476

4,957

4,960

3,057

3,668

258

35,018

95,703

133

114

46

70

53

48

54

59

28

1

354

960

Gross Real Estate
Investment
(in thousands)

% of
Gross Real
Estate
Investment

$ 1,491,905

14.7%

995,386

648,738

643,640

580,542

579,343

554,741

447,574

422,024

336,069

9.8%

6.4%

6.4%

5.7%

5.7%

5.5%

4.4%

4.2%

3.3%

3,430,983

$10,130,945

33.9%

100.0%

Item 3 — Legal Proceedings

See Note 20 — Commitments and Contingencies to the Consolidated Financial Statements — Part IV,

Item 15, which is hereby incorporated by reference in response to this item.

Item 4 — Mine Safety Disclosures

None.

35

PART II

Item 5 — Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Market Information

Shares of Omega Healthcare Investors, Inc. (together with its consolidated subsidiaries, collectively,
“Omega” or the “Company”) common stock are traded on the New York Stock Exchange under the
symbol “OHI.” As of February 11, 2022, there were 2,755 registered holders and 239,112,249 shares of
Omega common stock outstanding.

Performance Graph

The graph and table below compare the cumulative total return of Omega, the FTSE NAREIT Equity
Health Care Index (Ticker: FN11-FTX), the FTSE NAREIT All REITs Index (Ticker: FNAR), the S&P
500 Index, and the Russell 2000 from January 1, 2017 to December 31, 2021. We have included the FTSE
NAREIT Equity Health Care Index and the FTSE NAREIT All REITs Index because we believe that they
are representative of
the industry in which we compete and are relevant to an assessment of our
performance. Total cumulative return is based on a $100 investment in Omega common stock and in each of
the indices at the close of trading on December 31, 2016 and assumes quarterly reinvestment of dividends.
Stockholder returns over the indicated periods should not be considered indicative of future stock prices or
stockholder returns.

12/31/2016

12/31/2017

12/31/2018

12/31/2019

12/31/2020

12/31/2021

Omega Healthcare Investors, Inc. . . . .

$100.00

$ 92.23

$128.60

$166.07

$154.47

$136.26

FTSE NAREIT Health Care Index . .
FTSE NAREIT All REITs Index . . . .
S&P 500 Index . . . . . . . . . . . . . . . . .
Russell 2000 Index . . . . . . . . . . . . . .

$100.00
$100.00
$100.00
$100.00

$100.88
$109.27
$121.83
$114.65

$108.52
$104.79
$116.49
$102.02

$131.51
$134.20
$153.17
$128.06

$118.54
$126.33
$181.35
$153.62

$137.90
$176.71
$233.41
$176.39

Issuer Purchases of Equity Securities

On March 20, 2020, the Company authorized the repurchase of up to $200 million of our outstanding
common stock from time to time over the twelve months ending March 20, 2021. Omega did not
repurchase any of its stock under this amended program during 2020 and 2021.

36

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

During 2021, we did not repurchase any shares of our outstanding common stock.

Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter ended December 31, 2021, Omega issued an aggregate of 12,985 shares of Omega
common stock in exchange for an equivalent number of units of partnership interest in OHI Healthcare
Properties Limited Partnership (collectively with subsidiaries, “Omega OP”) tendered to Omega OP for
redemption in accordance with the provisions of its partnership agreement. The Company issued these
shares of Omega common stock in reliance on an exemption from registration under Section 4(a)(2) of the
Securities Act of 1933, as amended, based upon factual representations received from the limited partners
who received the Omega common stock.

Item 6 — [Reserved]

Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is based primarily on the consolidated financial statements of
Omega Healthcare Investors, Inc. presented in conformity with U.S. generally accepted accounting
principles (“GAAP”) for the periods presented and should be read together with the notes thereto
contained in this Annual Report on Form 10-K. Other
factors are identified in
“Forward-Looking Statements” and “Item 1A — Risk Factors” above.

important

Overview and Outlook

Omega Healthcare Investors, Inc. (“Parent”) is a Maryland corporation that, together with its
consolidated subsidiaries has elected to be taxed as a REIT for federal income tax purposes. Omega is
structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega’s assets are owned
directly or indirectly by, and all of Omega’s operations are conducted directly or indirectly through, its
operating partnership subsidiary, Omega OP. As of December 31, 2021, Parent owned approximately 97%
of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and other
investors owned approximately 3% of the outstanding Omega OP Units.

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

37

Our portfolio of investments at December 31, 2021, included 960 healthcare facilities, located in 42
states and the U.K. that are operated by 63 third-party operators. Our real estate investment in these
facilities totaled approximately $10.1 billion at December 31, 2021, with approximately 98% of our real
estate investments related to long-term healthcare facilities. The portfolio is made up of (i) 685 SNFs,
(ii) 133 ALFs, (iii) 20 ILFs, (iv) 16 specialty facilities, (v) two MOBs, (vi) fixed rate mortgages on 59 SNFs,
two ALFs and two specialty facilities and (vii) 41 facilities that are held for sale. At December 31, 2021, we
held other investments of approximately $469.9 million, consisting primarily of secured loans to third-party
operators of our facilities and $194.7 million of investments in six unconsolidated joint ventures.

As healthcare delivery continues to evolve, we continuously evaluate potential investments, our assets,
operators and markets to position our portfolio for long-term success. Our strategy includes applying data
analytics to our investment underwriting and asset management, as well as selling or transitioning assets
that do not meet our portfolio criteria.

COVID-19 Pandemic Update

The COVID-19 pandemic has significantly and adversely impacted SNFs and long-term care providers
due to the higher rates of virus transmission and fatality among the elderly and frail populations that these
facilities serve. As a result, many of our operators have been and may continue to be significantly impacted
by the pandemic. During the third and fourth quarters of 2020, four of our operators, including Agemo
Holdings, LLC (“Agemo”) and Genesis Healthcare, Inc. (“Genesis”), indicated in their financial statements
substantial doubt regarding their ability to continue as going concerns, citing in part the impact of the
COVID-19 pandemic and uncertainties regarding the continuing availability of sufficient government
support. This resulted in placing these operators on a cash basis of revenue recognition and a
corresponding write-off of approximately $143.0 million in aggregate of contractual receivables,
straight-line receivables and lease inducements to rental income during fiscal year 2020. During the year
ended December 31, 2021, Agemo, Gulf Coast Health Care LLC (together with certain affiliates “Gulf
Coast”), Guardian Healthcare (“Guardian”) and one other operator either failed to make contractual rent
or interest payments for a period or have informed us that they would be unable to pay us rent for the
foreseeable future. See “Portfolio and Recent Developments — Guardian” below. In addition, on
October 14, 2021, Gulf Coast commenced voluntary cases under chapter 11 of the U.S. Bankruptcy Code.
See “Receivables, Other Investments and Operator Collectibility — Gulf Coast” below. As of December 31,
2021, we have placed six operators, inclusive of Gulf Coast, Guardian and the one other non-paying
operator noted above, on a cash basis of revenue recognition during 2021 as collection of substantially all
contractual lease payments with these six operators was no longer probable.

We believe these operators were impacted by, among other things, reduced revenue as a result of lower
occupancy and increased expenses resulting from the COVID-19 pandemic and uncertainties regarding the
continuing availability of sufficient government support. In connection with these developments, we wrote
off approximately $36.0 million in aggregate of straight-line receivables and lease inducements to rental
income for the year ended December 31, 2021 (in connection with the six operators placed on a cash basis
during the year). We have also have taken impairments of $83.4 million for the year ended December 31,
2021 in connection with loans outstanding with Agemo, Gulf Coast and Guardian, all of whom are
non-paying operators. The six operators that were placed on a cash basis during 2021 collectively represent
6.6% and 7.3%, respectively, of our total revenues (excluding the impact of the write-offs in 2021 and 2020)
for the years ended December 31, 2021 and 2020. We remain cautious as the COVID-19 pandemic
continues to have a significant impact on our operators and their financial conditions, particularly given
continued uncertainty regarding the availability of sufficient government support, the persistence of
staffing shortages that continue to impact our operators’ occupancy levels and profitability, the impact of
governmental vaccine mandates for staff on these ongoing staffing shortages, other factors that may impact
virus transmission in our facilities,
the virus into new variants, the
commencement in April 2021 for many of our operators of the repayment of accelerated payments of
Medicare funds that were previously received as Advanced Medicare payments in 2020 and the
commencement in December 2021 of repayment of deferred FICA obligations.

including genetic mutations of

38

As of January 26, 2022, our operators reported cases of COVID-19 within 713, or 75.5%, of our 944
operating facilities as of September 30, 2021, which includes cases involving employees and residents. This
represents a significant increase from the 263 facilities with cases, or 27.7%, of our 949 operating facilities,
that our operators reported as of October 27, 2021. Consistent with national trends, we experienced a slight
downturn in the number of COVID-19 cases in our facilities from September to November of 2021,
followed by a slight increase in December and a meaningful increase in January driven by new variants. The
January 2022 case counts are consistent with case rates that were experienced in January 2021, which
represented an increase over the December 22, 2020 cases in 614 facilities, or 64% of our 959 operating
facilities. We caution that we have not independently validated any such facility virus incidence information,
which may be reported on an inconsistent basis by our operators, and we can provide no assurance
regarding the information’s accuracy or that there have not been any changes since the time it was obtained
from our operators; we also undertake no duty to update this information. It remains uncertain when and
to what extent vaccination programs for COVID-19 and any booster doses will mitigate the effects of
COVID-19 in our facilities, particularly with regard to new variants of
the virus, the impact of
governmental vaccine mandates for staff on ongoing staffing shortages in our facilities and other factors
that impact virus transmission in our facilities. The impact of these programs will depend in part on the
continued efficacy and delivery of the vaccine and booster doses in our facilities, compliance with staff
vaccination requirements and participation levels in vaccination programs among the residents and
employees of our operators and in the communities in which they operate.

In addition to experiencing outbreaks of positive cases and deaths of residents and employees during
the pandemic, our operators have been required to, and continue to, adapt their operations to manage the
spread of the COVID-19 virus as well as the implementation of new treatments and vaccines, and to
implement new requirements relating to infection control, staffing levels, personal protective equipment
(“PPE”), testing mandates, quality of care, visitation protocols and reporting, among other regulations,
throughout the pandemic while facing staffing shortages that have accelerated during the pandemic and
that may impede the delivery of care. Many of our operators have reported incurring significant cost
increases as a result of the COVID-19 pandemic, with dramatic increases for facilities with positive cases.
These increases have been offset to some extent by increases in reimbursements due to increased skilling in
place, which has been necessitated by pandemic-related protocols and may decrease when such protocols
subside. We believe these increases primarily stem from elevated labor costs, including increased use of
overtime and bonus pay and reliance on agency staffing due to staffing shortages, as well as a significant
increase in both the cost and usage of PPE, testing equipment and processes and supplies, as well as
implementation of new infection control protocols and vaccination programs. The federal government
announced in August and September 2021 that it would be requiring SNF and healthcare workers to be
vaccinated against COVID-19 and issued an emergency implementing regulation effective November 5,
2021 requiring covered healthcare facilities to ensure eligible staff have received a first vaccine dose as of
December 5, 2021 and a second dose of a two-dose vaccine as of January 4, 2022, with certain permitted
exemptions in alignment with federal law, which were subsequently extended by the U.S. Centers for
Medicare and Medicaid Services by between one to two months depending on the applicable state.
Notwithstanding these extensions, vaccination rates have increased in anticipation of
the full
implementation of the requirements and we expect them to further increase once such requirements are
fully implemented. However, we expect that such mandates may exacerbate ongoing staffing shortages in
skilled nursing and senior housing facilities. In addition, operators who do not achieve full compliance with
the requirements may face potential survey issues and penalties. At this time, there is significant uncertainty
regarding the impact of such developments. In addition, our facilities, on average, have experienced
declines, in some cases that are material, in occupancy levels as a result of the pandemic. While these
declines have generally improved on average during 2021, new variants have caused improvement in
occupancy to stall towards the end of 2021 and average occupancy has not returned to pre-pandemic levels.
It remains unclear when and the extent to which demand and occupancy levels will return to pre-COVID-19
levels. We believe these challenges to occupancy recovery may be in part due to staffing shortages, which in
some cases have required operators to limit admissions, as well as COVID-19 related fatalities at the
facilities, the delay of SNF placement and/or utilization of alternative care settings for those with lower
level of care needs, the suspension and/or postponement of elective hospital procedures, fewer discharges
from hospitals to SNFs and higher hospital readmittances from SNFs.

39

While substantial government support, primarily through the federal CARES Act in the U.S. and
distribution of PPE, vaccines and testing equipment by federal and state governments, was allocated to
SNFs and to a lesser extent to ALFs in 2020, federal relief efforts were limited in 2021 as have been relief
efforts in certain states. We believe further government support will be needed to continue to offset these
impacts. It is unclear whether and to what extent such government support will continue to be sufficient
and timely to offset these impacts. In particular, while $25.5 billion in federal funding for healthcare
providers impacted by COVID-19 was announced in September 2021 with distributions beginning in late
2021, it remains unclear the extent to which these funds or remaining unallocated funds under the Public
Health and Social Services Emergency Fund (“Provider Relief Fund”) will be distributed to our operators
in any meaningful way, whether additional funds will be added to the Provider Relief Fund or otherwise
allocated to healthcare operators or our operators, or whether additional Medicaid funds under the
American Rescue Plan Act of 2021 (the “American Rescue Plan Act”) in the U.S. will ultimately support
reimbursement to our operators. Further, to the extent the cost and occupancy impacts on our operators
continue or accelerate and are not offset by continued government relief that is sufficient and timely, we
anticipate that the operating results of additional operators may be materially and adversely affected, some
may be unwilling or unable to pay their contractual obligations to us in full or on a timely basis and we may
be unable to restructure such obligations on terms as favorable to us as those currently in place.

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

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

We continue to monitor the impacts of other regulatory changes, as discussed in Item 1.
Business — Government Regulation and Reimbursement, including any significant limits on the scope of
services reimbursed and on reimbursement rates and fees, which could have a material adverse effect on an
operator’s results of operations and financial condition, which could adversely affect the operator’s ability
to meet its obligations to us.

Other Trends and Conditions

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

40

2021 and Recent Highlights

Investments

• We acquired 32 facilities for an aggregate consideration of $604.0 million during the year ended
December 31, 2021. The initial cash yield (the initial annual contractual cash rent divided by the
purchase price) on these asset acquisitions was between 7.89% and 9.25%. This includes the
acquisition of 24 facilities from Healthpeak Properties, Inc. (“Healthpeak”) for $511.3 million in
the first quarter. We also had $58.6 million of non-cash acquisitions of facilities previously subject
to mortgage loans with Omega in which principal amounts under the loan agreements were
reduced or settled in exchange for title to the facilities.

• We invested $140.0 million under our construction-in-progress and capital improvement programs
during the year ended December 31, 2021. This includes the purchase of a real estate property
located in Washington, D.C. in the third quarter for approximately $68.0 million that Omega, in
conjunction with Maplewood Senior Living (along with affiliates, “Maplewood”), plans to
redevelop into a 174-bed ALF and lease back to Maplewood.

• We financed $82.5 million of new mortgage loans for eight facilities with a weighted average
interest rate of 10.3%. In 2021, we also advanced $4.2 million under existing mortgage loans.

Dispositions and Impairments

•

•

•

•

In 2021, we sold 48 facilities for approximately $318.5 million in net cash proceeds, recognizing a
net gain of approximately $161.6 million.

In 2021, we recorded impairments on real estate properties of approximately $44.7 million on 14
facilities primarily as a result of reclassifying facilities to held for sale.

In 2021, we terminated the Daybreak Ventures, LLC (“Daybreak”) master lease and fully exited
our relationship after transitioning 14 Daybreak facilities to existing operators and selling the four
remaining Daybreak facilities.

In December 2021, we entered into an agreement to sell 22 facilities that were previously leased
and operated by Gulf Coast Health Care LLC (together with certain affiliates “Gulf Coast”) for
estimated gross proceeds of $317.5 million. The agreement includes an earnout clause pursuant to
which the buyer is obligated to pay an additional $18.7 million to Omega if certain financial
metrics are achieved at the facilities in the five years following the sale. The sale is targeted to close
on or around April 1, 2022. See “Collectibility Issues” below for further developments related to
Gulf Coast.

Financing Activities

•

•

•

On March 10, 2021, the Company issued $700 million aggregate principal amount of its 3.250%
Senior Notes due 2033. The notes were sold at a public offering price of 99.304% of their face
value before the underwriters’ discount. The Company’s net proceeds from the offering were used
to repay $350 million of aggregate principal of our 4.375% Senior Notes due 2023 on March 18,
2021 and partially repay borrowings under the Company’s then outstanding revolving credit
facility and term loans. As a result of the notes retirement, the Company recorded approximately
$30.8 million in early extinguishment of debt charges.

On April 30, 2021, the Company entered into a new four-year $1.45 billion senior unsecured credit
facility (the “Revolving Credit Facility”). The Revolving Credit Facility replaced a $1.25 billion
senior unsecured credit facility that was scheduled to mature on May 25, 2021.

On April 30, 2021, the Company’s operating partnership subsidiary entered into a new four-year
$50 million senior unsecured term loan facility (the “OP Term Loan”). The OP Term Loan
replaced a $50 million senior unsecured term loan that was scheduled to mature on May 25, 2022.

41

•

On May 13, 2021, we established a $1.0 billion at-the-market program (the “2021 ATM Program”)
to sell shares of our common stock from time to time in an at-the-market offering. The 2021 ATM
Program replaced our $500 million Equity Shelf Program that was entered into in 2015 (the “2015
ATM Program”).

• We sold 7.6 million shares of common stock under our 2015 ATM Program, 2021 ATM Program
and Dividend Reinvestment and Common Stock Purchase Plan (“DRSPP”) during the year ended
December 31, 2021. Aggregate net proceeds from these sales generated $278.4 million during 2021.

Other Highlights

•

•

•

•

In January 2022, our Board authorized the repurchase of up to $500 million of our outstanding
common stock, from time to time, through March 2025.

During 2021, we made $62.1 million of new other investment loans with a weighted average
interest rate of 9.3%. In 2021, we also advanced $88.4 million under existing other investment
loans.

In the third quarter of 2021, we made an investment of $20.0 million in SafelyYou, Inc.
(“SafelyYou”), a technology company that has developed artificial intelligence-enabled video that
detects and helps prevent resident falls in ALFs and SNFs. Through our investment, we obtained
preferred shares representing 5% of the outstanding equity of SafelyYou and warrants to purchase
SafelyYou common stock representing an additional 5% of outstanding equity as of the date of
our investment, which are subject to vesting conditions based on SafelyYou’s deployment of our
invested capital to support Omega facilities and operators. As part of our investment strategy, we
will continue to evaluate investments in companies that provide complementary products and
services that improve the quality of our facilities and allow our operators to improve care.

In 2021, Omega was included in the Bloomberg Gender-Equality Index (GEI) — one of only 380
companies worldwide, and fewer than 15 U.S. REITs, to be included in the 2021 index.

Collectibility Issues

•

During the second quarter of 2021, Gulf Coast stopped paying contractual rent under its master
lease agreement for 24 facilities because of on-going liquidity issues. On October 14, 2021, Gulf
Coast commenced voluntary cases under chapter 11 of the U.S. Bankruptcy Code. As a result of
Gulf Coast’s non-payment of contractual rent, in the second quarter of 2021, we placed Gulf
Coast on a cash basis of revenue recognition and wrote-off straight-line rent receivable balances of
$17.4 million through rental income. Subsequent to placing Gulf Coast on a cash basis of revenue
recognition in June 2021, we recognized $24.6 million of contractual rent during the remaining
period of 2021, based on our ability to offset any uncollected rent receivables against Gulf Coast’s
security deposit and against certain debt obligations of Omega. In connection with the
bankruptcy, we agreed to provide up to $25.0 million in senior secured debtor-in-possession
(“DIP”) financing to Gulf Coast, subject to certain conditions, to provide liquidity and assist with
the transition of operations in our 23 open facilities. Operations of the 23 open facilities were
transitioned to a new manager on December 1, 2021 for an interim period until the license for the
facilities could be obtained by a new operator. In the fourth quarter of 2021, we funded
$20.5 million under the DIP facility and fully reserved for the loan principal through the provision
for credit losses. During the Interim Period, no rent is being paid by Gulf Coast, and we have
provided a $20.0 million working capital loan to the new manager, discussed in further detail in
Note 8 — Other Investments to our Consolidated Financial Statements.

42

•

•

•

•

From August 2021 through October 2021 and December 2021, Agemo Holdings, LLC (“Agemo”)
failed to pay contractual rent and interest due under their lease and loan agreements, but paid rent
and interest in November 2021. As of December 31, 2021, we have two loans outstanding to
Agemo, a term loan with remaining principal of $32.0 million that bears interest at 9% per annum
and matures on December 31, 2024 (the “Agemo Term Loan”) and a $25.0 million secured
working capital loan bearing interest at 7% per annum that matures on April 30, 2025 (the
“Agemo WC Loan”). In the third quarter of 2021, we recorded a provision for credit losses of
$16.7 million related to these loans as a result of a reduction in the fair value of the underlying
collateral assets supporting the current carrying values. During the third and fourth quarters of
2021, we recorded $8.7 million of revenue by collecting rental and interest payments and we
recorded $8.5 million of revenue by drawing on the letter of credit and through application of the
security deposit balance.

From October 2021 through December 2021, Guardian Healthcare (“Guardian”) failed to make
contractual rent and interest payments under its lease agreement for 26 operating facilities and on
its $112.5 million mortgage loan agreement, bearing interest at 10.81%, for nine facilities, due to
ongoing liquidity issues. As a result of Guardian’s non-payment of contractual rent, in the fourth
quarter of 2021, we placed Guardian on a cash basis of revenue recognition and wrote off
approximately $14.0 million of straight-line rent receivables and lease inducements through rental
income. As of December 31, 2021, we have $7.4 million of letters of credit from Guardian as
collateral which could be applied against our uncollected rent and interest receivables. On
December 30, 2021, we acquired two facilities, previously subject to the Guardian mortgage loan,
in consideration for a reduction of $8.7 million in the mortgage principal and added the facilities
to the master lease agreement. During the fourth quarter of 2021, we concluded that the
$112.5 million first mortgage loan was impaired. We recorded a provision for credit loss of
$38.2 million during the fourth quarter of 2021 to reduce the carrying value of this loan to the fair
value of the underlying collateral. See Note 9 — Allowance for Credit Losses to our Consolidated
Financial Statements.

In addition to the Gulf Coast and Guardian straight-line receivable write-offs in 2021 discussed
above, during the year ended December 31, 2021, we wrote off straight-line rent receivable
balances of $5.9 million through rental income primarily due to placing four other operators (one
operator in the first quarter, two operators in the third quarter and one operator in the fourth
quarter) on a cash basis of revenue recognition. We determined that collection of substantially all
contractual lease payments with these operators was no longer probable.

In January and February 2022, an operator, representing 3.4% of total revenue (excluded the
impact of write-offs) for the year ended December 31, 2021, did not pay its contractual amounts
due under its lease agreement. The operator asked for a short-term rent deferral and negotiations
with the operator are on-going. Omega holds a $1.0 million letter of credit from this operator. The
operator remains current on its loan obligations, which are secured by a first lien on the accounts
receivable of
the operator, as discussed further in Note 8 — Other Investments to our
Consolidated Financial Statements.

Dividends

•

On January 27, 2022, the Board of Directors declared a cash dividend for the quarter ended
December 31, 2021 of $0.67 per share.

Results of Operations

The following is our discussion of

the consolidated results of operations for the year ended
December 31, 2021 as compared to the year ended December 31, 2020. For a discussion of our results of
operation for the year ended December 31, 2020 as compared to the year ended December 31, 2019, see
“Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” of
our Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”).

43

Revenues

Our revenues for the year ended December 31, 2021 totaled $1.1 billion, an increase of $170.4 million
over the same period in 2020. Following is a description of certain of the changes in revenues for the year
ended December 31, 2021 compared to 2020:

•

Rental income was $923.7 million, an increase of $170.3 million over the same period in 2020. The
increase was primarily the result of
(i) $109.3 million increase due to a net reduction in
straight-line rent receivable and lease inducement write-offs in 2021 following significant write-offs
associated with Agemo and Genesis in the third quarter of 2020 as a result of placing these
operators on a cash basis for revenue recognition, (ii) a $101.4 million increase related to facility
acquisitions made in 2021 (primarily the 24 facilities acquired from Healthpeak in the first
quarter), the completion of the construction of certain facilities that were placed in service in 2021
(primarily related to developmental projects with Maplewood), and incremental revenue as a result
of
(iii) a
$7.7 million increase related to Gulf Coast as a result of accelerating rent due to a default under
its master lease agreement and (iv) a $5.5 million one-time rent payment from a cash basis
operator for past due contractual amounts owed under its lease agreement partially offset by a
(a) $49.5 million decrease in rental income resulting from not recording straight-line rent for
operators placed on a cash basis for revenue recognition in 2020 and 2021 and resulting from
facility sales and (b) $4.7 million decrease related to the acceleration of the amortization of
in-place lease intangibles resulting from facility transitions and lease terminations.

transitioning facilities previously associated with Daybreak to other operators,

• Mortgage interest income totaled $91.7 million, an increase of $2.2 million over the same period
in 2020. The increase was primarily due to new and refinanced mortgages and additional funding
to existing operators made throughout 2020 and 2021, offset by principal payments. As noted
above, in 2021, we funded $86.7 million for new or existing mortgages loans.

Expenses

Our expenses for the year ended December 31, 2021, totaled $777.0 million, an increase of
approximately $42.0 million over the same period in 2020. Following is a description of certain of the
changes in our expenses for the year ended December 31, 2021 compared to 2020:

•

•

•

•

Our depreciation and amortization expense was $342.0 million for the year ended December 31,
2021, compared to $329.9 million for the same period in 2020. The increase primarily relates to the
facility acquisitions and capital expenditures, partially offset by a reduction in
timing of
depreciation expense related to facility sales and facilities reclassified to assets held for sale.

Our general and administrative (“G&A”) expense was $64.6 million, compared to $59.9 million for
the same period in 2020. The increase primarily related to (i) a $2.6 million increase in stock-based
compensation expense (see Note 19 — Stock-Based Compensation to the Consolidated Financial
Statements for a full summary of stock-compensation movements over the last three years) and
(ii) a $1.6 million increase in professional service costs related to the Gulf Coast bankruptcy and
related matters.

Our impairment on real estate properties was $44.7 million, compared to $72.5 million for the
same period in 2020. The 2021 impairments primarily related to 14 facilities to reduce their net
book value to their estimated fair value less costs to sell or fair value. The 2020 impairments
primarily related to 25 facilities to reduce their net book value to their estimated fair value less
costs to sell or fair value. The 2021 and 2020 impairments were primarily the result of decisions to
exit certain non-strategic facilities and/or operators.

Our recovery on direct financing leases was approximately $0.7 million, compared to $3.1 million
for the same period in 2020. Our recovery on direct financing leases primarily relates to the
Orianna Health Systems bankruptcy and proceeds received from the Trust (See Note 6 — Leases
to the Consolidated Financial Statements for further information regarding Orianna Health
Systems).

44

•

•

Our $39.7 million increase in provision for credit losses primarily relates to increase in the amount
of specific reserves recorded against loans in 2021 compared to 2020. In 2021, we recorded
provisions of $16.7 million (in the third quarter) related to Agemo’s loans, $20.0 million (in the
fourth quarter) related to the Gulf Coast DIP facility, and $38.2 million (in the fourth quarter)
related to Guardian’s mortgage loan. In 2020, we recorded provisions of $22.7 million against
Agemo’s loans.

Our interest expense was $234.6 million, compared to $223.4 million for the same period in 2020.
The increase primarily related to (i) interest on the $700 million senior notes issued in the fourth
quarter of 2020 and (ii) interest on the $700 million senior notes issued in the first quarter of
2021, partially offset by the retirement of our previous $425 million senior unsecured U.S. Dollar
term loan facility and our previous $250 million senior unsecured term loan facility in the fourth
quarter of 2020, the partial paydown of our previous $50 million senior unsecured term loan
obtained in 2017 in the fourth quarter of 2020, the redemption of $350 million of the 4.375%
Senior Notes due 2023 and the repayment of outstanding borrowings on the 2017 Revolving
Credit Facility and the Sterling term loan in the first quarter of 2021 and lower average
borrowings under the Revolving Credit Facility.

Other Income (Expenses)

For the year ended December 31, 2021, total other income was $130.3 million, an increase of
approximately $125.4 million over the same period in 2020. The increase was primarily due to a
$142.5 million increase in gain on assets sold — net resulting from the sale of 48 facilities and 43 facilities
during 2021 and 2020, respectively, as we continue to exit certain facilities, operator relationships and/or
states to improve the strength of our overall portfolio, offset by a $30.8 million loss on debt extinguishment
primarily resulting from fees, premiums, and expenses related to the redemption of $350 million of the
4.375% Senior Notes due 2023 during the first quarter of 2021.

Income Tax Expense

As a REIT, we generally are not subject to federal income taxes on the REIT taxable income that we
distribute to stockholders, subject to certain exceptions. For tax year 2021, we made common dividend
payments of $637.6 million to satisfy REIT requirements relating to qualifying income. We have elected to
treat certain of our active subsidiaries as TRSs. Our domestic TRSs are subject to federal, state and local
income taxes at the applicable corporate rates. Our foreign TRSs are subject to foreign income taxes. As of
December 31, 2021, one of our TRSs that is subject to income taxes at the applicable corporate rates had a
net operating loss (“NOL”) carry-forward of approximately $10.6 million. The loss carry-forward is fully
reserved as of December 31, 2021 with a valuation allowance due to uncertainties regarding realization.

Under current law, NOL carry-forwards generated up through December 31, 2017 may be carried
forward for no more than 20 years, and our NOL carry-forwards generated in our taxable years ended after
December 31, 2017 may be carried forward indefinitely. The Coronavirus Aid, Relief, and Economic
Security Act (the “CARES Act”) modified the NOL carryback rules to permit the use of NOLs arising
after December 31, 2017 and before January 1, 2021 to be carried back to recover taxes paid in prior tax
periods. We do not anticipate that such changes will materially impact the computation of Omega’s taxable
income, or the taxable income of any Omega entity, including our TRSs. We also do not expect that Omega
or any Omega entity, including our TRSs, will realize a material tax benefit as a result of the changes to the
provisions of the Code made by the CARES Act.

For the year ended December 31, 2021, we recorded approximately $1.4 million of federal, state and
local income tax provision and approximately $2.4 million of tax provision for foreign income taxes. These
amounts do not include any gross receipts or franchise taxes payable to certain states and municipalities.

Income from Unconsolidated Joint Ventures

For the year ended December 31, 2021, income from unconsolidated joint ventures was $16.1 million,
an increase of approximately $9.9 million over the same period in 2020. The increase was primarily due to
one of the joint ventures realizing a $14.9 million gain on sale of real estate investments during 2021.

45

National Association of Real Estate Investment Trusts Funds From Operations

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

We further believe that by excluding the effect of depreciation, amortization, impairment on real estate
assets and gains or losses from sales of real estate, all of which are based on historical costs and which may
be of limited relevance in evaluating current performance, Nareit FFO can facilitate comparisons of
operating performance between periods and between other REITs. We offer this measure to assist the users
of our financial statements in evaluating our financial performance under GAAP, and Nareit FFO should
not be considered a measure of liquidity, an alternative to net income or an indicator of any other
performance measure determined in accordance with GAAP. Investors and potential investors in our
securities should not rely on this measure as a substitute for any GAAP measure, including net income.

The following table presents our Nareit FFO results for the years ended December 31, 2021 and 2020:

Year Ended December 31,

2021

2020

(in thousands)

Net income(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deduct gain from real estate dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 428,302

$163,545

(161,609)

(19,113)

Deduct gain from real estate dispositions – unconsolidated joint ventures

. . . . .

(14,880)

(5,894)

251,813

138,538

Elimination of non-cash items included in net income:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

342,014

329,924

Depreciation – unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . . .
Add back impairments on real estate properties
. . . . . . . . . . . . . . . . . . . . . . .
Add back impairments on real estate properties – unconsolidated joint

ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Add back unrealized loss on warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,285
44,658

14,000
72,494

4,430

43

—

988

Nareit FFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 655,243

$555,944

(1)

(2)

The year ended December 31, 2021 includes the application of $11.8 million of Agemo and Gulf Coast security deposits (letter
of credit and cash deposits) in revenue.

The year ended December 31, 2021 includes $21.3 million of revenue related to Gulf Coast recognized based on our ability to
offset uncollected rent against the interest and principal of certain debt obligations of Omega.

46

Liquidity and Capital Resources

Sources and Uses

Our primary sources of cash include rental income and interest receipts, existing availability under our
Revolving Credit Facility, proceeds from our DRSPP and the 2021 ATM Program, facility sales, and
proceeds from mortgage and other investment payoffs. We anticipate that these sources will be adequate to
fund our cash flow needs through the next twelve months, which include common stock dividends, debt
service payments (including principal and interest), real estate investments (including facility acquisitions,
capital
improvement programs and other capital expenditures), mortgage and other investment loan
advances and normal recurring G&A expenses (primarily consisting of employee payroll and benefits and
expenses relating to third parties for legal, consulting and audit services).

