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 June 30, 2018

or

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

For the transition period from _______________ to _______________

OMEGA HEALTHCARE INVESTORS, INC.

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

(Exact name of Registrant as specified in its charter)

Maryland	1-11316	38-3041398
(Omega Healthcare Investors, Inc.)	(Omega Healthcare Investors, Inc.)	(Omega Healthcare Investors, Inc.)
Delaware	333-203447-11	36-4796206
(OHI Healthcare Properties Limited Partnership)	(OHI Healthcare Properties Limited Partnership)	(OHI Healthcare Properties Limited Partnership)
(State of incorporation or organization)	(Commission file number)	(IRS Employer Identification No.)

303 International Circle, Suite 200, Hunt Valley, MD 21030

(Address of principal executive offices)

(410) 427-1700

(Telephone number, including area code)

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.

Omega Healthcare Investors, Inc. Yes x     No ¨          OHI Healthcare Properties Limited Partnership Yes x   No ¨

Indicate by check mark whether the registrant has submitted electronically 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).

Omega Healthcare Investors, Inc. Yes x    No ¨        OHI Healthcare Properties Limited Partnership Yes x    No ¨

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

Omega Healthcare Investors, Inc.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ Emerging growth company ¨

OHI Healthcare Properties Limited Partnership

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Omega Healthcare Investors, Inc. ¨ OHI Healthcare Properties Limited Partnership ¨

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

Omega Healthcare Investors, Inc. Yes ¨ No x OHI Healthcare Properties Limited Partnership Yes ¨ No x

Indicate the number of shares outstanding of each of the issuers’ classes of common stock as of August 1, 2018

Omega Healthcare Investors, Inc.
Common Stock, $.10 par value	200,335,705
OHI Healthcare Properties Limited Partnership
N/A	No common stock outstanding
(Class)	(Number of shares)

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2018 of Omega Healthcare Investors, Inc. and OHI Healthcare Properties Limited Partnership (“Omega OP”). Unless stated otherwise or the context otherwise requires, (i) references to “Omega” or the “Company” means Omega Healthcare Investors, Inc. and its consolidated subsidiaries, (ii) references to “Parent” refer to Omega Healthcare Investors, Inc. without regard to its consolidated subsidiaries, and (iii) references to “Omega OP” means OHI Healthcare Properties Limited Partnership and its consolidated subsidiaries.

Omega is a self-administered real estate investment trust (“REIT”) under the Internal Revenue Code of 1986. Omega is structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega's assets are owned directly or indirectly by, and all of Omega's operations are conducted directly or indirectly through, its operating partnership subsidiary, Omega OP.

Parent directly owned approximately 96% of the issued and outstanding partnership units in Omega OP (the “Omega OP Units”) at June 30, 2018. Each Omega OP Unit (other than those owned by Parent) is redeemable at the election of the holder for cash equal to the then-fair market value of one share of common stock of Parent, subject to Parent’s election to exchange the Omega OP Units tendered for redemption for common stock of the Parent on a one-for-one basis in an unregistered transaction, subject to adjustment as set forth in the partnership agreement. The management of Parent consists of the same members as the management of Omega OP.

The financial results of Omega OP are consolidated into the financial statements of Omega. Omega has no significant assets other than its investments in Omega OP. Omega and Omega OP are managed and operated as one entity. Omega OP has no significant assets other than its interests in non-guarantor subsidiaries.

We believe it is important for investors to understand the few differences between Omega and Omega OP in the context of how we operate as a consolidated company. Omega acts as the general partner of Omega OP. Net proceeds from equity issuances by Parent are contributed to Omega OP in exchange for additional partnership units. Parent and Omega OP incur indebtedness. The net proceeds of the Parent’s borrowings are loaned to Omega OP. The outstanding senior notes and certain other debt of Parent is guaranteed by Omega OP.

The presentation of debt and related interest, including amounts accrued, stockholders’ equity, owners’ equity and noncontrolling interests are the main areas of difference between the consolidated financial statements of Omega and Omega OP. The differences between debt, stockholders’ equity and owners’ equity result from differences in the debt or equity issued at the Omega and Omega OP levels. With respect to owners’ equity, the units held by the partners in Omega OP other than the Parent are accounted for as owners’ equity in Omega OP’s financial statements and as noncontrolling interests in Omega’s financial statements. Although classified differently, total debt and equity of Omega and Omega OP are the same.

We believe combining the quarterly reports on Form 10-Q of Omega and Omega OP into this single report results in the following benefits:

· combined reports better reflect how management and the analyst community view the business as a single operating unit;

· combined reports enhance investors’ understanding of Omega and Omega OP by enabling them to view the business as a whole and in the same manner as management;

· combined reports are more efficient for Omega and Omega OP and result in savings in time, effort and expense; and

· combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

In order to highlight the differences between Omega and Omega OP, the separate sections in this report for Omega and Omega OP specifically refer to Omega and Omega OP. In the sections that combine disclosure of Omega and Omega OP, this report refers to “we” and “us” actions or holdings as being “our” actions or holdings. Although Omega OP and its subsidiaries hold all of our assets, we believe that reference to “we,” “us” or “our” in this context is appropriate because the business is one enterprise and we operate substantially all of our business through Omega OP.

OMEGA HEALTHCARE INVESTORS, INC.

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

FORM 10-Q

June 30, 2018

TABLE OF CONTENTS

		Page No.
PART I	Financial Information
Item 1.	Financial Statements of Omega Healthcare Investors, Inc.:
	Consolidated Balance Sheets June 30, 2018 (unaudited) and December 31, 2017	2
	Consolidated Statements of Operations (unaudited) Three and Six months ended June 30, 2018 and 2017	3
	Consolidated Statements of Comprehensive Income (unaudited) Three and Six months ended June 30, 2018 and 2017	4
	Consolidated Statement of Changes in Equity (unaudited) Six months ended June 30, 2018	5
	Consolidated Statements of Cash Flows (unaudited) Six months ended June 30, 2018 and 2017	6
	Financial Statements of OHI Healthcare Properties Limited Partnership:
	Consolidated Balance Sheets June 30, 2018 (unaudited) and December 31, 2017	7
	Consolidated Statements of Operations (unaudited) Three and Six months ended June 30, 2018 and 2017	8
	Consolidated Statements of Comprehensive Income (unaudited) Three and Six months ended June 30, 2018 and 2017	9
	Consolidated Statement of Changes in Owners’ Equity (unaudited) Six months ended June 30, 2018	10
	Consolidated Statements of Cash Flows (unaudited) Six months ended June 30, 2018 and 2017	11
	Notes to Consolidated Financial Statements June 30, 2018 (unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4.	Controls and Procedures	56
PART II	Other Information
Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 6.	Exhibits	58

PART I – FINANCIAL INFORMATION

Item 1 - Financial Statements

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	June 30,			December 31,
	2018			2017
	(Unaudited)
ASSETS
Real estate properties
Real estate investments	$	7,571,661		$	7,655,960
Less accumulated depreciation		(1,475,463	)		(1,376,828	)
Real estate investments – net		6,096,198			6,279,132
Investments in direct financing leases – net		349,465			364,965
Mortgage notes receivable – net		703,309			671,232
		7,148,972			7,315,329
Other investments – net		377,206			276,342
Investment in unconsolidated joint venture		32,820			36,516
Assets held for sale – net		3,782			86,699
Total investments		7,562,780			7,714,886
Cash and cash equivalents		10,951			85,937
Restricted cash		2,598			10,871
Accounts receivable – net		320,140			279,334
Goodwill		644,369			644,690
Other assets		33,301			37,587
Total assets	$	8,574,139		$	8,773,305
LIABILITIES AND EQUITY
Revolving line of credit		220,000			290,000
Term loans – net		902,168			904,670
Secured borrowings – net		-			53,098
Unsecured borrowings – net		3,325,889			3,324,390
Accrued expenses and other liabilities		257,049			295,142
Deferred income taxes		14,718			17,747
Total liabilities		4,719,824			4,885,047
Equity:
Common stock $.10 par value authorized – 350,000 shares,  issued and outstanding – 200,332 shares as of  June 30, 2018 and 198,309 as of December 31, 2017		20,033			19,831
Common stock – additional paid-in capital		4,997,329			4,936,302
Cumulative net earnings		2,011,689			1,839,356
Cumulative dividends paid		(3,473,406	)		(3,210,248	)
Accumulated other comprehensive loss		(30,157	)		(30,150	)
Total stockholders’ equity		3,525,488			3,555,091
Noncontrolling interest		328,827			333,167
Total equity		3,854,315			3,888,258
Total liabilities and equity	$	8,574,139		$	8,773,305

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						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Revenue
Rental income	$	192,850		$	193,997		$	386,799		$	386,534
Income from direct financing leases		497			15,462			1,110			31,108
Mortgage interest income		16,834			16,297			33,413			32,253
Other investment income		9,097			7,278			17,624			14,192
Miscellaneous income		603			2,763			1,134			3,454
Total operating revenues		219,881			235,797			440,080			467,541
Expenses
Depreciation and amortization		69,609			70,350			139,970			140,343
General and administrative		15,237			11,541			31,712			24,065
Acquisition costs		-			19			-			(22	)
(Recovery) impairment on real estate properties		(1,097	)		10,135			3,817			17,773
Provision for uncollectible accounts		564			2,673			8,378			5,077
Total operating expenses		84,313			94,718			183,877			187,236
Income before other income and expense		135,568			141,079			256,203			280,305
Other income (expense)
Interest income and other - net		1,125			254			1,710			258
Interest expense		(48,082	)		(48,085	)		(96,093	)		(93,126	)
Interest – amortization of deferred financing costs		(2,242	)		(2,543	)		(4,485	)		(5,045	)
Interest – refinancing costs		-			(21,965	)		-			(21,965	)
Contractual settlement		-			-			-			10,412
Realized (loss) gain on foreign exchange		(66	)		79			(7	)		140
Total other expense		(49,265	)		(72,260	)		(98,875	)		(109,326	)
Income before (loss) gain on assets sold		86,303			68,819			157,328			170,979
(Loss) gain on assets sold – net		(2,891	)		(622	)		14,609			6,798
Income from continuing operations		83,412			68,197			171,937			177,777
Income tax expense		(838	)		(591	)		(1,381	)		(1,691	)
(Loss) income from unconsolidated joint venture		(588	)		551			(637	)		1,183
Net income		81,986			68,157			169,919			177,269
Net income attributable to noncontrolling interest		(3,450	)		(2,900	)		(7,163	)		(7,572	)
Net income available to common stockholders	$	78,536		$	65,257		$	162,756		$	169,697
Earnings per common share available to common stockholders:
Basic:
Net income available to common stockholders	$	0.39		$	0.33		$	0.82		$	0.86
Diluted:
Net income	$	0.39		$	0.33		$	0.82		$	0.86
Dividends declared per common share	$	0.66		$	0.63		$	1.32		$	1.25
Weighted-average shares outstanding, basic		199,497			197,433			199,204			197,223
Weighted-average shares outstanding, diluted		208,460			206,672			208,139			206,423

See notes to consolidated financial statements.

3

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Net income	$	81,986		$	68,157		$	169,919		$	177,269
Other comprehensive (loss) income:
Foreign currency translation		(16,153	)		10,274			(6,284	)		14,608
Cash flow hedges		1,788			(3,407	)		6,276			(2,153	)
Total other comprehensive (loss) income		(14,365	)		6,867			(8	)		12,455
Comprehensive income		67,621			75,024			169,911			189,724
Comprehensive income attributable to noncontrolling interest		(2,843	)		(3,192	)		(7,162	)		(8,103	)
Comprehensive income attributable to common stockholders	$	64,778		$	71,832		$	162,749		$	181,621

See notes to consolidated financial statements.

4

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Unaudited

(in thousands, except per share amounts)

											Accumulated
	Common		Additional			Cumulative					Other			Total
	Stock		Paid-in			Net		Cumulative			Comprehensive			Stockholders’			Noncontrolling			Total
	Par Value		Capital			Earnings		Dividends			Loss			Equity			Interest			Equity
Balance at December 31, 2017 (198,309 common shares & 8,772 Omega OP Units)	$	19,831	$	4,936,302		$	1,839,356	$	(3,210,248	)	$	(30,150	)	$	3,555,091		$	333,167		$	3,888,258
Cumulative effect of accounting change (see Note 1)		-		-			9,577		-			-			9,577			423			10,000
Balance at January 1, 2018 (198,309 common shares & 8,772 Omega OP Units)		19,831		4,936,302			1,848,933		(3,210,248	)		(30,150	)		3,564,668			333,590			3,898,258
Grant of restricted stock to company directors (38 shares at $30.36 per share)		4		(4	)		-		-			-			-			-			-
Stock-based compensation expense		-		8,145			-		-			-			8,145			-			8,145
Vesting/exercising of equity compensation plan, net of tax withholdings (89 shares)		9		(1,663	)		-		-			-			(1,654	)		-			(1,654	)
Dividend reinvestment and stock purchase plan (948 shares at an average of $28.55 per share)		95		26,955			-		-			-			27,050			-			27,050
Deferred compensation directors (35 shares at $30.42 per share)		3		134			-		-			-			137			-			137
Equity Shelf Program (912 shares at $30.16 per share, net of issuance costs)		91		27,418			-		-			-			27,509			-			27,509
Common dividends declared ($1.32 per share)		-		-			-		(263,158	)		-			(263,158	)		-			(263,158	)
Conversion of Omega OP Units to common stock (1 share at $31.26 per share)		-		42			-		-			-			42			-			42
Redemption of Omega OP Units (6 units at $28.06 per share)		-		-			-		-			-			-			(160	)		(160	)
Omega OP Units distributions		-		-			-		-			-			-			(11,765	)		(11,765	)
Comprehensive income:
Foreign currency translation		-		-			-		-			(6,019	)		(6,019	)		(265	)		(6,284	)
Cash flow hedges		-		-			-		-			6,012			6,012			264			6,276
Net income		-		-			162,756		-			-			162,756			7,163			169,919
Total comprehensive income																					169,911
Balance at June 30, 2018 (200,332 shares & 8,766 Omega OP Units)	$	20,033	$	4,997,329		$	2,011,689	$	(3,473,406	)	$	(30,157	)	$	3,525,488		$	328,827		$	3,854,315

See notes to consolidated financial statements.

5

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited (in thousands)

	Six Months Ended
	June 30,
	2018			2017
Cash flows from operating activities
Net income	$	169,919		$	177,269
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		139,970			140,343
Impairment on real estate properties		8,992			17,773
Provision for uncollectible accounts		8,378			5,077
Interest - amortization of deferred financing costs		4,485			15,240
Accretion of direct financing leases		67			(6,164	)
Stock-based compensation expense		8,145			7,478
Gain on assets sold – net		(14,609	)		(6,798	)
Amortization of acquired in-place leases - net		(5,277	)		(6,202	)
Effective yield receivable on mortgage notes		(710	)		(1,191	)
Interest paid-in-kind		(3,493	)		-
Change in operating assets and liabilities – net:
Contractual receivables		1,563			(33,293	)
Straight-line rent receivables		(30,746	)		(23,174	)
Lease inducements		(31,551	)		895
Other operating assets and liabilities		(37,967	)		(23,053	)
Net cash provided by operating activities		217,166			264,200
Cash flows from investing activities
Acquisition of real estate		(52,744	)		(130,977	)
Cash acquired		-			2,341
Investments in construction in progress		(63,313	)		(46,108	)
Investments in direct financing leases		-			(4,767	)
Proceeds from sale of direct financing lease		15,433			27,253
Placement of mortgage loans		(56,944	)		(24,978	)
Distributions from unconsolidated joint venture		3,739			9,741
Net proceeds from sale of real estate investments		221,952			64,061
Capital improvements to real estate investments		(19,183	)		(16,861	)
Receipts from insurance proceeds		6,901			-
Proceeds from other investments		105,695			35,997
Investments in other investments		(192,962	)		(52,228	)
Collection of mortgage principal		25,176			673
Net cash used in investing activities		(6,250	)		(135,853	)
Cash flows from financing activities
Proceeds from credit facility borrowings		549,000			817,000
Payments on credit facility borrowings		(619,000	)		(852,000	)
Receipts of other long-term borrowings		-			1,346,749
Payments of other long-term borrowings		(2,049	)		(1,252,139	)
Payments of financing related costs		(8	)		(28,483	)
Receipts from dividend reinvestment plan		27,050			19,721
Payments for exercised options and restricted stock		(1,654	)		(2,120	)
Net proceeds from issuance of common stock		27,509			6,634
Dividends paid		(263,021	)		(246,722	)
Redemption of Omega OP Units		(118	)		(48	)
Distributions to Omega OP Unit Holders		(11,765	)		(11,143	)
Net cash used in financing activities		(294,056	)		(202,551	)
Effect of foreign currency translation on cash, cash equivalents and restricted cash		(119	)		162
Decrease in cash, cash equivalents and restricted cash		(83,259	)		(74,042	)
Cash, cash equivalents and restricted cash at beginning of period		96,808			107,276
Cash, cash equivalents and restricted cash at end of period	$	13,549		$	33,234

See notes to consolidated financial statements.

6

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	June 30,			December 31,
	2018			2017
	(Unaudited)
ASSETS
Real estate properties
Real estate investments	$	7,571,661		$	7,655,960
Less accumulated depreciation		(1,475,463	)		(1,376,828	)
Real estate investments – net		6,096,198			6,279,132
Investments in direct financing leases – net		349,465			364,965
Mortgage notes receivable – net		703,309			671,232
		7,148,972			7,315,329
Other investments – net		377,206			276,342
Investment in unconsolidated joint venture		32,820			36,516
Assets held for sale – net		3,782			86,699
Total investments		7,562,780			7,714,886
Cash and cash equivalents		10,951			85,937
Restricted cash		2,598			10,871
Accounts receivable – net		320,140			279,334
Goodwill		644,369			644,690
Other assets		33,301			37,587
Total assets	$	8,574,139		$	8,773,305
LIABILITIES AND OWNERS’ EQUITY
Term loan – net	$	99,488		$	99,423
Secured borrowings – net		-			53,098
Accrued expenses and other liabilities		195,463			226,028
Deferred income taxes		14,718			17,747
Intercompany loans payable		4,410,155			4,488,751
Total liabilities		4,719,824			4,885,047
Owners’ Equity:
General partners’ equity		3,525,488			3,555,091
Limited partners’ equity		328,827			333,167
Total owners’ equity		3,854,315			3,888,258
Total liabilities and owners’ equity	$	8,574,139		$	8,773,305

See notes to consolidated financial statements.

7

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Revenue
Rental income	$	192,850		$	193,997		$	386,799		$	386,534
Income from direct financing leases		497			15,462			1,110			31,108
Mortgage interest income		16,834			16,297			33,413			32,253
Other investment income		9,097			7,278			17,624			14,192
Miscellaneous income		603			2,763			1,134			3,454
Total operating revenues		219,881			235,797			440,080			467,541
Expenses
Depreciation and amortization		69,609			70,350			139,970			140,343
General and administrative		15,237			11,541			31,712			24,065
Acquisition costs		-			19			-			(22	)
(Recovery) impairment loss on real estate properties		(1,097	)		10,135			3,817			17,773
Provision for uncollectible accounts		564			2,673			8,378			5,077
Total operating expenses		84,313			94,718			183,877			187,236
Income before other income and expense		135,568			141,079			256,203			280,305
Other income (expense)
Interest income and other - net		1,125			254			1,710			258
Interest expense		(48,082	)		(48,085	)		(96,093	)		(93,126	)
Interest – amortization of deferred financing costs		(2,242	)		(2,543	)		(4,485	)		(5,045	)
Interest – refinancing costs		-			(21,965	)		-			(21,965	)
Contractual settlement		-			-			-			10,412
Realized (loss) gain on foreign exchange		(66	)		79			(7	)		140
Total other expense		(49,265	)		(72,260	)		(98,875	)		(109,326	)
Income before (loss) gain on assets sold		86,303			68,819			157,328			170,979
(Loss) gain on assets sold – net		(2,891	)		(622	)		14,609			6,798
Income from continuing operations		83,412			68,197			171,937			177,777
Income tax expense		(838	)		(591	)		(1,381	)		(1,691	)
(Loss) income from unconsolidated joint venture		(588	)		551			(637	)		1,183
Net income	$	81,986		$	68,157		$	169,919		$	177,269
Earnings per unit:
Basic:
Net income	$	0.39		$	0.33		$	0.82		$	0.86
Diluted:
Net income	$	0.39		$	0.33		$	0.82		$	0.86
Dividends declared per Omega OP Unit	$	0.66		$	0.63		$	1.32		$	1.25
Weighted-average Omega OP Units outstanding, basic		208,263			206,205			207,972			206,016
Weighted-average Omega OP Units outstanding, diluted		208,460			206,672			208,139			206,423

See notes to consolidated financial statements.

8

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Net income	$	81,986		$	68,157		$	169,919		$	177,269
Other comprehensive income (loss):
Foreign currency translation		(16,153	)		10,274			(6,284	)		14,608
Cash flow hedges		1,788			(3,407	)		6,276			(2,153	)
Total other comprehensive (loss) income		(14,365	)		6,867			(8	)		12,455
Comprehensive income	$	67,621		$	75,024		$	169,911		$	189,724

See notes to consolidated financial statements.

9

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

CONSOLIDATED STATEMENT OF CHANGES IN OWNERS’ EQUITY

Unaudited

(in thousands)

	General		Limited
	Partners’		Partners’			Total			General			Limited			Total
	Omega		Omega			Omega			Partners’			Partners’			Owners’
	OP Units		OP Units			OP Units			Equity			Equity			Equity
Balance at December 31, 2017		198,309		8,772			207,081		$	3,555,091		$	333,167		$	3,888,258
Cumulative effect of accounting change (see Note 1)		-		-			-			9,577			423			10,000
Balance at January 1, 2018		198,309		8,772			207,081			3,564,668			333,590			3,898,258
Contributions from partners		2,023		-			2,023			61,229			-			61,229
Distributions to partners		-		-			-			(263,158	)		(11,765	)		(274,923	)
Omega OP Unit redemptions		-		(6	)		(6	)		-			(160	)		(160	)
Comprehensive income
Foreign currency translation		-		-			-			(6,019	)		(265	)		(6,284	)
Cash flow hedges		-		-			-			6,012			264			6,276
Net income		-		-			-			162,756			7,163			169,919
Total comprehensive income																169,911
Balance at June 30, 2018		200,332		8,766			209,098		$	3,525,488		$	328,827		$	3,854,315

See notes to consolidated financial statements.

10

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited (in thousands)

	Six Months Ended
	June 30,
	2018			2017
Cash flows from operating activities
Net income	$	169,919		$	177,269
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		139,970			140,343
Impairment on real estate properties		8,992			17,773
Provision for uncollectible accounts		8,378			5,077
Interest - amortization of deferred financing costs		4,485			15,240
Accretion of direct financing leases		67			(6,164	)
Stock-based compensation expense		8,145			7,478
Gain on assets sold – net		(14,609	)		(6,798	)
Amortization of acquired in-place leases - net		(5,277	)		(6,202	)
Effective yield receivable on mortgage notes		(710	)		(1,191	)
Interest paid-in-kind		(3,493	)		-
Change in operating assets and liabilities – net:
Contractual receivables		1,563			(33,293	)
Straight-line rent receivables		(30,746	)		(23,174	)
Lease inducements		(31,551	)		895
Other operating assets and liabilities		(37,967	)		(23,053	)
Net cash provided by operating activities		217,166			264,200
Cash flows from investing activities
Acquisition of real estate		(52,744	)		(130,977	)
Cash acquired		-			2,341
Investments in construction in progress		(63,313	)		(46,108	)
Investments in direct financing leases		-			(4,767	)
Proceeds from sale of direct financing lease		15,433			27,253
Placement of mortgage loans		(56,944	)		(24,978	)
Distributions from unconsolidated joint venture		3,739			9,741
Proceeds from sale of real estate investments		221,952			64,061
Capital improvements to real estate investments		(19,183	)		(16,861	)
Receipts from insurance proceeds		6,901			-
Proceeds from other investments		105,695			35,997
Investments in other investments		(192,962	)		(52,228	)
Collection of mortgage principal		25,176			673
Net cash used in investing activities		(6,250	)		(135,853	)
Cash flows from financing activities
Proceeds from intercompany loans payable to Omega		549,000			2,163,749
Repayment of intercompany loans payable to Omega		(621,049	)		(2,104,139	)
Payment of financing related costs incurred by Omega		(8	)		(28,483	)
Equity contributions from general partners		52,905			24,235
Distributions to general partners		(263,021	)		(246,722	)
Distributions to limited partners		(11,765	)		(11,143	)
Redemption of Omega OP Units		(118	)		(48	)
Net cash used in financing activities		(294,056	)		(202,551	)
Effect of foreign currency translation on cash, cash equivalents and restricted cash		(119	)		162
Decrease in cash, cash equivalents and restricted cash		(83,259	)		(74,042	)
Cash, cash equivalents and restricted cash at beginning of period		96,808			107,276
Cash, cash equivalents and restricted cash at end of period	$	13,549		$	33,234

See notes to consolidated financial statements.

