LEASES

12 Months Ended

Dec. 31, 2021

LEASES [Abstract]

LEASES

NOTE 6 –LEASES

Lease Income

The following table summarizes the Company’s rental income from operating leases:

	Year Ended December 31,
	2021		2020		2019
	(in thousands)
Rental income – operating leases	$	911,701	$	741,681	$	792,010
Variable lease income – operating leases		11,976		11,746		12,066
Total rental income	$	923,677	$	753,427	$	804,076

Our variable lease income primarily represents the reimbursement of real estate taxes and ground lease expenses by operators that Omega pays directly.

The following amounts reflect the future minimum lease payments due to us for the remainder of the initial terms of our operating leases as of December 31, 2021:

	(in thousands)
2022	$	820,565
2023		838,780
2024		852,632
2025		861,586
2026		871,072
Thereafter		4,192,976
Total	$	8,437,611

Lease Costs

As of December 31, 2021, the Company is a lessee under ground leases and/or facility leases related to 11 SNFs and two offices. For the years ended December 31, 2021, 2020 and 2019, the expenses associated with these operating leases were $2.2 million, respectively and are included within general and administrative expense on the Statement of Operations.

The following table summarizes the balance sheet information related to leases where the Company is a lessee:

	December 31,		December 31,		December 31,
	2021		2020		2019
	(in thousands)
Other assets - right of use assets	$	16,117	$	16,526	$	17,533
Accrued expenses and other liabilities – lease liabilities	$	17,180	$	17,349	$	18,033

Direct Financing Leases

The components of investments in direct financing leases consist of the following:

	December 31,		December 31,
	2021		2020
	(in thousands)
Minimum lease payments receivable	$	24,863	$	25,947
Less unearned income		(13,460)		(14,489)
Investment in direct financing leases		11,403		11,458
Less allowance for credit losses on direct financing leases		(530)		(694)
Investment in direct financing leases – net	$	10,873	$	10,764
Properties subject to direct financing leases		1		1
Number of direct financing leases		1		1

Orianna Direct Financing Lease

On January 11, 2019, pursuant to a bankruptcy court order, affiliates of Orianna Health Systems (“Orianna”) purchased the remaining 15 SNFs subject to the direct financing lease with Orianna for $176 million of consideration, comprised of $146 million in cash received by Orianna and a $30.0 million seller note held by the Company. On the same date, Orianna repaid $25.0 million of our then outstanding debtor in possession financing, including all related interest.  The $30.0 million note, which was repaid during the third quarter of 2021, bore interest at 6% per annum and had a maturity date of January 11, 2026.

On January 16, 2019, the bankruptcy court confirmed Orianna’s plan of reorganization, creating a Distribution Trust (the “Trust”) to distribute the proceeds from Orianna’s sale of the remaining 15 SNFs, as well as the Trust’s collections of Orianna’s accounts receivable portfolio. In January 2019, we reclassified our net investment in direct financing lease of $115.8 million from the Trust to other assets on our Consolidated Balance Sheets. For the period from January 16, 2019 through December 31, 2019, we received approximately $94 million from the Trust as a partial liquidation.

In March 2019, we received updated information from the Trust indicating diminished collectibility of the accounts receivable owed to us. As a result, we recorded an additional $7.7 million allowance. As of December 31, 2019, our remaining receivable from the Trust was approximately $14.1 million which was recorded in other assets on our Consolidated Balance Sheets. During 2020, we received approximately $17.2 million from the Trust of which approximately $3.1 million is recorded in (recovery) impairment on direct financing leases on our Consolidated Statements of Operations. During 2021, we received approximately $0.7 million from the Trust which is recorded in (recovery) impairment on direct financing leases on our Consolidated Statement of Operations.