Capital Structure

At December 31, 2021, we had total assets of $9.6 billion, total equity of $4.1 billion and total net debt

of $5.3 billion, with such debt representing approximately 56.4% of total capitalization.

Debt

At December 31, 2021, the weighted-average annual interest rate of our debt was 4.13%. Additionally,
as of December 31, 2021, 100% of our debt with outstanding principal balances has fixed interest payments
(when considering the impact of cash flow hedges). As of December 31, 2021, Omega’s debt obligations
consisted of the following:

•

•

•

•

A $1.45 billion Revolving Credit Facility that bears interest at LIBOR (or in the case of loans
denominated in GBP, the Sterling overnight index average reference rate plus an adjustment of
0.1193% per annum) plus an applicable percentage (with a range of 95 to 185 basis points) based
on our credit ratings. The Revolving Credit Facility matures on April 30, 2025, subject to Omega’s
option to extend such maturity date for two six-month periods. As of December 31, 2021, Omega
had no borrowings on the Revolving Credit Facility.

A $50.0 million OP Term Loan that bears interest at LIBOR plus an applicable percentage (with a
range of 85 to 185 basis points) based on our credit ratings. The interest on the OP Term Loan is
effectively fixed at 3.29%, as we have interest rate swaps that effectively hedge the interest
payments on this loan. The OP Term Loan matures on April 30, 2025, subject to Omega OP’s
option to extend such maturity date for two six-month periods.

$4.9 billion of senior unsecured notes with staggered maturity dates in 2023, 2024, 2025, 2026,
2027, 2028, 2029, 2031 and 2033. These notes bear fixed interest rates between 3.25% and 5.25%
per annum.

$362.1 million of secured borrowings consisting of HUD Mortgages and a term loan. We had
$359.8 million of outstanding HUD Mortgages as of December 31, 2021, with weighted average
interest rates of 3.01% per annum that mature from 2046 to 2052.

As of December 31, 2021, we had long-term credit ratings of Baa3 from Moody’s and BBB- from S&P
Global and Fitch. Credit ratings impact our ability to access capital and directly impact our cost of capital
as well. For example, our Revolving Credit Facility accrues interest and fees at a rate per annum equal to
LIBOR plus a margin that depends upon our credit rating. A downgrade in credit ratings by Moody’s and
S&P Global may have a negative impact on the interest rates and fees for our Revolving Credit Facility.

Our credit facilities that reference LIBOR contain customary LIBOR replacement language, including,

but not limited to, the use of rates based on the secured overnight financing rate.

47

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

Equity

At December 31, 2021, we had 239.1 million shares of common stock outstanding and our shares had
a market value of $7.1 billion. As of December 31, 2021, we had the following equity programs in place that
we can utilize to raise capital:

•

The 2021 ATM Program under which shares of common stock having an aggregate gross sales
price of up to $1.0 billion may be sold from time to time. The 2021 ATM Program has a forward
sale provision that generally allows Omega to lock in a price on the sale of shares of common
stock when sold by the forward sellers but defer receiving the net proceeds from such sales until
the shares of our common stock are issued at settlement on a later date. We did not utilize the
forward provisions under the 2021 ATM Program during 2021. We have $929.9 million of sales
remaining under the 2021 ATM Program as of December 31, 2021.

• We have a DRSPP that allows for the reinvestment of dividends and the optional purchase of our

common stock.

Dividends

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

In 2021, we paid dividends of $637.6 million to our common stockholders.

The Board has declared common stock dividends as set forth below:

Record Date

Payment Date

Dividend per
Common Share

February 8, 2021 . . . . . . . .

. . . . . . . . February 16, 2021 . . . . . . . . . . . . . . . . . . .

$0.67

. . . . . . . . . . May 17, 2021. . . . . . . . . . . . . . . . . . . . . . .
May 3, 2021 . . . . . . . . . .
August 2, 2021 . . . . . . . . .
. . . . . . . . . August 13, 2021 . . . . . . . . . . . . . . . . . . . . .
November 5, 2021 . . . . . . . . . . . . . . . . November 15, 2021 . . . . . . . . . . . . . . . . . .
. . . . . . . . February 15, 2022 . . . . . . . . . . . . . . . . . . .
February 7, 2022 . . . . . . . .

0.67
0.67
0.67
0.67

48

Material Cash Requirements

The following table shows our material cash requirements, described below, as of December 31, 2021:

Payments due by period

Total

Less than
1 year

Years 2 – 3

Years 4 – 5

(in thousands)

More than
5 years

. . . . . . . . . . . . . . . . . . . . . . . . . . . $5,312,081 $

9,945 $ 766,048 $1,067,041 $3,469,047

Debt(1)
Interest payments on long-term debt . . . . . . .
Operating lease and other obligations(2) . . . . .

1,416,255
41,236

203,029
1,998

395,235
4,132

320,497
3,883

497,494
31,223

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . $6,769,572 $214,972 $1,165,415 $1,391,421 $3,997,764

(1)

The $5.3 billion of debt outstanding includes: (i) $50 million under the OP Term Loan due April 2025, (ii) $350 million of
4.375% Senior Notes due August 2023, (iii) $400 million of 4.95% Senior Notes due April 2024, (iv) $400 million of 4.50%
Senior Notes due January 2025, (v) $600 million of 5.25% Senior Notes due January 2026, (vi) $700 million of 4.5% Senior
Notes due April 2027, (vii) $550 million of 4.75% Senior Notes due January 2028, (viii) $500 million of 3.625% Senior Notes due
October 2029, (ix) $700 million of 3.375% Senior Notes due February 2031, (x) $700 million of 3.25% Senior Notes due
April 2033, (xi) $2.3 million of 3.75% per annum debt held at a consolidated joint venture due February 2022 and
(xii) $360 million of HUD debt at a 3.01% weighted average interest rate due between 2046 and 2052. Other than the $50 million
outstanding under the OP Term Loan, the $360 million of HUD debt and the $2.3 million of debt held at a consolidated joint
venture, Parent is the obligor of all outstanding debt.

(2)

In connection with the adoption of Topic 842, we recognized lease liabilities in connection with ground and/or facility leases.
Certain operators pay these obligations directly to the landlord. We recognize rental income for ground and/or facility leases
where the operator reimburses us, or pays the obligation directly to the landlord on our behalf.

In addition to the obligations in the table above, as of December 31, 2021, we also had $244.7 million
of commitments to fund the construction of new leased and mortgaged facilities, capital improvements and
other commitments. Additionally, we have commitments to fund $50.1 million of advancements under
existing other investment loans. These commitments are expected to be funded over the next several years
and are dependent upon the operators’ election to use the commitments.

Other Arrangements

We own interests in certain unconsolidated joint ventures as described in Note 11 to the Consolidated
Financial Statements. Our risk of loss is generally limited to our investment in the joint venture and any
outstanding loans receivable. We use derivative instruments to hedge interest rate and foreign currency
exchange rate exposure as discussed in Note 15 to the Consolidated Financial Statements.

Cash Flow Summary

The following is our discussion of our consolidated cash flows for the year ended December 31, 2021
as compared to the year ended December 31, 2020. For a discussion of our consolidated cash flows for the
year
see
“Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” of
our 2020 Form 10-K.

ended December 31, 2020 as

ended December 31, 2019,

compared to the year

Cash, cash equivalents and restricted cash totaled $24.4 million as of December 31, 2021, a decrease of
$143.1 million as compared to the balance at December 31, 2020. The following is a discussion of changes
in cash, cash equivalents and restricted cash due to operating, investing and financing activities, which are
presented in our Consolidated Statements of Cash Flows.

Operating Activities — Operating activities generated $722.1 million of net cash flow for the year
ended December 31, 2021, as compared to $708.3 million for the same period in 2020, an increase of
$13.9 million, which is primarily driven by an increase of $77.8 million of net income, adjusted for non-cash
items, due to revenue growth as a result of facility acquisitions and transitions, investments in mortgages
and other investments. This increase was partially offset by a $63.9 million change in the net movements of
the operating assets and liabilities, primarily driven by the change in receivables driven by operator
collectibility issues with Agemo, Guardian and Gulf Coast.

49

Investing Activities — Net cash flow from investing activities was an outflow of $524.2 million for the
year ended December 31, 2021, as compared to an outflow of $89.1 million for the same period in 2020.
The $435.1 million change in cash used by investing activities related primarily to (i) a $510.2 million
increase in real estate acquisitions, primarily related to the acquisition of 24 senior living facilities from
Healthpeak in the first quarter of 2021, (ii) $8.0 million increase in investments in unconsolidated joint
ventures primarily related to Second Spring II LLC, a new joint venture investment in 2021, (iii) a
$33.8 million increase in capital improvements to real estate investments and construction in progress
(including $68.0 million related to the purchase of a real estate property located in Washington, D.C. that
Omega,
in conjunction with Maplewood, plans to redevelop), (iv) a $35.6 million increase in other
investments, net of repayments driven by lower repayments in 2021 and (v) a $14.7 million decrease in
proceeds from sale of direct financing lease assets and related trust related to Orianna. Offsetting these
changes were: (i) a $11.1 million decrease in mortgage placements, net of repayments which is primarily
driven by higher repayments in 2021, (ii) $137.7 million increase in proceeds from the sales of real estate
investments driven by an attractive real estate market in which Omega elected to sell non-strategic assets,
(iii) a $5.1 million decrease in business acquisitions and (iv) a $5.1 million increase in receipts from
insurance proceeds.

Financing Activities — Net cash flow from financing activities was an outflow of $341.1 million for
the year ended December 31, 2021, as compared to an outflow of $485.5 million for the same period in
2020. The $144.4 million change in cash used in financing activities was primarily related to (i) a
$82.8 million change in other long-term borrowings — net which is the result of greater additional
long-term borrowings in 2021 (including the issuance of $700 million 3.25% Senior Notes due in 2033) as
compared to 2020, partially offset by other long-term debt repayments in 2021 (including pay downs of
$350 million on the 4.375% Senior Notes due in 2023, $138.4 million related to the Sterling term loan and
$102.5 million on the 2017 Revolving Credit Facility), and (ii) a $122.2 million increase in cash proceeds
from the issuance of common stock in 2021, as compared to the same period in 2020 primarily driven by
$126.7 million of proceeds from the DRSPP in 2021, offset by (a) a $25.3 million increase in dividends paid
primarily resulting from additional share issuances throughout 2020 and 2021 and (b) a $30.8 million
increase in payment of financing related costs related to the redemption of $350 million of the 4.375%
Senior Notes due 2023 and entering new debt facilities in 2021 such as the Revolving Credit Facility, the OP
Term Loan and the 3.25% Senior Notes due 2033.

Supplemental Guarantor Information

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

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

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

50

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP in the U.S. requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported
amounts of revenues and expenses. Our significant accounting policies are described in Note 2 — Summary
of Significant Accounting Policies to the Consolidated Financial Statements. These policies were followed
in preparing the Consolidated Financial Statements for all periods presented. Actual results could differ
from those estimates.

We have identified the following significant accounting policies that we believe are critical accounting
policies. These critical accounting policies are those that have the most impact on the reporting of our
financial condition and those requiring significant assumptions, judgments and estimates. With respect to
these critical accounting policies, we believe the application of assumptions, judgments and estimates is
consistently applied and produces financial information that fairly presents the results of operations for all
periods presented. The following table presents information about our critical accounting policies, as well as
the material assumptions used to develop each estimate:

Nature of Critical Accounting Estimate

Assumptions/Approach Used

Revenue Recognition

Rental income from our operating leases
is generally recognized on a straight-line
basis over the lease term when we have
determined that
the collectibility of
substantially all of the lease payments
are probable. If we determine that it is
not probable that substantially all of the
lease payments will be collected, we
account for the revenue under the lease
on a cash basis.

the probability of

collecting substantially all
We assess
payments under our leases based on several factors, including,
among other things, payment history of the lessee, the financial
strength of the lessee and any guarantors, historical operations
and operating trends, current and future economic conditions
and expectations of performance (which includes known
substantial doubt about an operator’s ability to continue as a
going concern). If our evaluation of these factors indicates it is
probable that we will be unable to collect substantially all rents,
we place that operator on a cash basis and limit our rental
income to the lesser of lease income on a straight-line basis plus
variable rents when they become accruable or cash collected. As
a result of placing an operator on a cash basis, we may
recognize a charge to rental income for any contractual rent
receivable, straight-line rent receivable and lease inducements.
As of December 31, 2021 and 2020, we had outstanding
and
straight-line
$139.0 million,
inducements of
$93.8 million and $83.4 million, respectively. During 2021, we
wrote-off
contractual
receivables, straight-line rent receivables and lease inducements
to rental income primarily as a result of placing six operators
on a cash-basis. During 2020, we wrote-off approximately
$143.0 million of contractual receivables, straight-line rent
receivables and lease inducements to rental income as a result of
placing four operators on a cash-basis. If we change our
conclusion regarding the probability of
collecting rent
payments required by a lessee, we may recognize an adjustment
to rental income in the period we make a change to our prior
conclusion. Changes in the assessment of probability are
accounted for on a cumulative basis as if the lease had always
been accounted for based on the current determination of the
likelihood of collection, potentially resulting in increased
volatility of rental income.

$148.5 million

$37.3 million

approximately

respectively,

and lease

receivables

rent

of

of

51

Nature of Critical Accounting Estimate

Assumptions/Approach Used

Real Estate Investment Impairment

estimated

flows. The

Assessing impairment of real property
involves subjectivity in determining if
indicators of impairment are present and
in estimating the future undiscounted
cash
future
undiscounted cash flows are generally
based on the related lease which relates
to one or more properties and may
include cash flows from the eventual
disposition of
In some
instances, there may be various potential
outcomes for a real estate investment
and its potential future cash flows. In
these instances, the undiscounted future
cash
the
recoverability are probability-weighted
based on management’s best estimates as
of
evaluation. These
estimates can have a significant impact
on the undiscounted cash flows.

the date of

the asset.

assess

flows

used

to

Asset Acquisitions

our

that

estate
real
believe
We
acquisitions are
typically considered
asset acquisitions. The assets acquired
and liabilities assumed are recognized by
the acquisition,
allocating the cost of
including
to the
transaction costs,
individual assets acquired and liabilities
assumed on a relative fair value basis.
Tangible assets consist primarily of land,
building and site improvements and
furniture and equipment.
Identifiable
intangible assets and liabilities primarily
consist of the above or below market
component of in-place leases.

for

future

the ability to meet

We evaluate our
impairment
real estate investments
indicators at each reporting period, including the evaluation of
our assets’ useful lives. The judgment regarding the existence of
impairment indicators is based on factors such as, but not
limited to, market conditions, operator performance including
the current payment status of contractual obligations and
expectations of
contractual
obligations, legal structure, as well as our intent with respect to
holding or disposing of the asset. If indicators of impairment
are present, we evaluate the carrying value of the related real
future
estate investments in relation to our estimate of
to
undiscounted cash flows of
determine if an impairment charge is necessary. This analysis
requires us to use judgment in determining whether indicators
of impairment exist, probabilities of potential outcomes and to
estimate the expected future undiscounted cash flows or
the facility which impact our
estimated fair values of
assessment of impairment, if any.
During 2021, we recorded impairments on real estate properties
of approximately $44.7 million on 14 facilities. During 2020, we
of
recorded
approximately $76.0 million on 25 facilities.

the underlying facilities

impairments

properties

estate

real

on

The allocation of the purchase price to the related real estate
acquired (tangible assets and intangible assets and liabilities)
involves subjectivity as such allocations are based on a relative
fair value analysis. In determining the fair values that drive such
analysis, we estimate the fair value of each component of the
real estate acquired which generally includes land, buildings and
site improvements, furniture and equipment, and the above or
in-place leases. Significant
below market component of
assumptions used to determine such fair values
include
comparable land sales, capitalization rates, discount rates,
market rental rates and property operating data, all of which
future market or
can be impacted by expectations about
economic conditions. Our estimates of
these
and
of
components
amortization we record over the estimated useful life of the
property or the term of the lease.
During 2021 and 2020, we acquired real estate assets of
approximately $604.0 million and $104.4 million, respectively.

the values of
depreciation

amount

affect

the

52

Nature of Critical Accounting Estimate

Assumptions/Approach Used

on
for Credit
Allowance
Mortgages, Other Investments and Direct
Financing Leases

Losses

aggregate

determining

purposes
for

our
of
For
loss, we pool
credit
allowance
financial assets that have similar risk
characteristics. We
our
financial assets by financial instrument
type and by internal risk rating. Our
internal ratings range between 1 and 7.
An internal rating of 1 reflects the lowest
likelihood of loss and a 7 reflects the
loss. We have a
highest likelihood of
limited history of
incurred losses and
consequently have elected to employ
external data to perform our expected
credit
loss calculation. We utilize a
probability of default (“PD”) and loss
given default
(“LGD”) methodology.
Periodically, the Company may identify
an individual loan for impairment. When
we identify a loan impairment, the loan
is written down to the present value of
the expected future cash flows. In cases
where expected future cash flows are not
readily determinable, the loan is written
down to the fair value of the underlying
collateral. We may base our valuation on
a loan’s observable market price, if any,
or the fair value of collateral, net of sales
costs, if the repayment of the loan is
expected to be provided solely by the sale
of the collateral.

security,

We assess our internal credit ratings on a quarterly basis. Our
internal credit ratings consider several factors including the
collateral and/or
the performance of borrowers
underlying facilities, if applicable, available credit support (e.g.,
guarantees), borrowings with third parties, and other ancillary
business ventures and real estate operations of the borrower.
Our model’s historic inputs consider PD and LGD data for
residential care facilities published by the Federal Housing
Administration (“FHA”) along with Standards & Poor’s
one-year global corporate default rates. Our historical loss rates
revert to historical averages after 36 periods. Our model’s
current conditions and supportable forecasts consider internal
credit ratings, current and projected U.S. unemployment rates
published by the U.S. Bureau of Labor Statistics and the
Federal Reserve Bank of St. Louis and the weighted average life
to maturity of the underlying financial asset. During 2021 and
2020, we recorded a provision for credit losses of approximately
$77.7 million and $38.0 million. As of December 31, 2021 and
2020, we had a total allowance for credit loss of $144.5 million
and $67.8 million, respectively. A 10% increase or decrease in
the quarterly FHA default rates as of December 31, 2021
would result in a $1.0 million increase or decrease in the
provision for credit losses. If the weighted average yield to
maturity on our portfolio increases or decreases by 1% or 10%,
this will result in an additional provision or recover for credit
losses of $0.8 million or $3.4 million, respectively. If
the
weighted average yield to maturity on our portfolio decreases
by 1% or 10%, this will result in a recovery of credit losses of
$0.8 million or $3.3 million, respectively.

Item 7A — Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks, including the potential loss arising from adverse changes in
interest rates and foreign currency exchange rates. We seek to mitigate the effects of fluctuations in interest
rates by matching the terms of new investments with new long-term fixed rate borrowings to the extent
possible. We also use financial derivative instruments to hedge our interest rate exposure as well as our
foreign currency exchange rate exposure. We do not enter into our market risk sensitive financial
instruments and related derivative positions (if any) for trading or speculative purposes. The following
disclosures discuss potential fluctuations in interest rates and foreign currency exchange rates and 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. Readers are cautioned that many of the statements contained in these paragraphs are
the heading
forward-looking and should be read in conjunction with our disclosures under
“Forward-Looking Statements” set forth above. The use of different market assumptions and estimation
methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the
estimates presented below are not necessarily indicative of the amounts we would realize in a current
market exchange.

53

Interest Rate Risk

We borrow debt at a combination of variable and fixed rates. Movements in interest rates on our
variable rate borrowings would change our future earnings and cash flows but not significantly affect the
fair value of those instruments. During the year ended December 31, 2021, we incurred interest expense of
$1.1 million related to variable rate borrowings outstanding under our Revolving Credit Facility. Assuming
no changes in outstanding balances, a 1% increase in interest rates would not have significantly impacted
the annual interest expense on our Revolving Credit Facility. Our OP Term Loan bears interest at a variable
interest rate, but the entire outstanding principal of $50.0 million was hedged by two notional interest rate
swaps at December 31, 2021 that effectively fix the variable portion of the interest rate at 1.84%. Assuming
no changes in outstanding balances, a 1% increase in interest rates would have no effect on annual interest
expense because of the interest rate swaps.

A change in interest rates will not affect the interest expense associated with our long-term fixed rate
borrowings but will affect the fair value of our long-term fixed rate borrowings. The estimated fair value of
our total
long-term fixed-rate borrowings at December 31, 2021 was approximately $5.6 billion. A
one percent increase in interest rates would result in a decrease in the fair value of long-term fixed-rate
borrowings by approximately $319.8 million at December 31, 2021.

At December 31, 2021, we have $400 million of forward interest rate swaps outstanding that are
recorded at fair value in other assets on our Consolidated Balance Sheets. The forward-starting swaps hedge
the interest rate risk associated with interest payments on a forecasted issuance of fixed rate long-term debt.

Foreign Currency Risk

We are exposed to foreign currency risk through our investments in the U.K. Increases or decreases in
the value of the British Pound Sterling relative to the U.S. Dollar impact the amount of net income we earn
from our investments in the U.K. Based solely on our results for the year ended December 31, 2021, if the
applicable exchange rate was to increase or decrease by 10%, our net income from our consolidated
U.K.-based investments would increase or decrease, as applicable by $1.0 million.

To hedge a portion of our net investments in the U.K., at December 31, 2021, we have four foreign
currency forward contracts with notional amounts totaling £174.0 million, which mature on March 8, 2024.

Item 8 — Financial Statements and Supplementary Data

The consolidated financial statements and the report of Ernst & Young LLP, Independent Registered
Public Accounting Firm, on such financial statements are filed as part of this report beginning on page F-1.
There have been no retrospective changes to our Consolidated Statements of Operations for any of the
quarters within the two most recent fiscal years that are individually or in the aggregate material.

Item 9 — Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A — Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of our Form 10-K as of and for the year ended December 31, 2021,
management evaluated the effectiveness of the design and operation of disclosure controls and procedures
of the Company as of December 31, 2021. Based on this evaluation, the Chief Executive Officer and Chief
Financial Officer of the Company concluded that the disclosure controls and procedures of the Company
were effective at the reasonable assurance level as of December 31, 2021.

54

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over
financial reporting. The Company’s internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP and includes those policies and procedures that:

•

•

•

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles and that receipts
and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and

timely detection of unauthorized
Provide reasonable assurance regarding prevention or
acquisition, use or disposition of the company’s assets that could have a material effect on the
financial statements.

All internal control systems, no matter how well designed, have inherent limitations and can provide
only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if
any, within our company have been detected. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement preparation and presentation.

In connection with the preparation of this Form 10-K, our management assessed the effectiveness of
the Company’s internal control over financial reporting as of December 31, 2021. In making that
assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (“2013 framework”).
Based on management’s assessment, management believes that, as of December 31, 2021, the Company’s
internal control over financial reporting was effective based on those criteria.

The independent registered public accounting firm’s attestation reports regarding the Company’s
internal control over financial reporting is included in the 2021 financial statements under the caption
entitled Report of Independent Registered Public Accounting Firm and is incorporated herein by reference.

Changes in Internal Control Over Financial Reporting

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

Item 9B — Other Information

On February 2, 2022, we issued an earnings release reporting our financial and operating results for the
fourth quarter and full year ended December 31, 2021. A copy of the earnings release was furnished to the
SEC as Exhibit 99.1 to our Current Report on Form 8-K on February 2, 2022. The earnings release
inadvertently included an error in the table presenting the tax treatment of 2021 dividends paid to
shareholders. Specifically, for all dividends paid in 2021 (on February 16th, May 17th, August 13th and
November 15th) the correct percentage of dividends taxable as a return on capital was 4.3802% (rather than
21.4776% stated in the earnings release) and the correct percentage of dividends taxable as a capital gain
was 21.4776% (rather than 4.3802% stated in the earnings release). This inadvertent error had no impact on
our financial statements or operating results reported in the earnings release. Additionally, this information
was correctly included in the 1099 forms provided to shareholders and on our website at
www.omegahealthcare.com under the “Investor Relations” tab under “Dividend Taxation.” A corrected
earnings release is posted on our website under the “Investors Relations” tab under “Press Releases”.

55

PART III

Item 10 — Directors, Executive Officers of the Registrant and Corporate Governance

The information required by this item is incorporated herein by reference to our Company’s definitive
proxy statement for the 2022 Annual Meeting of Stockholders, to be filed with the SEC pursuant to
Regulation 14A.

For information regarding executive officers of our Company, see Item 1 — Business — Information

about our Executive Officers.

Code of Business Conduct and Ethics

We have adopted a written Code of Business Conduct and Ethics (“Code of Ethics”) that applies to all
financial officer, chief
of our directors and employees,
accounting officer and controller. A copy of our Code of Ethics is available on our website at
www.omegahealthcare.com. Any amendment to our Code of Ethics or any waiver of our Code of Ethics
that is required to be disclosed will be provided on our website at www.omegahealthcare.com promptly
following the date of such amendment or waiver.

including our chief executive officer, chief

Item 11 — Executive Compensation

The information required by this item is incorporated herein by reference to our Company’s definitive
proxy statement for the 2022 Annual Meeting of Stockholders, to be filed with the SEC pursuant to
Regulation 14A.

Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

The information required by this item is incorporated herein by reference to our Company’s definitive
proxy statement for the 2022 Annual Meeting of Stockholders, to be filed with the SEC pursuant to
Regulation 14A, except as set forth below.

The following table provides information about shares available for future issuance under our equity

compensation plans as of December 31, 2021:

Equity Compensation Plan Information

(a)

(b)

(c)

Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights(1)

Weighted-average
exercise price of
outstanding options,
warrants and rights(2)

Number of securities
remaining available for
future issuance under
equity compensation plans
excluding securities
reflected in column (a)(3)

Plan category

Equity compensation plans approved by

security holders . . . . . . . . . . . . . . . . . .

3,125,423

Equity compensation plans not approved

by security holders . . . . . . . . . . . . . . . .

—

Total

. . . . . . . . . . . . . . . . . . . . . . . . .

3,125,423

$ —

—

$ —

3,321,935

—

3,321,935

(1) Reflects (i) 272,752 time-based restricted stock units (“RSUs”) and profit interest units (“PIUs”), (ii) 2,222,048 shares related to
performance-based RSUs (“PRSUs”) and performance-based PIUs that could be issued if certain performance conditions are
achieved and (iii) 630,623 shares in respect of outstanding deferred stock units.

(2) No exercise price is payable with respect to the RSUs and PRSUs.

(3) Reflects (i) 2,838,290 shares of common stock under our 2018 Stock Incentive Plan and (ii) 483,645 shares of common stock

under the Omega Healthcare Investors, Inc. Employee Stock Purchase Plan.

56

Item 13 — Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated herein by reference to our Company’s definitive
proxy statement for the 2022 Annual Meeting of Stockholders, to be filed with the SEC pursuant to
Regulation 14A.

Item 14 — Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to our Company’s definitive
proxy statement for the 2022 Annual Meeting of Stockholders, to be filed with the SEC pursuant to
Regulation 14A.

57

PART IV

Item 15 — Exhibits and Financial Statement Schedules

(a)(1) Listing of Consolidated Financial Statements

Title of Document

Page
Number

Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)

. . . . . . .

F-1

Consolidated Financial Statements of Omega Healthcare Investors, Inc.

Consolidated Balance Sheets as of December 31, 2021 and 2020 . . . . . . . . . . . . . .

F-5

Consolidated Statements of Operations for the three years ended December 31,

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-6

Consolidated Statements of Comprehensive Income for the three years ended

December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-7

Consolidated Statements of Changes in Equity for the three years ended

December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-8

Consolidated Statements of Cash Flows for the three years ended December 31,

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to Consolidated Financial Statements

. . . . . . . . . . . . . . . . . . . . . . . . . . .

F-9

F-10

(a)(2) Listing of Financial Statement Schedules. The following consolidated financial statement

schedules are included herein:

Schedule II — Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule III — Real Estate and Accumulated Depreciation . . . . . . . . . . . . . . . . . . .

Schedule IV — Mortgage Loans on Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . .

F-64

F-65

F-67

All other schedules for which provision is made in the applicable accounting regulation of the
Securities and Exchange Commission are not required under the related instructions or are inapplicable or
have been omitted because sufficient information has been included in the notes to the Consolidated
Financial Statements.

(a)(3) Listing of Exhibits — See “Index to Exhibits” beginning on Page I-1 of this report.

(b) Exhibits — See “Index to Exhibits” beginning on Page I-1 of this report.

(c) Financial Statement Schedules — The following consolidated financial statement schedules are

included herein:

Schedule II — Valuation and Qualifying Accounts

Schedule III — Real Estate and Accumulated Depreciation

Schedule IV — Mortgage Loans on Real Estate

Item 16 — Form 10-K Summary

None.

58

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Omega Healthcare Investors, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Omega Healthcare Investors, Inc. (the
Company) as of December 31, 2021 and 2020, the related consolidated statements of operations,
comprehensive income, changes in equity and cash flows for each of the three years in the period ended
December 31, 2021, and the related notes and financial statement schedules listed in the Index at
Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted
accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States)
the Company’s internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report
dated February 17, 2022 expressed an unqualified opinion thereon.

(PCAOB),

Adoption of ASU No. 2016-13

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of
accounting for the measurement of credit losses on financial instruments in 2020 due to the adoption of
ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments, and the related amendments.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the
financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our
especially challenging, subjective or complex judgments. The communication of the critical audit matters
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are
not, by communicating the critical audit matters below, providing a separate opinion on the critical audit
matters or on the accounts or disclosures to which they relate.

F-1

Description of the Matter

Collectibility of future lease payments

The Company recognized rental income of $924 million during 2021. As
described in Note 2 to the consolidated financial statements, the timing
and pattern of rental income recognition for operating leases is affected
by the Company’s determination as to whether the collectibility of lease
payments is probable.

future lease payments

involved in the Company’s determination of

Auditing the Company’s accounting for rental income is complex due to
the judgment
the
collectibility of
from its operators. The
determination involves consideration of the lessee’s payment history and
recent payment trends, an assessment of the financial strength of the
future contractual rents,
lessees and guarantors, where applicable,
historical and projected operating results of
the lessees in such
properties, and the timing of expected payments.

How We Addressed the Matter
in Our Audit

Description of the Matter

We obtained an understanding, evaluated the design and tested the
operating effectiveness of the Company’s controls over the recognition
of rental income, including controls over management’s assessment of
future lease payments. For example, we tested
the collectibility of
controls over management’s consideration of
the factors used in
assessing collectibility and controls over the completeness and accuracy
of the data used in management’s analyses.

To test the rental income recognized, we performed audit procedures
that
lease
included, among others, evaluating the collectibility of
payments. For example, we assessed the operators’ historical operating
results in the properties, the financial condition of the operators and
payment trends for a sample of operators. We also considered whether
other information obtained throughout
the course of our audit
procedures corroborated or contradicted management’s analysis. In
addition, we tested the completeness and accuracy of the data that was
used in management’s analyses.

Accounting for acquisitions

As described in Note 2 to the financial statements, the Company
invested $662.6 million in asset acquisitions, including the acquisition of
the Healthpeak Properties, Inc. portfolio for $511.3 million.

Auditing the Company’s accounting for its acquisitions was complex
due to the significant estimation uncertainty in the Company’s
determination of the fair value of the acquired assets and liabilities,
including the acquired properties and assumed lease. The significant
estimation uncertainty was primarily due to the sensitivity of
the
respective fair values to the underlying significant assumptions utilized
in the measurement of the fair value of the acquired properties and
lease. The Company used discounted cash flow analyses, market
comparable data, and replacement cost data, to estimate the fair value
of
the acquired properties and assumed lease. The significant
assumptions used to estimate the fair value of the acquired properties
and assumed lease included lease coverage ratios, lease yields, market
rents, land values per acre, discount rates, and replacement costs of
furniture,
these significant
future economic and market
assumptions include consideration of
conditions.

fixtures, and equipment. Certain of

F-2

How We Addressed the Matter
in Our Audit

We obtained an understanding, evaluated the design, and tested the
operating effectiveness of the controls over the Company’s accounting
for acquisitions. For example, we tested controls over the measurement
of the acquired properties and assumed leases, including management’s
review of
the valuation methodology and
assumptions used in the valuation models.

the appropriateness of

among others,

To test the estimated fair value of the acquired properties and assumed
lease, we involved our valuation specialists and performed procedures
including,
valuation
evaluating
methodology and testing the significant assumptions. For example, we
compared the significant assumptions used to independent third-party
data and the Company’s recent lease and acquisition transactions.
Additionally, we tested the completeness and accuracy of the underlying
data supporting the significant assumptions and estimates including
through comparison to the related lease agreements.

the Company’s

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1992.