11

OMEGA HEALTHCARE INVESTORS, INC. AND OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

June 30, 2018

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Business Overview and Organization

Omega Healthcare Investors, Inc. (“Omega”) was formed as a real estate investment trust (“REIT”) and incorporated in the State of Maryland on March 31, 1992. Omega is structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega's assets are owned directly or indirectly by, and all of Omega's operations are conducted directly or indirectly through, its operating partnership subsidiary, OHI Healthcare Properties Limited Partnership (“Omega OP”). Omega OP was formed as a limited partnership and organized in the State of Delaware on October 24, 2014. Unless stated otherwise or the context otherwise requires, the terms the “Company,” “we,” “our” and “us” means Omega and Omega OP, collectively.

The Company has one reportable segment consisting of investments in healthcare-related real estate properties located in the United States (“U.S.”) and the United Kingdom (“U.K.”). Our core business is to provide financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities (“SNFs”) and, to a lesser extent, assisted living facilities (“ALFs”), independent living facilities and rehabilitation and acute care facilities. 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. Our other investment income derives from fixed and variable rate loans, which are either unsecured or secured by the collateral of the borrower.

Omega OP is governed by the Second Amended and Restated Agreement of Limited Partnership of OHI Healthcare Properties Limited Partnership, dated as of April 1, 2015 (the “Partnership Agreement”). Omega has exclusive control over Omega OP’s day-to-day management pursuant to the Partnership Agreement. As of June 30, 2018, Omega owned approximately 96% of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and investors owned approximately 4% of the outstanding Omega OP Units.

Basis of Presentation

The accompanying unaudited consolidated financial statements 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. 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 filed with the SEC on February 23, 2018.

Omega’s consolidated financial statements include the accounts of (i) Omega, (ii) Omega OP, and (iii) all direct and indirect wholly owned subsidiaries of Omega. All intercompany transactions and balances have been eliminated in consolidation, and Omega’s net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.

12

Omega OP’s consolidated financial statements include the accounts of (i) Omega OP, and (ii) all direct and indirect wholly owned subsidiaries of Omega OP. All intercompany transactions and balances have been eliminated in consolidation.

Variable Interest Entities

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

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

We consolidate a VIE when we determine that we are its primary beneficiary. We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. Factors considered in determining whether we are the primary beneficiary of an entity include: (i) our voting rights, if any; (ii) our involvement in day-to-day capital and operating decisions; (iii) our risk and reward sharing; (iv) the financial condition of the operator or joint venture and (iv) our representation on the VIE’s board of directors. We perform this analysis on an ongoing basis.

As of June 30, 2018, we have not consolidated any VIEs, as we do not have the power to direct the activities of any VIEs that most significantly impact their economic performance and we do not have the obligation to absorb losses or receive benefits of the VIEs that could be significant to the entity.

Cash and Cash Equivalents

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

Restricted Cash

Restricted cash consists primarily of liquidity deposits escrowed for tenant obligations required by us pursuant to certain contractual terms. Prior to June 1, 2018, restricted cash also included other deposits required by the U.S. Department of Housing and Urban Development (“HUD”) in connection with our mortgage borrowings guaranteed by HUD. For additional information see Note 2 – Properties and Investments and Note 14 – Borrowing Activities and Arrangements.

13

Real Estate Investment Impairment

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

For the three months ended June 30, 2018 and 2017, we recognized (a recovery on) impairment on real estate properties of $(1.1) million and $10.1 million, respectively. For the six months ended June 30, 2018 and 2017, we recognized impairment on real estate properties of $3.8 million and $17.8 million, respectively. For additional information see Note 2 – Properties and Investments.

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

The allowances for losses on mortgage notes receivable, other investments and direct financing leases (collectively, our “loans”) are maintained at a level believed adequate to absorb potential losses. The determination of the allowances is based on a quarterly evaluation of these loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans based on a combination of factors, including, but not limited to, delinquency status, financial strength of the borrower and guarantors, if applicable, and the value of the underlying collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreements. Consistent with this definition, all loans on non-accrual status may be deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to full accrual status. When management identifies potential loan impairment indicators, the loan is written down to the present value of the expected future cash flows. In cases where expected future cash flows are not readily determinable, the loan is written down to the fair value of the underlying collateral, if applicable. We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the sale of the collateral.

We account for impaired loans using (a) the cost-recovery method, and/or (b) the cash basis method. We generally utilize the cost-recovery method for impaired loans for which impairment reserves were recorded. We utilize the cash basis method for impaired loans for which no impairment reserves were recorded because the net present value of the discounted cash flows expected under the loan and/or the underlying collateral supporting the loan were equal to or exceeded the book value of the loan. Under the cost-recovery method, we apply cash received against the outstanding loan balance prior to recording interest income. Under the cash basis method, we apply cash received to principal or interest income based on the terms of the agreement. As of June 30, 2018 and December 31, 2017, we had $177.1 million and $177.5 million, respectively, of reserves on our loans. For additional information see Note 3 – Direct Financing Leases, Note 4 – Mortgage Notes Receivable and Note 5 – Other Investments.

14

Goodwill Impairment

We assess goodwill for potential impairment during the fourth quarter of each fiscal year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment on an interim basis, we assess qualitative factors such as a significant decline in real estate valuations, current macroeconomic conditions, state of the equity and capital markets and our overall financial and operating performance or a significant decline in the value of our market capitalization, to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of the reporting unit is less than its carrying amount. On an annual basis during the fourth quarter of each fiscal year, or on an interim basis if we conclude it is more likely than not that the fair value of the reporting unit is less than its carrying value, we perform a two-step goodwill impairment test to identify potential impairment and measure the amount of impairment we will recognize, if any.

Noncontrolling Interests

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

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

The noncontrolling interest for Omega represents the outstanding Omega OP Units held by outside investors.

Foreign Operations

The U.S. dollar is the functional currency for our consolidated subsidiaries operating in the U.S. The functional currency for our consolidated subsidiaries operating in the U.K. is the British Pound (“GBP”). For our consolidated subsidiaries whose functional currency is not the U.S. dollar (“USD”), we translate their financial statements into the USD. We translate assets and liabilities at the exchange rate in effect as of the financial statement date. Revenue and expense accounts are translated using an average exchange rate for the period. Gains and losses resulting from translation are included in Omega OP’s owners’ equity and Omega’s accumulated other comprehensive loss (“AOCL”), as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interests.

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

15

Derivative Instruments

Cash flow hedges

During our normal course of business, we may use certain types of derivative instruments for the purpose of managing interest rate and currency risk. To qualify for hedge accounting, derivative instruments used for risk management purposes must effectively reduce the risk exposure that they are designed to hedge. In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions, must be, and are expected to remain, probable of occurring in accordance with the Company’s related assertions. The Company recognizes all derivative instruments, including embedded derivatives required to be bifurcated, as assets or liabilities in the Consolidated Balance Sheets at their fair value which is determined using a market approach and Level 2 inputs. Changes in the fair value of derivative instruments that are not designated in hedging relationships or that do not meet the criteria of hedge accounting are recognized in earnings. For derivatives designated in qualifying cash flow hedging relationships, the gain or loss on the derivative is recognized in Omega OP’s owners’ equity and Omega’s AOCL as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interest. We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivatives that are part of a hedging relationship to specific forecasted transactions as well as recognized liabilities or assets on the Consolidated Balance Sheets. We also assess and document, both at inception of the hedging relationship and on a quarterly basis thereafter, whether the derivatives are highly effective in offsetting the designated risks associated with the respective hedged items. If it is determined that a derivative ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, we discontinue hedge accounting prospectively and record the appropriate adjustment to earnings based on the current fair value of the derivative. As a matter of policy, we do not use derivatives for trading or speculative purposes. At June 30, 2018 and December 31, 2017, $7.7 million and $1.5 million, respectively, of qualifying cash flow hedges were recorded at fair value in other assets on our Consolidated Balance Sheets.

Net investment hedge

The Company is exposed to fluctuations in the GBP against its functional currency, the USD, relating to its investments in healthcare-related real estate properties located in the U.K. The Company uses a nonderivative, GBP-denominated term loan to manage its exposure to fluctuations in the GBP-USD exchange rate. The foreign currency transaction gain or loss on the nonderivative hedging instrument that is designated and qualifies as a net investment hedge is reported in Omega OP’s owners’ equity and Omega’s AOCL in our Consolidated Balance Sheets.

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 rent receivables relate to the difference between the rental revenue recognized on a straight-line basis and the amounts currently due to us according to the contractual agreement. Lease inducements result from value provided by us to the lessee, at the inception, modification, or renewal of the lease, and are amortized as a reduction of rental revenue over the non-cancellable lease term.

On a quarterly basis, and more frequently as appropriate, 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 any. 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, a loan recognized on an effective yield basis or the existence of lease inducements, we generally provide an allowance for straight-line, effective interest, and/or lease inducement accounts receivable when certain conditions or indicators of adverse collectability are present. If the accounts receivable balance is subsequently deemed uncollectible, the receivable and allowance for doubtful account balance are written off.

16

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

	June 30,			December 31,
	2018			2017
	(in thousands)
Contractual receivables	$	37,655		$	43,258
Effective yield interest receivables		12,384			11,673
Straight-line rent receivables		226,633			216,054
Lease inducements		48,456			16,812
Allowance		(4,988	)		(8,463	)
Accounts receivable – net	$	320,140		$	279,334

During the first quarter of 2018, we wrote-off approximately $7.8 million of straight-line rent receivables to provision for uncollectible accounts, as a result of facility transitions to other operators.

During the second quarter of 2018, we placed two of our operators on a cash basis and wrote-off approximately $2.8 million of straight-line rent receivables and reserved approximately $0.6 million of contractual receivables to provision for uncollectible accounts related to these two operators. The provision for uncollectible accounts was offset by a recovery of approximately $2.8 million.

During the first quarter of 2018, we paid an existing operator approximately $50 million in exchange for a reduction of such operator’s participation in an in-the-money purchase option. As a result, we recorded an approximate $28 million lease inducement that will be amortized as a reduction to rental income over the remaining term of the lease. The remaining $22 million was recorded as a reduction to the initial contingent liability which was included in accrued expenses and other liabilities on our Consolidated Balance Sheets.

Reclassification

Certain prior quarter amounts have been reclassified to conform to the current quarter presentation.

Accounting Pronouncements Adopted in 2018

In 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In addition, the FASB issued targeted updates to clarify specific implementation issues of ASU 2014-09. These updates included ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients. As a result of adopting ASU 2014-09 and its updates on January 1, 2018, the Company recognized $10.0 million of deferred gain resulting from the sale of facilities to a third-party in December 2017 through opening equity on January 1, 2018. The Company adopted ASU 2014-09 and its subsequent updates in accordance with the modified retrospective approach. The adoption of ASU 2014-09 and its related updates did not have a material impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements and interest income from loan arrangements, both of which are specifically excluded from ASU 2014-09 and its updates.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). The purpose of this updated guidance is to better align the financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. This adoption method will require the Company to recognize the cumulative effect of initially applying ASU 2017-12 as an adjustment to accumulated other comprehensive income (loss) with a corresponding adjustment to the opening balance of equity as of the beginning of the fiscal year that an entity adopts the update. On January 1, 2018, the Company adopted ASU 2017-12 using the modified retrospective transition method. As a result of adopting the standard, the Company is making certain adjustments to its existing hedge designation documentation for active hedging relationships in order to take advantage of specific provisions in the new guidance and to fully align its documentation with ASU 2017-12. The adoption of ASU 2017-12 did not have a material impact on our consolidated financial statements.

17

Recent Accounting Pronouncements - Pending Adoption

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective for the Company beginning January 1, 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. As a result of the pending adoption of ASU 2016-02, the Company may be required to record real estate tax revenues and an equal and offsetting real estate tax expense, as a result of our operators paying real estate taxes on our behalf. In July 2018, the FASB issued ASU 2018-11, Leases (“ASU 2018-11”): Targeted Improvements to simplify the implementation of ASU 2016-02. This targeted improvement permits the adoption of ASU 2016-02 at the adoption date instead of the earliest comparative period presented in the financial statements and a practical expedient permitting lessors to not separate nonlease components from the associated lease component if certain conditions are met. Upon adoption of ASU 2016-02 and its updates, we intend to transition to the new leasing accounting standard on January 1, 2019, without modifying our prior year balance sheet and recognizing the cumulative-effect adjustment to opening equity. We continue to evaluate the other impacts of adopting ASU 2016-02 and its updates on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. We are currently evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements.

NOTE 2 – PROPERTIES AND INVESTMENTS

Leased Property

Our leased real estate properties, represented by 709 SNFs, 116 ALFs, 14 specialty facilities and one medical office building at June 30, 2018, are leased under provisions of single or master operating leases with initial terms typically ranging from five to 15 years, plus renewal options. Also see Note 3 – Direct Financing Leases for information regarding additional properties accounted for as direct financing leases. 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 between 2.0% and 3.0%; (ii) an increase based on the change in pre-determined formulas from year to year (e.g., 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.

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A summary of our investment in leased real estate properties is as follows:

	June 30,			December 31,
	2018			2017
	(in thousands)
Buildings	$	5,985,795		$	6,098,119
Land		782,913			795,874
Furniture, fixtures and equipment		436,680			440,737
Site improvements		230,304			227,150
Construction in progress		135,969			94,080
Total real estate investments		7,571,661			7,655,960
Less accumulated depreciation		(1,475,463	)		(1,376,828	)
Real estate investments - net	$	6,096,198		$	6,279,132

The following table summarizes the significant acquisitions that occurred during the first six months of 2018:

	Number of					Total					Building & Site		Furniture		Initial
	Facilities				Country/	Investment			Land		Improvements		& Fixtures		Annual
Period	SNF		ALF		State	(in millions)									Cash Yield(3)
Q1		-		1	UK	$	4.0	(1)	$	0.9	$	2.9	$	0.2		8.5	%
Q1		-		1	UK		5.7	(2)		1.4		4.1		0.2		8.5	%
Q1		1		-	PA		7.4			1.6		5.4		0.4		9.5	%
Q1		1		-	VA		13.2			2.4		10.5		0.3		9.5	%
Q2		5		-	TX		22.8			0.5		20.4		1.9		9.5	%
Total		7		2		$	53.1		$	6.8	$	43.3	$	3.0

⁽¹⁾ Omega recorded a non-cash deferred tax liability of approximately $0.4 million in connection with this acquisition.

⁽²⁾ Omega recorded a non-cash deferred tax liability of approximately $0.2 million in connection with this acquisition.

⁽³⁾ The cash yield is based on the purchase price.

For the six months ended June 30, 2018, we acquired two parcels of land (not reflected in the table above) for approximately $3.5 million with the intent of building new facilities for our existing operators.

Asset Sales, Impairments and Other

During the first quarter of 2018, we sold 14 facilities (five of which were previously held for sale at December 31, 2017) subject to operating leases for approximately $74.7 million in net cash proceeds recognizing a gain on sale of approximately $17.5 million. In addition, we recorded impairments on real estate properties of approximately $4.9 million on 17 facilities (16 of which were subsequently reclassified to assets held for sale).

During the second quarter of 2018, we sold 45 facilities and one ancillary building (33 of which were previously held for sale at March 31, 2018) subject to operating leases for approximately $147.2 million in net cash proceeds recognizing a loss on sale of approximately $2.9 million. In addition, we recorded impairments of approximately $4.1 million on nine facilities (three of which were subsequently reclassified to assets held for sale). Our impairments were offset by $5.2 million of insurance proceeds received related to a facility destroyed in November 2017.

Of the 45 facilities sold during the second quarter of 2018, we sold 12 SNFs on June 1, 2018 (12 of which were previously held for sale at March 31, 2018) secured by HUD mortgages to subsidiaries of an existing operator. The Company sold the 12 SNF facilities with carrying values of approximately $62 million for approximately $78 million which consisted of $25 million of cash consideration and their assumption of approximately $53 million of our HUD mortgages. See Note 14 – Borrowing Activities and Arrangements for additional details. Simultaneously, subsidiaries of the operator assumed our HUD restricted cash accounts, deposits and escrows. The Company recorded a gain on sale of approximately $11 million after approximately $5 million of closing and other transaction related costs. In connection with this sale, we provided a principal of an existing operator an unsecured loan of approximately $39.7 million. See Note 5 – Other Investments for details.

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Our recorded impairments were primarily the result of decisions to exit certain non-strategic facilities and/or operators. We reduced the net book value of the impaired facilities to their estimated fair values or, with respect to the facilities reclassified to assets held for sale, to their estimated fair values less costs to sell. To estimate the fair value of the facilities, we utilized a market approach which considered binding sale agreements (a Level 1 input) and/or Level 3 inputs (which generally consist of non-binding offers from unrelated third parties). Also see Note 8 – Assets Held For Sale.

NOTE 3 – DIRECT FINANCING LEASES

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

	June 30,			December 31,
	2018			2017
	(in thousands)
Minimum lease payments receivable	$	3,649,602		$	3,707,079
Less unearned income		(3,127,950	)		(3,169,942	)
Investment in direct financing leases		521,652			537,137
Less allowance for loss on direct financing lease		(172,187	)		(172,172	)
Investment in direct financing leases – net	$	349,465		$	364,965
Properties subject to direct financing leases		40			41
Number of direct financing leases		4			5

The following minimum rents are due under our direct financing leases for the remainder of 2018 and the subsequent five years (in thousands):

2018(1)		2019(1)		2020(1)		2021(1)		2022(1)		2023(1)
$	580	$	1,166	$	1,170	$	1,084	$	1,106	$	1,128

⁽¹⁾ Orianna has been excluded from the contractual minimum rent payments due under our direct financing leases as the facilities are expected to be transitioned or sold. See below for additional information.

In June 2018, we sold one SNF with a carrying value of approximately $15.4 million subject to a direct financing lease to an unrelated third-party for approximately $15.4 million.

On November 27, 2013, we closed an aggregate $529 million purchase/leaseback transaction in connection with the acquisition of Ark Holding Company, Inc. (“Ark Holding”) by 4 West Holdings Inc. At closing, we acquired 55 SNFs and 1 ALF operated by Ark Holding and leased the facilities back to Ark Holding, now known as New Ark Investment Inc. (“New Ark” which does business as “Orianna Health Systems” and is herein referred to as “Orianna”), pursuant to four 50-year master leases with rental payments yielding 10.6% per annum over the term of the leases. The purchase/leaseback transaction is being accounted for as a direct financing lease.

The 38 facilities remaining under our master leases with Orianna as of June 30, 2018 are located in seven states, predominantly in the southeastern U.S. (37 facilities) and Indiana (1 facility). Our recorded investment in these direct financing leases, net of the $172.2 million allowance, amounted to $337.7 million as of June 30, 2018. We have not recognized any direct financing lease income from Orianna for the period from July 1, 2017 through June 30, 2018.

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Orianna has not satisfied the contractual payments due under the terms of the remaining two direct financing leases or the separate operating lease covering four facilities with the Company and the collectability of future amounts due is uncertain.

In March 2018, Orianna commenced voluntary Chapter 11 proceedings in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the “Bankruptcy Court”). As described in Orianna’s filings with the Bankruptcy Court, we entered into a Restructuring Support Agreement (“RSA”) that was expected to form the basis for Orianna’s restructuring. The RSA provided for the recommencement, in April 2018, of partial rent payments at $1.0 million per month and established a specific timeline for the implementation of Orianna’s planned restructuring. The RSA provided for the transition of 23 facilities to new operators and the potential sale of the remaining 19 facilities subject to the plan of reorganization as approved by the Bankruptcy Court. On July 25, 2018, we terminated the RSA with Orianna. See Note 19 – Subsequent Events.

To provide liquidity to Orianna during their Chapter 11 proceedings, we entered into a senior secured superpriority debtor-in-possession (“DIP”) credit agreement with Orianna for a revolving credit and term loan DIP facility of up to $30 million, which DIP facility was approved by the Bankruptcy Court on an interim basis on March 9, 2018 and on a final basis on May 14, 2018. On July 23, 2018, we notified Orianna that it was in default under the DIP facility. See Note 5 – Other Investments and Note 19 – Subsequent Events.

In 2017, we recorded an allowance for loss on direct financing leases of $172.2 million with Orianna covering 38 facilities in the Southeast region of the U.S. The amount of the allowance was determined based on the fair value of the facilities subject to the direct financing lease. To estimate the fair value of the underlying collateral, we utilized an income approach and Level 3 inputs. Our estimate of fair value assumed annual rents ranging between $32.0 million and $38.0 million, rental yields between 9% and 10%, current and projected operating performance of the facilities, coverage ratios and bed values. Such assumptions are subject to change based on changes in market conditions and the ultimate resolution of this matter. Such changes could be significantly different than the currently estimated fair value and such differences could have a material impact on our financial statements.

In addition to our direct financing leases with Orianna, we own four facilities and lease them to Orianna under a master lease which expires in 2026. The four facility lease is being accounted for as an operating lease. We have not recognized any income on this operating lease for the period from July 1, 2017 through June 30, 2018, as Orianna did not pay the contractual amounts due and collectability is uncertain. Our recorded investment in the four facilities subject to this operating lease was $37.3 million as of June 30, 2018.

NOTE 4 – MORTGAGE NOTES RECEIVABLE

As of June 30, 2018, mortgage notes receivable relate to six fixed rate mortgage notes on 53 long-term care facilities. The mortgage notes are secured by first mortgage liens on the borrowers' underlying real estate and personal property. The mortgage notes receivable relate to facilities located in six states that 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 mortgage notes.

Mortgage interest income is recognized as earned over the terms of the related mortgage notes, typically 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 the application of security deposits.

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The principal amounts outstanding of mortgage notes receivable, net of allowances, were as follows:

	June 30,			December 31,
	2018			2017
	(in thousands)
Mortgage note due 2027; interest at 10.18%	$	112,500		$	112,500
Mortgage notes due 2029; interest at 9.67% (1)		529,960			476,320
Other mortgage notes outstanding (2)		65,754			87,317
Mortgage notes receivable, gross		708,214			676,137
Allowance for loss on mortgage notes receivable (3)		(4,905	)		(4,905	)
Total mortgages — net	$	703,309		$	671,232

⁽¹⁾ Approximates the weighted average interest rate on 39 facilities. Two notes totaling approximately $15.2 million are construction mortgages maturing in 2018 and 2019. The remaining loan balance matures in 2029.

⁽²⁾ Other mortgage notes outstanding have a weighted average interest rate of 11.25% per annum and maturity dates between 2018 and 2028.

⁽³⁾ The allowance for loss on mortgage notes receivable relates to one mortgage with an operator. The carrying value and fair value of the mortgage note receivable is approximately $1.5 million at June 30, 2018 and December 31, 2017.

$112.5 Million of Mortgage Note due 2027

On January 17, 2014, we entered into a $112.5 million first mortgage loan with an existing operator. The loan is secured by 7 SNFs and 2 ALFs located in Pennsylvania (7) and Ohio (2). The mortgage is cross-defaulted and cross-collateralized with our existing master lease with the operator. In March 2018, we extended the maturity date to January 31, 2027 and provided an option to extend the maturity for a five year period through January 31, 2032 and a second option to extend the maturity for a two year period through September 30, 2034.

$530.0 Million of Mortgage Notes due 2029

On June 30, 2014, we entered into a mortgage loan agreement with Ciena Healthcare (“Ciena”) to refinance/consolidate $117 million in existing mortgages with maturity dates ranging from 2021 to 2023 on 17 facilities into one mortgage and simultaneously provide mortgage financing for an additional 14 facilities. The $415 million mortgage (the “Master Mortgage”) matures in 2029 and is secured by 30 facilities. The Master Mortgage note bore an initial interest rate of 9.0% per annum which increases each year by 0.225% per annum. As of June 30, 2018, the outstanding principal balance of the Master Mortgage note is approximately $410.0 million and the interest rate is 9.68% per annum.

Subsequent to June 30, 2014, the Company amended its Master Mortgage with Ciena to provide for additional borrowings in the form of incremental facility mortgages, construction and/or improvement mortgages with maturity dates in 2018, 2019 and 2029 with initial annual interest rates ranging between 8.5% and 10% and fixed annual escalators of 2% or 2.5% over the prior year’s interest rate, or a fixed increase of 0.225% per annum. As of June 30, 2018 the outstanding principal balance of these mortgage notes are approximately $75.8 million.

