10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

or

o              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission file number 1-11316

OMEGA HEALTHCARE

INVESTORS, INC.

(Exact name of Registrant as specified in its charter)
Maryland	38-3041398
(State of incorporation)	(IRS Employer Identification No.)
200 International Circle, Suite 3500, Hunt Valley, MD 21030
(Address of principal executive offices)
(410) 427-1700
(Telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes   x                                           No   o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes    x                                           No   o

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   o                                                      No   x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of October 31, 2013.

Common Stock, $.10 par value	122,524,279
(Class)	(Number of shares)

OMEGA HEALTHCARE INVESTORS, INC.

FORM 10-Q

September 30, 2013

TABLE OF CONTENTS
		Page No.
PART I	Financial Information
Item 1.	Financial Statements:
	Consolidated Balance Sheets
	September 30, 2013 (unaudited) and December 31, 2012	2
	Consolidated Statements of Operations (unaudited)
	Three and nine months ended September 30, 2013 and 2012	3
	Consolidated Statement of Stockholders’ Equity
	Nine months ended September 30, 2013 (unaudited)	4
	Consolidated Statements of Cash Flows (unaudited)
	Nine months ended September 30, 2013 and 2012	5
	Notes to Consolidated Financial Statements
	September 30, 2013 (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition
	and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
PART II	Other Information
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 6.	Exhibits	39

PART I – FINANCIAL INFORMATION

Item 1 - Financial Statements

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	September 30,			December 31,
	2013			2012
	(Unaudited)
ASSETS
Real estate properties
Land and buildings	$	3,060,188		$	3,038,553
Less accumulated depreciation		(675,685	)		(580,373	)
Real estate properties – net		2,384,503			2,458,180
Mortgage notes receivable – net		241,490			238,621
		2,625,993			2,696,801
Other investments – net		75,421			47,339
		2,701,414			2,744,140
Assets held for sale – net		1,020			1,020
Total investments		2,702,434			2,745,160
Cash and cash equivalents		67,757			1,711
Restricted cash		28,781			36,660
Accounts receivable – net		142,426			125,180
Other assets		73,380			73,294
Total assets	$	3,014,778		$	2,982,005
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit	$	—		$	158,000
Term loan		200,000			100,000
Secured borrowings		300,034			366,538
Unsecured borrowings – net		1,200,013			1,200,394
Accrued expenses and other liabilities		124,733			145,744
Total liabilities		1,824,780			1,970,676
Stockholders’ equity:
Common stock $.10 par value 200,000 shares authorized –– 119,518 shares as of September 30, 2013 and 112,393 as of December 31, 2012 issued and outstanding		11,952			11,239
Common stock – additional paid-in capital		1,876,609			1,664,855
Cumulative net earnings		879,443			754,128
Cumulative dividends paid		(1,578,006	)		(1,418,893	)
Total stockholders’ equity		1,189,998			1,011,329
Total liabilities and stockholders’ equity	$	3,014,778		$	2,982,005

See notes to consolidated financial statements.

2

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Revenue
Rental income	$	93,837		$	78,170		$	280,015		$	229,373
Mortgage interest income		7,289			7,677			22,070			22,417
Other investment income – net		2,175			1,238			5,341			3,533
Miscellaneous		-			23			151			125
Total operating revenues		103,301			87,108			307,577			255,448
Expenses
Depreciation and amortization		32,202			28,305			96,386			82,651
General and administrative		5,462			5,173			16,142			15,653
Acquisition costs		(9	)		483			134			686
Impairment loss on real estate properties		-			-			-			272
Provisions for uncollectible mortgages, notes and accounts receivable		2,321			-			2,386			-
Total operating expenses		39,976			33,961			115,048			99,262
Income before other income and expense		63,325			53,147			192,529			156,186
Other income (expense)
Interest income		3			6			20			22
Interest expense		(24,492	)		(24,050	)		(75,116	)		(71,026	)
Interest – amortization of deferred financing costs		(699	)		(673	)		(2,079	)		(1,970	)
Interest – refinancing gain (costs)		-			-			11,112			(5,410	)
Total other expense		(25,188	)		(24,717	)		(66,063	)		(78,384	)
Income before gain on assets sold		38,137			28,430			126,466			77,802
Gain (loss) on assets sold – net		-			1,689			(1,151	)		8,973
Net income available to common stockholders	$	38,137		$	30,119		$	125,315		$	86,775
Income per common share available to common shareholders:
Basic:
Net income	$	0.32		$	0.28		$	1.08		$	0.82
Diluted:
Net income	$	0.32		$	0.27		$	1.08		$	0.81
Dividends declared and paid per common share	$	0.47		$	0.42		$	1.38		$	1.25
Weighted-average shares outstanding, basic		117,600			109,135			115,527			106,202
Weighted-average shares outstanding, diluted		118,462			109,667			116,335			106,570

See notes to consolidated financial statements.

3

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

Unaudited

(in thousands, except per share amounts)

	Common Stock Par Value		Additional Paid-in Capital			Cumulative Net Earnings		Cumulative Dividends			Total
Balance at December 31, 2012 (112,393 common shares)	$	11,239	$	1,664,855		$	754,128	$	(1,418,893	)	$	1,011,329
Issuance of common stock:
Grant of restricted stock to company directors (15 shares at $30.33 per share)		2		(2	)		—		—			—
Amortization of restricted stock		—		4,350			—		—			4,350
Dividend reinvestment plan (1,677 shares at $28.53 per share)		168		47,653			—		—			47,821
Grant of stock as payment of directors fees (5 shares at an average of $30.93 per share)		—		137			—		—			137
Equity Shelf Program (5,428 shares at $30.19 per share, net of issuance costs)		543		159,616			—		—			160,159
Net income		—		—			125,315		—			125,315
Common dividends ($1.38 per share)		—		—			—		(159,113	)		(159,113	)
Balance at September 30, 2013 (119,518 common shares)	$	11,952	$	1,876,609		$	879,443	$	(1,578,006	)	$	1,189,998

See notes to consolidated financial statements.

4

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited (in thousands)

	Nine Months Ended September 30,
	2013			2012
Cash flows from operating activities
Net income	$	125,315		$	86,775
Adjustment to reconcile net income to cash provided by operating activities:
Depreciation and amortization		96,386			82,651
Impairment on real estate properties		—			272
Provision for uncollectible mortgages, notes and accounts receivable		2,386			—
Amortization of deferred financing and debt extinguishment (gain)/costs		(9,033	)		7,380
Restricted stock amortization expense		4,433			4,456
Loss (gain) on assets sold – net		1,151			(8,973	)
Amortization of acquired in-place leases - net		(3,821	)		(4,088	)
Other		—			(113	)
Change in operating assets and liabilities – net of amounts assumed/acquired:
Accounts receivable, net		(61	)		195
Straight-line rent receivables		(20,385	)		(19,745	)
Lease inducements		2,230			2,527
Effective yield receivable on mortgage notes		(1,416	)		(1,674	)
Other operating assets and liabilities		2,865			7,304
Net cash provided by operating activities		200,050			156,967
Cash flows from investing activities
Acquisition of real estate – net of liabilities assumed and escrows acquired		(2,400	)		(232,661	)
Deposit for proposed capital lease		(15,000	)		—
Placement of mortgage loans		(3,227	)		(7,126	)
Proceeds from sale of real estate investments		2,288			24,194
Capital improvements to real estate investments		(23,732	)		(20,106	)
Proceeds from other investments		4,113			11,821
Investments in other investments		(32,195	)		(4,671	)
Collection of mortgage principal		358			362
Net cash used in investing activities		(69,795	)		(228,187	)
Cash flows from financing activities
Proceeds from credit facility borrowings		101,000			272,000
Payments on credit facility borrowings		(259,000	)		(442,500	)
Proceeds from term loan		100,000			—
Receipts of other long-term borrowings		59,355			400,000
Payments of other long-term borrowings		(113,418	)		(189,657	)
Payments of financing related costs		(1,053	)		(13,150	)
Receipts from dividend reinvestment plan		47,821			106,132
Net proceeds from issuance of common stock		160,159			77,673
Dividends paid		(159,073	)		(132,678	)
Net cash (used in) provided by financing activities		(64,209	)		77,820
Increase in cash and cash equivalents		66,046			6,600
Cash and cash equivalents at beginning of period		1,711			351
Cash and cash equivalents at end of period	$	67,757		$	6,951
Interest paid during the period, net of amounts capitalized	$	75,848		$	70,123

See notes to consolidated financial statements.

5

OMEGA HEALTHCARE INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

September 30, 2013

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Business Overview

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

Basis of Presentation

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

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

Accounts Receivable

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

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

6

A summary of our net receivables by type is as follows:

	September 30,			December 31,
	2013			2012
	(in thousands)
Contractual receivables	$	3,905		$	3,963
Effective yield interest receivables		4,992			3,576
Straight-line receivables		116,972			98,973
Lease inducements		17,077			19,307
Allowance		(520	)		(639	)
Accounts receivable – net	$	142,426		$	125,180

In August 2013, we entered into an agreement with one of our current operators and a new third party operator to transition 11 facilities from the current operator to the third party operator.  As a result of the transition, we evaluated the recoverability of the straight-line rent receivable associated with the current operator’s lease and recorded a $2.3 million provision for uncollectible accounts associated with straight-line receivables that were written-off.  (See Note 2 – Properties and Investments).

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

NOTE 2 – PROPERTIES AND INVESTMENTS

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

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

Leased Property

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

7

Transition of 11 Arkansas Facilities to a New Operator

On August 30, 2013, we transitioned 11 SNFs located in Arkansas that we previously leased to Advocat Inc. (now known as Diversicare Healthcare Services) to a new third party operator. The 11 facilities represent 1,084 operating beds. We amended the Advocat master lease to provide for reduced rent to reflect the transition of the 11 facilities to the new operator, and recorded a $2.3 million provision for uncollectible straight-line rent receivable. Simultaneously with the amendment to the Advocat master lease, we entered into a new master lease with the new third party operator of the 11 facilities. The new master lease expires on August 30, 2023 and includes fixed annual rent escalators.

Commitment to Enter into a $525 Million Sale/Leaseback Transaction

In September 2013, a wholly owned subsidiary of Omega committed to enter into a $525 million sale/leaseback transaction in connection with the proposed acquisition of Ark Holding Company, Inc. (“Ark Holding”) by 4 West Holdings, Inc. In connection with the closing of the proposed acquisition, a subsidiary of Omega will acquire title to 56 facilities currently operated by Ark Holding and lease them back to Ark Holding pursuant to a 50-year lease, with rental payments yielding 10.7% per annum over the term of the lease. The sale/leaseback transaction will be accounted for as a capital lease for accounting purposes and, consistent with that treatment, the tenant will have the right to purchase the facilities for a nominal price plus closing costs at the end of the lease. In addition, commencing in the 41st year of the lease, the tenant will have the right to prepay the remainder of its obligations thereunder for an amount equal to the sum of unamortized portion of the original $525 million investment by Omega, the net present value of the remaining payments under the lease, and closing costs. In the event the tenant exercises either of these options, we would have the right to purchase the properties for fair market value at the time. The sale/leaseback transaction is subject to the satisfaction of all the conditions to the closing of the proposed acquisition of Ark Holding, including obtaining certain consents and licenses, the absence of any event having a material adverse effect on Ark Holding since the date of the agreement, and the issuance of title insurance on the properties. In September 2013, we funded a $15.0 million deposit related to this potential transaction which is included in other assets as of September 30, 2013.

8

Pro Forma Acquisition Results

The facilities acquired in 2012 are included in our results of operations from the date of acquisition.  The following unaudited pro forma results of operations reflect the impact of the transactions as if they occurred on January 1, 2012.  For a list of the transactions, refer to Note 3 – Properties in our 2012 Form 10-K.  In the opinion of management, all significant necessary adjustments to reflect the effect of the acquisitions have been made.  The following pro forma information is not indicative of future operations.

	Pro Forma
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands, except per share amounts, unaudited)
Revenues	$	103,301	$	97,892	$	307,577	$	293,244
Net income available to common stockholders	$	38,137	$	34,703	$	125,315	$	102,571
Earnings per share – diluted:
Net income available to common stockholders – as reported	$	0.32	$	0.27	$	1.08	$	0.81
Net income available to common stockholders – pro forma	$	0.32	$	0.32	$	1.08	$	0.96

Assets Sold or Assets Held for Sale

Assets Sold

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

Assets Held for Sale

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

Mortgage Notes Receivables

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

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

9

NOTE 3 – OTHER INVESTMENTS

A summary of our other investments is as follows:

	September 30,			December 31,
	2013			2012
	(in thousands)
Other Investment note due 2015	$	2,368		$	2,518
Other Investment notes due 2021 - 2023		13,217			9,775
Other Investment note due 2013		551			1,018
Other Investment note due 2014		250			812
$28.0 Million Other Investment note due 2017		24,500			26,500
$2.5 Million Other Investment note due 2014		306			-
$6.0 Million Other Investment note due 2013		5,439			3,450
Other Investment note due 2013		-			261
$1.3 Million Other Investment note due 2017		1,300			425
$25.0 Million Other Investment note due 2017		24,910			-
Notes receivable, gross(1)		72,841			44,759
Allowance for loss on notes receivable		(1,977	)		(1,977	)
Notes receivable, net		70,864			42,782
Marketable securities and other		4,557			4,557
Total other investments	$	75,421		$	47,339

(1) The majority of these notes bear interest at approximately 10% annually.

$25 Million Other Investment Note due 2017

In May 2013, we invested $24.9 million in a mezzanine loan with a third party.  The loan bears interest at 12% per annum and matures in December 2017.

NOTE 4 – CONCENTRATION OF RISK

As of September 30, 2013, our portfolio of real estate investments consisted of 480 healthcare facilities, located in 34 states and operated by 48 third-party operators.  Our gross investment in these facilities, net of impairments and before reserve for uncollectible loans, totaled approximately $3.3 billion at September 30, 2013, with approximately 99% of our real estate investments related to long-term care facilities.  Our portfolio is made up of 417 SNFs, 16 ALFs, 11 specialty facilities, fixed rate mortgages on 33 SNFs and three SNFs that are closed/held-for-sale.  At September 30, 2013, we also held miscellaneous investments of approximately $75.4 million, consisting primarily of secured loans to third-party operators of our facilities.

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

For the three-month period ended September 30, 2013, our revenues from operations totaled $103.3 million, of which approximately $13.8 million were from Genesis (13%) and $11.0 million were from CommuniCare (11%).  No other operator generated more than 10% of our revenues from operations for the three-month period ended September 30, 2013.

10

For the nine-month period ended September 30, 2013, our revenues from operations totaled $307.6 million, of which approximately $41.4 million were from Genesis (13%) and $33.1 million were from CommuniCare (11%).  No other operator generated more than 10% of our revenues from operations for the nine-month period ended September 30, 2013.

NOTE 5 – DIVIDENDS

On October 15, 2013, the Board of Directors declared a common stock dividend of $0.48 per share, increasing the quarterly common dividend by $0.01 per share over the previous quarter.  The common dividends are to be paid November 15, 2013 to common stockholders of record on October 31, 2013.

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

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

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

NOTE 6 – TAXES

So long as we qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code (the “Code”), we generally will not be subject to federal income taxes on the REIT taxable income that we distribute to stockholders, subject to certain exceptions.  On a quarterly and annual basis, we test our compliance within the REIT taxation rules to ensure that we were in compliance with the rules.

Subject to the limitation under the REIT asset test rules, we are permitted to own up to 100% of the stock of one or more taxable REIT subsidiaries (“TRSs”).  Currently, we have one TRS that is taxable as a corporation and pays federal, state and local income tax on its net income at the applicable corporate rates.  As of September 30, 2013, the TRS had a net operating loss carry-forward of $1.0 million.  The loss carry-forward is fully reserved with a valuation allowance as of September 30, 2013.

NOTE 7 – STOCK-BASED COMPENSATION

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

11

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands)
Stock-based compensation expense	$	1,509	$	1,485	$	4,433	$	4,456

Stock Awards

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

Restricted Stock Awards

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

Performance Restricted Stock Units

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

Annual TSR PRSUs

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

Multi-year Absolute TSR PRSUs

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

Multi-year Relative TSR PRSUs

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

12

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

As of September 30, 2013, none of the multi-year PRSUs are vested or earned.

The following table summarizes our total unrecognized compensation cost as of September 30, 2013 associated with outstanding restricted stock and PRSU awards to employees:

	Shares/ Units		Grant Date Average Fair Value Per Unit/ Share		Total Compensation Cost (in millions)		Weighted Average Period of Expense Recognition (in months)		Unrecognized Compensation Cost (in millions)
Restricted stock		428,503	$	22.44	$	9.6		36	$	0.8
2013 Annual PRSUs		124,244	$	8.92		1.1		12		0.3
Multi-year absolute TSR PRSUs		279,550	$	11.06		3.1		44		0.7
Multi-year relative TSR PRSUs		93,183	$	12.26		1.1		44		0.2
Total		925,480	$	14.93	$	14.9			$	2.0

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

Director Restricted Stock Grants

As of September 30, 2013, we had 43,457 shares of restricted stock outstanding to directors.  The directors’ restricted shares are scheduled to vest over the next three years.  As of September 30, 2013, the unrecognized compensation cost associated with outstanding director restricted stock grants is approximately $0.5 million.

13

NOTE 8 – FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS

Secured and Unsecured Borrowings

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

			Current			September 30,		December 31,
	Maturity		Rate			2013		2012
						(in thousands)
Secured borrowings:
HUD mortgages assumed June 2010		2036 - 2040		-		$	—	$	62,921
HUD mortgages assumed June 2010 (1)		2040 - 2045		4.85	%		129,209		130,887
HUD mortgages assumed October 2011 (1)		2036 - 2040		4.87	%		31,359		31,991
HUD mortgages assumed December 2011(1)		2044		3.06	%		58,880		58,884
HUD mortgages assumed December 2012(1)		2031 - 2045		5.50	%		80,586		81,855
Total secured borrowings							300,034		366,538
Unsecured borrowings:
Revolving line of credit		2016		-		$	—	$	158,000
Term loan		2017		1.93	%		200,000		100,000
							200,000		258,000
2020 notes		2020		7.50	%		200,000		200,000
2022 notes		2022		6.75	%		575,000		575,000
2024 notes		2024		5.875	%		400,000		400,000
Subordinated debt		2021		9.00	%		20,930		21,049
							1,195,930		1,196,049
Premium - net							4,083		4,345
Total unsecured borrowings							1,400,013		1,458,394
Totals – net						$	1,700,047	$	1,824,932

(1) Reflects the weighted average annual interest rate on the mortgages.

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

Bank Credit Agreements

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

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

At September 30, 2013, we had no outstanding amount under the 2012 Revolving Credit Facility, and no letters of credit outstanding, leaving availability of $500 million.  The 2012 Revolving Credit Facility matures on December 6, 2016, with an option by us to extend the maturity one additional year.  The 2012 Revolving Credit Facility is priced at LIBOR plus an applicable percentage (beginning at 150 basis points, with a range of 100 to 190 basis points) based on our ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings, plus a facility fee based on the same ratings (initially 30 basis points, with a range of 15 to 45 basis points).

14

At September 30, 2013, the full $200 million was outstanding under the 2012 Term Loan Facility.  The 2012 Term Loan Facility is also priced at LIBOR plus an applicable percentage (beginning at 175 basis points, with a range of 110 to 230 basis points) based our ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings.  The 2012 Term Loan Facility matures on December 6, 2017.

HUD Loans Payoff

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

HUD Mortgage Debt Refinancing

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

$250 Million Equity Shelf Program

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

For the three months ended September 30, 2013, we sold 2.1 million shares under the 2013 ESP, at an average price of $29.42 per share, generating gross proceeds of approximately $63.2 million, before $1.3 million of commissions.  For the nine months ended September 30, 2013, we sold approximately 4.4 million shares under the 2013 ESP, at an average price of $30.61 per share, generating gross proceeds of approximately $136.0 million, before $2.7 million of commissions.

Termination of $245 Million Equity Shelf Program

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

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

15

Dividend Reinvestment and Common Stock Purchase Plan

For the three-month period ended September 30, 2013, approximately 0.2 million shares of our common stock at an average price of $29.03 per share were issued through our Dividend Reinvestment and Common Stock Purchase Program for net proceeds of approximately $6.2 million.  For the nine-month period ended September 30, 2013, approximately 1.7 million shares of our common stock at an average price of $28.53 per share were issued through our Dividend Reinvestment and Common Stock Purchase Program for net proceeds of approximately $47.8 million.

NOTE 9 – FINANCIAL INSTRUMENTS

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

	September 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:	(in thousands)
Cash and cash equivalents	$	67,757	$	67,757	$	1,711	$	1,711
Restricted cash		28,781		28,781		36,660		36,660
Mortgage notes receivable – net		241,490		240,013		238,621		235,705
Other investments – net		75,421		72,820		47,339		44,077
Totals	$	413,449	$	409,371	$	324,331	$	318,153
Liabilities:
Revolving line of credit	$	—	$	—	$	158,000	$	158,000
Term loan		200,000		200,000		100,000		100,000
7.50% Notes due 2020 – net		197,805		246,304		197,546		252,363
6.75% Notes due 2022 – net		581,278		709,601		581,799		724,240
5.875% Notes due 2024 – net		400,000		401,492		400,000		441,761
HUD debt		300,034		335,745		366,538		433,803
Subordinated debt		20,930		27,153		21,049		27,896
Totals	$	1,700,047	$	1,920,295	$	1,824,932	$	2,138,063

Fair value estimates are subjective in nature and are dependent on a number of important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument (see Note 2 – Summary of Significant Accounting Policies in our 2012 Annual Report on Form 10-K).  The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts.

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

● Cash and cash equivalents and restricted cash:  The carrying amount of cash and cash equivalents and restricted cash reported in the balance sheet approximates fair value because of the short maturity of these instruments (i.e., less than 90 days) (Level 1).

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

● Other investments:  Other investments are primarily comprised of: (i) notes receivable and (ii) an investment in a redeemable non-convertible preferred security of an unconsolidated business accounted for using the cost method of accounting.  The fair values of notes receivable are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3).  The fair value of the investment in the unconsolidated business is estimated using quoted market value and considers the terms of the underlying arrangement (Level 3).

16

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

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

NOTE 10 – LITIGATION

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

NOTE 11 – EARNINGS PER SHARE

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

17

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands, except per share amounts)
Numerator:
Net income	$	38,137	$	30,119	$	125,315	$	86,775
Numerator for net income available to common per share - basic and diluted	$	38,137	$	30,119	$	125,315	$	86,775
Denominator:
Denominator for basic earnings per share		117,600		109,135		115,527		106,202
Effect of dilutive securities:
Restricted stock		823		511		774		350
Deferred stock		39		21		34		18
Denominator for diluted earnings per share		118,462		109,667		116,335		106,570
Earnings per share – basic:
Net income – basic	$	0.32	$	0.28	$	1.08	$	0.82
Earnings per share – diluted:
Net income – diluted	$	0.32	$	0.27	$	1.08	$	0.81

NOTE 12 – CONSOLIDATING FINANCIAL STATEMENTS

As of September 30, 2013, we had outstanding (i) $200 million 7.5% Senior Notes due 2020, (ii) $575 million 6.75% Senior Notes due 2022 and (iii) $400 million 5.875% Senior Notes due 2024, which we collectively refer to as the Senior Notes. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, by each of our subsidiaries that guarantee other indebtedness of Omega or any of the subsidiary guarantors. All of our subsidiaries that guarantee the Senior Notes also guarantee the 2012 Credit Facilities. Any subsidiary that we properly designate as an “unrestricted subsidiary” under the indentures governing the Senior Notes will not provide guarantees of the Senior Notes or of our 2012 Credit Facilities.

As of and prior to March 31, 2010, the non-guarantor subsidiaries were minor and insignificant. On June 29, 2010, we designated as “unrestricted subsidiaries” the 39 subsidiaries we acquired from CapitalSource subject to HUD indebtedness. During the fourth quarter of 2011, we designated as “unrestricted subsidiaries” 20 subsidiaries we acquired subject to HUD indebtedness, of which five subsidiaries were removed in July 2012 due to the retirement of the HUD related mortgages. During the fourth quarter of 2012, we designated as “unrestricted subsidiaries” eight subsidiaries we acquired subject to HUD indebtedness. In July 2013, we removed 11 subsidiaries due to the retirement of the HUD related debt.