Baltimore, Maryland
February 17, 2022

F-3

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Omega Healthcare Investors, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Omega Healthcare Investors, Inc.’s internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO
criteria). In our opinion, Omega Healthcare Investors, Inc. (the Company) maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO
criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the consolidated balance sheets of Omega Healthcare Investors, Inc. as of
December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income,
changes in equity and cash flows for each of the three years in the period ended December 31, 2021, and the
related notes and financial statement schedules listed in the Index at Item 15(a)(2) and our report dated
February 17, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in
the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We
are a public accounting firm registered with the PCAOB and are required to be independent with respect to
the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Baltimore, Maryland
February 17, 2022

F-4

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

Real estate assets

ASSETS

Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate assets – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in direct financing leases – net
. . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage notes receivable – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total investments

Other investments – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . . . .
Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractual receivables – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables and lease inducements . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

LIABILITIES AND EQUITY
Revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured borrowings
Senior notes and other unsecured borrowings – net
. . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equity:
Preferred stock $1.00 par value authorized – 20,000 shares, issued and

December 31,

2021

2020

$ 7,448,126
916,328
511,271
74,062
8,949,787
(2,160,696)
6,789,091
10,873
835,086
7,635,050
469,884
194,687
261,151
8,560,772
20,534
3,877
11,259
251,815
651,417
138,804
$ 9,638,478

$ 7,269,596
883,765
518,664
30,129
8,702,154
(1,996,914)
6,705,240
10,764
885,313
7,601,317
467,442
200,638
81,452
8,350,849
163,535
4,023
10,408
234,666
651,737
82,231
$ 9,497,449

$

— $

362,081
4,891,455
268,516
8,200
5,530,252

101,158
369,524
4,698,570
280,824
10,766
5,460,842

outstanding – none . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

Common stock $.10 par value authorized – 350,000 shares, issued and

outstanding – 239,061 shares as of December 31, 2021 and 231,199 shares as
of December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23,906
6,427,566
3,011,474
(5,553,908)
(2,200)
3,906,838
201,388
4,108,226
$ 9,638,478

23,119
6,152,887
2,594,735
(4,916,097)
(12,768)
3,841,876
194,731
4,036,607
$ 9,497,449

See accompanying notes.
F-5

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

Revenues

Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from direct financing leases . . . . . . . . . . . . . . . . . . . . . . .
Mortgage interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenues
Expenses

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition, merger and transition related costs . . . . . . . . . . . . . .
Impairment on real estate properties . . . . . . . . . . . . . . . . . . . . . .
(Recovery) impairment on direct financing leases . . . . . . . . . . . . .
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expense)

. . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income – net
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on assets sold – net
Total other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income tax expense and income from unconsolidated joint
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
Income from unconsolidated joint ventures
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interest
. . . . . . . . . . . . . .
Net income available to common stockholders . . . . . . . . . . . . . . . . . .

Earnings per common share available to common stockholders:
Basic:

Net income available to common stockholders . . . . . . . . . . . . . . .

Diluted:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2021

2020

2019

$ 923,677
1,029
91,661
44,721
1,721
1,062,809

$753,427
1,033
89,422
44,864
3,635
892,381

$804,076
1,036
76,542
43,400
3,776
928,830

342,014
64,628
12,260
1,814
44,658
(717)
77,733
234,604
776,994

(581)
(30,763)
161,609
130,265

329,924
59,889
12,316
2,018
72,494
(3,079)
37,997
223,389
734,948

(879)
(13,340)
19,113
4,894

301,683
57,869
14,933
5,115
45,264
7,917
—
208,715
641,496

814
—
55,696
56,510

416,080
(3,840)
16,062
428,302
(11,563)
$ 416,739

162,327
(4,925)
6,143
163,545
(4,218)
$159,327

343,844
(2,844)
10,947
351,947
(10,824)
$341,123

$

$

1.76

1.75

$

$

0.70

0.70

$

$

1.60

1.58

See accompanying notes.
F-6

OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

Year Ended December 31,

2021

2020

2019

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$428,302

$163,545

$351,947

Other comprehensive income (loss):

Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,842)

Cash flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . .

12,689

10,847

7,762

20,087

27,849

8,114

(6,363)

1,751

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

439,149

191,394

353,698

Comprehensive income attributable to noncontrolling interest . . . . . .

(11,842)

(4,977)

(10,781)

Comprehensive income attributable to common stockholders . . . . . . . . . .

$427,307

$186,417

$342,917

See accompanying notes.
F-7

OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands, except per share amounts)

Balance at December 31, 2018 . . . . . . . . . .

$20,235

$5,074,544 $2,130,511 $(3,739,197)

$(41,652)

$3,444,441

$ 320,043

$3,764,484

Common
Stock
Par Value

Additional
Paid-in
Capital

Cumulative
Net
Earnings

Cumulative
Dividends

Accumulated
Other
Comprehensive
Loss (Income)

Total
Stockholders’
Equity

Noncontrolling
Interest

Total
Equity

Cumulative effect of accounting change (see

Note 2) . . . . . . . . . . . . . . . . . . . .

Stock related compensation . . . . . . . . . .

—

—

—

(8,198)

15,093

Issuance of common stock . . . . . . . . . . .

2,132

795,092

Common dividends declared ($2.65 per share)

Vesting/exercising of OP units . . . . . . . . .

Conversion and redemption of Omega OP

Units to common stock . . . . . . . . . . .

Omega OP Units distributions . . . . . . . . .

Noncontrolling interest — consolidated joint
venture . . . . . . . . . . . . . . . . . . . .

Other comprehensive income (loss) . . . . . .

Net income . . . . . . . . . . . . . . . . . . .

—

—

296

—

—

—

—

—

(6,648)

114,652

—

—

—

—

—

—

—

—

—

—

—

—

341,123

—

—

—

(564,349)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(8,198)

15,093

797,224

(564,349)

(6,648)

(292)

—

—

—

6,648

114,948

(114,948)

(8,490)

15,093

797,224

(564,349)

—

—

—

—

(21,294)

(21,294)

228

(43)

228

1,751

10,824

351,947

1,794

—

1,794

341,123

Balance at December 31, 2019 . . . . . . . . . .

22,663

5,992,733

2,463,436

(4,303,546)

(39,858)

4,135,428

201,166

4,336,594

Cumulative effect of accounting change (see

Note 2) . . . . . . . . . . . . . . . . . . . .

—

—

(28,028)

—

—

(28,028)

(757)

(28,785)

Balance at January 1, 2020 . . . . . . . . . . . .

22,663

5,992,733

2,435,408

(4,303,546)

(39,858)

4,107,400

200,409

4,307,809

Stock related compensation . . . . . . . . . .

Issuance of common stock . . . . . . . . . . .

Common dividends declared ($2.68 per share)

Vesting/exercising of OP units . . . . . . . . .

Conversion and redemption of Omega OP

Units to common stock . . . . . . . . . . .

Omega OP Units distributions . . . . . . . . .

Other comprehensive income

. . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . .

—

452

—

—

4

—

—

—

19,064

151,409

—

(11,551)

1,232

—

—

—

—

—

—

—

—

—

—

159,327

—

—

(612,551)

—

—

—

—

—

—

—

—

—

—

—

27,090

—

19,064

151,861

(612,551)

(11,551)

1,236

—

27,090

159,327

—

—

—

19,064

151,861

(612,551)

11,551

(1,236)

(20,970)

759

4,218

—

—

(20,970)

27,849

163,545

Balance at December 31, 2020 . . . . . . . . . .

23,119

6,152,887

2,594,735

(4,916,097)

(12,768)

3,841,876

194,731

4,036,607

Stock related compensation . . . . . . . . . .

Issuance of common stock . . . . . . . . . . .

Common dividends declared ($2.68 per share)

Vesting/exercising of OP units . . . . . . . . .

Conversion and redemption of Omega OP

Units to common stock . . . . . . . . . . .

Omega OP Units distributions . . . . . . . . .

Other comprehensive income

. . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . .

—

783

—

—

4

—

—

—

21,578

273,228

—

(21,623)

1,496

—

—

—

—

—

—

—

—

—

—

416,739

—

—

(637,811)

—

—

—

—

—

—

—

—

—

—

—

10,568

—

21,578

274,011

(637,811)

(21,623)

1,500

—

10,568

416,739

—

—

—

21,623

(1,579)

(25,229)

279

11,563

21,578

274,011

(637,811)

—

(79)

(25,229)

10,847

428,302

Balance at December 31, 2021 . . . . . . . . . .

$23,906

$6,427,566 $3,011,474 $(5,553,908)

$ (2,200)

$3,906,838

$ 201,388

$4,108,226

See accompanying notes.
F-8

OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Year Ended December 31,
2020

2019

2021

Cash flows from operating activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustment to reconcile net income to net cash provided by operating activities:

$

428,302

$

163,545

$

351,947

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment on real estate properties
. . . . . . . . . . . . . . . . . . .
(Recovery) impairment on direct financing leases
Provision for rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred financing costs and loss on debt extinguishment
. . . . .
Accretion of direct financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on assets sold – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of acquired in-place leases – net . . . . . . . . . . . . . . . . . . . . .
Effective yield payable (receivable) on mortgage notes . . . . . . . . . . . . . . . . .
Interest paid-in-kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
(Income) loss from unconsolidated joint ventures

Change in operating assets and liabilities – net:

Contractual receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Straight-line rent receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease inducements
Other operating assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash provided by operating activities
Cash flows from investing activities

Acquisition of a business, net of cash acquired . . . . . . . . . . . . . . . . . . . . .
Acquisition of real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition deposit – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from sale of real estate investments . . . . . . . . . . . . . . . . . . . .
Investments in construction in progress . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of direct financing lease and related trust . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Placement of mortgage loans
Collection of mortgage principal
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated joint ventures . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .
Distributions from unconsolidated joint ventures in excess of earnings
Capital improvements to real estate investments
. . . . . . . . . . . . . . . . . . . .
Receipts from insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in other investments
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash used in investing activities
Cash flows from financing activities

342,014
44,658
(717)
38,806
77,733
43,051
55
21,415
(161,609)
(9,516)
1,526
(7,496)
(2,060)

(23,169)
(52,206)
(13,733)
(4,918)
722,136

—
(615,873)
(5,730)
318,529
(95,064)
717
(86,664)
45,167
(10,484)
17,868
(44,948)
5,993
(164,793)
111,109
(524,173)

329,924
75,972
(3,079)
146,608
37,997
11,608
30
18,822
(19,113)
(14,187)
(719)
(7,718)
(1,315)

5,709
(28,968)
(22,443)
15,583
708,256

(5,058)
(105,663)
(2,500)
180,851
(75,111)
15,414
(62,432)
9,867
(2,471)
6,291
(31,072)
897
(167,936)
149,866
(89,057)

301,683
48,939
7,917
11,120
—
9,564
13
15,359
(55,696)
(5,904)
(173)
(7,160)
22

(5,931)
(46,580)
(42,071)
(29,302)
553,747

(59,616)
(377,841)
—
219,262
(139,678)
93,730
(20,702)
54,529
(103,963)
9,079
(52,892)
8,170
(100,312)
91,281
(378,953)

. . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from long-term borrowings
Payments of long-term borrowings
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of financing related costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling members’ contributions to consolidated joint venture . . . . . . . .
Redemption of Omega OP Units
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to Omega OP Unit Holders . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of foreign currency translation on cash, cash equivalents and restricted cash . . . .
(Decrease) increase in cash, cash equivalents and restricted cash . . . . . . . . . . . . . .
Cash, cash equivalents and restricted cash at beginning of period . . . . . . . . . . . . . .
Cash, cash equivalents and restricted cash at end of period . . . . . . . . . . . . . . . . .

2,275,128
(2,178,311)
(48,989)
274,011
(637,648)
—
(79)
(25,229)
(341,117)
7
(143,147)
167,558
24,411

$

1,852,209
(1,838,155)
(18,183)
151,861
(612,310)
—
—
(20,970)
(485,548)
527
134,178
33,380
167,558

$

2,001,985
(2,081,322)
(4,787)
515,358
(564,127)
228
—
(21,294)
(153,959)
874
21,709
11,671
33,380

$

See accompanying notes.
F-9

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION

Omega Healthcare Investors, Inc. (“Parent”),
(collectively, “Omega”,

is a Maryland corporation that, together with its
in
consolidated subsidiaries
the “Company”, “we”, “our”, “us”)
healthcare-related real estate properties located in the United States (“U.S.”) and the United Kingdom
(“U.K.”). Our core business is to provide financing and capital to the long-term healthcare industry with a
particular focus on skilled nursing facilities (“SNFs”), assisted living facilities (“ALFs”), and to a lesser
extent, independent living facilities (“ILFs”), rehabilitation and acute care facilities (“specialty facilities”)
and medical office buildings (“MOBs”). Our core portfolio consists of our long-term “triple-net” leases and
mortgage loans with healthcare operating companies and affiliates (collectively, our “operators”). In
addition to our core investments, we selectively make loans to operators for working capital and capital
expenditures. From time to time, we also acquire equity interests in joint ventures or entities that support
the long-term healthcare industry and our operators.

invests

Omega has elected to be taxed as a real estate investment trust (“REIT”) for federal income tax
purposes and is structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega’s
assets are owned directly or indirectly by, and all of Omega’s operations are conducted directly or indirectly
through, its operating partnership subsidiary, OHI Healthcare Properties Limited Partnership (collectively
with subsidiaries, “Omega OP”). Omega has exclusive control over Omega OP’s day-to-day management
pursuant to the partnership agreement governing Omega OP. As of December 31, 2021, Parent owned
approximately 97% of the issued and outstanding units of partnership interest in Omega OP (“Omega OP
Units”), and other investors owned approximately 3% of the outstanding Omega OP Units.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

The preparation of

financial statements in conformity with U.S. generally accepted accounting
principles (“GAAP”) requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Consolidation

Omega’s consolidated financial statements include the accounts of (i) Parent, (ii) Omega OP, (iii) all
direct and indirect wholly-owned subsidiaries of Omega and (iv) other entities in which Omega or Omega
OP has a majority voting interest and control. All intercompany transactions and balances have been
eliminated in consolidation, and Omega’s net earnings are reduced by the portion of net earnings
attributable to noncontrolling interests.

GAAP requires us to identify entities for which control is achieved through means other than voting
rights and to determine which business enterprise, if any, is the primary beneficiary of variable interest
entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics:
(a) the total equity investment at risk is insufficient to finance the entity’s activities without additional
subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the
ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to
absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the
entity; or (c) the equity investors have voting rights that are not proportional to their economic interests,
and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that
has disproportionately few voting rights. We may change our original assessment of a VIE upon subsequent
events such as the modification of contractual arrangements that affects the characteristics or adequacy of
the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the
primary beneficiary.

F-10

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our variable interests in VIEs may be in the form of equity ownership, leases, guarantees and/or loans
with our operators. We analyze our agreements and investments to determine whether our operators or
unconsolidated joint ventures are VIEs and, if so, whether we are the primary beneficiary.

We consolidate a VIE when we determine that we are its primary beneficiary. We identify the primary
beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that
most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the
right to receive benefits of the VIE that could be significant to the entity. Factors considered in determining
whether we are the primary beneficiary of an entity include: (i) our voting rights,
if any; (ii) our
involvement in day-to-day capital and operating decisions; (iii) our risk and reward sharing; (iv) the
financial condition of the operator or joint venture and (iv) our representation on the VIE’s board of
directors. We perform this analysis on an ongoing basis. As of December 31, 2021 and 2020 we did not have
any VIEs that we consolidated.

Revenue Recognition

Rental Income

Substantially all of our operating 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 the specific provisions
of each lease as follows: (i) a specific annual increase over the prior year’s rent, generally between 2.0% and
3.0% (which is the most prevalent in our lease portfolio); (ii) an increase based on the change in
pre-determined formulas from year to year (e.g., increases in the Consumer Price Index); or (iii) specific
dollar increases over prior years. Rental
income from operating leases is generally recognized on a
straight-line basis over the lease term when we have determined that the collectibility of substantially all of
the lease payments is probable.

We assess the probability of collecting substantially all payments due under our leases on several
factors, including, among other things, payment history, the financial strength of the lessee and/or borrower
and any guarantors, historical operations and operating trends, current and future economic conditions,
and expectations of performance (which includes known substantial doubt about an operator’s ability to
continue as a going concern). If our evaluation of these factors indicates it is probable that we will be
unable to collect substantially all rents, we recognize a charge to rental income and limit our rental income
to the lesser of lease income on a straight-line basis plus variable rents when they become accruable or cash
collected. Provisions for uncollectible lease payments are recognized as a direct reduction to rental income.
If we change our conclusion regarding the probability of collecting rent payments required by a lessee, we
may recognize an adjustment to rental income in the period we make a change to our prior conclusion,
potentially resulting in increased volatility of rental income.

Our leased real estate properties are leased under provisions of single or master leases with initial terms
typically ranging from 5 to 15 years. Some of our leases have options to extend, terminate or purchase the
facilities, which are considered when determining the lease term. We do not include in our measurement of
our lease receivables certain variable payments, including changes in an index until the specific events that
trigger the variable payments have occurred.

Under the terms of the leases, the lessee is responsible for all maintenance, repairs, taxes and insurance
on the leased properties. Certain of our operating leases require the operators to reimburse us for property
taxes and other expenditures that are not considered components of
the lease and therefore no
consideration is allocated to them as they do not result in the transfer of a good or service to the operators.
We have determined that all of our leases qualify for the practical expedient to not separate the lease and
non-lease components because (i) the lease components are operating leases and (ii) the timing and pattern
of recognition of the non-lease components are the same as the lease components. We apply Accounting
Standards Codification (“ASC”) 842, Leases (“Topic 842”) to the combined component.

F-11

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Certain operators are obligated to pay directly their obligations under their leases for real estate taxes,
insurance and certain other expenses. These obligations, which have been assumed by the tenants under the
terms of their respective leases, are not reflected in our consolidated financial statements. To the extent any
tenant responsible for these obligations under their respective lease defaults on its lease or if it is deemed
probable that the tenant will fail to pay for such costs, we would record a liability for such obligation.

We have elected to exclude sales and other similar taxes from the measurement of lease revenue and

expense.

Mortgage Interest Income and Other Investment Income

Mortgage interest income and other investment income is recognized as earned over the terms of the
related mortgage notes or other investment. Interest income is recorded on an accrual basis to the extent
that such amounts are expected to be collected using the effective interest method. In applying the effective
interest method, the effective yield on a loan is determined based on its contractual payment terms, adjusted
for prepayment terms.

Direct Financing Lease Income

As of December 31, 2021, we have one lease for a facility that is classified as a direct financing lease.
For leases accounted for as direct financing leases, we record the present value of the future minimum lease
payments (utilizing a constant interest rate over the term of the lease agreement) as a receivable and record
interest income based on the contractual terms of the lease agreement. Costs related to originating direct
financing leases are deferred and amortized on a straight-line basis as a reduction to income from direct
financing leases over the term of the direct financing leases.

Fair Value Measurement

The Company measures and discloses the fair value of nonfinancial and financial assets and liabilities
utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are
considered to be observable or unobservable in a marketplace. Observable inputs reflect market data
obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions.
This hierarchy requires the use of observable market data when available. These inputs have created the
following fair value hierarchy:

•

•

•

Level 1 — quoted prices for identical instruments in active markets;

Level 2 — quoted prices for similar instruments in active markets; quoted prices for identical or
similar instruments in markets that are not active; and model-derived valuations in which
significant inputs and significant value drivers are observable in active markets; and

Level 3 — fair value measurements derived from valuation techniques in which one or more
significant inputs or significant value drivers are unobservable.

The Company measures fair value using a set of standardized procedures that are outlined herein for
all assets and liabilities which are required to be measured at fair value. When available, the Company
utilizes quoted market prices from an independent third-party source to determine fair value and classifies
such items in Level 1. In some instances where a market price is available, but the instrument is in an
inactive or over-the-counter market, the Company consistently applies the dealer (market maker) pricing
estimate and classifies such items in Level 2.

If quoted market prices or inputs are not available, fair value measurements are based upon valuation
models that utilize current market or independently sourced market inputs, such as interest rates, option
volatilities, credit spreads and/or market capitalization rates. Items valued using such internally-generated
valuation techniques are classified according to the lowest level input that is significant to the fair value

F-12

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

measurement. As a result, these items could be classified in either Level 2 or Level 3 even though there may
be some significant inputs that are readily observable. Internal fair value models and techniques used by the
Company include discounted cash flow and Monte Carlo valuation models.

Risks and Uncertainties including COVID-19

The Company is subject to certain risks and uncertainties affecting the healthcare industry, including
those stemming from the novel coronavirus (“COVID-19”) global pandemic, which has disproportionately
impacted the senior care sector, as well as, those stemming from healthcare legislation and changing
regulation by federal, state and local governments. Additionally, we are subject to risks and uncertainties as
a result of changes affecting operators of nursing home facilities due to the actions of governmental
agencies and insurers to limit the rising cost of healthcare services.

Real Estate Acquisitions

Upon acquisition of real estate properties, we evaluate the acquisition to determine if it is a business
combination or an asset acquisition. Our real estate acquisitions are generally accounted for as asset
acquisitions as substantially all of the fair value of the gross assets acquired is concentrated in a single
identifiable asset or group of similar identifiable assets.

If the acquisition is determined to be an asset acquisition, the Company records the purchase price and
other related costs incurred to the acquired tangible assets and identified intangible assets and liabilities on
a relative fair value basis. In addition, costs incurred for asset acquisitions including transaction costs, are
capitalized.

If the acquisition is determined to be a business combination, we record the purchase of properties to
net tangible and identified intangible assets acquired and liabilities assumed at fair value. Goodwill is
measured as the excess of the fair value of the consideration transferred over the fair value of the
identifiable net assets. Transaction costs are expensed as incurred as part of a business combination.

In making estimates of

fair value for purposes of recording asset acquisitions and business
combinations, we utilize a number of sources, including independent appraisals that may be obtained in
connection with the acquisition or financing of the respective property and other market data. The
Company determines the fair value of acquired assets and liabilities as follows:

•

•

•

Land is determined based on third-party appraisals which typically include market comparables.

Buildings and site improvements acquired are valued using a combination of discounted cash flow
projections that assume certain future revenues and costs and consider capitalization and discount
rates using current market conditions as well as the residual approach.

Furniture and fixtures are determined based on third-party appraisals which typically utilize a
replacement cost approach.

• Mortgages and other investments are valued using a discounted cash flow analysis, using interest

rates being offered for similar loans to borrowers with similar credit ratings.

•

•

Investments in joint ventures are valued based on the fair value of the joint ventures’ assets and
liabilities. Differences, if any, between the Company’s basis and the joint venture’s basis are
generally amortized over the lives of the related assets and liabilities, and such amortization is
included in the Company’s share of earnings (losses) of the joint venture.

Intangible assets and liabilities acquired are valued using a combination of discounted cash flow
projections as well as other valuation techniques based on current market conditions for the
intangible asset or liability being acquired. When evaluating below market leases we consider
extension options controlled by the lessee in our evaluation.

F-13

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

•

•

Other assets acquired and liabilities assumed are typically valued at stated amounts, which
approximate fair value on the date of the acquisition.

Assumed debt balances are valued by discounting the remaining contractual cash flows using a
current market rate of interest.

Noncontrolling interests are valued using a stock price on the acquisition date.

Real Estate Properties

Real estate properties are carried at initial recorded value less accumulated depreciation. The costs of
significant improvements, renovations and replacements, including interest are capitalized. Our interest
expense reflected in the Consolidated Statements of Operations has been reduced by the amounts
capitalized. For the years ended December 31, 2021, 2020 and 2019, we capitalized $1.5 million,
$10.0 million and $13.9 million, respectively, of interest to our projects under development. In addition, we
capitalize leasehold improvements when certain criteria are met, including when we supervise construction
and will own the improvement. Expenditures for maintenance and repairs are expensed as they are
incurred.

Depreciation is computed on a straight-line basis over the estimated useful lives ranging from 20 to
40 years for buildings, eight to 15 years for site improvements, and three to ten years for furniture and
equipment. Leasehold interests are amortized over the shorter of the estimated useful life or term of the
lease.

Management evaluates our real estate properties for impairment indicators at each reporting period,
including the evaluation of our assets’ useful lives. The judgment regarding the existence of impairment
indicators is based on factors such as, but not limited to, market conditions, operator performance
including the current payment status of contractual obligations and expectations of the ability to meet
future contractual obligations, legal structure, as well as our intent with respect to holding or disposing of
the asset. If indicators of impairment are present, management evaluates the carrying value of the related
real estate investments in relation to management’s estimate of future undiscounted cash flows of the
underlying facilities. The estimated future undiscounted cash flows are generally based on the related lease
which relates to one or more properties and may include cash flows from the eventual disposition of the
asset. In some instances, there may be various potential outcomes for a real estate investment and its
potential future cash flows. In these instances, the undiscounted future cash flows used to assess the
recoverability of the assets are probability-weighted based on management’s best estimates as of the date of
evaluation. Impairment losses related to long-lived assets are recognized when expected future undiscounted
cash flows based on our intended use of the property are determined to be less than the carrying values of
the assets. An adjustment is made to the net carrying value of the real estate investments for the excess of
carrying value over fair value. The fair value of the real estate investment is determined based on current
market conditions and considers matters such as rental rates and occupancies for comparable properties,
recent sales data for comparable properties, and, where applicable, contracts or the results of negotiations
with purchasers or prospective purchasers. Additionally, our evaluation of fair value may consider valuing
the property as a nursing home or other healthcare facility as well as alternative uses. All impairments are
taken as a period cost at that time, and depreciation is adjusted going forward to reflect the new value
assigned to the asset. Management’s impairment evaluation process, and when applicable, impairment
calculations involve estimation of the future cash flows from management’s intended use of the property as
well as the fair value of the property. Changes in the facts and circumstances that drive management’s
assumptions may result in an impairment to our assets in a future period that could be material to our
results of operations.

Assets Held for Sale

We consider properties to be assets held for sale when (1) management commits to a plan to sell the
property; (2) it is unlikely that the disposal plan will be significantly modified or discontinued; (3) the
property is available for immediate sale in its present condition; (4) actions required to complete the sale of

F-14

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the property have been initiated; (5) sale of the property is probable and we expect the completed sale will
occur within one year; and (6) the property is actively being marketed for sale at a price that is reasonable
given our estimate of current market value. Upon designation of a property as an asset held for sale, we
record the property’s value at the lower of its carrying value or its estimated fair value, less estimated costs
to sell, and we cease depreciation.

Real Estate Sales

We recognize gains related to the sale of real estate when we transfer control of the property and when

it is probable that we will collect substantially all of the related consideration.

Lessee Accounting

Omega leases real estate (corporate headquarters and certain other facilities), office equipment and is
party to certain ground leases on our owned facilities. We determine if an arrangement is or contains a lease
at inception. Leases are classified as either finance or operating at inception of the lease. Short-term leases,
defined as leases with an initial term of 12 months or less that do not contain a purchase option, are not
recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over
the lease term. As of December 31, 2021 and 2020, all of the leases where we are the lessee were classified as
operating leases.

We have leases that contain both lease and non-lease components and have elected, as an accounting
policy, to not separate lease components and non-lease components. Operating and finance lease right of
use (“ROU”) assets and liabilities are recognized at the commencement date based on the present value of
lease payments over the lease term. Our ROU assets and lease liabilities are included in other assets and
accrued expenses and other liabilities, respectively, on our Consolidated Balance Sheets. The lease liability is
calculated as the present value of the remaining minimum rental payments for existing leases using either
the rate implicit in the lease or, if none exists, the Company’s incremental borrowing rate, as the discount
rate. Certain leases have options to extend, terminate or purchase the asset and have been considered in our
analysis of the lease term and the measurement of the right-of-use assets and lease liabilities.

On a quarterly basis, we remeasure our lease liabilities at the present value of the future lease payments
using the discount rate determined at lease commencement. Rental expense from operating leases is
generally recognized on a straight-line basis over the lease term. Lease expense derived from our operating
leases is recorded in general and administrative in our Consolidated Statements of Operations. We do not
include in our measurement of our lease liability certain variable payments, including changes in an index
until the specific events that trigger the variable payments have occurred.

We record on a straight-line basis rental income and ground lease expense for those assets we lease and

are reimbursed by our operators and/or are paid for directly by our operators.

In-Place Leases

In-place lease assets and liabilities result when we assume a lease as part of an asset acquisition or
business combination. The fair value of in-place leases consists of the following components, as applicable
(1) the estimated cost to replace the leases and (2) the above or below market cash flow of the leases,
determined by comparing the projected cash flows of the leases in place at the time of acquisition to
projected cash flows of comparable market-rate leases.

Above market

leases, net of accumulated amortization, are included in other assets on our
Consolidated Balance Sheets. Below market leases, net of accumulated amortization, are included in
accrued expenses and other liabilities on our Consolidated Balance Sheets. The net amortization related to
the above and below market leases is included in our Consolidated Statements of Operations as an
adjustment to rental income over the estimated remaining term of the underlying leases. Should a tenant
terminate the lease, the unamortized portion of the lease intangible is recognized immediately as an
adjustment to rental income.

F-15

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Allowance for Credit Losses

The allowance for credit losses reflects our current estimate of the potential credit losses on our
mortgage notes, other investment loans, and our investment in direct financing leases and is recorded as a
valuation account as a direct offset against these financial instruments on our Consolidated Balance Sheets.
Expected credit losses inherent in non-cancelable unfunded loan commitments are accounted for as
separate liabilities included in accrued expenses and other liabilities on the Consolidated Balance Sheets.
The Company has elected to not measure an allowance for credit losses on accrued interest receivables
related to all of its mortgage notes and other investment loans because we write off uncollectible accrued
interest receivable in a timely manner pursuant to our non-accrual policy, described below. Changes to the
allowance for credit losses on loans resulting from quarterly evaluations are recorded through provision for
credit losses on the Consolidated Statements of Operations.

We assess the creditworthiness of our borrowers on a quarterly basis. For purposes of determining our
allowance for credit loss, we pool financial assets that have similar risk characteristics. We aggregate our
financial assets by financial instrument type (i.e. mortgage, other investment, etc.) and by internal risk
rating. Our internal credit ratings consider several factors including the collateral and/or security, the
performance of borrowers underlying facilities, if applicable, available credit support (e.g., guarantees),
borrowings with third parties, and other ancillary business ventures and real estate operations of the
borrower. Our internal ratings range between 1 and 7. An internal rating of 1 reflects the lowest likelihood
of loss and a 7 reflects the highest likelihood of loss. The characteristics associated with each risk rating is
as follows:

•

•

•

•

•

Risk Rating 1 through 3 — Instruments with minimal to marginally acceptable risk.

Risk Rating 4 — Instruments with potential weaknesses identified (Special mention).

Risk Rating 5 — Instruments with well-defined weaknesses that may result in possible losses
(Substandard).

Risk Rating 6 — Instruments that are unlikely to be repaid in full and will probably result in
losses (Doubtful).

Risk Rating 7 — Instrument that will not be repaid in full and losses will occur (Loss).

We have a limited history of incurred losses and consequently have elected to employ external data to
perform our expected credit loss calculation. We utilize a probability of default (“PD”) and loss given
default (“LGD”) methodology. Our model’s historic inputs consider PD and LGD data for residential care
facilities published by the Federal Housing Administration along with Standards & Poor’s one-year global
corporate default rates. Our historical loss rates revert to historical averages after 36 periods. Our model’s
current conditions and supportable forecasts consider internal credit ratings, current and projected U.S.
unemployment rates published by the U.S. Bureau of Labor Statistics and the Federal Reserve Bank of St.
Louis and the weighted average life to maturity of the underlying financial asset.

Periodically, the Company may identify an individual loan for impairment. A loan is considered
impaired when, based on current information and events, it is probable that we will be unable to collect all
amounts due as scheduled according to the contractual terms of the loan agreements. Our assessment of
collectibility considers several factors,
including, among other things, payment history, the financial
strength of the borrower and any guarantors, historical operations and operating trends, current and future
economic conditions, expectations of performance (which includes known substantial doubt about an
operator’s ability to continue as a going concern) and the value of the underlying collateral of the
agreement, if any. Consistent with this definition, all loans on non-accrual status may be deemed impaired.
To the extent circumstances improve and the risk of collectibility is diminished, we will return these loans to
full accrual status. When we identify a loan impairment, the loan is written down to the present value of the
expected future cash flows. In cases where expected future cash flows are not readily determinable, the loan
is written down to the fair value of the underlying collateral. We may base our valuation on a loan’s

F-16

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan
is expected to be provided solely by the sale of the collateral. Financial instruments are charged off against
the allowance for credit losses when collectibility is determined to be permanently impaired.

We account for impaired loans using (a) the cost-recovery method, and/or (b) the cash basis method.
We generally utilize the cost-recovery method for impaired loans for which impairment reserves were
recorded. Under the cost-recovery method, we apply cash received against the outstanding loan balance
prior to recording interest income. Under the cash basis method, we apply cash received to principal or
interest income based on the terms of the agreement.

Investments in Unconsolidated Joint Ventures

We account for our investments in unconsolidated joint ventures using the equity method of

accounting as we exercise significant influence, but do not control the entities.

Under the equity method of accounting, the net equity investments of the Company are reflected in
the accompanying Consolidated Balance Sheets and the Company’s share of net income and comprehensive
income from the joint ventures are included in the accompanying Consolidated Statements of Operations
and Consolidated Statements of Comprehensive Income, respectively.