In June 2018, we amended the Master Mortgage with the addition of a $44.7 million mortgage note related to five SNFs located in Michigan. The mortgage note matures on June 30, 2029 and bears an initial annual interest rate of 9.5% which increases each year by 0.225%. As of June 30, 2018 the outstanding principal balance of this mortgage note is approximately $44.2 million. Additionally, the Company committed to fund an additional $9.6 million to Ciena if certain performance metrics are achieved by the portfolio.

The mortgage notes with Ciena are cross-defaulted and cross-collateralized with our existing master lease and other investment notes with the operator.

Mortgage notes paid off

In January 2018, one of our operators repaid two construction loans with a total outstanding balance of approximately $21.2 million. These construction loans bore interest at 8.75%.

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NOTE 5 – OTHER INVESTMENTS

A summary of our other investments is as follows:

	June 30,		December 31,
	2018		2017
	(in thousands)
Other investment notes due 2018-2022; interest at 8.29% (1)	$	39,984	$	15,115
Other investment notes due 2018-2023; interest at 10.59% (1)		39,166		40,985
Other investment notes due 2020; interest at 13.05% (1)		68,175		49,490
Other investment note due 2021; interest at 6.00%		39,689		7,000
Other investment notes due 2023-2030; interest at 7.24% (1)		62,800		64,050
Other investment note due 2023; interest at 12.00%		59,324		49,708
Other investment notes due 2024-2025; interest at 8.52% (1)		41,987		31,987
Other investment notes outstanding (2)		26,081		18,380
Other investments, gross		377,206		276,715
Allowance for loss on other investments (3)		-		(373	)
Total other investments	$	377,206	$	276,342

(1) Approximate weighted average interest rate as of June 30, 2018.

(2) Other investment notes have a weighted average interest rate of 8.55% and maturity dates through 2028.

(3) The allowance for loss on other investments relates to one loan with an operator that was fully reserved at December 31, 2017 and written off during the second quarter of 2018.

Other investment notes due 2018 - 2022

In March 2018, we agreed to provide senior secured superpriority DIP financing to Orianna consisting of a $14.2 million term loan and a $15.8 million revolving credit facility. The DIP financing has been approved by the Bankruptcy Court. The DIP financing is secured by a security interest in and liens on substantially all of Orianna’s existing and future real and personal property. The $14.2 million term loan bears interest at 1-month LIBOR plus 5.5% per annum and matures on September 30, 2018. Orianna has borrowed the full amount of the term loan to repay their previous secured working capital lender. As of June 30, 2018, approximately $14.2 million is outstanding on this term loan. The $15.8 million revolving credit facility bears interest at 1-month LIBOR plus 9.0% per annum and matures on September 30, 2018. The borrowings under the revolving credit facility are to be used for general business expenses and other uses permitted under the loan documents. As of June 30, 2018, approximately $10.5 million is outstanding on this revolving credit facility. On July 23, 2018, we notified Orianna that it was in default under the DIP facility. See Note 19 – Subsequent Events.

In May 2017, we provided Orianna an $18.8 million maximum borrowing secured revolving working capital loan that bears interest at 9% per annum (with one-half (1/2) of all accrued interest to be paid-in-kind and added to the loan balance) and matures on April 30, 2022. This revolving working capital loan has a default rate of 5% per annum. As of June 30, 2018, approximately $15.2 million is outstanding on this revolving working capital loan. Pursuant to the Bankruptcy Court’s interim order approving the DIP financing, Orianna is obligated to pay one-half (1/2) of all accrued post-bankruptcy interest payable on this revolving working capital loan at the default rate. As of June 30, 2018, our total other investments outstanding with Orianna was approximately $40.0 million.

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Other investment notes due 2020

On July 29, 2016, we provided Genesis HealthCare, Inc. (“Genesis”) a $48.0 million secured term loan bearing interest at LIBOR with a floor of 1% plus 13% maturing on July 29, 2020. The $48.0 million term loan (and the $16.0 million term loan discussed below) is secured by a perfected first priority lien on and security interest in certain collateral of Genesis. The term loan required monthly principal payments of $0.25 million through July 2019, and $0.5 million from August 2019 through maturity. In addition, a portion of the monthly interest accrued to the outstanding principal balance of the loan. In November 2017, we provided Genesis forbearance through February 2018. The forbearance allowed for the deferral of principal payments and permitted Genesis to accrue all interest due to the outstanding principal balance of the loan.

On March 6, 2018, we amended certain terms of the $48.0 million secured term loan. As of February 22, 2018, the $48.0 million term loan bears interest at a fixed rate of 14% per annum, of which 9% per annum will be paid-in-kind. Additionally, the amended term loan does not require monthly payments of principal. All principal and accrued and unpaid interest will be due at maturity on July 29, 2020. As of June 30, 2018, approximately $52.0 million is outstanding on this term loan.

Also on March 6, 2018, we provided Genesis an additional $16.0 million secured term loan bearing interest at a fixed rate of 10% per annum, of which 5% per annum will be paid-in-kind and matures on July 29, 2020. As of June 30, 2018, approximately $16.2 million is outstanding on this term loan. As of June 30, 2018, our total other investments outstanding with Genesis was approximately $68.2 million.

Other investment note due 2021

Simultaneously, with the sale of 12 SNFs to subsidiaries of an existing operator we provided a principal of the existing operator a $39.7 million unsecured loan bearing interest at 6% per annum that matures on May 31, 2021. Commencing October 1, 2018 and the first day of each subsequent quarter, the loan requires principal payments of $0.6 million and additional quarterly principal payments of $0.3 million in the future. The borrower has one option to extend the loan to May 31, 2024 subject to an extension fee. A $7.0 million loan provided to the same principal in 2017 was repaid with proceeds from the $39.7 million loan. As of June 30, 2018, our total other investments outstanding with this principal borrower was approximately $39.7 million.

Other investment note due 2023

On February 26, 2016, we acquired and funded a $50.0 million mezzanine loan at a discount of approximately $0.75 million. In May 2018, the Company amended the mezzanine loan with the borrower which is secured by an equity interest in subsidiaries of the borrower. As part of the refinancing, the Company increased the mezzanine loan by $10.0 million, extended the maturity date to May 31, 2023 and fixed the interest rate at 12% per annum. The mezzanine loan requires semi-annual principal payments of $2.5 million commencing December 31, 2018 (payments due each December 31 and June 30). As of June 30, 2018, our total other investments outstanding with this borrower was approximately $59.3 million. In connection with the amendment, the Company recognized fees of approximately $1.1 million of which $0.5 million was paid at closing with the remainder due at maturity. The discount and loan fee are deferred and recognized on an effective basis over the term of the loan.

Other investment note due 2024-2025

On September 30, 2016, we acquired and amended a term loan with a fair value of approximately $37.0 million with Agemo Holdings LLC (“Agemo” an entity formed in May 2018 to silo the leases and loans formerly held by Signature Healthcare). A $5.0 million tranche of the term loan that bore interest at 13% per annum was repaid in August 2017. The remaining $32.0 million tranche of the term loan bears interest at 9% per annum and currently matures on December 31, 2024. The $32.0 million term loan (and the $25.0 million working capital loan discussed below) is secured by a security interest in the collateral of Agemo.

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On May 7, 2018, the Company provided Agemo a $25.0 million secured working capital loan bearing interest at 7% per annum that matures on April 30, 2025. The proceeds of the working capital loan are for paying operating expenses, settlement payments, fees, taxes and other costs approved by the Company. As of June 30, 2018, approximately $10.0 million is outstanding on this working capital loan. Our total loans outstanding with Agemo at June 30, 2018 approximate $42.0 million.

On May 7, 2018, the Company also provided principals of Agemo a one year unsecured $2.8 million loan. The proceeds were used to pay down contractual receivables outstanding.

Other investments note

On December 28, 2017, we provided $10.0 million of financing to a third-party to acquire ten SNFs previously owned by us. The loan bears interest at 10% per annum and requires principal payments of $5.0 million in December 2018, $2.0 million in December 2019 and $3.0 million at maturity in December 2020. In March 2018, the third-party buyer repaid $5.0 million related to this financing.

NOTE 6 – VARIABLE INTEREST ENTITIES

As of June 30, 2018, Orianna and Agemo are VIEs. Below is a summary of our assets and liabilities associated with each operator as of June 30, 2018:

	Operator
	Orianna			Agemo
	(in thousands)
Assets
Real estate investments - net	$	37,286		$	409,450
Investments in direct financing leases - net		337,705			-
Other investments - net		39,984			41,987
Contractual receivables - net		279			17,574
Straight-line rent receivables		-			28,737
Above market lease		-			4
Subtotal		415,254			497,752
Liabilities
Letters of credit		-			(9,253	)
Subtotal		-			(9,253	)
Collateral
Personal guarantee		-			(15,000	)
Other collateral		(399,926	)		(409,450	)
Subtotal		(399,926	)		(424,450	)
Maximum exposure to loss	$	15,328		$	64,049

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In determining our maximum exposure to loss from these VIEs, we considered the underlying fair value of the real estate subject to leases with these operators and other collateral, if any, supporting our other investments, which may include accounts receivable, security deposits, letters of credit or personal guarantees, if any. See Note 5 – Other Investments regarding the terms of other investments with these two operators. The Company has also committed to provide Agemo with up to approximately $13.6 million of capital expenditure funding through 2021 to be used for general maintenance and capital improvements for our facilities. As of June 30, 2018, approximately $13.1 million of the $13.6 million remains unfunded by the Company.

The table below reflects our total revenues from Orianna and Agemo for the three and six months ended June 30, 2018:

	Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
	Operator				Operator
	Orianna		Agemo		Orianna		Agemo
	(in thousands)
Revenue
Rental income	$	-	$	14,860	$	-	$	29,711
Other investment income		1,145		828		1,664		1,548
Total	$	1,145	$	15,688	$	1,664	$	31,259

NOTE 7 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

On November 1, 2016, we invested approximately $50.0 million for an approximate 15% ownership interest in a joint venture operating as Second Spring Healthcare Investments. The other approximate 85% interest is owned by affiliates of Lindsey Goldberg LLC. We account for our investment in the joint venture using the equity method. On November 1, 2016, the joint venture acquired 64 SNFs for approximately $1.1 billion and leased them to Genesis. During the second quarter of 2018, the joint venture sold 12 SNF facilities subject to an operating lease for approximately $149.3 million in net cash proceeds and recognized a loss on sale of approximately $4.4 million.

We receive asset management fees from the joint venture for services provided. For the three months ended June 30, 2018 and 2017, we recognized $0.5 million of asset management fees in each period. For the six months ended June 30, 2018 and 2017, we recognized $1.0 million of asset management fees in each period. These fees are included in miscellaneous income in the accompanying Consolidated Statements of Operations. The accounting policies for the unconsolidated joint venture are the same as those of the Company.

NOTE 8 – ASSETS HELD FOR SALE

The following is a summary of our assets held for sale:

	Properties Held For Sale
	Number			Net Book
	of			Value
	Properties			(in thousands)
December 31, 2017		22		$	86,699
Properties sold/other (1)		(5	)		(9,307	)
Properties added (2)		16			66,027
March 31, 2018		33			143,419
Properties sold/other (1)		(33	)		(143,419	)
Properties added (2)		3			3,782
June 30, 2018(3)		3		$	3,782

⁽¹⁾ In the first quarter of 2018, we sold five facilities for approximately $13.1 million in net cash proceeds recognizing a gain on sale of approximately $3.5 million. In the second quarter of 2018, we sold 33 facilities for approximately $96.4 million in net cash proceeds recognizing a gain on sale of approximately $3.5 million.

⁽²⁾ In the first quarter of 2018, we recorded $3.5 million of impairments to reduce 16 facilities and one ancillary building’s net book value to their estimated fair values less costs to sell before they were reclassified to assets held for sale. In the second quarter of 2018, we recorded approximately $2.5 million of impairments to reduce three facilities net book value to their estimated fair values less cost to sell before they were reclassified to assets held for sale.

⁽³⁾ We plan to sell the facilities classified as assets held for sale at June 30, 2018 within the next twelve months.

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NOTE 9 – INTANGIBLES

The following is a summary of our intangibles as of June 30, 2018 and December 31, 2017:

	June 30,			December 31,
	2018			2017
	(in thousands)
Assets:
Goodwill	$	644,369		$	644,690
Above market leases	$	22,426		$	22,426
In-place leases		167			167
Accumulated amortization		(17,541	)		(17,059	)
Net intangible assets	$	5,052		$	5,534
Liabilities:
Below market leases	$	161,286		$	164,443
Accumulated amortization		(89,584	)		(83,824	)
Net intangible liabilities	$	71,702		$	80,619

Above market leases and in-place leases, net of accumulated amortization, are included in other assets on our Consolidated Balance Sheets. Below market leases, net of accumulated amortization, are included in accrued expenses and other liabilities on our Consolidated Balance Sheets. The net amortization related to the above and below market leases is included in our Consolidated Statements of Operations as an adjustment to rental income.

For the three months ended June 30, 2018 and 2017, our net amortization related to intangibles was $2.6 million and $3.1 million, respectively. For the six months ended June 30, 2018 and 2017, our net amortization related to intangibles was $5.3 million and $6.2 million, respectively. The estimated net amortization related to these intangibles for the remainder of 2018 and the subsequent four years is as follows: remainder of 2018 – $4.3 million; 2019 – $8.2 million; 2020 – $8.0 million; 2021– $7.6 million and 2022 – $7.0 million. As of June 30, 2018, the weighted average remaining amortization period of above market leases and below market leases is approximately seven years and nine years, respectively.

The following is a summary of our goodwill as of June 30, 2018:

	(in thousands)
Balance as of December 31, 2017	$	644,690
Less: foreign currency translation		(321	)
Balance as of June 30, 2018	$	644,369

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NOTE 10 – CONCENTRATION OF RISK

As of June 30, 2018, our portfolio of real estate investments consisted of 936 healthcare facilities, located in 41 states and the U.K. and operated by 67 third-party operators. Our investment in these facilities, net of impairments and allowances, totaled approximately $8.6 billion at June 30, 2018, with approximately 99% of our real estate investments related to long-term care facilities. Our portfolio is made up of 748 SNFs, 117 ALFs, 14 specialty facilities, one medical office building, fixed rate mortgages on 51 SNFs and two ALFs, and three facilities that are held for sale. At June 30, 2018, we also held other investments of approximately $377.2 million, consisting primarily of secured loans to third-party operators of our facilities and a $32.8 million investment in an unconsolidated joint venture.

At June 30, 2018, we had investments with one operator/or manager that exceeded 10% of our total investments: Ciena. Ciena also generated approximately 10% of our total revenues for the three and six months ended June 30, 2018 and 2017. At June 30, 2018, the three states in which we had our highest concentration of investments were Texas (10%), Florida (10%) and Michigan (8%).

NOTE 11 – STOCKHOLDERS’/OWNERS’ EQUITY

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

Record	Payment	Dividend per
Date	Date	Common Share
January 31, 2018	February 15, 2018	$	0.66
April 30, 2018	May 15, 2018		0.66
July 31, 2018	August 15, 2018		0.66

On the same dates listed above, Omega OP Unit holders received the same distributions per unit as those paid to the common stockholders of Omega.

$500 Million Equity Shelf Program

For the three months ended June 30, 2018, we issued 0.9 million shares of our common stock at an average price of $30.19 per share, net of issuance costs, generating net proceeds of $27.5 million under our $500 million Equity Shelf Program. For the six months ended June 30, 2018, we issued 0.9 million shares of our common stock at an average price of $30.16 per share, net of issuance costs, generating net proceeds of $27.5 million under our $500 million Equity Shelf Program.

Dividend Reinvestment and Common Stock Purchase Plan

For the three months ended June 30, 2018, approximately 0.8 million shares of our common stock at an average price of $29.22 per share were issued through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $22.2 million. For the six months ended June 30, 2018, approximately 0.9 million shares of our common stock at an average price of $28.55 per share were issued through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $27.1 million.

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Accumulated Other Comprehensive Loss

The following is a summary of our accumulated other comprehensive loss, net of tax where applicable:

	As of and For the						As of and For the
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
	(in thousands)
Foreign Currency Translation:
Beginning balance	$	(11,015	)	$	(50,614	)	$	(25,993	)	$	(54,948	)
Translation (loss) gain		(24,383	)		10,195			(9,464	)		14,468
Realized (loss) gain		(66	)		79			(7	)		140
Ending balance		(35,464	)		(40,340	)		(35,464	)		(40,340	)
Derivative Instruments:
Cash flow hedges:
Beginning balance		5,951			(166	)		1,463			(1,420	)
Unrealized gain (loss)		1,735			(1,840	)		5,970			(1,350	)
Realized gain(1)		53			626			306			1,390
Ending balance		7,739			(1,380	)		7,739			(1,380	)
Net investment hedge:
Beginning balance		(12,219	)		-			(7,110	)		-
Unrealized gain (loss)		8,296			(2,193	)		3,187			(2,193	)
Ending balance		(3,923	)		(2,193	)		(3,923	)		(2,193	)
Total accumulated other comprehensive loss for Omega OP(2)		(31,648	)		(43,913	)		(31,648	)		(43,913	)
Add: portion included in noncontrolling interest		1,491			2,010			1,491			2,010
Total accumulated other comprehensive loss for Omega	$	(30,157	)	$	(41,903	)	$	(30,157	)	$	(41,903	)

⁽¹⁾ Recorded in interest expense on the Consolidated Statements of Operations.

⁽²⁾ These amounts are included in owners’ equity.

NOTE 12 – TAXES

Omega is a REIT for United States federal income tax purposes, and Omega OP is a pass through entity for United States federal income tax purposes.

Since our inception, Omega has elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code (“Code”). A REIT is generally not subject to federal income tax on that portion of its REIT taxable income which is distributed to its stockholders, provided that at least 90% of such taxable income is distributed each tax year and certain other requirements are met, including asset and income tests. So long as we qualify as a REIT under the Code, we generally will not be subject to federal income taxes on the REIT taxable income that we distribute to stockholders, subject to certain exceptions.

If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income taxes on its taxable income at regular corporate rates and dividends paid to our stockholders will not be deductible by us in computing taxable income. Further, we would not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which qualification is denied, unless the Internal Revenue Service grants us relief under certain statutory provisions. Failing to qualify as a REIT could materially and adversely affect the Company’s net income; however, we believe we are organized and operate in such a manner as to qualify for treatment as a REIT. We test our compliance within the REIT taxation rules to ensure that we are in compliance with the REIT rules on a quarterly and annual basis. We review our distributions and projected distributions each year to ensure we have met and will continue to meet the annual REIT distribution requirements. In 2018, we expect to pay dividends in excess of our taxable income.

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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”). We have elected for two of our active subsidiaries to be treated as TRSs. One of our TRSs is subject to federal, state and local income taxes at the applicable corporate rates and the other is subject to foreign income taxes. As of June 30, 2018, our TRS that is subject to federal, state and local income taxes at the applicable corporate rates had a net operating loss carry-forward of approximately $5.8 million. The loss carry-forward is fully reserved as of June 30, 2018, with a valuation allowance due to uncertainties regarding realization. Our net operating loss carryforwards will be carried forward for no more than 20 years.

For the three months ended June 30, 2018 and 2017, we recorded approximately $0.2 million and $0.5 million, respectively, of state and local income tax provision. For the six months ended June 30, 2018 and 2017, we recorded approximately $0.3 million and $1.5 million, respectively, of state and local income tax provision. For the three months ended June 30, 2018 and 2017, we recorded approximately $0.6 million and $0.1 million, respectively, of tax provision for foreign income taxes. For the six months ended June 30, 2018 and 2017, we recorded approximately $1.0 million and $0.2 million, respectively, of tax provision for foreign income taxes. The expenses were included in income tax expense on our Consolidated Statements of Operations.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was enacted. The Tax Act includes numerous changes to existing U.S. tax law, including lowering the statutory U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018. The Company has completed its preliminary assessment of these changes, and has determined that there is an immaterial impact to the consolidated financial statements.

NOTE 13 – STOCK-BASED COMPENSATION

On June 8, 2018, at our Company’s Annual Meeting, our stockholders approved the 2018 Stock Incentive Plan (the “2018 Plan”), which amended and restated the Company’s 2013 Stock Incentive Plan (the “2013 Plan”). The 2018 Plan is a comprehensive incentive compensation plan that allows for various types of equity-based compensation, including restricted stock units (including performance-based restricted stock units), stock awards (including restricted stock), deferred restricted stock units, incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, performance unit awards, certain cash-based awards (including performance-based cash awards) and other stock-based awards. The 2018 Plan increases the number of shares of common stock available for issuance under the 2013 Plan by 4.5 million.

The following is a summary of our stock-based compensation expense for the three and six months ended June 30, 2018 and 2017, respectively:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(in thousands)
Stock-based compensation expense	$	4,089	$	3,734	$	8,145	$	7,478

Restricted Stock and Restricted Stock Units

Restricted stock and restricted stock units (“RSUs”) are subject to forfeiture if the holder’s service to us terminates prior to vesting, subject to certain exceptions for certain qualifying terminations of service or a change in control of the Company. Prior to vesting, ownership of the shares/units cannot be transferred. Restricted stock has the same dividend and voting rights as our common stock. RSUs accrue dividend equivalents but have no voting rights. Restricted stock and RSUs are valued at the price of our common stock on the date of grant. We expense the cost of these awards ratably over their vesting period. We awarded 169,900 RSUs to employees on January 1, 2018.

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Performance Restricted Stock Units and LTIP Units

Performance restricted stock units (“PRSUs”) and long term incentive plan units (“LTIP Units”) are subject to forfeiture if the performance requirements are not achieved or if the holder’s service to us terminates prior to vesting, subject to certain exceptions for certain qualifying terminations of employment or a change in control of the Company. The PRSUs and the LTIP Units have varying degrees of performance requirements to achieve vesting, and each PRSU and LTIP Units award represents the right to a variable number of shares of common stock or partnership units. Each LTIP Unit once earned and vested is convertible into one Omega OP Unit in Omega OP, subject to certain conditions. The vesting requirements are based on either the (i) total shareholder return (“TSR”) of Omega or (ii) Omega’s TSR relative to other real estate investment trusts in the MSCI U.S. REIT Index for awards before 2016 and in the FTSE NAREIT Equity Health Care Index for awards granted in or after 2016 (both “Relative TSR”). Vesting, in general, requires that the employee remain employed by us until the date specified in the applicable PRSU or LTIP agreement, which may be later than the date that the TSR or Relative TSR requirements are satisfied. We expense the cost of these awards ratably over their service period.

Prior to vesting and the distribution of shares, ownership of the PRSUs cannot be transferred. Dividends on the PRSUs are accrued and only paid to the extent the applicable performance requirements are met. While each LTIP Unit is unearned, the employee receives a partnership distribution equal to 10% of the quarterly approved regular periodic distributions per Omega OP Unit. The remaining partnership distributions (which in the case of normal periodic distributions is equal to the total approved quarterly dividend on Omega’s common stock) on the LTIP Units accumulate, and if the LTIP Units are earned, the accumulated distributions are paid.

The number of shares or units earned under the TSR PRSUs or LTIP Units depends generally on the level of achievement of Omega’s TSR over the indicated performance period. We awarded 677,488 LTIP Units to employees on January 1, 2018.

The number of shares earned under the Relative TSR PRSUs depends generally on the level of achievement of Omega’s TSR relative to other real estate investment trusts in the MSCI U.S. REIT Index or FTSE NAREIT Equity Health Care Index TSR over the performance period indicated. We awarded 334,544 Relative TSR PRSUs to employees on January 1, 2018.