For the nine months ended September 30, 2013 and 2012, the operating cash flow of the non-guarantor subsidiaries approximated net income of the non-guarantor subsidiaries, adjusted for depreciation and amortization expense.  On March 26, 2013, the non-guarantor subsidiaries refinanced existing HUD mortgage debt on 12 properties in Arkansas for approximately $59.4 million. The refinanced amount included $58.9 million related to retiring the old HUD debt and $0.5 million of closing costs that were added to the new (refinanced) HUD debt.  On May 31, 2013, we retired 11 HUD mortgages totaling $62.3 million ($51.0 million related to the outstanding principal of the 11 HUD mortgages and $11.3 million related to the unamortized premium for marking the debt to market on the date the debt was assumed and $0.2 million in prepayment fees).

18

               In addition, the non-guarantor subsidiaries also made $3.4 million of routine principal payments during the nine months ended September 30, 2013. For the nine-month period ended September 30, 2012, the non-guarantor subsidiaries did not engage in investing or financing activities other than the principal payment of $2.3 million for the HUD mortgages on the facilities owned by the non-guarantor subsidiaries. All of the subsidiary guarantors of our outstanding Senior Notes and 2012 Credit Facilities, and all of our non-guarantor subsidiaries, are 100% owned by Omega.

The following summarized condensed consolidating financial information segregates the financial information of the non-guarantor subsidiaries from the financial information of Omega Healthcare Investors, Inc. and the subsidiary guarantors under the Senior Notes.  The results and financial position of acquired entities are included from the dates of their respective acquisitions.

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING BALANCE SHEETS

Unaudited

(in thousands, except per share amounts)

	September 30, 2013
	Issuer & Subsidiary Guarantors			Non-Guarantor Subsidiaries			Elimination Company			Consolidated
ASSETS
Real estate properties
Land and buildings	$	2,602,688		$	457,500		$	-		$	3,060,188
Less accumulated depreciation		(627,301	)		(48,384	)		-			(675,685	)
Real estate properties – net		1,975,387			409,116			-			2,384,503
Mortgage notes receivable – net		241,490			-			-			241,490
		2,216,877			409,116			-			2,625,993
Other investments – net		75,421			-			-			75,421
		2,292,298			409,116			-			2,701,414
Assets held for sale – net		1,020			-			-			1,020
Total investments		2,293,318			409,116			-			2,702,434
Cash and cash equivalents		67,757			-			-			67,757
Restricted cash		6,755			22,026			-			28,781
Accounts receivable – net		136,101			6,325			-			142,426
Investment in affiliates		107,535			-			(107,535	)		-
Other assets		46,829			26,551			-			73,380
Total assets	$	2,658,295		$	464,018		$	(107,535	)	$	3,014,778
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit	$	-		$	-		$	-		$	-
Term loan		200,000			-			-			200,000
Secured borrowings		-			300,034			-			300,034
Unsecured borrowings – net		1,179,083			20,930			-			1,200,013
Accrued expenses and other liabilities		89,214			35,519			-			124,733
Intercompany payable		-			85,438			(85,438	)		-
Total liabilities		1,468,297			441,921			(85,438	)		1,824,780
Stockholders’ equity:
Common stock		11,952			-			-			11,952
Common stock – additional paid-in capital		1,876,609			-			-			1,876,609
Cumulative net earnings		879,443			22,097			(22,097	)		879,443
Cumulative dividends paid		(1,578,006	)		-			-			(1,578,006	)
Total stockholders’ equity		1,189,998			22,097			(22,097	)		1,189,998
Total liabilities and stockholders’ equity	$	2,658,295		$	464,018			(107,535	)	$	3,014,778

19

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING BALANCE SHEETS

 (in thousands, except per share amounts)

	December 31, 2012
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
ASSETS
Real estate properties
Land and buildings	$	2,580,977		$	457,576		$	—		$	3,038,553
Less accumulated depreciation		(547,489	)		(32,884	)		—			(580,373	)
Real estate properties – net		2,033,488			424,692			—			2,458,180
Mortgage notes receivable – net		238,621			—			—			238,621
		2,272,109			424,692			—			2,696,801
Other investments – net		47,339			—			—			47,339
		2,319,448			424,692			—			2,744,140
Assets held for sale – net		1,020			—			—			1,020
Total investments		2,320,468			424,692			—			2,745,160
Cash and cash equivalents		1,711			—			—			1,711
Restricted cash		10,095			26,565			—			36,660
Accounts receivable – net		121,488			3,692			—			125,180
Investment in affiliates		115,835			—			(115,835	)		—
Other assets		49,153			24,141			—			73,294
Total assets	$	2,618,750		$	479,090			(115,835	)	$	2,982,005
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit	$	158,000		$	—		$	—		$	158,000
Term loan		100,000			—			—			100,000
Secured borrowings		62,921			303,617			—			366,538
Unsecured borrowings – net		1,179,345			21,049			—			1,200,394
Accrued expenses and other liabilities		107,155			38,589			—			145,744
Intercompany payable		—			104,040			(104,040	)		—
Total liabilities		1,607,421			467,295			(104,040	)		1,970,676
Stockholders’ equity:
Common stock		11,239			—			—			11,239
Common stock – additional paid-in capital		1,664,855			—			—			1,664,855
Cumulative net earnings		754,128			11,795			(11,795	)		754,128
Cumulative dividends paid		(1,418,893	)		—			—			(1,418,893	)
Total stockholders’ equity		1,011,329			11,795			(11,795	)		1,011,329
Total liabilities and stockholders’ equity	$	2,618,750		$	479,090		$	(115,835	)	$	2,982,005

20

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

	Three Months Ended September 30, 2013												Nine Months Ended September 30, 2013
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination			Consolidated			Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination			Consolidated
Revenue
Rental income	$	81,289		$	12,548		$	-		$	93,837		$	242,253		$	37,762		$	-		$	280,015
Mortgage interest income		7,289			-			-			7,289			22,070			-			-			22,070
Other investment income – net		2,175			-			-			2,175			5,341			-			-			5,341
Miscellaneous		-			-			-			-			151			-			-			151
Total operating revenues		90,753			12,548			-			103,301			269,815			37,762			-			307,577
Expenses
Depreciation and amortization		27,034			5,168			-			32,202			80,885			15,501			-			96,386
General and administrative		5,372			90			-			5,462			15,859			283			-			16,142
Acquisition costs		(9	)		-			-			(9	)		134			-			-			134
Provision for uncollectible mortgages, notes and accounts receivable		2,321			-			-			2,321			2,386			-			-			2,386
Total operating expenses		34,718			5,258			-			39,976			99,264			15,784			-			115,048
Income before other income and expense		56,035			7,290			-			63,325			170,551			21,978			-			192,529
Other income (expense):
Interest income		(4	)		7			-			3			(1	)		21			-			20
Interest expense		(20,725	)		(3,767	)		-			(24,492	)		(63,429	)		(11,687	)		-			(75,116	)
Interest – amortization of deferred financing costs		(694	)		(5	)		-			(699	)		(2,069	)		(10	)		-			(2,079	)
Interest – refinancing gain (costs)		-			-			-			-			11,112			-			-			11,112
Equity in earnings		3,525			-			(3,525	)		-			10,302			-			(10,302	)		-
Total other expense		(17,898	)		(3,765	)		(3,525	)		(25,188	)		(44,085	)		(11,676	)		(10,302	)		(66,063	)
Income before gain on assets sold		38,137			3,525			(3,525	)		38,137			126,466			10,302			(10,302	)		126,466
Loss on assets sold – net		-			-			-			-			(1,151	)		-			-			(1,151	)
Net income (loss) available to common stockholders	$	38,137		$	3,525		$	(3,525	)	$	38,137		$	125,315		$	10,302		$	(10,302	)	$	125,315

21

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

	Three Months Ended September 30, 2012												Nine Months Ended September 30, 2012
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated			Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
Revenue
Rental income	$	69,092		$	9,078		$	-		$	78,170		$	202,008		$	27,365		$	-		$	229,373
Mortgage interest income		7,677			-			-			7,677			22,417			-			-			22,417
Other investment income – net		1,238			-			-			1,238			3,533			-			-			3,533
Miscellaneous		23			-			-			23			125			-			-			125
Total operating revenues		78,030			9,078			-			87,108			228,083			27,365			-			255,448
Expenses
Depreciation and amortization		24,220			4,085			-			28,305			70,457			12,194			-			82,651
General and administrative		5,090			83			-			5,173			15,390			263			-			15,653
Acquisition costs		483			-			-			483			686			-			-			686
Impairment loss on real estate properties		-			-			-			-			272			-			-			272
Total operating expenses		29,793			4,168			-			33,961			86,805			12,457			-			99,262
Income before other income and expense		48,237			4,910			-			53,147			141,278			14,908			-			156,186
Other income (expense):
Interest income		-			6			-			6			4			18			-			22
Interest expense		(20,602	)		(3,448	)		-			(24,050	)		(61,290	)		(9,736	)		-			(71,026	)
Interest – amortization of deferred financing costs		(673	)		-			-			(673	)		(1,970	)		-			-			(1,970	)
Interest – refinancing gain (costs)		-			-			-			-			(5,410	)		-			-			(5,410	)
Equity in earnings		1,468			-			(1,468	)		-			5,190			-			(5,190	)		-
Total other expense		(19,807	)		(3,442	)		(1,468	)		(24,717	)		(63,476	)		(9,718	)		(5,190	)		(78,384	)
Income before gain on assets sold		28,430			1,468			(1,468	)		28,430			77,802			5,190			(5,190	)		77,802
Gain on assets sold – net		1,689			-			-			1,689			8,973			-			-			8,973
Net income (loss) available to common stockholders	$	30,119		$	1,468		$	(1,468	)	$	30,119		$	86,775		$	5,190		$	(5,190	)	$	86,775

22

NOTE 13 – SUBSEQUENT EVENTS

$33 Million of New Investments in Florida in October 2013

In October 2013, we completed two separate acquisitions with two existing operators totaling $33 million. The acquisitions consisted of 1 ALF in Florida totaling 97 beds and 4 SNFs located in Indiana totaling 384 beds. These facilities were added to existing master leases.

2.875 Million Shares of Common Stock Offering

On October 7, 2013, we sold 2,875,000 shares of common stock in an underwritten public offering at an offering price of $30 per share before underwriting discounts and expenses. Our total net proceeds from the offering, after underwriting discounts and expenses were approximately $84.5 million.

23

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

Forward-looking Statements, Reimbursement Issues and Other Factors Affecting Future Results

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

(i) those items discussed under “Risk Factors” in Item 1A to our annual report on Form 10-K for the year ended December 31, 2012, and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the three months ended March 31, 2013 and June 30, 2013, and in Part II, Item 1A of this report;

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

(iii) the ability of any operators in bankruptcy to reject unexpired lease obligations, modify the terms of our mortgages and impede our ability to collect unpaid rent or interest during the process of a bankruptcy proceeding and retain security deposits for the debtors’ obligations;

(iv) our ability to sell closed or foreclosed assets on a timely basis and on terms that allow us to realize the carrying value of these assets;

(v) our ability to negotiate appropriate modifications to the terms of our credit facilities;

(vi) our ability to manage, re-lease or sell any owned and operated facilities;

(vii) the availability and cost of capital;

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

(ix) competition in the financing of healthcare facilities;

(x) regulatory and other changes in the healthcare sector;

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

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

(xiii) changes in interest rates;

(xiv) the amount and yield of any additional investments;

(xv) changes in tax laws and regulations affecting real estate investment trusts; and

(xvi) our ability to maintain our status as a real estate investment trust.

Overview

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

24

Our portfolio of investments at September 30, 2013, consisted of 480 healthcare facilities (including three facilities that are closed/held for sale), located in 34 states and operated by 48 third-party operators.  Our gross investment in these facilities totaled approximately $3.3 billion at September 30, 2013, with 99% of our real estate investments related to long-term healthcare facilities.  Our portfolio is made up of (i) 417 SNFs, (ii) 16 assisted living facilities (“ALFs”), (iii) 11 specialty facilities, (iv) fixed rate mortgages on 33 SNFs and (v) three SNFs that are closed/held for sale.  At September 30, 2013, we also held other investments of approximately $75.4 million, consisting primarily of secured loans to third-party operators of our facilities.

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

Taxation

We have elected to be taxed as a Real Estate Investment Trust (“REIT”), under Sections 856 through 860 of the Internal Revenue Code (the “Code”), beginning with our taxable year ended December 31, 1992.  We believe that we have been organized and operated in such a manner as to qualify for taxation as a REIT. We intend to continue to operate in a manner that will 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.  Under the Code, we generally are not subject to federal income tax on taxable income distributed to stockholders if certain distribution, income, asset and stockholder tests are met, including a requirement that we must generally distribute at least 90% of our annual taxable income, excluding any net capital gain, to stockholders.  If we fail to qualify as a REIT in any taxable year, we may be subject to federal income taxes on our taxable income for that year and for the four years following the year during which qualification is lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders.  For further information, see “Taxation” in Item 1 of our annual report on Form 10-K for the year ended December 31, 2012.

Government Regulation and Reimbursement

The following is a description of certain of the laws and regulations and reimbursement policies and programs affecting our business and the businesses conducted by our operators.  The following description should be read in conjunction with the risk factors described under “Item 1A – Risk Factors.”

Healthcare Reform.  The Patient Protection and Affordable Care Act and accompanying Healthcare and Education Affordability and Reconciliation Act of 2010 (the “Healthcare Reform Law”) were signed into law in March 2010. This legislation represents the most comprehensive change to healthcare benefits since the inception of the Medicare program in 1965 and will affect reimbursement for governmental programs, private insurance and employee welfare benefit plans in various ways.  Significant rule making and regulation promulgated under the Healthcare Reform Law has already occurred, and we expect additional rules, regulations and interpretation that may materially affect the operations of our operators.

On June 28, 2012, the U.S. Supreme Court upheld all of the Healthcare Reform Law except for the requirement that states expand Medicaid beginning in 2014. However, the Healthcare Reform Law and the implementation thereof continue to receive challenge and scrutiny from Congress, state attorneys general and legislators, and private individuals and organizations.  For example, several congressional bills and budget proposals have sought to repeal or change certain provisions of the law.

25

In addition, certain measures recently taken under the authority of, or in connection with, the Healthcare Reform Law may lead to additional modification and/or clarification in the future, including the following:

●         On January 3, 2013, a new federal Commission on Long-Term Care was established and tasked with developing a plan for the establishment, implementation and financing of a high-quality system to provide long-term care services.

●         The Healthcare Reform Law requires private health insurers that sell policies to individuals and small businesses to provide, starting in 2014, a set of “essential health benefits” in ten categories, including prescription drugs, rehabilitative and habilitative services, and chronic disease management.  As required under the law, states define the essential health benefits. States are now submitting their essential health benefit packages to the Department of Health and Human Services (HHS).  How these benefits are established will affect payments for long term care facilities.

●         The Healthcare Reform Law requires SNFs to implement a compliance and ethics program by March 23, 2013 that is effective in preventing and detecting criminal, civil and administrative violations and in promoting quality of care.  HHS has not yet issued the proposed regulations to implement this law that were due in March 2012.  It is unclear whether this provision of the law will be enforced until the regulations are issued.

Given the complexity of the Healthcare Reform Law and the substantial requirements for regulation thereunder, the impact of the Healthcare Reform Law on our operators or their ability to meet their obligations to us is uncertain.  The Healthcare Reform Law could result in decreases in payments to our operators or otherwise adversely affect the financial condition of our operators, thereby negatively impacting our financial condition.  The efforts of our operators to modify their operations to lessen the impact of any increased costs or other adverse effects resulting from changes in governmental programs, private insurance and/or employee welfare benefit plans may not be successful.  The impact of the Healthcare Reform Law on each of our operators will vary depending on payor mix, resident conditions and a variety of other factors.  In addition to the provisions relating to reimbursement, other provisions of the Healthcare Reform Law may impact our operators as employers (e.g., requirements related to providing health insurance for employees). We anticipate that many of the provisions in the Healthcare Reform Law may be subject to further clarification and modification during the rule making process.

Reimbursement Generally. A significant portion of our operators’ revenue is derived from governmentally-funded reimbursement programs, primarily Medicare and Medicaid. In recent years, the federal government and many state governments are currently focusing on reducing expenditures under Medicare and Medicaid programs, resulting in significant cost-cutting at both the federal and state levels.   These cost-cutting measures, together with the implementation of changes in reimbursement rates such as those described below, could result in a significant reduction of reimbursement rates to our operators under both the Medicare and Medicaid programs.

We currently believe that our operator coverage ratios are adequate and that our operators can absorb moderate reimbursement rate reductions and still meet their obligations to us. However, significant limits on the scopes of services reimbursed and/or reductions of reimbursement rates 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.

Medicaid.  State budgetary concerns, coupled with the implementation of rules under the Healthcare Reform Law, may result in significant changes in healthcare spending at the state level.  Many states are currently focusing on the reduction of expenditures under their state Medicaid programs, which may result in a reduction in reimbursement rates for our operators.  The need to control Medicaid expenditures may be exacerbated by the potential for increased enrollment in Medicaid due to unemployment and declines in family incomes.  Since our operators’ profit margins on Medicaid patients are generally relatively low, more than modest reductions in Medicaid reimbursement or an increase in the number of Medicaid patients could adversely affect our operators’ results of operations and financial conditions, which in turn could negatively impact us.

26

The Healthcare Reform Law provided for Medicaid coverage to be expanded to all individuals under age 65 with incomes up to 133% of the federal poverty level, beginning January 1, 2014.  The federal government will pay the entire cost for Medicaid coverage for newly eligible beneficiaries for 3 years (2014 through 2016).  In 2017, the federal share declines to 95%; in 2018, to 94%; in 2019, to 93%; and in 2020 and subsequent years, to 90%.  States may delay Medicaid expansion after 2014 but the federal payment rates will be less.  However, on June 28, 2012, the Supreme Court ruled that states could not be required to expand Medicaid or risk losing federal funding of their existing Medicaid programs.  Currently, 26 states and the District of Columbia have decided to expand Medicaid coverage as contemplated by the Healthcare Reform Law, with many of the remaining states involved in a variety of legislative proposals or discussions. The U.S. Department of Health and Human Services has stated that it will consider a limited number of premium assistance demonstration programs from states that want to privatize Medicaid expansion. States must provide a choice between at least two qualified health plans that offer very similar benefits as those required by the health insurance exchanges. Arkansas became the first state to obtain federal approval to use Medicaid funding to purchase private insurance for low-income residents. Several other states are also considering this option.

Medicare.  For the federal fiscal year 2014, CMS proposes to increase SNF payment rates by 1.4% (2.3% market basket update minus adjustments), which amounts to an estimated $500 million increase in payments to SNFs beginning October 1, 2013.

Provisions contained in the American Taxpayer Relief Act (ATRA) of 2012, known colloquially as the fiscal cliff deal, are designed to reduce Medicare payments to SNFs by an estimated $600 million during 2012 to 2022.  It also reduces payments for multiple procedures or therapies provided on the same day, which will result in approximately $1.8 billion savings to Medicare over the next 10 years, which will impact SNFs as well.  Under the ATRA, sequestration cuts impacting domestic and defense spending became effective March 1, 2013.  Although Medicaid is exempted from the sequestration cuts, they include a 2% cut in payments to Medicare providers and suppliers, which will amount to an estimated $11.3 billion in cuts in fiscal year 2013. We cannot predict whether Congress will take any action to change the automatic spending cuts under sequestration, nor how states will react to any changes at the federal level.

The Middle Class Tax Relief and Job Creation Act of 2012 was signed into law on February 22, 2012 and extended the Medicare Part B Outpatient Therapy Cap Exceptions Process through December 31, 2012.  The statutory Medicare Part B outpatient cap for occupational therapy is $1,900 for 2013, and the combined cap for physical therapy and speech therapy is also $1,900 for 2013.  These caps do not apply to therapy services covered under Medicare Part A for SNFs, although the caps apply in most other instances involving patients in SNFs or long-term care facilities who receive therapy services covered under Medicare Part B.  Congress implemented a temporary therapy cap exceptions process, which permits medically necessary therapy services to exceed the payment limits.  Expiration of the therapy cap exceptions process in the future could have a material adverse effect on our operators’ financial condition and operations, which could adversely impact their ability to meet their obligations to us.

Quality of Care Initiatives.  The CMS has implemented a number of initiatives focused on the quality of care provided by nursing homes that could affect our operators.  For instance, in December 2008, the CMS released quality ratings for all of the nursing homes that participate in Medicare or Medicaid. 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.  Based on this data and the results of state health inspections, SNFs are then rated based on the five-star rating system.  We cannot predict what changes, if any, CMS will make to the rating system.  It is possible that this or any other ranking system could lead to future reimbursement policies that reward or penalize facilities on the basis of the reported quality of care parameters.

27

CMS has incorporated hospital readmissions review into the Quality Indicators Survey.  Under Medicare’s Inpatient Prospective Payment System, CMS began adjusting payments to hospitals for excessive readmissions of patients for heart attacks, heart failure, and pneumonia during fiscal years beginning on and after October 1, 2012.  Long term care facilities will be under increased scrutiny to prevent residents from being readmitted to hospitals for these conditions in particular, and have an opportunity to demonstrate their quality of care by reducing their hospital readmission rates.  It is anticipated that hospital readmissions will be a consideration in the future in the CMS five-star rating system.

Office of the Inspector General Activities.  The Office of Inspector General’s (OIG) Work Plan for government fiscal year 2013, which describes projects that the OIG plans to address during the fiscal year, includes a number of projects related to nursing homes.  Reviews of Medicare Part A and Part B payments and services for SNFs will focus on the following: (1) adverse events in post-acute care; (2) Medicare requirements for quality of care; (3) verification of state agency identified deficiencies’ corrections; (4) oversight of poorly performing SNFs; (5) use of atypical antipsychotic drugs; (6) hospitalizations of SNF residents; (7) questionable billing practices for Part B services; and (8) oversight of the accuracy and completeness of MDS data.  Medicaid reviews will focus on communicable diseases and MDS data.  The OIG plans to continue its efforts in addressing fraud and abuse.  While we cannot predict the results of the OIG’s activities, the projects could result in further scrutiny and/or oversight of nursing homes.

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.  In addition, federal and state governments are devoting increasing attention and resources to anti-fraud initiatives against healthcare providers.

The federal anti-kickback statute is a criminal statute that prohibits the knowing and willful offer, payment, solicitation or receipt of any remuneration in return for, to induce or to arrange for the referral of individuals for any item or service payable by a federal or state healthcare program. There is also a civil analogue. States also have enacted similar statutes covering Medicaid payments, and some states have broader statutes. Some enforcement efforts have targeted relationships between SNFs and ancillary providers, relationships between SNFs and referral sources for SNFs and relationships between SNFs and facilities for which the SNFs serve as referral sources. The federal self-referral law, commonly known as the “Stark Law,” is a civil statute that prohibits a physician from making referrals to an entity for “designated health services” if the physician has a financial relationship with the entity. Some of the services provided in SNFs are classified as designated health services. There are also 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. In addition, the federal False Claims Act allows a private individual with knowledge of fraud to bring a claim on behalf of the federal government and earn a percentage of the federal government’s recovery. Because of these incentives, these so-called “whistleblower” suits have become more frequent. The violation of any of these laws or regulations by an operator may result in the imposition of fines or other penalties, including exclusion from Medicare, Medicaid and all other federal and state healthcare programs.

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, and the corresponding regulations promulgated thereunder (“HIPAA”).  On January 25, 2013, the Office for Civil Rights (OCR) issued a final rule modifying HIPAA which will require our operators to expend significant time and money to implement.  Some of the new requirements include, among other things: making business associates subject to the HIPAA Privacy and Security Rules which will require new business associate agreements; changes in determining whether a breach of unsecured protected health information occurred; new requirements for the Notice of Privacy Practices; and decreasing the time to disclose protected health information and requiring disclosures to be electronic under certain conditions.

28

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 large 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 licensing and certification laws and regulations, including laws and regulations under Medicare and 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.

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; quality of services, including care and food service; residents’ rights, including abuse and neglect laws; and the health standards set by the federal Occupational Safety and Health Administration).

