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Omega Announces Portfolio Restructure.

Business Editors/Health/Medical Writers

TIMONIUM, Md.--(BUSINESS WIRE)--Nov. 10, 2003

Omega Healthcare Investors, Inc. (NYSE:OHI) today announced it has re-leased seven skilled nursing facilities ("SNFs"), one assisted living facility ("ALF") and sold three closed facilities.

Sun Healthcare Group, Inc.

Effective November 1, 2003, the Company re-leased two SNFs formerly leased by Sun Healthcare Group, Inc. ("Sun"), located in California and representing 185 beds, to a new operator under a Master Lease, which has a ten-year term and has an initial annual lease rate of $0.6 million. In addition, on October 1, 2003, the Company re-leased three SNFs formerly leased by Sun, located in California and representing 271 beds, to a new operator under a Master Lease, which has a 15-year term and has an initial annual lease rate of $1.24 million. In addition, the Company is in the process of negotiating terms and conditions for the re-lease of ten additional Sun properties with new operators.

Separately, the Company continues its ongoing restructuring discussions with Sun. At the time of this press release, the Company cannot determine the timing or outcome of these discussions. There can be no assurance that Sun will continue to pay rent at the current level, although, the Company believes that alternative operators would be available to lease or buy the remaining Sun facilities if an appropriate agreement is not completed with Sun. However, as a result of the above mentioned transitions of the five former Sun facilities, Sun's contractual monthly rent, starting in November, was reduced approximately $0.15 million from approximately $2.00 million to approximately $1.85 million. For the month of November, Sun remitted approximately $1.51 million in lease payments (or $18.1 million on an annual basis) similar to what was paid on a monthly basis during the third quarter of 2003. Rent received in November from the ten former Sun facilities (five mentioned above, plus five facilities re-leased in July) totaled approximately $0.35 million or $4.22 million annually.

Claremont Healthcare Holdings, Inc.

Effective November 7, 2003, the Company re-leased two SNFs formerly leased by Claremont Healthcare Holdings, Inc. ("Claremont"), located in Ohio and representing 279 beds, to a new operator under a Master Lease, which has a ten-year term and has an initial annual lease rate of $1.2 million.

Claremont failed to pay base rent due on November 1, 2003 in the amount of $0.5 million. On November 10, 2003, the Company applied a security deposit in the amount of $0.5 million to pay Claremont's November rent payment and the Company demanded that Claremont restore the $0.5 million security deposit. As of the date of this press release, the Company has no additional security deposits with Claremont. The Company is recognizing revenue from Claremont on a cash-basis as it is received.

Alterra Healthcare Corporation

Effective November 1, 2003, the Company re-leased one ALF formerly leased by Alterra Healthcare Corporation ("Alterra"), located in Washington and representing 52 beds, to a new operator under a Lease, which has a ten-year term and has an initial annual lease rate of $0.2 million. The Company is in the process of negotiating terms and conditions for the re-lease of the remaining two properties. In the interim, Alterra will continue to operate the two facilities.

Other Assets

On November 4, 2003, the Company sold one closed facility located in Iowa for its approximate net book value. On October 31, 2003, the Company sold one closed facility located in Florida, realizing proceeds of approximately $2.6 million, net of closing costs, resulting in a gain of $1.5 million. In addition, on October 31, 2003, the Company sold its remaining held for sale facility located in Texas, realizing proceeds of approximately $1.5 million, net of closing costs, resulting in a loss of $0.8 million. At the time of this press release, the Company has eight closed facilities remaining with a total net book value of $2.7 million.

Omega is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At September 30, 2003, the Company owned or held mortgages on 216 skilled nursing and assisted living facilities with approximately 21,800 beds located in 28 states and operated by 34 third-party healthcare operating companies.

This announcement includes forward-looking statements. All forward-looking statements included herein are based on information available to the Company on the date hereof. Such statements only speak as of the date hereof and the Company assumes no obligation to update such forward-looking statements. Actual results may differ materially from those reflected in such forward-looking statements as a result of a variety of factors, including, among other things: (i) uncertainties relating to the operation of the Company's owned and operated asset, including those relating to reimbursement by third-party payors, regulatory matters and occupancy levels; (ii) uncertainties relating to the restructuring of Sun's remaining obligations and payment of contractual rents, regulatory and other changes in the healthcare sector, including without limitation, changes in Medicare reimbursement; (iii) changes in the financial position of the Company's operators; (iv) the ability of operators in bankruptcy to reject unexpired lease obligations, modify the terms of the Company's mortgages, and impede the ability of the Company to collect unpaid rent or interest during the pendency of a bankruptcy proceeding and retain security deposits for the debtor's obligations; (v) the availability and cost of capital; (vi) competition in the financing of healthcare facilities; and (vii) other factors identified in the Company's filings with the Securities and Exchange Commission.
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Publication:Business Wire
Geographic Code:1USA
Date:Nov 10, 2003
Words:926
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