On a periodic basis, management assesses whether there are any indicators that the value of the
Company’s investments in the unconsolidated joint ventures may be other-than-temporarily-impaired. An
investment is impaired only if management’s estimate of the value of the investment is less than the carrying
value of the investment, and such a decline in value is deemed to be other than-temporary. To the extent
impairment has occurred, the loss is measured as the excess of the carrying amount of the investment over
the estimated fair value of the investment. The estimated fair value of the investment is determined using a
discounted cash flow model which is a Level 3 valuation. We consider a number of assumptions that are
subject to economic and market uncertainties including, among others, rental rates, operating costs,
capitalization rates, holding periods and discount rates.

No impairment losses on our investments in unconsolidated joint ventures were recognized during

the years ended December 31, 2021, 2020 and 2019.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments with a maturity date
of three months or less when purchased. These investments are stated at cost, which approximates fair
value. The majority of our cash, cash equivalents and restricted cash are held at major commercial banks.
Certain cash account balances exceed FDIC insurance limits of $250,000 per account and, as a result, there
is a concentration of credit risk related to amounts in excess of the insurance limits. We regularly monitor
the financial stability of these financial institutions and believe that we are not exposed to any significant
credit risk in cash, cash equivalents or restricted cash.

Restricted Cash

Restricted cash consists primarily of liquidity deposits escrowed for tenant obligations required by us
pursuant to certain contractual terms and other deposits required by the U.S. Department of Housing and
Urban Development (“HUD”) in connection with our mortgage borrowings guaranteed by HUD.

Deposits

We obtain liquidity deposits and other deposits, security deposits and letters of credit from certain
operators pursuant to our lease and mortgage agreements. These generally represent the rental and/or
mortgage interest for periods ranging from three to six months with respect to certain of our investments or
the required deposits in connection with our HUD borrowings. At December 31, 2021 and 2020, we held

F-17

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$3.9 million and $4.0 million, respectively,
in liquidity and other deposits and $46.1 million and
$43.2 million, respectively, in security deposits. We also had the ability to draw on $38.1 million and
$52.5 million of letters of credit at December 31, 2021 and 2020, respectively.

The liquidity deposits and other deposits, security deposits and the letters of credit may be used in the
event of lease and/or loan defaults, subject to applicable limitations under bankruptcy law with respect to
operators filing under Chapter 11 of the U.S. Bankruptcy Code. Liquidity deposits and other deposits are
recorded as restricted cash on our Consolidated Balance Sheets with the offset recorded as a liability in
accrued expenses and other liabilities on our Consolidated Balance Sheets. Security deposits related to cash
received from the operators are primarily recorded in cash and cash equivalents on our Consolidated
Balance Sheets with a corresponding offset in accrued expenses and other liabilities on our Consolidated
Balance Sheets. Additional security for rental and mortgage interest revenue from operators is provided by
covenants regarding minimum working capital and net worth, liens on accounts receivable and other
operating assets of the operators, provisions for cross-default, provisions for cross-collateralization and by
corporate or personal guarantees.

Goodwill Impairment

We test goodwill for potential impairment at least annually in the fourth quarter, or more frequently if
an event or other circumstance indicates that we may not be able to recover the carrying amount of the net
assets of the reporting unit. In evaluating goodwill for impairment, we may assess qualitative factors to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying
amount. If we bypass the qualitative assessment, or if we conclude that it is more likely than not that the
fair value of a reporting unit is less than its carrying value, then we perform a quantitative impairment test
by comparing the fair value of a reporting unit with its carrying amount.

In evaluating goodwill for impairment, we assess qualitative factors such as a significant decline in real
estate valuations, current macroeconomic conditions, state of the equity and capital markets and our overall
financial and operating performance or a significant decline in the value of our market capitalization, to
determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying
amount. Goodwill is not deductible for tax purposes. We have had no goodwill impairment charges for the
last three fiscal years.

Income Taxes

Omega and its wholly-owned subsidiaries were organized to qualify for taxation as a REIT under
Section 856 through 860 of the Internal Revenue Code (“Code”). As long as we qualify as a REIT; we will
not be subject to federal income taxes on the REIT taxable income that we distributed to stockholders,
subject to certain exceptions. However, with respect to certain of our subsidiaries that have elected to be
treated as taxable REIT subsidiaries (“TRSs”), we record income tax expense or benefit, as those entities
are subject to federal income tax similar to regular corporations. Omega OP is a pass-through entity for
United States federal income tax purposes.

We account for deferred income taxes using the asset and liability method and recognize deferred tax
assets and liabilities for the expected future tax consequences of events that have been included in our
financial statements or tax returns. Under this method, we determine deferred tax assets and liabilities
based on the differences between the financial reporting and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to reverse. Any increase or decrease in
the deferred tax liability that results from a change in circumstances, and that causes us to change our
judgment about expected future tax consequences of events, is included in the tax provision when such
changes occur. Deferred income taxes also reflect
the impact of operating loss and tax credit
carry-forwards. A valuation allowance is provided if we believe it is more likely than not that all or some
portion of the deferred tax asset will not be realized. Any increase or decrease in the valuation allowance
that results from a change in circumstances, and that causes us to change our judgment about the
realizability of the related deferred tax asset, is included in the tax provision when such changes occur.

F-18

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We are subject to certain state and local income tax, franchise taxes and foreign taxes. The expense
associated with these taxes are included in income tax expense on the Consolidated Statements of
Operations.

Stock-Based Compensation

We recognize stock-based compensation expense adjusted for estimated forfeitures to employees and
directors, in general and administrative in our Consolidated Statements of Operations on a straight-line
basis over the requisite service period of the awards.

Deferred Financing Costs and Original Issuance Premium and/or Discounts for Debt Issuance

External costs incurred from the placement of our debt are capitalized and amortized on a straight-line
basis over the terms of the related borrowings which approximates the effective interest method. Deferred
financing costs related to our revolving line of credit are included in other assets on our Consolidated
Balance Sheets and deferred financing costs related to our other borrowings are included as a direct
deduction from the carrying amount of the related liability on our Consolidated Balance Sheets. Original
issuance premium or discounts reflect the difference between the face amount of the debt issued and the
cash proceeds received and are amortized on a straight-line basis over the term of the related borrowings.
All premiums and discounts are recorded as an addition to or reduction from debt on our Consolidated
Balance Sheets. Amortization of deferred financing costs and original issuance premiums or discounts
totaled $12.3 million, $10.1 million and $9.6 million in 2021, 2020 and 2019, respectively, and are recorded
in interest expense on our Consolidated Statements of Operations. When financings are terminated,
unamortized deferred financing costs and unamortized premiums or discounts, as well as charges incurred
for the termination, are recognized as expense or income at the time the termination is made. Gains and
losses from the extinguishment of debt are presented in loss on debt extinguishment on our Consolidated
Statements of Operations.

Earnings Per Share

The computation of basic earnings per share/unit (“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
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 restricted stock and profit interest units, performance restricted stock and profit interest units, the
assumed issuance of additional shares related to Omega OP Units held by outside investors.

Noncontrolling Interests and Redeemable Limited Partnership Unitholder Interests

Noncontrolling interests is the portion of equity not attributable to the respective reporting entity. We
present the portion of any equity that we do not own in consolidated entities as noncontrolling interests
and classify those interests as a component of total equity, separate from total stockholders’ equity on our
Consolidated Balance Sheets. We include net income attributable to the noncontrolling interests in net
income in our Consolidated Statements of Operations.

As our ownership of a controlled subsidiary increases or decreases, any difference between the
aggregate consideration paid to acquire the noncontrolling interests and our noncontrolling interest balance
is recorded as a component of equity in additional paid-in capital, so long as we maintain a controlling
ownership interest.

The noncontrolling interest for Omega represents the outstanding Omega OP Units held by outside
investors and interests in a consolidated real estate joint venture not fully owned by Omega. Each of the
Omega OP Units (other than the Omega OP Units owned by Omega) is redeemable at the election of the
Omega OP Unit holder for cash equal to the then-fair market value of one share of Omega common stock,

F-19

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

par value $0.10 per share (“Omega Common Stock”), subject to Omega’s election to exchange the Omega
OP Units tendered for redemption for unregistered shares of Omega Common Stock on a one-for-one
basis, subject to adjustment as set forth in Omega OP’s partnership agreement. As of December 31, 2021,
Omega owns approximately 97% of the issued and outstanding Omega OP Units, and investors own
approximately 3% of the outstanding Omega OP Units.

Foreign Operations

The U.S. dollar (“USD”) is the functional currency for our consolidated subsidiaries operating in the
U.S. The functional currency for our consolidated subsidiaries operating in the U.K. is the British Pound
(“GBP”). Total revenues from our consolidated U.K. operating subsidiaries were $38.1 million,
$34.8 million and $33.5 million for the years ended December 31, 2021, 2020 and 2019, respectively. Our
consolidated U.K. operating subsidiaries held long-lived assets of $387.2 million and $395.2 million as of
December 31, 2021 and 2020, respectively.

For our consolidated subsidiaries whose functional currency is not the USD, we translate their
financial statements into the USD. We translate assets and liabilities at the exchange rate in effect as of the
financial statement date. Revenue and expense accounts are translated using an average exchange rate for
the period. Gains and losses resulting from translation are included in accumulated other comprehensive
income (loss) (“AOCI”), as a separate component of equity and a proportionate amount of gain or loss is
allocated to noncontrolling interests, if applicable.

We and certain of our consolidated subsidiaries may have intercompany and third-party debt that is
not denominated in the entity’s functional currency. When the debt is remeasured against the functional
currency of the entity, a gain or loss can result. The resulting adjustment is reflected in results of
operations, unless it is intercompany debt that is deemed to be long-term in nature in which case the
adjustments are included in AOCI and a proportionate amount of gain or loss is allocated to
noncontrolling interests, if applicable.

Derivative Instruments

We are exposed to, among other risks, the impact of changes in foreign currency exchange rates as a
result of our investments in the U.K. and interest rate risk related to our capital structure. As a matter of
policy, we do not use derivatives for trading or speculative purposes. Our risk management program is
designed to manage the exposure and volatility arising from these risks, and utilizes foreign currency
forward contracts, interest rate swaps and debt issued in foreign currencies to offset a portion of these risks.

To qualify for hedge accounting, derivative instruments used for risk management purposes must
effectively reduce the risk exposure that they are designed to hedge. We formally document all relationships
between hedging instruments and hedged items, as well as our risk-management objectives and strategy for
undertaking various hedge transactions. This process includes designating all derivatives that are part of a
hedging relationship to specific forecasted transactions as well as recognized liabilities or assets on the
Consolidated Balance Sheets. In addition, at the inception of a qualifying cash flow hedging relationship,
the underlying transaction or transactions, must be, and are expected to remain, probable of occurring in
accordance with the Company’s related assertions. The Company recognizes all derivative instruments,
including embedded derivatives required to be bifurcated, as assets or liabilities on the Consolidated
Balance Sheets at fair value which is determined using a market approach and Level 2 inputs. Changes in
the fair value of derivative instruments that are not designated in hedging relationships or that do not meet
the criteria of hedge accounting are recognized in earnings. For derivatives designated in qualifying cash
flow hedging relationships, the gain or loss on the derivative is recognized in AOCI as a separate component
of equity and a proportionate amount of gain or loss is allocated to noncontrolling interest, if applicable.

If it is determined that a derivative instrument ceases to be highly effective as a hedge, or that it is
probable the underlying forecasted transaction will not occur, the Company discontinues its cash flow
hedge accounting prospectively and records the appropriate adjustment to earnings based on the current
fair value of the derivative instrument. For net investment hedge accounting, upon sale or liquidation of
our U.K. investment, the cumulative balance of the remeasurement value is reclassified to earnings.

F-20

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Segments

We conduct our operations and report financial results as one business segment. The presentation of
financial results as one reportable segment is consistent with the way we operate our business and is
consistent with the manner in which our Chief Operating Decision Maker (CODM), our Chief Executive
Officer, evaluates performance and makes resource and operating decisions for the business.

Reclassification

Certain line items on our Consolidated Balance Sheets, Consolidated Statements of Changes in Equity
and Consolidated Statements of Cash Flows and have been reclassified to conform to the current period
presentation.

Recently Adopted Accounting Pronouncements

ASU — 2021-05, Leases (Topic 842): Lessors — Certain Leases with Variable Lease Payments

On July 19, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards
Update (“ASU”) 2021-05. This guidance requires lessors to classify leases with variable lease payments, that
do not depend on an index or rate, as an operating lease on the commencement date of the lease if specified
criteria are met. The guidance is effective for fiscal years beginning after December 15, 2021, including
interim periods within those fiscal years. Early adoption is permitted. We early adopted this guidance
prospectively effective July 1, 2021. The adoption of the guidance did not have an impact on our
consolidated financial statements.

ASU — 2020-04, Financial Instruments — Reference Rate Reform (Topic 848)

On March 12, 2020, the FASB issued ASU 2020-04, which contains optional practical expedients for a
limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference
rate reform on financial reporting for contracts, hedging relationships, and other transactions that reference
the London Interbank Offered Rate (“LIBOR”). The guidance may be elected over time until December 31,
2022, as reference rate reform activities occur. The Company has several derivative instruments (See
Note 15 — Derivatives and Hedging), a $1.45 billion senior unsecured multicurrency revolving credit
facility, and a $50 million senior unsecured term loan facility (See Note 14 — Borrowing Arrangements)
that reference LIBOR. We also have a $25.0 million senior secured DIP facility loan with an operator that
references LIBOR (See Note 8 — Other Investments), but it matures in 2022 prior to LIBOR being
discontinued. During the first quarter of 2020, we elected to apply the hedge accounting expedients related
to probability and the assessments of effectiveness for future LIBOR indexed cash flows to assume that the
index upon which future hedged transactions will be based matches the index on the corresponding
derivatives. Application of these expedients preserves the presentation of derivatives consistent with past
presentation. Our credit facilities that reference LIBOR contain customary LIBOR replacement language,
including, but not limited to, the use of rates based on the secured overnight financing rate. The Company
is evaluating: (i) how the transition away from LIBOR will impact the Company, (ii) whether the any
additional optional expedients provided by the standards will be adopted, and (iii) the impact that adopting
ASU 2020-04 will have on our consolidated financial statements.

ASU — 2016-13, Financial Instruments — Credit Losses (Topic 326)

In June 2016, the FASB issued ASU 2016-13, which changed the impairment model for most financial
assets. The new model uses a forward-looking expected loss method, which will generally result in earlier
recognition of allowances for credit losses. The new approach requires the calculation of expected lifetime
credit losses and is applied to financial assets measured at amortized cost, including loans, as well as certain
off-balance sheet credit exposures such as unfunded loan commitments. The allowance for credit loss on the
loans is a valuation amount that is deducted from the amortized cost basis of the loans not held at fair
value to present the net amount expected to be collected over the contractual term of the loans.

F-21

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

ASU 2016-13 specifically excludes from its scope receivables arising from operating leases accounted
for under Topic 842. We adopted ASU 2016-13 on January 1, 2020 using the modified retrospective
approach and we recorded an initial $28.8 million allowance for expected credit losses with a corresponding
adjustment to equity. Included below is a summary of impact of the adoption on our Consolidated Balance
Sheets.

Financial Statement Line Item

Pre-adoption balance as of
December 31, 2019

Impact of adopting
Topic 326

Post-adoption balance as of
January 1, 2020

Mortgage notes receivable – net . . . . . . . . . .

$ 773,563

Investment in direct financing leases – net . . .

Other investments – net

. . . . . . . . . . . . . . .

Off-balance sheet commitments . . . . . . . . . .

11,488

419,228

20,777

(in thousands)

$(21,386)

(611)

(6,688)

(100)

$ 752,177

10,877

412,540

20,677

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,225,056

$(28,785)

$1,196,271

ASU — 2016-02, Leases (Topic 842)

On January 1, 2019, we adopted ASC 842, Leases (“Topic 842”) using the modified retrospective
method. Topic 842 sets out the principles for the recognition, measurement, presentation and disclosure of
leases for both parties to a contract (i.e., lessees and lessors). At the inception of a lease and over its term,
we evaluate each lease to determine the proper lease classification. Certain of these leases provide our
operators or us the contractual right to use and economically benefit from all of the physical space specified
in the lease, therefore we have determined that they should be evaluated as lease arrangements.

Upon adoption of Topic 842, we applied the package of practical expedients that allowed us to not
reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any
expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we
applied the optional transition method, which allowed us to initially apply Topic 842 at the adoption date
and recognize a cumulative effect adjustment to the opening balance of equity in the period of adoption.
During the year ended December 31, 2019, we made an adjustment of approximately $8.5 million to the
equity balance to reflect our assessment of the collectibility of certain operator’s future contractual lease
payments based on the facts and circumstances that existed as of January 1, 2019. In addition, we recorded
total initial non-cash ROU assets and lease liabilities of approximately $11.1 million.

NOTE 3 — REAL ESTATE ACQUISITIONS

2021 Acquisitions and Other

The following table summarizes the significant asset acquisitions that occurred in 2021:

Number of
Facilities

Period

SNF ALF Specialty

Country/
State

Total Real Estate
Assets Acquired(1)

(in millions)

Initial
Annual
Cash Yield(2)

Q1 . . . . . . — 17

7

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

$511.3

Q1 . . . . . .
6 — —
Q3 . . . . . . — 2 —

Total

. . . .

6

19

7

FL
U.K.

83.1
9.6

$604.0

8.43%

9.25%
7.89%

(1)

Excludes $10.6 million of land acquisitions, $58.6 million of non-cash acquisitions of facilities previously subject to mortgage
loans with Omega in which principal amounts under the loan agreements were reduced or settled in exchange for title to the
facilities (See Note 7 — Mortgage Notes Receivable), and $1.2 million of transaction costs incurred related to the non-cash
acquisitions.

(2)

Initial annual cash yield reflects the initial annual contractual cash rent divided by the purchase price.

F-22

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On January 20, 2021, we acquired 24 senior living facilities from Healthpeak Properties, Inc. for
$511.3 million. The acquisition involved the assumption of an in-place master lease with Brookdale Senior
Living Inc. We recognized approximately $45.0 million of rental income for the year ended December 31,
2021 under this master lease, which includes 24 facilities representing 2,552 operating units.

Construction in progress investments

During the third quarter of 2021, we purchased a real estate property located in Washington, D.C. (not
reflected in the table above) for approximately $68.0 million and plan to redevelop the property into a 174
bed ALF. Concurrent with the acquisition, we entered into a single facility lease for this property with
Maplewood Senior Living (along with affiliates, “Maplewood”) through August 31, 2045. For accounting
purposes, the lease will commence upon the substantial completion of construction of the ALF, which is
currently expected to be in the first quarter of 2025. The lease provides for the accrual of financing costs at
a rate of 5% per annum during the construction phase. The lease provides for an annual cash yield of 6% in
the first year following the completion of construction, increasing to 7% in year two and 8% in year three
with 2.5% annual escalators thereafter. We are committed to a maximum funding of $177.7 million for the
redevelopment of the real estate property, subject to ordinary development related cost changes (see
Note 20 — Commitments and Contingencies).

2020 Acquisitions

The following table summarizes the significant asset acquisitions that occurred in 2020:

Period

Number of
Facilities

SNF

ALF

Country/
State

Total Real Estate
Assets Acquired

(in millions)

Initial
Annual
Cash Yield(1)

Q1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

2

U.K.

$ 12.1

Q1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Q2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Q4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 —

1 —

6

8

1

3

IN

OH

VA

7.0

6.9

78.4

$104.4

8.00%

9.50%

9.50%

9.50%

(1)

Initial annual cash yield reflects the initial annual contractual cash rent divided by the purchase price.

2019 Acquisitions and Other

The following table summarizes the significant transactions that occurred in 2019:

Number of
Facilities

Period

SNF

ALF

Specialty MOB

—

Q1 . . . .

Q2 . . . .
Q2 . . . .
Q3 . . . .
Q4 . . . .

1 —

1
20
7
1
3 —
2
58

Total

. .

89

4

—

11
3
—
—

14

Country/
State

OH

CA, CT, IN, NV, SC, TN, TX
PA, VA
NC, VA

1
—
—
— FL, ID, KY, LA, MS, MO, MT, NC

1

Total Real Estate
Assets Acquired

(in millions)
$ 11.9(3)
440.7(2)
131.8(3)
24.9
735.2

$1,344.5

Initial
Annual
Cash Yield(1)

12.00%
9.82%
9.35%

9.50%
8.71%

(1)

(2)

Initial annual cash yield reflects the initial annual contractual cash rent divided by the purchase price.

The acquisition was accounted for as a business combination. The other 2019 acquisitions were accounted for as asset
acquisitions.

(3) Acquired via a deed-in-lieu of foreclosure.

F-23

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Encore Portfolio Acquisition

On October 31, 2019, we completed the $757 million portfolio acquisition of 60 facilities (the “Encore
Portfolio”). Consideration consisted of approximately $369 million of cash and the assumption of
approximately $389 million in mortgage loans guaranteed by HUD. See Note 14 — Borrowing
Arrangements for additional information.

The following table highlights the fair value of

the assets acquired and liabilities assumed on

October 31, 2019:

Fair value of net assets acquired:

Real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractual receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(in thousands)

$ 735,182
600
2,216
227
28,173
766,398
(388,627)
(8,978)
$ 368,793

MedEquities Merger

On May 17, 2019, we completed our acquisition by merger of MedEquities (the “MedEquities
Merger”) and its subsidiary operating partnership and the general partner of its subsidiary operating
partnership.

In connection with the MedEquities Merger, we issued approximately 7.5 million shares of Omega
common stock and paid approximately $63.7 million of cash consideration to former MedEquities
stockholders. We borrowed approximately $350 million under our existing senior unsecured revolving credit
facility to fund the cash consideration and the repayment of MedEquities’ previously outstanding debt. As
a result of the MedEquities Merger, we acquired 33 facilities subject to operating leases, four mortgages,
three other investments and an investment in an unconsolidated joint venture. We also acquired other assets
and assumed debt and other liabilities. Based on the closing price of our common stock on May 16, 2019,
the fair value of the consideration exchanged approximated $346 million.

F-24

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our purchase price allocation was finalized during the second quarter of 2020, with no material
adjustments recorded. The following table highlights the final fair value of the assets acquired and liabilities
assumed on May 17, 2019:

Fair value of net assets acquired:

Real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in unconsolidated joint venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contractual receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Debt(2)
Accrued expenses and other liabilities(3)

(in thousands)

$ 440,690
108,097
19,192
73,834
4,067
1,002
7,698
654,580
(285,100)
(23,931)
$ 345,549

(1)
(2)

(3)

Includes approximately $2.5 million in above market lease assets.
In connection with the MedEquities Merger on May 17, 2019, we assumed a $125.0 million term loan and outstanding
borrowings of $160.1 million under MedEquities’ previous revolving credit facility. We repaid the total outstanding balance on
both the term loan and the revolving credit facility and terminated the related agreements on May 17, 2019.
Includes approximately $1.1 million in below market lease liabilities.

The MedEquities facilities acquired in 2019 are included in our results of operations from the date of
acquisition. For the period from May 17, 2019 through December 31, 2019, we recognized approximately
$35.2 million of total revenue from the assets acquired in connection with the MedEquities Merger. For the
year ended December 31, 2019, we incurred approximately $5.1 million of acquisition and merger related
costs associated with the MedEquities Merger.

Pro Forma Acquisition Results

The following unaudited pro forma information presents consolidated financial information as if the
MedEquities Merger occurred on January 1, 2019. In the opinion of management, all significant necessary
adjustments to reflect the effect of the merger have been made. The following pro forma information is not
indicative of future operations.

Pro Forma

Year Ended December 31, 2019

(in thousands, except per share amounts, unaudited)

Pro forma revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pro forma net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Earnings per share – diluted:

Net income – as reported . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income – pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . .

$950,318
$362,220

$
$

1.58
1.60

NOTE 4 — ASSETS HELD FOR SALE, DISPOSITIONS AND IMPAIRMENTS

Periodically, we will sell facilities to reduce our concentration in certain operators, geographies, and

non-strategic assets or due to the exercise of a tenant purchase option.

In December 2021, we entered into an agreement to sell 22 facilities that were previously leased and
operated by Gulf Coast Health Care LLC (together with certain affiliates “Gulf Coast”) for estimated gross
proceeds of $317.5 million. We elected to exit these facilities following Gulf Coast commencing the

F-25

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Chapter 11 bankruptcy process in October 2021, as discussed further in Note 5 — Contractual Receivables
and Other Receivables and Lease Inducements. The agreement includes an earnout clause pursuant to
which the buyer is obligated to pay an additional $18.7 million to Omega if certain financial metrics are
achieved at the facilities in the five years following the sale. We reclassified the 22 facilities subject to the
agreement to Assets held for sale in the fourth quarter of 2021.

As of February 7, 2022, the remaining 19 facilities in held for sale are all under sales agreements which

provide for estimated gross proceeds of $88.8 million, subject to terms and conditions of such agreements.

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

December 31, December 31,

2021

2020

Number of facilities held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41

22

Amount of assets held for sale (in thousands)

. . . . . . . . . . . . . . . . . . . . . . . .

$261,151

$81,452

Asset Sales

During the year ended December 31, 2021, we sold 48 facilities, subject to operating leases, for

approximately $318.5 million in net cash proceeds, recognizing a net gain of approximately $161.6 million.

During the year ended December 31, 2020, we sold 43 facilities for approximately $180.9 million in net

cash proceeds, recognizing a net gain of approximately $19.1 million.

During the year ended December 31, 2019, we sold 34 facilities for approximately $219.3 million in net

cash proceeds, recognizing a net gain of approximately $55.7 million.

Real Estate Impairments

During the year ended December 31, 2021, we recorded impairments of approximately $44.7 million
on 14 facilities which were sold or classified as held for sale for which the carrying values exceeded the
estimated fair values less costs to sell.

During the year ended December 31, 2020, we recorded impairments of approximately $41.5 million
on 14 facilities which were sold or classified as held for sale for which the carrying values exceeded the
estimated fair values less costs to sell. Additionally, during the year ended December 31, 2020, we recorded
an impairment of approximately $34.5 million on 11 held for use facilities for which it was determined that
the carrying value exceeded the fair value. The $34.5 million relates to facilities subject to a lease with
Daybreak Ventures, LLC (“Daybreak”) (see Note 5 — Contractual Receivables and Other Receivables and
Lease Inducements), which were planned for resale or transitioned to another existing operator and it was
determined that the new cash flows were not sufficient to support the carrying value of the facility. Our
impairments were offset by approximately $3.5 million of insurance proceeds received related to a facility
that was previously destroyed and impaired.

During the year ended December 31, 2019, we recorded impairments of approximately $14.5 million
on 9 facilities which were sold or classified as held for sale for which the carrying values exceeded the
estimated fair values less costs to sell. Additionally, during the year ended December 31, 2019, we recorded
an impairment of approximately $34.5 million on 13 held for use facilities for which it was determined that
the carrying value exceeded the fair value. Of the $34.5 million, the $28.3 million relates to 11 facilities
subject to a lease with Daybreak which were planned for resale or transitioned to another existing operator
and it was determined that the new cash flows were not sufficient to support the carrying value of the
facility. Our impairments were offset by approximately $3.7 million of insurance proceeds received related
to two facilities that were previously destroyed and impaired.

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

F-26

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 5 — CONTRACTUAL RECEIVABLES AND OTHER RECEIVABLES AND LEASE
INDUCEMENTS

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 rent 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,
modification or renewal of
income over the
non-cancellable lease term.

the lease, and are amortized as a reduction of rental

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

December 31, December 31,

2021

2020

(in thousands)

Contractual receivables – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 11,259

$ 10,408

Effective yield interest receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 9,590

$ 12,195

Straight-line rent receivables

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

148,455

Lease inducements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93,770

139,046

83,425

Other receivables and lease inducements . . . . . . . . . . . . . . . . . . . . . . . . . . .

$251,815

$234,666

Agemo Holdings, LLC

From August 2021 through October 2021 and in December 2021, Agemo Holdings, LLC (“Agemo”),
failed to pay contractual rent and interest due under their lease and loan agreements, but paid rent and
interest in November 2021. Agemo was formed in May 2018 by Signature Healthcare, LLC, as part of an
out-of-court restructuring agreement, to be the holding company of their leases and loans with Omega.

We placed Agemo on a cash basis of revenue recognition during the third quarter of 2020 as collection
of substantially all contractual lease payments due from them was deemed no longer probable because of
information received regarding substantial doubt of their ability to continue as a going concern. As a result,
we wrote-off approximately $75.3 million of contractual rent receivables, straight-line rent receivables, and
lease inducements to rental income during the third quarter of 2020. Agemo continued to make their rental
and interest payments to us until August 2021. During the third and fourth quarters of 2021, we recorded
$8.7 million of revenue by collecting rental and interest payments and we recorded $8.5 million of revenue
the security deposit balance. See
by drawing on the letter of credit and through application of
Note 8 — Other Investments for additional details on our loans with Agemo. For the years ended
December 31, 2021, 2020 and 2019, Agemo generated approximately 3.9%, 5.6% and 6.9%, respectively, of
our total revenues (excluding the impact of write-offs).

As part of the 2018 restructuring agreement with Agemo discussed above, Omega agreed to, among
other terms, defer rent of $6.3 million per annum through April 2021. During the year ended December 31,
2021, the Agemo lease was amended to allow for the extension of the rent deferral through January 2022,
which represents an additional deferral of approximately $4.7 million of rent. Additionally, during the year
ended December 31, 2021, we entered into a forbearance agreement with Agemo pursuant to which we
agreed to forbear from exercising remedies under our lease and loan agreements until January 31, 2022. The
forbearance period and rent deferral period were subsequently extended to February 28, 2022.

Guardian Healthcare

From October 2021 through December 2021, Guardian Healthcare (“Guardian”) failed to make
contractual rent and interest payments under its lease agreement for 26 operating facilities and on its
$112.5 million mortgage loan agreement, bearing interest at 10.81%, for nine facilities, due to ongoing

F-27

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

liquidity issues. The Company is currently in on-going negotiations to restructure and amend Guardian’s
lease and loan agreements. As part of the restructuring negotiations, on December 30, 2021, we acquired 2
facilities, previously subject to the Guardian mortgage loan, in consideration for a reduction of $8.7 million
in the mortgage principal and added the facilities to the master lease agreement. Subsequent to year end, in
February 2022, we completed additional restructuring activities related to Guardian, including selling and
re-leasing certain facilities as discussed further in Note 23 — Subsequent Events.

As a result of Guardian’s non-payment of contractual rent and the anticipated restructuring noted
above, in the fourth quarter of 2021, we placed Guardian on a cash basis of revenue recognition and
wrote-off approximately $14.0 million of straight-line rent receivables and lease inducements through rental
income. As of December 31, 2021, we have $7.4 million of letters of credit from Guardian as collateral
which could be applied against our uncollected rent and interest receivables. See Note 7 — Mortgage Notes
Receivable for additional details on our mortgage with Guardian. Guardian represents approximately 2.5%,
3.5% and 3.8% of our total revenues (excluding the impact of straight-line write-offs) for the years ended
December 31, 2021, 2020 and 2019, respectively.

Gulf Coast

During the second quarter of 2021, Gulf Coast stopped paying contractual rent under its master lease
agreement because of on-going liquidity issues. Gulf Coast operates 24 facilities subject to a master lease
with Omega and represents approximately 3.3%, 2.8% and 2.7% of Omega’s total revenues (excluding the
impact of write-offs) for the years ended December 31, 2021, 2020 and 2019, respectively.

As a result of Gulf Coast’s default under its master lease agreement, in August 2021, we exercised our
right to accelerate the full amount of rent due under Gulf Coast’s master lease agreement. On October 14,
2021, Gulf Coast commenced voluntary cases under Chapter 11 of the U.S. Bankruptcy Code in the U.S.
Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The payment of our accelerated
rent will be subject to the Bankruptcy Code and approval of the bankruptcy court in Gulf Coast’s
Chapter 11 cases. As described in Gulf Coast’s filings with the Bankruptcy Court, we have entered into a
Restructuring Support Agreement (the “Support Agreement”) that forms the basis for Gulf Coast’s
intended restructuring and liquidation. The Support Agreement establishes a timeline for
the
including the transition of
implementation of Gulf Coast’s planned restructuring and liquidation,
management of
the Support
Agreement, we committed to provide up to $25 million of senior secured debtor-in-possession (“DIP”)
financing to Gulf Coast, which is discussed in further detail
in Note 8 — Other Investments. In
November 2021, Gulf Coast entered into management and operations transfer agreements (“MOTAs”)
with a new manager (“New Manager”), pursuant to which the management of 23 of the 24 facilities subject
to the master lease with Omega would be performed by New Manager during an interim period until the
license for the facilities subject to the MOTAs could be obtained by a new operator (“New Operator”).
During the interim period, no rent is being paid by Gulf Coast, and we have provided a $20 million
working capital loan to New Manager, discussed in further detail in Note 8 — Other Investments. The
Bankruptcy Court approved the MOTAs on November 24, 2021 and the operations were transitioned
effective December 1, 2021.

the facilities to a third-party operator. As part of

the operations of

As a result of Gulf Coast’s non-payment of contractual rent, in the second quarter of 2021, we placed
Gulf Coast on a cash basis of revenue recognition and wrote-off straight-line rent receivable balances of
$17.4 million through rental income. Subsequent to placing Gulf Coast on a cash basis of revenue
recognition in June 2021, we recognized $24.6 million of rental income over the remaining period of 2021,
based on our ability to offset any uncollected rent receivables against Gulf Coast’s security deposit and
against certain debt obligations of Omega, as discussed further below. We held a security deposit of
$3.3 million from Gulf Coast, which we have applied against Gulf Coast’s obligations in the second and
third quarters of 2021. In relation to Gulf Coast, a subsidiary of Omega (“Omega Obligor”) is the obligor
on five notes due to third parties with aggregate outstanding principal of $20.0 million (collectively, the
“Subordinated Debt”) that bear interest at 9% per annum with a maturity date of December 21, 2021 (see

F-28

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 14 — Borrowing Activities and Arrangements). Under the terms of the Subordinated Debt, to the
extent Gulf Coast fails to pay rent when due to us under its master lease, Gulf Coast’s unpaid rent can be
used to offset Omega Obligor’s obligations under the Subordinated Debt (on a quarterly basis with respect
to interest and, under some circumstances, on an annual basis with respect to principal). As of
December 31, 2021, we have offset $1.3 million of accrued interest and $20.0 million of principal under the
Subordinated Debt against the uncollected rent under the master lease with Gulf Coast. Following the
application of these offsets, Omega has no further obligations under the Subordinated Debt.