General and Professional Liability.  Although arbitration agreements have been effective in limiting general and professional liabilities for long term care providers, there have been national efforts to outlaw the use of pre-dispute arbitration agreements in long term care settings.  At least one state is allowing residents to sue a SNF for failing to comply with staffing quality measures.  All of these factors have a potential impact on liability costs of our operators, which could adversely affect our operators’ ability to meet their obligations to us.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), and a summary of our significant accounting policies is included in Note 2 – Summary of Significant Accounting Policies to our Annual Report on Form 10-K for the year ended December 31, 2012.  Our preparation of the financial statements requires us to make estimates and assumptions about future events that affect the amounts reported in our financial statements and accompanying footnotes.  Future events and their effects cannot be determined with absolute certainty.  Therefore, the determination of estimates requires the exercise of judgment.  Actual results inevitably will differ from those estimates, and such difference may be material to the consolidated financial statements.  We have described our most critical accounting policies in our 2012 Annual Report on Form 10-K in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

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

29

Three Months Ended September 30, 2013 and 2012

Operating Revenues

Our operating revenues for the three months ended September 30, 2013, totaled $103.3 million, an increase of $16.2 million over the same period in 2012.  The $16.2 million increase was primarily the result of additional rental income associated with acquisitions made throughout 2012 and a lease amendment/extension with an operator.  We recorded approximately $10.8 million of rental revenue associated with the 2012 acquisitions during the third quarter of 2013.  In addition, on December 1, 2012, two of our operators combined.  In connection with the combination, we entered into a new master lease covering all of the facilities previously leased to the two operators.  The new master lease (i) increased contractual rent when compared to the combined contractual rent of the prior leases of the two operators, (ii) provided an extension of the expiration date and (iii) included annual rent escalators.  As a result of the new master lease, we recorded approximately $2.9 million of additional rental revenue during the third quarter of 2013 compared to the same period in 2012 for the prior leases.  The additional increase in rental revenue is primarily due to the transition of four Arizona facilities to a new operator during the first quarter of 2013 and additional revenue from our capital renovation program.  The increase in other investment income-net is primarily due to a $24.9 million investment made during the second quarter of 2013.

Operating Expenses

Operating expenses for the three months ended September 30, 2013, totaled $40.0 million, an increase of approximately $6.0 million over the same period in 2012.  The increase was primarily due to: (i) an increase of $3.9 million of depreciation and amortization associated with acquisitions made throughout 2012, (ii) a $2.3 million increase in provision for uncollectible accounts receivables related to the write-off of straight-line receivables for 11 Arkansas facilities that were transitioned from a current operator to a new operator during the quarter and (iii) an increase of $0.3 million in general and administrative expense offset by $0.5 million of reduced acquisition costs.

Other Income (Expense)

For the three months ended September 30, 2013, total other expenses were $25.2 million, an increase of approximately $0.5 million over the same period in 2012.  The increase was primarily the result of an increase of approximately $0.5 million in interest expense due to an increase in borrowings outstanding, including debt assumed or incurred to finance 2012 transactions.

Nine Months Ended September 30, 2013 and 2012

Operating Revenues

Our operating revenues for the nine months ended September 30, 2013, totaled $307.6 million, an increase of $52.1 million over the same period in 2012.  The $52.1 million increase was primarily the result of: (i) additional $50.6 million rental income associated with (a) acquisitions made throughout 2012, (b) a lease amendment/extension with an operator, (c) additional revenue from our capital renovation program and (ii) a $1.8 million increase in other investment income primarily related to the new $24.9 million investment in May 2013. We recorded approximately $37.8 million of rental revenue associated with the 2012 acquisitions for the nine-months ended September 30, 2013.   In addition, on December 1, 2012, two of our operators combined.  In connection with the combination, we entered into a new master lease covering all of the facilities previously leased to the two operators.  The new master lease (i) increased contractual rent when compared to the combined contractual rent of the prior leases of the two operators, (ii) provided an extension of the expiration date and (iii) included annual rent escalators.  As a result of the new master lease, we recorded approximately $8.8 million of additional rental revenue for the nine-months ended September 30, 2013 compared to the same period in 2012 for the prior leases.

Operating Expenses

Operating expenses for the nine months ended September 30, 2013, totaled $115.0 million, an increase of approximately $15.8 million over the same period in 2012.  The increase was primarily due to (i) an increase of $13.7 million of depreciation and amortization associated with acquisitions made throughout 2012, (ii) an increase of $2.4 million of provision for uncollectible accounts receivable primarily related to the write-off of straight-line receivables for 11 Arkansas facilities that were transitioned from a current operator to a new operator during the third quarter and (iii) an increase of $0.5 million in general and administrative expense, offset by (i) a decrease of $0.6 million in acquisition costs and (ii) a $0.3 million impairment charge for two held-for-sale facilities that were sold in 2012.

30

Other Income (Expense)

For the nine months ended September 30, 2013, total other expenses were $66.1 million, a decrease of approximately $12.3 million over the same period in 2012.  The $12.3 million decrease was primarily the result of a $4.2 million increase in interest expense due to an increase in borrowings outstanding, including debt assumed or incurred to finance 2012 acquisitions, offset by a $16.5 million decrease in interest refinancing costs.  In the second quarter of 2013, we recorded an $11.1 million interest refinancing gain associated with the write-off of the premium for above market value debt assumed on 11 HUD mortgage loans that we paid off in May 2013.  During the first quarter of 2012, we recorded $7.1 million in interest refinancing cost including (i) prepayment penalties of approximately $4.5 million, (ii) the write-off of deferred financing costs of $2.2 million and (iii) $0.4 million of expenses associated with the tender offer and redemption of our outstanding $175 million 7% 2016 Notes. The 2012 costs were partially offset by a $1.7 million write-off of the premium for above market value debt assumed on four HUD loans that were paid off early during the second quarter of 2012.

Funds From Operations

Our funds from operations available to common stockholders (“FFO”), for the three months ended September 30, 2013, was $70.3 million, compared to $56.7 million, for the same period in 2012.  Our FFO, for the nine months ended September 30, 2013, was $222.9 million, compared to $160.7 million, for the same period in 2012.

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

FFO is a non-GAAP financial measure.  We use FFO as one of several criteria to measure operating performance of our business.  We further believe that by excluding the effect of depreciation, amortization, impairment on real estate assets and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, 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 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.

31

The following table presents our FFO results for the three- and nine- months periods ended September 30, 2013 and 2012:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013		2012			2013		2012
	(in thousands)
Net income available to common stockholders	$	38,137	$	30,119		$	125,315	$	86,775
Add back loss (deduct gain) from real estate dispositions		—		(1,689	)		1,151		(8,973	)
Sub-total		38,137		28,430			126,466		77,802
Elimination of non-cash items included in net income:
Depreciation and amortization		32,202		28,305			96,386		82,651
Add back impairments on real estate properties		—		—			—		272
Funds from operations available to common stockholders	$	70,339	$	56,735		$	222,852	$	160,725

Portfolio and Recent Developments

For the nine months ended September 30, 2013, we did not acquire any facilities.

Transition of 11 Arkansas Facilities to a New Operator

On August 30, 2013, we transitioned 11 SNFs located in Arkansas that we previously leased to Advocat Inc. (now known as Diversicare Healthcare Services) to a new third party operator. The 11 facilities represent 1,084 operating beds. We amended the Advocat master lease to provide for reduced rent to reflect the transition of the 11 facilities to the new operator, and recorded a $2.3 million provision for uncollectible straight-line rent receivable. Simultaneously with the amendment to the Advocat master lease, we entered into a new master lease with the new third party operator of the 11 facilities. The new master lease expires on August 30, 2023 and includes fixed annual rent escalators.

$33 Million of New Investments in October 2013

In October 2013, we completed two separate acquisitions with two existing operators totaling $33 million. The acquisitions consisted of 1 ALF in Florida totaling 97 beds and 4 SNFs located in Indiana totaling 384 beds. These facilities were added to existing master leases.

Assets Sold

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

32

Assets Held for Sale

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

Commitment to Enter into a $525 Million Sale/Leaseback Transaction

In September 2013, a wholly owned subsidiary of Omega committed to enter into a $525 million sale/leaseback transaction in connection with the proposed acquisition of Ark Holding Company, Inc. (“Ark Holding”) by 4 West Holdings, Inc. In connection with the closing of the proposed acquisition, a subsidiary of Omega will acquire title to 56 facilities currently operated by Ark Holding and lease them back to Ark Holding pursuant to a 50-year lease, with rental payments yielding 10.7% per annum over the term of the lease. The sale/leaseback transaction will be accounted for as a capital lease for accounting purposes and, consistent with that treatment, the tenant will have the right to purchase the facilities for a nominal price plus closing costs at the end of the lease. In addition, commencing in the 41st year of the lease, the tenant will have the right to prepay the remainder of its obligations thereunder for an amount equal to the sum of unamortized portion of the original $525 million investment by Omega, the net present value of the remaining payments under the lease, and closing costs. In the event the tenant exercises either of these options, we would have the right to purchase the properties for fair market value at the time. The sale/leaseback transaction is subject to the satisfaction of all the conditions to the closing of the proposed acquisition of Ark Holding, including obtaining certain consents and licenses, the absence of any event having a material adverse effect on Ark Holding since the date of the agreement, and the issuance of title insurance on the properties. In September 2013, we funded a $15.0 million deposit related to this potential transaction which is included in other assets as of September 30, 2013.

Liquidity and Capital Resources

At September 30, 2013, we had total assets of $3.0 billion, stockholders’ equity of $1.2 billion and debt of $1.7 billion, representing approximately 58.8% of total capitalization.

Financing Activities and Borrowing Arrangements

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

2.875 Million Shares of Common Stock Offering

On October 7, 2013, we sold 2,875,000 shares of common stock in an underwritten public offering at an offering price of $30 per share before underwriting discounts and expenses.  Our total net proceeds from the offering, after underwriting discounts and expenses were approximately $84.5 million.

Bank Credit Agreements

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

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

At September 30, 2013, we had no outstanding amount under the 2012 Revolving Credit Facility, and no letters of credit outstanding, leaving availability of $500 million. The 2012 Revolving Credit Facility matures on December 6, 2016, with an option by us to extend the maturity one additional year.  The 2012 Revolving Credit Facility is priced at LIBOR plus an applicable percentage (beginning at 150 basis points, with a range of 100 to 190 basis points) based on our ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings, plus a facility fee based on the same ratings (initially 30 basis points, with a range of 15 to 45 basis points).

33

At September 30, 2013, the full $200 million was outstanding under the 2012 Term Loan Facility.  The 2012 Term Loan Facility is also priced at LIBOR plus an applicable percentage (beginning at 175 basis points, with a range of 110 to 230 basis points) based our ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings.  The 2012 Term Loan Facility matures on December 6, 2017.

HUD Loans Payoff

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

HUD Mortgage Debt Refinancing

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

$250 Million Equity Shelf Program

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

For the three months ended September 30, 2013, we sold 2.1 million shares under the 2013 ESP, at an average price of $29.42 per share, generating gross proceeds of approximately $63.2 million, before $1.3 million of commissions.  For the nine months ended September 30, 2013, we sold approximately 4.4 million shares under the 2013 ESP, at an average price of $30.61 per share, generating gross proceeds of approximately $136.0 million, before $2.7 million of commissions.

Termination of $245 Million Equity Shelf Program

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

34

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

Dividend Reinvestment and Common Stock Purchase Plan

For the three-month period ended September 30, 2013, approximately 0.2 million shares of our common stock at an average price of $29.03 per share were issued through our Dividend Reinvestment and Common Stock Purchase Program for net proceeds of approximately $6.2 million.  For the nine-month period ended September 30, 2013, approximately 1.7 million shares of our common stock at average of $28.53 per share were issued through our Dividend Reinvestment and Common Stock Purchase Program for net proceeds of approximately $47.8 million.

Dividends

In order to qualify 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 addition, our 2012 Credit Agreement has certain financial covenants that limit the distribution of dividends paid during a fiscal quarter to no more than 95% of our aggregate cumulative FFO as defined in the credit agreement, unless a greater distribution is required to maintain REIT status.  Solely for purposes of the credit agreement, FFO is defined as net income (or loss) plus depreciation and amortization, adjusted to take into account our interests in unconsolidated partnerships and joint ventures, and further adjusted to exclude gains or losses resulting from: (i) restructuring our debt; (ii) sales of property; (iii) sales or redemptions of preferred stock; (iv) revenue or expenses related to owned and operated assets; (v) revenues or expenses related to FIN 46 consolidation requirements, (vi) cash litigation charges up to $10.0 million over the term of the credit agreement; (vii) non-cash charges associated with the write-down of accounts due to straight-line rent; (viii) other non-cash charges for accounts and notes receivable up to $20.0 million over the term of the credit agreement; (ix) certain non-cash compensation related expenses; (x) non-cash real property impairment charges; (xi) non-cash charges associated with the sale or settlement of derivative instruments; and (xii) charges related to acquisition deal-related costs.

For the three- and nine- months ended September 30, 2013, we paid total dividends of $55.1 million and $159.1 million, respectively.

On October 15, 2013, the Board of Directors declared a common stock dividend of $0.48 per share, increasing the quarterly common dividend by $0.01 per share over the previous quarter.  The common dividends are to be paid November 15, 2013 to common stockholders of record on October 31, 2013.

Liquidity

We believe our liquidity and various sources of available capital, including cash from operations, our existing availability under our 2012 Credit Facilities and expected proceeds from mortgage payoffs are adequate to finance operations, meet recurring debt service requirements and fund future investments through the next twelve months.

35

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

●           normal recurring expenses;

●           debt service payments;

●           common stock dividends; and

●           growth through acquisitions of additional properties.

The primary source of liquidity is our cash flows from operations.  Operating cash flows have historically been determined by: (i) the number of facilities we lease or have mortgages on; (ii) rental and mortgage rates; (iii) our debt service obligations; and (iv) general and administrative expenses.  The timing, source and amount of cash flows provided by financing activities and used in investing activities are sensitive to the capital markets environment, especially to changes in interest rates.  Changes in the capital markets environment may impact the availability of cost-effective capital and affect our plans for acquisition and disposition activity.

Cash and cash equivalents totaled $67.8 million as of September 30, 2013, an increase of $66.0 million as compared to the balance at December 31, 2012.  The following is a discussion of changes in cash and cash equivalents due to operating, investing and financing activities, which are presented in our Consolidated Statements of Cash Flows.

Operating Activities– Operating activities generated $200.1 million of net cash flow for the nine months ended September 30, 2013, as compared to $157.0 million for the same period in 2012, an increase of $43.1 million.  The increase was primarily due to the additional cash flow from the facilities acquired and leased throughout 2012.

Investing Activities – Net cash flow from investing activities was an outflow of $69.8 million for the nine months ended September 30, 2013, as compared to an outflow of $228.2 million for the same period in 2012.  The $158.4 million decrease in cash outflow from investing activities relates primarily to change in acquisition activities.  During the nine months ended September 30, 2012, we acquired (i) a parcel of land for $1.9 million, and (ii) 32 facilities for $230.8 million.  During the nine months ended September 30, 2013, we invested $2.4 million to acquire assets to construct a new facility in Palm Beach Florida.  In addition, during the nine months ended September 30, 2012, we placed $7.1 million of investment in mortgage loans compared to $3.2 million for the same period in 2013.  Offsetting these decreases of the cash outflow were: (i) in 2012 we received net proceeds of $24.2 million for the sale of real estate compared to $2.3 million for the same period in 2013, (ii) in 2012 we had a net cash inflow of $7.2 million from other investments – net compared to  cash outflow of $28.1 million for the same period in 2013, (iii) in 2013 we made $23.7 million of investment in our capital renovation program compared to $20.1 million in the same period of 2012 and (iv) in September 2013 we funded a $15 million deposit for the proposed $525 million investment scheduled for Q4 2013.

36

Financing Activities – Net cash flow from financing activities was an outflow of $64.2 million for the nine months ended September 30, 2013 as compared to an inflow of $77.8 million for the same period in 2012.  The $142.0 million change in financing activities related primarily to the decreased level of acquisition and investment activity during the nine months ended September 30, 2013 compared to 2012.  The change was primarily a result of: (i) net proceed of $100 million on the 2012 Term Loan Facility for the nine months ended September 30, 2013, (ii) an increase in net proceeds of $82.5 million from our common stock issued through our Equity Shelf Program during the nine months period of 2013 compared to the same period in 2012.  Offsetting these increases were: (i) net payments of $158 million on the 2012 Credit Facility during the nine months period of 2013 compared to $170.5 million of net payments on the 2011 Credit Facility for the same period in 2012, (ii) $59.4 million proceeds from HUD debt refinancing during the first quarter of 2013 compared to the issuance of our $400 million 2024 Notes in March 2012, (iii) $113.4 million HUD mortgages payoff including routine HUD debt principal payments during the nine months period of 2013 compared to $189.7 million payments for the same period in 2012 including: (a) $175.0 million tender offer and redemption payments for our outstanding $175 million 2016 Notes, (b) $11.7 million early retirement of four HUD mortgages and (c) $2.9 million in routine HUD debt principal, (iv) a decrease in net payment of $12.1 million in refinancing costs during the nine months period of 2013 compared to the same period of 2012 primarily associated with (a) the tender offer and redemption of our $175 million 2016 Notes in the first quarter of 2012, (b) the issuance of our $400 million 2024 Notes in the first quarter of 2012 and (c) prepayment penalty for the extinguishment of the HUD debt in the second quarter of 2012, (v) a decrease in net proceeds of $58.3 million from our dividend reinvestment plan during the nine months period of 2013 compared to the same period in 2012, and (vi) an increase in dividend payments of $26.4 million related to an increase in number of shares outstanding and an increase of $0.13 per share in the dividends during the nine months period of 2013 compared to the same period in 2012.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes in our primary market risk exposures or how those exposures are managed from the information disclosed under Item 7A of our annual report on Form 10-K for the year ended December 31, 2012.

Item 4 – Controls and Procedures

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

In connection with the preparation of this Form 10-Q, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2013.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2013.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report identified in connection with the evaluation of our disclosure controls and procedures described above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

37

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

See Note 10 – Litigation to the Consolidated Financial Statements in Part I, Item 1 hereto, which is hereby incorporated by reference in response to this item.

Item 1A – Risk Factors

We filed our Annual Report on Form 10-K for the year ended December 31, 2012, with the Securities and Exchange Commission on February 28, 2013, which sets forth our risk factors in Item 1A therein.  We have not experienced any material changes from the risk factors previously described therein.

38

Item 6–Exhibits

Exhibit No.
4.1	Ninth Supplemental Indenture, dated as of August 1, 2013, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee,  supplementing the Indenture, dated as of February 9, 2010, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee, related to the 7.5% Senior Notes due 2020, including the Form of 7.5% Senior Notes and Form of Subsidiary Guarantee related thereto. (Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on February 10, 2010).*
4.2	Seventh Supplemental Indenture, dated as of August 1, 2013, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee, supplementing the Indenture, dated as of October 4, 2010, by and among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto and U.S. Bank National Association, as trustee, related to the 6.75% Senior Notes due 2022, including the Form of 6.75% Senior Notes and Form of Subsidiary Guarantee related thereto. (Incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on October 5, 2010).*
4.3	Fifth Supplemental Indenture, dated as of August 1, 2013, among Omega Healthcare Investors, Inc., each of the Subsidiary Guarantors listed on Schedule I thereto, each of the New Subsidiaries listed on Schedule II thereto and U.S. Bank National Association, as trustee, supplementing the Indenture, dated as of March 19, 2012, among Omega Healthcare Investors, Inc., each of the subsidiary guarantors listed therein and U.S. Bank National Association, as trustee, relating to the 5.875% Senior Notes due 2024. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on March 19, 2012).*
31.1	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer.
32.1	Section 1350 Certification of the Chief Executive Officer.
32.2	Section 1350 Certification of the Chief Financial Officer.
101.INS	XBRL Instance Document.**
101.SCH	XBRL Taxonomy Extension Schema Document.**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.**

* Exhibits that are filed herewith.

**In accordance with Rule 406T of Regulation S-T, this XBRL-related information shall be deemed to be “furnished” and not “filed.”

39

SIGNATURES

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

	OMEGA HEALTHCARE INVESTORS, INC.
		Registrant
Date:        November 7, 2013		By:	/S/ C. TAYLOR PICKETT
			C. Taylor Pickett
			Chief Executive Officer

Date:        November 7, 2013	By:	/S/ ROBERT O. STEPHENSON
		Robert O. Stephenson
		Chief Financial Officer

40

EX-4.1

Exhibit 4.1

NINTH SUPPLEMENTAL INDENTURE

(Senior Notes due 2020)

THIS NINTH SUPPLEMENTAL INDENTURE (this “Ninth Supplemental Indenture”) is dated as of August 1, 2013, among OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation (the “Issuer”), each of the SUBSIDIARY GUARANTORS listed on Schedule I hereto (collectively, the “Subsidiary Guarantors”), each of the companies listed on Schedule II hereto (collectively, the “New Subsidiaries”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”).

W I T N E S S E T H :

WHEREAS, the Issuer and the Subsidiary Guarantors have heretofore executed and delivered to the Trustee an Indenture, dated as of February 9, 2010 (as supplemented by that First Supplemental Indenture, dated June 23, 2010, that Second Supplemental Indenture, dated as of September 2, 2010, that Third Supplemental Indenture, dated as of January 13, 2011, that Fourth Supplemental Indenture, dated as of June 10, 2011, that Fifth Supplemental Indenture, dated as of July 2, 2012, that Sixth Supplemental Indenture, dated as of August 9, 2012, that Seventh Supplemental Indenture, dated as of September 24, 2012, and that Eighth Supplemental Indenture, effective as of December 31, 2012, the “Indenture”), providing for the issuance of the Issuer’s 7-1/2% Senior Notes due 2020 (the “Notes”);

WHEREAS, Section 9.01 of the Indenture authorizes the Issuer, the Subsidiary Guarantors and the Trustee, together, to amend or supplement the Indenture, without notice to or consent of any Holder of the Notes, for the purpose of making any change that would not materially adversely affect the rights of any Holder of the Notes;

WHEREAS, the Issuer has re-designated the New Subsidiaries (formerly Unrestricted Subsidiaries) as Restricted Subsidiaries under the Indenture and now wishes to cause the New Subsidiaries to become Subsidiary Guarantors pursuant to Section 4.14 of the Indenture;

WHEREAS, in Section 1.01 of the Indenture, the term “Subsidiary Guarantors” is defined to include all Persons that become a Subsidiary Guarantor by the terms of the Indenture after the Closing Date; and

WHEREAS, Section 10.01 of the Indenture provides that each Subsidiary Guarantor shall be a guarantor of the Issuer’s obligations under the Notes, subject to the terms and conditions described in the Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the Subsidiary Guarantors, the New Subsidiaries and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. AMENDMENT TO GUARANTEE. The New Subsidiaries hereby agree, jointly and severally with all other Subsidiary Guarantors, to guarantee the Issuer’s obligations under the Notes on the terms and subject to the conditions set forth in the Indenture, and to be bound by, and to receive the benefit of, all other applicable provisions of the Indenture as Subsidiary Guarantors. Such guarantee shall be evidenced by the New Subsidiaries’ execution of Subsidiary Guarantees, the form of which is attached as Exhibit E to the Indenture, and shall be effective as of the date hereof.

3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, partner, affiliate, beneficiary or stockholder of the New Subsidiaries, as such, shall have any liability for any obligations of the Issuer or any Subsidiary Guarantor under the Notes, any Guarantees, the Indenture or this Ninth Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes, by accepting and holding a Note, waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes.

4. NEW YORK LAW TO GOVERN. The laws of the State of New York shall govern and be used to construe this Ninth Supplemental Indenture.

5. COUNTERPARTS. The parties may sign any number of copies of this Ninth Supplemental Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement.

6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.

7. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Ninth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Issuer, the Subsidiary Guarantors and the New Subsidiaries.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have caused this Ninth Supplemental Indenture to be duly executed and attested, all as of the date first above written.

OMEGA HEALTHCARE INVESTORS, INC.

By: /s/ Robert O. Stephenson

Name: Robert O. Stephenson

Title: Chief Financial Officer and Treasurer

On behalf of each Subsidiary Guarantor, its sole member, general partner or trustee, named on the attached Schedule I

By: /s/ Daniel J. Booth

Name: Daniel J. Booth

Title: Chief Operating Officer and Secretary

On behalf of each of the New Subsidiaries or its sole member, named on the attached Schedule II

By: /s/ Daniel J. Booth

Name: Daniel J. Booth

Title: Chief Operating Officer and Secretary

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

By: /s/ Dave Ferrell

Name: Dave Ferrell

Title: Vice President

Schedule I

SUBSIDIARY GUARANTORS

13922 Cerise Avenue, LLC

245 East Wilshire Avenue, LLC

3806 Clayton Road, LLC

637 East Romie Lane, LLC

523 Hayes Lane, LLC

1200 Ely Street Holdings Co. LLC

42235 County Road Holdings Co. LLC

2425 Teller Avenue, LLC

48 High Point Road, LLC

Arizona Lessor - Infinia, Inc.

Baldwin Health Center, Inc.

Bayside Alabama Healthcare Second, Inc.

Bayside Arizona Healthcare Associates, Inc.

Bayside Arizona Healthcare Second, Inc.