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The following table summarizes our total unrecognized compensation cost as of June 30, 2018 associated with RSUs, PRSU awards, and LTIP Unit awards to employees:

				Grant Date		Total		Weighted Average		Unrecognized
				Average		Compensation		Period of Expense		Compensation
	Grant	Shares		Fair Value		Cost		Recognition		Cost		Performance	Vesting
	Year	/ Units		Per Unit/ Share		(in millions) (1)		(in months)		(in millions)		Period	Dates
RSUs
3/17/16 RSU	2016		130,006	$	34.78	$	4.50		33	$	0.80	N/A	12/31/2018
1/1/2017 RSU	2017		140,416		31.26		4.40		36		2.20	N/A	12/31/2019
1/1/2018 RSU	2018		169,900		27.54		4.70		36		3.90	N/A	12/31/2020
Restricted Stock Units Total			440,322	$	30.86	$	13.60			$	6.90
TSR PRSUs and LTIP Units
3/31/15 2017 LTIP Units	2015		137,249	$	14.66	$	2.00		45	$	0.30	1/1/2015-12/31/2017	Quarterly in 2018
4/1/2015 2017 LTIP Units	2015		53,387		14.81		0.80		45		0.10	1/1/2015-12/31/2017	Quarterly in 2018
3/17/2016 2018 LTIP Units	2016		370,152		13.21		4.90		45		1.90	1/1/2016-12/31/2018	Quarterly in 2019
1/1/2017 2019 LTIP Units	2017		399,726		12.61		5.00		48		3.20	1/1/2017-12/31/2019	Quarterly in 2020
1/1/2018 2020 LTIP Units	2018		677,488		7.31		5.00		48		4.30	1/1/2018-12/31/2020	Quarterly in 2021
TSR PRSUs & LTIP Total			1,638,002	$	10.80	$	17.70			$	9.80
Relative TSR PRSUs
3/31/15 2017 Relative TSR	2015		137,249	$	22.50	$	3.10		45	$	0.40	1/1/2015-12/31/2017	Quarterly in 2018
4/1/2015 2017 Relative TSR	2015		53,387		22.92		1.20		45		0.20	1/1/2015-12/31/2017	Quarterly in 2018
3/17/2016 2018 Relative TSR	2016		305,563		16.44		5.00		45		2.00	1/1/2016-12/31/2018	Quarterly in 2019
1/1/2017 2019 Relative TSR	2017		285,338		18.04		5.10		48		3.20	1/1/2017-12/31/2019	Quarterly in 2020
1/1/2018 2020 Relative TSR	2018		334,544		16.65		5.60		48		4.80	1/1/2018-12/31/2020	Quarterly in 2021
Relative TSR PRSUs Total			1,116,081	$	17.97	$	20.00			$	10.60
Grand Total			3,194,405	$	16.07	$	51.30			$	27.30

⁽¹⁾ Total shares/units and compensation costs are net of shares/units cancelled.

⁽²⁾ This table excludes approximately $1.5 million of unrecognized compensation costs related to outstanding director restricted stock grants.

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NOTE 14 – BORROWING ACTIVITIES AND ARRANGEMENTS

Secured and Unsecured Borrowings

The following is a summary of our borrowings:

			Annual
			Interest Rate
			as of
			June 30,			June 30,			December 31,
	Maturity		2018			2018			2017
						(in thousands)
Secured borrowings:
HUD mortgages assumed December 2011		2044		-		$	-		$	53,666
Deferred financing costs – net							-			(568	)
Total secured borrowings – net(1)							-			53,098
Unsecured borrowings:
Revolving line of credit		2021		3.29	%		220,000			290,000
U.S. term loan		2022		3.54	%		425,000			425,000
Sterling term loan (2)		2022		1.95	%		132,030			135,130
Omega OP term loan(1)		2022		3.54	%		100,000			100,000
2015 term loan		2022		3.80	%		250,000			250,000
Discounts and deferred financing costs – net(3)							(4,862	)		(5,460	)
Total term loans – net							902,168			904,670
2023 notes		2023		4.375	%		700,000			700,000
2024 notes		2024		4.950	%		400,000			400,000
2025 notes		2025		4.500	%		400,000			400,000
2026 notes		2026		5.250	%		600,000			600,000
2027 notes		2027		4.500	%		700,000			700,000
2028 notes		2028		4.750	%		550,000			550,000
Other		2018		-			-			1,500
Subordinated debt		2021		9.000	%		20,000			20,000
Discount – net							(19,798	)		(21,073	)
Deferred financing costs – net							(24,313	)		(26,037	)
Total senior notes and other unsecured borrowings – net							3,325,889			3,324,390
Total unsecured borrowings - net							4,448,057			4,519,060
Total secured and unsecured borrowings – net (4)						$	4,448,057		$	4,572,158

⁽¹⁾ These amounts represent borrowings that were incurred by Omega OP or wholly owned subsidiaries of Omega OP.

⁽²⁾ This borrowing is denominated in British Pounds Sterling.

⁽³⁾ The amount includes $0.5 million of net deferred financing costs related to the Omega OP term loan as of June 30, 2018.

⁽⁴⁾ All borrowings are direct borrowings of Omega unless otherwise noted.

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HUD Mortgage Disposition

On June 1, 2018, subsidiaries of an existing operator assumed approximately $53 million of our indebtedness guaranteed by HUD that secured 12 separate facilities located in Arkansas. In connection with our disposition of the mortgages we wrote-off approximately $0.6 million of unamortized deferred costs that are recorded in (Loss) gain on assets sold – net on our Consolidated Statement of Operations. These fixed rate mortgages had a weighted average interest rate of approximately 3.06% per annum and matured in July 2044. See Note 2 – Properties and Investments.

Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants. As of June 30, 2018 and December 31, 2017, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings. Omega OP, the guarantor of Parent’s outstanding senior notes, does not directly own any substantive assets other than its interest in non-guarantor subsidiaries.

NOTE 15 – FINANCIAL INSTRUMENTS

The net carrying amount of cash and cash equivalents, restricted cash, contractual receivables and accrued expenses and other liabilities reported in the Consolidated Balance Sheets approximates fair value because of the short maturity of these instruments (Level 1).

At June 30, 2018 and December 31, 2017, the net carrying amounts and fair values of our other financial instruments were as follows:

	June 30, 2018				December 31, 2017
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(in thousands)
Assets:
Investments in direct financing leases – net	$	349,465	$	349,465	$	364,965	$	364,965
Mortgage notes receivable – net		703,309		726,016		671,232		686,772
Other investments – net		377,206		373,842		276,342		281,031
Total	$	1,429,980	$	1,449,323	$	1,312,539	$	1,332,768
Liabilities:
Revolving line of credit	$	220,000	$	220,000	$	290,000	$	290,000
U.S. term loan		422,782		425,000		422,498		425,000
Sterling term loan		131,347		132,030		134,360		135,130
Omega OP term loan(1)		99,488		100,000		99,423		100,000
2015 term loan		248,551		250,000		248,390		250,000
4.375% notes due 2023 – net		694,059		694,736		693,474		711,190
4.95% notes due 2024 – net		394,186		406,220		393,680		420,604
4.50% notes due 2025 – net		395,021		390,337		394,640		399,874
5.25% notes due 2026 – net		594,674		605,460		594,321		625,168
4.50% notes due 2027 – net		687,248		666,345		686,516		681,007
4.75% notes due 2028 – net		540,379		529,727		539,882		550,667
HUD debt – net(1)		-		-		53,098		51,817
Subordinated debt – net		20,322		23,253		20,376		23,646
Other		-		-		1,500		1,500
Total	$	4,448,057	$	4,443,108	$	4,572,158	$	4,665,603

⁽¹⁾ These amounts represent borrowings that were incurred by Omega OP or wholly owned subsidiaries of Omega OP.

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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 Annual Report on Form 10-K for the year ended December 31, 2017). 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.

· Direct financing leases: The fair value of the investments in direct financing leases are estimated using a discounted cash flow analysis, using interest rates being offered for similar leases to borrowers with similar credit ratings (Level 3). In addition, the Company may estimate the fair value of its investment based on the estimated fair value of the collateral using a market approach or an income approach which considers inputs such as, current and projected operating performance of the facilities, projected rent, prevailing capitalization rates and/or coverages and bed values (Level 3).

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

· Other investments: Other investments are primarily comprised of notes receivable. The fair values of notes receivable are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3).

· Revolving line of credit and term loans: The fair value of our borrowings under variable rate agreements are estimated using a present value technique based on expected cash flows discounted using the current market rates (Level 3).

· Senior notes and subordinated debt: The fair value of our borrowings under fixed rate agreements are estimated using a present value technique based on inputs from trading activity provided by a third-party (Level 2).

· HUD debt: The fair value of our borrowings under HUD debt agreements are estimated using an expected present value technique based on quotes obtained by HUD debt brokers (Level 2).

NOTE 16 – COMMITMENTS AND CONTINGENCIES

Litigation

On November 16, 2017, a purported securities class action complaint captioned Dror Gronich v. Omega Healthcare Investors, Inc., C. Taylor Pickett, Robert O. Stephenson, and Daniel J. Booth was filed against the Company and certain of its officers in the United States District Court for the Southern District of New York, Case No. 1:17-cv-08983-NRB (the “Gronich Securities Class Action”). On November 17, 2017, a second purported securities class action complaint captioned Steve Klein v. Omega Healthcare Investors, Inc., C. Taylor Pickett, Robert O. Stephenson, and Daniel J. Booth was filed against the Company and the same officers in the United States District Court for the Southern District of New York, Case No. 1:17-cv-09024-NRB (together with the Gronich Class Action, the “Securities Class Action”). Thereafter, the Court considered a series of applications by various shareholders to be named lead plaintiff, consolidated the two actions and designated Royce Setzer as the lead plaintiff.

Pursuant to a Scheduling Order entered by the Court, lead plaintiff Setzer and additional plaintiff Earl Holtzman filed a Consolidated Amended Class Action Complaint on May 25, 2018 (the “Amended Complaint”). The Securities Class Action purports to be a class action brought on behalf of shareholders who acquired the Company’s securities between May 3, 2017 and October 31, 2017. The Securities Class Action alleges that the defendants violated the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by making materially false and/or misleading statements, and by failing to disclose material adverse facts about the Company’s business, operations, and prospects, including the financial and operating results of one of the Company’s operators, the ability of such operator to make timely rent payments, and the impairment of certain of the Company’s leases and the uncollectibility of certain receivables. The Securities Class Action, which purports to assert claims for violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act, seeks an unspecified amount of monetary damages, interest, fees and expenses of attorneys and experts, and other relief. The Company and the officers named in the Amended Complaint filed a Motion to Dismiss on July 17, 2018. Briefing on the Motion to Dismiss is to be completed by September 14, 2018.

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Although the Company denies the material allegations of the Securities Class Action and intends to vigorously pursue its defense, we are in the very early stages of this litigation and are unable to predict the outcome of the case or to estimate the amount of potential costs.

The Company’s Board of Directors received a demand letter, dated April 9, 2018, from an attorney for a purported current shareholder of the Company relating to the subject matter covered by the Securities Class Action (the “Shareholder Demand”). The letter demanded that the Board of Directors conduct an investigation into the statements and other matters at issue in the Securities Class Action and commence legal proceedings against each party identified as being responsible for the alleged activities. The Board of Directors is reviewing the Shareholder Demand to determine the appropriate course of action.

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

Commitments

We have committed to fund the construction of new leased and mortgaged facilities and other capital improvements. We expect the funding of these commitments to be completed over the next several years. Our remaining commitments at June 30, 2018, are outlined in the table below (in thousands):

Total commitment	$	730,009
Amounts funded (1)		(450,050	)
Remaining commitment	$	279,959

⁽¹⁾ Includes finance costs.

NOTE 17 – EARNINGS PER SHARE/UNIT

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

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

	Omega
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
	(in thousands, except per share amounts)
Numerator:
Net income	$	81,986		$	68,157		$	169,919		$	177,269
Less: net income attributable to noncontrolling interests		(3,450	)		(2,900	)		(7,163	)		(7,572	)
Net income available to common stockholders	$	78,536		$	65,257		$	162,756		$	169,697
Denominator:
Denominator for basic earnings per share		199,497			197,433			199,204			197,223
Effect of dilutive securities:
Common stock equivalents		197			467			167			407
Noncontrolling interest – Omega OP Units		8,766			8,772			8,768			8,793
Denominator for diluted earnings per share		208,460			206,672			208,139			206,423
Earnings per share – basic:
Net income available to common stockholders	$	0.39		$	0.33		$	0.82		$	0.86
Earnings per share – diluted:
Net income	$	0.39		$	0.33		$	0.82		$	0.86

	Omega OP
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(in thousands, except per share amounts)
Numerator:
Net income	$	81,986	$	68,157	$	169,919	$	177,269
Denominator:
Denominator for basic earnings per unit		208,263		206,205		207,972		206,016
Effect of dilutive securities:
Omega OP Unit equivalents		197		467		167		407
Denominator for diluted earnings per unit		208,460		206,672		208,139		206,423
Earnings per unit – basic:
Net income available to Omega OP Unit holders	$	0.39	$	0.33	$	0.82	$	0.86
Earnings per unit – diluted:
Net income	$	0.39	$	0.33	$	0.82	$	0.86

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NOTE 18 – SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS

The following are supplemental disclosures to the consolidated statements of cash flows for the six months ended June 30, 2018 and 2017:

	Six Months Ended
	June 30,
	2018			2017
	(in thousands)
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	10,951		$	21,031
Restricted cash		2,598			12,203
Cash, cash equivalents and restricted cash at end of period	$	13,549		$	33,234
Supplemental information:
Interest paid during the period, net of amounts capitalized	$	108,317		$	97,610
Taxes paid during the period	$	2,072		$	2,032
Non cash investing activities
Non cash acquisition of real estate (See Note 2)	$	(880	)	$	(9,430	)
Non cash proceeds from sale of real estate investments (See Note 2)		53,118			-
Non cash investment in other investments (See Note 5)		(11,026	)		-
Non cash proceeds from other investments (see Note 5)		7,000			(6,353	)
Total	$	48,212		$	(15,783	)
Non cash financing activities
Non cash disposition of other long-term borrowings (See Note 14)	$	(53,118	)	$	-
Change in fair value of cash flow hedges		6,233			(108	)
Remeasurement of debt denominated in a foreign currency		(3,100	)		2,190
Total	$	(49,985	)	$	2,082

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NOTE 19 – SUBSEQUENT EVENTS

On July 23, 2018, Omega notified Orianna that it was in default under the DIP facility and, as a result of such default, Omega (a) declared the amounts owing under the DIP facility to be immediately due and payable, (b) terminated the DIP facility and any further commitment of Omega to extend credit to Orianna under the DIP facility, and (c) restricted Orianna’s use of cash collateral solely to payment of those amounts contained in a budget approved by Omega. Omega also informed Orianna that while Omega did not (as of such date) intend to immediately collect amounts owing under the DIP facility, Omega may at any time in the future exercise further rights and remedies under the DIP facility.

On July 25, 2018, Omega terminated the restructuring support agreement with its tenant 4 West Holdings and the sponsor of Orianna’s restructuring plan. The Company is evaluating and/or pursuing alternative courses of action to protect its assets and shareholder value, and working with operators to protect the interests of residents of the facilities. On July 1, 2018, we transitioned the legacy Orianna portfolio in Mississippi (13 facilities) to an existing Omega operator with annual contractual rent of $12 million and on August 1, 2018, a legacy Orianna facility in Indiana was transitioned to an existing operator with annual contractual rent of $0.5 million. 

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

Forward-Looking Statements and 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 Part I, Item 1A to our annual report on Form 10-K;

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

(iv) our ability to re-lease, otherwise transition, or sell underperforming assets on a timely basis and on terms that allow us to realize the carrying value of these assets;

(v) our ability to sell assets held for sale on a timely basis and on terms that allow us to realize the carrying value of these assets;

(vi) the availability and cost of capital to us;

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

(viii) competition in the financing of healthcare facilities;

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

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

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

(xii) changes in interest rates;

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

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

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

(xvi) our ability to maintain our status as a REIT.

Overview

Omega Healthcare Investors, Inc. (“Omega”) was formed as a real estate investment trust (“REIT”) and incorporated in the State of Maryland on March 31, 1992. Omega is structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega's assets are owned directly or indirectly by, and all of Omega's operations are conducted directly or indirectly through, its operating partnership subsidiary, OHI Healthcare Properties Limited Partnership (“Omega OP”). Omega OP was formed as a limited partnership and organized in the State of Delaware on October 24, 2014. Unless stated otherwise or the context otherwise requires, the terms the “Company,” “we,” “our” and “us” means Omega and Omega OP, collectively.

The Company has one reportable segment consisting of investments in healthcare-related real estate properties located in the United States (“U.S.”) and the United Kingdom (“U.K.”). Our core business is to provide financing and capital to the long-term healthcare industry with a particular focus on SNFs and, to a lesser extent, ALFs, independent living facilities and rehabilitation and acute care facilities. 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. Our other investment income derives from fixed and variable rate loans, which are either unsecured or secured by the collateral of the borrower.

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Omega OP is governed by the Second Amended and Restated Agreement of Limited Partnership of OHI Healthcare Properties Limited Partnership, dated as of April 1, 2015 (the “Partnership Agreement”). Omega has exclusive control over Omega OP’s day-to-day management pursuant to the Partnership Agreement. As of June 30, 2018, Omega owned approximately 96% of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and investors owned approximately 4% of the Omega OP Units.

Our portfolio of real estate investments at June 30, 2018, consisted of 936 healthcare facilities, located in 41 states and the U.K. and operated by 67 third-party operators. Our investment in these facilities, net of impairments and allowances, totaled approximately $8.6 billion at June 30, 2018, with approximately 99% of our real estate investments related to long-term care facilities. Our portfolio is made up of: (i) 748 SNFs, (ii) 117 ALFs, (iii) 14 specialty facilities, (iv) one medical office building, (v) fixed rate mortgages on 51 SNFs and two ALFs and (vi) three facilities that are held for sale. At June 30, 2018, we also held other investments of approximately $377.2 million, consisting primarily of secured loans to third-party operators of our facilities and a $32.8 million investment in an unconsolidated joint venture.

In 2017, we began implementation of a strategic asset repositioning program, disposing of non-core assets and reinvesting the proceeds in assets we envision holding for the long-term. This program is expected to continue for much of 2018 and is designed to position the Company for future growth.

As of June 30, 2018 and December 31, 2017, we do not have any material properties or operators with facilities that are not materially occupied.

Omega’s consolidated financial statements include the accounts of (i) Omega, (ii) Omega OP, and (iii) all direct and indirect wholly owned subsidiaries of Omega. All intercompany transactions and balances have been eliminated in consolidation, and Omega’s net earnings are reduced by the portion of net earnings attributable to noncontrolling interests. Omega OP’s consolidated financial statements include the accounts of (i) Omega OP, and (ii) all direct and indirect wholly owned subsidiaries of Omega OP. All intercompany transactions and balances have been eliminated in consolidation.

Taxation

Omega is a REIT for United States federal income tax purposes, and Omega OP is a pass through entity for United States federal income tax purposes.

Since our inception, Omega has elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code (“Code”). A REIT is generally not subject to federal income tax on that portion of its REIT taxable income which is distributed to its stockholders, provided that at least 90% of such taxable income is distributed each tax year and certain other requirements are met, including asset and income tests. So long as we qualify as a REIT under the Code, we generally will not be subject to federal income taxes on the REIT taxable income that we distribute to stockholders, subject to certain exceptions.

If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income taxes on its taxable income at regular corporate rates and dividends paid to our stockholders will not be deductible by us in computing taxable income. Further, we would not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which qualification is denied, unless the Internal Revenue Service grants us relief under certain statutory provisions. Failing to qualify as a REIT could materially and adversely affect the Company’s net income; however, we believe we are organized and operate in such a manner as to qualify for treatment as a REIT. We test our compliance within the REIT taxation rules to ensure that we are in compliance with the REIT rules on a quarterly and annual basis. We review our distributions and projected distributions each year to ensure we have met and will continue to meet the annual REIT distribution requirements. In 2018, we expect to pay dividends in excess of our taxable income.

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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”). We have elected for two of our active subsidiaries to be treated as TRSs. One of our TRSs is subject to federal, state and local income taxes at the applicable corporate rates and the other is subject to foreign income taxes. As of June 30, 2018, our TRS that is subject to federal, state and local income taxes at the applicable corporate rates had a net operating loss carry-forward of approximately $5.8 million. The loss carry-forward is fully reserved as of June 30, 2018, with a valuation allowance due to uncertainties regarding realization. Our net operating loss carryforwards will be carried forward for no more than 20 years.

For the three months ended June 30, 2018 and 2017, we recorded approximately $0.2 million and $0.5 million, respectively, of state and local income tax provision. For the six months ended June 30, 2018 and 2017, we recorded approximately $0.3 million and $1.5 million, respectively, of state and local income tax provision. For the three months ended June 30, 2018 and 2017, we recorded approximately $0.6 million and $0.1 million, respectively, of tax provision for foreign income taxes. For the six months ended June 30, 2018 and 2017, we recorded approximately $1.0 million and $0.2 million, respectively, of tax provision for foreign income taxes. The expenses were included in income tax expense on our Consolidated Statements of Operations.

Government Regulation and Reimbursement

The healthcare industry is heavily regulated. Our operators are subject to extensive and complex federal, state and local healthcare laws and regulations. These laws and regulations are subject to frequent and substantial changes resulting from the adoption of new legislation, rules and regulations, and administrative and judicial interpretations of existing law. The ultimate timing or effect of these changes, which may be applied retroactively, cannot be predicted. Changes in laws and regulations impacting our operators, in addition to regulatory non-compliance by our operators, can have a significant effect on the operations and financial condition of our operators, which in turn may adversely impact us. The following is a discussion of certain laws and regulations generally applicable to our operators, and in certain cases, to us.

Healthcare Reform. A substantial amount of rules and regulations have been issued under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education and Reconciliation Act of 2010 (collectively referred to as the “Healthcare Reform Law”). The new administration has brought several Congressional efforts to repeal and replace the Affordable Care Act. Under any new legislation, we expect additional rules, regulations and interpretations to be issued that may materially affect our operators’ financial condition and operations. Even if the Healthcare Reform Law is not ultimately amended or repealed, the new administration could propose changes impacting implementation of the Healthcare Reform Law. The ultimate composition and timing of any legislation enacted under the new administration that would impact the current implementation of the Healthcare Reform Law remains uncertain. 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 cannot be predicted, whether in its current form or as amended or repealed.

Reform Requirements for Long-Term Care Facilities. On October 4, 2016, the Centers for Medicare and Medicaid Services (“CMS”) issued a final rule modifying the conditions of participation in Medicare and Medicaid for SNFs. CMS stated that the regulations, last updated in 1991, were “necessary to reflect the substantial advances that had been made over the past several years in the theory and practice of service delivery and safety” within long-term care. The extensive modifications require SNFs to implement new processes; make changes to current practices; and create new policies and procedures within a short timeframe to remain in compliance with their conditions for participation. Changes include provisions related to staff training, discharge planning, infection prevention and control programs, and pharmacy services, among others. While many of the regulations became effective on November 28, 2016, some of the regulations became effective in Phase 2 on November 28, 2017, with others becoming effective in Phase 3, beginning on November 28, 2019. CMS delayed for eighteen months the imposition of any fines for failure to implement Phase 2 of the new “Requirements of Participation” implemented in November 2017. CMS also announced a freeze on the inspection star ratings for any surveys occurring between November 28, 2017 and November 27, 2018. CMS estimates the average cost for a SNF to implement the new regulations is estimated to be $62,900 the first year and $55,000 each year thereafter.

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Reimbursement Generally. A significant portion of our operators’ revenue is derived from government-funded reimbursement programs, consisting primarily of Medicare and Medicaid. As federal and state governments continue to focus on healthcare reform initiatives, and as the federal government and many states face significant current and future budget deficits, efforts to reduce costs by government payors will likely continue, which may result in reductions in reimbursement at both the federal and state levels. Additionally, new and evolving payor and provider programs, including but not limited to Medicare Advantage, dual eligible, accountable care organizations, and bundled payments could adversely impact our tenants’ and operators’ liquidity, financial condition or results of operations. Significant limits on the scope 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, or prospective changes to the Healthcare Reform Law under the new administration, 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 by the states 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 condition, which in turn could negatively impact us.

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. While the federal government committed to paying the entire cost for Medicaid coverage for newly eligible beneficiaries from 2014 through 2016, the federal share declines to 95% in 2017, 94% in 2018, 93% in 2019, and 90% in 2020 and subsequent years. Although the Supreme Court ruled on June 28, 2012 that states could not be required to expand Medicaid or risk losing federal funding of their existing Medicaid programs, as of July 12, 2018, thirty-four (34) states and the District of Columbia have expanded Medicaid eligibility with additional states continuing to consider expansion.

Medicare. On July 31, 2017, CMS issued a final rule regarding the fiscal year (“FY”) 2018 Medicare payment rates and quality payment programs for SNFs, which continues the trend of shifting Medicare payments from volume to value. Proposed aggregate payments to SNFs effective October 1, 2017 for FY 2018 are expected to increase by $370 million, or 1.0%, over FY 2017 payments. This reimbursement increase is attributable to a 1.0% market basket increase as required under the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) after application of the productivity adjustment. Additionally, as mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (“IMPACT Act”), the annual update is reduced by 2 percentage points for SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program (“QRP”), beginning with FY 2018. The application of this penalty to those SNFs that do not meet the requirements for the FY 2018 SNF QRP would produce a market basket index percentage change that is less than zero and would also result in FY 2018 payment rates that are less than such payment rates for the preceding fiscal year. Similarly, a value-based purchasing program under the 2014 Protecting Access to Medicare Act (“PAMA”) legislation discounts SNF Medicare Fee-for-Service (“FFS”) payments by 2% commencing on October 1, 2018 (FY 2019), with reimbursement of those discounts to SNF based on comparative rehospitalization metrics. Beginning on October 1, 2018, the “Bipartisan Budget Act of 2018” froze the market basket update at 2.4% prior to application of any penalty adjustment for failure to meet the requirements of the SNF QRP. This freeze could reduce Medicare reimbursements to SNFs which could have a material adverse effect on our operators’ financial condition and operations, adversely impacting their ability to meet their obligations to us.