In August 2021, following an assertion by the holders of the Subordinated Debt that our prior exercise
of offset rights had resulted in defaults under the terms of the Subordinated Debt, we also filed suit in the
Circuit Court for Baltimore County against the holders of the Subordinated Debt seeking a declaratory
judgment to, among other items, declare that the aggregate amount of unpaid rent due from Gulf Coast
under the master lease agreement exceeds all amounts which otherwise would be due and owing by Omega
Obligor under the Subordinated Debt, and that all principal and interest due and owing under the
Subordinated Debt may be (and was) offset in full as of December 31, 2021. In October 2021, the
defendants in the case filed a motion to dismiss for lack of personal jurisdiction. While Omega believes that
Omega Obligor is entitled to the enforcement of the offset rights sought in the action, the outcome of
litigation is unpredictable, and Omega cannot predict the outcome of the declaratory judgment action.

Daybreak

During the third quarter of 2017, we placed Daybreak on a cash basis for revenue recognition as a
result of nonpayment of funds owed to us. During the fourth quarter of 2017, we executed a Settlement
and Forbearance Agreement with Daybreak which permitted Daybreak to defer payments up to 23% of
their contractual rent until January 2018, subject to certain conditions. During the fourth quarter of 2018,
Daybreak was no longer in compliance with the 2017 Settlement and Forbearance Agreement.

On January 30, 2019, we entered into a Second Amendment to the Settlement and Forbearance
Agreement under which we agreed to defer approximately $4.2 million of rent in the fourth quarter of 2018
and approximately $2.5 million (or approximately one month’s rent) in each of the first two quarters of
2019. Except for $1.1 million in required real estate tax escrows, Daybreak met their contractual payment
obligations through the second quarter of 2019; however, during the second half of 2019, Daybreak did not
meet their full contractual payment obligations to us as we received approximately $1.3 million of cash rent.

During 2020, as part of our plan to transition and sell our Daybreak facilities, we transitioned 31
Daybreak facilities to existing operators. The total annual contractual rent from the 31 transitioned facilities
was approximately $12.4 million. In 2021, we transitioned 14 additional facilities to existing operators with
annual contractual rent of approximately $4.0 million and sold the remaining four Daybreak facilities. The
transition and sale of these facilities completed our exit from our relationship with Daybreak.

Other straight-line receivables and write-offs

In addition to the Guardian and Gulf Coast straight-line receivable write-offs in 2021 discussed above,
we wrote-off straight-line rent receivable balances of $5.9 million through rental income in 2021 primarily
due to placing four other operators (one operator in the first quarter, two operators in the third quarter and
one operator in the fourth quarter) on a cash basis of revenue recognition. We determined that collection of
substantially all contractual lease payments with these operators was no longer probable for various
reasons. The placement of an operator on a cash basis of revenue recognition during the first quarter was
because the operator stopped paying contractual rent under our lease agreement. The two operators placed
on a cash basis of revenue recognition during the third quarter and the one operator placed on a cash basis
of revenue recognition during the fourth quarter are current with rent payments as of December 31, 2021.
The four operators collectively represent approximately 0.8%, 1.0% and 1.0%, respectively, of our total
revenues (excluding the impact of write-offs) for the years ended December 31, 2021, 2020 and 2019.

In addition to the write-off of Agemo’s contractual receivables, straight-line rent receivables, and lease
inducements in the third quarter of 2020 discussed above, we wrote-off approximately $67.7 million of

F-29

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

contractual receivables, straight-line rent receivables, and lease inducements through rental income in 2020
as a result of placing three operators (excluding Agemo discussed above) on a cash basis resulting from a
change in our evaluation of the collectibility of future rent payments due under the respective lease
agreements. In part, our conclusions were based on information the Company received from these three
operators during the third and fourth quarters of 2020 regarding substantial doubt as to their ability to
continue as a going concern. Of the $67.7 million, $64.9 million related to Genesis Healthcare, Inc.
(“Genesis”) and $2.8 million related to two other operators which lease five facilities from the Company.
During 2020, we also wrote-off approximately $3.6 million of straight-line rent receivables to rental income
as a result of transitioning facilities to other existing operators. In addition, during 2020, we received a
one-time rent payment of approximately $55.4 million from Maplewood,
in conjunction with the
restructuring of its master lease and loans with Omega (see Note 8 — Other Investments). This payment
was accounted for as an adjustment to straight-line rent receivables and is being amortized over the
remaining term of the master lease.

During 2019, we wrote-off approximately $11.1 million of contractual receivables, straight-line rent
receivables and lease inducements to rental income, of which $9.9 million resulted from placing five
operators on a cash basis of revenue recognition due to changes in our evaluation of the collectibility of
future rent payments due under the respective lease agreements. The remaining $1.2 million write-off of
straight-line rent receivables to rental income resulted from transitioning a facility to another existing
operator.

Lease Inducements

For the years ended December 31, 2021, 2020 and 2019, we provided fundings of $22.3 million,
$34.1 million, and $50.8 million, respectively, to our operators subject to operating leases, which were
accounted for as lease inducements and will be amortized as a reduction to rental income over the
remaining term of the leases. Of the $22.3 million funded in 2021, $20 million was paid to Consulate Health
Care (“Consulate”), $2.3 million was paid to four other existing operators. Of the $34.1 million funded in
2020, $23.9 million was paid to Maplewood for development and start-up related costs and the remaining
$10.2 million was paid to three other operators. Of the $50.8 million funded in 2019, $15.0 million was paid
to Genesis and the remaining $35.8 million was paid to seven other existing operators.

NOTE 6 — LEASES

Lease Income

The following table summarizes the Company’s rental income from operating leases:

Year Ended December 31,

2021

2020

2019

(in thousands)

Rental income – operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease income – operating leases . . . . . . . . . . . . . . . . . . . . . . .

$911,701
11,976

$741,681
11,746

$792,010
12,066

Total rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$923,677

$753,427

$804,076

Our variable lease income primarily represents the reimbursement of real estate taxes and ground lease

expenses by operators that Omega pays directly.

F-30

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following amounts reflect the future minimum lease payments due to us for the remainder of the

initial terms of our operating leases as of December 31, 2021:

2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 820,565

2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

838,780

852,632

861,586

871,072

Thereafter

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,192,976

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$8,437,611

(in thousands)

Lease Costs

As of December 31, 2021, the Company is a lessee under ground leases and/or facility leases related to
11 SNFs and two offices. For the years ended December 31, 2021, 2020 and 2019, the expenses associated
with these operating leases were $2.2 million, respectively and are included within general and
administrative expense on the Statement of Operations.

The following table summarizes the balance sheet information related to leases where the Company is a

lessee:

December 31, December 31, December 31,

2021

2020

2019

Other assets – right of use assets . . . . . . . . . . . . . . . . . . . . . . . .

$16,117

Accrued expenses and other liabilities – lease liabilities

. . . . . . . .

$17,180

(in thousands)

$16,526

$17,349

$17,533

$18,033

Direct Financing Leases

The components of investments in direct financing leases consist of the following:

December 31, December 31,

2021

2020

(in thousands)

Minimum lease payments receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 24,863

$ 25,947

Less unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13,460)

(14,489)

Investment in direct financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11,403

Less allowance for credit losses on direct financing leases

. . . . . . . . . . . . . . . .

(530)

11,458

(694)

Investment in direct financing leases – net

. . . . . . . . . . . . . . . . . . . . . . . . .

$ 10,873

$ 10,764

Properties subject to direct financing leases . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of direct financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

1

1

1

Orianna Direct Financing Lease

On January 11, 2019, pursuant to a bankruptcy court order, affiliates of Orianna Health Systems
(“Orianna”) purchased the remaining 15 SNFs subject to the direct financing lease with Orianna for
$176 million of consideration, comprised of $146 million in cash received by Orianna and a $30.0 million
seller note held by the Company. On the same date, Orianna repaid $25.0 million of our then outstanding
debtor in possession financing, including all related interest. The $30.0 million note, which was repaid
during the third quarter of 2021, bore interest at 6% per annum and had a maturity date of January 11,
2026.

F-31

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On January 16, 2019, the bankruptcy court confirmed Orianna’s plan of reorganization, creating a
Distribution Trust (the “Trust”) to distribute the proceeds from Orianna’s sale of the remaining 15 SNFs, as
well as the Trust’s collections of Orianna’s accounts receivable portfolio. In January 2019, we reclassified
our net investment in direct financing lease of $115.8 million from the Trust to other assets on our
Consolidated Balance Sheets. For the period from January 16, 2019 through December 31, 2019, we
received approximately $94 million from the Trust as a partial liquidation.

In March 2019, we received updated information from the Trust indicating diminished collectibility of
the accounts receivable owed to us. As a result, we recorded an additional $7.7 million allowance. As of
December 31, 2019, our remaining receivable from the Trust was approximately $14.1 million which was
recorded in other assets on our Consolidated Balance Sheets. During 2020, we received approximately
$17.2 million from the Trust of which approximately $3.1 million is recorded in (recovery) impairment on
direct
financing leases on our Consolidated Statements of Operations. During 2021, we received
approximately $0.7 million from the Trust which is recorded in (recovery) impairment on direct financing
leases on our Consolidated Statement of Operations.

NOTE 7 — MORTGAGE NOTES RECEIVABLE

As of December 31, 2021, mortgage notes receivable relate to seven fixed rate mortgages on 63
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 six
states, operated by six independent healthcare operating companies. We monitor compliance with
mortgages and when necessary have initiated collection, foreclosure and other proceedings with respect to
certain outstanding mortgage notes.

The principal amounts outstanding of mortgage notes receivable, net of allowances, were as follows:

December 31, December 31,

2021

2020

(in thousands)

Mortgage note due 2027; interest at 10.81% . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage notes due 2029; interest at 10.79%(1) . . . . . . . . . . . . . . . . . . . . . . . .
Other mortgage notes outstanding(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage notes receivable, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$103,762
653,564
151,361

908,687

Allowance for credit losses on mortgage notes receivable . . . . . . . . . . . . . . . . .

(73,601)

$112,500
670,015
136,043

918,558

(33,245)

Total mortgage notes receivable – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$835,086

$885,313

(1) Approximates the weighted average interest rate on 45 facilities as of December 31, 2021.

(2) Other mortgage notes outstanding have a weighted average interest rate of 8.84% per annum as of December 31, 2021 and

maturity dates ranging from 2023 through 2032.

Mortgage Note due 2027

On January 17, 2014, we entered into a $112.5 million first mortgage loan with Guardian. The loan
was originally secured by seven SNFs and two ALFs located in Pennsylvania and Ohio. The mortgage is
cross-defaulted and cross-collateralized with our existing master lease with the operator. In March 2018, we
extended the maturity date to January 31, 2027 and provided an option to extend the maturity for a five
year period through January 31, 2032 and a second option to extend the maturity through September 30,
2034. As discussed in Note 5 — Contractual Receivables and Other Receivables and Lease Inducements,
Guardian failed to pay contractual rent and interest to us from October 2021 through December 2021 due
to on-going liquidity issues. The Company is currently in on-going negotiations to restructure and amend
Guardian’s lease and loan agreements. As part of the restructuring negotiations, on December 30, 2021, we
acquired two facilities, previously subject to the Guardian mortgage loan, in consideration for a reduction

F-32

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of $8.7 million in the mortgage principal and added the facilities to the master lease agreement. Subsequent
to year end, in February 2022, we completed additional restructuring activities related to Guardian,
including selling and re-leasing certain facilities as discussed further in Note 23 — Subsequent Events.

As discussed in Note 9 — Allowance for Credit Losses, we reduced the risk rating on the mortgage
loan from a 4 to a 5 during the third quarter of 2021, primarily due to the increased likelihood of a
restructuring that would result in the modification of the mortgage loan terms. The reduction in risk rating
increased our reserve on the mortgage loan, determined using our PD and LGD credit loss model, to
$8.9 million as of the end of the third quarter. Following Guardian’s non-payment of rent and interest
during the fourth quarter of 2021 and further negotiations with Guardian in the fourth quarter, we elected
to further reduce the risk rating on the loan from a 5 to a 6 in the fourth quarter of 2021 and to evaluate the
risk of loss on the loan on an individual basis. As the fair value of the 7 properties that collateralize the
mortgage loan were estimated to be less than the remaining principal of $103.8 million, we reserved an
additional $38.2 million through provision for credit losses in the fourth quarter. The total reserve on
December 31, 2021, related to the mortgage loan is $47.1 million and reduces to the loan carrying value, to
the estimated fair value of the collateral of $56.7 million. We also fully reserved approximately $1.0 million
of contractual interest receivable related to the mortgage loan with Guardian in the fourth quarter of 2021
(see Note 9 — Allowance for Credit Losses). The mortgage loan was also placed on non-accrual status for
interest recognition in October 2021 and we will utilize the cost recovery method for any proceeds received
on the mortgage loan.

Mortgage Notes due 2029

At December 31, 2021, the $653.6 million of Mortgages Notes with Ciena Healthcare (“Ciena”)

consisted of the following:

•

•

•

$415 million amortizing mortgage (the “Master Mortgage”) that matures in 2029. The Master
Mortgage note bore an initial interest rate of 9.0% per annum which increases by 0.225% per
annum. In May 2020, we amended the Master Mortgage to increase the interest rate by 54 basis
points from 10.13% per annum to 10.67% per annum and we sold eight SNFs and one ALF
located in Michigan to Ciena for $83.5 million (as discussed below). As of December 31, 2021, the
outstanding principal balance of the Master Mortgage note is approximately $372.8 million and is
secured by 25 facilities. The interest rate on the Master Mortgage was 11.13% at December 31,
2021.

Additional borrowings in the form of
incremental facility mortgages, construction and/or
improvement mortgages with maturities through 2029 (with exception to one construction
mortgage with principal of $9.3 million that matures in 2023) with initial annual interest rates
ranging between 8.5% and 10% and fixed annual escalators of 2% or 2.5% over the prior year’s
interest rate, or a fixed increase of 0.225% per annum. As of December 31, 2021, the outstanding
principal balance of these mortgage notes which are secured by five facilities is approximately
$132.4 million. During the second quarter of 2021, one construction mortgage, included in the
mortgage notes described above, with an original maturity date of 2021 was extended to 2029 and
converted into a facility mortgage. During the third quarter of 2021, we acquired a facility which
was previously subject to a $13.9 million construction mortgage, also included in the notes
described above, and subsequently leased the property back to Ciena.

$44.7 million mortgage note related to five SNFs located in Michigan. The mortgage note matures
on June 30, 2029 and bears an initial annual interest rate of 9.5% which increases each year by
0.225%. The interest rate on the mortgage note was 10.18% at December 31, 2021. As of
December 31, 2021, the outstanding principal balance of this mortgage note is approximately
$43.8 million. Additionally, the Company committed to fund an additional $9.6 million to Ciena if
certain performance metrics are achieved by the portfolio.

F-33

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

•

$83.5 million mortgage note related to eight SNFs and one ALF located in Michigan. These nine
facilities were formerly leased to Ciena and were sold to Ciena by issuance of a first mortgage on
May 1, 2020. In connection with this sale, we recorded a loss of $3.6 million related to the
write-off of the nine facilities’ straight-line rent receivable. The mortgage note matures on June 30,
2029 and bears an initial annual interest rate of 10.31% which increases each year by 2%. The
interest rate on the mortgage note was 10.52% at December 31, 2021. As of December 31, 2021,
the outstanding principal balance of this mortgage note is approximately $83.2 million.

$21.3 million mortgage note related to one SNF located in Ohio. The mortgage note matures on
March 31, 2022 and bears an initial annual interest rate of 9.5%. In January 2022, we amended the
mortgage note to increase the interest rate to 9.74% beginning April 1, 2022 and to extend the
maturity date to December 31, 2022. As of December 31, 2021, the outstanding principal balance
of this mortgage note is approximately $21.3 million.

The mortgage notes with Ciena are cross-defaulted and cross-collateralized with our existing master

lease and other investment notes with the operator.

Other mortgage notes outstanding

Mortgage Note due 2032; interest at 10.50%

On July 1, 2021, we financed six SNFs in Ohio and amended an existing $6.4 million mortgage,
inclusive of 2 Ohio SNFs, to include the six facilities in a consolidated $72.4 million mortgage for eight
Ohio facilities bearing interest at an initial rate of 10.5% per annum. In conjunction with this transaction,
we also acquired three Maryland facilities that were previously subject to a mortgage issued by Omega
bearing interest at 13.75% per annum with a principal balance of $36.0 million that was included in other
mortgage notes outstanding. The purchase price for these three facilities was equal to the remaining
mortgage principal amount, and the three acquired Maryland facilities were subsequently leased back to
the seller for a term expiring on December 31, 2032, assuming Omega exercises the options under the
agreement. The base rent in the initial year is approximately $5.0 million and includes annual escalators of
2.5%. As of December 31, 2021, the outstanding principal balance of this mortgage note is approximately
$72.4 million.

Mortgage Note due 2025; interest at 7.85%

In connection with the MedEquities Merger on May 17, 2019, the Company acquired a first mortgage
lien issued to Lakeway Realty, L.L.C, an unconsolidated joint venture discussed in Note 11 — Investments
in Joint Ventures, in the original principal amount of approximately $73.0 million bearing interest at 8% per
annum based on a 25-year amortization schedule and maturing on March 20, 2025. We determined the
acquisition date fair value of the acquired mortgage was $69.1 million. As of December 31, 2021 and 2020,
this mortgage has a carrying value of $65.5 million and $67.0 million, respectively.

F-34

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 8 — OTHER INVESTMENTS

Our other investments consist of fixed and variable rate loans to our operators and/or their principals
to fund working capital and capital expenditures. These loans may be either unsecured or secured by the
collateral of the borrower. Interest revenue on these loans is included within other investment income on the
Consolidated Statement of Operations. As of December 31, 2021, we had 34 loans with 18 different
operators. A summary of our other investments is as follows:

Other investment notes due 2024; interest at 13.15%(1)
Other investment notes due 2024-2025; interest at 8.12%(1)
Other investment note due 2023; interest at 12.00% . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .

Other investment notes due 2030; interest at 7.00% . . . . . . . . . . . . . . . . . . . . .
Other investment notes outstanding(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other investments, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31, December 31,

2021

2020

(in thousands)

$ 90,752
55,791

40,232

201,613
150,890

539,278

$ 83,636
56,987

49,973

147,148
161,155

498,899

Allowance for credit losses on other investments . . . . . . . . . . . . . . . . . . . . . . .

(69,394)

(31,457)

Total other investments – net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$469,884

$467,442

(1) Approximate weighted average interest rate as of December 31, 2021.
(2) Other investment notes have a weighted average interest rate of 8.46% as of December 31, 2021 with maturity dates ranging from

2022 through 2031 (with $81.9 million maturing in 2022).

Other investment notes due 2024

Our other investment notes due in 2024 consists of two secured term loans with Genesis with initial
borrowings of $48.0 million and $16.0 million at issuance. The $48.0 million term loan was issued in
July 2016 (the “2016 Term Loan”), with subsequent amendments in 2018, 2019 and 2021, and currently
bears interest at a fixed rate of 14% per annum, of which 9% per annum is paid-in-kind. The 2016 Term
Loan was initially scheduled to mature on July 29, 2020, but through the amendments noted above, the
maturity date of this loan was extended to January 1, 2024. The $16.0 million secured term loan was issued
on March 6, 2018 (the “2018 Term Loan”), and amended in 2021, and bears interest at a fixed rate of 10%
per annum, of which 5% per annum is paid-in-kind. The 2018 Term Loan was initially scheduled to mature
on July 29, 2020, but through the amendments noted above was extended to January 1, 2024. Both the 2016
and 2018 Term Loans are secured by a first priority lien on and security interest in certain collateral of
Genesis. As of December 31, 2021, there was approximately $71.4 million and $19.4 million outstanding on
the 2016 and 2018 Term Loans, respectively. We evaluated our 2016 and 2018 Term Loans with Genesis for
impairment during 2021 and 2020, with no incremental provision for credit loss recognized given the
underlying collateral value.

Other investment notes due 2024-2025

Our other investment notes due in 2024-2025 consist of a $32 million secured term loan (the “Agemo
Term Loan”) and a $25.0 million secured working capital loan (the “Agemo WC Loan”) with Agemo. The
Agemo Term Loan was acquired in 2016 and bears interest at 9% per annum. The Agemo Term Loan
matures on December 31, 2024 and is secured by a security interest in certain collateral of Agemo. The
Agemo WC Loan was issued on May 7, 2018 and bears interest at 7% per annum. The Agemo WC Loan
matures on April 30, 2025 and is primarily secured by a collateral package that includes a second lien on the
accounts receivable of the Agemo. The proceeds of the Agemo WC Loan were used to pay operating
expenses, settlement payments, fees, taxes and other costs approved by the Company. During the third
quarter of 2020, we evaluated both loans for impairment upon receiving information from Agemo
regarding substantial doubt of its ability to continue as a going concern. Based on our evaluation, we

F-35

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

recorded a provision for credit loss of $22.7 million in the third quarter of 2020 to reduce the carrying value
of the loans to the fair value of the underlying collateral. We also fully reserved approximately $3.8 million
of contractual interest receivable related to the Agemo Term Loan in the third quarter of 2020 (see
Note 9 — Allowance for Credit Losses).

As discussed in Note 5 — Contractual Receivables and Other Receivables and Lease Inducements,
Agemo failed to pay contractual rent and interest to us from August 2021 through October 2021 and in
December 2021. We have continued to monitor the fair value of the collateral associated with these loans on
a quarterly basis. In the third quarter of 2021, we recorded an additional provision for credit loss of
$16.7 million related to these loans as a result of a reduction in the fair value of the underlying collateral
assets supporting the current carrying values. The reduction in fair value of the collateral assets was
primarily driven by the application of Agemo’s $9.3 million letter of credit that supported the value of the
Agemo Term Loan to Omega’s uncollected receivables and a reduction in Agemo’s working capital
accessible to Omega as collateral, after considering other liens on the assets. Additionally, the loan has been
placed on non-accrual status and we will use the cost recovery method and will apply any interest and fees
received directly against the principal of the loan. As of December 31, 2021, we have received $1.2 million
of interest payments and applied against the principal.

We previously had two other loans with Agemo affiliates that were repaid during 2020: $1.7 million
term loan (which was added to Agemo Term Loan) that was issued on November 5, 2019 and a $3.5 million
term loan that was issued on February 28, 2020. The $1.7 million term loan and $3.5 million term loan bore
interest at fixed rates of 9% and 10% per annum, respectively.

At December 31, 2021, the total carrying value of our loans outstanding with Agemo and its affiliates,

net of allowances for credit losses, is approximately $16.7 million.

Other investment note due 2023

Our other investment note due in 2023 consists of a $60.0 million mezzanine loan, with an operator,
that was acquired and financed in 2016 and subsequently amended and refinanced in May 2018. As
amended, the mezzanine loan bears interest at a fixed interest rate of 12% per annum and matures on
May 31, 2023. The mezzanine loan requires semi-annual principal payments of $2.5 million commencing
December 31, 2018 and is secured by an equity interest in subsidiaries of the borrower. As of December 31,
2021, our total other investments outstanding with this borrower was approximately $40.2 million.

Other investment notes due 2030

subsidiaries. These revolving credit

In 2015 and 2017, we entered into two separate $50.0 million and $15.0 million secured revolving credit
facilities bore interest at
facilities with Maplewood and its
approximately 6.66% per annum and 9.5% per annum, respectively, and were initially scheduled to mature
in 2023. As a part of an overall restructuring with this operator, we entered into a $220.5 million secured
revolving credit facility with Maplewood on July 31, 2020, of which $132.1 million was drawn at closing.
The funds drawn at closing were used to repay our prior credit facilities with Maplewood, as well as other
lease obligations owed to us, of which approximately $55.4 million was scheduled to be repaid at
termination of the master lease. Loan proceeds under the new credit facility may also be used to fund
Maplewood’s working capital needs. Loans made under this facility bear interest at a fixed rate of 7% per
annum and mature on June 30, 2030. As of December 31, 2021, $201.6 million remains outstanding on this
credit facility to Maplewood.

As a result of entering into the $220.5 million secured revolving credit facility in July 2020, we

reassessed our relationship with Maplewood and concluded that Maplewood was a VIE.

Other investment notes outstanding

As of December 31, 2021, our other investment notes outstanding represents 28 loans to operators that
primarily consists of term loans and working capital loans or revolving credit facilities. Many of these loans

F-36

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

are not individually significant and the use of proceeds of these loans can vary. Included below are the
significant new loans entered into in 2021 and significant updates to any existing loans.

Gulf Coast — DIP Facility

As discussed in Note 5 — Contractual Receivables and Other Receivables and Lease Inducements, in
October 2021, we provided an up to $25.0 million senior secured DIP facility (the “DIP Facility”) with Gulf
Coast, in order to provide liquidity for the operations of the Gulf Coast facilities during its Chapter 11
cases. A portion of the funding under the DIP Facility is tied to certain milestones and other conditions,
including the transition of the management of the operations of the facilities. At December 31, 2021, these
milestones and conditions had been met and the full capacity of the DIP Facility was available to be
borrowed upon by Gulf Coast. The DIP Facility bears interest at LIBOR (subject to a 1% floor) plus 12%
per annum and has an unused commitment fee equal to .50% of the average daily balance of the undrawn
commitments. Interest and fees are payable monthly and the principal is due at maturity, unless the amount
outstanding thereunder is accelerated prior to maturity. Currently, the DIP Facility matures on the earlier
of (i) June 18, 2022, (ii) the effective date of a plan of reorganization or liquidation in the Chapter 11 Cases
or (iii) upon an event of default as defined in the DIP Facility agreement. The DIP financing is guaranteed
by all debtors in Gulf Coast’s Chapter 11 cases and is secured by liens on substantially all of their assets,
including post-petition accounts receivable, subject in certain cases to other priorities or exceptions. As of
December 31, 2021, $20.5 million was outstanding under the DIP Facility, which was fully reserved for as
discussed further below.

Given the uncertainty and complexity surrounding the bankruptcy process and the deteriorated credit
of Gulf Coast, we evaluated the DIP facility on an individual basis and elected to measure the risk of loss
on the DIP Facility based on the fair value of the collateral. Based on the cash forecasts provided by Gulf
Coast as part of the Support Agreement and on-going monthly reporting, we estimate that the collateral
will have insufficient value to support the loan at maturity and that we will be unable to collect on
substantially all principal amounts advanced to Gulf Coast under the DIP Facility. Upon funding, we fully
reserved all principal amounts advanced under the DIP Facility. In the fourth quarter of 2021, we recorded
reserves of $20.0 million (the principal outstanding after considering interest payments applied to principal
discussed below) related to the DIP facility through the provision for credit losses on December 31, 2021.
Please see further discussion within Note 9 — Allowance for Credit Losses. Additionally, we have placed
the loan on non-accrual status and will use the cost recovery method and will apply any interest and fees
received directly against the principal of the loan. As of December 31, 2021, we have received $0.5 million
of interest and fee payments and applied against the principal.

Working Capital Loan — $20 million

As discussed in Note 5 — Contractual Receivables and Other Receivables and Lease Inducements, in
November 2021, we entered into a $20.0 million working capital loan with New Manager of 23 of the 24
Gulf Coast facilities as part of the MOTAs that became effective on December 1, 2021. The working capital
loan bears interest at 3% per annum. The maturity date of the loan is the earlier of (i) December 31, 2022,
(ii) the date of the termination of one or more of the MOTAs, or (iii) the date that New Manager requests
that the loan be terminated. Advances under the working capital loan are not required to be repaid until
maturity. The working capital loan is collateralized by the post-transition accounts receivable of the 24
facilities. As of December 31, 2021, the outstanding principal under this loan was $12.5 million.

Revolving Credit Facility — $20 million

On October 1, 2021, the Company amended the terms of a $15 million revolving credit facility with an
operator that was previously issued in December 2020 and had a maturity date of December 1, 2022. The
revolving credit facility, as amended, has an increased maximum principal of $20 million, bears interest at
5% for the first year and 6% thereafter and has a maturity date of September 30, 2024. The credit facility is
secured by a first lien on the accounts receivable of the operator. Following the amendment in the fourth
quarter, this operator drew $7.8 million under the credit facility. As of December 31, 2021, the outstanding
principal under this loan was $16.0 million.

F-37

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As discussed in Note 23 — Subsequent Events, in January and February 2022, this operator paid
contractual interest under the credit facility but failed to pay contractual rent due under its lease agreement.
The operator has asked for a short-term rent deferral, and negotiations are on-going.

Second Spring Healthcare Investments

On April 17, 2020, we provided a $17.6 million unsecured loan to a subsidiary of Second Spring
Healthcare Investments (an entity in which we have an approximate 15% ownership interest, see
Note 11 — Investments in Joint Ventures) bearing interest at the greater of the prime interest rate or
3-month LIBOR plus 2.75% per annum which was due on demand. This loan was repaid in 2021.

Sellers Note — $30 million

In connection with transitioning facilities associated with Orianna Health Systems, a former operator,
in January 2019 we issued a $30 million sellers note that bore interest at a fixed rate of 6% per annum. The
$23.5 million in principal outstanding on this loan was repaid in September 2021.

F-38

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 9 — ALLOWANCE FOR CREDIT LOSSES

A rollforward of our allowance for credit losses, summarized by financial instrument type and internal

credit risk rating, for the years ended December 31, 2021 and 2020 is as follows:

Rating

Financial Statement
Line Item

Allowance for
Credit Loss as of
December 31,
2020

Provision (recovery)
for Credit Loss
for the year ended
December 31, 2021

Write-offs charged
against allowance
for the year ended
December 30, 2021

Allowance for Credit
Loss as of
December 31, 2021

(in thousands)

2 . . . Mortgage notes receivable

$

88

$

(73)

$ —

$

15

3 . . . Mortgage notes receivable

4 . . . Mortgage notes receivable

5 . . . Mortgage notes receivable

6 . . . Mortgage notes receivable

Sub-total

3 . . .

Investment in direct financing leases

Sub-total

2 . . . Other investments

3 . . . Other investments

4 . . . Other investments

5 . . . Other investments

6 . . . Other investments

Sub-total

2 . . . Off-balance sheet note commitments

3 . . . Off-balance sheet note commitments

4 . . . Off-balance sheet note commitments

4 . . . Off-balance sheet mortgage commitments

6 . . . Off-balance sheet mortgage commitments

Sub-total

Total

954

26,865

433

4,905

33,245

694

694

94

5,113

24,397

1,853

—

31,457

116

2,305

—

24

—

2,445

$67,841

1,019

(7,404)(1)

(298)

47,112(1)

40,356

(164)

(164)

(65)

(513)

(23,225)(2)

6,103(3)

55,732(4)

38,032

(109)

(1,847)

216

93

143

(1,504)

$ 76,720

—

—

—

—

—

—

—

—

—

—

(95)

—

(95)

—

—

—

—

—

—

1,973

19,461

135

52,017

73,601

530

530

29

4,600

1,172

7,861

55,732

69,394

7

458

216

117

143

941

$(95)

$144,466

(1) Amount reflects the movement of reserves associated with a $112.5 million mortgage for 9 facilities with Guardian due to a
reduction of our internal risk rating on the loan from a 4 to a 5 in the third quarter of 2021, which was primarily due to the
increased likelihood of a restructuring that would result in the modification of the mortgage loan terms, and from a 5 to a 6
during the fourth quarter of 2021, which was primarily due to Guardian’s non-payment of rent and interest during the fourth
quarter of 2021 due to on-going liquidity issues (as discussed further in Note 5 — Contractual Receivables and Other
Receivables and Lease Inducements) and further negotiations with Guardian in the fourth quarter. As discussed in
Note 7 — Mortgage Notes Receivable, we elected to evaluate the risk of loss on the loan on an individual basis, which resulted in
recording an additional $38.2 million reserve on the mortgage loan.