Bayside Colorado Healthcare Associates, Inc.

Bayside Colorado Healthcare Second, Inc.

Bayside Indiana Healthcare Associates, Inc.

Bayside Street II, Inc.

Bayside Street, Inc.

Canton Health Care Land, Inc.

Carnegie Gardens LLC

Center Healthcare Associates, Inc.

CFG 2115 Woodstock Place LLC

Cherry Street - Skilled Nursing, Inc.

Colonial Gardens, LLC

Colorado Lessor - Conifer, Inc.

Copley Health Center, Inc.

CSE Anchorage LLC

CSE Blountville LLC

CSE Bolivar LLC

CSE Camden LLC

CSE Centennial Village

CSE Corpus North LLC

CSE Crane LLC

CSE Denver Iliff LLC

CSE Fairhaven LLC

CSE Huntingdon LLC

CSE Jacinto City LLC

CSE Jefferson City LLC

CSE Kerrville LLC

CSE Marianna Holdings LLC

CSE Memphis LLC

CSE Pennsylvania Holdings

CSE Ripley LLC

CSE Ripon LLC

CSE Spring Branch LLC

CSE Texarkana LLC

CSE The Village LLC

CSE West Point LLC

CSE Whitehouse LLC

CSE Williamsport LLC

Dallas - Skilled Nursing, Inc.

Delta Investors I, LLC

Delta Investors II, LLC

Desert Lane, LLC

Dixon Health Care Center, Inc.

Encanto Senior Care, LLC

Florida Lessor - Crystal Springs, Inc.

Florida Lessor - Emerald, Inc.

Florida Lessor - Lakeland, Inc.

Florida Lessor - Meadowview, Inc.

Florida Real Estate Company, LLC

Georgia Lessor - Bonterra/Parkview, Inc.

Greenbough, LLC

Hanover House, Inc.

Heritage Texarkana Healthcare Associates, Inc.

House of Hanover, Ltd.

Hutton I Land, Inc.

Hutton II Land, Inc.

Hutton III Land, Inc.

Indiana Lessor - Jeffersonville, Inc.

Indiana Lessor - Wellington Manor, Inc.

Jefferson Clark, Inc.

LAD I Real Estate Company, LLC

Lake Park - Skilled Nursing, Inc.

Leatherman 90-1, Inc.

Leatherman Partnership 89-1, Inc.

Leatherman Partnership 89-2, Inc.

Long Term Care - Michigan, Inc.

Long Term Care - North Carolina, Inc.

Long Term Care Associates - Illinois, Inc.

Long Term Care Associates - Indiana, Inc.

Long Term Care Associates - Texas, Inc.

Meridian Arms Land, Inc.

North Las Vegas LLC

NRS Ventures, L.L.C.

OHI (Connecticut), Inc.

OHI (Florida), Inc.

OHI (Illinois), Inc.

OHI (Indiana), Inc.

OHI (Iowa), Inc.

OHI (Kansas), Inc.

OHI Asset (CA), LLC

OHI Asset (CT) Lender, LLC

OHI Asset (FL), LLC

OHI Asset (ID), LLC

OHI Asset (IN), LLC

OHI Asset (LA), LLC

OHI Asset (MI), LLC

OHI Asset (MI/NC), LLC

OHI Asset (MO), LLC

OHI Asset (OH) Lender, LLC

OHI Asset (OH) New Philadelphia, LLC

OHI Asset (OH), LLC

OHI Asset (PA) Trust

OHI Asset (PA), LLC

OHI Asset (SMS) Lender, Inc.

OHI Asset (TX), LLC

OHI Asset CSE-E, LLC

OHI Asset CSE-U, LLC

OHI Asset Essex (OH), LLC

OHI Asset II (CA), LLC

OHI Asset II (PA) Trust

OHI Asset III (PA) Trust

OHI Asset, LLC

OHI of Texas, Inc.

OHI Sunshine, Inc.

OHI Tennessee, Inc. (formerly known as OHI of Kentucky, Inc.)

OHIMA, Inc.

Omega (Kansas), Inc.

Omega TRS I, Inc.

Orange Village Care Center, Inc.

OS Leasing Company

Panama City Nursing Center LLC

Parkview - Skilled Nursing, Inc.

Pavillion North Partners, Inc.

Pavillion North, LLP

Pavillion Nursing Center North, Inc.

Pine Texarkana Healthcare Associates, Inc.

Reunion Texarkana Healthcare Associates, Inc.

San Augustine Healthcare Associates, Inc.

Skilled Nursing - Gaston, Inc.

Skilled Nursing - Herrin, Inc.

Skilled Nursing - Hicksville, Inc.

Skilled Nursing - Paris, Inc.

Skyler Maitland LLC

South Athens Healthcare Associates, Inc.

St. Mary’s Properties, Inc.

Sterling Acquisition Corp.

Sterling Acquisition Corp. II

Suwanee, LLC

Texas Lessor - Stonegate GP, Inc.

Texas Lessor - Stonegate Limited, Inc.

Texas Lessor - Stonegate, L.P.

Texas Lessor - Treemont, Inc.

The Suburban Pavilion, Inc.

Washington Lessor - Silverdale, Inc.

Waxahachie Healthcare Associates, Inc.

West Athens Healthcare Associates, Inc.

Wilcare, LLC

OHI Asset (CO), LLC

OHI Asset (IL), LLC

OHI Asset IV (PA) Silver Lake Trust

OHI Asset II (FL), LLC

CSE Albany LLC

CSE Amarillo LLC

CSE Arden L.P.

CSE Augusta LLC

CSE Bedford LLC

CSE Cambridge LLC

CSE Cambridge Realty LLC

CSE Canton LLC

CSE Cedar Rapids LLC

CSE Chelmsford LLC

CSE Chesterton LLC

CSE Claremont LLC

CSE Denver LLC

CSE Douglas LLC

CSE Dumas LLC

CSE Elkton LLC

CSE Elkton Realty LLC

CSE Fort Wayne LLC

CSE Frankston LLC

CSE Georgetown LLC

CSE Green Bay LLC

CSE Hilliard LLC

CSE Huntsville LLC

CSE Indianapolis-Continental LLC

CSE Indianapolis-Greenbriar LLC

CSE Jefferson-Hillcrest Center LLC

CSE Jefferson-Jennings House LLC

CSE King L.P.

CSE Kingsport LLC

CSE Knightdale L.P.

CSE Lake City LLC

CSE Lake Worth LLC

CSE Lakewood LLC

CSE Las Vegas LLC

CSE Lawrenceburg LLC

CSE Lenoir L.P.

CSE Lexington Park LLC

CSE Lexington Park Realty LLC

CSE Ligonier LLC

CSE Live Oak LLC

CSE Logansport LLC

CSE Lowell LLC

CSE Mobile LLC

CSE Moore LLC

CSE North Carolina Holdings I LLC

CSE North Carolina Holdings II LLC

CSE Omro LLC

CSE Orange Park LLC

CSE Orlando-Pinar Terrace Manor LLC

CSE Orlando-Terra Vista Rehab LLC

CSE Piggott LLC

CSE Pilot Point LLC

CSE Ponca City LLC

CSE Port St. Lucie LLC

CSE Richmond LLC

CSE Safford LLC

CSE Salina LLC

CSE Seminole LLC

CSE Shawnee LLC

CSE Stillwater LLC

CSE Taylorsville LLC

CSE Texas City LLC

CSE Upland LLC

CSE Walnut Cove L.P.

CSE Winter Haven LLC

CSE Woodfin L.P.

CSE Yorktown LLC

CSE Casablanca Holdings LLC

CSE Casablanca Holdings II LLC

OHI Asset CSB LLC

OHI Asset (FL) Lender, LLC

OHI Asset (MD), LLC

OHI Asset HUD CFG, LLC

OHI Asset HUD WO, LLC

OHI Asset HUD SF, LLC

OHI Asset (IN) Greensburg, LLC

OHI Asset (IN) Indianapolis, LLC

OHI Asset (IN) Wabash, LLC

OHI Asset (IN) Westfield, LLC

OHI Asset (IN) American Village, LLC

OHI Asset (IN) Beech Grove, LLC

OHI Asset (IN) Eagle Valley, LLC

OHI Asset (IN) Anderson, LLC

OHI Asset (IN) Forest Creek, LLC

OHI Asset (IN) Franklin, LLC

OHI Asset (IN) Fort Wayne, LLC

OHI Asset (IN) Monticello, LLC

OHI Asset (IN) Kokomo, LLC

OHI Asset (IN) Elkhart, LLC

OHI Asset (IN) Clarksville, LLC

OHI Asset (IN) Noblesville, LLC

OHI Asset (IN) Rosewalk, LLC

OHI Asset (IN) Lafayette, LLC

OHI Asset (IN) Spring Mill, LLC

OHI Asset (IN) Terre Haute, LLC

OHI Asset (IN) Zionsville, LLC

OHI Asset (TX) Hondo, LLC

OHI Asset HUD SF CA, LLC

OHI Asset (MI) Heather Hills, LLC

OHI Asset (IN) Crown Point, LLC

OHI Asset (IN) Madison, LLC

Schedule II

NEW SUBSIDIARIES

OHI Asset HUD Delta, LLC

CSE Pine View LLC

Dixie White House Nursing Home, Inc.

Ocean Springs Nursing Home, Inc.

Pensacola Real Estate Holdings I, Inc.

Pensacola Real Estate Holdings II, Inc.

Pensacola Real Estate Holdings III, Inc.

Pensacola Real Estate Holdings IV, Inc.

Pensacola Real Estate Holdings V, Inc.

Skyler Boyington, Inc.

Skyler Florida, Inc.

Skyler Pensacola, Inc.

EX-4.2

 Exhibit 4.2

SEVENTH SUPPLEMENTAL INDENTURE

(Senior Notes due 2022)

THIS SEVENTH SUPPLEMENTAL INDENTURE (this “Seventh Supplemental Indenture”) is dated as of August 1, 2013, among OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation (the “Issuer”), each of the SUBSIDIARY GUARANTORS listed on Schedule I hereto (collectively, the “Subsidiary Guarantors”), each of the companies listed on Schedule II hereto (collectively, the “New Subsidiaries”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”).

W I T N E S S E T H :

WHEREAS, the Issuer and the Subsidiary Guarantors have heretofore executed and delivered to the Trustee an Indenture, dated as of October 4, 2010 (as supplemented by that First Supplemental Indenture dated as of January 13, 2011, that Second Supplemental Indenture dated as of June 10, 2011, that Third Supplemental Indenture dated as of July 2, 2012, that Fourth Supplemental Indenture dated as of August 9, 2012, that Fifth Supplemental Indenture dated as of September 24, 2012, and that Sixth Supplemental Indenture effective as of December 31, 2012, the “Indenture”), providing for the issuance of the Issuer’s 6-3/4% Senior Notes due 2022 (the “Notes”);

WHEREAS, Section 9.01 of the Indenture authorizes the Issuer, the Subsidiary Guarantors and the Trustee, together, to amend or supplement the Indenture, without notice to or consent of any Holder of the Notes, for the purpose of making any change that would not materially adversely affect the rights of any Holder of the Notes;

WHEREAS, the Issuer has re-designated the New Subsidiaries (formerly Unrestricted Subsidiaries) as Restricted Subsidiaries under the Indenture and now wishes to cause the New Subsidiaries to become Subsidiary Guarantors pursuant to Section 4.14 of the Indenture;

WHEREAS, in Section 1.01 of the Indenture, the term “Subsidiary Guarantors” is defined to include all Persons that become a Subsidiary Guarantor by the terms of the Indenture after the Closing Date; and

WHEREAS, Section 10.01 of the Indenture provides that each Subsidiary Guarantor shall be a guarantor of the Issuer’s obligations under the Notes, subject to the terms and conditions described in the Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the Subsidiary Guarantors, the New Subsidiaries and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. AMENDMENT TO GUARANTEE. The New Subsidiaries hereby agree, jointly and severally with all other Subsidiary Guarantors, to guarantee the Issuer’s obligations under the Notes on the terms and subject to the conditions set forth in the Indenture, and to be bound by, and to receive the benefit of, all other applicable provisions of the Indenture as Subsidiary Guarantors. Such guarantee shall be evidenced by the New Subsidiaries’ execution of Subsidiary Guarantees, the form of which is attached as Exhibit E to the Indenture, and shall be effective as of the date hereof.

3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, partner, affiliate, beneficiary or stockholder of the New Subsidiaries, as such, shall have any liability for any obligations of the Issuer or any Subsidiary Guarantor under the Notes, any Guarantees, the Indenture or this Seventh Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes, by accepting and holding a Note, waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes.

4. NEW YORK LAW TO GOVERN. The laws of the State of New York shall govern and be used to construe this Seventh Supplemental Indenture.

5. COUNTERPARTS. The parties may sign any number of copies of this Seventh Supplemental Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement.

6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.

7. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Seventh Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Issuer, the Subsidiary Guarantors and the New Subsidiaries.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have caused this Seventh Supplemental Indenture to be duly executed, all as of the date first above written.

OMEGA HEALTHCARE INVESTORS, INC.

By: /s/ Robert O. Stephenson

Name: Robert O. Stephenson

Title: Chief Financial Officer and Treasurer

On behalf of each Subsidiary Guarantor, its sole member, general partner or trustee, named on the attached Schedule I

By: /s/ Daniel J. Booth

Name: Daniel J. Booth

Title: Chief Operating Officer and Secretary

On behalf of each of the New Subsidiaries or its sole member, named on the attached Schedule II

By: /s/ Daniel J. Booth

Name: Daniel J. Booth

Title: Chief Operating Officer and Secretary

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

By: /s/ Dave Ferrell

Name: Dave Ferrell

Title: Vice President

Schedule I

SUBSIDIARY GUARANTORS

13922 Cerise Avenue, LLC

245 East Wilshire Avenue, LLC

3806 Clayton Road, LLC

637 East Romie Lane, LLC

523 Hayes Lane, LLC

1200 Ely Street Holdings Co. LLC

42235 County Road Holdings Co. LLC

2425 Teller Avenue, LLC

48 High Point Road, LLC

Arizona Lessor - Infinia, Inc.

Baldwin Health Center, Inc.

Bayside Alabama Healthcare Second, Inc.

Bayside Arizona Healthcare Associates, Inc.

Bayside Arizona Healthcare Second, Inc.

Bayside Colorado Healthcare Associates, Inc.

Bayside Colorado Healthcare Second, Inc.

Bayside Indiana Healthcare Associates, Inc.

Bayside Street II, Inc.

Bayside Street, Inc.

Canton Health Care Land, Inc.

Carnegie Gardens LLC

Center Healthcare Associates, Inc.

CFG 2115 Woodstock Place LLC

Cherry Street - Skilled Nursing, Inc.

Colonial Gardens, LLC

Colorado Lessor - Conifer, Inc.

Copley Health Center, Inc.

CSE Anchorage LLC

CSE Blountville LLC

CSE Bolivar LLC

CSE Camden LLC

CSE Centennial Village

CSE Corpus North LLC

CSE Crane LLC

CSE Denver Iliff LLC

CSE Fairhaven LLC

CSE Huntingdon LLC

CSE Jacinto City LLC

CSE Jefferson City LLC

CSE Kerrville LLC

CSE Marianna Holdings LLC

CSE Memphis LLC

CSE Pennsylvania Holdings

CSE Ripley LLC

CSE Ripon LLC

CSE Spring Branch LLC

CSE Texarkana LLC

CSE The Village LLC

CSE West Point LLC

CSE Whitehouse LLC

CSE Williamsport LLC

Dallas - Skilled Nursing, Inc.

Delta Investors I, LLC

Delta Investors II, LLC

Desert Lane, LLC

Dixon Health Care Center, Inc.

Encanto Senior Care, LLC

Florida Lessor - Crystal Springs, Inc.

Florida Lessor - Emerald, Inc.

Florida Lessor - Lakeland, Inc.

Florida Lessor - Meadowview, Inc.

Florida Real Estate Company, LLC

Georgia Lessor - Bonterra/Parkview, Inc.

Greenbough, LLC

Hanover House, Inc.

Heritage Texarkana Healthcare Associates, Inc.

House of Hanover, Ltd.

Hutton I Land, Inc.

Hutton II Land, Inc.

Hutton III Land, Inc.

Indiana Lessor - Jeffersonville, Inc.

Indiana Lessor - Wellington Manor, Inc.

Jefferson Clark, Inc.

LAD I Real Estate Company, LLC

Lake Park - Skilled Nursing, Inc.

Leatherman 90-1, Inc.

Leatherman Partnership 89-1, Inc.

Leatherman Partnership 89-2, Inc.

Long Term Care - Michigan, Inc.

Long Term Care - North Carolina, Inc.

Long Term Care Associates - Illinois, Inc.

Long Term Care Associates - Indiana, Inc.

Long Term Care Associates - Texas, Inc.

Meridian Arms Land, Inc.

North Las Vegas LLC

NRS Ventures, L.L.C.

OHI (Connecticut), Inc.

OHI (Florida), Inc.

OHI (Illinois), Inc.

OHI (Indiana), Inc.

OHI (Iowa), Inc.

OHI (Kansas), Inc.

OHI Asset (CA), LLC

OHI Asset (CT) Lender, LLC

OHI Asset (FL), LLC

OHI Asset (ID), LLC

OHI Asset (IN), LLC

OHI Asset (LA), LLC

OHI Asset (MI), LLC

OHI Asset (MI/NC), LLC

OHI Asset (MO), LLC

OHI Asset (OH) Lender, LLC

OHI Asset (OH) New Philadelphia, LLC

OHI Asset (OH), LLC

OHI Asset (PA) Trust

OHI Asset (PA), LLC

OHI Asset (SMS) Lender, Inc.

OHI Asset (TX), LLC

OHI Asset CSE-E, LLC

OHI Asset CSE-U, LLC

OHI Asset Essex (OH), LLC

OHI Asset II (CA), LLC

OHI Asset II (PA) Trust

OHI Asset III (PA) Trust

OHI Asset, LLC

OHI of Texas, Inc.

OHI Sunshine, Inc.

OHI Tennessee, Inc. (formerly known as OHI of Kentucky, Inc.)

OHIMA, Inc.

Omega (Kansas), Inc.

Omega TRS I, Inc.

Orange Village Care Center, Inc.

OS Leasing Company

Panama City Nursing Center LLC

Parkview - Skilled Nursing, Inc.

Pavillion North Partners, Inc.

Pavillion North, LLP

Pavillion Nursing Center North, Inc.

Pine Texarkana Healthcare Associates, Inc.

Reunion Texarkana Healthcare Associates, Inc.

San Augustine Healthcare Associates, Inc.

Skilled Nursing - Gaston, Inc.

Skilled Nursing - Herrin, Inc.

Skilled Nursing - Hicksville, Inc.

Skilled Nursing - Paris, Inc.

Skyler Maitland LLC

South Athens Healthcare Associates, Inc.

St. Mary’s Properties, Inc.

Sterling Acquisition Corp.

Sterling Acquisition Corp. II

Suwanee, LLC

Texas Lessor - Stonegate GP, Inc.

Texas Lessor - Stonegate Limited, Inc.

Texas Lessor - Stonegate, L.P.

Texas Lessor - Treemont, Inc.

The Suburban Pavilion, Inc.

Washington Lessor - Silverdale, Inc.

Waxahachie Healthcare Associates, Inc.

West Athens Healthcare Associates, Inc.

Wilcare, LLC

OHI Asset (CO), LLC

OHI Asset (IL), LLC

OHI Asset IV (PA) Silver Lake Trust

OHI Asset II (FL), LLC

CSE Albany LLC

CSE Amarillo LLC

CSE Arden L.P.

CSE Augusta LLC

CSE Bedford LLC

CSE Cambridge LLC

CSE Cambridge Realty LLC

CSE Canton LLC

CSE Cedar Rapids LLC

CSE Chelmsford LLC

CSE Chesterton LLC

CSE Claremont LLC

CSE Denver LLC

CSE Douglas LLC

CSE Dumas LLC

CSE Elkton LLC

CSE Elkton Realty LLC

CSE Fort Wayne LLC

CSE Frankston LLC

CSE Georgetown LLC

CSE Green Bay LLC

CSE Hilliard LLC

CSE Huntsville LLC

CSE Indianapolis-Continental LLC

CSE Indianapolis-Greenbriar LLC

CSE Jefferson-Hillcrest Center LLC

CSE Jefferson-Jennings House LLC

CSE King L.P.

CSE Kingsport LLC

CSE Knightdale L.P.

CSE Lake City LLC

CSE Lake Worth LLC

CSE Lakewood LLC

CSE Las Vegas LLC

CSE Lawrenceburg LLC

CSE Lenoir L.P.

CSE Lexington Park LLC

CSE Lexington Park Realty LLC

CSE Ligonier LLC

CSE Live Oak LLC

CSE Logansport LLC

CSE Lowell LLC

CSE Mobile LLC

CSE Moore LLC

CSE North Carolina Holdings I LLC

CSE North Carolina Holdings II LLC

CSE Omro LLC

CSE Orange Park LLC

CSE Orlando-Pinar Terrace Manor LLC

CSE Orlando-Terra Vista Rehab LLC

CSE Piggott LLC

CSE Pilot Point LLC

CSE Ponca City LLC

CSE Port St. Lucie LLC

CSE Richmond LLC

CSE Safford LLC

CSE Salina LLC

CSE Seminole LLC

CSE Shawnee LLC

CSE Stillwater LLC

CSE Taylorsville LLC

CSE Texas City LLC

CSE Upland LLC

CSE Walnut Cove L.P.

CSE Winter Haven LLC

CSE Woodfin L.P.

CSE Yorktown LLC

CSE Casablanca Holdings LLC

CSE Casablanca Holdings II LLC

OHI Asset CSB LLC

OHI Asset (FL) Lender, LLC

OHI Asset (MD), LLC

OHI Asset HUD CFG, LLC

OHI Asset HUD WO, LLC

OHI Asset HUD SF, LLC

OHI Asset (IN) Greensburg, LLC

OHI Asset (IN) Indianapolis, LLC

OHI Asset (IN) Wabash, LLC

OHI Asset (IN) Westfield, LLC

OHI Asset (IN) American Village, LLC

OHI Asset (IN) Beech Grove, LLC

OHI Asset (IN) Eagle Valley, LLC

OHI Asset (IN) Anderson, LLC

OHI Asset (IN) Forest Creek, LLC

OHI Asset (IN) Franklin, LLC

OHI Asset (IN) Fort Wayne, LLC

OHI Asset (IN) Monticello, LLC

OHI Asset (IN) Kokomo, LLC

OHI Asset (IN) Elkhart, LLC

OHI Asset (IN) Clarksville, LLC

OHI Asset (IN) Noblesville, LLC

OHI Asset (IN) Rosewalk, LLC

OHI Asset (IN) Lafayette, LLC

OHI Asset (IN) Spring Mill, LLC

OHI Asset (IN) Terre Haute, LLC

OHI Asset (IN) Zionsville, LLC

OHI Asset (TX) Hondo, LLC

OHI Asset HUD SF CA, LLC

OHI Asset (MI) Heather Hills, LLC

OHI Asset (IN) Crown Point, LLC

OHI Asset (IN) Madison, LLC

Schedule II

NEW SUBSIDIARIES

OHI Asset HUD Delta, LLC

CSE Pine View LLC

Dixie White House Nursing Home, Inc.

Ocean Springs Nursing Home, Inc.

Pensacola Real Estate Holdings I, Inc.

Pensacola Real Estate Holdings II, Inc.

Pensacola Real Estate Holdings III, Inc.

Pensacola Real Estate Holdings IV, Inc.

Pensacola Real Estate Holdings V, Inc.

Skyler Boyington, Inc.

Skyler Florida, Inc.

Skyler Pensacola, Inc.

EX-4.3

Exhibit 4.3

FIFTH SUPPLEMENTAL INDENTURE

(Senior Notes due 2024)

THIS FIFTH SUPPLEMENTAL INDENTURE (this “Fifth Supplemental Indenture”) is dated as of August 1, 2013, among OMEGA HEALTHCARE INVESTORS, INC., a Maryland corporation (the “Issuer”), each of the SUBSIDIARY GUARANTORS listed on Schedule I hereto (collectively, the “Subsidiary Guarantors”), each of the companies listed on Schedule II hereto (collectively, the “New Subsidiaries”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”).