Reimbursement methodology reforms, such as value-based purchasing, continue to be prevalent and attempt to hold providers accountable for the cost and quality of care provided by redistributing a portion of a provider or facility’s reimbursement based on the relative performance on designated economic, clinical quality, and patient satisfaction metrics. On April 27, 2018, CMS issued a proposed rule to replace the SNF PPS RUG-IV case-mix classification methodology with a new value-based Patient Driven Payment Model (“PDPM”). Under the PDPM, payments would be based on a resident’s objective classification group, and payment would be calculated by multiplying the case-mix index for the resident’s classification group to create a resident’s total per diem rate. The new payment system, if adopted as proposed, is expected to go into effect on October 1, 2019.

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In addition to FY 2018 Medicare payment rates, SNFs continue to be impacted by the “Bipartisan Budget Act of 2015” (“BBA”) which provided $80 billion in discretionary spending sequestration relief over two years, and extended Medicare sequestration, which generally cuts Medicare provider and plan payments by 2% across the board, for an additional year, through 2025. The FY 2025 sequestration will be “front loaded,” such that a 4% reduction will apply during the first six months of the fiscal year and no reduction will be imposed during the second half of the fiscal year.

Furthermore, while the exceptions review process for therapy caps stipulated by MACRA expired December 31, 2017, the Bipartisan Budget Act of 2018 permanently repealed the therapy caps and the exceptions review process that applied to Medicare Part B therapy coverage as of January 1, 2018. The industry estimates that these changes may potentially (i) result in the restoration of Medicare Part B SNF revenues that would have declined had the therapy caps remained in place and (ii) permit continued necessary services to maintain beneficiary quality of care levels. However, it reduced the reimbursement rate for Medicare Part B therapy services performed by therapy assistants to 85% of the physician fee schedule beginning January 1, 2022 which may offset some of the additional expenses. The Bipartisan Budget Act of 2018 also restored the limited post-pay claims review process and eliminated a threat to future SNF Medicare payment rates by ending the “Independent Payment Advisory Board” which was tasked with cutting future Medicare rates.

Relatedly, CMS released a final rule on December 1, 2017 to significantly scale back mandatory participation in the bundled payment program for Lower Extremity Joint Replacement (“CJR”) procedures that went into effect on April 1, 2016, and was mandatory for all hospitals paid under the Medicare Inpatient Prospective Payment System that are located in the 67 selected metropolitan statistical areas (“MSAs”). Effective January 1, 2018, CJR program participation under the final rule is voluntary for the eligible hospitals in 33 of the MSAs currently covered by the program as of February 2018. The CJR program will remain mandatory in the 34 MSAs for the duration of the program, with an exception for certain low volume and rural hospitals. CMS anticipates the number of mandatory participating hospitals to decrease from approximately 700 under this rule. SNFs receiving Medicare revenues related to hospital discharges subject to CJR bundled payment programs in the identified geographic areas could be either positively or negatively affected by the CJR bundled payment program.

Quality of Care Initiatives. In addition to quality or value based reimbursement reforms, CMS has implemented a number of initiatives focused on the quality of care provided by long term care facilities that could affect our operators. In December 2008, CMS released quality ratings for all of the nursing homes that participate in Medicare or Medicaid under its “Five Star Quality Rating System.” Facility rankings, ranging from five stars (“much above average”) to one star (“much below average”) are updated on a monthly basis. SNFs are required to provide information for the CMS Nursing Home Compare website regarding staffing and quality measures. Based on this data and the results of state health inspections, SNFs are then rated based on the five-star rating system.

In August 2016, CMS announced a modification to the Five Star Quality Rating System through the introduction of new quality measures based primarily on Medicare claims data submitted by hospitals, including: (1) percentage of short-stay residents who were successfully discharged to the community; (2) percentage of short-stay residents who have had an outpatient emergency department visit; (3) percentage of short-stay residents who were re-hospitalized after a nursing home admission; (4) percentage of short-stay residents who made improvements in function; and (5) percentage of long-stay residents whose ability to move independently worsened. These ratings were incorporated into the nursing home rating system in July 2016 and were phased in through January 2017. 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.

Office of the Inspector General Activities. Beginning June 15, 2017, the Office of Inspector General (“OIG”) began updating its Work Plan website monthly in order to enhance transparency around the OIG’s continuous work planning efforts. The OIG reported in its January 2018 update that it would review the quality of care provided to Medicare beneficiaries, including elders and disabled persons, who are being treated at inpatient and outpatient medical facilities for conditions that may be the result of abuse or neglect. The OIG referenced prior reviews which indicated problems with the quality of care and the reporting and investigation of potential abuse or neglect at group homes, nursing homes, and skilled nursing facilities.

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This review supplements the OIG’s Work Plan for government fiscal year 2017 that included seven projects related specifically to nursing homes: (1) determining to what extent State agencies investigate serious nursing home complaints within the required timeframes; (2) unreported incidents of potential abuse and neglect in SNFs; (3) review of SNF Medicare reimbursement documentation (determine if it meets requirements for each particular resource utilization group); (4) the SNF Adverse Event Screening Tool, which will disseminate practical information about the SNF Adverse Event Trigger Tool; (5) review of the National Background Check Program for long-term care employees; (6) compliance with the SNF prospective payment system requirement related to a three-day qualifying inpatient hospital stay; and (7) review of potentially avoidable hospitalizations of Medicare and Medicaid-Eligible nursing facility residents and prevention and detection services provided by nursing homes. Additionally, regional Recovery Audit Contractor program auditors along with the OIG and Department of Justice are expected to continue their efforts to evaluate SNF Medicare claims for any excessive therapy charges. In addition to the seven projects identified on the fiscal year 2017 Work Plan, subsequent updates indicate that the OIG would review whether ambulance services paid by Medicare Part B were subject to Part A SNF consolidated billing requirements. This review is ongoing.

Department of Justice. SNFs are under intense scrutiny for the quality of care being rendered to residents and appropriate billing practices. The Department of Justice launched ten regional Elder Justice Task Forces in 2016 which are coordinating and enhancing efforts to pursue SNFs that provide grossly substandard care to their residents. They are also focusing on therapy billing issues. These Task Forces are composed of representatives from the U.S. Attorneys’ Offices, State Medicaid Fraud Control Units, state and local prosecutors’ offices, U.S. Department of Health and Human Services (“HHS”), State Adult Protective Services agencies, Long Term Care Ombudsmen programs, and law enforcement.

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

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

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

Several of our operators have responded to subpoenas and other requests for information regarding their operations in connection with inquiries by the U.S. Department of Justice or other regulatory agencies.

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Privacy. Our operators are subject to various federal, state and local laws and regulations designed to protect the confidentiality and security of patient health information, including the federal Health Insurance Portability and Accountability Act of 1996, as amended, the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and the corresponding regulations promulgated thereunder (collectively referred to herein as “HIPAA”). The HITECH Act expanded the scope of these provisions by mandating individual notification in instances of breaches of protected health information, providing enhanced penalties for HIPAA violations, and granting enforcement authority to states’ Attorneys General in addition to the HHS Office for Civil Rights. HHS continued its auditing program in 2016 to assess compliance efforts by covered entities and business associates. Through a second phase of audits, which commenced for covered entities in July 2016, HHS focused on a review of policies and procedures adopted and employed by covered entities and their business associates to meet selected standards and implementation specifications of the HIPAA Privacy, Security, and Breach Notification Rules. Covered entities and business associates selected for a desk audit have the potential to be selected for an on-site audit. The HHS Office for Civil Rights reported that as of September 2017, desk audits of covered entities were completed and desk audits of business associates were ongoing.

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. In addition, many states require certain healthcare providers to obtain a certificate of need, which requires prior approval for the construction, expansion or closure of certain healthcare facilities, which has the potential to impact some of our operators’ abilities to expand or change their businesses.

Americans with Disabilities Act (the “ADA”). Our properties must comply with the ADA and any similar state or local laws to the extent that such properties are public accommodations as defined in those statutes. The ADA may require removal of barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable. Should barriers to access by persons with disabilities be discovered at any of our properties, we may be directly or indirectly responsible for additional costs that may be required to make facilities ADA-compliant. Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants. Our commitment to make readily achievable accommodations pursuant to the ADA is ongoing, and we continue to assess our properties and make modifications as appropriate in this respect.

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 SNF and long term care providers, there have been numerous lawsuits challenging the validity of arbitration agreements in long term care settings. As set forth in the recent conditions of participation final rule issued on October 4, 2016, CMS prohibited pre-dispute arbitration agreements between SNFs and residents effective November 28, 2016, thereby increasing potential liabilities for SNFs and long-term care providers. Subsequently, the authority of CMS to restrict the rights of these parties to arbitrate was challenged by litigation in various jurisdictions, and enforcement by CMS was suspended on November 7, 2016 following the issuance of a preliminary injunction by the U.S. District Court for the Northern District of Mississippi. In a reversal from its previous position, CMS issued a proposed rule on June 5, 2017, that lifts CMS’ ban on pre-dispute arbitration agreements in the long-term care setting. The proposed rule continues to face challenges by certain industry groups.

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Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States, 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, 2017. 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 differences may be material to the consolidated financial statements. We have described our most critical accounting policies in our 2017 Annual Report on Form 10-K for the year ended December 31, 2017, in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

There have been no changes to our critical accounting policies or estimates since December 31, 2017. See Note 2 – Summary of Significant Accounting Policies to our Annual Report on Form 10-K for the year ended December 31, 2017.

Accounting Pronouncements Adopted in 2018

In 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In addition, the FASB issued targeted updates to clarify specific implementation issues of ASU 2014-09. These updates included ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients. As a result of adopting ASU 2014-09 and its updates on January 1, 2018, the Company recognized $10.0 million of deferred gain resulting from the sale of facilities to a third-party in December 2017 through opening equity on January 1, 2018. The Company adopted ASU 2014-09 and its subsequent updates in accordance with the modified retrospective approach. The adoption of ASU 2014-09 and its related updates did not have a material impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements and interest income from loan arrangements, both of which are specifically excluded from ASU 2014-09 and its updates.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). The purpose of this updated guidance is to better align the financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. This adoption method will require the Company to recognize the cumulative effect of initially applying ASU 2017-12 as an adjustment to accumulated other comprehensive income (loss) with a corresponding adjustment to the opening balance of equity as of the beginning of the fiscal year that an entity adopts the update. On January 1, 2018, the Company adopted ASU 2017-12 using the modified retrospective transition method. As a result of adopting the standard, the Company is making certain adjustments to its existing hedge designation documentation for active hedging relationships in order to take advantage of specific provisions in the new guidance and to fully align its documentation with ASU 2017-12. The adoption of ASU 2017-12 did not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements - Pending Adoption

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective for the Company beginning January 1, 2019. Early adoption of ASU 2016-02 as of its issuance is permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. As a result of the pending adoption of ASU 2016-02, the Company may be required to record real estate tax revenues and an equal and offsetting real estate tax expense, as a result of our operators paying real estate taxes on our behalf. In July 2018, the FASB issued ASU 2018-11, Leases (“ASU 2018-11”): Targeted Improvements to simplify the implementation of ASU 2016-02. This targeted improvement permits the adoption of ASU 2016-02 at the adoption date instead of the earliest comparative period presented in the financial statements and a practical expedient permitting lessors to not separate nonlease components from the associated lease component if certain conditions are met. Upon adoption of ASU 2016-02 and its updates, we intend to transition to the new leasing accounting standard on January 1, 2019, without modifying our prior year balance sheet and recognizing the cumulative-effect adjustment to opening equity. We continue to evaluate the other impacts of adopting ASU 2016-02 and its updates on our consolidated financial statements.

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In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. We are currently evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements.

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.

Three Months Ended June 30, 2018 and 2017

Operating Revenues

Our operating revenues for the three months ended June 30, 2018 totaled $219.9 million, a decrease of $15.9 million over the same period in 2017. The $15.9 million decrease was primarily the result of (i) a $15.0 million decrease in the direct financing lease income related to New Ark Investment Inc. (“New Ark” which does business as “Orianna Health Systems” and is herein referred to as “Orianna”), (ii) $1.1 million decrease in rental income resulting from facility sales and placing three leases on cash basis, offset by additional revenue from facility acquisitions, facility transitions and lease amendments and (iii) a $2.2 million decrease in miscellaneous income primarily related to the reversal of operator earn-outs in the second quarter of 2017 and fewer late fees in 2018. These decreases were offset by a $1.8 million increase in other investment income primarily related to new notes and additional funding to existing operators made throughout 2017 and 2018.

Operating Expenses

Operating expenses for the three months ended June 30, 2018, totaled $84.3 million, a decrease of approximately $10.4 million over the same period in 2017. The $10.4 million decrease was primarily due to: (i) $4.1 million of impairments on nine facilities in the second quarter of 2018, offset by $5.2 million of insurance proceeds received related to a facility destroyed in November 2017, as compared to $10.1 million of impairments on six facilities in the same period of 2017, (ii) a $2.1 million decrease in provisions for uncollectible accounts and (iii) a $0.7 million decrease in depreciation and amortization expense, primarily resulting from facilities reclassified to held for sale and facility sales. The decreases were partially offset by a $3.7 million increase in general and administrative expenses.

Other Income (Expense)

For the three months ended June 30, 2018, total other expenses were $49.3 million, a decrease of approximately $23.0 million over the same period in 2017. The decrease was primarily related to a $22.0 million decrease in interest - refinance costs related to the redemption of the $400 million 5.875% senior notes and the restructuring of the credit facility in the second quarter of 2017.

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Six Months Ended June 30, 2018 and 2017

Operating Revenues

Our operating revenues for the six months ended June 30, 2018 totaled $440.1 million, a decrease of $27.5 million over the same period in 2017. The $27.5 million decrease was primarily the result of (i) a $30.0 million decrease in the direct financing lease income related to Orianna and (ii) a $2.3 million decrease in miscellaneous income primarily related to the reversal of operator earn-outs in the second quarter of 2017 and fewer late fees in 2018. The decrease was offset by: (i) a $3.4 million increase in other investment income primarily related to new notes and additional funding to existing operators made throughout 2017 and 2018, (ii) a $1.2 million increase in mortgage interest income primarily related to additional funding on mortgages to an existing operator, partially offset by mortgage loan payoffs and (iii) a $0.3 million increase in rental income related to acquisitions, transitions, and lease amendments made throughout 2017 and 2018, offset by the loss of rental income from facility sales and operators placed on a cash basis due to future collectability concerns.

Operating Expenses

Operating expenses for the six months ended June 30, 2018, totaled $183.9 million, a decrease of approximately $3.4 million over the same period in 2017. The $3.4 million decrease was primarily due to a $14.0 million decrease in impairment on real estate properties, offset by (i) a $7.6 million increase in general and administrative expenses resulting from higher professional service fees resulting from operator restructurings and a $2.0 million buyout of an in-the-money purchase option to an unrelated third-party and (ii) a $3.3 million increase in provisions for uncollectible accounts related to the reserve and/or write-off of contractual receivables and straight-line receivables.

Other Income (Expense)

For the six months ended June 30, 2018, total other expenses were $98.9 million, a decrease of approximately $10.5 million over the same period in 2017. The decrease was primarily related to a $22.0 million decrease in interest - refinance costs related to the redemption of the $400 million 5.875% senior notes and the restructuring of the credit facility in the second quarter of 2017, offset by (i) a $10.4 million favorable contractual settlement with an unrelated third-party related to a contingent liability obligation that originated in 2012 and was resolved in the first quarter of 2017 and (ii) a $3.0 million increase in interest expense related to higher debt balances outstanding to fund new investments and higher blended borrowing costs.

National Association of Real Estate Investment Trusts Funds From Operations

Our funds from operations (“NAREIT FFO”) for the three months ended June 30, 2018 was $155.5 million compared to $150.9 million for the same period in 2017. Our NAREIT FFO for the six months ended June 30, 2018 was $303.5 million compared to $331.9 million for the same period in 2017.

We calculate and report NAREIT FFO in accordance with the definition of Funds from Operations and interpretive guidelines issued by the National Association of Real Estate Investment Trusts (“NAREIT”), and, consequently, NAREIT FFO is defined as net income (computed in accordance with GAAP), adjusted for the effects of asset dispositions and certain non-cash items, primarily depreciation and amortization and impairment on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We believe that NAREIT 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. NAREIT FFO was designed by the real estate industry to address this issue. NAREIT FFO herein is not necessarily comparable to NAREIT FFO of other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us.

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NAREIT FFO is a non-GAAP financial measure. We use NAREIT FFO as one of several criteria to measure the 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, NAREIT FFO can facilitate comparisons of operating performance between periods and between other REITs. We offer this measure to assist the users of our financial statements in evaluating our financial performance under GAAP, and NAREIT FFO should not be considered a measure of liquidity, an alternative to net income or an indicator of any other performance measure determined in accordance with GAAP. Investors and potential investors in our securities should not rely on this measure as a substitute for any GAAP measure, including net income.

The following table presents our NAREIT FFO results for the three and six months ended June 30, 2018 and 2017:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2018			2017		2018			2017
	(in thousands)
Net income	$	81,986		$	68,157	$	169,919		$	177,269
Add back loss (deduct gain) from real estate dispositions		2,891			622		(14,609	)		(6,798	)
Add back loss from real estate dispositions - unconsolidated joint venture		640			-		640			-
		85,517			68,779		155,950			170,471
Elimination of non-cash items included in net income:
Depreciation and amortization		69,609			70,350		139,970			140,343
Depreciation – unconsolidated joint venture		1,466			1,658		3,123			3,316
(Deduct) add back (recovery) impairments on real estate properties		(1,097	)		10,135		3,817			17,773
Add back impairments on real estate properties - unconsolidated joint venture		-			-		608			-
NAREIT FFO (a)	$	155,495		$	150,922	$	303,468		$	331,903

^(a) Includes amounts allocated to Omega stockholders and Omega OP Unit holders.

Portfolio and Recent Developments

The following table summarizes the significant acquisitions that occurred during the first six months of 2018:

	Number of					Total					Building & Site		Furniture		Initial
	Facilities				Country/	Investment			Land		Improvements		& Fixtures		Annual
Period	SNF		ALF		State	(in millions)									Cash Yield(3)
Q1		-		1	UK	$	4.0	(1)	$	0.9	$	2.9	$	0.2		8.5	%
Q1		-		1	UK		5.7	(2)		1.4		4.1		0.2		8.5	%
Q1		1		-	PA		7.4			1.6		5.4		0.4		9.5	%
Q1		1		-	VA		13.2			2.4		10.5		0.3		9.5	%
Q2		5		-	TX		22.8			0.5		20.4		1.9		9.5	%
Total		7		2		$	53.1		$	6.8	$	43.3	$	3.0

⁽¹⁾ Omega recorded a non-cash deferred tax liability of approximately $0.4 million in connection with the acquisition.

⁽²⁾ Omega recorded a non-cash deferred tax liability of approximately $0.2 million in connection with the acquisition.

⁽³⁾ The cash yield is based on the purchase price.

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For the six months ended June 30, 2018, we acquired two parcels of land (not reflected in the table above) for approximately $3.5 million with the intent of building new facilities for our existing operators.

In June 2018, we amended our original $415.0 million mortgage with Ciena Healthcare (“Ciena”) with the addition of a $44.7 million mortgage note related to five SNFs located in Michigan. The mortgage note matures on June 30, 2029 and bears an initial annual interest rate of 9.5% which increases each year by 0.225%. As of June 30, 2018, the outstanding principal balance of this mortgage note is approximately $44.2 million. Additionally, the Company committed to fund an additional $9.6 million to Ciena if certain performance metrics are achieved by the portfolio.

On February 26, 2016, we acquired and funded a $50.0 million mezzanine loan at a discount of approximately $0.75 million. In May 2018, the Company amended the mezzanine loan with the borrower which is secured by an equity interest in subsidiaries of the borrower. As part of the refinancing, the Company increased the mezzanine loan by $10.0 million, extended the maturity date to May 31, 2023 and fixed the interest rate at 12% per annum. The mezzanine loan requires semi-annual principal payments of $2.5 million commencing December 31, 2018 (payments due each December 31 and June 30). As of June 30, 2018, our total other investments outstanding with this borrower was approximately $59.3 million.

As of June 30, 2018, we have three facilities, totaling $3.8 million classified as assets held for sale. We expect to sell these facilities over the next twelve months.

Asset Sales, Impairments, Accounts Receivable and Other

Asset Sales

During the first quarter of 2018, we sold 14 facilities (five of which were previously held for sale at December 31, 2017) subject to operating leases for approximately $74.7 million in net cash proceeds recognizing a gain on sale of approximately $17.5 million.

During the second quarter of 2018, we sold 45 facilities and one ancillary building (33 of which were previously held for sale at March 31, 2018) subject to operating leases for approximately $147.2 million in net cash proceeds recognizing a loss on sale of approximately $2.9 million.

Of the 45 facilities sold during the second quarter of 2018, we sold 12 SNFs on June 1, 2018 (12 of which were previously held for sale at March 31, 2018) secured by HUD mortgages to subsidiaries of an existing operator. The Company sold the 12 SNF facilities with carrying values of approximately $62 million for approximately $78 million which consisted of $25 million of cash consideration and their assumption of approximately $53 million of our HUD mortgages. Simultaneously, subsidiaries of the operator assumed our HUD restricted cash accounts, deposits and escrows. The Company recorded a gain on sale of approximately $11 million after approximately $5 million of closing and other transaction related costs. In connection with this sale, we provided a principal of an existing operator an unsecured loan of approximately $39.7 million bearing interest at 6% per annum and maturing on May 31, 2021. Commencing October 1, 2018 and the first day of each subsequent quarter, the unsecured loan requires principal payments of $0.6 million and additional quarterly principal payments of $0.3 million in the future. The borrower has one option to extend the loan to May 31, 2024 subject to an extension fee. A $7.0 million loan provided to the same principal in 2017 was repaid with proceeds from the $39.7 million loan.

In June 2018, we sold one SNF with a carrying value of approximately $15.4 million subject to a direct financing lease to an unrelated third-party for approximately $15.4 million.

Impairments

During the first quarter of 2018, we recorded impairments on real estate properties of approximately $4.9 million on 17 facilities (16 of which were subsequently reclassified to assets held for sale).

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During the second quarter of 2018, we recorded impairments of approximately $4.1 million on nine facilities (three of which were subsequently reclassified to assets held for sale). Our impairments were offset by $5.2 million of insurance proceeds received related to a facility destroyed in November 2017.

Our recorded impairments were primarily the result of decisions to exit certain non-strategic facilities and/or operators. We reduced the net book value of the impaired facilities to their estimated fair values or, with respect to the facilities reclassified to assets held for sale, to their estimated fair values less costs to sell. To estimate the fair value of the facilities, we utilized a market approach which considered binding sale agreements (a Level 1 input) and/or Level 3 inputs (which generally consist of non-binding offers from unrelated third parties).

Accounts Receivable

As of June 30, 2018, we have approximately $32.7 million of contractual receivables outstanding – net of allowances. Of the $32.7 million of contractual receivables outstanding – net of allowances, approximately $20.8 million relates to Orianna, Agemo Holdings LLC (“Agemo” an entity formed in May 2018 to silo the leases and loans formerly held by Signature Healthcare), and Daybreak Venture LLC (“Daybreak”). Orianna and Daybreak are on a cash basis of accounting for purposes of revenue recognition, see additional discussion below. In addition to the contractual receivables, we have approximately $36.1 million of straight-line rent receivables and/or lease inducements associated with these operators as of June 30, 2018. For the three and six months ended June 30, 2018, we recorded approximately $22.9 million and $42.2 million of rental income, respectively, $2.0 million and $3.2 million of other investment income and no income from direct financing leases for these operators.

Other

Orianna has not satisfied the contractual payments due under the terms of the remaining two direct financing leases or the separate operating lease covering four facilities with the Company and the collectability of future amounts due is uncertain.

In March 2018, Orianna commenced voluntary Chapter 11 proceedings in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the “Bankruptcy Court”). As described in Orianna’s filings with the Bankruptcy Court, we entered into a Restructuring Support Agreement (“RSA”) that was expected to form the basis for Orianna’s restructuring. The RSA provided for the recommencement of partial rent payments at $1.0 million per month and established a specific timeline for the implementation of Orianna’s planned restructuring. The RSA provided for the transition of 23 facilities to new operators and the potential sale of the remaining 19 facilities.