(3)

(2) Amount reflects the movement of $27.2 million of reserves from Other Investments with a rating of 4 to Other Investments with
a rating of 6 as a result of a reduction of our internal credit rating from a 4 to a 6 on the Agemo Term Loan and one other loan
during the third quarter of 2021.
The provision includes an additional $7.9 million allowance recorded on the Agemo WC Loan during the third quarter of 2021.
We also reduced the internal rating on the Agemo WC Loan from a 4 to a 5 during the third quarter of 2021. See
Note 8 — Other Investments for additional information on the conditions that drove the Agemo WC Loan impairment and
rating reduction.

(4) Amount reflects the movement of $27.2 million of reserves from Other Investments with a rating of 4 to Other Investments with
a rating of 6 as a result of a reduction of our internal credit rating from a 4 to a 6 on the Agemo Term Loan and one other loan
during the third quarter of 2021. The amount also reflects $8.8 million of additional allowance recorded in the third quarter of
2021 to fully impair the remaining carrying value of the Agemo Term Loan and $20.0 million of additional allowance recorded
in the fourth quarter of 2021 to fully impair the remaining carrying value of the Gulf Coast DIP Facility. See Note 8 — Other
Investments for additional information on the conditions that drove the Agemo Term Loan impairment and ratings reduction
and the Gulf Coast DIP Facility Impairment.

F-39

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Rating

Financial Statement
Line Item

Allowance for
Credit Loss at
December 31, 2019

Allowance for
Credit Loss on
January 1, 2020

Provision (recovery)
for Credit Loss
for the year ended
December 31, 2020

Write-offs charged
against allowance
for the year ended
December 30, 2020

Allowance for
Credit Loss as of
December 31, 2020

2 . . . Mortgage notes receivable

3 . . . Mortgage notes receivable

4 . . . Mortgage notes receivable

5 . . . Mortgage notes receivable

6 . . . Mortgage notes receivable

Sub-total

3 . . . Investment in direct financing leases

Sub-total

2 . . . Other investments

3 . . . Other investments

4 . . . Other investments

5 . . . Other investments

Sub-total

2 . . . Off-balance sheet note commitments

3 . . . Off-balance sheet note commitments

4 . . . Off-balance sheet mortgage commitments

Sub-total

Total

$ —

—

—

—

4,905

4,905

217

217

—

—

—

—

—

—

—

—

—

$ —

901

19,293

829

363

21,386

611

611

195

1,434

3,158

1,901

6,688

—

—

100

100

(in thousands)

$

88

53

7,572

(396)

(363)

6,954

83

83

(101)

3,679

21,239

(48)

24,769

116

2,305

(76)

2,345

$ —

$

88

—

—

—

—

—

(217)

(217)

—

—

—

—

—

—

—

—

—

954

26,865

433

4,905

33,245

694

694

94

5,113

24,397

1,853

31,457

116

2,305

24

2,445

$5,122

$28,785

$34,151

$(217)

$67,841

F-40

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Included below is a summary of the amortized cost basis of our financial instruments, subject to the

allowance for credit losses, by year of origination and our internal risk rating:

Rating

Financial Statement
Line Item

2021

2020

2019

2018

2017

2016

(in thousands)

2015 &
older

Revolving
Loans

Balance as of
December 31,
2021

1 . . . Mortgage notes receivable

$

— $

— $ — $

— $ — $

— $ 65,475 $

— $

65,475

2 . . . Mortgage notes receivable

— 21,325

3 . . . Mortgage notes receivable

72,420

—

—

—

—

—

—

—

—

—

—

—

4 . . . Mortgage notes receivable

16,776

89,349

5,034

44,308

46,377

39,713

390,681

5 . . . Mortgage notes receivable

6 . . . Mortgage notes receivable

—

—

—

—

—

—

—

—

—

—

—

7,090

— 110,139

Sub-total

89,196

110,674

5,034

44,308

46,377

39,713

573,385

3 . . . Investment in direct financing leases

Sub-total

2 . . . Other investments

3 . . . Other investments

—

—

—

—

—

—

—

—

—

—

—

—

—

— 18,574

27,017

—

—

—

—

— 11,403

— 11,403

—

—

4 . . . Other investments

2,690

— 10,859

90,752

— 41,232

—

—

—

—

—

—

—

—

21,325

72,420

632,238

7,090

110,139

908,687

11,403

11,403

21,500

— 21,500

2,829

238,370

286,790

—

—

—

—

—

—

145,533

29,723

55,732

5 . . . Other investments

6 . . . Other investments

Sub-total

Total

—

20,026

22,716

—

—

— 29,723

—

—

—

4,463

— 31,243

— 29,433

151,955

— 72,475

2,829

259,870

539,278

$111,912 $110,674 $34,467 $196,263 $46,377 $112,188 $587,617 $259,870

$1,459,368

Interest Receivable on Mortgage and Other Investment Loans

We have elected the practical expedient to exclude interest receivable from our allowance for credit
losses. As of December 31, 2021 and 2020, $11.1 million and $10.0 million, respectively, of contractual
interest receivable is recorded in contractual receivables — net on our Consolidated Balance Sheets. We
write-off interest receivable to provision for credit losses in the period we determine the interest is no longer
considered collectible. For the years ended December 31, 2021 and 2020, we wrote-off interest receivables of
$1.0 million (related to the Guardian mortgage loan, see Note 7 — Mortgage Notes Receivable) and
$3.8 million (related to the Agemo Term Loan, see Note 8 — Other Investments) through the provision for
credit losses, respectively. These write-offs are not reflected in the rollforward of the allowance for credit
losses above.

During the year ended December 31, 2021, we recognized $11.9 million of interest income related to

loans on non-accrual status as of December 31, 2021.

NOTE 10 — VARIABLE INTEREST ENTITIES

We hold variable interests in several VIEs through our investing and financing activities. As of
December 31, 2021, we have not consolidated any VIEs, as we have concluded that we are not the primary
beneficiary of these entities as we either we do not have the power to direct activities that most significantly
impact the VIE’s economic performance and/or the variable interest we hold does not obligate us to absorb
losses or provide us with the right to receive benefits from the VIE which could potentially be significant.

F-41

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Below is a summary of our assets, liabilities, collateral and maximum exposure to loss associated with

these unconsolidated VIEs as of December 31, 2021 and 2020:

December 31,

December 31,

2021

2020

(in thousands)

Assets

Real estate assets – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,144,851

$ 1,121,498

Assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other investments – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contractual receivables – net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Straight-line rent receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lease inducement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

191,016

230,768

1,227

(41,512)

64,307

—

181,401

1,233

(56,664)

69,666

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,590,657

1,317,134

Liabilities

Net in-place lease liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Security deposit

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contingent liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(305)

(4,715)

(43,915)

(48,935)

(331)

—

(43,915)

(44,246)

Collateral

Letters of credit

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

(9,253)

Personal guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other collateral(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(48,000)
(1,335,867)

(48,000)
(1,121,498)

Total collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,383,867)

(1,178,751)

Maximum exposure to loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

157,855

$

94,137

(1) Amount excludes accounts receivable amounts that Omega has a security interest in as collateral under the two working capital
loans with operators that are VIEs. The fair value of the accounts receivable available to Omega was $29.2 million and
$25.0 million as of December 31, 2021 and December 31, 2020, respectively.

In determining our maximum exposure to loss from these VIEs, we considered the underlying carrying
value of the real estate subject to leases with these operators and other collateral, if any, supporting our
other investments, which may include accounts receivable, security deposits, letters of credit or personal
guarantees, if any, as well as other liabilities recognized with respect to these operators.

The table below reflects our total revenues from the operators that are considered VIEs for the years

ended December 31, 2021, 2020 and 2019:

Revenue

Rental income(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2021
(in thousands)

2020

2019

$120,381
15,336
$135,717

$30,055
11,864
$41,919

$ 99,750
9,323
$109,073

(1)

The rental income for the year ended December 31, 2020, reflects the write-off of approximately $75.3 million of contractual
rent receivable, straight-line rent receivable and lease inducements related to Agemo (see Note 5 — Contractual Receivables and
Other Receivables and Lease Inducements).

F-42

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 11 — INVESTMENTS IN JOINT VENTURES

Unconsolidated Joint Ventures

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

Entity

%

Date

Investment(1)

Ownership Initial Investment

Second Spring Healthcare

Carrying Amount

Facility
Type

Facilities at
12/31/2021

December 31, December 31,

2021

2020

Investments(2)

Second Spring II LLC(3)

. . . . . . . .
. .

Lakeway Realty, L.L.C.(4) . .
Cindat Joint Venture(5)
. . .
OMG Senior Housing,

15%
15%

11/1/2016
3/10/2021

$ 50,032
10,330

51%
5/17/2019
49% 12/18/2019

73,834
105,688

LLC . . . . . . . . . . . . . . .

50%

12/6/2019

OH CHS SNP, Inc. . . . . . .

9% 12/20/2019

—

900

$240,784

SNF
SNF
Specialty
facility
ALF

Specialty
facility

— $ 11,355
8
—

$ 17,700
—

1
65

1

71,286
111,792

72,318
110,360

—

246

—

260

$194,687

$200,638

N/A

N/A

(1) Our investment includes our transaction costs, if any.
(2)

The Company made a loan of $17.6 million in April 2020 to the venture which is included in other investments. See
Note 8 — Other Investments. During the first quarter of 2021, this joint venture sold 16 SNFs to an unrelated third-party for
approximately $328 million in net proceeds and recognized a gain on sale of approximately $102.2 million ($14.9 million of
which represents the Company’s share of the gain). During the first quarter of 2021, this joint venture also sold five SNFs to
Second Spring II LLC for approximately $70.8 million in net proceeds. During 2020, this joint venture sold 16 SNFs subject to
an operating lease for approximately $259.1 million in net cash proceeds and recognized a gain on sale of approximately
$40.4 million. During 2019, this joint venture sold 14 SNFs subject to an operating lease for approximately $311.8 million in net
cash proceeds and recognized a gain on sale of approximately $64.0 million.

(3) We acquired a 15% interest in Second Spring II LLC for approximately $10.3 million. During the first quarter of 2021, this joint
venture acquired five SNFs from Second Spring Healthcare Investments for approximately $70.8 million. During the second and
third quarters of 2021, this joint venture sold five SNFs to an unrelated third-party for approximately $65 million in net proceeds
and recognized a loss on sale of approximately $0.4 million ($0.1 million of which represents the Company’s share of the loss).

(4) We acquired an interest in a joint venture that owns the Lakeway Regional Medical Center (the “Lakeway Hospital”) in Lakeway,
Texas. Our initial basis difference of approximately $69.9 million is being amortized on a straight-line basis over 40 years to
income (loss) from unconsolidated joint ventures in the Consolidated Statements of Operations. The lessee of the Lakeway
Hospital has an option to purchase the facility from the joint venture. The lessee also has a right of first refusal and a right of
first offer in the event the joint venture intends to sell or otherwise transfer Lakeway Hospital.

(5) We acquired a 49% interest in Cindat Ice Portfolio JV, GP Limited, Cindat Ice Portfolio Holdings, LP and Cindat Ice Portfolio
Lender, LP. Cindat Ice Portfolio Holdings, LP owns 65 care homes leased to two operators in the U.K. pursuant to operating
leases. Cindat Ice Portfolio Lender, LP holds loans to a third-party operator. Our investment in Cindat Joint Venture consists
primarily of real estate. Our initial basis difference of approximately $35 million is being amortized on a straight-line basis over
approximately 40 years to income (loss) from unconsolidated joint ventures in the Consolidated Statements of Operations.

F-43

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table reflects our income (loss) from unconsolidated joint ventures for the years ended

December 31, 2021, 2020 and 2019:

Entity

Second Spring Healthcare Investments(1)
Second Spring II LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . .

Lakeway Realty, L.L.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cindat Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OMG Senior Housing, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OH CHS SNP, Inc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,

2021

2020

2019

(in thousands)

$12,323

$2,807

$ 9,490

(757)

2,562

2,478

(417)

(127)

—

2,483

1,812

(497)

(462)

—

1,479

(22)

—

—

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,062

$6,143

$10,947

(1)

The income from this unconsolidated joint venture for the year ended December 31, 2021 includes a $14.9 million gain on sale of
real estate investments.

Asset Management Fees

We receive asset management fees from certain joint ventures for services provided. For the years ended
December 31, 2021, 2020 and 2019, we recognized approximately $0.8 million, $1.2 million and
$0.9 million, respectively, of asset management fees. These fees are included in miscellaneous income in the
accompanying Consolidated Statements of Operations.

Other Equity Investments

In the third quarter of 2021, we made an investment of $20.0 million in SafelyYou, Inc. (“SafelyYou”),
a technology company that has developed artificial intelligence-enabled video that detects and helps prevent
resident falls in ALFs and SNFs. Through our investment, we obtained preferred shares representing 5% of
the outstanding equity of SafelyYou and warrants to purchase SafelyYou common stock representing an
additional 5% of outstanding equity as of the date of our investment. SafelyYou has committed, for a
specified period, to using the proceeds of our investment to install its technology in our facilities or other
facilities of our operators. The vesting of the warrants is contingent upon SafelyYou’s attainment of certain
installation targets in our facilities. To the extent these installation targets are not attained, the investment
funds associated with the unvested warrants would be returned to Omega. The investment in the preferred
shares and warrants are recorded within other assets on the Consolidated Balance Sheets.

NOTE 12 — GOODWILL AND OTHER INTANGIBLES

The following is a summary of our goodwill:

Balance as of December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$651,737
(320)

Balance as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$651,417

(in thousands)

F-44

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a summary of our lease intangibles as of December 31, 2021 and 2020:

December 31, December 31,

2021

2020

(in thousands)

Assets:

Above market leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,929

$ 22,822

Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4,313)

(20,882)

Net above market leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,616

$

1,940

Liabilities:

Below market leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 66,324

$ 139,515

Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(38,091)

(100,996)

Net below market leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 28,233

$ 38,519

For the years ended December 31, 2021, 2020 and 2019, our net amortization related to intangibles was
$9.5 million, $14.2 million and $5.9 million, respectively. The estimated net amortization related to these
intangibles for the subsequent five years is as follows: 2022 — $4.1 million; 2023 — $4.0 million;
2024 — $3.9 million; 2025 — $3.7 million; 2026 — $2.9 million and $8.1 million thereafter. As of
December 31, 2021, the weighted average remaining amortization period of above market lease assets is
approximately ten years and of below market lease liabilities is approximately eight years.

NOTE 13 — CONCENTRATION OF RISK

As of December 31, 2021, our portfolio of real estate investments (including properties associated with
mortgages, direct financing leases, and assets held for sale) consisted of 960 healthcare facilities, located in
42 states and the U.K. and operated by 63 third-party operators. Our investment in these facilities, net of
impairments and allowances, totaled approximately $10.1 billion at December 31, 2021, with approximately
98% of our real estate investments related to healthcare facilities. Our portfolio is made up of (i) 685 SNFs,
133 ALFs, 20 ILFs, 16 specialty facilities, two MOBs, (ii) fixed rate mortgages on 59 SNFs, two ALFs and
two specialty facilities, and (iii) 41 facilities that are held for sale. At December 31, 2021, we also held other
investments of approximately $469.9 million, consisting primarily of secured loans to third-party operators
of our facilities and $194.7 million of investment in six unconsolidated joint ventures.

At December 31, 2021, we had investments with two operators/or managers that approximated or
exceeded 10% of our total investments: Maplewood and Consulate. Maplewood generated approximately
7.9%, 5.4% and 4.4% of our total revenues (excluding the impact of write-offs) for the years ended
December 31, 2021, 2020 and 2019, respectively. Consulate generated approximately 9.5%, 9.4% and 3.6%
of our total revenues (excluding the impact of write-offs) for the years ended December 31, 2021, 2020 and
2019, respectively.

At December 31, 2020, we had investments with one operator/or manager that exceeded 10% of our
total investments: Ciena. Ciena generated approximately 9.3%, 9.9% and 10.5% of our total revenues
(excluding the impact of write-offs) for the years ended December 31, 2021, 2020 and 2019, respectively.

At December 31, 2021, the three states in which we had our highest concentration of investments were

Florida (15%), Texas (10%) and Michigan (6%).

F-45

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 14 — BORROWING ARRANGEMENTS

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

Annual
Interest Rate
as of
December 31,
2021

Maturity

December 31,

2021

2020

(in thousands)

Secured borrowings

HUD mortgages(1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2046-2052
Term loan(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
Total secured borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.01% $ 359,806 $ 367,249
2,275
3.75%
369,524

2,275
362,081

Unsecured borrowings

Revolving borrowings:

2017 Revolving credit facility(4)
Revolving credit facility(4)

. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revolving borrowings . . . . . . . . . . . . . . . . . . . . . . . . . .

N/A
2025

N/A
1.30%

—
—
—

101,158
—
101,158

Senior notes and other unsecured borrowings:

2023 notes(4)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 notes(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 notes(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 notes(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 notes(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 notes(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2029 notes(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2031 notes(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2033 notes(4)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subordinated debt(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sterling term loan(4)(7)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 OP term loan(8)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OP term loan(8)(9)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred financing costs – net . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount – net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total senior notes and other unsecured borrowings – net . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .

Total unsecured borrowings – net

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

2023
2024
2025
2026
2027
2028
2029
2031
2033
N/A
N/A
N/A
2025

4.375%
4.950%
4.500%
5.250%
4.500%
4.750%
3.625%
3.375%
3.250%
N/A
N/A
N/A
3.29%

350,000
400,000
400,000
600,000
700,000
550,000
500,000
700,000
700,000
—
—
—
50,000
(26,980)
(31,565)
4,891,455
4,891,455

700,000
400,000
400,000
600,000
700,000
550,000
500,000
700,000
—
20,000
136,700
50,000
—
(26,421)
(31,709)
4,698,570
4,799,728
$5,253,536 $5,169,252

(1) Reflects the weighted average annual contractual interest rate on the mortgages at December 31, 2021. Secured by real estate

assets with a net carrying value of $544.5 million as of December 31, 2021.

Borrowing is the debt of a consolidated joint venture.

(2) Wholly owned subsidiaries of Omega OP are the obligor on these borrowings.
(3)
(4) Guaranteed by Omega OP.
(5)

In March 2021, we used a portion of the proceeds from the 2033 Senior Notes offering to fund the tender offer to redeem
$350 million of the 4.375% Senior Notes due 2023. In connection with this transaction, we recorded approximately $30.6 million
in related fees, premiums, and expenses for the year ended December 31, 2021, which were recorded as Loss on debt
extinguishment in our Consolidated Statement of Operations.

(6) We used the proceeds from this offering to pay down outstanding borrowings on the 2017 Revolving Credit Facility, repay the
Sterling term loan, and fund the tender offer to purchase $350 million of the 4.375% Senior Notes due 2023 and the payment of
accrued interest and related fees, premiums and expenses.

(7) Actual borrowing is in GBP and remeasured to USD. The Sterling term loan was settled in March 2021 using proceeds from the

3.250% 2033 Senior Notes offering.

(8) Omega OP is the obligor on this borrowing.

(9)

The weighted average interest rate of the OP Term Loan has been adjusted to reflect the impact of the interest rate swaps that
effectively fix the LIBOR based portion of the interest rate at 1.84%

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

(11) Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including
financial covenants. As of December 31, 2021 and 2020, we were in compliance with all affirmative and negative covenants,
including financial covenants, for our secured and unsecured borrowings.

F-46

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Secured Borrowings

HUD Mortgage Debt

On October 31, 2019, we assumed approximately $389 million in mortgage loans guaranteed by HUD.
The HUD loans have maturity dates between 2046 and 2052 with fixed interest rates ranging from 2.82%
per annum to 3.24% per annum. The HUD loans may be prepaid subject to an initial penalty of 10% of the
remaining principal balances in the first year and the prepayment penalty decreases each subsequent year by
1% until no penalty is required.

On August 26, 2020, we paid approximately $13.7 million to retire two mortgage loans guaranteed by
HUD that were assumed in 2019 and had an average interest rate of 3.08% per annum with maturities in
2051 and 2052. The payoff included a $0.9 million prepayment fee which is included in loss on debt
extinguishment on our Consolidated Statements of Operations.

All HUD loans are subject to the regulatory agreements that require escrow reserve funds to be
deposited with the loan servicer for mortgage insurance premiums, property taxes, debt service and capital
replacement expenditures. As of December 31, 2021,
the Company has total escrow reserves of
$27.5 million with the loan servicer that is reported within other assets on the Consolidated Balance Sheets.

Unsecured Borrowings

Revolving Credit Facility

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

loans denominated in Euros,

The Revolving Credit Facility bears interest at LIBOR (or in the case of loans denominated in GBP,
the Sterling overnight index average reference rate plus an adjustment of 0.1193% per annum, and in the
case of
the Euro interbank offered rate, or EURIBOR) plus an
applicable percentage (with a range of 95 to 185 basis points) based on our credit ratings. The Revolving
Credit Facility matures on April 30, 2025, subject to Omega’s option to extend such maturity date for two
six-month periods. The Revolving Credit Facility may be drawn in Euros, GBP, Canadian Dollars
(collectively, “Alternative Currencies”) or USD, with a $1.15 billion tranche available in USD and a
$300 million tranche available in Alternative Currencies. For purposes of the Revolving Credit Facility,
references to LIBOR include the Canadian dealer offered rates for amounts offered in Canadian Dollars
and any other Alternative Currency rate approved in accordance with the terms of the 2021 Omega Credit
Agreement for amounts offered in any other non-LIBOR quoted currency, as applicable. The Revolving
Credit Facility includes customary LIBOR replacement language, including, but not limited to, the use of
rates for U.S. dollar-denominated borrowings based on the secured overnight financing rate (“SOFR”)
recommended by the Alternative Reference Rates Committee, a steering committee comprised of U.S.
financial market participants, as a replacement rate for LIBOR. SOFR is a broad measure of the cost of
borrowing cash in the overnight U.S. Treasury repo market, and is administered by the Federal Reserve
Bank of New York.

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

F-47

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

OP Term Loan

On April 30, 2021, Omega OP entered into a credit agreement (the “2021 Omega OP Credit
Agreement”) providing it with a new $50 million senior unsecured term loan facility (the “OP Term Loan”).
The OP Term Loan replaces the $50 million senior unsecured term loan obtained in 2017 (the “2017 OP
Term Loan”) and the related credit agreement. The OP Term Loan bears interest at LIBOR plus an
applicable percentage (with a range of 85 to 185 basis points) based on our credit ratings. The OP Term
Loan includes customary LIBOR replacement language, including, but not limited to, the use of rates
based on SOFR. The OP Term Loan matures on April 30, 2025, subject to Omega OP’s option to extend
such maturity date for two, six-month periods.

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

2017 Omega Credit Facilities

On May 25, 2017, Omega entered into a credit agreement (the “2017 Omega Credit Agreement”) for a
new $1.8 billion senior unsecured revolving and term loan credit facility, consisting of a $1.25 billion senior
unsecured multicurrency revolving credit facility (the “2017 Revolving Credit Facility”), a $425 million
senior unsecured U.S. Dollar term loan facility (the “U.S. Term Loan”), and a £100 million senior
unsecured British Pound Sterling term loan facility (the “Sterling Term Loan” and, together with the 2017
Revolving Credit Facility and the U.S. Term Loan Facility, collectively, the “2017 Omega Credit Facilities”).

In 2020, we repaid the outstanding balance on our U.S. Term Loan and wrote-off $0.8 million of
unamortized deferred costs to loss on debt extinguishment on our Consolidated Statements of Operations.
In 2021, we repaid the outstanding balance on our 2017 Revolving Credit Facility and Sterling Term Loan
using a portion of the proceeds from the 2033 Senior Notes offering and wrote-off $0.2 million of
unamortized deferred costs relating to the Sterling Term Loan to loss on debt extinguishment on our
Consolidated Statements of Operations. In April 2021, the 2017 Revolving Credit Facility was replaced by
the Revolving Credit Facility.

2017 OP Term Loan

On May 25, 2017, Omega OP entered into a credit agreement (the “2017 Omega OP Credit
Agreement”) providing it with a new $100 million senior unsecured term loan facility (the “2017 OP Term
Loan”). The 2017 OP Term Loan bore interest at LIBOR plus an applicable percentage (with a range of 90
to 190 basis points) based on our ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings. At
December 31, 2020, we had $50.0 million in outstanding borrowings under this facility. In April 2021, The
2017 OP Term loan was replaced by the OP Term Loan.

Amended 2015 Term Loan Facility

On May 25, 2017, Omega entered into an amended and restated credit agreement (the “Amended 2015
Credit Agreement”), which amended and restated our previous $250 million senior unsecured term loan
facility (the “Amended 2015 Term Loan Facility”). The Amended 2015 Term Loan Facility bore interest at
LIBOR plus an applicable percentage (with a range of 140 to 235 basis points) based on our ratings from
Standard & Poor’s, Moody’s and/or Fitch Ratings. We repaid the Amended 2015 Term Loan Facility in
October 2020 with proceeds from the senior notes issuance and wrote-off $0.7 million of unamortized
deferred costs to loss on debt extinguishment on our Consolidated Statements of Operations.

Subordinated Debt

In connection with a 2010 acquisition, we assumed five separate $4.0 million subordinated notes
bearing interest at 9% per annum that mature on December 21, 2021. Interest on these notes is due
quarterly with the principal balance due at maturity. As discussed in Note 5 — Contractual Receivables and
Other Receivables and Lease Inducements, to the extent that the operator of the facilities (Gulf Coast) fails
to pay rent when due to us under our existing master lease, we have the right to offset the amounts owed to

F-48

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

us against the amounts we owe to the lender under the notes. As of December 31, 2021, we have offset
$1.3 million of accrued interest and $20.0 million of principal under the Subordinated Debt against the
uncollected receivables of Gulf Coast. Following the application of these offsets, Omega has no further
obligations under the Subordinated Debt.

General

Parent and Omega OP, on a combined basis, have no material assets, liabilities or operations other than
financing activities (including borrowings under the senior unsecured revolving and term loan credit
facility, OP term loan and the outstanding senior notes) and their investments in non-guarantor
subsidiaries. Substantially all of our assets are held by non-guarantor subsidiaries.

The required principal payments, excluding the premium or discount and deferred financing costs on
our secured and unsecured borrowings, for each of the five years following December 31, 2021 and the
aggregate due thereafter are set forth below:

2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(in thousands)
9,945
$
357,904
408,144
458,393
608,648
3,469,047
$5,312,081

NOTE 15 — DERIVATIVES AND HEDGING

Cash Flow Hedges of Interest Rate Risk

We enter into interest rate swaps in order to maintain a capital structure containing targeted amounts
of fixed and floating-rate debt and manage interest rate risk. Interest rate swaps designated as cash flow
hedges involve the receipt of variable amounts from a counterparty in exchange for our fixed-rate payments.
These interest rate swap agreements are used to hedge the variable cash flows associated with variable-rate
debt.

As a result of exposure to interest rate movements associated with the Amended 2015 Term Loan
Facility, on December 16, 2015, we entered into various forward-starting interest rate swap arrangements,
which effectively converted $250 million of our variable-rate debt based on one-month LIBOR to an
aggregate fixed rate of approximately 3.80% effective December 30, 2016. The effective fixed rate achieved
by the combination of the Amended 2015 Term Loan Facility and the interest rate swaps could fluctuate up
by 55 basis points or down by 40 basis points based on future changes to our credit ratings. Each of these
swaps had a scheduled maturity date of December 15, 2022. In October 2020, we terminated these
$250.0 million of notional value interest rate swaps in connection with the repayment of the Amended 2015
Term Loan Facility and paid our swap counterparties $10.3 million which is recorded in loss on debt
extinguishment on our Consolidated Statements of Operations.

On March 27, 2020, we entered into five forward starting swaps totaling $400 million. We designated
the forward starting swaps as cash flow hedges of interest rate risk associated with interest payments on a
forecasted issuance of fixed rate long-term debt, initially expected to occur within the next five years. The
swaps are effective on August 1, 2023 and expire on August 1, 2033 and were issued at a fixed rate of
approximately 0.8675%. In March 2021, in conjunction with the issuance of $700 million aggregate
principal amount of our 3.25% Senior Notes due 2033, we discontinued hedge accounting for these five
forward starting swaps. Simultaneously, we re-designated these swaps in new cash flow hedging

F-49

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

relationships of interest rate risk associated with interest payments on another forecasted issuance of
long-term debt. We are hedging our exposure to the variability in future cash flows for forecasted
transactions over a maximum period of 46 months (excluding forecasted transactions related to the
payment of variable interest on existing financial instruments).

In addition to the forward swaps discussed above, we also assumed various interest rate swap contracts
in connection with the MedEquities Merger on May 17, 2019. We designated the interest rate swap
contracts as cash flow hedges of interest rate risk associated with the 2017 Omega OP Credit Agreement.
The assumed interest rate swap contracts effectively converted $75 million of our 2017 Omega OP Credit
Agreement to an aggregate fixed rate of approximately 3.29% through February 10, 2022. The effective
fixed rate achieved by the combination of the 2017 Omega OP Credit Agreement and the interest rate swaps
could fluctuate up by 55 basis points or down by 45 basis points based on future changes to our credit
ratings. In October 2020, we terminated $25.0 million of notional value interest rate swaps in connection
with the partial repayment and paid our swap counterparty $0.6 million which is recorded in loss on debt
extinguishment on our Consolidated Statements of Operations. As of December 31, 2021, we have two
interest rate swaps remaining with aggregate notional amounts of $50.0 million that are designated as
hedges against our exposure to changes in interest payment cash flow fluctuations in the variable interest
rates on the OP Term Loan. The OP Term Loan will be unhedged for the period after February 10, 2022
through its maturity on April 30, 2025.

Foreign Currency Forward Contracts and Debt Designated as Net Investment Hedges

We use debt denominated in GBP and foreign currency forward contracts to hedge a portion of our

net investment in the U.K. against fluctuations in foreign exchange rates.

GBP denominated borrowings under the Sterling term loan and the 2017 Revolving Credit Facility,
were previously used to hedge a portion of our investments in the U.K. against fluctuations in GBP against
the USD. The GBP denominated borrowings under both debt instruments were deemed an effective hedge
from issuance in May 2017 until the settlement of the Sterling term loan and the repayment of the GBP
denominated borrowings under the 2017 Revolving Credit Facility in March 2021.

Concurrent with the settlement of the GBP denominated debt, we entered into four foreign currency
forwards with notional amounts totaling £174.0 million, that mature on March 8, 2024, to hedge a portion
of our net investments in the U.K., effectively replacing the terminated net investment hedge.

The location and the fair value of derivative instruments designated as hedges, at the respective balance

sheet dates, were as follows:

December 31, December 31,

2021

2020

(in thousands)

Cash flow hedges:

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$32,849
96
$

$17,005
955
$

Net investment hedges:

Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 6,754

$ —

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

NOTE 16 — FINANCIAL INSTRUMENTS

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

F-50

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 31, 2021 and 2020, the net carrying amounts and fair values of other financial

instruments were as follows:

December 31, 2021
Fair
Value

Carrying
Amount

December 31, 2020
Fair
Value

Carrying
Amount

(in thousands)

Assets:

Investments in direct financing leases – net . . . . . .
Mortgage notes receivable – net
. . . . . . . . . . . . .
Other investments – net . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

$

10,873
835,086
469,884
$1,315,843

$

10,873
869,715
476,664
$1,357,252

$

10,764
885,313
467,442
$1,363,519

$

10,764
924,353
474,552
$1,409,669

Liabilities:

2017 Revolving credit facility . . . . . . . . . . . . . . .
Revolving credit facility . . . . . . . . . . . . . . . . . . .
Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sterling term loan . . . . . . . . . . . . . . . . . . . . . . .
2017 OP term loan . . . . . . . . . . . . . . . . . . . . . .
OP Term loan . . . . . . . . . . . . . . . . . . . . . . . . . .
4.375% notes due 2023 – net . . . . . . . . . . . . . . . .
4.95% notes due 2024 – net . . . . . . . . . . . . . . . . .
4.50% notes due 2025 – net . . . . . . . . . . . . . . . . .
5.25% notes due 2026 – net . . . . . . . . . . . . . . . . .
4.50% notes due 2027 – net . . . . . . . . . . . . . . . . .
4.75% notes due 2028 – net . . . . . . . . . . . . . . . . .
3.625% notes due 2029 – net . . . . . . . . . . . . . . . .
3.375% notes due 2031 – net . . . . . . . . . . . . . . . .
3.25% notes due 2033 – net . . . . . . . . . . . . . . . . .
HUD mortgages – net . . . . . . . . . . . . . . . . . . . .
Subordinated debt – net . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total

$

— $
—
2,275
—
—
49,661
349,100
397,725
397,685
597,142
692,374
543,908
490,681
683,592
689,587
359,806
—
$5,253,536

— $ 101,158
—
—
2,275
2,275
136,453
—
49,896
—
50,000
—
696,981
365,243
396,714
427,184
396,924
427,440
596,437
667,524
690,909
766,003
542,899
607,249
489,472
519,430
681,802
705,810
683,151
—
367,249
394,284
20,083
—
$5,169,252
$5,615,593

$ 101,158
—
2,275
136,700
50,000
—
770,635
441,194
444,652
697,993
794,294
633,950
532,248
731,541
—
409,004
21,599
$5,767,243

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). 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.