W I T N E S S E T H :

WHEREAS, the Issuer and the Subsidiary Guarantors have heretofore executed and delivered to the Trustee an Indenture, dated as of March 19, 2012 (as supplemented by that First Supplemental Indenture, dated as of July 2, 2012, that Second Supplemental Indenture, dated as of August 9, 2012, that Third Supplemental Indenture, dated as of September 24, 2012, and that Fourth Supplemental Indenture effective as of December 31, 2012, the “Indenture”), providing for the issuance of the Issuer’s 5-7/8% Senior Notes due 2024 (the “Notes”);

WHEREAS, Section 9.01 of the Indenture authorizes the Issuer, the Subsidiary Guarantors and the Trustee, together, to amend or supplement the Indenture, without notice to or consent of any Holder of the Notes, for the purpose of making any change that would not materially adversely affect the rights of any Holder of the Notes;

WHEREAS, the Issuer has re-designated the New Subsidiaries (formerly Unrestricted Subsidiaries) as Restricted Subsidiaries under the Indenture and now wishes to cause the New Subsidiaries to become Subsidiary Guarantors pursuant to Section 4.14 of the Indenture;

WHEREAS, in Section 1.01 of the Indenture, the term “Subsidiary Guarantors” is defined to include all Persons that become a Subsidiary Guarantor by the terms of the Indenture after the Closing Date; and

WHEREAS, Section 10.01 of the Indenture provides that each Subsidiary Guarantor shall be a guarantor of the Issuer’s obligations under the Notes, subject to the terms and conditions described in the Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Issuer, the Subsidiary Guarantors, the New Subsidiaries and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. AMENDMENT TO GUARANTEE. The New Subsidiaries hereby agree, jointly and severally with all other Subsidiary Guarantors, to guarantee the Issuer’s obligations under the Notes on the terms and subject to the conditions set forth in the Indenture, and to be bound by, and to receive the benefit of, all other applicable provisions of the Indenture as Subsidiary Guarantors. Such guarantee shall be evidenced by the New Subsidiaries’ execution of Subsidiary Guarantees, the form of which is attached as Exhibit E to the Indenture, and shall be effective as of the date hereof.

3. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, partner, affiliate, beneficiary or stockholder of the New Subsidiaries, as such, shall have any liability for any obligations of the Issuer or any Subsidiary Guarantor under the Notes, any Guarantees, the Indenture or this Fifth Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes, by accepting and holding a Note, waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Notes.

4. NEW YORK LAW TO GOVERN. The laws of the State of New York shall govern and be used to construe this Fifth Supplemental Indenture.

5. COUNTERPARTS. The parties may sign any number of copies of this Fifth Supplemental Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement.

6. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.

7. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Fifth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Issuer, the Subsidiary Guarantors and the New Subsidiaries.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties hereto have caused this Fifth Supplemental Indenture to be duly executed, all as of the date first above written.

OMEGA HEALTHCARE INVESTORS, INC.

By: /s/ Robert O. Stephenson

Name: Robert O. Stephenson

Title: Chief Financial Officer and Treasurer

On behalf of each Subsidiary Guarantor, its sole member, general partner or trustee, named on the attached Schedule I

By: /s/ Daniel J. Booth

Name: Daniel J. Booth

Title: Chief Operating Officer and Secretary

On behalf of each of the New Subsidiaries or its sole member, named on the attached Schedule II

By: /s/ Daniel J. Booth

Name: Daniel J. Booth

Title: Chief Operating Officer and Secretary

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

By: /s/ Dave Ferrell

Name: Dave Ferrell

Title: Vice President

Schedule I

SUBSIDIARY GUARANTORS

13922 Cerise Avenue, LLC

245 East Wilshire Avenue, LLC

3806 Clayton Road, LLC

637 East Romie Lane, LLC

523 Hayes Lane, LLC

1200 Ely Street Holdings Co. LLC

42235 County Road Holdings Co. LLC

2425 Teller Avenue, LLC

48 High Point Road, LLC

Arizona Lessor - Infinia, Inc.

Baldwin Health Center, Inc.

Bayside Alabama Healthcare Second, Inc.

Bayside Arizona Healthcare Associates, Inc.

Bayside Arizona Healthcare Second, Inc.

Bayside Colorado Healthcare Associates, Inc.

Bayside Colorado Healthcare Second, Inc.

Bayside Indiana Healthcare Associates, Inc.

Bayside Street II, Inc.

Bayside Street, Inc.

Canton Health Care Land, Inc.

Carnegie Gardens LLC

Center Healthcare Associates, Inc.

CFG 2115 Woodstock Place LLC

Cherry Street - Skilled Nursing, Inc.

Colonial Gardens, LLC

Colorado Lessor - Conifer, Inc.

Copley Health Center, Inc.

CSE Anchorage LLC

CSE Blountville LLC

CSE Bolivar LLC

CSE Camden LLC

CSE Centennial Village

CSE Corpus North LLC

CSE Crane LLC

CSE Denver Iliff LLC

CSE Fairhaven LLC

CSE Huntingdon LLC

CSE Jacinto City LLC

CSE Jefferson City LLC

CSE Kerrville LLC

CSE Marianna Holdings LLC

CSE Memphis LLC

CSE Pennsylvania Holdings

CSE Ripley LLC

CSE Ripon LLC

CSE Spring Branch LLC

CSE Texarkana LLC

CSE The Village LLC

CSE West Point LLC

CSE Whitehouse LLC

CSE Williamsport LLC

Dallas - Skilled Nursing, Inc.

Delta Investors I, LLC

Delta Investors II, LLC

Desert Lane, LLC

Dixon Health Care Center, Inc.

Encanto Senior Care, LLC

Florida Lessor - Crystal Springs, Inc.

Florida Lessor - Emerald, Inc.

Florida Lessor - Lakeland, Inc.

Florida Lessor - Meadowview, Inc.

Florida Real Estate Company, LLC

Georgia Lessor - Bonterra/Parkview, Inc.

Greenbough, LLC

Hanover House, Inc.

Heritage Texarkana Healthcare Associates, Inc.

House of Hanover, Ltd.

Hutton I Land, Inc.

Hutton II Land, Inc.

Hutton III Land, Inc.

Indiana Lessor - Jeffersonville, Inc.

Indiana Lessor - Wellington Manor, Inc.

Jefferson Clark, Inc.

LAD I Real Estate Company, LLC

Lake Park - Skilled Nursing, Inc.

Leatherman 90-1, Inc.

Leatherman Partnership 89-1, Inc.

Leatherman Partnership 89-2, Inc.

Long Term Care - Michigan, Inc.

Long Term Care - North Carolina, Inc.

Long Term Care Associates - Illinois, Inc.

Long Term Care Associates - Indiana, Inc.

Long Term Care Associates - Texas, Inc.

Meridian Arms Land, Inc.

North Las Vegas LLC

NRS Ventures, L.L.C.

OHI (Connecticut), Inc.

OHI (Florida), Inc.

OHI (Illinois), Inc.

OHI (Indiana), Inc.

OHI (Iowa), Inc.

OHI (Kansas), Inc.

OHI Asset (CA), LLC

OHI Asset (CT) Lender, LLC

OHI Asset (FL), LLC

OHI Asset (ID), LLC

OHI Asset (IN), LLC

OHI Asset (LA), LLC

OHI Asset (MI), LLC

OHI Asset (MI/NC), LLC

OHI Asset (MO), LLC

OHI Asset (OH) Lender, LLC

OHI Asset (OH) New Philadelphia, LLC

OHI Asset (OH), LLC

OHI Asset (PA) Trust

OHI Asset (PA), LLC

OHI Asset (SMS) Lender, Inc.

OHI Asset (TX), LLC

OHI Asset CSE-E, LLC

OHI Asset CSE-U, LLC

OHI Asset Essex (OH), LLC

OHI Asset II (CA), LLC

OHI Asset II (PA) Trust

OHI Asset III (PA) Trust

OHI Asset, LLC

OHI of Texas, Inc.

OHI Sunshine, Inc.

OHI Tennessee, Inc. (formerly known as OHI of Kentucky, Inc.)

OHIMA, Inc.

Omega (Kansas), Inc.

Omega TRS I, Inc.

Orange Village Care Center, Inc.

OS Leasing Company

Panama City Nursing Center LLC

Parkview - Skilled Nursing, Inc.

Pavillion North Partners, Inc.

Pavillion North, LLP

Pavillion Nursing Center North, Inc.

Pine Texarkana Healthcare Associates, Inc.

Reunion Texarkana Healthcare Associates, Inc.

San Augustine Healthcare Associates, Inc.

Skilled Nursing - Gaston, Inc.

Skilled Nursing - Herrin, Inc.

Skilled Nursing - Hicksville, Inc.

Skilled Nursing - Paris, Inc.

Skyler Maitland LLC

South Athens Healthcare Associates, Inc.

St. Mary’s Properties, Inc.

Sterling Acquisition Corp.

Sterling Acquisition Corp. II

Suwanee, LLC

Texas Lessor - Stonegate GP, Inc.

Texas Lessor - Stonegate Limited, Inc.

Texas Lessor - Stonegate, L.P.

Texas Lessor - Treemont, Inc.

The Suburban Pavilion, Inc.

Washington Lessor - Silverdale, Inc.

Waxahachie Healthcare Associates, Inc.

West Athens Healthcare Associates, Inc.

Wilcare, LLC

OHI Asset (CO), LLC

OHI Asset (IL), LLC

OHI Asset IV (PA) Silver Lake Trust

OHI Asset II (FL), LLC

CSE Albany LLC

CSE Amarillo LLC

CSE Arden L.P.

CSE Augusta LLC

CSE Bedford LLC

CSE Cambridge LLC

CSE Cambridge Realty LLC

CSE Canton LLC

CSE Cedar Rapids LLC

CSE Chelmsford LLC

CSE Chesterton LLC

CSE Claremont LLC

CSE Denver LLC

CSE Douglas LLC

CSE Dumas LLC

CSE Elkton LLC

CSE Elkton Realty LLC

CSE Fort Wayne LLC

CSE Frankston LLC

CSE Georgetown LLC

CSE Green Bay LLC

CSE Hilliard LLC

CSE Huntsville LLC

CSE Indianapolis-Continental LLC

CSE Indianapolis-Greenbriar LLC

CSE Jefferson-Hillcrest Center LLC

CSE Jefferson-Jennings House LLC

CSE King L.P.

CSE Kingsport LLC

CSE Knightdale L.P.

CSE Lake City LLC

CSE Lake Worth LLC

CSE Lakewood LLC

CSE Las Vegas LLC

CSE Lawrenceburg LLC

CSE Lenoir L.P.

CSE Lexington Park LLC

CSE Lexington Park Realty LLC

CSE Ligonier LLC

CSE Live Oak LLC

CSE Logansport LLC

CSE Lowell LLC

CSE Mobile LLC

CSE Moore LLC

CSE North Carolina Holdings I LLC

CSE North Carolina Holdings II LLC

CSE Omro LLC

CSE Orange Park LLC

CSE Orlando-Pinar Terrace Manor LLC

CSE Orlando-Terra Vista Rehab LLC

CSE Piggott LLC

CSE Pilot Point LLC

CSE Ponca City LLC

CSE Port St. Lucie LLC

CSE Richmond LLC

CSE Safford LLC

CSE Salina LLC

CSE Seminole LLC

CSE Shawnee LLC

CSE Stillwater LLC

CSE Taylorsville LLC

CSE Texas City LLC

CSE Upland LLC

CSE Walnut Cove L.P.

CSE Winter Haven LLC

CSE Woodfin L.P.

CSE Yorktown LLC

CSE Casablanca Holdings LLC

CSE Casablanca Holdings II LLC

OHI Asset CSB LLC

OHI Asset (FL) Lender, LLC

OHI Asset (MD), LLC

OHI Asset HUD CFG, LLC

OHI Asset HUD WO, LLC

OHI Asset HUD SF, LLC

OHI Asset (IN) Greensburg, LLC

OHI Asset (IN) Indianapolis, LLC

OHI Asset (IN) Wabash, LLC

OHI Asset (IN) Westfield, LLC

OHI Asset (IN) American Village, LLC

OHI Asset (IN) Beech Grove, LLC

OHI Asset (IN) Eagle Valley, LLC

OHI Asset (IN) Anderson, LLC

OHI Asset (IN) Forest Creek, LLC

OHI Asset (IN) Franklin, LLC

OHI Asset (IN) Fort Wayne, LLC

OHI Asset (IN) Monticello, LLC

OHI Asset (IN) Kokomo, LLC

OHI Asset (IN) Elkhart, LLC

OHI Asset (IN) Clarksville, LLC

OHI Asset (IN) Noblesville, LLC

OHI Asset (IN) Rosewalk, LLC

OHI Asset (IN) Lafayette, LLC

OHI Asset (IN) Spring Mill, LLC

OHI Asset (IN) Terre Haute, LLC

OHI Asset (IN) Zionsville, LLC

OHI Asset (TX) Hondo, LLC

OHI Asset HUD SF CA, LLC

OHI Asset (MI) Heather Hills, LLC

OHI Asset (IN) Crown Point, LLC

OHI Asset (IN) Madison, LLC

Schedule II

NEW SUBSIDIARIES

OHI Asset HUD Delta, LLC

CSE Pine View LLC

Dixie White House Nursing Home, Inc.

Ocean Springs Nursing Home, Inc.

Pensacola Real Estate Holdings I, Inc.

Pensacola Real Estate Holdings II, Inc.

Pensacola Real Estate Holdings III, Inc.

Pensacola Real Estate Holdings IV, Inc.

Pensacola Real Estate Holdings V, Inc.

Skyler Boyington, Inc.

Skyler Florida, Inc.

Skyler Pensacola, Inc.

EX-31.1

Exhibit 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Certification

I, C. Taylor Pickett, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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:        November 7, 2013
	/S/ C. TAYLOR PICKETT
	C. Taylor Pickett
	Chief Executive Officer

EX-31.2

Exhibit 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER

Certifications

I, Robert O. Stephenson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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:        November 7, 2013
	/S/ ROBERT O. STEPHENSON
	Robert O. Stephenson
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION

OF THE CHIEF EXECUTIVE OFFICER

I, C. Taylor Pickett, 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 Quarterly Report on Form 10-Q of the Company for the three months ended September 30, 2013 (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:       November 7, 2013

/S/   C. TAYLOR PICKETT

        C. Taylor Pickett

        Chief Executive Officer

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION

OF THE CHIEF FINANCIAL OFFICER

I, Robert O. Stephenson, 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 Quarterly Report on Form 10-Q of the Company for the three months ended September 30, 2013 (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:        November 7, 2013

/S/   ROBERT O. STEPHENSON

        Robert O. Stephenson

        Chief Financial Officer

XML

LITIGATION

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

LITIGATION

NOTE 10 – LITIGATION

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

XML

SUBSEQUENT EVENTS (Detail) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	9 Months Ended	0 Months Ended	1 Months Ended
	Sep. 30, 2013 Operator	Oct. 07, 2013 Subsequent Event	Oct. 31, 2013 Subsequent Event Property Operator	Oct. 31, 2013 Subsequent Event Florida Bed	Oct. 31, 2013 Subsequent Event Indiana Bed	Oct. 31, 2013 Subsequent Event SNF's Indiana Property	Oct. 31, 2013 Subsequent Event ALFs Florida Property
Subsequent Event [Line Items]
Investment in facility			$ 33,000,000
Number of real estate properties acquired						4	1
Number of acquisition completed			2
Number of existing operators	48		2
Number of operating beds				97	384
Shares of common stock issued in an underwritten public offering	5,428	2,875
Shares of common stock issued in an underwritten public offering, price per share		$ 30
Proceeds from shares of common stock issued in an underwritten public offering	$ 160,159,000	$ 84,500,000

XML

CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (USD $) In Thousands, except Per Share data, unless otherwise specified	0 Months Ended			3 Months Ended		9 Months Ended
	Jul. 16, 2013	Apr. 16, 2013	Jan. 16, 2013	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenue
Rental income				$ 93,837	$ 78,170	$ 280,015	$ 229,373
Mortgage interest income				7,289	7,677	22,070	22,417
Other investment income - net				2,175	1,238	5,341	3,533
Miscellaneous					23	151	125
Total operating revenues				103,301	87,108	307,577	255,448
Expenses
Depreciation and amortization				32,202	28,305	96,386	82,651
General and administrative				5,462	5,173	16,142	15,653
Acquisition costs				(9)	483	134	686
Impairment loss on real estate properties							272
Provisions for uncollectible mortgages, notes and accounts receivable				2,321		2,386
Total operating expenses				39,976	33,961	115,048	99,262
Income before other income and expense				63,325	53,147	192,529	156,186
Other income (expense)
Interest income				3	6	20	22
Interest expense				(24,492)	(24,050)	(75,116)	(71,026)
Interest - amortization of deferred financing costs				(699)	(673)	(2,079)	(1,970)
Interest - refinancing gain (costs)						11,112	(5,410)
Total other expense				(25,188)	(24,717)	(66,063)	(78,384)
Income before gain on assets sold				38,137	28,430	126,466	77,802
Gain (loss) on assets sold - net					1,689	(1,151)	8,973
Net income available to common stockholders				$ 38,137	$ 30,119	$ 125,315	$ 86,775
Basic:
Net income				$ 0.32	$ 0.28	$ 1.08	$ 0.82
Diluted:
Net income				$ 0.32	$ 0.27	$ 1.08	$ 0.81
Dividends declared and paid per common share	$ 0.47	$ 0.46	$ 0.45	$ 0.47	$ 0.42	$ 1.38	$ 1.25
Weighted-average shares outstanding, basic				117,600	109,135	115,527	106,202
Weighted-average shares outstanding, diluted				118,462	109,667	116,335	106,570

XML

OTHER INVESTMENTS

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

OTHER INVESTMENTS

NOTE 3 – OTHER INVESTMENTS

A summary of our other investments is as follows:

	September 30,			December 31,
	2013			2012
	(in thousands)
Other Investment note due 2015	$	2,368		$	2,518
Other Investment notes due 2021 - 2023		13,217			9,775
Other Investment note due 2013		551			1,018
Other Investment note due 2014		250			812
$28.0 Million Other Investment note due 2017		24,500			26,500
$2.5 Million Other Investment note due 2014		306			-
$6.0 Million Other Investment note due 2013		5,439			3,450
Other Investment note due 2013		-			261
$1.3 Million Other Investment note due 2017		1,300			425
$25.0 Million Other Investment note due 2017		24,910			-
Notes receivable, gross(1)		72,841			44,759
Allowance for loss on notes receivable		(1,977	)		(1,977	)
Notes receivable, net		70,864			42,782
Marketable securities and other		4,557			4,557
Total other investments	$	75,421		$	47,339

(1) The majority of these notes bear interest at approximately 10% annually.

$25 Million Other Investment Note due 2017

In May 2013, we invested $24.9 million in a mezzanine loan with a third party.  The loan bears interest at 12% per annum and matures in December 2017.

XML

OTHER INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Schedule of other investments

	September 30,			December 31,
	2013			2012
	(in thousands)
Other Investment note due 2015	$	2,368		$	2,518
Other Investment notes due 2021 - 2023		13,217			9,775
Other Investment note due 2013		551			1,018
Other Investment note due 2014		250			812
$28.0 Million Other Investment note due 2017		24,500			26,500
$2.5 Million Other Investment note due 2014		306			-
$6.0 Million Other Investment note due 2013		5,439			3,450
Other Investment note due 2013		-			261
$1.3 Million Other Investment note due 2017		1,300			425
$25.0 Million Other Investment note due 2017		24,910			-
Notes receivable, gross(1)		72,841			44,759
Allowance for loss on notes receivable		(1,977	)		(1,977	)
Notes receivable, net		70,864			42,782
Marketable securities and other		4,557			4,557
Total other investments	$	75,421		$	47,339

(1) The majority of these notes bear interest at approximately 10% annually.

XML

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2013

Net Income Available To Common Per Share

EARNINGS PER SHARE

NOTE 11 – EARNINGS PER SHARE

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

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands, except per share amounts)
Numerator:
Net income	$	38,137	$	30,119	$	125,315	$	86,775
Numerator for net income available to common per share - basic and diluted	$	38,137	$	30,119	$	125,315	$	86,775
Denominator:
Denominator for basic earnings per share		117,600		109,135		115,527		106,202
Effect of dilutive securities:
Restricted stock		823		511		774		350
Deferred stock		39		21		34		18
Denominator for diluted earnings per share		118,462		109,667		116,335		106,570
Earnings per share – basic:
Net income – basic	$	0.32	$	0.28	$	1.08	$	0.82
Earnings per share – diluted:
Net income – diluted	$	0.32	$	0.27	$	1.08	$	0.81

XML

FINANCIAL INSTRUMENTS (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
Assets:
Cash and cash equivalents	$ 67,757	$ 1,711	$ 6,951	$ 351
Restricted cash	28,781	36,660
Mortgage notes receivable - net	241,490	238,621
Other investments - net	75,421	47,339
Liabilities:
Revolving line of credit		158,000
Term loan	200,000	100,000
HUD debt	300,034	366,538
Carrying Amount
Assets:
Cash and cash equivalents	67,757	1,711
Restricted cash	28,781	36,660
Mortgage notes receivable - net	241,490	238,621
Other investments - net	75,421	47,339
Totals	413,449	324,331
Liabilities:
Revolving line of credit		158,000
Term loan	200,000	100,000
HUD debt	300,034	366,538
Subordinated debt	20,930	21,049
Totals	1,700,047	1,824,932
Carrying Amount | 7.50% Notes due 2020
Liabilities:
Notes Payable	197,805	197,546
Carrying Amount | 6.75% Notes due 2022
Liabilities:
Notes Payable	581,278	581,799
Carrying Amount | 5.875% Notes due 2024
Liabilities:
Notes Payable	400,000	400,000
Fair Value
Assets:
Cash and cash equivalents	67,757	1,711
Restricted cash	28,781	36,660
Mortgage notes receivable - net	240,013	235,705
Other investments - net	72,820	44,077
Totals	409,371	318,153
Liabilities:
Revolving line of credit		158,000
Term loan	200,000	100,000
HUD debt	335,745	433,803
Subordinated debt	27,153	27,896
Totals	1,920,295	2,138,063
Fair Value | 7.50% Notes due 2020
Liabilities:
Notes Payable	246,304	252,363
Fair Value | 6.75% Notes due 2022
Liabilities:
Notes Payable	709,601	724,240
Fair Value | 5.875% Notes due 2024
Liabilities:
Notes Payable	$ 401,492	$ 441,761

XML

CONCENTRATION OF RISK (Narrative) (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013 Facility Operator State	Sep. 30, 2012	Sep. 30, 2013 Facility Operator State	Sep. 30, 2012	Dec. 31, 2012
Concentration Risk [Line Items]
Number of facilities owned	480		480
Number of states	34		34
Number of operators	48		48
Gross investment in facilities, net of impairments and before reserve for uncollectible loans	$ 3,300,000,000		$ 3,300,000,000
Percentage share of real estate investments related to long-term care facilities	99.00%		99.00%
Miscellaneous investments, net	75,421,000		75,421,000		47,339,000
Operated, concentration percent for separate disclosure	10.00%		10.00%
Operated, concentration number	2		2
Revenues from operations	103,301,000	87,108,000	307,577,000	255,448,000
Revenues from operations, percentage	10.00%		10.00%
Florida
Concentration Risk [Line Items]
Concentration percent by state	18.00%		18.00%
Ohio
Concentration Risk [Line Items]
Concentration percent by state	11.00%		11.00%
Indiana
Concentration Risk [Line Items]
Concentration percent by state	10.00%		10.00%
Genesis Healthcare
Concentration Risk [Line Items]
Operated, concentration percent	11.00%		11.00%
Revenues from operations	13,800,000		41,400,000
Revenues from operations, percentage	13.00%		13.00%
CommuniCare
Concentration Risk [Line Items]
Operated, concentration percent	10.00%		10.00%
Revenues from operations	$ 11,000,000		$ 33,100,000
Revenues from operations, percentage	11.00%		11.00%
SNF's
Concentration Risk [Line Items]
Number of facilities owned	417		417
Number of facilities held-for-sale/closed	3		3
Number of facilities under fixed rate mortgage loan	33		33
ALFs
Concentration Risk [Line Items]
Number of facilities owned	16		16
Specialty facilities
Concentration Risk [Line Items]
Number of facilities owned	11		11

XML

FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Schedule of the carrying amounts and fair values of financial instruments

	September 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:	(in thousands)
Cash and cash equivalents	$	67,757	$	67,757	$	1,711	$	1,711
Restricted cash		28,781		28,781		36,660		36,660
Mortgage notes receivable – net		241,490		240,013		238,621		235,705
Other investments – net		75,421		72,820		47,339		44,077
Totals	$	413,449	$	409,371	$	324,331	$	318,153
Liabilities:
Revolving line of credit	$	—	$	—	$	158,000	$	158,000
Term loan		200,000		200,000		100,000		100,000
7.50% Notes due 2020 – net		197,805		246,304		197,546		252,363
6.75% Notes due 2022 – net		581,278		709,601		581,799		724,240
5.875% Notes due 2024 – net		400,000		401,492		400,000		441,761
HUD debt		300,034		335,745		366,538		433,803
Subordinated debt		20,930		27,153		21,049		27,896
Totals	$	1,700,047	$	1,920,295	$	1,824,932	$	2,138,063

XML

FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS (Tables)

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Schedule of long-term borrowings

			Current			September 30,		December 31,
	Maturity		Rate			2013		2012
						(in thousands)
Secured borrowings:
HUD mortgages assumed June 2010		2036 - 2040		-		$	—	$	62,921
HUD mortgages assumed June 2010 (1)		2040 - 2045		4.85	%		129,209		130,887
HUD mortgages assumed October 2011 (1)		2036 - 2040		4.87	%		31,359		31,991
HUD mortgages assumed December 2011(1)		2044		3.06	%		58,880		58,884
HUD mortgages assumed December 2012(1)		2031 - 2045		5.50	%		80,586		81,855
Total secured borrowings							300,034		366,538
Unsecured borrowings:
Revolving line of credit		2016		-		$	—	$	158,000
Term loan		2017		1.93	%		200,000		100,000
							200,000		258,000
2020 notes		2020		7.50	%		200,000		200,000
2022 notes		2022		6.75	%		575,000		575,000
2024 notes		2024		5.875	%		400,000		400,000
Subordinated debt		2021		9.00	%		20,930		21,049
							1,195,930		1,196,049
Premium - net							4,083		4,345
Total unsecured borrowings							1,400,013		1,458,394
Totals – net						$	1,700,047	$	1,824,932

(1) Reflects the weighted average annual interest rate on the mortgages.