On July 25, 2018, Omega terminated the restructuring support agreement with its tenant 4 West Holdings and the sponsor of Orianna’s restructuring plan. The Company is evaluating and/or pursuing alternative courses of action to protect its assets and shareholder value, and working with operators to protect the interests of residents of the facilities. While the form of resolution with 4 West Holdings and the sponsor of Orianna’s restructuring plan is evolving, we remain confident that the final resolution will ultimately result in our previously stated range of $32 million to $38 million of annual rent or rent equivalents from the assets that previously constituted our Orianna portfolio. On July 1, 2018, we transitioned the legacy Orianna portfolio in Mississippi (13 facilities) to an existing Omega operator with annual contractual rent of $12 million and on August 1, 2018, a legacy Orianna facility in Indiana was transitioned to an existing operator with annual contractual rent of $0.5 million.

To provide liquidity to Orianna during their Chapter 11 proceedings, we entered into a senior secured superpriority debtor-in-possession (“DIP”) credit agreement with Orianna for a revolving credit and term loan DIP facility of up to $30 million, which DIP facility was approved by the Bankruptcy Court on an interim basis on March 9, 2018 and on a final basis on May 14, 2018. The DIP financing consists of a $14.2 million term loan and a $15.8 million revolving credit facility which are secured by a security interest in and liens on substantially all of Orianna’s existing and future real and personal property. The $14.2 million term loan bears interest at 1-month LIBOR plus 5.5% per annum and matures on September 30, 2018. Orianna has borrowed the full amount of the term loan to repay their previous secured working capital lender. As of June 30, 2018, approximately $14.2 million is outstanding on this term loan. The $15.8 million revolving credit facility bears interest at 1-month LIBOR plus 9.0% per annum and matures on September 30, 2018. The borrowings under the revolving credit facility are to be used for general business expenses and other uses permitted under the loan documents. As of June 30, 2018, approximately $10.5 million is outstanding on this revolving credit facility.

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In May 2017, we provided Orianna an $18.8 million maximum borrowing secured revolving working capital loan that bears interest at 9% per annum (with one-half (1/2) of all accrued interest to be paid-in-kind and added to the loan balance) and matures on April 30, 2022. This revolving working capital loan has a default rate of 5% per annum. As of June 30, 2018, approximately $15.2 million is outstanding on this revolving working capital loan. Pursuant to the Bankruptcy Court’s order approving the DIP financing, Orianna is obligated to pay one-half (1/2) of all accrued post-bankruptcy interest payable on this revolving working capital loan at the default rate. As of June 30, 2018, our total other investments outstanding with Orianna approximate $40.0 million.

In 2017, we recorded an allowance for loss on direct financing leases of $172.2 million with Orianna covering 38 facilities in the Southeast region of the U.S. The amount of the allowance was determined based on the fair value of the facilities subject to the direct financing lease. To estimate the fair value of the underlying collateral, we utilized an income approach and Level 3 inputs. Our estimate of fair value assumed annual rents ranging between $32.0 million and $38.0 million, rental yields between 9% and 10%, current and projected operating performance of the facilities, coverage ratios and bed values. Such assumptions are subject to change based on changes in market conditions and the ultimate resolution of this matter. Such changes could be significantly different than the currently estimated fair value and such differences could have a material impact on our financial statements.

The 38 facilities remaining under our direct financing leases with Orianna as of June 30, 2018 are located in seven states, predominantly in the southeastern U.S. (37 facilities) and Indiana (1 facility). Our recorded investment in these direct financing leases, net of the $172.2 million allowance, amounted to $337.7 million as of June 30, 2018. We have not recognized any direct financing lease income from Orianna for the period from July 1, 2017 through June 30, 2018. In addition to our direct financing leases with Orianna, we own four facilities and lease them to Orianna under a master lease which expires in 2026. The four facility lease is being accounted for as an operating lease. We have not recognized any income on this operating lease for the period from July 1, 2017 through June 30, 2018, as Orianna did not pay the contractual amounts due and collectability is uncertain.

On July 23, 2018, Omega notified Orianna that it was in default under the DIP facility and, as a result of such default, Omega (a) declared the amounts owing under the DIP facility to be immediately due and payable, (b) terminated the DIP facility and any further commitment of Omega to extend credit to Orianna under the DIP facility, and (c) restricted Orianna’s use of cash collateral solely to payment of those amounts contained in a budget approved by Omega. Omega also informed Orianna that while Omega did not (as of such date) intend to immediately collect amounts owing under the DIP facility, Omega may at any time in the future exercise further rights and remedies under the DIP facility.

On May 7, 2018, Omega and Signature Healthcare entered into a consensual, out-of-court restructuring agreement. The restructuring involves multiple third-party constituents, including other third-party landlords, a new working capital lender, medical malpractice claimants, and other third-party interests. As part of the restructuring, Signature Healthcare was reorganized to separate each of its primary portfolios with its major landlords into three distinct lease silos and separate virtually all other legal obligations. As part of this restructuring, Signature Healthcare formed Agemo Holdings LLC (“Agemo”) to be the holding company of the lessees and loans of the Omega portfolio, and for which Omega agreed to:

· defer up to $6.3 million of rent per annum for 3 years commencing May 1, 2018;

· provide capital expenditure funds to be used for the general maintenance and capital improvements of our 59 facilities in the amount of approximately $4.5 million per year for 3 years;

· extend a 7-year working capital term loan at 7% for an amount up to $25 million with a maturity date of April 30, 2025 ($10.0 million is outstanding as of June 30, 2018);

· extend the term of the master lease by two years to December 31, 2030 and;

· extend the maturity date of the existing term loan by two years to December 31, 2024.

As part of the restructuring, Signature Healthcare entered into new working capital credit facilities with its new working capital lender for each of its separate silos, including Agemo. In addition, as part of our restructure, certain third-party guarantors of the Agemo master lease were required to contribute approximately $7.8 million in funds to the enterprise to be used to reduce the outstanding contractual receivables owed to Omega from Agemo. On May 8, 2018, the Company received $5.0 million in cash from the guarantors and a one-year term note from the principals of Agemo for approximately $2.8 million.

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During the third quarter of 2017, we placed Daybreak on a cash basis for revenue recognition as a result of nonpayment. During the fourth quarter of 2017, we executed a Settlement and Forbearance Agreement with Daybreak which permitted Daybreak to defer payments up to 23% of their contractual rent for the remainder of 2017, subject to certain conditions. During 2018, rent returned to the full contractual amount and we expect that past due rent will begin to be repaid in the latter part of 2018.

The Company continues to closely monitor the performance of all of its operators, as well as industry trends and developments generally.

Liquidity and Capital Resources

At June 30, 2018, we had total assets of $8.6 billion, total equity of $3.9 billion and debt of $4.4 billion, representing approximately 53.6% of total capitalization.

Financing Activities and Borrowing Arrangements

HUD Mortgage Disposition

On June 1, 2018, subsidiaries of an existing operator assumed approximately $53 million of our indebtedness guaranteed by HUD that secured 12 separate facilities located in Arkansas. In connection with our disposition of the mortgages we wrote-off approximately $0.6 million of unamortized deferred costs that are recorded in (Loss) gain on assets sold – net on our Consolidated Statement of Operations. These fixed rate mortgages had a weighted average interest rate of approximately 3.06% per annum and matured in July 2044.

Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants. As of June 30, 2018 and December 31, 2017, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings. Omega OP, the guarantor of Parent’s outstanding senior notes, does not directly own any substantive assets other than its interest in non-guarantor subsidiaries.

$500 Million Equity Shelf Program

For the three months ended June 30, 2018, we issued 0.9 million shares of our common stock at an average price of $30.19 per share, net of issuance costs, generating net proceeds of $27.5 million under our $500 million Equity Shelf Program. For the six months ended June 30, 2018, we issued 0.9 million shares of our common stock at an average price of $30.16 per share, net of issuance costs, generating net proceeds of $27.5 million under our $500 million Equity Shelf Program.

Dividend Reinvestment and Common Stock Purchase Plan

For the three months ended June 30, 2018, approximately 0.8 million shares of our common stock at an average price of $29.22 per share were issued through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $22.2 million. For the six months ended June 30, 2018, approximately 0.9 million shares of our common stock at an average price of $28.55 per share were issued through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $27.1 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.

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For the three and six months ended June 30, 2018, we paid dividends of approximately $131.6 million and $263.0 million, to our common stockholders, respectively. The Omega OP Unit holders received the same distributions per unit as those paid to the common stockholders of Omega.

Liquidity

We believe our liquidity and various sources of available capital, including cash from operations, our existing availability under our Omega 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.

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;

· capital improvement programs;

· 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; (iv) general and administrative expenses and (v) our operators’ ability to pay amounts owed. The timing, source and amount of cash flows provided by or used in financing activities and 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, cash equivalents and restricted cash totaled $13.5 million as of June 30, 2018, a decrease of $83.3 million as compared to the balance at December 31, 2017. The following is a discussion of changes in cash, cash equivalents and restricted cash due to operating, investing and financing activities, which are presented in our Consolidated Statements of Cash Flows.

Operating Activities – Operating activities generated $217.2 million of net cash flow for the six months ended June 30, 2018, as compared to $264.2 million for the same period in 2017, a decrease of $47.0 million which is primarily due to lower rental income resulting from facility sales, the loss of direct financing lease income from Oriana and cash payments for lease inducements of which we paid one operator approximately $28.4 million during the first quarter of 2018.

Investing Activities – Net cash flow from investing activities was an outflow of $6.3 million for the six months ended June 30, 2018, as compared to an outflow of $135.9 million for the same period in 2017. The $129.6 million change in cash flow from investing activities related primarily to (i) a $157.9 million increase in proceeds from sale of real estate investments, (ii) a $78.2 million decrease in real estate acquisitions and (iii) a $6.9 million increase in receipts from insurance proceeds. Offsetting these changes were: (i) a $71.0 million increase in other investments – net primarily related to funding more other investments in 2018, (ii) a $17.2 million increase in investments in construction in progress in 2018, as compared to the same period in 2017, (iii) an $11.8 million decrease in proceeds from the sale of direct financing lease assets and (iv) a $7.5 million increase in mortgages – net primarily related to funding additional mortgages in 2018.

Financing Activities – Net cash flow from financing activities was an outflow of $294.1 million for the six months ended June 30, 2018, as compared to an outflow of $202.6 million for the same period in 2017. The $91.5 million change in cash from financing activities was primarily related to (i) a net $35.0 million increase in cash used by our credit facility, (ii) a net $96.7 million increase in cash from our other long-term borrowings, primarily resulting from the second quarter 2017 issuance of $550.0 million 4.75% senior notes due 2028 and $150.0 million 4.5% senior notes due 2025, offset by the repayment of the $400.0 million 5.875% senior notes due 2024 and a reduction in borrowings outstanding under our credit facility and (iii) a $16.3 million increase in dividends paid, offset by (i) a $28.5 million decrease in financing related costs in 2018, as compared to the same period in 2017, (ii) $20.9 million increase in cash proceeds from the issuance of common stock in 2018, as compared to the same period in 2017 and (iii) a $7.3 million increase in net proceeds from our dividend reinvestment plan in 2018, as compared to the same period in 2017.

55

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

During the quarter ended June 30, 2018, there were 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, 2017.

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, management evaluated the effectiveness of the design and operation of the disclosure controls and procedures of Omega and Omega OP (for purposes of this Item 4, the “Companies”) as of June 30, 2018. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures of the Companies were effective at a reasonable assurance level as of June 30, 2018.

Internal Control Over Financial Reporting

There were no changes in the Companies’ 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.

56

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

See Note 16 – Commitments and Contingencies in the Consolidated Financial Statements - Part I, Item 1 hereto, which is hereby incorporated by reference in response to this item.

Item 1A – Risk Factors

There have been no material changes to our risk factors as previously disclosed in Item 1A contained in Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

During the quarterly period ended June 30, 2018, Omega issued an aggregate of 1,350 shares of Omega common stock in exchange for an equivalent number of Omega OP Units tendered to Omega OP for redemption in accordance with the provisions of the Partnership Agreement. The Company issued these shares of Omega common stock in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, based upon factual representations received from the limited partners who received the Omega common stock.

57

Item 6–Exhibits

Exhibit No.
10.1	2018 Stock Incentive Plan (Incorporated by reference to Form 8-K filed June 11, 2018).
10.2	Omega Healthcare Investors, Inc. Deferred Cash Compensation Plan with form of Deferral Agreement pursuant to the Omega Healthcare Investors, Inc. Deferred Cash Compensation Plan (June 30, 2018).*
10.3	Fourth Amendment to Steven Insoft Employment Agreement (Incorporated by reference to the Form 8-K filed May 1, 2018).
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Omega Healthcare Investors, Inc.*
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Omega Healthcare Investors, Inc.*
31.3	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of OHI Healthcare Properties Limited Partnership.*
31.4	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of OHI Healthcare Properties Limited Partnership.*
32.1	Section 1350 Certification of the Chief Executive Officer of Omega Healthcare Investors, Inc.*
32.2	Section 1350 Certification of the Chief Financial Officer of Omega Healthcare Investors, Inc.*
32.3	Section 1350 Certification of the Chief Executive Officer of OHI Healthcare Properties Limited Partnership.*
32.4	Section 1350 Certification of the Chief Financial Officer of OHI Healthcare Properties Limited Partnership.*
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.

58

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:	August 8, 2018	By:	/S/ C. TAYLOR PICKETT
			C. Taylor Pickett
			Chief Executive Officer

Date:	August 8, 2018	By:	/S/ ROBERT O. STEPHENSON
			Robert O. Stephenson
			Chief Financial Officer

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

Co-Registrant

By: Omega Healthcare Investors, Inc., its General Partner

Date:	August 8, 2018	By:	/S/ C. TAYLOR PICKETT
			C. Taylor Pickett
			Chief Executive Officer

Date:	August 8, 2018	By:	/S/ ROBERT O. STEPHENSON
			Robert O. Stephenson
			Chief Financial Officer

59

EX-10.2

Exhibit 10.2

OMEGA HEALTHCARE INVESTORS, INC.

DEFERRED CASH COMPENSATION PLAN

TABLE OF CONTENTS

1.	BACKGROUND AND INTERPRETATION	1
2.	ELIGIBILITY	1
3.	DEFERRAL ELECTIONS	1
4.	TIMING OF ELECTIONS	1
5.	TERMS AND CONDITIONS OF DEFERRALS	4
6.	ACCOUNTS	5
7.	UNFUNDED PLAN	6
8.	ADMINISTRATION	6
9.	CLAIMS PROCEDURES	6
10	Participation Voluntary	8
11.	AMENDMENT AND TERMINATION	8
12.	GOVERNING LAW	8
13.	DEFINITIONS	8

 1

OMEGA HEALTHCARE INVESTORS, INC.

DEFERRED CASH COMPENSATION PLAN

1. BACKGROUND AND INTERPRETATION

(a)       Background and ERISA. For purposes of ERISA, the Plan shall be deemed to constitute two separate plans, one of which applies to Directors and is wholly exempt from ERISA, and one of which applies to the employees of a Plan Sponsor and is an unfunded plan maintained by the Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees pursuant to Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

(b)       Section 409A. The Plan is intended to comply with Section 409A of the Internal Revenue Code and the regulations thereunder (“Section 409A”). Therefore, all provisions of the Plan and any deferral agreements under or subject to the Plan shall be interpreted consistently with this intent. To that end, all provisions of the Plan and the deferral agreements shall be subject to the requirements of Section 409A, and to the extent permissible under Section 409A, any provisions that are inconsistent with such requirements shall be deemed to be excised and inoperable. While the Company intends to maintain and operate the Plan and the deferral agreements in compliance with Section 409A, no assurances are made to Participants that the Plan and the deferral agreements will be maintained and operated in compliance with Section 409A. Participants will be liable for their own taxes, including any taxes resulting from a failure of the Plan or deferral agreements to be maintained or operated in compliance with Section 409A.

2. ELIGIBILITY

(a)          Employees. Employees of the Company or any Affiliate of the Company that has adopted the Plan with the consent of the Committee or the Board who satisfy the requirements of eligibility, consistent with Section 1(a), established in resolutions of the Committee or the Board shall be eligible to participate in the Plan.

(b)          Directors. Directors of the Company who are not employees of the Company or an Affiliate who satisfy requirements of eligibility established by the Board shall be eligible to participate in the Plan, once the Board has in resolutions approved participation by Directors.

3. DEFERRAL ELECTIONS

(a)          Employees. Each Participant who is an employee of a Plan Sponsor may elect, in the manner prescribed herein, to defer receipt of base salary and Bonuses payable by a Plan Sponsor. In general, the Plan Administrator may permit each Participant to elect to defer salary only or Bonus only or both salary and Bonus.

(b)          Directors. Each Participant who is a Director may elect, in the manner prescribed herein, to defer receipt of Director’s Cash Fees.

(c)          Limit. A limit on annual deferrals may be established by the Plan Administrator from time to time.

4. TIMING OF ELECTIONS

(a)           Initial Employee Elections in 2018. On or before the Effective Date, each Participant who is an employee of a Plan Sponsor will be permitted to make a deferral election only for any Performance-Based Bonus for 2018 performance that is payable in 2019. When permitted in 2018 by the Plan Administrator, each Participant who is an employee of a Plan Sponsor will be permitted to make a deferral election for 2019 salary, and if desired, Bonuses for 2019 performance.

(b)          Initial Employee Eligibility after the Effective Date. Each Participant who is an employee of a Plan Sponsor and first becomes eligible to participate in the Plan (and any other plan that is aggregated with the Plan pursuant to Treas Regs. Section 1.409A-1(b)(2)) after the Effective Date may elect, within thirty (30) days after the date the Participant first becomes eligible to participate in the Plan, to defer receipt of any base salary for the current year for services beginning thirty (30) days after the date of becoming eligible.

 2

(c)          Initial Director Eligibility after the Effective Date. Each Participant who is a Director and first becomes eligible to participate in the Plan (and any other plan that is aggregated with the Plan pursuant to Treas. Regs. Section 1.409A-1(b)(2)) after the Effective Date may elect, on or before the date the Participant first becomes eligible to participate in the Plan, to defer receipt of any Director’s Cash Fees for the current year for services beginning after becoming eligible.

(d)          Initial Deferral Election with respect to Forfeitable Rights. Each Participant may elect to defer receipt of any Bonus, the terms of which require the Participant to continue to provide services to the Company for at least twelve (12) months from the date of grant to avoid forfeiture, if the election is made within thirty (30) days of the date of grant. For purposes of this Subsection, a Bonus will not be treated as failing to require the Participant to perform services for at least twelve (12) months from the date of grant merely because the risk of forfeiture lapses upon the Participant’s death or Disability, or a Change in Control, provided that if the Participant’s death or Disability or a Change in Control occurs and the risk of forfeiture lapses within such twelve (12) month period, the deferral election will be given effect only if it is permitted under this Section without regard to this Subsection.

(e)          Initial Deferral Election with respect to Performance-Based Bonus. Each Participant may elect to defer receipt of any Performance-Based Bonus within six (6) months before the end of the applicable performance period, provided that the Participant continuously performs services for the Company or an Affiliate from the later of the beginning of the performance period or the date the performance criteria are established through the date an election is made under this Subsection, provided that no such election may be made after the compensation underlying the Performance-Based Bonus has become readily ascertainable.

(f)           Initial Deferral Election with respect to Short-Term Deferrals. Each Participant may elect to defer receipt of any Bonus that, absent the deferral election, would be treated as a “short-term deferral” within the meaning of Treas. Regs. Section 1.409A-1, in accordance with the requirements of Section 5(c) below, applied as if the Bonus were a deferral of compensation and the scheduled payment date were the date the risk of forfeiture lapses; provided, however, that such election may require payment upon a Change in Control without regard to the five-year additional deferral requirement in Section 5(c).

(g)          General Rule. Except as otherwise provided in this Section, each Participant may elect to defer receipt of any salary, Bonus or Director’s Cash Fees that represent compensation for services for a calendar year only if the election is made not later than the last day of the immediately preceding calendar year.

(h)          No Standing Election. Notwithstanding any other provision hereof, unless otherwise provided by the Plan Administrator in an Agreement, any deferral election made in a given year will apply only to compensation for the year to which the Agreement relates and not to compensation for any future years beyond that year.

(i)           Subsequent Changes in Deferral Elections. Once a Participant makes a deferral election, the Participant may change the Participant’s deferral election at any time before the last permissible date for making a deferral election as set forth above in this Section.

(j)           Other Restrictions. The Plan Administrator may provide other restrictions on the timing or revocation of deferral elections, and all such elections will be limited as the Plan Administrator may provide in the applicable Agreement.

 3

5. TERMS AND CONDITIONS OF DEFERRALS

(a)          Terms of Deferrals. The Plan Administrator shall have the sole authority and discretion in determining the terms and conditions, subject to the terms of the Plan, that shall be reflected in the applicable Agreement.

(b)          Manner of Deferral Election and Timing of Payment. A Participant may elect to defer receipt of salary, Bonuses or Director’s Cash Fees by entering into an Agreement provided by the Company for this purpose, which shall contain such terms and conditions as may be established by the Plan Administrator. If a Participant makes a deferral election, payment of the related salary, Bonus or Director’s Cash Fees (as adjusted for earnings or losses pursuant to Section 6) shall be delayed until the date or event specified in the Agreement at the date the Participant’s deferral election in Section 3 is made. Except as otherwise provided in an Agreement, compensation that is deferred shall be paid only upon an event or date set forth below:

(i)        a specified date;

(ii)       the date of the Participant’s Separation from Service if the Participant is not a Specified Employee;

(iii)      six (6) months after the date of the Participant’s Separation from Service if the Participant is a Specified Employee;

(iv)       the date of the Participant’s death;

(v)        the date the Participant becomes subject to a Disability;

(vi)       the date of a Change in Control; or

(vii)      the date the Participant is subject to an Unforeseeable Emergency;

provided, however, that for administrative convenience, the Plan Administrator may require that the Agreement will not contain Clause (ii) above but instead will contain the six (6) month delay in Clause (iii) above for each Participant who is or was an employee of a Plan Sponsor regardless of whether the Participant is a Specified Employee, and provided further, such further terms, conditions, and restrictions as set forth in the applicable Agreement shall apply.

(c)       Subsequent Changes in Time of Payment. If a Participant is permitted to elect the timing of payment pursuant to Subsection (d), the Participant may change the timing of payment of the deferred compensation at any time before the last permissible date for making a deferral election as to such compensation as set forth in Section 3, or if after such last permissible date, only in accordance with the following rules:

(i)        the election shall not take effect until at least twelve (12) months after the date on which the election is made;

(ii)       in the case of an election related to a payment that is not on account of the Participant’s Disability or death, or the occurrence of an Unforeseeable Emergency, the payment with respect to which the election is made must be deferred for a period of at least five (5) years from the date that such payment would have been made; and

 4

(iii)       any election related to a payment to be paid at a specified time or pursuant to a fixed schedule must be made at least twelve (12) months before the date the payment was previously scheduled to be paid.

(d)          Non-Transferability. The rights and interests of a Participant in respect of the deferred compensation shall not be transferable or assignable other than by will or the laws of succession to the legal representative of the Participant; provided, however, that the Plan Administrator may allow a Participant to designate a person to receive the benefits payable under the Plan on the Participant’s death or alter or revoke such designation from time to time, subject to the provisions of any applicable law.

6. ACCOUNTS

(a)          Deferrals. All deferrals of salary, Bonuses and Director’s Cash Fees shall be credited to a Participant’s Account as of the date the compensation would otherwise have been paid to the Participant if the Participant had not made a deferral election. If deferrals of salary, Bonus or Director’s Cash Fees are subject to different Agreements, each of which require payment upon different date(s) or event(s), the Plan Administrator shall maintain a separate Account for each such Agreement. (For example, if a Participant elects in 2018 to defer 2019 salary to 2022 and elects in 2019 to defer 2020 salary to 2025, a separate Account will be maintained for each of the two deferrals.)

(b)          Investment of Accounts. Accounts shall be invested in such Investment Fund(s) as the Participant shall direct the Plan Administrator by notice in the form and manner prescribed by the Plan Administrator, which direction shall be stated in whole number percentages (unless otherwise determined by the Plan Administrator) and may be given effect for amounts credited to the Participant’s Account on or after the Valuation Date coinciding with or next following the Plan Administrator’s processing of the direction pursuant to normal administrative procedures. If no direction is effective for the date an amount is to be credited, all amounts which are then to be credited shall be invested in such Investment Fund(s) to which the Participant last directed amounts to be credited, or, if no direction is outstanding, to such Investment Fund(s) as the Plan Administrator in its absolute discretion determines are likely to best preserve principal.