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

•

•

•

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

Revolving credit facility and OP term loan: The carrying amount of these approximate fair value
because the borrowings are interest rate adjusted. Differences between carrying value and the fair
value in the table above are due to the inclusion of deferred financing costs in the carrying value.

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

F-51

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

•

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

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

NOTE 17 — TAXES

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

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

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

We currently own stock in certain subsidiary REITs. These subsidiary entities are required to
individually satisfy all of the rules for qualification as a REIT. If we fail to meet the requirements for
qualification as a REIT for any of the subsidiary REITs, it may cause the Parent REIT to fail the
requirements for qualification as a REIT also.

We have elected to treat certain of our active subsidiaries as TRSs. Our domestic TRSs are subject to
federal, state and local income taxes at the applicable corporate rates. Our foreign TRSs are subject to
foreign income taxes and may be subject to current-year income inclusion relating to ownership of a
controlled foreign corporation for U.S. income tax purposes. As of December 31, 2021, one of our TRSs
that is subject to income taxes at the applicable corporate rates had a net operating loss (“NOL”)
carry-forward of approximately $10.6 million. Our NOL carry-forward was fully reserved as of
December 31, 2021, with a valuation allowance due to uncertainties regarding realization. Under current
law, NOL carry-forwards generated up through December 31, 2017 may be carried forward for no more
than 20 years, and NOL carry-forwards generated in taxable years ended after December 31, 2017, may be
carried forward indefinitely. We do not anticipate that such changes will materially impact the computation
of Omega’s taxable income, or the taxable income of any Omega entity, including our TRSs.

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

Provision for federal, state and local income taxes
. . . . . . . . . . . . . . . . . . . . . . . .
Provision for foreign income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total provision for income taxes(1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended December 31,
2018
2020
2021
(in millions)
$1.3
3.6
$4.9

$0.8
2.0
$2.8

$1.4
2.4
$3.8

(1)

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

F-52

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a summary of deferred tax assets and liabilities:

December 31, December 31,

2021

2020

(in thousands)

Deferred tax assets:

Federal net operating loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2,221

$ 1,194

Deferred tax liability:
Foreign deferred tax liability(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance on deferred tax asset

(8,200)

(2,221)

(10,766)

(1,194)

Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(8,200)

$(10,766)

(1)

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

NOTE 18 — STOCKHOLDERS’ EQUITY

$300 Million 2019 Forward Equity Sale

In connection with a $300 million underwritten public offering, we entered into a forward equity sales
agreement on September 9, 2019 to sell 7.5 million shares of our common stock at an initial net price of
$40.01 per share, after underwriting discounts and commissions. On December 27, 2019, we settled the
forward equity sale agreement by physical delivery of 7.5 million shares of common stock at $39.45 per
share, net of dividends paid and interest received, for net proceeds of approximately $295.9 million.

$200 Million Stock Repurchase Program

On March 20, 2020, Omega’s Board of Directors authorized the repurchase of up to $200 million of
its outstanding common stock from time to time over the twelve months ending March 20, 2021. Omega
did not repurchase any of its outstanding common stock under this announced program during 2020 or
2021.

At-The-Market Offering Program

On September 3, 2015, we entered into separate Equity Distribution Agreements with several financial
institutions to sell $500 million of shares of our common stock from time to time through an
“at-the-market” (“ATM”) offering program (the “2015 ATM Program”). Sales of the shares, if any, were
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 paid each Manager compensation for sales of the shares
up to 2% of the gross sales price per share for shares sold through such Manager under the applicable
Equity Shelf Agreements.

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

F-53

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following is a summary of the shares issued under the 2021 and 2015 ATM Programs for each of

the years ended December 31, 2019, 2020, and 2021 (in millions except average price per share):

Year Ended

Shares issued

Average Net Price
Per Share(1)

Gross Proceeds

Commissions Net Proceeds

December 31, 2019 . . . . . . . . . . . .

December 31, 2020 . . . . . . . . . . . .

December 31, 2021 . . . . . . . . . . . .

3.1

4.2

4.2

$34.79

36.16

36.53

$112.2

155.1

155.1

$3.2

2.5

3.4

$109.0

152.6

151.7

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

Dividend Reinvestment and Common Stock Purchase Plan

We have a Dividend Reinvestment and Common Stock Purchase Plan (the “DRSPP”) that allows for
the reinvestment of dividends and the optional purchase of our common stock. On March 23, 2020, we
temporarily suspended the DRSPP and on December 17, 2020, we reinstated the DRSPP. The table below
presents information regarding the shares issued under the DRSPP for each of
the years ended
December 31, 2019, 2020, and 2021 (in millions):

Year Ended

Shares issued Gross Proceeds

December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.0

0.1

3.4

$115.1

3.7

126.7

Dividends

The Board of Directors has declared common stock dividends as set forth below:

Payment Date

Record Date
February 8, 2021 . . . . . . . . . . . . . . . . . February 16, 2021 . . . . . . . . . . . . . . . . . . .
May 3, 2021 . . . . . . . . . . . . . . . . . . . . May 17, 2021. . . . . . . . . . . . . . . . . . . . . . .
August 2, 2021. . . . . . . . . . . . . . . . . . . August 13, 2021 . . . . . . . . . . . . . . . . . . . . .
November 5, 2021 . . . . . . . . . . . . . . . . November 15, 2021 . . . . . . . . . . . . . . . . . .
February 7, 2022 . . . . . . . . . . . . . . . . . February 15, 2022 . . . . . . . . . . . . . . . . . . .

Dividend per
Common Share
$0.67
0.67
0.67
0.67
0.67

Per Share Distributions

Per share distributions by our Company were characterized in the following manner for income tax

purposes (unaudited):

Common

Year Ended December 31,

2021

2020

2019

Ordinary income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1.987

$1.961

$1.763

Return of capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.117
0.576

0.654
0.065

0.591
0.296

Total dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2.680

$2.680

$2.650

F-54

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For additional information regarding dividends, see Note 17 — Taxes.

Accumulated Other Comprehensive Income (Loss)

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

applicable:

As of and for the
Year Ended December 31,

2021

2020

2019

(in thousands)

Foreign Currency Translation:

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(18,427) $(35,100) $(47,704)

Translation (loss) gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6,302)

16,595

12,646

Realized gain (loss)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

717

78

(42)

Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(24,012)

(18,427)

(35,100)

Derivative Instruments:

Cash flow hedges:

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17,718

(2,369)

3,994

Unrealized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized gain (loss)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,788
2,901

34,712
(14,625)

(7,071)
708

30,407

17,718

(2,369)

Net investment hedges:

Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13,331)

(4,420)

70

Unrealized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,743

(8,911)

(4,490)

Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9,588)

(13,331)

(4,420)

Total accumulated other comprehensive loss before noncontrolling interest . . . .

(3,193)

(14,040)

(41,889)

Add: portion included in noncontrolling interest . . . . . . . . . . . . . . . . . . .

993

1,272

2,031

Total accumulated other comprehensive loss for Omega . . . . . . . . . . . . . . . . . $ (2,200) $(12,768) $(39,858)

(1)

Expenses related to our effective cash flow hedges are recorded within interest expense. As noted in Note 15 — Derivatives and
Hedging, we terminated $250.0 million of notional value interest rate swaps in October 2020 and reclassified the remaining
balance in AOCI to loss on debt extinguishment on the Consolidated Statements of Operations.

NOTE 19 — STOCK-BASED COMPENSATION

At December 31, 2021, we maintained several stock-based compensation plans as described below. For
the years ended December 31, 2021, 2020 and 2019, we recognized stock-based compensation of
$21.4 million, $18.8 million and $14.9 million, respectively, related to these plans.

Time-Based Restricted Equity Awards

Restricted stock, restricted stock units (“RSUs”) and profits interest units (“PIUs”) are subject to
forfeiture if the holder’s service to us terminates prior to vesting, subject to certain exceptions for certain
qualifying terminations of service or a change in control of the Company. Prior to vesting, ownership of
the shares/units cannot be transferred. The restricted stock has the same dividend and voting rights as our
common stock. RSUs accrue dividend equivalents but have no voting rights. PIUs accrue distributions,
which are equivalent to dividend equivalents, but have no voting rights. Once vested, each RSU is settled by
the issuance of one share of Omega common stock and each PIU is settled by the issuance of one Omega

F-55

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

OP Unit, subject to certain conditions. Restricted stock and RSUs are valued at the price of our common
stock on the date of grant. The PIUs are valued using a Monte Carlo model to estimate fair value. We
expense the cost of these awards ratably over their vesting period.

Performance-Based Restricted Equity Awards

Performance-based restricted equity awards include performance restricted stock units (“PRSUs”) and
PIUs. PRSUs and PIUs are subject to forfeiture if the performance requirements are not achieved or if the
holder’s service to us terminates prior to vesting, subject to certain exceptions for certain qualifying
terminations of employment or a change in control of the Company. PRSUs and PIUs have varying
degrees of performance requirements to achieve vesting, and each PRSU and PIU award represents the
right to a variable number of shares of common stock or partnership units. Each PIU once earned is
convertible into one Omega OP Unit in Omega OP, subject to certain conditions. The vesting requirements
are based on either the (i) total shareholder return (“TSR”) of Omega or (ii) Omega’s TSR relative to other
REITs in the FTSE NAREIT Equity Health Care Index (“Relative TSR”). We expense the cost of these
awards ratably over their service period.

Prior to vesting and the distribution of shares or Omega OP Units, ownership of the PRSUs or PIUs
cannot be transferred. Dividend equivalents on the PRSUs are accrued and paid to the extent the applicable
performance requirements are met. While each PIU is unearned, the employee receives a partnership
distribution equal to 10% of the quarterly approved regular periodic distributions per Omega OP Unit.
Partnership distributions (which in the case of normal periodic distributions is equal to the total approved
quarterly dividend on Omega’s common stock), less the 10% already paid, on the PIUs accumulate, and if
the PIUs are earned, the accumulated distributions are paid. We used a Monte Carlo model to estimate the
fair value for the PRSUs and PIUs granted to the employees. The following are the significant assumptions
used in estimating the value of the awards for grants made on the following dates:

Closing price on date of grant . . . . . . . . . . .

January 1,
2021

$36.32

Dividend yield . . . . . . . . . . . . . . . . . . . . .

7.38%

January 1,
2020

$42.35

6.33%

January 1,
2019

$35.15

7.51%

Risk free interest rate at time of grant . . . . .

0.04% to 0.18%

1.63% to 1.68%

2.45% to 2.57%

Expected volatility . . . . . . . . . . . . . . . . . . .

42.55% to 57.79% 21.26% to 21.97% 21.78% to 22.76%

F-56

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the activity in restricted stock, RSUs, PRSUs, and PIUs for the years

ended December 31, 2019, 2020 and 2021:

Time-Based

Performance-Based

Number of
Shares/Omega
OP Units

Weighted -
Average Grant-
Date Fair Value
per Share

Non-vested at December 31, 2018 . . . . .

358,873

Granted during 2019 . . . . . . . . . . . .

160,158

Cancelled during 2019 . . . . . . . . . . .

(32,376)

Vested during 2019 . . . . . . . . . . . . . .

(188,063)

Non-vested at December 31, 2019 . . . . .

298,592

Granted during 2020 . . . . . . . . . . . .

158,572

Cancelled during 2020 . . . . . . . . . . .

(2,006)

Vested during 2020 . . . . . . . . . . . . . .

(184,480)

Non-vested at December 31, 2020 . . . . .

270,678

Granted during 2021 . . . . . . . . . . . .

210,429

Cancelled during 2021 . . . . . . . . . . .

(14,157)

Forfeited during 2021 . . . . . . . . . . . .
Vested during 2021(2)
. . . . . . . . . . . .

—
(148,538)

29.44

35.20

30.38

31.01

31.44

39.88

42.05

29.28

37.78

36.52

36.58

—
34.30

Number of
Shares/Omega
OP Units

2,169,432

822,584

(125,885)

(465,044)

2,401,087

1,208,537

(54,076)

(658,052)

2,897,496

1,232,178

(188,128)

(746,357)
(973,142)

Weighted -
Average Grant-
Date Fair Value
per Share

Total
Compensation
Cost (1)
(in millions)

$17.82

$27.00

$30.80

13.04

14.80

14.57

15.89

13.01

17.11

16.52

14.85

14.24

18.76

18.01

14.83
10.33

Non-vested at December 31, 2021 . . . . .

318,412

$38.62

2,222,047

$17.94

(1)

(2)

Total compensation cost to be recognized on the awards based on grant date fair value.

PRSUs are shown as vesting in the year that the Compensation Committee determines the level of achievement of the applicable
performance measures.

As of December 31, 2021, unrecognized compensation costs related to unvested awards to employees is

as follows:

•

•

•

•

$5.3 million on RSUs and PIUs expected to be recognized over a weighted average period of
approximately 36 months.

$0.7 million on RSUs and PIUs expected to be recognized over a weighted average period of
approximately 12 months.

$12.4 million on TSR PRSUs and PIUs expected to be recognized over a weighted average period
of approximately 47 months.

$14.8 million on Relative TSR PRSUs and PIUs expected to be recognized over a weighted
average period of approximately 46 months.

In addition, we have a deferred stock compensation plan that allows employees and directors the
ability to defer the receipt of stock awards (units). The deferred stock awards (units) participate in future
dividend equivalents as well as the change in the value of
the Company’s common stock. As of
December 31, 2021 and 2020, the Company had 630,623 and 537,236 deferred stock units outstanding.

Tax Withholding for Stock Compensation Plans

Stock withheld to pay tax withholdings for equity instruments granted under stock-based payment
arrangements for the years ended December 31, 2021, 2020 and 2019, was $4.6 million, $4.7 million and
$4.8 million, respectively.

F-57

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Shares Available for Issuance for Compensation Purposes

On June 8, 2018, at the Annual Meeting of Stockholders, our stockholders approved the 2018 Stock
Incentive Plan (the “2018 Plan”), which amended and restated the Company’s 2013 Stock Incentive Plan
(the “2013 Plan”). The 2018 Plan is a comprehensive incentive compensation plan that allows for various
types of equity-based compensation, including RSUs (including PRSUs), stock awards (including restricted
stock), deferred RSUs, incentive stock options, non-qualified stock options, stock appreciation rights,
(including
dividend equivalent
performance-based cash awards), PIUs and other stock-based awards. The 2018 Plan increased the number
of shares of common stock available for issuance under the 2013 Plan by 4.5 million.

certain cash-based awards

rights, performance unit

awards,

As of December 31, 2021, approximately 2.8 million shares of common stock were reserved for

issuance to our employees, directors and consultants under our stock incentive plans.

NOTE 20 — COMMITMENTS AND CONTINGENCIES

Shareholder Litigation

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

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

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

F-58

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

The Company believes that the claims asserted against it in these lawsuits are without merit and

intends to vigorously defend against them.

Other

Gulf Coast Subordinated Debt

In August 2021, we filed suit in the Circuit Court for Baltimore County against the holders of certain
Subordinated Debt associated with our Gulf Coast master lease agreement, following an assertion by the
holders that our prior exercise of offset rights in connection with Gulf Coast’s non-payment of rent had
resulted in defaults under the terms of the Subordinated Debt. The suit seeks a declaratory judgment to,
among other items, declare that the aggregate amount of unpaid rent due from Gulf Coast under the
master lease agreement exceeds all amounts which otherwise would be due and owing by Omega Obligor
under the Subordinated Debt, and that all principal and interest due and owing under the Subordinated
Debt may be (and was) offset in full as of December 31, 2021. In October 2021, the defendants in the case
filed a motion to dismiss for lack of personal jurisdiction, with a hearing scheduled on the motion for
February 25, 2022. While Omega believes Omega Obligor is entitled to the enforcement of the offset rights
sought in the action, the outcome of litigation is unpredictable, and Omega cannot predict the outcome of
the declaratory judgment action. See Note 5 — Contractual Receivables and Other Receivables and Lease
Inducements — Gulf Coast Health Care, LLC.

Lakeway Realty, L.L.C.

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

F-59

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

Indemnification Agreements

In connection with certain facility transitions, we have agreed to indemnify certain operators in certain
events. As of December 31, 2021, our maximum funding commitment under these indemnification
agreements was approximately $5.6 million. Claims under these indemnification agreements may be made
within 18 months to 72 months of the transition date. These indemnification agreements were provided to
certain operators in connection with facility transitions and generally would be applicable in the event that
the prior operators do not perform under their transition agreements.

Commitments

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

Total commitments(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts funded to date(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remaining commitments(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 763,698
(518,960)

$ 244,738

(1)

(2)

(3)

Includes our $177.7 million commitment relating to the redevelopment of the real estate property located in Washington, D.C.
discussed in Note 3 — Real Estate Acquisitions.

Includes finance costs.

This amount excludes our remaining commitments to fund under our other investments of approximately $50.1 million.

Environmental Matters

As of December 31, 2021 and 2020, we had identified conditional asset retirement obligations
primarily related to the future removal and disposal of asbestos that is contained within certain of our real
estate investment properties. The asbestos is appropriately contained, and we believe we are compliant with
current environmental regulations. If these properties undergo major renovations or are demolished, certain
environmental regulations are in place, which specify the manner in which asbestos must be handled and
disposed. We are required to record the fair value of these conditional liabilities if they can be reasonably
estimated. As of December 31, 2021 and 2020, no liability for conditional asset retirement obligations was
recorded on our accompanying Consolidated Balance Sheets.

F-60

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 21 — SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH
FLOWS

The following are supplemental disclosures to the consolidated statements of cash flows for the years

ended December 31, 2021, 2020 and 2019:

Year Ended December 31,

2021

2020

2019

(in thousands)

Reconciliation of cash and cash equivalents and restricted cash:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 20,534

$ 163,535

$ 24,117

Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,877

4,023

9,263

Cash, cash equivalents and restricted cash at end of year . . . . . . . .

$ 24,411

$ 167,558

$ 33,380

Supplemental information:

Interest paid during the year, net of amounts capitalized . . . . . . . .

$214,406

$ 216,206

$ 205,943

Taxes paid during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 6,288

$

6,974

$

5,097

Non cash investing activities

Non-cash acquisition of business . . . . . . . . . . . . . . . . . . . . . . . . .

$

— $ (1,826) $(566,966)

Non-cash acquisition of real estate . . . . . . . . . . . . . . . . . . . . . . .

$ (58,595) $

— $(531,801)

Non-cash proceeds from sale of real estate investments . . . . . . . . . .

$

— $ 83,910

$

Non-cash placement of mortgage principal . . . . . . . . . . . . . . . . . .

$ (7,000) $ (86,936) $

Non-cash collection of mortgage principal

. . . . . . . . . . . . . . . . . .

$ 58,595

$

— $

—

—

—

Non-cash surrender of mortgage . . . . . . . . . . . . . . . . . . . . . . . . .

Non-cash investment in other investments

. . . . . . . . . . . . . . . . . .

$

$

— $

— $ 11,874

— $(121,139) $ (27,408)

Non-cash proceeds from other investments . . . . . . . . . . . . . . . . . .

$ 7,000

$ 68,025

$ 149,542

Non-cash settlement of direct financing lease . . . . . . . . . . . . . . . .

Initial non-cash right of use asset – ground leases . . . . . . . . . . . . .

Initial non-cash lease liability – ground leases . . . . . . . . . . . . . . . .

$

$

$

— $

— $

— $

— $

— $

4,970

5,593

— $ (5,593)

Non cash financing activities

Debt assumed in merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

— $

— $ 285,100

— $
$
$
— $
$ (20,000) $
$ 23,457
$ 3,010

— $ 281,865
— $ 388,627
(6,459)
(7,757)
4,490

$
$
$

6,459
$ 19,788
8,911
$

Stock exchanged in merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of other long-term borrowings . . . . . . . . . . . . . . . . . .
Non-cash borrowing (repayment) of other long-term borrowings . .
Change in fair value of cash flow hedges . . . . . . . . . . . . . . . . . . . .
Remeasurement of debt denominated in a foreign currency . . . . . .

F-61

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 22 — EARNINGS PER SHARE

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

Year Ended December 31,

2021

2020

2019

(in thousands, except per share amounts)

Numerator:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$428,302

$163,545

$351,947

Deduct: net income attributable to noncontrolling interests . . . . . . . .

(11,563)

(4,218)

(10,824)

Net income available to common stockholders

. . . . . . . . . . . . . . . .

$416,739

$159,327

$341,123

Denominator:

Denominator for basic earnings per share . . . . . . . . . . . . . . . . . . . .

236,933

227,741

213,404

Effect of dilutive securities:

Common stock equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net forward share contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

785

—

Noncontrolling interest – Omega OP Units . . . . . . . . . . . . . . . . . . .

6,620

1,239

—

6,124

1,753

179

6,789

Denominator for diluted earnings per share . . . . . . . . . . . . . . . . . .

244,338

235,104

222,125

Earnings per share – basic:

Net income available to common stockholders

. . . . . . . . . . . . . . . .

Earnings per share – diluted:

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

$

1.76

1.75

$

$

0.70

0.70

$

$

1.60

1.58

In September 2019, we entered into a forward equity sales agreement to sell up to an aggregate of
7.5 million shares of our common stock at an initial net price of $40.01 per share, after underwriting
discounts and commissions. On December 27, 2019, we completed the forward equity sale and issued the
7.5 million shares of common stock at a net price of $39.45 per share, and received approximately
$295.9 million of net proceeds. See Note 18 — Stockholders’ Equity — $300 Million Forward Equity Sale.
The shares issuable prior to settlement of the forward equity sales agreement are reflected in the diluted
earnings per share calculations using the treasury stock method. Under this method, the number of our
common shares used in calculating diluted earnings per share is deemed to be increased by the excess, if any,
of the number of common shares that would be issued upon full physical settlement of the forward equity
sales agreement over the number of common shares that could be purchased by us in the market (based on
the average market price during the period) using the proceeds receivable upon full physical settlement
(based on the adjusted forward sale price at the end of the reporting period).

NOTE 23 — SUBSEQUENT EVENTS

Asset Acquisitions

On January 1, 2022, we acquired a Maryland SNF for $8.2 million and amended an operator’s existing
lease, with an initial term expiring on December 31, 2032, to include the acquired facility. The incremental
base rent for the additional facility in the initial year is $0.8 million and includes annual escalators of 2.5%.

On January 31, 2022, we acquired one care home facility in the U.K. (similar to ALFs in the U.S.) for
approximately $8.2 million. The facility was added to an existing operator’s master lease with an initial cash
yield of 8.0% with 2.5% annual escalators.

F-62

OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$500 Million Stock Repurchase Program

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

Operator Collectibility

In January and February 2022, an operator representing 3.4% of total revenue (excluding the impact of
write-offs) for the year ended December 31, 2021, did not pay its contractual amounts due under its lease
agreement. The operator asked for a short-term rent deferral, and negotiations are on-going. Omega holds
a $1.0 million letter of credit from this operator.

As discussed in Note 8 — Other Investments under “Revolving Credit Facility — $20 million”, we also
have a $20.0 million revolving credit facility with this operator, and the operator paid contractual interest
under the facility in January and February 2022. As of December 31, 2021, the total outstanding principal
due under the credit facility was $16.0 million. The credit facility is secured by a first lien on the accounts
receivable of the operator.

Guardian

In connection with on-going restructuring negotiations with Guardian,

in February 2022, we
completed the sale of two facilities for $3.1 million in gross proceeds, previously leased to Guardian, and
included in held for sale as of December 31, 2021. In February 2022, we also agreed to re-lease 7 facilities,
also previously leased to Guardian, to another operator. The new 7 facility lease has an initial term expiring
January 31, 2027. The base rent in the initial year is $0.9 million and increases to $1.2 million in the second
year with annual escalators of 2.5% thereafter.

On February 15, 2022, Guardian completed the sale of three facilities, subject to a mortgage loan with
Omega (see Note — 8 Mortgage Notes Receivable). Concurrent with the sale, Omega agreed to release the
mortgage liens on these facilities in exchange for a partial paydown of $21.7 million.

Guardian failed to make rent and interest payments in January and February 2022 and discussions on

restructuring the remaining Guardian lease facilities are on-going.

F-63

OMEGA HEALTHCARE INVESTORS, INC.
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

Description

Year Ended December 31, 2019:

Allowance for doubtful accounts:

Balance at
Beginning of
Period

Charged to
Provision
Accounts

Deductions or
Other(1)

Balance at
End of
Period

Contractual receivables(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage notes receivable(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Direct financing leases(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1,075
4,905
103,200

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$109,180

$ —
—
7,917

$7,917

$

1,075
—
110,900

$111,975

$ —
4,905
217

$5,122

(1) Uncollectible accounts written off, net of recoveries or adjustments.

(2)

(3)

The Company adopted Topic 842 on January 1, 2019. As a result of this adoption, lease related receivables are written off through rental income, as
opposed to the provision account. As such, our lease receivables are no longer considered in the valuation and qualifying accounts.

The Company adopted Topic 326 on January 1, 2020 which addressed expected credit losses on our mortgage notes receivables, other investments, and
direct financing leases. As a result of this adoption, we have disclosed a rollforward of our allowance for credit loss related to these financial instruments
for 2020 and 2021 in Note 9 — Allowance for Credit Losses.

F-64

OMEGA HEALTHCARE INVESTORS, INC.
SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION
(in thousands)
December 31, 2021
Cost Capitalized
Subsequent to
Acquisition

Gross Amount at
Which Carried at
Close of Period(3) (5)

Initial Cost to
Company

Description(1)

Encumbrances

Land

Buildings and
Improvements Improvements

Carrying
Cost

Other(6)

Land(8)

Buildings and
Improvements

Total

Accumulated
Depreciation(4)

Date of
Construction

Date
Acquired(7)

Life on Which
Depreciation
in Latest
Income Statements
is Computed

.

.

.

.
.

.
.

.
.
.
Alabama (SNF)
.
.
Arizona (ALF, SNF, ILF)
.
.
.
Arkansas (ALF, SNF) .
.
California (ALF, SH, SNF) .
.
.
Colorado (ILF, SNF)
.
.
.
Connecticut (ALF)
.
.
Florida (ALF, SNF, ILF)
.
.
Georgia (ALF, SNF)
.
.
.
Idaho (SNF) .
.
.
.
Illinois (ALF)
Indiana (ALF, ILF, IRF, MOB,
.
.
.
.
.
.
.
.

.
Iowa (SNF)
.
.
Kansas (SNF)
.
Kentucky (ALF, SNF) .
Louisiana (ALF, SNF) .

SH, SNF)

.
.
.
.
.

.
.
.
.
.

.
.
.

.
.
.

.
.
.

.
.
.

.
.

.
.

Maryland (SNF)

.

.

.

.

.

Massachusetts (ALF, SNF) .

Michigan (SNF)

.

.

.

.

.

Minnesota (ALF, ILF, SNF)

Mississippi (SNF) .

Missouri (SNF)

Montana (SNF)

.

.

.

.

.

.

.

.

.

.

.

Nevada (BHS, SH, SNF) .

.

.

.

.

.

.

.

.

.

.

.

.

New Hampshire (ALF, SNF) .

New Jersey (ALF)

.

New Mexico (SNF) .

New York (ALF) .

.

.

.

.

North Carolina (SNF) .

.

.

.

.

.

.

.

.

.

.

.

.

.
.
.
.
.
.
.
.
.
.

.
.
.
.
.

.

.

.

.

.

.

.

.

.

.

.

.

.

.
.
.
.
.
.
.
.
.
.

.
.
.
.
.

.

.

.

.

.

.

.

.

.

.

.

.

.

(2)

(2)

(2)

(2)

Ohio (BHP, BHS, ALF, SH, SNF) .

Oklahoma (SNF) .

.

.

.

Oregon (ALF, SNF, ILF)

.

.

.

.

Pennsylvania (ALF, ILF, SNF)

Rhode Island (SNF) .

.

South Carolina (SNF) .

.

.

.

.

Tennessee (ALF, BHP, SNF)

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

Texas (ALF, BHS, ILF, IRF, MOB,
.
.

SH, SNF)

.

.

.

.

.

.

.

United Kingdom (ALF) .

Vermont (SNF) .
Virginia (ALF, SNF)

.

.

.
.

.
.

Washington (ALF, SNF) .

Washington DC (ALF)

West Virginia (SNF) .

Wisconsin (SNF) .

Total .

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.
.

.

.

.

.

.

.

.
.

.

.

.

.

.

.

.
.

.

.

.

.

.

.

.
.

.

.

.

.

.

$ 1,817 $
12,427
2,893
85,645
11,279
25,063
133,711
7,573
5,735
1,830
48,529

33,356
121,422
59,094
475,027
88,830
252,417
1,163,655
58,535
47,530
13,967
585,487

$ 12,916
2,639
8,517
5,671
7,790
7,308
34,151
5,071
1,514
1,054
5,374

$ — $
—
—
—
—
1,319
1,468
—
—
—
—

— $ 1,817 $
— 12,427
2,893
(36)
85,645
(478)
— 11,279
— 25,063
(12,968) 132,771
7,573
5,193
1,830
48,508

—
(542)
—
4,251

46,272 $
124,061
67,575
480,220
96,620
261,044
1,187,246
63,606
49,044
15,021
595,133

48,089
136,488
70,468
565,865
107,899
286,107
1,320,017
71,179
54,237
16,851
643,641

$(39,724) 1960 – 1982 1992 – 1997 31 years – 33 years
(26,680) 1949 – 1999 2005 – 2021 25 years – 40 years
(40,699) 1967 – 1988 1992 – 2014 25 years – 31 years
(125,678) 1938 – 2013 1997 – 2021 5 years – 35 years
(48,017) 1925 – 1975 1998 – 2016 20 years – 39 years
(55,417) 1968 – 2019 2010 – 2017 30 years – 33 years
(307,993) 1940 – 2020 1993 – 2021 2 years – 39 years
(25,967) 1964 – 1997 1998 – 2016 20 years – 40 years
(19,939) 1920 – 2008 1997 – 2014 25 years – 39 years

(660)

1999

2021

25 years

(182,771) 1942 – 2015 1992 – 2020 20 years – 40 years

590
4,092
15,556
6,676

15,053

23,621

380

10,502

8,803

4,914

1,319

8,811

1,782

12,953

6,008

118,606

24,197

32,637

2,296

7,331

32,331

3,299

8,480

12,976

82,261

90,275

318
35,435

14,759

68,017

1,973

399

9,757
38,693
130,819
95,486

124,671

143,172

16,120

52,585

191,448

89,535

11,698

92,797

19,837

58,199

45,285

176,921

295,248

422,645

19,934

125,133

435,591

23,487

76,912

268,846

856,947

369,310

6,005
376,943

186,802

—

66,946

4,581

—
14,219
7,239
4,878

6,038

17,750

—

5,972

827

11,216

—

8,350

1,463

157

1,318

—
—
—
448

—

—

—

—

—

—

—

—

—

1,559

—

— 40,543

8,718

15,445

—

5,354

17,017

3,805

2,860

6,634

336

345

—

—

—

—

—

—

—
590
—
4,092
— 15,556
6,676

(1,135)

— 15,053

(693)

23,621

—

380

— 10,502

—

(21,246)

—

—

—

8,803

4,906

1,319

8,811

1,782

— 12,953

—

6,008

— 118,606

(714)

24,197

(1,108)

32,637

—

—

2,296

7,331

(20,859)

32,326

—

—

3,299

8,480

— 12,976

30,905

197

(40,400)

81,258

8,729

602
10,104

3,186

1,216

7,062

2,153

—

—
—

—

719

—

—

(20,739)

88,304

—
(459)

318
35,261

(68)

14,692

— 68,017

—

—

1,973

399

9,757
52,912
138,058
99,677

130,709

160,229

16,120

58,557

10,347
57,004
153,614
106,353

145,762

183,850

16,500

69,059

2010

1965

(5,280)
(21,379) 1957 – 1977 2005 – 2011
(48,747) 1964 – 2002 1999 – 2016 20 years – 33 years
(31,109) 1957 – 2020 1997 – 2019 22 years – 39 years

23 years
25 years

(42,393) 1921 – 1985 2008 – 2011 25 years – 30 years

(56,328) 1964 – 2017 1997 – 2014 20 years – 33 years

(7,243) 1964 – 1973

(17,921) 1966 – 1983

2011

2014

25 years

33 years

192,275

201,078

(34,596) 1965 – 2008 2009 – 2019 20 years – 30 years

79,513

11,698

84,419

13,017

(20,440) 1955 – 1994 1999 – 2019 25 years – 33 years

(3,124) 1963 – 1971

2005

33 years

101,147

109,958

(28,830) 1972 – 2012 2009 – 2017 25 years – 33 years

21,300

59,915

46,603

217,464

303,588

437,327

19,934

130,487

431,754

27,292

79,772

275,480

848,652

359,271

6,607
386,762

189,987

1,935

74,008

6,734

23,082

72,868

52,611

336,070

327,785

469,964

22,230

137,818

464,080

30,591

88,252

288,456

929,910

447,575

6,925
422,023

204,679

69,952

75,981

7,133

(11,365) 1963 – 1999 1998 – 2006 33 years – 39 years

(1,702) 1999 – 2021 2019 – 2021

(11,692) 1960 – 1985

(12,823)

2020

2005

2015

25 years

33 years

25 years

(91,602) 1964 – 2019 1994 – 2019 25 years – 36 years

(111,269) 1929 – 2021 1994 – 2020 20 years – 39 years

(9,931) 1965 – 1993 2010 – 2013 20 years – 33 years

(17,595) 1959 – 2007 2005 – 2021 25 years – 33 years

(123,602) 1873 – 2012 2004 – 2021 20 years – 39 years

(15,085) 1965 – 1981

2006

39 years

(23,166) 1959 – 2007 2014 – 2016 20 years – 33 years

(97,816) 1968 – 2018 1992 – 2021 20 years – 31 years

(205,894) 1949 – 2019 1997 – 2021 20 years – 40 years

(74,447) 1700 – 2012 2015 – 2021 25 years – 30 years

(3,267)

1971

2004

39 years

(71,603) 1964 – 2017 2010 – 2021 25 years – 40 years

(38,783) 1930 – 2004 1999 – 2021 25 years – 33 years

—

N/A

2021

N/A

(45,384) 1961 – 1996 1994 – 2011 25 years – 39 years

(2,735)

1974

2005

33 years

$993,152 $7,731,673

$295,222

$46,934

$(117,194) $988,421 $7,961,366 $8,949,787

$(2,160,696)

(1)

The real estate included in this schedule is being used in either the operation of skilled nursing facilities (“SNF”), assisted living facilities (“ALF”),
independent living facilities (“ILF”), specialty facilities (consisting of behavioral health substance facilities (“BHS”), behavioral health psychology
facilities (“BHP”), independent rehabilitation facilities (“IRF”) and specialty hospitals (“SH”)) or medical office buildings (“MOB”), located in the states
or country indicated.