XML

FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS - Long-term borrowings (Detail) - Unsecured Borrowings (Narrative) (Detail 1) (USD $)			9 Months Ended		9 Months Ended				9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Unsecured borrowings 2012 Revolving Credit Facility	Dec. 06, 2012 Unsecured borrowings 2012 Revolving Credit Facility	Sep. 30, 2013 Unsecured borrowings 2012 Revolving Credit Facility Minimum	Sep. 30, 2013 Unsecured borrowings 2012 Revolving Credit Facility Maximum	Sep. 30, 2013 Unsecured borrowings 2012 Term Loan Facility	Dec. 06, 2012 Unsecured borrowings 2012 Term Loan Facility	Sep. 30, 2013 Unsecured borrowings 2012 Term Loan Facility Minimum	Sep. 30, 2013 Unsecured borrowings 2012 Term Loan Facility Maximum	Dec. 06, 2012 Unsecured borrowings 2012 Credit Facilities	Dec. 06, 2012 Unsecured borrowings 2012 Credit Facilities Maximum	Sep. 30, 2013 Unsecured borrowings Term loan	Dec. 31, 2012 Unsecured borrowings Term loan
Borrowing Arrangements [Line Items]
Credit facility, borrowing capacity				$ 500,000,000				$ 200,000,000			$ 700,000,000
Credit facility, potential borrowing capacity											300,000,000	1,000,000,000
Line of credit remaining borrowing capacity			500,000,000
Term loan	200,000,000	100,000,000											200,000,000	100,000,000
Revolving line of credit		$ 158,000,000					$ 200,000,000
Pricing of credit facility at LIBOR plus an applicable percentage			1.50%		1.00%	1.90%	1.75%		1.10%	2.30%
Credit facility, description of variable rate basis			The 2012 Revolving Credit Facility is priced at LIBOR plus an applicable percentage (beginning at 150 basis points, with a range of 100 to 190 basis points) based on our ratings from Standard & Poor's, Moody's and/or Fitch Ratings				The 2012 Term Loan Facility is also priced at LIBOR plus an applicable percentage (beginning at 175 basis points, with a range of 110 to 230 basis points) based our ratings from Standard & Poor's, Moody's and/or Fitch Ratings
Facility fee, basis spread on variable rate			0.30%		0.15%	0.45%
Facility fee, description of variable rate basis			facility fee based on the same ratings (initially 30 basis points, with a range of 15 to 45 basis points)
Debt maturity date			Dec. 06, 2016				Dec. 06, 2017

XML

PROPERTIES AND INVESTMENTS - Assets Sold or Held for Sale (Narrative) (Detail 2) (USD $)	1 Months Ended		9 Months Ended
	Jun. 30, 2013 Property	Apr. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Real Estate Properties [Line Items]
Number of properties sold	1
Proceeds from sale of real estate investments	$ 2,200,000	$ 100,000	$ 2,288,000	$ 24,194,000
Loss on sale of properties	(1,200,000)
SNF's
Real Estate Properties [Line Items]
Number of held-for-sale facilities			2
Number of parcels of land held-for-sale			1
Net book value of held-for-sale			$ 1,000,000

XML

TAXES (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Permitted ownership of a taxable REIT subsidiary ("TRS"), maximum percentage	100.00%
Net operating loss carry-forward	$ 1.0

XML

EARNINGS PER SHARE (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Numerator:
Net income	$ 38,137	$ 30,119	$ 125,315	$ 86,775
Numerator for net income available to common per share - basic and diluted	$ 38,137	$ 30,119	$ 125,315	$ 86,775
Denominator:
Denominator for basic earnings per share	117,600	109,135	115,527	106,202
Effect of dilutive securities:
Restricted stock	823	511	774	350
Deferred stock	39	21	34	18
Denominator for diluted earnings per share	118,462	109,667	116,335	106,570
Earnings per share - basic:
Net income - basic	$ 0.32	$ 0.28	$ 1.08	$ 0.82
Earnings per share - diluted:
Net income - diluted	$ 0.32	$ 0.27	$ 1.08	$ 0.81

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Detail)	9 Months Ended
	Sep. 30, 2013 Segment
Real Estate Properties [Line Items]
Number of reportable segment	1

XML

STOCK-BASED COMPENSATION (Narrative) (Detail 1)		1 Months Ended			9 Months Ended		12 Months Ended	9 Months Ended	12 Months Ended			1 Months Ended	9 Months Ended
	Jun. 06, 2013 2013 Plan	Jan. 31, 2013 Performance restricted stock units Employee	Jan. 31, 2012 Performance restricted stock units Employee	Jan. 31, 2011 Performance restricted stock units Employee	Sep. 30, 2013 Performance restricted stock units	Sep. 30, 2013 Performance restricted stock units Multi-year absolute TSR PRSUs	Dec. 31, 2011 Performance restricted stock units Multi-year absolute TSR PRSUs	Sep. 30, 2013 Performance restricted stock units Multi-year relative TSR PRSUs	Dec. 31, 2011 Performance restricted stock units Multi-year relative TSR PRSUs	Dec. 31, 2012 Performance restricted stock units Annual TSR	Dec. 31, 2011 Performance restricted stock units Annual TSR Employee	Jan. 31, 2011 Restricted stock Employee	Sep. 30, 2013 Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares reserved for issuance	3,000,000
Number of shares granted		124,244	124,244	496,977			279,550		93,183		124,244	428,503
Performance based restricted stock granted, number of employees		6	6	6							6	6
Stock awards, vesting percent						25.00%		25.00%					100.00%
Stock awards, vesting date													Dec. 31, 2013
Stock awards, vesting year						2014		2014
Shares of stock vested										124,244
Shares forfeited											124,244
Method used to estimate the fair value for PRSUs					Monte Carlo model

XML

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of stock-based compensation expense

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands)
Stock-based compensation expense	$	1,509	$	1,485	$	4,433	$	4,456

Schedule of unrecognized compensation cost associated with outstanding restricted stock and PRSU awards

	Shares/ Units		Grant Date Average Fair Value Per Unit/ Share		Total Compensation Cost (in millions)		Weighted Average Period of Expense Recognition (in months)		Unrecognized Compensation Cost (in millions)
Restricted stock		428,503	$	22.44	$	9.6		36	$	0.8
2013 Annual PRSUs		124,244	$	8.92		1.1		12		0.3
Multi-year absolute TSR PRSUs		279,550	$	11.06		3.1		44		0.7
Multi-year relative TSR PRSUs		93,183	$	12.26		1.1		44		0.2
Total		925,480	$	14.93	$	14.9			$	2.0

XML

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Unaudited (Parentheticals) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Balance (in shares)	112,393
Dividend reinvestment plan, shares issued	1,677
Dividend reinvestment plan (in dollars per share)	$ 28.53
Equity Shelf Program (in shares)	5,428
Equity Shelf Program (in dollars per share)	$ 30.19
Common dividends, (in dollars per share)	$ 1.38
Balance (in shares)	119,518
Directors
Grant of restricted stock (in shares)	15
Grant of restricted stock (in dollars per share)	$ 30.33
Grant of stock as payment of directors fees (in shares)	5
Grant of stock as payment of directors fees (in dollars per share)	$ 30.93

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Business Overview

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

Basis of Presentation

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

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

Accounts Receivable

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

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

A summary of our net receivables by type is as follows:

	September 30,			December 31,
	2013			2012
	(in thousands)
Contractual receivables	$	3,905		$	3,963
Effective yield interest receivables		4,992			3,576
Straight-line receivables		116,972			98,973
Lease inducements		17,077			19,307
Allowance		(520	)		(639	)
Accounts receivable – net	$	142,426		$	125,180

In August 2013, we entered into an agreement with one of our current operators and a new third party operator to transition 11 facilities from the current operator to the third party operator.  As a result of the transition, we evaluated the recoverability of the straight-line rent receivable associated with the current operator’s lease and recorded a $2.3 million provision for uncollectible accounts associated with straight-line receivables that were written-off.  (See Note 2 – Properties and Investments).

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

XML

CONCENTRATION OF RISK

9 Months Ended

Sep. 30, 2013

Risks and Uncertainties [Abstract]

CONCENTRATION OF RISK

NOTE 4 – CONCENTRATION OF RISK

As of September 30, 2013, our portfolio of real estate investments consisted of 480 healthcare facilities, located in 34 states and operated by 48 third-party operators.  Our gross investment in these facilities, net of impairments and before reserve for uncollectible loans, totaled approximately $3.3 billion at September 30, 2013, with approximately 99% of our real estate investments related to long-term care facilities.  Our portfolio is made up of 417 SNFs, 16 ALFs, 11 specialty facilities, fixed rate mortgages on 33 SNFs and three SNFs that are closed/held-for-sale.  At September 30, 2013, we also held miscellaneous investments of approximately $75.4 million, consisting primarily of secured loans to third-party operators of our facilities.

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

For the three-month period ended September 30, 2013, our revenues from operations totaled $103.3 million, of which approximately $13.8 million were from Genesis (13%) and $11.0 million were from CommuniCare (11%).  No other operator generated more than 10% of our revenues from operations for the three-month period ended September 30, 2013.

For the nine-month period ended September 30, 2013, our revenues from operations totaled $307.6 million, of which approximately $41.4 million were from Genesis (13%) and $33.1 million were from CommuniCare (11%).  No other operator generated more than 10% of our revenues from operations for the nine-month period ended September 30, 2013.

XML

PROPERTIES AND INVESTMENTS

9 Months Ended

Sep. 30, 2013

Real Estate [Abstract]

PROPERTIES AND INVESTMENTS

NOTE 2 – PROPERTIES AND INVESTMENTS

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

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

Leased Property

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

Transition of 11 Arkansas Facilities to a New Operator

On August 30, 2013, we transitioned 11 SNFs located in Arkansas that we previously leased to Advocat Inc. (now known as Diversicare Healthcare Services) to a new third party operator. The 11 facilities represent 1,084 operating beds. We amended the Advocat master lease to provide for reduced rent to reflect the transition of the 11 facilities to the new operator, and recorded a $2.3 million provision for uncollectible straight-line rent receivable. Simultaneously with the amendment to the Advocat master lease, we entered into a new master lease with the new third party operator of the 11 facilities. The new master lease expires on August 30, 2023 and includes fixed annual rent escalators.

Commitment to Enter into a $525 Million Sale/Leaseback Transaction

In September 2013, a wholly owned subsidiary of Omega committed to enter into a $525 million sale/leaseback transaction in connection with the proposed acquisition of Ark Holding Company, Inc. (“Ark Holding”) by 4 West Holdings, Inc. In connection with the closing of the proposed acquisition, a subsidiary of Omega will acquire title to 56 facilities currently operated by Ark Holding and lease them back to Ark Holding pursuant to a 50-year lease, with rental payments yielding 10.7% per annum over the term of the lease. The sale/leaseback transaction will be accounted for as a capital lease for accounting purposes and, consistent with that treatment, the tenant will have the right to purchase the facilities for a nominal price plus closing costs at the end of the lease. In addition, commencing in the 41st year of the lease, the tenant will have the right to prepay the remainder of its obligations thereunder for an amount equal to the sum of unamortized portion of the original $525 million investment by Omega, the net present value of the remaining payments under the lease, and closing costs. In the event the tenant exercises either of these options, we would have the right to purchase the properties for fair market value at the time. The sale/leaseback transaction is subject to the satisfaction of all the conditions to the closing of the proposed acquisition of Ark Holding, including obtaining certain consents and licenses, the absence of any event having a material adverse effect on Ark Holding since the date of the agreement, and the issuance of title insurance on the properties. In September 2013, we funded a $15.0 million deposit related to this potential transaction which is included in other assets as of September 30, 2013.

Pro Forma Acquisition Results

The facilities acquired in 2012 are included in our results of operations from the date of acquisition.  The following unaudited pro forma results of operations reflect the impact of the transactions as if they occurred on January 1, 2012.  For a list of the transactions, refer to Note 3 – Properties in our 2012 Form 10-K.  In the opinion of management, all significant necessary adjustments to reflect the effect of the acquisitions have been made.  The following pro forma information is not indicative of future operations.

	Pro Forma
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands, except per share amounts, unaudited)
Revenues	$	103,301	$	97,892	$	307,577	$	293,244
Net income available to common stockholders	$	38,137	$	34,703	$	125,315	$	102,571
Earnings per share – diluted:
Net income available to common stockholders – as reported	$	0.32	$	0.27	$	1.08	$	0.81
Net income available to common stockholders – pro forma	$	0.32	$	0.32	$	1.08	$	0.96

Assets Sold or Assets Held for Sale

Assets Sold

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

Assets Held for Sale

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

Mortgage Notes Receivables

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

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

XML

STOCK-BASED COMPENSATION (Detail 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]
Stock-based compensation expense	$ 1,509	$ 1,485	$ 4,433	$ 4,456

XML

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2013

Net Income Available To Common Per Share

Schedule of computation of basic and diluted earnings per share

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands, except per share amounts)
Numerator:
Net income	$	38,137	$	30,119	$	125,315	$	86,775
Numerator for net income available to common per share - basic and diluted	$	38,137	$	30,119	$	125,315	$	86,775
Denominator:
Denominator for basic earnings per share		117,600		109,135		115,527		106,202
Effect of dilutive securities:
Restricted stock		823		511		774		350
Deferred stock		39		21		34		18
Denominator for diluted earnings per share		118,462		109,667		116,335		106,570
Earnings per share – basic:
Net income – basic	$	0.32	$	0.28	$	1.08	$	0.82
Earnings per share – diluted:
Net income – diluted	$	0.32	$	0.27	$	1.08	$	0.81

XML

PROPERTIES AND INVESTMENTS (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings per share - diluted:
Net income available to common stockholders - as reported	$ 0.32	$ 0.27	$ 1.08	$ 0.81
Pro forma
Proforma Information [Line Items]
Revenues	$ 103,301	$ 97,892	$ 307,577	$ 293,244
Net income available to common stockholders	$ 38,137	$ 34,703	$ 125,315	$ 102,571
Earnings per share - diluted:
Net income available to common stockholders - as reported	$ 0.32	$ 0.27	$ 1.08	$ 0.81
Net income available to common stockholders - pro forma	$ 0.32	$ 0.32	$ 1.08	$ 0.96

XML

OTHER INVESTMENTS (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013	May 31, 2013
Schedule of Investments [Line Items]
Interest rate	10.00%
$28.0 Million Other Investment note due 2017
Schedule of Investments [Line Items]
Loan amount	$ 28.0
$2.5 Million Other Investment note due 2014
Schedule of Investments [Line Items]
Loan amount	2.5
$6.0 Million Other Investment note due 2013
Schedule of Investments [Line Items]
Loan amount	6.0
$1.3 Million Other Investment note due 2017
Schedule of Investments [Line Items]
Loan amount	1.3
$25.0 Million Other Investment note due 2017
Schedule of Investments [Line Items]
Loan amount	25.0
Mezzanine loan amount		$ 24.9
Interest rate on mezzanine loan		12.00%

XML

CONSOLIDATING FINANCIAL STATEMENTS (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
Real estate properties
Land and buildings	$ 3,060,188	$ 3,038,553
Less accumulated depreciation	(675,685)	(580,373)
Real estate properties - net	2,384,503	2,458,180
Mortgage notes receivable - net	241,490	238,621
Real estate properties, total	2,625,993	2,696,801
Other investments - net	75,421	47,339
Total investments held, continuing operations	2,701,414	2,744,140
Assets held for sale - net	1,020	1,020
Total investments	2,702,434	2,745,160
Cash and cash equivalents	67,757	1,711	6,951	351
Restricted cash	28,781	36,660
Accounts receivable - net	142,426	125,180
Investment in affiliates
Other assets	73,380	73,294
Total assets	3,014,778	2,982,005
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving line of credit		158,000
Term loan	200,000	100,000
Secured borrowings	300,034	366,538
Unsecured borrowings - net	1,200,013	1,200,394
Accrued expenses and other liabilities	124,733	145,744
Intercompany payable
Total liabilities	1,824,780	1,970,676
Stockholders' equity:
Common stock	11,952	11,239
Common stock - additional paid-in capital	1,876,609	1,664,855
Cumulative net earnings	879,443	754,128
Cumulative dividends paid	(1,578,006)	(1,418,893)
Total stockholders' equity	1,189,998	1,011,329
Total liabilities and stockholders' equity	3,014,778	2,982,005
Issuer & Subsidiary Guarantors
Real estate properties
Land and buildings	2,602,688	2,580,977
Less accumulated depreciation	(627,301)	(547,489)
Real estate properties - net	1,975,387	2,033,488
Mortgage notes receivable - net	241,490	238,621
Real estate properties, total	2,216,877	2,272,109
Other investments - net	75,421	47,339
Total investments held, continuing operations	2,292,298	2,319,448
Assets held for sale - net	1,020	1,020
Total investments	2,293,318	2,320,468
Cash and cash equivalents	67,757	1,711
Restricted cash	6,755	10,095
Accounts receivable - net	136,101	121,488
Investment in affiliates	107,535	115,835
Other assets	46,829	49,153
Total assets	2,658,295	2,618,750
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving line of credit		158,000
Term loan	200,000	100,000
Secured borrowings		62,921
Unsecured borrowings - net	1,179,083	1,179,345
Accrued expenses and other liabilities	89,214	107,155
Intercompany payable
Total liabilities	1,468,297	1,607,421
Stockholders' equity:
Common stock	11,952	11,239
Common stock - additional paid-in capital	1,876,609	1,664,855
Cumulative net earnings	879,443	754,128
Cumulative dividends paid	(1,578,006)	(1,418,893)
Total stockholders' equity	1,189,998	1,011,329
Total liabilities and stockholders' equity	2,658,295	2,618,750
Non-guarantor subsidiaries
Real estate properties
Land and buildings	457,500	457,576
Less accumulated depreciation	(48,384)	(32,884)
Real estate properties - net	409,116	424,692
Mortgage notes receivable - net
Real estate properties, total	409,116	424,692
Other investments - net
Total investments held, continuing operations	409,116	424,692
Assets held for sale - net
Total investments	409,116	424,692
Cash and cash equivalents
Restricted cash	22,026	26,565
Accounts receivable - net	6,325	3,692
Investment in affiliates
Other assets	26,551	24,141
Total assets	464,018	479,090
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving line of credit
Term loan
Secured borrowings	300,034	303,617
Unsecured borrowings - net	20,930	21,049
Accrued expenses and other liabilities	35,519	38,589
Intercompany payable	85,438	104,040
Total liabilities	441,921	467,295
Stockholders' equity:
Common stock
Common stock - additional paid-in capital
Cumulative net earnings	22,097	11,795
Cumulative dividends paid
Total stockholders' equity	22,097	11,795
Total liabilities and stockholders' equity	464,018	479,090
Elimination Company
Real estate properties
Land and buildings
Less accumulated depreciation
Real estate properties - net
Mortgage notes receivable - net
Real estate properties, total
Other investments - net
Total investments held, continuing operations
Assets held for sale - net
Total investments
Cash and cash equivalents
Restricted cash
Accounts receivable - net
Investment in affiliates	(107,535)	(115,835)
Other assets
Total assets	(107,535)	(115,835)
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving line of credit
Term loan
Secured borrowings
Unsecured borrowings - net
Accrued expenses and other liabilities
Intercompany payable	(85,438)	(104,040)
Total liabilities	(85,438)	(104,040)
Stockholders' equity:
Common stock
Common stock - additional paid-in capital
Cumulative net earnings	(22,097)	(11,795)
Cumulative dividends paid
Total stockholders' equity	(22,097)	(11,795)
Total liabilities and stockholders' equity	$ (107,535)	$ (115,835)

XML

FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS - Long-term borrowings (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013		Dec. 31, 2012
Debt Instrument [Line Items]
Current Rate	10.00%
HUD debt	$ 300,034		$ 366,538
Revolving line of credit			158,000
Term loan	200,000		100,000
Revolving line of credit including term loan	200,000		258,000
Totals - net	1,700,047		1,824,932
2020 notes
Debt Instrument [Line Items]
Senior notes outstanding	200,000
2022 notes
Debt Instrument [Line Items]
Senior notes outstanding	575,000
2024 notes
Debt Instrument [Line Items]
Senior notes outstanding	400,000
Secured borrowings | HUD mortgages assumed June 2010
Debt Instrument [Line Items]
Maturity	2036 - 2040
Current Rate
Long-term borrowing amount, secured borrowings			62,921
Secured borrowings | HUD mortgages assumed June 2010
Debt Instrument [Line Items]
Maturity	2040 - 2045	[1]
Current Rate	4.85%	[1]
Long-term borrowing amount, secured borrowings	129,209	[1]	130,887	[1]
Secured borrowings | HUD mortgages assumed October 2011
Debt Instrument [Line Items]
Maturity	2036 - 2040	[1]
Current Rate	4.87%	[1]
Long-term borrowing amount, secured borrowings	31,359	[1]	31,991	[1]
Secured borrowings | HUD mortgages assumed December 2011
Debt Instrument [Line Items]
Maturity	2044	[1]
Current Rate	3.06%	[1]
Long-term borrowing amount, secured borrowings	58,880	[1]	58,884	[1]
Secured borrowings | HUD mortgages assumed December 2012
Debt Instrument [Line Items]
Maturity	2031 - 2045	[1]
Current Rate	5.50%	[1]
Long-term borrowing amount, secured borrowings	80,586	[1]	81,855	[1]
Unsecured borrowings
Debt Instrument [Line Items]
Unsecured borrowing	1,195,930		1,196,049
Premium - net	4,083		4,345
Total unsecured borrowings	1,400,013		1,458,394
Unsecured borrowings | Revolving line of credit
Debt Instrument [Line Items]
Maturity	2016
Current Rate
Revolving line of credit			158,000
Unsecured borrowings | Term loan
Debt Instrument [Line Items]
Maturity	2017
Current Rate	1.93%
Term loan	200,000		100,000
Unsecured borrowings | 2020 notes
Debt Instrument [Line Items]
Maturity	2020
Current Rate	7.50%
Senior notes outstanding	200,000		200,000
Unsecured borrowings | 2022 notes
Debt Instrument [Line Items]
Maturity	2022
Current Rate	6.75%
Senior notes outstanding	575,000		575,000
Unsecured borrowings | 2024 notes
Debt Instrument [Line Items]
Maturity	2024
Current Rate	5.875%
Senior notes outstanding	400,000		400,000
Unsecured borrowings | Subordinated debt
Debt Instrument [Line Items]
Maturity	2021
Current Rate	9.00%
Subordinated debt	$ 20,930		$ 21,049

[1] Reflects the weighted average annual interest rate on the mortgages.

XML

CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	119,518	112,393
Common stock, shares outstanding	119,518	112,393

XML

STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

STOCK-BASED COMPENSATION

NOTE 7 – STOCK-BASED COMPENSATION

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

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands)
Stock-based compensation expense	$	1,509	$	1,485	$	4,433	$	4,456

Stock Awards

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

Restricted Stock Awards

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

Performance Restricted Stock Units

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

Annual TSR PRSUs

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

Multi-year Absolute TSR PRSUs

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

Multi-year Relative TSR PRSUs

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

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

As of September 30, 2013, none of the multi-year PRSUs are vested or earned.