(c)          Changes to Investment Elections. A Participant may modify or change the Participant’s investment direction at any time and direct that a portion or all of Participant’s Account invested in one or more of the Investment Fund(s) be transferred to another Investment Fund by giving notice to the Plan Administrator in the form and manner prescribed by the Plan Administrator as provided in and subject to the following rules:

(i)       Each direction shall be made in the form and name prescribed by the Plan Administrator, shall state the Investment Fund(s) from which all or a portion of the Participant’s Account shall be transferred and to which the transfer shall be made, shall state the percentage in whole numbers (unless otherwise determined by the Plan Administrator) of the Participant’s interest in the Investment Fund(s) which shall be transferred and such other information as the Plan Administrator shall require; and

(ii)       Directions as to a modification or change in investment or a transfer may be given effect for any Valuation Date coinciding with or next following the Plan Administrator’s processing of the modification pursuant to normal administrative procedures.

(d)       Distributions. Any distributions to a Participant pursuant to the Plan shall be treated as a reduction pro rata from each Investment Fund in which the Participant has an interest, unless otherwise elected by the Participant and permitted by the Plan Administrator.

 5

(e)           Adjustment of Accounts for Earnings and Losses. The Plan Administrator shall adjust each Account as of each Valuation Date for the earnings or losses of the Investment Funds in which the Participant’s Account is invested.

(f)           No Segregated Assets. The provisions of this Section are subject to Section 7.

7. UNFUNDED PLAN

All allocations to Accounts and the investment of and returns on Accounts shall be used solely for bookkeeping purposes. It is the intent of the Company that the Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. Participants have the status of general unsecured creditors of the Plan Sponsor and the Plan constitutes a mere promise by the Plan Sponsor to make benefit payments in the future. Each Plan Sponsor’s liability hereunder shall be several and relate solely to the Accounts of Participants which it employs or employed. Each Plan Sponsor’s obligations hereunder shall constitute general, unsecured obligations, payable solely out of its general assets, and no Participant or other person has any right to any specific assets of the Plan Sponsor. No liability or obligation of the Plan Sponsor pursuant to the Plan will be deemed to be secured by any pledge of, or encumbrance on, any property of the Plan Sponsor. The Company may, but is not required to, establish a grantor trust to hold assets attributable to the Accounts. In such event, all payments provided under the Plan shall be paid from such trust and from the general assets of the applicable Plan Sponsor to the extent the trust assets are insufficient; provided, however, that Participants shall have no preferred claim on, or any beneficial ownership interest in, the assets of the trust.

8. ADMINISTRATION

(a)           Plan Terms. The Plan Administrator shall administer the Plan in accordance with its terms. The Plan Administrator may, subject to the terms of the Plan, delegate duties relating to the administration of the Plan and will determine the scope of such delegation. Any decision made by the Plan Administrator in carrying out its responsibilities with respect to the administration of the Plan will be final and binding on the Participants.

(b)           Plan Interpretation. In addition to the other powers granted to the Plan Administrator under the Plan and subject to the terms of the Plan, the Plan Administrator shall have full and complete authority to interpret the Plan. The Plan Administrator may from time to time prescribe such rules and regulations and make all determinations necessary or desirable for the administration of the Plan. Any such interpretation, rule, determination or other act of the Plan Administrator shall be conclusively binding upon all persons, including the Participants and their legal representatives and beneficiaries. Notwithstanding the foregoing, the Plan Administrator shall not make any determinations as to whether a Participant is subject to a Disability.

(c)           Plan Administrator Liability. The Plan Administrator shall not be liable for any action or determination made in good faith pursuant to the Plan. To the full extent permitted by law, the Company will indemnify and save harmless each person made, or threatened to be made, a party to any action or proceeding by reason of the fact that such person is or was, or acted on behalf of, the Plan Administrator, and, as such, is or was required or entitled to take action pursuant to the terms of the Plan.

9. CLAIMS PROCEDURES FOR EMPLOYEES

This Section applies only to Participants who are employees of a Plan Sponsor, former employees of Plan Sponsor who are Participants as a result of having been employed by a Plan Sponsor, beneficiaries of either of the foregoing categories of Participants, or any other person entitled to file a claim under the Plan pursuant to ERISA, but shall not apply to Participants who are Directors, former Directors who are Participants as a result of having been Directors, or beneficiaries of either of the foregoing categories of Participants.

 6

(a)          Notice of Denial. If a Participant (or other person entitled to file a claim for benefits under ERISA) (a “claimant”) is denied a claim for benefits under the Plan, the Plan Administrator shall provide to the claimant written notice of the denial within ninety (90) days after the Plan Administrator receives the claim, unless special circumstances require an extension of time for processing the claim. If such an extension of time is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 90-day period. In no event shall the extension exceed a period of ninety (90) days from the end of such initial period. Any extension notice shall indicate the special circumstances requiring the extension of time, the date by which the Plan Administrator expects to render the final decision, the standards on which entitlement to benefits are based, the unresolved issues that prevent a decision on the claim and the additional information needed to resolve those issues.

(b)          Contents of Notice of Denial. If a claimant is denied a claim for benefits under a Plan, the Plan Administrator shall provide to such claimant written notice of the denial which shall set forth, in language calculated to be understood by the claimant:

(i)        the specific reasons for the denial;

(ii)       specific references to the pertinent provisions of the Plan on which the denial is based;

(iii)       a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

(iv)      an explanation of the Plan’s claim review procedures, and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review.

(c)          Right to Review. After receiving written notice of the denial of a claim, a claimant or his representative shall be entitled to:

(i)         request a full and fair review of the denial of the claim by written application to the Plan Administrator;

(ii)       request, free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim;

(iii)      submit written comments, documents, records, and other information relating to the denied claim to the Plan Administrator; and

(iv)      a review that takes into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

(d)          Application for Review. If a claimant wishes a review of the decision denying his claim to benefits under the Plan, he must submit the written application to the Plan Administrator within sixty (60) days after receiving written notice of the denial.

(e)          Hearing. Upon receiving such written application for review, the Plan Administrator may schedule a hearing for purposes of reviewing the claimant’s claim, which hearing shall take place not more than thirty (30) days from the date on which the Plan Administrator received such written application for review.

 7

(f)           Notice of Hearing. At least ten (10) days prior to the scheduled hearing, the claimant and his representative designated in writing by him, if any, shall receive written notice of the date, time, and place of such scheduled hearing. The claimant or his representative, if any, may request that the hearing be rescheduled, for his convenience, on another reasonable date or at another reasonable time or place.

(g)          Counsel. All claimants requesting a review of the decision denying their claim for benefits may employ counsel for purposes of the hearing.

(h)          Decision on Review. No later than sixty (60) days following the receipt of the written application for review, the Plan Administrator shall submit its decision on the review in writing to the claimant involved and to his representative, if any, unless the Committee determines that special circumstances (such as the need to hold a hearing) require an extension of time, to a day no later than one hundred twenty (120) days after the date of receipt of the written application for review. If the Plan Administrator determines that the extension of time is required, the Plan Administrator shall furnish to the claimant written notice of the extension before the expiration of the initial sixty (60) day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan Administrator expects to render its decision on review. In the case of a decision adverse to the claimant, the Plan Administrator shall provide to the claimant written notice of the denial which shall include:

(i)        the specific reasons for the decision;

(ii)       specific references to the pertinent provisions of the Plan on which the decision is based;

(iii)      a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and

(iv)      an explanation of the Plan’s claim review procedures, and the time limits applicable to such procedures, including a statement of the claimant’s right to bring an action under Section 502(a) of ERISA following the denial of the claim upon review.

10. Participation Voluntary

Participation in the Plan by Participants is voluntary. The issuance of Agreements under the Plan will not be construed as giving a Participant any right to continue in the service of the Company or any of its Affiliates. Participation in the Plan by any Participant will constitute acceptance of the terms and conditions of the Plan by the Participant and as to the Participant’s agreement to be bound thereby.

11. AMENDMENT AND TERMINATION

The Committee or the Board may from time to time amend, suspend or terminate the Plan in whole or in part. No amendment or termination of the Plan shall take away any rights that the Participant has under the terms of any applicable Agreement.

12. GOVERNING LAW

The Plan shall be governed by the laws of the State of Maryland, to the extent not preempted by Federal law, without reference to principles of conflicts of laws.

13. DEFINITIONS

For purposes of the Plan, the terms contained herein have the following meanings. 

 8

(a)           “Accounts” means the accounts established and maintained by the Plan Administrator in bookkeeping records reflecting the amount of a Participant’s deferrals and earnings or losses thereon in accordance with Sections 4 through 6.

(b)          “Affiliate” means:

(i)        any Subsidiary or Parent;

(ii)        any entity that directly or through one or more intermediaries controls, is controlled by, or is under common control with the Company, as determined by the Committee; or

(iii)       any entity in which the Company has such a significant interest that the Company determines it should be deemed an “Affiliate,” as determined in the sole discretion of the Committee.

(c)           “Agreement” means an agreement approved by the Plan Administrator which sets forth the terms and conditions of the Participant’s deferral.

(d)          “Board” means the board of directors of the Company.

(e)          “Bonus” means any payment of cash compensation by a Plan Sponsor that is not paid on a periodic basis

(f)           “Change in Control” means a “change in the ownership of the corporation, a change in the effective control of the corporation, or a change in the ownership of a substantial portion of the assets of the corporation,” in each case within the meaning of Treas. Regs. Section 1.409A-3; provided that the term “corporation” in this definition shall refer to the Company.

(g)          “Committee” means the Compensation Committee of the Board.

(h)          “Company” means Omega Healthcare Investors, Inc., a Maryland corporation.

(i)           “Director” means as member of the Board.

(j)           “Director’s Cash Fees” mean cash payments payable to the Director by the Company for services as a Director, including Board and committee cash retainers and cash meeting fees.

(k)          “Disability” means any condition that constitutes a “disability” under Treas. Regs. Section 1.409A-3; provided, however, that the determination of whether a Participant is subject to a Disability shall not be made by the Plan, the Company or the Plan Administrator but shall be made (i) by the Social Security Administration, (ii) in accordance with the requirements of the Company’s long-term disability insurance plan (provided that the definition of disability applied complies with the requirements of this definition), (iii) by a qualified physician that is acceptable to the Plan Administrator, or (iv) by any other qualified party that is independent of the Plan, the Company and the Plan Administrator and that is acceptable to the Plan Administrator.

(l)           “Effective Date” means June 30, 2018.

(m)         “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations issued thereunder.

 9

(n)          “Investment Fund” means each individual investment fund established by the Plan Administrator for purposes of determining the balance of each Participant’s Accounts.

(o)          “Parent” means any company (other than the Company) in an unbroken chain of corporations ending with the Company if each of the companies other than the Company owns equity possessing fifty percent (50%) or more of the total combined voting power of all classes of equity in one of the other companies in such chain.

(p)          “Participant” means any individual who is eligible to participate in the Plan pursuant to Section 2.

(q)          “Performance-Based Bonus” means a Bonus, the entitlement to which is contingent on the satisfaction of pre-established organizational or individual performance criteria (including subjective criteria) relating to a performance period of at least twelve (12) consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing within ninety (90) days after the commencement of the period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established. Compensation may be performance-based compensation if the amount will be paid regardless of satisfaction of the performance criteria due to the Participant’s death or Disability, or a Change in Control, provided that payment made under such circumstances without regard to the satisfaction of the performance criteria will not constitute a Performance-Based Bonus.

(r)           “Plan” means the Omega Healthcare Investors, Inc. Deferred Cash Compensation Plan, as it may be amended from time to time.

(s)          “Plan Administrator” means the Committee, or to the extent the Committee or the Board has delegated authority with respect to administration of the Plan, such person(s) or entity to whom the Committee or the Board has delegated authority.

(t)           “Plan Sponsor” means individually each entity that has adopted the Plan pursuant to Section 2 and has current or former employees who participate in the Plan.

(u)          “Separation from Service” means a “separation from service” within the meaning of Treas. Regs. Section 1.409A-1.

(v)          “Specified Employee” means a “specified employee” within the meaning of Treas. Regs. Section 1.409A-1.

(w)         “Subsidiary” means any company (other than the Company) in an unbroken chain of companies beginning with the Company if each of the companies other than the last company in the unbroken chain owns equity possessing fifty percent (50%) or more of the total combined voting power of all classes of equity in one of the other companies in the chain.

(x)           “Valuation Date” means each regular business day of the entity maintaining the investments in which the Individual Funds are invested, if such entity values such Individual Funds on a daily basis, provided, however, that the Plan Administrator may in its sole discretion provide for less frequent Valuation Dates with respect to Individual Funds.

(y)          “Unforeseeable Emergency” means an “unforeseeable emergency” within the meaning of Treas. Regs. Section 1.409A-3.

 10

IN WITNESS WHEREOF, the Company has adopted the Plan, effective June 30, 2018.

OMEGA HEALTHCARE INVESTORS, INC.

By:

Title:

 11

DEFERRAL AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

DEFERRED CASH COMPENSATION PLAN

THIS AGREEMENT (this “Agreement”) is made as of June 30, 2018 (the “Effective Date”), by OHI Asset Management, LLC (the “Company”) and ____________________________________ (the “Employee”).

This Agreement includes the Terms and Conditions, which are part of this Agreement.

A. Effect of Agreement: This Agreement relates to the annual cash bonus for 2018 performance that, to the extent earned, is payable in 2019.

This election will be given effect only to the extent that the compensation to be deferred satisfies the requirements for deferral under Treas. Regs. Section 1.409A-2(a), including Treas. Regs. Section 1.409A-2(a)(8).

If the Employee wishes to revoke or modify this election, the Employee must submit a written election to do so to the Company’s Human Resources Officer by June 30, 2018.

B. “Plan”: Omega Healthcare Investors, Inc. Deferred Cash Compensation Plan (the “Plan”), to which this Agreement is subject.

D. “Deferral Amount”: This Agreement relates to the percentage or dollar amount of the Employee’s annual cash bonus for 2018 performance that, to the extent earned, is payable in 2019 (the “2018 Bonus”):

___% or $________ of my 2018 Bonus (the “Deferral Amount”) [if you wish to defer, either fill in the percentage or insert the dollar amount to be deferred. If you fill in a dollar amount and your 2018 Bonus is less than the dollar amount, that lesser amount will be the Deferral Amount].

In lieu of being paid the Deferral Amount on the date that the entire 2018 Bonus would otherwise have been paid, the Employee’s Account in the Plan (the “Account”) will be credited with the Deferral Amount on that date. The Account balance will be adjusted based on the earnings or losses of the Investment Funds that the Employee chooses at a later date from among the Investment Funds that are available under the Plan, or if the Employee fails to select Investment Funds, in one or more Investment Funds determined in the sole discretion of the Plan Administrator to be likely to best preserve principal.

E. “Deferral Period”: The Employee has elected to defer payment of the Account balance until the dates or events set forth below (the period of time from the deferral until payment being referred to as the “Deferral Period”):

You must complete either paragraph 1 or 2 below, but you may complete other paragraphs as well.

1. If you complete this paragraph 1, you must complete A or B below:

A.	¨	in one lump sum in the month of ___________, 20___ (specify month and year); or
B.	¨	in annual ratable installments over __ calendar years (specify number of calendar years up to 10) with the first payment being made in the month of ___________, 20___ (specify month and year) and each subsequent payment being made in the month of _________ (specify month) of each calendar year thereafter.

2. If you complete this paragraph 2, you must check A or B below, but not both:

A. ¨ upon the date that is six (6) months following the Employee’s Separation from Service; or

 i

B. ¨ in the month of _____________ (specify month) of the __________ (specify number, first, second, etc.) calendar year following the calendar year of the Officer’s Separation from Service (but not earlier than six (6) months following the Employee’s Separation from Service.

The Account balance in paragraph 2A or 2B will be paid (check (i) or (ii) but not both):

(i)	¨	in one lump sum; or
(ii)	¨	in annual ratable installments over __ calendar years (specify number of calendar years up to 10), with each payment after the first payment being made in the month of ____________ (specify month) of each calendar year.

3.	¨	the earlier of paragraph 1 or 2 above.
4.	¨	the later of paragraph 1 or 2 above.
5.	¨	If a Change in Control occurs before the date payment is required to be made pursuant to the elections above, payment shall be made in one lump sum upon the Change in Control.
6.	¨	If the Employee becomes subject to a Disability before the date payment is required to be made pursuant to the elections above, payment shall be made in one lump sum upon the Disability.

The Employee may elect to change the timing of payment in paragraph E only under the following conditions:

(i) the election shall not take effect until twelve (12) months after the date the written election is submitted to the Company;

(ii) in the case of an election related to a payment date or event other than Disability, the election must defer payment for at least five (5) years from the date payment would otherwise have been made under this Agreement (i.e., date of lump sum or first installment payment); and

(iii) in the case of a payment at a specified date, the election must be submitted at least twelve (12) months before the date payment (i.e. lump sum or first installment payment) was previously scheduled to be made under this Agreement.

Notwithstanding the foregoing, the Account shall be payable within 90 days following the Officer’s death. In such case, the Account will be paid in accordance with the Participant’s will or pursuant to the laws of succession, unless the Participant has designated on a form provided by the Company for such purpose another person to receive the benefits payable under the Plan following the Participant’s death.

F. Unfunded Agreement: The Employee acknowledges and agrees that:

(1) all allocations to the Account and the investment of and returns on the Account shall be solely for bookkeeping purposes;

(2) the Plan shall be unfunded for tax purposes;

(3) the Employee has the status of a general unsecured creditor of the Company with respect to the Account;

 ii

(4) the Company’s obligation to pay the Account balance in the Plan constitutes a mere promise by the Company to make payment in the future;

(5) the Company’s obligations hereunder shall constitute general, unsecured obligations, payable solely out of its general assets, and neither the Employee nor other person has any right to any specific assets of the Company; and

(6) the Company may, but is not required to, establish a grantor trust (a form of trust as to which the Company is the legal owner of the assets) to hold assets attributable to the Account, and if such trust is established, all payments provided under the Plan shall be paid from such trust and from the general assets of the Company to the extent the trust assets are insufficient; provided, however, that the Employee shall have no preferred claim on, or any beneficial ownership interest in, the assets of such trust; provided further, that even if such trust is established, because the Company is the legal owner of the assets of the trust, the Employee would nonetheless remain a general unsecured creditor of the Company and all the provisions of clauses (1) through (5) of this Item F would continue to apply.

G. The Employee’s Representations and Warranties: The Employee represents and warrants to the Company that the Employee is an “accredited investor” as that term is defined in Rule 501 of Regulation D of the Securities Act of 1933; specifically, either:

(1) the Employee is an executive officer of Omega Healthcare Investors, Inc.;

[check only one of box (2) or (3) below to indicate which representation and warranty you are making if you are not an executive officer of Omega Healthcare Investors, Inc.]

¨ (2) the Employee had an individual income in excess of $200,000 in each of the two most recent calendar years or had a joint income with the Employee’s spouse in excess of $300,000 in each of those calendar years and has a reasonable expectation of reaching the same income level in the current year; or

¨ (3) the Employee’s net worth or joint net worth with the Employee’s spouse (excluding the value of the Employee’s primary residence), exceeds $1,000,000.

The Employee agrees to furnish any information requested by the Company to evidence the Employee’s compliance with the foregoing representations and warranties.

IN WITNESS WHEREOF, the Employee and the Company have executed this Agreement as of the Effective

Date set forth above.
EMPLOYEE	OHI ASSET MANAGEMENT, LLC
	By:
[Signature]	Title:

 iii

TERMS AND CONDITIONS TO THE

DEFERRAL AGREEMENT

PURSUANT TO THE OMEGA HEALTHCARE INVESTORS, INC.

DEFERRED CASH COMPENSATION PLAN

1.            Tax Withholding. All payments will be subject to tax withholding in accordance with law. In general, Social Security taxes are required to be withheld when the Employee’s compensation would be paid if the Employee had not elected to defer it under this Agreement, and income taxes are required to be withheld when the Account is paid to the Employee, subject to Section 409A.

2.            Unforeseeable Emergency. In the event of an Unforeseeable Emergency, the Employee may terminate the Deferral Period but only to the extent necessary to meet the emergency (which may include amounts necessary to pay Federal, state, local, or foreign taxes or penalties reasonably anticipated to result from the distribution), and only to the extent that the hardship is not or cannot be relieved through reimbursement or compensation by insurance or otherwise, or by liquidation of the Employee’s assets to the extent such liquidation would not itself cause severe financial hardship, or by cessation of future deferrals.

3.            Restrictions on Transfer. Except for transfer taking effect upon death by bequest, inheritance or beneficiary designation, the Employee shall not have the right to make or permit to exist any transfer or hypothecation, whether outright or as security, with or without consideration, voluntary or involuntary, of all or any part of any right, title or interest in or to any of the Account balance until it is paid. Any such disposition not made in accordance with this Agreement shall be deemed null and void.

4.            Governing Laws. This Agreement shall be construed, administered and enforced according to the laws of the State of Maryland.

5.            Successors. This Agreement shall be binding upon and inure to the benefit of the heirs, legal representatives, successors, and permitted assigns of the parties.

6.            Notice. Except as otherwise specified herein, all notices and other communications under this Agreement shall be in writing and shall be deemed to have been given if personally delivered or if sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the proposed party at the last known address of the party. Any party may designate any other address to which notices shall be sent by giving notice of the address to the other parties in the same manner as provided herein.

7.            Severability. In the event that any one or more of the provisions or portion thereof contained in this Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Agreement, and this Agreement shall be construed as if the invalid, illegal or unenforceable provision or portion thereof had never been contained herein.

8.            Entire Agreement. This Agreement is subject to the terms and conditions of the Plan, and in the event of a conflict, the Plan shall control. Subject to the terms of the Plan, this Agreement expresses the entire understanding and agreement of the parties with respect to the subject matter.

9.            Interpretation. Paragraph headings used herein are for convenience of reference only and shall not be considered in construing this Agreement. This Agreement is intended to comply with Section 409A of the Internal Revenue Code and the regulations thereunder (“Section 409A.”) Therefore, all provisions of this Agreement shall be interpreted consistently with this intent. To that end, all provisions of this Agreement shall be subject to the requirements of Section 409A, and to the extent permissible under Section 409A, any provisions that are inconsistent with such requirements shall be deemed to be excised and inoperable. While the Company intends to maintain and operate the Plan and this Agreement in compliance with Section 409A, no assurances are made to the Employee that the Plan and the Agreement will be maintained and operated in compliance with Section 409A. The Employee will be liable for the Employee’s own taxes, including any taxes resulting from a failure of the Plan or deferral agreements to be maintained or operated in compliance with Section 409A.

10.          Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.

11.          No Right to Continued Retention. Neither the establishment of the Plan nor this Agreement shall be construed as giving the Employee the right to continued service with the Company or an Affiliate.

4

12.          Termination of Agreement. The Company reserves the right to accelerate the time of payment under this Agreement pursuant to a termination and liquidation of the award under this Agreement, to the extent permitted under Treas. Regs. Section 1.409A-3, notwithstanding any election made by the Employee or any other provisions of this Agreement.

13.          Definitions. Capitalized terms used, but not defined, in this Agreement shall be given the meaning ascribed to them in the Plan. When used in this Agreement, the following terms have the meanings set forth below:

(a) “Change in Control” means:

(i) “A change in the ownership of the corporation,”

(ii) “A change in the effective control of the corporation,” or

(iii) “A change in the ownership of a substantial portion of the assets of the corporation,”

in each case within the meaning of Treas. Regs. Section 1.409A-3; provided, however, that for purposes of determining a “substantial portion of the assets of the corporation” “eighty-five percent (85%)” shall be used instead of “forty percent (40%).” For purposes of this subsection (a), the “corporation” refers to Omega Healthcare Investors, Inc. Notwithstanding the foregoing, in the event of a merger, consolidation, reorganization, share exchange or other transaction as to which the holders of the capital stock of the corporation before the transaction continue after the transaction to hold, directly or indirectly, shares of capital stock of the corporation (or other surviving company) representing more than fifty percent (50%) of the value or ordinary voting power to elect directors of the capital stock of the corporation (or other surviving company), such transaction shall not constitute a Change in Control.

(b) “Disability” means any condition that would constitute a “disability” under the Plan.

(c) “Separation from Service” means a “separation from service” within the meaning of Treas. Regs. Section 1.409A-1.

(d) “Unforeseeable Emergency” means an “unforeseeable emergency” within the meaning of Treas. Regs. Section 1.409A-3, meaning specifically, a severe financial hardship to the Employee resulting from (1) an illness or accident of the Employee, the Employee’s spouse, the Employee’s beneficiary under the Plan, or the Employee’s dependent (as defined in such regulations), (2) loss of the Employee’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance), or (3) or other similarly extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Employee, including for example, the imminent foreclosure of or eviction from the Employee’s primary residence, the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication, or the need to pay for the funeral expense of a spouse, the Employee’s beneficiary under the Plan or the Employee’s dependent (as defined above).