(2) Certain of the real estate indicated are security for the HUD loan borrowings totaling $359.8 million at December 31, 2021.

F-65

OMEGA HEALTHCARE INVESTORS, INC.
SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION (continued)
(in thousands)
December 31, 2021

(3)

(4)

Year Ended December 31,

2019

2020

2021

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$7,746,410

$8,985,994

$8,702,154

Acquisitions through foreclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions(a)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

143,753

1,201,924

(48,939)

170,997

Disposals/other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(228,151)

—

125,060

(69,913)

88,130

(427,117)

742,486

(44,673)

60,953

(511,133)

Balance at close of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$8,985,994

$8,702,154

$8,949,787

(a)

Includes approximately $750.6 million, $19.1 million and $58.6 million of non-cash consideration exchanged and/or valuation adjustments during
the years ended December 31, 2019, 2020 and 2021, respectively.

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,562,619

$1,787,425

$1,996,914

Provisions for depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dispositions/other

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

301,177

(76,371)

329,508

(120,019)

341,497

(177,715)

Balance at close of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,787,425

$1,996,914

$2,160,696

Year Ended December 31,

2019

2020

2021

The reported amount of our real estate at December 31, 2021 is greater than the tax basis of the real estate by approximately $41.0 million.

(5)
(6) Reflects bed sales, impairments (including the write-off of accumulated depreciation), land easements and impacts from foreign currency exchange rates.
(7)
(8)

To the extent that we acquired an entity previously owning the underlying facility, the acquisition date reflects the date that the entity acquired the facility.
Includes $72.1 million of construction in progress related to land, all other amounts related to construction in progress are reflected in buildings and
improvements.

F-66

OMEGA HEALTHCARE INVESTORS, INC.
SCHEDULE IV – MORTGAGE LOANS ON REAL ESTATE
(in thousands)
December 31, 2021

Grouping

Description(1)

First Mortgages

Interest
Rate

Fixed/
Variable

Final
Maturity
Date

Periodic Payment
Terms

Prior Liens

Face Amount
of Mortgages

Carrying
Amount of
Mortgages(3)(4)(6)

Carrying
Amount of
Loans Subject
to Delinquent
Principal or
Interest

Michigan (25 SNFs)

.

.

.

.

.

.

.

.

11.13%

F(2)

2029

Michigan (5 SNFs)

.

.

.

.

.

.

.

.

.

10.18%

F(2)

2029

Michigan (2 SNFs)

.

.

.

.

.

.

.

.

.

10.40%

F(2)

2029

Interest plus approximately $166.0 of
principal payable monthly with
$352,454 due at maturity

Interest plus approximately $12.0 of
principal payable monthly with $42,341
due at maturity

Interest plus approximately $3.0 of
principal payable monthly with $10,460
due at maturity

None

$415,000

$372,789

$ —

None

44,200

43,808

None

11,000

10,864

10.50%

10.81%

F(2)

F(2)

2032

2027

Interest payable monthly until maturity

Interest payable monthly until maturity

None

None

72,420

103,762

72,420

56,650

Ohio (8 SNFs)

.

.

.

.

.

.

.

.

.

.

Ohio (2 SNFs) and Pennsylvania (4
.
SNFs and 1 ALFs)

.

.

.

.

.

.

.

Texas (1 specialty facility) .

.

.

.

.

Massachusetts (1 specialty facility)

Tennessee (1 SNF)

Michigan (1 SNF)

10 Michigan (1 SNF)

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

11

Ohio (1 SNF) .

.

.

.

.

.

.

.

.

12 Michigan (8 SNFs and 1 ALF)

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

7.85%

F

2025

9.00%

F

2023

8.35%

9.38%

10.40%

9.50%

10.52%

F

F(2)

F(2)

F

F(2)

2015

2029

2029

2022

2029

13 Michigan (1 SNF)

.

.

.

.

.

.

.

.

.

10.40%

F(2)

2029

Capital Expenditure Mortgages

Interest plus approximately $139.0 of
principal payable monthly with $59,749
due at maturity

Interest plus approximately $55.0 of
principal payable monthly with $6,079
due at maturity

Past due

Interest payable monthly until maturity

Interest plus approximately $4.0 of
principal payable monthly with $17,613
due at maturity

Interest payable monthly until maturity

Interest plus approximately $15.0 of
principal payable monthly with $81,302
due at maturity

Interest plus approximately $2.9 of
principal payable monthly with $16,617
due at maturity

None

72,960

65,475

None

9,000

7,090

None

None

None

None

None

6,997

14,045

18,147

21,325

83,454

1,472

14,045

18,075

21,325

83,208

None

17,032

16,983

1

2

3

4

5

6

7

8

9

14 Michigan .

15 Michigan .

16 Michigan .

17 Michigan .

18 Michigan .

19 Michigan .

20 Michigan .

21 Michigan .

22 Michigan .

23 Michigan .

24 Michigan .

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

Construction Mortgages

25 Michigan (1 SNF)

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

Allowance for credit loss on
mortgage loans(7)
.

.

.

.

.

10.49%

12.18%

11.89%

11.60%

10.75%

10.18%

9.98%

9.36%

9.74%

10.49%

9.50%

F(2)

F(2)

F(2)

F(2)

F(2)

F(2)

F(2)

F(2)

F(2)

F(2)

F(2)

2029

2029

2029

2029

2029

2029

2029

2029

2029

2029

2029

Interest payable monthly until maturity

Interest payable monthly until maturity

Interest payable monthly until maturity

Interest payable monthly until maturity

Interest payable monthly until maturity

Interest payable monthly until maturity

Interest payable monthly until maturity

Interest payable monthly until maturity

Interest payable monthly until maturity

Interest payable monthly until maturity

Interest payable monthly until maturity

None

None

None

None

None

None

None

None

None

None

None

9.50%

F(2)

2023

Interest payable monthly until maturity

None

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

465

4,220

4,120

9,645

455

4,220

4,112

9,374

26,190

25,668

500

5,450

2,900

9,067

3,025

325

9,330

—

500

5,123

2,542

7,949

3,025

169

9,330

(21,585)

(1)

(2)
(3)

Loans included in this schedule represent first mortgages, capital expenditure mortgages and construction mortgages on facilities used in the delivery of
long-term healthcare of which such facilities are located in the states indicated.
Interest on the loans escalates annually at a fixed rate.
The aggregate cost for federal income tax purposes is approximately $909.3 million.

$964,579

$835,086

$58,122

F-67

—

—

—

56,650(5)

—

—

1,472(5)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

OMEGA HEALTHCARE INVESTORS, INC.
SCHEDULE IV – MORTGAGE LOANS ON REAL ESTATE (continued)
(in thousands)
December 31, 2021

(4)

Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions during period – new mortgage loans or additional fundings(a)
Deductions during period – collection of principal/other(b)

. . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . .

2019

$710,858

129,108

(66,403)

Allowance for credit loss on mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

Year Ended December 31,

2020

$773,563

149,957

(9,867)

(28,340)

2021

$ 885,313

93,891

(103,761)

(40,357)

Balance at close of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$773,563

$885,313

$ 835,086

(a)

The 2019 amount includes $0.3 million of non-cash interest paid-in-kind. The 2020 amount includes $0.6 million of non-cash interest paid-in-kind
and $86.9 million of non-cash placement of mortgage capital. The 2021 amount includes $0.2 million of non-cash interest paid-in-kind and
$7.0 million of non-cash placement of mortgage principal.

(b) The 2019 amount includes $11.9 million of non-cash deed-in-lieu of foreclosure. The 2021 amount includes $58.6 million of non-cash principal

reductions.

(5) Mortgage written down to the fair value of the underlying collateral.
(6) Mortgages included in the schedule which were extended during 2021 aggregated approximately $38.3 million.
(7)

The allowance for credit loss on mortgage loans represents the allowance calculated utilizing a PD and LGD methodology. For mortgages that the risk of
loss was evaluated on an individual basis, the allowance is included as a reduction to the carrying amount of the mortgage.

F-68

EXHIBIT
NUMBER

2.1

3.1

3.2

3.3

3.4

3.5

4.0

4.1

4.1A

4.1B

4.1C

4.1D

4.1E

INDEX TO EXHIBITS TO 2021 FORM 10-K

DESCRIPTION

Agreement and Plan of Merger, dated as of January 2, 2019, by and among Omega Healthcare
Investors, Inc., OHI Healthcare Properties Limited Partnership, MedEquities Realty Trust,
Inc., MedEquities OP GP, LLC and MedEquities Realty Operating Partnership, LP together
with First Amendment thereto dated March 26, 2019 (Incorporated by reference to Annex A
of Amendment No. 1 to Form S-4, filed March 29, 2019).

Articles of Amendment and Restatement of Omega Healthcare Investors, Inc., as amended.
(Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form
S-3ASR, filed September 3, 2015).

Articles Supplementary of Omega Healthcare Investors, Inc. filed with the State Department
of Assessments and Taxation of Maryland on November 5, 2019 (Incorporated by reference to
Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q, filed November 8, 2019).

Amended and Restated Bylaws of Omega Healthcare Investors, Inc. as of January 27, 2022
(Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed
January 27, 2022).

Certificate of Limited Partnership of OHI Healthcare Properties Limited Partnership
(Incorporated by reference to Exhibit 3.121 to the Company’s Form S-4, filed April 16, 2015).

Second Amended and Restated Agreement of Limited Partnership by and among Omega
Healthcare Investors, Inc., OHI Healthcare Properties Holdco, Inc., and Aviv Healthcare
Properties Limited Partnership (Incorporated by reference to Exhibit 10.11 to the Company’s
Current Report on Form 8-K, filed April 3, 2015).

See Exhibits 3.1 to 3.5.

Indenture, dated as of March 11, 2014, by and among the Company, the guarantors named
therein, and U.S. Bank National Association (Incorporated by reference to Exhibit 4.1 to the
Company’s Current Report on Form 8-K, filed March 11, 2014).

First Supplemental Indenture, dated as of June 27, 2014, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q, filed August 6,
2014).

Second Supplemental Indenture, dated as of November 25, 2014, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association, and that certain
Third Supplemental Indenture, dated as of January 23, 2015, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.4B to the Company’s Annual Report on Form 10-K, filed February 27,
2015).

Fourth Supplemental Indenture, dated effective as of March 2, 2015, among the Company,
each of
the subsidiary guarantors listed therein and U.S. Bank National Association
(Incorporated by reference to Exhibit 4.3B to the Company’s Quarterly Report on Form 10-Q,
filed May 8, 2015).

Fifth Supplemental Indenture, dated as of April 1, 2015, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3C to the Company’s Quarterly Report on Form 10-Q, filed May 8,
2015).

Sixth Supplemental Indenture, dated as of August 4, 2015, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q, filed November 6,
2015).

I-1

4.1F

4.1G

4.1H

4.1I

4.1J

4.1K

4.1L

4.1M

4.2

4.2A

4.2B

4.2C

Seventh Supplemental Indenture, dated as of November 9, 2015, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2F to the Company’s Annual Report on Form 10-K, filed February 29,
2016).

Eighth Supplemental Indenture, dated as of March 29, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, filed May 6, 2016).

Ninth Supplemental Indenture, dated as of May 13, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, filed August 5,
2016).

Tenth Supplemental Indenture, dated as of August 9, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, filed November 8,
2016).

Eleventh Supplemental Indenture, dated as of November 10, 2016, among the Company, each
of the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated
filed
by reference to Exhibit 4.2J to the Company’s Annual Report on Form 10-K,
February 24, 2017).

Twelfth Supplemental Indenture, dated as of March 17, 2017, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, filed May 5, 2017).

Thirteenth Supplemental Indenture, dated as of May 11, 2017, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Fourteenth Supplemental Indenture, dated as of May 25, 2017, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.1A to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Indenture, dated as of September 11, 2014, by and among the Company, the subsidiary
guarantors named therein, and U.S. Bank National Association (Incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed September 11, 2014).

First Supplemental Indenture, dated as of November 25, 2014, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association, and that certain
Second Supplemental Indenture, dated as of January 23, 2015, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.5A to the Company’s Annual Report on Form 10-K, filed February 27,
2015).

Third Supplemental Indenture, dated effective as of March 2, 2015, among the Company, each
of the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated
by reference to Exhibit 4.2B to the Company’s Registration Statement on Form S-4, filed
April 16, 2015).

Fourth Supplemental Indenture, dated as of April 1, 2015, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2B to the Company’s Registration Statement on Form S-4, filed
April 16, 2015).

I-2

4.2D

4.2E

4.2F

4.2G

4.2H

4.2I

4.2J

4.2K

4.2L

4.3

4.3A

4.3B

4.3C

Fifth Supplemental Indenture, dated as of August 4, 2015, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q, filed November 6,
2015).

Sixth Supplemental Indenture, dated as of November 9, 2015, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3E to the Company’s Annual Report on Form 10-K, filed February 29,
2016).

Seventh Supplemental Indenture, dated as of March 29, 2016, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q, filed May 6, 2016).

Eighth Supplemental Indenture, dated as of May 13, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q, filed August 5,
2016).

Ninth Supplemental Indenture, dated as of August 9, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q, filed November 8,
2016).

Tenth Supplemental Indenture, dated as of November 10, 2016, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3I to the Company’s Annual Report on Form 10-K, filed February 24,
2017).

Eleventh Supplemental Indenture, dated as of March 17, 2017, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q, filed May 5, 2017).

Twelfth Supplemental Indenture, dated as of May 11, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Thirteenth Supplemental Indenture, dated as of May 25, 2017, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2A to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Indenture, dated as of March 18, 2015, by and among the Company, the subsidiary guarantors
named therein and U.S. Bank National Association (Incorporated by reference to Exhibit 4.1
to the Company’s Current Report on Form 8-K, filed March 24, 2015).

First Supplemental Indenture, dated as of April 1, 2015, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.5A to the Company’s Quarterly Report on Form 10-Q, filed May 8,
2015).

Second Supplemental Indenture, dated as of August 4, 2015, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2A to the Company’s Registration Statement on Form S-4, filed
October 6, 2015).

Third Supplemental Indenture, dated as of November 9, 2015, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.2B to the Amendment to the Company’s Registration Statement on
Form S-4/A, filed November 12, 2015).

I-3

4.3D

4.3E

4.3F

4.3G

4.3H

4.3I

4.3J

4.4

4.4A

4.4B

4.4C

4.4D

4.4E

Fourth Supplemental Indenture, dated as of March 29, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q, filed May 6, 2016).

Fifth Supplemental Indenture, dated as of May 13, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q, filed August 5,
2016).

Sixth Supplemental Indenture, dated as of August 9, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q, filed November 8,
2016).

Seventh Supplemental Indenture, dated as of November 10, 2016, among the Company, each
of the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated
by reference to Exhibit 4.4G to the Company’s Annual Report on Form 10-K, filed
February 24, 2017).

Eighth Supplemental Indenture, dated as of March 17, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q, filed May 5, 2017).

Ninth Supplemental Indenture, dated as of May 11, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Tenth Supplemental Indenture, dated as of May 25, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.3A to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Indenture, dated as of September 23, 2015, by and among the Company, each of
the
subsidiary guarantors listed therein, and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed September 29,
2015).

First Supplemental Indenture, dated as of November 9, 2015, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.1A to the Company’s Registration Statement on Form S-4, filed
November 12, 2015).

Second Supplemental Indenture, dated as of March 29, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q, filed May 6, 2016).

Third Supplemental Indenture, dated as of May 13, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q, filed August 5,
2016).

Fourth Supplemental Indenture, dated as of August 9, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q, filed November 8,
2016).

Fifth Supplemental Indenture, dated as of November 10, 2016, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.5E to the Company’s Annual Report on Form 10-K, filed February 24,
2017).

I-4

4.4F

4.4G

4.4H

4.5

4.5A

4.5B

4.5C

4.5D

4.5E

4.6

4.6A

4.6B

4.7

4.8

Sixth Supplemental Indenture, dated as of March 17, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q, filed May 5, 2017).

Seventh Supplemental Indenture, dated as of May 11, 2017 among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Eighth Supplemental Indenture, dated as of May 25, 2017 among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.4A to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Indenture, dated as of July 12, 2016, by and among the Company, each of the subsidiary
guarantors listed therein, and U.S. Bank National Association (Incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed July 12, 2016).

First Supplemental Indenture, dated as of August 9, 2016, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.6A to the Company’s Quarterly Report on Form 10-Q,
filed
November 8, 2016).

Second Supplemental Indenture, dated as of November 10, 2016, among the Company, each of
the subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.6B to the Company’s Annual Report on Form 10-K, filed February 24,
2017).

Third Supplemental Indenture, dated as of March 17, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.6 to the Company’s Quarterly Report on Form 10-Q, filed May 5, 2017).

Fourth Supplemental Indenture, dated as of May 11, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.5 to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Fifth Supplemental Indenture, dated as of May 25, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.5A to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Indenture, dated as of April 4, 2017, by and among the Company, each of the subsidiary
guarantors listed therein and U.S. Bank National Association (Incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed April 4, 2017).

First Supplemental Indenture, dated as of May 11, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.6A to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Second Supplemental Indenture, dated as of May 25, 2017, among the Company, each of the
subsidiary guarantors listed therein and U.S. Bank National Association (Incorporated by
reference to Exhibit 4.6B to the Company’s Quarterly Report on Form 10-Q, filed August 9,
2017).

Indenture, dated as of September 20, 2019, among the Company, OHI Healthcare Properties
Limited Partnership and U.S. Bank National Association (Incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed September 20, 2019).

Indenture, dated as of October 9, 2020, among the Company, OHI Healthcare Properties
Limited Partnership and U.S. Bank National Association (Incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed October 9, 2020).

I-5

4.8A

4.9

4.10

10.1

10.2

10.3

10.4

10.5

10.6

10.6A

10.6B

10.6C

10.6D

10.6E

10.6F

10.6G

First Supplemental Indenture, dated as of October 30, 2020, among the Company, OHI
Healthcare Properties Limited Partnership and U.S. Bank National Association (Incorporated
by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q, filed
November 3, 2020).

Indenture, dated as of March 10, 2021, among the Company, OHI Healthcare Properties
Limited Partnership and U.S. Bank National Association (Incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed March 10, 2021).

Description of Securities registered under Section 12 of the Securities Exchange Act of 1934
(Incorporated by reference to Exhibit 4.8 to the Company’s Annual Report on Form 10-K,
filed February 28, 2020).

Form of Directors and Officers Indemnification Agreement (Incorporated by reference to
Exhibit 10.1 to the Company’s Annual Report on Form 10-K, filed February 23, 2018).

Amended and Restated Deferred Stock Plan, dated October 16, 2012, and forms of related
agreements (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on
Form 10-Q, filed November 7, 2012).

Credit Agreement, dated as of April 30, 2021, among the Company, certain subsidiaries of the
Company identified therein as guarantors, the lenders named therein and Bank of America,
N.A., as administrative agent for such lenders (Incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K, filed May 4, 2021).

Credit Agreement, dated as of April 30, 2021, among OHI Healthcare Properties Limited
Partnership, the lenders named therein and Bank of America, N.A., as administrative agent for
such lenders (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K, filed May 4, 2021).

At-the Market Equity Offering Sales Agreement, dated May 20, 2021, among the Company,
the Sales Agents, the Forward Sellers and the Forward Purchasers (Incorporated by reference
to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed May 20, 2021).

Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 11, 2018).+

2019 Form of Time-Based Restricted Stock Units Agreement pursuant to the Omega
Healthcare Investors,
Inc. 2018 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.8A of the Company’s Annual Report on Form 10-K filed February 26, 2019).+

2019 Form of Time-Based Profits Interest Units Agreement pursuant to the Omega Healthcare
Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference to Exhibit 10.8B of the
Company’s Annual Report on Form 10-K filed February 26, 2019).+

2019 Form of TSR-Based Performance Restricted Stock Units Agreement pursuant to the
Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.8C of the Company’s Annual Report on Form 10-K filed February 26, 2019).+

2019 Form of TSR-Based Performance Profits Interest Units Agreement pursuant to the
Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.8D of the Company’s Annual Report on Form 10-K filed February 26, 2019).+

2019 Form of Relative TSR-Based Performance Restricted Stock Units Agreement pursuant
to the Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference
to Exhibit 10.8E of the Company’s Annual Report on Form 10-K filed February 26, 2019).+

2019 Form of Relative TSR-Based Performance Profits Interest Units Agreement pursuant to
the Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.8F of the Company’s Annual Report on Form 10-K filed February 26, 2019).+

2020 Form of Time-Based Restricted Stock Units Agreement pursuant to the Omega
Healthcare Investors,
Inc. 2018 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.8G to the Company’s Annual Report on Form 10-K, filed February 28, 2020).+

I-6

10.6H

10.6I

10.6J

10.6K

10.6L

10.6M

10.6N

10.6O

10.6P

10.6Q

10.6R

10.7

10.8

10.9

10.10

10.11

10.12

21.1

22.1

2020 Form of Time-Based Profits Interest Units Agreement pursuant to the Omega Healthcare
Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference to Exhibit 10.8H to the
Company’s Annual Report on Form 10-K, filed February 28, 2020).+

2020 Form of TSR-Based Performance Restricted Stock Units Agreement pursuant to the
Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.8I to the Company’s Annual Report on Form 10-K, filed February 28, 2020).+

2020 Form of TSR-Based Performance Profits Interest Units Agreement pursuant to the
Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.8J to the Company’s Annual Report on Form 10-K, filed February 28, 2020).+

2020 Form of Relative TSR-Based Performance Restricted Stock Units Agreement pursuant
to the Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference
to Exhibit 10.8K to the Company’s Annual Report on Form 10-K, filed February 28, 2020).+

2020 Form of Relative TSR-Based Performance Profits Interest Units Agreement pursuant to
the Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.8L to the Company’s Annual Report on Form 10-K, filed February 28, 2020).+

2022 Form of Time-Based Restricted Stock Units Agreement pursuant to the Omega
Healthcare Investors, Inc. 2018 Stock Incentive Plan.+*

2022 Form of Time-Based Profits Interest Units Agreement pursuant to the Omega Healthcare
Investors, Inc. 2018 Stock Incentive Plan.+*

2022 Form of TSR-Based Performance Restricted Stock Units Agreement pursuant to the
Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan.+*

2022 Form of TSR-Based Performance Profits Interest Units Agreement pursuant to the
Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan.+*

2022 Form of Relative TSR-Based Performance Restricted Stock Units Agreement pursuant
to the Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan.+*

2022 Form of Relative TSR-Based Performance Profits Interest Units Agreement pursuant to
the Omega Healthcare Investors, Inc. 2018 Stock Incentive Plan.+*

Form of Officer Deferred Performance Restricted Stock Unit Agreement (Incorporated by
reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q, filed August 5,
2013).+

Form of Employment Agreement for Company’s executive officers, other than Ms. Makode,
effective as of January 1, 2020 for the Company’s executive officers (Incorporated by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 20, 2019).+

Employment Agreement, effective as of January 1, 2020, between the Company and Gail
Makode (Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on
Form 8-K, filed December 20, 2019).+

Form of Annual Amendment to Employment Agreement for the Company’s executive
officers.+*

Amended and Restated Phantom Partnership Unit Award Agreement, dated as of
September 17, 2010, among Aviv Asset Management, L.L.C., Steven J. Insoft and Aviv
Healthcare Properties Limited Partnership (Incorporated by reference to Exhibit 10.8 to Aviv
REIT, Inc.’s Registration Statement on Form S-4, filed May 2, 2011).+

Omega Healthcare Investors, Inc. Deferred Cash Compensation Plan with form of Deferral
Agreement pursuant to the Omega Healthcare Investors, Inc. Deferred Cash Compensation
Plan (June 30, 2018) (Incorporated by reference to Exhibit 10.2 to Omega Healthcare Investor
Inc.’s Form 10-Q filed August 8, 2018).+

Subsidiaries of the Registrant.*

Subsidiary guarantors of guaranteed securities.*

I-7

23.1

31.1

31.2

32.1

32.2

101

Consent of Independent Registered Public Accounting Firm for Omega Healthcare Investors,
Inc.*

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Omega Healthcare
Investors, Inc.*

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Omega Healthcare
Investors, Inc.*

Section 1350 Certification of the Chief Executive Officer of Omega Healthcare Investors, Inc.*

Section 1350 Certification of the Chief Financial Officer of Omega Healthcare Investors, Inc.*

The following financial statements from the Company’s Annual Report on Form 10-K for the
year ended December 31, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets,
(ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive
Income, (iv) Consolidated Statements of Changes in Equity, (v) Consolidated Statements of
Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and
including detailed tags.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document and contained
in Exhibit 101).

Exhibits that are filed or furnished herewith.

*
+ Management contract or compensatory plan, contract or arrangement.

I-8

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

SIGNATURES

Date: February 17, 2022

OMEGA HEALTHCARE INVESTORS, INC.
Registrant

By:

/s/ C. Taylor Pickett
C. Taylor Pickett
Chief Executive Officer

I-9

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by
the following persons on behalf of the Omega Healthcare Investors, Inc., for itself and in the capacities on
the date indicated.

Signatures

Title

Date

/s/ C. Taylor Pickett
C. Taylor Pickett

/s/ Robert O. Stephenson
Robert O. Stephenson

/s/ Neal A. Ballew
Neal A. Ballew

/s/ Craig R. Callen
Craig R. Callen

/s/ Kapila K. Anand
Kapila K. Anand

/s/ Dr. Lisa C. Egbuonu-Davis
Dr. Lisa C. Egbuonu-Davis

/s/ Barbara B. Hill
Barbara B. Hill

/s/ Kevin J. Jacobs
Kevin J. Jacobs

/s/ Edward Lowenthal
Edward Lowenthal

/s/ C. Taylor Pickett
C. Taylor Pickett

/s/ Stephen D. Plavin
Stephen D. Plavin

/s/ Burke W. Whitman
Burke W. Whitman

Chief Executive Officer
(Principal Executive Officer)

Chief Financial Officer
(Principal Financial Officer)

Chief Accounting Officer
(Principal Accounting Officer)

February 17, 2022

February 17, 2022

February 17, 2022

Chair of the Board

February 17, 2022

February 17, 2022

February 17, 2022

February 17, 2022

February 17, 2022

February 17, 2022

February 17, 2022

February 17, 2022

February 17, 2022

Director

Director

Director

Director

Director

Director

Director

Director

I-10

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Form S-8 Registration Statements (File Nos. 333-225595, 333-189144 and 333-117656) related to
the 2018 Stock Incentive Plan (formerly known as the 2013 Stock Incentive Plan and 2004 Stock
Incentive Plan) of Omega Healthcare Investors, Inc.;

(2) Form S-3 Registration Statement (File No. 333-256084) related to the registration of preferred

stock, common stock, warrants, and units of Omega Healthcare Investors, Inc.;

(3) Form S-3 Registration Statement (File No. 333-261519) pertaining to the debt securities and

guarantees of debt securities of Omega Healthcare Investors, Inc.; and

(4) Form S-8 Registration Statement (File No. 333-234599) pertaining to the Omega Healthcare

Investors, Inc. Employee Stock Purchase Plan.

of our reports dated February 17, 2022, with respect to the consolidated financial statements and schedules
of Omega Healthcare Investors, Inc. and the effectiveness of internal control over financial reporting of
Omega Healthcare Investors, Inc., included in this Annual Report (Form 10-K) of Omega Healthcare
Investors, Inc. for the year ended December 31, 2021.

/s/ Ernst & Young LLP

Baltimore, Maryland
February 17, 2022

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Exhibit 31.1

I, C. Taylor Pickett, certify that:

Certification

1.

I have reviewed this Annual Report on Form 10-K of Omega Healthcare Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant’s internal control over financial reporting.

Date:

February 17, 2022

/s/ C. TAYLOR PICKETT
C. Taylor Pickett
Chief Executive Officer

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER

Exhibit 31.2

I, Robert O. Stephenson, certify that:

Certifications

1.

I have reviewed this Annual Report on Form 10-K of Omega Healthcare Investors, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a

significant role in the registrant’s internal control over financial reporting.

Date: February 17, 2022

/s/ ROBERT O. STEPHENSON

Robert O. Stephenson
Chief Financial Officer

Exhibit 32.1

SECTION 1350 CERTIFICATION
OF THE CHIEF EXECUTIVE OFFICER

I, C. Taylor Pickett, Chief Executive Officer of Omega Healthcare Investors, Inc. (the “Company”),
hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to
the best of my knowledge:

(1)

the Annual Report on Form 10-K of the Company for the year ended December 31, 2021 (the
“Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.

Date: February 17, 2022

/s/ C. TAYLOR PICKETT
C. Taylor Pickett
Chief Executive Officer

Exhibit 32.2

SECTION 1350 CERTIFICATION
OF THE CHIEF FINANCIAL OFFICER

I, Robert O. Stephenson, Chief Financial Officer of Omega Healthcare Investors, Inc.
(the
“Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350, that, to the best of my knowledge:

(1)

the Annual Report on Form 10-K of the Company for the year ended December 31, 2021 (the
“Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.

Date: February 17, 2022

/s/ ROBERT O. STEPHENSON
Robert O. Stephenson
Chief Financial Officer

STOCKHOLDER INFORMATION

Executive Officers and Directors as of
April 19, 2022

C. Taylor Pickett (1)
Chief Executive Officer
Director

Daniel J. Booth
Chief Operating Officer

Gail D. Makode
Chief Legal Officer

Robert O. Stephenson
Chief Financial Officer

Kapila K. Anand (1), (3)
Director

Craig R. Callen (1), (3), (4)
Chair of the Board

Dr. Lisa C. Egbuonu-Davis
Director

Barbara B. Hill (2)
Director

Kevin Jacobs (1), (3)
Director

Edward Lowenthal (2), (4), (5)
Director

Stephen D. Plavin (2), (4)
Director

Burke W. Whitman (2), (3)
Director

(1) Member of Investment Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
(4) Member of Nominating and Corporate

Governance Committee

(5) Retiring as a member of the Board on June 3,

2022

Please call 800-368-5948 for information about the
Plan, and to request a prospectus and enrollment
forms. Alternatively, Plan materials can be downloaded
directly at www.computershare.com/investor.

Auditors

Ernst & Young LLP
Baltimore, Maryland

Transfer Agent and Registrar

Postal correspondence should be mailed to:
Computershare
P.O. Box 505000
Louisville, KY 40233
Overnight correspondence should be sent to:
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202

Exchange Listing

New York Stock Exchange (Symbol: OHI)

Corporate Office

303 International Circle
Suite 200
Hunt Valley, MD 21030
(410) 427-1700 Phone

Annual Meeting

The Annual Meeting of the Stockholders will
be held virtually at 10:00 A.M. EDT June 3, 2022.
invited to participate.
All
Instructions for logging into our virtual Annual
Meeting will be included in your proxy materials.

stockholders

are

Publications Available

To view a copy of press releases or the most
recent financial results, please visit the Company’s
web site at www.omegahealthcare.com.

Dividend Reinvestment and Stock Purchase Plan

Member

The Dividend Reinvestment

and Stock
Purchase Plan provides investors and shareholders
with a convenient method for reinvesting dividends
and purchasing shares of Common Stock directly
from the Company without paying any service
charges or brokerage commissions.

Please

see www.omegahealthcare.com and
the

click on “Stock Purchase Plan” under
“Investor Relations” tab for plan features.

National Association

of Real

Estate

Investment Trusts, Inc.

NYSE Certification

The Chief

Executive Officer’s

annual
certification pursuant to §303.12(a) of the New
York Stock Exchange Listed Company Manual
was submitted to the New York Stock Exchange
on June 30, 2021. There are no qualifications to
that certification.

303 International Circle, Suite 200
Hunt Valley, MD 21030
Phone (410) 427-1700