The following table summarizes our total unrecognized compensation cost as of September 30, 2013 associated with outstanding restricted stock and PRSU awards to employees:

	Shares/ Units		Grant Date Average Fair Value Per Unit/ Share		Total Compensation Cost (in millions)		Weighted Average Period of Expense Recognition (in months)		Unrecognized Compensation Cost (in millions)
Restricted stock		428,503	$	22.44	$	9.6		36	$	0.8
2013 Annual PRSUs		124,244	$	8.92		1.1		12		0.3
Multi-year absolute TSR PRSUs		279,550	$	11.06		3.1		44		0.7
Multi-year relative TSR PRSUs		93,183	$	12.26		1.1		44		0.2
Total		925,480	$	14.93	$	14.9			$	2.0

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

Director Restricted Stock Grants

As of September 30, 2013, we had 43,457 shares of restricted stock outstanding to directors.  The directors’ restricted shares are scheduled to vest over the next three years.  As of September 30, 2013, the unrecognized compensation cost associated with outstanding director restricted stock grants is approximately $0.5 million.

XML

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Unaudited (USD $) In Thousands, unless otherwise specified	Common Stock Par Value	Additional Paid-in Capital	Cumulative Net Earnings	Cumulative Dividends	Total
Balance (112,393 common shares) at Dec. 31, 2012	$ 11,239	$ 1,664,855	$ 754,128	$ (1,418,893)	$ 1,011,329
Issuance of common stock:
Grant of restricted stock to company directors (15 shares at $30.33 per share)	2	(2)
Amortization of restricted stock		4,350			4,350
Dividend reinvestment plan (1,677 shares at $28.53 per share)	168	47,653			47,821
Grant of stock as payment of directors fees (5 shares at an average of $30.93 per share)		137			137
Equity Shelf Program (5,428 shares at $30.19 per share, net of issuance costs)	543	159,616			160,159
Net income			125,315		125,315
Common dividends ($1.38 per share)				(159,113)	(159,113)
Balance (119,518 common shares) at Sep. 30, 2013	$ 11,952	$ 1,876,609	$ 879,443	$ (1,578,006)	$ 1,189,998

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Dec. 31, 2011
Real estate properties
Land and buildings	$ 3,060,188	$ 3,038,553
Less accumulated depreciation	(675,685)	(580,373)
Real estate properties - net	2,384,503	2,458,180
Mortgage notes receivable - net	241,490	238,621
Real estate properties, total	2,625,993	2,696,801
Other investments - net	75,421	47,339
Total investments held, continuing operations	2,701,414	2,744,140
Assets held for sale - net	1,020	1,020
Total investments	2,702,434	2,745,160
Cash and cash equivalents	67,757	1,711	6,951	351
Restricted cash	28,781	36,660
Accounts receivable - net	142,426	125,180
Other assets	73,380	73,294
Total assets	3,014,778	2,982,005
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving line of credit		158,000
Term loan	200,000	100,000
Secured borrowings	300,034	366,538
Unsecured borrowings - net	1,200,013	1,200,394
Accrued expenses and other liabilities	124,733	145,744
Total liabilities	1,824,780	1,970,676
Stockholders' equity:
Common stock $.10 par value 200,000 shares authorized - 119,518 shares as of September 30, 2013 and 112,393 as of December 31, 2012 issued and outstanding	11,952	11,239
Common stock - additional paid-in capital	1,876,609	1,664,855
Cumulative net earnings	879,443	754,128
Cumulative dividends paid	(1,578,006)	(1,418,893)
Total stockholders' equity	1,189,998	1,011,329
Total liabilities and stockholders' equity	$ 3,014,778	$ 2,982,005

XML

CONSOLIDATING FINANCIAL STATEMENTS (Detail 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenue
Rental income	$ 93,837	$ 78,170	$ 280,015	$ 229,373
Mortgage interest income	7,289	7,677	22,070	22,417
Other investment income - net	2,175	1,238	5,341	3,533
Miscellaneous		23	151	125
Total operating revenues	103,301	87,108	307,577	255,448
Expenses
Depreciation and amortization	32,202	28,305	96,386	82,651
General and administrative	5,462	5,173	16,142	15,653
Acquisition costs	(9)	483	134	686
Provisions for uncollectible mortgages, notes and accounts receivable	2,321		2,386
Impairment on real estate properties				272
Total operating expenses	39,976	33,961	115,048	99,262
Income before other income and expense	63,325	53,147	192,529	156,186
Other income (expense)
Interest income	3	6	20	22
Interest expense	(24,492)	(24,050)	(75,116)	(71,026)
Interest - amortization of deferred financing costs	(699)	(673)	(2,079)	(1,970)
Interest - refinancing gain (costs)			11,112	(5,410)
Equity in earnings
Total other expense	(25,188)	(24,717)	(66,063)	(78,384)
Income before gain on assets sold	38,137	28,430	126,466	77,802
Loss (Gain) on assets sold - net		1,689	(1,151)	8,973
Net income available to common stockholders	38,137	30,119	125,315	86,775
Issuer & Subsidiary Guarantors
Revenue
Rental income	81,289	69,092	242,253	202,008
Mortgage interest income	7,289	7,677	22,070	22,417
Other investment income - net	2,175	1,238	5,341	3,533
Miscellaneous		23	151	125
Total operating revenues	90,753	78,030	269,815	228,083
Expenses
Depreciation and amortization	27,034	24,220	80,885	70,457
General and administrative	5,372	5,090	15,859	15,390
Acquisition costs	(9)	483	134	686
Provisions for uncollectible mortgages, notes and accounts receivable	2,321		2,386
Impairment on real estate properties				272
Total operating expenses	34,718	29,793	99,264	86,805
Income before other income and expense	56,035	48,237	170,551	141,278
Other income (expense)
Interest income	(4)		(1)	4
Interest expense	(20,725)	(20,602)	(63,429)	(61,290)
Interest - amortization of deferred financing costs	(694)	(673)	(2,069)	(1,970)
Interest - refinancing gain (costs)			11,112	(5,410)
Equity in earnings	3,525	1,468	10,302	5,190
Total other expense	(17,898)	(19,807)	(44,085)	(63,476)
Income before gain on assets sold	38,137	28,430	126,466	77,802
Loss (Gain) on assets sold - net		1,689	(1,151)	8,973
Net income available to common stockholders	38,137	30,119	125,315	86,775
Non-guarantor subsidiaries
Revenue
Rental income	12,548	9,078	37,762	27,365
Mortgage interest income
Other investment income - net
Miscellaneous
Total operating revenues	12,548	9,078	37,762	27,365
Expenses
Depreciation and amortization	5,168	4,085	15,501	12,194
General and administrative	90	83	283	263
Acquisition costs
Provisions for uncollectible mortgages, notes and accounts receivable
Impairment on real estate properties
Total operating expenses	5,258	4,168	15,784	12,457
Income before other income and expense	7,290	4,910	21,978	14,908
Other income (expense)
Interest income	7	6	21	18
Interest expense	(3,767)	(3,448)	(11,687)	(9,736)
Interest - amortization of deferred financing costs	(5)		(10)
Interest - refinancing gain (costs)
Equity in earnings
Total other expense	(3,765)	(3,442)	(11,676)	(9,718)
Income before gain on assets sold	3,525	1,468	10,302	5,190
Loss (Gain) on assets sold - net
Net income available to common stockholders	3,525	1,468	10,302	5,190
Elimination Company
Revenue
Rental income
Mortgage interest income
Other investment income - net
Miscellaneous
Total operating revenues
Expenses
Depreciation and amortization
General and administrative
Acquisition costs
Provisions for uncollectible mortgages, notes and accounts receivable
Impairment on real estate properties
Total operating expenses
Income before other income and expense
Other income (expense)
Interest income
Interest expense
Interest - amortization of deferred financing costs
Interest - refinancing gain (costs)
Equity in earnings	(3,525)	(1,468)	(10,302)	(5,190)
Total other expense	(3,525)	(1,468)	(10,302)	(5,190)
Income before gain on assets sold	(3,525)	(1,468)	(10,302)	(5,190)
Loss (Gain) on assets sold - net
Net income available to common stockholders	$ (3,525)	$ (1,468)	$ (10,302)	$ (5,190)

XML

CONSOLIDATING FINANCIAL STATEMENTS (Tables)

9 Months Ended

Sep. 30, 2013

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Schedule of consolidating balance sheets

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING BALANCE SHEETS

Unaudited

(in thousands, except per share amounts)

	September 30, 2013
	Issuer & Subsidiary Guarantors			Non-Guarantor Subsidiaries			Elimination Company			Consolidated
ASSETS
Real estate properties
Land and buildings	$	2,602,688		$	457,500		$	-		$	3,060,188
Less accumulated depreciation		(627,301	)		(48,384	)		-			(675,685	)
Real estate properties – net		1,975,387			409,116			-			2,384,503
Mortgage notes receivable – net		241,490			-			-			241,490
		2,216,877			409,116			-			2,625,993
Other investments – net		75,421			-			-			75,421
		2,292,298			409,116			-			2,701,414
Assets held for sale – net		1,020			-			-			1,020
Total investments		2,293,318			409,116			-			2,702,434
Cash and cash equivalents		67,757			-			-			67,757
Restricted cash		6,755			22,026			-			28,781
Accounts receivable – net		136,101			6,325			-			142,426
Investment in affiliates		107,535			-			(107,535	)		-
Other assets		46,829			26,551			-			73,380
Total assets	$	2,658,295		$	464,018		$	(107,535	)	$	3,014,778
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit	$	-		$	-		$	-		$	-
Term loan		200,000			-			-			200,000
Secured borrowings		-			300,034			-			300,034
Unsecured borrowings – net		1,179,083			20,930			-			1,200,013
Accrued expenses and other liabilities		89,214			35,519			-			124,733
Intercompany payable		-			85,438			(85,438	)		-
Total liabilities		1,468,297			441,921			(85,438	)		1,824,780
Stockholders’ equity:
Common stock		11,952			-			-			11,952
Common stock – additional paid-in capital		1,876,609			-			-			1,876,609
Cumulative net earnings		879,443			22,097			(22,097	)		879,443
Cumulative dividends paid		(1,578,006	)		-			-			(1,578,006	)
Total stockholders’ equity		1,189,998			22,097			(22,097	)		1,189,998
Total liabilities and stockholders’ equity	$	2,658,295		$	464,018			(107,535	)	$	3,014,778

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING BALANCE SHEETS

 (in thousands, except per share amounts)

	December 31, 2012
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
ASSETS
Real estate properties
Land and buildings	$	2,580,977		$	457,576		$	—		$	3,038,553
Less accumulated depreciation		(547,489	)		(32,884	)		—			(580,373	)
Real estate properties – net		2,033,488			424,692			—			2,458,180
Mortgage notes receivable – net		238,621			—			—			238,621
		2,272,109			424,692			—			2,696,801
Other investments – net		47,339			—			—			47,339
		2,319,448			424,692			—			2,744,140
Assets held for sale – net		1,020			—			—			1,020
Total investments		2,320,468			424,692			—			2,745,160
Cash and cash equivalents		1,711			—			—			1,711
Restricted cash		10,095			26,565			—			36,660
Accounts receivable – net		121,488			3,692			—			125,180
Investment in affiliates		115,835			—			(115,835	)		—
Other assets		49,153			24,141			—			73,294
Total assets	$	2,618,750		$	479,090			(115,835	)	$	2,982,005
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit	$	158,000		$	—		$	—		$	158,000
Term loan		100,000			—			—			100,000
Secured borrowings		62,921			303,617			—			366,538
Unsecured borrowings – net		1,179,345			21,049			—			1,200,394
Accrued expenses and other liabilities		107,155			38,589			—			145,744
Intercompany payable		—			104,040			(104,040	)		—
Total liabilities		1,607,421			467,295			(104,040	)		1,970,676
Stockholders’ equity:
Common stock		11,239			—			—			11,239
Common stock – additional paid-in capital		1,664,855			—			—			1,664,855
Cumulative net earnings		754,128			11,795			(11,795	)		754,128
Cumulative dividends paid		(1,418,893	)		—			—			(1,418,893	)
Total stockholders’ equity		1,011,329			11,795			(11,795	)		1,011,329
Total liabilities and stockholders’ equity	$	2,618,750		$	479,090		$	(115,835	)	$	2,982,005

Schedule of consolidating statement of operations

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

	Three Months Ended September 30, 2013												Nine Months Ended September 30, 2013
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination			Consolidated			Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination			Consolidated
Revenue
Rental income	$	81,289		$	12,548		$	-		$	93,837		$	242,253		$	37,762		$	-		$	280,015
Mortgage interest income		7,289			-			-			7,289			22,070			-			-			22,070
Other investment income – net		2,175			-			-			2,175			5,341			-			-			5,341
Miscellaneous		-			-			-			-			151			-			-			151
Total operating revenues		90,753			12,548			-			103,301			269,815			37,762			-			307,577
Expenses
Depreciation and amortization		27,034			5,168			-			32,202			80,885			15,501			-			96,386
General and administrative		5,372			90			-			5,462			15,859			283			-			16,142
Acquisition costs		(9	)		-			-			(9	)		134			-			-			134
Provision for uncollectible mortgages, notes and accounts receivable		2,321			-			-			2,321			2,386			-			-			2,386
Total operating expenses		34,718			5,258			-			39,976			99,264			15,784			-			115,048
Income before other income and expense		56,035			7,290			-			63,325			170,551			21,978			-			192,529
Other income (expense):
Interest income		(4	)		7			-			3			(1	)		21			-			20
Interest expense		(20,725	)		(3,767	)		-			(24,492	)		(63,429	)		(11,687	)		-			(75,116	)
Interest – amortization of deferred financing costs		(694	)		(5	)		-			(699	)		(2,069	)		(10	)		-			(2,079	)
Interest – refinancing gain (costs)		-			-			-			-			11,112			-			-			11,112
Equity in earnings		3,525			-			(3,525	)		-			10,302			-			(10,302	)		-
Total other expense		(17,898	)		(3,765	)		(3,525	)		(25,188	)		(44,085	)		(11,676	)		(10,302	)		(66,063	)
Income before gain on assets sold		38,137			3,525			(3,525	)		38,137			126,466			10,302			(10,302	)		126,466
Loss on assets sold – net		-			-			-			-			(1,151	)		-			-			(1,151	)
Net income (loss) available to common stockholders	$	38,137		$	3,525		$	(3,525	)	$	38,137		$	125,315		$	10,302		$	(10,302	)	$	125,315

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

	Three Months Ended September 30, 2012												Nine Months Ended September 30, 2012
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated			Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
Revenue
Rental income	$	69,092		$	9,078		$	-		$	78,170		$	202,008		$	27,365		$	-		$	229,373
Mortgage interest income		7,677			-			-			7,677			22,417			-			-			22,417
Other investment income – net		1,238			-			-			1,238			3,533			-			-			3,533
Miscellaneous		23			-			-			23			125			-			-			125
Total operating revenues		78,030			9,078			-			87,108			228,083			27,365			-			255,448
Expenses
Depreciation and amortization		24,220			4,085			-			28,305			70,457			12,194			-			82,651
General and administrative		5,090			83			-			5,173			15,390			263			-			15,653
Acquisition costs		483			-			-			483			686			-			-			686
Impairment loss on real estate properties		-			-			-			-			272			-			-			272
Total operating expenses		29,793			4,168			-			33,961			86,805			12,457			-			99,262
Income before other income and expense		48,237			4,910			-			53,147			141,278			14,908			-			156,186
Other income (expense):
Interest income		-			6			-			6			4			18			-			22
Interest expense		(20,602	)		(3,448	)		-			(24,050	)		(61,290	)		(9,736	)		-			(71,026	)
Interest – amortization of deferred financing costs		(673	)		-			-			(673	)		(1,970	)		-			-			(1,970	)
Interest – refinancing gain (costs)		-			-			-			-			(5,410	)		-			-			(5,410	)
Equity in earnings		1,468			-			(1,468	)		-			5,190			-			(5,190	)		-
Total other expense		(19,807	)		(3,442	)		(1,468	)		(24,717	)		(63,476	)		(9,718	)		(5,190	)		(78,384	)
Income before gain on assets sold		28,430			1,468			(1,468	)		28,430			77,802			5,190			(5,190	)		77,802
Gain on assets sold – net		1,689			-			-			1,689			8,973			-			-			8,973
Net income (loss) available to common stockholders	$	30,119		$	1,468		$	(1,468	)	$	30,119		$	86,775		$	5,190		$	(5,190	)	$	86,775

XML

PROPERTIES AND INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2013

Real Estate [Abstract]

Schedule of unaudited pro forma results of business acquisition

	Pro Forma
	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands, except per share amounts, unaudited)
Revenues	$	103,301	$	97,892	$	307,577	$	293,244
Net income available to common stockholders	$	38,137	$	34,703	$	125,315	$	102,571
Earnings per share – diluted:
Net income available to common stockholders – as reported	$	0.32	$	0.27	$	1.08	$	0.81
Net income available to common stockholders – pro forma	$	0.32	$	0.32	$	1.08	$	0.96

XML

STOCK-BASED COMPENSATION (Narrative) (Detail 2) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock outstanding	925,480
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock outstanding	428,503
Restricted stock | Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock outstanding	43,457
Vesting period, years	3 years
Unrecognized compensation cost	$ 0.5

XML

DIVIDENDS (Narrative) (Detail) (USD $)	0 Months Ended			3 Months Ended		9 Months Ended		0 Months Ended
	Jul. 16, 2013	Apr. 16, 2013	Jan. 16, 2013	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Oct. 15, 2013 Subsequent Event
Dividends [Line Items]
Common stock dividend declared, per share	$ 0.47	$ 0.46	$ 0.45	$ 0.47	$ 0.42	$ 1.38	$ 1.25	$ 0.48
Increase in quarterly common dividend, per share	$ 0.01	$ 0.01	$ 0.01					$ 0.01
Dividends declared, date of declaration	Jul. 16, 2013	Apr. 16, 2013	Jan. 16, 2013					Oct. 15, 2013
Dividends declared, date of payment	Aug. 15, 2013	May 15, 2013	Feb. 15, 2013					Nov. 15, 2013
Dividends declared, date of record	Jul. 31, 2013	Apr. 30, 2013	Jan. 31, 2013					Oct. 31, 2013

XML

PROPERTIES AND INVESTMENTS - Mortgage Notes Receivables (Narrative) (Detail 3)	Sep. 30, 2013 State Operator Facility
Real Estate Properties [Line Items]
Number of facilities owned	480
Number of states	34
Number of operators	48
Mortgage Receivable
Real Estate Properties [Line Items]
Number of states	5
Number of operators	5
Mortgage Receivable | Long-term care facilities
Real Estate Properties [Line Items]
Number of facilities owned	33
Mortgage Receivable | Fixed-rate mortgages
Real Estate Properties [Line Items]
Number of underlying real estate mortgages	14

XML

OTHER INVESTMENTS (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		Dec. 31, 2012
Schedule of Investments [Line Items]
Notes receivable, gross	$ 72,841	[1]	$ 44,759	[1]
Allowance for loss on notes receivable	(1,977)		(1,977)
Notes receivable, net	70,864		42,782
Marketable securities and other	4,557		4,557
Other investments - net	75,421		47,339
Other Investment note due 2015
Schedule of Investments [Line Items]
Notes receivable, gross	2,368		2,518
Other Investment notes due 2021 - 2023
Schedule of Investments [Line Items]
Notes receivable, gross	13,217		9,775
Other Investment note due 2013
Schedule of Investments [Line Items]
Notes receivable, gross	551		1,018
Other Investment note due 2014
Schedule of Investments [Line Items]
Notes receivable, gross	250		812
$28.0 Million Other Investment note due 2017
Schedule of Investments [Line Items]
Notes receivable, gross	24,500		26,500
$2.5 Million Other Investment note due 2014
Schedule of Investments [Line Items]
Notes receivable, gross	306
$6.0 Million Other Investment note due 2013
Schedule of Investments [Line Items]
Notes receivable, gross	5,439		3,450
Other Investment note due 2013
Schedule of Investments [Line Items]
Notes receivable, gross			261
$1.3 Million Other Investment note due 2017
Schedule of Investments [Line Items]
Notes receivable, gross	1,300		425
$25.0 Million Other Investment note due 2017
Schedule of Investments [Line Items]
Notes receivable, gross	$ 24,910

[1] The majority of these notes bear interest at approximately 10% annually.

XML

TAXES

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

TAXES

NOTE 6 – TAXES

So long as we qualify as a real estate investment trust (“REIT”) under the Internal Revenue Code (the “Code”), we generally will not be subject to federal income taxes on the REIT taxable income that we distribute to stockholders, subject to certain exceptions.  On a quarterly and annual basis, we test our compliance within the REIT taxation rules to ensure that we were in compliance with the rules.

Subject to the limitation under the REIT asset test rules, we are permitted to own up to 100% of the stock of one or more taxable REIT subsidiaries (“TRSs”).  Currently, we have one TRS that is taxable as a corporation and pays federal, state and local income tax on its net income at the applicable corporate rates.  As of September 30, 2013, the TRS had a net operating loss carry-forward of $1.0 million.  The loss carry-forward is fully reserved with a valuation allowance as of September 30, 2013.

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Organization, Consolidation and Presentation Of Financial Statements [Abstract]
Contractual receivables	$ 3,905	$ 3,963
Effective yield interest receivables	4,992	3,576
Straight-line receivables	116,972	98,973
Lease inducements	17,077	19,307
Allowance	(520)	(639)
Accounts receivable - net	$ 142,426	$ 125,180

XML

STOCK-BASED COMPENSATION (Detail 2) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares/Units	925,480
Grant Date Average Fair Value Per Unit/ Share	$ 14.93
Total Compensation Cost	$ 14.9
Unrecognized Compensation Cost	2.0
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares/Units	428,503
Grant Date Average Fair Value Per Unit/ Share	$ 22.44
Total Compensation Cost	9.6
Weighted Average Period of Expense Recognition	36 months
Unrecognized Compensation Cost	0.8
Performance restricted stock units | 2013 Annual PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares/Units	124,244
Grant Date Average Fair Value Per Unit/ Share	$ 8.92
Total Compensation Cost	1.1
Weighted Average Period of Expense Recognition	12 months
Unrecognized Compensation Cost	0.3
Performance restricted stock units | Multi-year absolute TSR PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares/Units	279,550
Grant Date Average Fair Value Per Unit/ Share	$ 11.06
Total Compensation Cost	3.1
Weighted Average Period of Expense Recognition	44 months
Unrecognized Compensation Cost	0.7
Performance restricted stock units | Multi-year relative TSR PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares/Units	93,183
Grant Date Average Fair Value Per Unit/ Share	$ 12.26
Total Compensation Cost	1.1
Weighted Average Period of Expense Recognition	44 months
Unrecognized Compensation Cost	$ 0.2

XML

FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

FINANCIAL INSTRUMENTS

NOTE 9 – FINANCIAL INSTRUMENTS

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

	September 30, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Assets:	(in thousands)
Cash and cash equivalents	$	67,757	$	67,757	$	1,711	$	1,711
Restricted cash		28,781		28,781		36,660		36,660
Mortgage notes receivable – net		241,490		240,013		238,621		235,705
Other investments – net		75,421		72,820		47,339		44,077
Totals	$	413,449	$	409,371	$	324,331	$	318,153
Liabilities:
Revolving line of credit	$	—	$	—	$	158,000	$	158,000
Term loan		200,000		200,000		100,000		100,000
7.50% Notes due 2020 – net		197,805		246,304		197,546		252,363
6.75% Notes due 2022 – net		581,278		709,601		581,799		724,240
5.875% Notes due 2024 – net		400,000		401,492		400,000		441,761
HUD debt		300,034		335,745		366,538		433,803
Subordinated debt		20,930		27,153		21,049		27,896
Totals	$	1,700,047	$	1,920,295	$	1,824,932	$	2,138,063

Fair value estimates are subjective in nature and are dependent on a number of important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument (see Note 2 – Summary of Significant Accounting Policies in our 2012 Annual Report on Form 10-K).  The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts.

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

● Cash and cash equivalents and restricted cash:  The carrying amount of cash and cash equivalents and restricted cash reported in the balance sheet approximates fair value because of the short maturity of these instruments (i.e., less than 90 days) (Level 1).

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

● Other investments:  Other investments are primarily comprised of: (i) notes receivable and (ii) an investment in a redeemable non-convertible preferred security of an unconsolidated business accounted for using the cost method of accounting.  The fair values of notes receivable are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3).  The fair value of the investment in the unconsolidated business is estimated using quoted market value and considers the terms of the underlying arrangement (Level 3).

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

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

XML

DIVIDENDS

9 Months Ended

Sep. 30, 2013

Dividends [Abstract]

DIVIDENDS

NOTE 5 – DIVIDENDS

On October 15, 2013, the Board of Directors declared a common stock dividend of $0.48 per share, increasing the quarterly common dividend by $0.01 per share over the previous quarter.  The common dividends are to be paid November 15, 2013 to common stockholders of record on October 31, 2013.

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

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

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

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities
Net income	$ 125,315	$ 86,775
Adjustment to reconcile net income to cash provided by operating activities:
Depreciation and amortization	96,386	82,651
Impairment on real estate properties		272
Provision for uncollectible mortgages, notes and accounts receivable	2,386
Amortization of deferred financing and debt extinguishment (gain)/costs	(9,033)	7,380
Restricted stock amortization expense	4,433	4,456
Loss (gain) on assets sold - net	1,151	(8,973)
Amortization of acquired in-place leases - net	(3,821)	(4,088)
Other		(113)
Change in operating assets and liabilities - net of amounts assumed/acquired:
Accounts receivable, net	(61)	195
Straight-line rent receivables	(20,385)	(19,745)
Lease inducements	2,230	2,527
Effective yield receivable on mortgage notes	(1,416)	(1,674)
Other operating assets and liabilities	2,865	7,304
Net cash provided by operating activities	200,050	156,967
Cash flows from investing activities
Acquisition of real estate - net of liabilities assumed and escrows acquired	(2,400)	(232,661)
Deposit for proposed capital lease	(15,000)
Placement of mortgage loans	(3,227)	(7,126)
Proceeds from sale of real estate investments	2,288	24,194
Capital improvements to real estate investments	(23,732)	(20,106)
Proceeds from other investments	4,113	11,821
Investments in other investments	(32,195)	(4,671)
Collection of mortgage principal	358	362
Net cash used in investing activities	(69,795)	(228,187)
Cash flows from financing activities
Proceeds from credit facility borrowings	101,000	272,000
Payments on credit facility borrowings	(259,000)	(442,500)
Proceeds from term loan	100,000
Receipts of other long-term borrowings	59,355	400,000
Payments of other long-term borrowings	(113,418)	(189,657)
Payments of financing related costs	(1,053)	(13,150)
Receipts from dividend reinvestment plan	47,821	106,132
Net proceeds from issuance of common stock	160,159	77,673
Dividends paid	(159,073)	(132,678)
Net cash (used in) provided by financing activities	(64,209)	77,820
Increase in cash and cash equivalents	66,046	6,600
Cash and cash equivalents at beginning of period	1,711	351
Cash and cash equivalents at end of period	67,757	6,951
Interest paid during the period, net of amounts capitalized	$ 75,848	$ 70,123

XML

CONSOLIDATING FINANCIAL STATEMENTS (Narrative) (Detail) (USD $)	9 Months Ended						1 Months Ended	9 Months Ended					9 Months Ended	1 Months Ended	3 Months Ended
	Sep. 30, 2013 Non-guarantor subsidiaries	Sep. 30, 2012 Non-guarantor subsidiaries	Jun. 29, 2010 CapitalSource Non-guarantor subsidiaries Subsidiary	Sep. 30, 2013 7.50% Notes due 2020	Sep. 30, 2013 6.75% Notes due 2022	Sep. 30, 2013 5.875% Notes due 2024	May 31, 2013 HUD debt HUD_Mortgage	Sep. 30, 2013 HUD debt Non-guarantor subsidiaries	Jul. 31, 2013 HUD debt Non-guarantor subsidiaries Subsidiary	Dec. 31, 2012 HUD debt Non-guarantor subsidiaries Subsidiary	Jul. 31, 2012 HUD debt Non-guarantor subsidiaries Subsidiary	Dec. 31, 2011 HUD debt Non-guarantor subsidiaries Subsidiary	Sep. 30, 2013 HUD debt Guarantor subsidiaries	Mar. 26, 2013 HUD Mortgage Debt Refinancing	Mar. 31, 2013 HUD Mortgage Debt Refinancing Property
Condensed Financial Statements, Captions [Line Items]
Senior notes, principal amount				$ 200,000,000	$ 575,000,000	$ 400,000,000
Rate on senior notes				7.50%	6.75%	5.875%
Number of subsidiaries acquired and designated as unrestricted			39							8		20
Number of unrestricted subsidiaries removed due to retirement of HUD related mortgages									11		5
Principal payment for mortgage	3,400,000	2,300,000					51,000,000							59,400,000	58,900,000
Closing cost															500,000
Ownership percent of the subsidiary guarantors (in percent)								100.00%					100.00%
Number of Arkansas mortgage debts paid off															12
Number of HUD mortgages							11
Payment to retire HUD mortgages							62,300,000
Unamortized premium							11,300,000
Prepayment fee							$ 200,000

XML

FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS (Narrative) (Detail 2) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended	9 Months Ended		1 Months Ended	3 Months Ended	9 Months Ended	1 Months Ended	3 Months Ended	1 Months Ended	3 Months Ended	1 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012	Mar. 18, 2013 $250 Million Equity Shelf Program	Sep. 30, 2013 $250 Million Equity Shelf Program	Sep. 30, 2013 $250 Million Equity Shelf Program	Mar. 18, 2013 Termination of $245 Million Equity Shelf Program	Mar. 31, 2013 Termination of $245 Million Equity Shelf Program	Mar. 26, 2013 HUD Mortgage Debt Refinancing	Mar. 31, 2013 HUD Mortgage Debt Refinancing Property	May 31, 2013 Hud loans payoff HUD_Mortgage
Debt Instrument [Line Items]
Principal payment for mortgage									$ 59,400,000	$ 58,900,000
Number of Arkansas mortgage debts paid off										12
Weighted average annual interest rate									5.55%
Reduction in annual interest rate for the refinanced debt									3.06%
Sales price, equity distribution agreement				250,000,000			245,000,000
Stock issued		5,428			2,100	4,400	3,600	1,000
Average price per share (in dollars per share)	$ 29.03	$ 28.53			$ 29.42	$ 30.61		$ 28.29
Gross proceeds from issue of common stock, before commissions					63,200,000	136,000,000	91,400,000	27,800,000
Commissions on sale of common stock					1,300,000	2,700,000	1,900,000	600,000
Shares issued through Dividend Reinvestment Plan and Common Stock Purchase Program	200	1,700
Net proceeds from shares issued under Dividend Reinvestment and Common Stock Purchase Program	6,200,000	47,821,000	106,132,000
Manager compensation, percentage of gross sales price per share sold				2.00%
Payment to retire HUD mortgages											51,000,000
Number of HUD mortgages											11
Gain on retirement of HUD mortgages											11,100,000
Unamortized premium											11,300,000
Prepayment fee											$ 200,000

XML

PROPERTIES AND INVESTMENTS - Leased Property (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended	1 Months Ended	9 Months Ended			1 Months Ended
	Sep. 30, 2013 Facility	Sep. 30, 2013 Ark Holding Company Inc Property	Sep. 30, 2013 Property available for operating lease Minimum	Sep. 30, 2013 Property available for operating lease Maximum	Sep. 30, 2013 SNF's Facility	Aug. 30, 2013 SNF's Advocat Inc New Operator Arkansas Facilities Facility Bed	Sep. 30, 2013 ALFs Facility	Sep. 30, 2013 Specialty facilities Facility
Leased Properties [Line Items]
Number of leased real estate properties	480	56			417		16	11
Lease term			5 years	15 years
Increase in the specific annual percentage over the prior year's rent	2.50%
Number of facilities transitioned to new third party operator						11
Number of operating beds						1,084
Expiration date of new lease						Aug. 30, 2023
Provisions for uncollectible mortgages, notes and accounts receivable						$ 2.3
Sale / leaseback transaction, amount		525
Sale / leaseback transaction, term		50-year lease
Sale / leaseback transaction, interest rate		10.70%
Deposits included in other assets		$ 15.0

XML

CONSOLIDATING FINANCIAL STATEMENTS

9 Months Ended

Sep. 30, 2013

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

CONSOLIDATING FINANCIAL STATEMENTS

NOTE 12 – CONSOLIDATING FINANCIAL STATEMENTS

As of September 30, 2013, we had outstanding (i) $200 million 7.5% Senior Notes due 2020, (ii) $575 million 6.75% Senior Notes due 2022 and (iii) $400 million 5.875% Senior Notes due 2024, which we collectively refer to as the Senior Notes. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, by each of our subsidiaries that guarantee other indebtedness of Omega or any of the subsidiary guarantors. All of our subsidiaries that guarantee the Senior Notes also guarantee the 2012 Credit Facilities. Any subsidiary that we properly designate as an “unrestricted subsidiary” under the indentures governing the Senior Notes will not provide guarantees of the Senior Notes or of our 2012 Credit Facilities.

As of and prior to March 31, 2010, the non-guarantor subsidiaries were minor and insignificant. On June 29, 2010, we designated as “unrestricted subsidiaries” the 39 subsidiaries we acquired from CapitalSource subject to HUD indebtedness. During the fourth quarter of 2011, we designated as “unrestricted subsidiaries” 20 subsidiaries we acquired subject to HUD indebtedness, of which five subsidiaries were removed in July 2012 due to the retirement of the HUD related mortgages. During the fourth quarter of 2012, we designated as “unrestricted subsidiaries” eight subsidiaries we acquired subject to HUD indebtedness. In July 2013, we removed 11 subsidiaries due to the retirement of the HUD related debt.

For the nine months ended September 30, 2013 and 2012, the operating cash flow of the non-guarantor subsidiaries approximated net income of the non-guarantor subsidiaries, adjusted for depreciation and amortization expense.  On March 26, 2013, the non-guarantor subsidiaries refinanced existing HUD mortgage debt on 12 properties in Arkansas for approximately $59.4 million. The refinanced amount included $58.9 million related to retiring the old HUD debt and $0.5 million of closing costs that were added to the new (refinanced) HUD debt.  On May 31, 2013, we retired 11 HUD mortgages totaling $62.3 million ($51.0 million related to the outstanding principal of the 11 HUD mortgages and $11.3 million related to the unamortized premium for marking the debt to market on the date the debt was assumed and $0.2 million in prepayment fees).

               In addition, the non-guarantor subsidiaries also made $3.4 million of routine principal payments during the nine months ended September 30, 2013. For the nine-month period ended September 30, 2012, the non-guarantor subsidiaries did not engage in investing or financing activities other than the principal payment of $2.3 million for the HUD mortgages on the facilities owned by the non-guarantor subsidiaries. All of the subsidiary guarantors of our outstanding Senior Notes and 2012 Credit Facilities, and all of our non-guarantor subsidiaries, are 100% owned by Omega.

The following summarized condensed consolidating financial information segregates the financial information of the non-guarantor subsidiaries from the financial information of Omega Healthcare Investors, Inc. and the subsidiary guarantors under the Senior Notes.  The results and financial position of acquired entities are included from the dates of their respective acquisitions.

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING BALANCE SHEETS

Unaudited

(in thousands, except per share amounts)

	September 30, 2013
	Issuer & Subsidiary Guarantors			Non-Guarantor Subsidiaries			Elimination Company			Consolidated
ASSETS
Real estate properties
Land and buildings	$	2,602,688		$	457,500		$	-		$	3,060,188
Less accumulated depreciation		(627,301	)		(48,384	)		-			(675,685	)
Real estate properties – net		1,975,387			409,116			-			2,384,503
Mortgage notes receivable – net		241,490			-			-			241,490
		2,216,877			409,116			-			2,625,993
Other investments – net		75,421			-			-			75,421
		2,292,298			409,116			-			2,701,414
Assets held for sale – net		1,020			-			-			1,020
Total investments		2,293,318			409,116			-			2,702,434
Cash and cash equivalents		67,757			-			-			67,757
Restricted cash		6,755			22,026			-			28,781
Accounts receivable – net		136,101			6,325			-			142,426
Investment in affiliates		107,535			-			(107,535	)		-
Other assets		46,829			26,551			-			73,380
Total assets	$	2,658,295		$	464,018		$	(107,535	)	$	3,014,778
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit	$	-		$	-		$	-		$	-
Term loan		200,000			-			-			200,000
Secured borrowings		-			300,034			-			300,034
Unsecured borrowings – net		1,179,083			20,930			-			1,200,013
Accrued expenses and other liabilities		89,214			35,519			-			124,733
Intercompany payable		-			85,438			(85,438	)		-
Total liabilities		1,468,297			441,921			(85,438	)		1,824,780
Stockholders’ equity:
Common stock		11,952			-			-			11,952
Common stock – additional paid-in capital		1,876,609			-			-			1,876,609
Cumulative net earnings		879,443			22,097			(22,097	)		879,443
Cumulative dividends paid		(1,578,006	)		-			-			(1,578,006	)
Total stockholders’ equity		1,189,998			22,097			(22,097	)		1,189,998
Total liabilities and stockholders’ equity	$	2,658,295		$	464,018			(107,535	)	$	3,014,778

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING BALANCE SHEETS

 (in thousands, except per share amounts)

	December 31, 2012
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
ASSETS
Real estate properties
Land and buildings	$	2,580,977		$	457,576		$	—		$	3,038,553
Less accumulated depreciation		(547,489	)		(32,884	)		—			(580,373	)
Real estate properties – net		2,033,488			424,692			—			2,458,180
Mortgage notes receivable – net		238,621			—			—			238,621
		2,272,109			424,692			—			2,696,801
Other investments – net		47,339			—			—			47,339
		2,319,448			424,692			—			2,744,140
Assets held for sale – net		1,020			—			—			1,020
Total investments		2,320,468			424,692			—			2,745,160
Cash and cash equivalents		1,711			—			—			1,711
Restricted cash		10,095			26,565			—			36,660
Accounts receivable – net		121,488			3,692			—			125,180
Investment in affiliates		115,835			—			(115,835	)		—
Other assets		49,153			24,141			—			73,294
Total assets	$	2,618,750		$	479,090			(115,835	)	$	2,982,005
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit	$	158,000		$	—		$	—		$	158,000
Term loan		100,000			—			—			100,000
Secured borrowings		62,921			303,617			—			366,538
Unsecured borrowings – net		1,179,345			21,049			—			1,200,394
Accrued expenses and other liabilities		107,155			38,589			—			145,744
Intercompany payable		—			104,040			(104,040	)		—
Total liabilities		1,607,421			467,295			(104,040	)		1,970,676
Stockholders’ equity:
Common stock		11,239			—			—			11,239
Common stock – additional paid-in capital		1,664,855			—			—			1,664,855
Cumulative net earnings		754,128			11,795			(11,795	)		754,128
Cumulative dividends paid		(1,418,893	)		—			—			(1,418,893	)
Total stockholders’ equity		1,011,329			11,795			(11,795	)		1,011,329
Total liabilities and stockholders’ equity	$	2,618,750		$	479,090		$	(115,835	)	$	2,982,005

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

	Three Months Ended September 30, 2013												Nine Months Ended September 30, 2013
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination			Consolidated			Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination			Consolidated
Revenue
Rental income	$	81,289		$	12,548		$	-		$	93,837		$	242,253		$	37,762		$	-		$	280,015
Mortgage interest income		7,289			-			-			7,289			22,070			-			-			22,070
Other investment income – net		2,175			-			-			2,175			5,341			-			-			5,341
Miscellaneous		-			-			-			-			151			-			-			151
Total operating revenues		90,753			12,548			-			103,301			269,815			37,762			-			307,577
Expenses
Depreciation and amortization		27,034			5,168			-			32,202			80,885			15,501			-			96,386
General and administrative		5,372			90			-			5,462			15,859			283			-			16,142
Acquisition costs		(9	)		-			-			(9	)		134			-			-			134
Provision for uncollectible mortgages, notes and accounts receivable		2,321			-			-			2,321			2,386			-			-			2,386
Total operating expenses		34,718			5,258			-			39,976			99,264			15,784			-			115,048
Income before other income and expense		56,035			7,290			-			63,325			170,551			21,978			-			192,529
Other income (expense):
Interest income		(4	)		7			-			3			(1	)		21			-			20
Interest expense		(20,725	)		(3,767	)		-			(24,492	)		(63,429	)		(11,687	)		-			(75,116	)
Interest – amortization of deferred financing costs		(694	)		(5	)		-			(699	)		(2,069	)		(10	)		-			(2,079	)
Interest – refinancing gain (costs)		-			-			-			-			11,112			-			-			11,112
Equity in earnings		3,525			-			(3,525	)		-			10,302			-			(10,302	)		-
Total other expense		(17,898	)		(3,765	)		(3,525	)		(25,188	)		(44,085	)		(11,676	)		(10,302	)		(66,063	)
Income before gain on assets sold		38,137			3,525			(3,525	)		38,137			126,466			10,302			(10,302	)		126,466
Loss on assets sold – net		-			-			-			-			(1,151	)		-			-			(1,151	)
Net income (loss) available to common stockholders	$	38,137		$	3,525		$	(3,525	)	$	38,137		$	125,315		$	10,302		$	(10,302	)	$	125,315

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATING STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

	Three Months Ended September 30, 2012												Nine Months Ended September 30, 2012
	Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated			Issuer & Subsidiary Guarantors			Non – Guarantor Subsidiaries			Elimination Company			Consolidated
Revenue
Rental income	$	69,092		$	9,078		$	-		$	78,170		$	202,008		$	27,365		$	-		$	229,373
Mortgage interest income		7,677			-			-			7,677			22,417			-			-			22,417
Other investment income – net		1,238			-			-			1,238			3,533			-			-			3,533
Miscellaneous		23			-			-			23			125			-			-			125
Total operating revenues		78,030			9,078			-			87,108			228,083			27,365			-			255,448
Expenses
Depreciation and amortization		24,220			4,085			-			28,305			70,457			12,194			-			82,651
General and administrative		5,090			83			-			5,173			15,390			263			-			15,653
Acquisition costs		483			-			-			483			686			-			-			686
Impairment loss on real estate properties		-			-			-			-			272			-			-			272
Total operating expenses		29,793			4,168			-			33,961			86,805			12,457			-			99,262
Income before other income and expense		48,237			4,910			-			53,147			141,278			14,908			-			156,186
Other income (expense):
Interest income		-			6			-			6			4			18			-			22
Interest expense		(20,602	)		(3,448	)		-			(24,050	)		(61,290	)		(9,736	)		-			(71,026	)
Interest – amortization of deferred financing costs		(673	)		-			-			(673	)		(1,970	)		-			-			(1,970	)
Interest – refinancing gain (costs)		-			-			-			-			(5,410	)		-			-			(5,410	)
Equity in earnings		1,468			-			(1,468	)		-			5,190			-			(5,190	)		-
Total other expense		(19,807	)		(3,442	)		(1,468	)		(24,717	)		(63,476	)		(9,718	)		(5,190	)		(78,384	)
Income before gain on assets sold		28,430			1,468			(1,468	)		28,430			77,802			5,190			(5,190	)		77,802
Gain on assets sold – net		1,689			-			-			1,689			8,973			-			-			8,973
Net income (loss) available to common stockholders	$	30,119		$	1,468		$	(1,468	)	$	30,119		$	86,775		$	5,190		$	(5,190	)	$	86,775

XML

FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS

NOTE 8 – FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS

Secured and Unsecured Borrowings

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

			Current			September 30,		December 31,
	Maturity		Rate			2013		2012
						(in thousands)
Secured borrowings:
HUD mortgages assumed June 2010		2036 - 2040		-		$	—	$	62,921
HUD mortgages assumed June 2010 (1)		2040 - 2045		4.85	%		129,209		130,887
HUD mortgages assumed October 2011 (1)		2036 - 2040		4.87	%		31,359		31,991
HUD mortgages assumed December 2011(1)		2044		3.06	%		58,880		58,884
HUD mortgages assumed December 2012(1)		2031 - 2045		5.50	%		80,586		81,855
Total secured borrowings							300,034		366,538
Unsecured borrowings:
Revolving line of credit		2016		-		$	—	$	158,000
Term loan		2017		1.93	%		200,000		100,000
							200,000		258,000
2020 notes		2020		7.50	%		200,000		200,000
2022 notes		2022		6.75	%		575,000		575,000
2024 notes		2024		5.875	%		400,000		400,000
Subordinated debt		2021		9.00	%		20,930		21,049
							1,195,930		1,196,049
Premium - net							4,083		4,345
Total unsecured borrowings							1,400,013		1,458,394
Totals – net						$	1,700,047	$	1,824,932

(1) Reflects the weighted average annual interest rate on the mortgages.

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

Bank Credit Agreements

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

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

At September 30, 2013, we had no outstanding amount under the 2012 Revolving Credit Facility, and no letters of credit outstanding, leaving availability of $500 million.  The 2012 Revolving Credit Facility matures on December 6, 2016, with an option by us to extend the maturity one additional year.  The 2012 Revolving Credit Facility is priced at LIBOR plus an applicable percentage (beginning at 150 basis points, with a range of 100 to 190 basis points) based on our ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings, plus a facility fee based on the same ratings (initially 30 basis points, with a range of 15 to 45 basis points).

              At September 30, 2013, the full $200 million was outstanding under the 2012 Term Loan Facility.  The 2012 Term Loan Facility is also priced at LIBOR plus an applicable percentage (beginning at 175 basis points, with a range of 110 to 230 basis points) based our ratings from Standard & Poor’s, Moody’s and/or Fitch Ratings.  The 2012 Term Loan Facility matures on December 6, 2017.

HUD Loans Payoff

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

HUD Mortgage Debt Refinancing

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

$250 Million Equity Shelf Program

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

For the three months ended September 30, 2013, we sold 2.1 million shares under the 2013 ESP, at an average price of $29.42 per share, generating gross proceeds of approximately $63.2 million, before $1.3 million of commissions.  For the nine months ended September 30, 2013, we sold approximately 4.4 million shares under the 2013 ESP, at an average price of $30.61 per share, generating gross proceeds of approximately $136.0 million, before $2.7 million of commissions.

Termination of $245 Million Equity Shelf Program

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

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

Dividend Reinvestment and Common Stock Purchase Plan

For the three-month period ended September 30, 2013, approximately 0.2 million shares of our common stock at an average price of $29.03 per share were issued through our Dividend Reinvestment and Common Stock Purchase Program for net proceeds of approximately $6.2 million.  For the nine-month period ended September 30, 2013, approximately 1.7 million shares of our common stock at an average price of $28.53 per share were issued through our Dividend Reinvestment and Common Stock Purchase Program for net proceeds of approximately $47.8 million.

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Schedule of summary of net receivables

	September 30,			December 31,
	2013			2012
	(in thousands)
Contractual receivables	$	3,905		$	3,963
Effective yield interest receivables		4,992			3,576
Straight-line receivables		116,972			98,973
Lease inducements		17,077			19,307
Allowance		(520	)		(639	)
Accounts receivable – net	$	142,426		$	125,180

XML

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2013

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 13 – SUBSEQUENT EVENTS

$33 Million of New Investments in Florida in October 2013

In October 2013, we completed two separate acquisitions with two existing operators totaling $33 million. The acquisitions consisted of 1 ALF in Florida totaling 97 beds and 4 SNFs located in Indiana totaling 384 beds. These facilities were added to existing master leases.

2.875 Million Shares of Common Stock Offering

On October 7, 2013, we sold 2,875,000 shares of common stock in an underwritten public offering at an offering price of $30 per share before underwriting discounts and expenses. Our total net proceeds from the offering, after underwriting discounts and expenses were approximately $84.5 million.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 31, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	OMEGA HEALTHCARE INVESTORS INC
Entity Central Index Key	0000888491
Trading Symbol	ohi
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock Shares Outstanding		122,524,279
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

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

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

Accounts Receivable

Accounts Receivable

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

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

A summary of our net receivables by type is as follows:

	September 30,			December 31,
	2013			2012
	(in thousands)
Contractual receivables	$	3,905		$	3,963
Effective yield interest receivables		4,992			3,576
Straight-line receivables		116,972			98,973
Lease inducements		17,077			19,307
Allowance		(520	)		(639	)
Accounts receivable – net	$	142,426		$	125,180

In August 2013, we entered into an agreement with one of our current operators and a new third party operator to transition 11 facilities from the current operator to the third party operator.  As a result of the transition, we evaluated the recoverability of the straight-line rent receivable associated with the current operator’s lease and recorded a $2.3 million provision for uncollectible accounts associated with straight-line receivables that were written-off.  (See Note 2 – Properties and Investments).

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