5

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:	August 8, 2018
	/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

Certification

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:	August 8, 2018
	/S/ ROBERT O. STEPHENSON
	Robert O. Stephenson
	Chief Financial Officer

EX-31.3

Exhibit 31.3

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 OHI Healthcare Properties Limited Partnership;

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:	August 8, 2018
	/S/ C. TAYLOR PICKETT
	C. Taylor Pickett
	Chief Executive Officer

EX-31.4

Exhibit 31.4

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

Certification

I, Robert O. Stephenson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of OHI Healthcare Properties Limited Partnership;

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:	August 8, 2018
	/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, Chief Executive Officer of Omega Healthcare Investors, Inc. (the “Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Quarterly Report on Form 10-Q of the Company for the three months ended June 30, 2018 (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:	August 8, 2018
	/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, Chief Financial Officer of Omega Healthcare Investors, Inc. (the “Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to the best of my knowledge:

(1) the Quarterly Report on Form 10-Q of the Company for the three months ended June 30, 2018 (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:	August 8, 2018
	/S/ ROBERT O. STEPHENSON
	Robert O. Stephenson
	Chief Financial Officer

EX-32.3

Exhibit 32.3

SECTION 1350 CERTIFICATION

OF THE CHIEF EXECUTIVE OFFICER

I, C. Taylor Pickett, Chief Executive Officer of OHI Healthcare Properties Limited Partnership (the “Partnership”), 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 Partnership for the three months ended June 30, 2018 (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 Partnership.

Date:	August 8, 2018
	/S/ C. TAYLOR PICKETT
	C. Taylor Pickett
	Chief Executive Officer

EX-32.4

Exhibit 32.4

SECTION 1350 CERTIFICATION

OF THE CHIEF FINANCIAL OFFICER

I, Robert O. Stephenson, Chief Financial Officer of OHI Healthcare Properties Limited Partnership (the “Partnership”), 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 Partnership for the three months ended June 30, 2018 (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 Partnership.

Date:	August 8, 2018
	/S/ ROBERT O. STEPHENSON
	Robert O. Stephenson
	Chief Financial Officer

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jun. 01, 2018
Document And Entity Information [Line Items]
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		200,335,705
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Omega OP
Document And Entity Information [Line Items]
Entity Registrant Name	OHI Healthcare Properties Limited Partnership
Entity Central Index Key	0001639315
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Real estate properties
Real estate investments	$ 7,571,661	$ 7,655,960
Less accumulated depreciation	(1,475,463)	(1,376,828)
Real estate investments - net	6,096,198	6,279,132
Investments in direct financing leases - net	349,465	364,965
Mortgage notes receivable - net	703,309	671,232
Total	7,148,972	7,315,329
Other investments - net	377,206	276,342
Investment in unconsolidated joint venture	32,820	36,516
Assets held for sale - net	3,782	86,699
Total investments	7,562,780	7,714,886
Cash and cash equivalents	10,951	85,937
Restricted cash	2,598	10,871
Accounts receivable - net	320,140	279,334
Goodwill	644,369	644,690
Other assets	33,301	37,587
Total assets	8,574,139	8,773,305
LIABILITIES AND EQUITY
Revolving line of credit	220,000	290,000
Term loans - net	902,168	904,670
Secured borrowings - net		53,098
Unsecured borrowings - net	3,325,889	3,324,390
Accrued expenses and other liabilities	257,049	295,142
Deferred income taxes	14,718	17,747
Total liabilities	4,719,824	4,885,047
Equity:
Common stock $.10 par value authorized - 350,000 shares, issued and outstanding - 200,332 shares as of June 30, 2018 and 198,309 as of December 31, 2017	20,033	19,831
Common stock - additional paid-in capital	4,997,329	4,936,302
Cumulative net earnings	2,011,689	1,839,356
Cumulative dividends paid	(3,473,406)	(3,210,248)
Accumulated other comprehensive loss	(30,157)	(30,150)
Total stockholders' equity	3,525,488	3,555,091
Noncontrolling interest	328,827	333,167
Total equity	3,854,315	3,888,258
Owners' Equity:
Total liabilities and equity	8,574,139	8,773,305
Omega OP
Real estate properties
Real estate investments	7,571,661	7,655,960
Less accumulated depreciation	(1,475,463)	(1,376,828)
Real estate investments - net	6,096,198	6,279,132
Investments in direct financing leases - net	349,465	364,965
Mortgage notes receivable - net	703,309	671,232
Total	7,148,972	7,315,329
Other investments - net	377,206	276,342
Investment in unconsolidated joint venture	32,820	36,516
Assets held for sale - net	3,782	86,699
Total investments	7,562,780	7,714,886
Cash and cash equivalents	10,951	85,937
Restricted cash	2,598	10,871
Accounts receivable - net	320,140	279,334
Goodwill	644,369	644,690
Other assets	33,301	37,587
Total assets	8,574,139	8,773,305
LIABILITIES AND EQUITY
Term loans - net	99,488	99,423
Secured borrowings - net		53,098
Accrued expenses and other liabilities	195,463	226,028
Deferred income taxes	14,718	17,747
Intercompany loans payable	4,410,155	4,488,751
Total liabilities	4,719,824	4,885,047
Owners' Equity:
General partners' equity	3,525,488	3,555,091
Limited partners' equity	328,827	333,167
Total owners' equity	3,854,315	3,888,258
Total liabilities and equity	$ 8,574,139	$ 8,773,305

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CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares shares in Thousands	Jun. 30, 2018	Dec. 31, 2017
Statement Of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.10	$ 0.10
Common stock, shares authorized	350,000	350,000
Common stock, shares issued	200,332	198,309
Common stock, shares outstanding	200,332	198,309

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue
Rental income	$ 192,850	$ 193,997	$ 386,799	$ 386,534
Income from direct financing leases	497	15,462	1,110	31,108
Mortgage interest income	16,834	16,297	33,413	32,253
Other investment income	9,097	7,278	17,624	14,192
Miscellaneous income	603	2,763	1,134	3,454
Total operating revenues	219,881	235,797	440,080	467,541
Expenses
Depreciation and amortization	69,609	70,350	139,970	140,343
General and administrative	15,237	11,541	31,712	24,065
Acquisition costs		19		(22)
(Recovery) impairment on real estate properties	(1,097)	10,135	3,817	17,773
Provision for uncollectible accounts	564	2,673	8,378	5,077
Total operating expenses	84,313	94,718	183,877	187,236
Income before other income and expense	135,568	141,079	256,203	280,305
Other income (expense)
Interest income and other - net	1,125	254	1,710	258
Interest expense	(48,082)	(48,085)	(96,093)	(93,126)
Interest - amortization of deferred financing costs	(2,242)	(2,543)	(4,485)	(5,045)
Interest - refinancing costs		(21,965)		(21,965)
Contractual settlement				10,412
Realized (loss) gain on foreign exchange	(66)	79	(7)	140
Total other expense	(49,265)	(72,260)	(98,875)	(109,326)
Income before (loss) gain on assets sold	86,303	68,819	157,328	170,979
(Loss) gain on assets sold - net	(2,891)	(622)	14,609	6,798
Income from continuing operations	83,412	68,197	171,937	177,777
Income tax expense	(838)	(591)	(1,381)	(1,691)
(Loss) income from unconsolidated joint venture	(588)	551	(637)	1,183
Net income	81,986	68,157	169,919	177,269
Net income attributable to noncontrolling interest	(3,450)	(2,900)	(7,163)	(7,572)
Net income available to common stockholders	$ 78,536	$ 65,257	$ 162,756	$ 169,697
Basic:
Net income available to common stockholders	$ 0.39	$ 0.33	$ 0.82	$ 0.86
Diluted:
Net income	0.39	0.33	0.82	0.86
Diluted:
Dividends declared per common share (in dollars per share)	$ 0.66	$ 0.63	$ 1.32	$ 1.25
Weighted-average shares outstanding, basic (in shares)	199,497	197,433	199,204	197,223
Weighted-average shares outstanding, diluted (in shares)	208,460	206,672	208,139	206,423
Omega OP
Revenue
Rental income	$ 192,850	$ 193,997	$ 386,799	$ 386,534
Income from direct financing leases	497	15,462	1,110	31,108
Mortgage interest income	16,834	16,297	33,413	32,253
Other investment income	9,097	7,278	17,624	14,192
Miscellaneous income	603	2,763	1,134	3,454
Total operating revenues	219,881	235,797	440,080	467,541
Expenses
Depreciation and amortization	69,609	70,350	139,970	140,343
General and administrative	15,237	11,541	31,712	24,065
Acquisition costs		19		(22)
(Recovery) impairment on real estate properties	(1,097)	10,135	3,817	17,773
Provision for uncollectible accounts	564	2,673	8,378	5,077
Total operating expenses	84,313	94,718	183,877	187,236
Income before other income and expense	135,568	141,079	256,203	280,305
Other income (expense)
Interest income and other - net	1,125	254	1,710	258
Interest expense	(48,082)	(48,085)	(96,093)	(93,126)
Interest - amortization of deferred financing costs	(2,242)	(2,543)	(4,485)	(5,045)
Interest - refinancing costs		(21,965)		(21,965)
Contractual settlement				10,412
Realized (loss) gain on foreign exchange	(66)	79	(7)	140
Total other expense	(49,265)	(72,260)	(98,875)	(109,326)
Income before (loss) gain on assets sold	86,303	68,819	157,328	170,979
(Loss) gain on assets sold - net	(2,891)	(622)	14,609	6,798
Income from continuing operations	83,412	68,197	171,937	177,777
Income tax expense	(838)	(591)	(1,381)	(1,691)
(Loss) income from unconsolidated joint venture	(588)	551	(637)	1,183
Net income	$ 81,986	$ 68,157	$ 169,919	$ 177,269
Basic:
Net (loss) income (in dollars per share)	$ 0.39	$ 0.33	$ 0.82	$ 0.86
Diluted:
Net income	0.39	0.33	0.82	0.86
Dividends declared per common share (in dollars per share)	$ 0.66	$ 0.63	$ 1.32	$ 1.25
Weighted-average Omega OP Units outstanding, basic (in shares)	208,263	206,205	207,972	206,016
Weighted-average Omega OP Units outstanding, diluted (in shares)	208,460	206,672	208,139	206,423

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net income	$ 81,986	$ 68,157	$ 169,919	$ 177,269
Other comprehensive (loss) income:
Foreign currency translation	(16,153)	10,274	(6,284)	14,608
Cash flow hedges	1,788	(3,407)	6,276	(2,153)
Total other comprehensive (loss) income	(14,365)	6,867	(8)	12,455
Comprehensive income	67,621	75,024	169,911	189,724
Comprehensive income attributable to noncontrolling interest	(2,843)	(3,192)	(7,162)	(8,103)
Comprehensive income attributable to common stockholders	64,778	71,832	162,749	181,621
Omega OP
Net income	81,986	68,157	169,919	177,269
Other comprehensive (loss) income:
Foreign currency translation	(16,153)	10,274	(6,284)	14,608
Cash flow hedges	1,788	(3,407)	6,276	(2,153)
Total other comprehensive (loss) income	(14,365)	6,867	(8)	12,455
Comprehensive income	$ 67,621	$ 75,024	$ 169,911	$ 189,724

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Thousands	Common Stock Par Value [Member]	Additional Paid-in Capital [Member]	Cumulative Net Earnings [Member]	Cumulative Dividends [Member]	Accumulated Other Comprehensive Loss [Member]	Total Stockholders' Equity [Member]	Noncontrolling Interest [Member]	Total
Cumulative effect of accounting change (see Note 1)			$ 9,577			$ 9,577	$ 423	$ 10,000
Balance, beginning at Dec. 31, 2017	$ 19,831	$ 4,936,302	1,839,356	$ (3,210,248)	$ (30,150)	3,555,091	333,167	3,888,258
Balance, beginning at Dec. 31, 2017	19,831	4,936,302	1,848,933	(3,210,248)	(30,150)	3,564,668	333,590	3,898,258
Grant of restricted stock to company directors (38 shares at $30.36 per share)	4	(4)
Stock-based compensation expense		8,145				8,145		8,145
Vesting/exercising of equity compensation plan, net of tax withholdings (89 shares)	9	(1,663)				(1,654)		(1,654)
Dividend reinvestment and stock purchase plan (948 shares at an average of $28.55 per share)	95	26,955				27,050		27,050
Deferred compensation directors (35 shares at $30.42 per share)	3	134				137		137
Equity Shelf Program (912 shares at $30.16 per share, net of issuance costs)	91	27,418				27,509		27,509
Common dividends declared ($1.32 per share)				(263,158)		(263,158)		(263,158)
Conversion of Omega OP Units to common stock (1 share at $31.26 per share)		42				42		42
Redemption of Omega OP Units (6 units at $28.06 per share)							(160)	(160)
Omega OP Units distributions							(11,765)	(11,765)
Comprehensive income:
Foreign currency translation					(6,019)	(6,019)	(265)	(6,284)
Cash flow hedges					6,012	6,012	264	6,276
Net income			162,756			162,756	7,163	169,919
Total comprehensive income								169,911
Balance , ending at Jun. 30, 2018	$ 20,033	$ 4,997,329	$ 2,011,689	$ (3,473,406)	$ (30,157)	$ 3,525,488	$ 328,827	$ 3,854,315

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) (Parentheticals) shares in Thousands	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Increase (Decrease) In Stockholders' Equity [Roll Forward]
Balance (in shares)	198,309
Balance (in units)	8,772
Grant of restricted stock (in shares)	38
Grant of restricted stock (in dollars per share) | $ / shares	$ 30.36
Vesting/exercising of equity compensation plan (in shares)	89
Dividend reinvestment and stock purchase plan (in shares)	948
Dividend reinvestment and stock purchase plan (in dollars per share) | $ / shares	$ 28.55
Deferred compensation directors (in shares)	35
Deferred compensation directors (in dollars per share) | $ / shares	$ 30.42
Equity shelf program (in shares)	912
Equity shelf program (in dollars per share) | $ / shares	$ 30.16
Common dividends (in dollars per share) | $ / shares	$ 1.32
Conversion of OP Units to Common stock (in shares)	1
Conversion of OP Units to Common stock (in dollars per share) | $ / shares	$ 31.26
Redemption of OP Units (in units)	6
Redemption of OP Units (in dollars per share) | $ / shares	28.06
Balance (in shares)	200,332
Balance (in units)	8,766

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CONSOLIDATED STATEMENT OF CHANGES IN OWNERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Omega OP General Partner	Omega OP Limited Partner	Omega OP	Total
Cumulative effect of accounting change (see Note 1)	$ 9,577	$ 423	$ 10,000	$ 10,000
Balance at Dec. 31, 2017	$ 3,555,091	$ 333,167	$ 3,888,258
Balance (in units) at Dec. 31, 2017	198,309	8,772	207,081
Balance at Dec. 31, 2017	$ 3,564,668	$ 333,590	$ 3,898,258
Balance (in units) at Dec. 31, 2017	198,309	8,772	207,081
Contributions from partners	$ 61,229		$ 61,229
Contributions from partners (in units)	2,023		2,023
Distributions to partners	$ (263,158)	$ (11,765)	$ (274,923)
Omega OP Unit redemptions		$ (160)	$ (160)
Omega OP Unit redemptions (in units)		(6)	(6)
Comprehensive income:
Foreign currency translation	(6,019)	$ (265)	$ (6,284)	(6,284)
Cash flow hedges	6,012	264	6,276	6,276
Net income	162,756	7,163	169,919	169,919
Total comprehensive income			169,911	$ 169,911
Balance at Jun. 30, 2018	$ 3,525,488	$ 328,827	$ 3,854,315
Balance (in units) at Jun. 30, 2018	200,332	8,766	209,098

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities
Net income	$ 169,919	$ 177,269
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	139,970	140,343
Impairment on real estate properties	8,992	17,773
Provision for uncollectible accounts	8,378	5,077
Interest - amortization of deferred financing costs	4,485	15,240
Accretion of direct financing leases	67	(6,164)
Stock-based compensation expense	8,145	7,478
Gain on assets sold - net	(14,609)	(6,798)
Amortization of acquired in-place leases - net	(5,277)	(6,202)
Effective yield receivable on mortgage notes	(710)	(1,191)
Interest paid-in-kind	(3,493)
Change in operating assets and liabilities - net:
Contractual receivables	1,563	(33,293)
Straight-line rent receivables	(30,746)	(23,174)
Lease inducements	(31,551)	895
Other operating assets and liabilities	(37,967)	(23,053)
Net cash provided by operating activities	217,166	264,200
Cash flows from investing activities
Acquisition of real estate	(52,744)	(130,977)
Cash acquired		2,341
Investments in construction in progress	(63,313)	(46,108)
Investments in direct financing leases		(4,767)
Proceeds from sale of direct financing lease	15,433	27,253
Placement of mortgage loans	(56,944)	(24,978)
Distributions from unconsolidated joint venture	3,739	9,741
Proceeds from sale of real estate investments	221,952	64,061
Capital improvements to real estate investments	(19,183)	(16,861)
Receipts from insurance proceeds	6,901
Proceeds from other investments	105,695	35,997
Investments in other investments	(192,962)	(52,228)
Collection of mortgage principal	25,176	673
Net cash used in investing activities	(6,250)	(135,853)
Cash flows from financing activities
Proceeds from credit facility borrowings	549,000	817,000
Payments on credit facility borrowings	(619,000)	(852,000)
Receipts of other long-term borrowings		1,346,749
Payments of other long-term borrowings	(2,049)	(1,252,139)
Payments of financing related costs	(8)	(28,483)
Receipts from dividend reinvestment plan	27,050	19,721
Payments for exercised options and restricted stock	(1,654)	(2,120)
Net proceeds from issuance of common stock	27,509	6,634
Dividends paid	(263,021)	(246,722)
Redemption of Omega OP Units	(118)	(48)
Distributions to Omega OP Unit Holders	(11,765)	(11,143)
Net cash used in financing activities	(294,056)	(202,551)
Effect of foreign currency translation on cash, cash equivalents and restricted cash	(119)	162
Decrease in cash, cash equivalents and restricted cash	(83,259)	(74,042)
Cash, cash equivalents and restricted cash at beginning of period	96,808	107,276
Cash, cash equivalents and restricted cash at end of period	13,549	33,234
Omega OP
Cash flows from operating activities
Net income	169,919	177,269
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	139,970	140,343
Impairment on real estate properties	8,992	17,773
Provision for uncollectible accounts	8,378	5,077
Interest - amortization of deferred financing costs	4,485	15,240
Accretion of direct financing leases	67	(6,164)
Stock-based compensation expense	8,145	7,478
Gain on assets sold - net	(14,609)	(6,798)
Amortization of acquired in-place leases - net	(5,277)	(6,202)
Effective yield receivable on mortgage notes	(710)	(1,191)
Interest paid-in-kind	(3,493)
Change in operating assets and liabilities - net:
Contractual receivables	1,563	(33,293)
Straight-line rent receivables	(30,746)	(23,174)
Lease inducements	(31,551)	895
Other operating assets and liabilities	(37,967)	(23,053)
Net cash provided by operating activities	217,166	264,200
Cash flows from investing activities
Acquisition of real estate	(52,744)	(130,977)
Cash acquired		2,341
Investments in construction in progress	(63,313)	(46,108)
Investments in direct financing leases		(4,767)
Proceeds from sale of direct financing lease	15,433	27,253
Placement of mortgage loans	(56,944)	(24,978)
Distributions from unconsolidated joint venture	3,739	9,741
Proceeds from sale of real estate investments	221,952	64,061
Capital improvements to real estate investments	(19,183)	(16,861)
Receipts from insurance proceeds	6,901
Proceeds from other investments	105,695	35,997
Investments in other investments	(192,962)	(52,228)
Collection of mortgage principal	25,176	673
Net cash used in investing activities	(6,250)	(135,853)
Cash flows from financing activities
Proceeds from intercompany loans payable from Omega	549,000	2,163,749
Repayment of intercompany loans payable to Omega	(621,049)	(2,104,139)
Payment of financing related costs incurred by Omega	(8)	(28,483)
Equity contributions from general partners	52,905	24,235
Distributions to general partners	(263,021)	(246,722)
Distributions to limited partners	(11,765)	(11,143)
Redemption of Omega OP Units	(118)	(48)
Net cash used in financing activities	(294,056)	(202,551)
Effect of foreign currency translation on cash, cash equivalents and restricted cash	(119)	162
Decrease in cash, cash equivalents and restricted cash	(83,259)	(74,042)
Cash, cash equivalents and restricted cash at beginning of period	96,808	107,276
Cash, cash equivalents and restricted cash at end of period	$ 13,549	$ 33,234

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2018

Basis of Presentation and Significant Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Business Overview and Organization

Omega Healthcare Investors, Inc. (“Omega”) was formed as a real estate investment trust (“REIT”) and incorporated in the State of Maryland on March 31, 1992.  Omega is structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega's assets are owned directly or indirectly by, and all of Omega's operations are conducted directly or indirectly through, its operating partnership subsidiary, OHI Healthcare Properties Limited Partnership (“Omega OP”).  Omega OP was formed as a limited partnership and organized in the State of Delaware on October 24, 2014.  Unless stated otherwise or the context otherwise requires, the terms the “Company,” “we,” “our” and “us” means Omega and Omega OP, collectively.

The Company has one reportable segment consisting of investments in healthcare-related real estate properties located in the United States (“U.S.”) and the United Kingdom (“U.K.”).  Our core business is to provide financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities (“SNFs”) and, to a lesser extent, assisted living facilities (“ALFs”), independent living facilities and rehabilitation and acute care facilities.  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.  Our other investment income derives from fixed and variable rate loans, which are either unsecured or secured by the collateral of the borrower.     

Omega OP is governed by the Second Amended and Restated Agreement of Limited Partnership of OHI Healthcare Properties Limited Partnership, dated as of April 1, 2015 (the “Partnership Agreement”).  Omega has exclusive control over Omega OP’s day-to-day management pursuant to the Partnership Agreement.  As of June 30, 2018, Omega owned approximately 96% of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and investors owned approximately 4% of the outstanding Omega OP Units.

Basis of Presentation

The accompanying unaudited consolidated financial statements 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.  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 filed with the SEC on February 23, 2018. 

Omega’s consolidated financial statements include the accounts of (i) Omega, (ii) Omega OP, and (iii) all direct and indirect wholly owned subsidiaries of Omega.  All intercompany transactions and balances have been eliminated in consolidation,  and Omega’s net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.   

Omega OP’s consolidated financial statements include the accounts of (i) Omega OP, and (ii) all direct and indirect wholly owned subsidiaries of Omega OP.  All intercompany transactions and balances have been eliminated in consolidation. 

Variable Interest Entities

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

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

We consolidate a VIE when we determine that we are its primary beneficiary. We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity.  Factors considered in determining whether we are the primary beneficiary of an entity include: (i) our voting rights, if any; (ii) our involvement in day-to-day capital and operating decisions; (iii) our risk and reward sharing; (iv) the financial condition of the operator or joint venture and (iv) our representation on the VIE’s board of directors.   We perform this analysis on an ongoing basis.

As of June 30, 2018, we have not consolidated any VIEs, as we do not have the power to direct the activities of any VIEs that most significantly impact their economic performance and we do not have the obligation to absorb losses or receive benefits of the VIEs that could be significant to the entity.      

Cash and Cash Equivalents

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

Restricted Cash

Restricted cash consists primarily of liquidity deposits escrowed for tenant obligations required by us pursuant to certain contractual terms.  Prior to June 1, 2018, restricted cash also included other deposits required by the U.S. Department of Housing and Urban Development (“HUD”) in connection with our mortgage borrowings guaranteed by HUD.   For additional information see Note 2 – Properties and Investments and Note 14 – Borrowing Activities and Arrangements.

Real Estate Investment Impairment

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

For the three months ended June 30, 2018 and 2017, we recognized (a recovery on) impairment on real estate properties of $(1.1) million and $10.1 million, respectively.  For the six months ended June 30, 2018 and 2017, we recognized impairment on real estate properties of $3.8 million and $17.8 million, respectively.  For additional information see Note 2 – Properties and Investments.

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

The allowances for losses on mortgage notes receivable, other investments and direct financing leases (collectively, our “loans”) are maintained at a level believed adequate to absorb potential losses.  The determination of the allowances is based on a quarterly evaluation of these loans, including general economic conditions and estimated collectability of loan payments.  We evaluate the collectability of our loans based on a combination of factors, including, but not limited to, delinquency status, financial strength of the borrower and guarantors, if applicable, and the value of the underlying collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required.  A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreements.  Consistent with this definition, all loans on non-accrual status may be deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to full accrual status.  When management identifies potential loan impairment indicators, the loan is written down to the present value of the expected future cash flows.  In cases where expected future cash flows are not readily determinable, the loan is written down to the fair value of the underlying collateral, if applicable.  We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the sale of the collateral.   

We account for impaired loans using (a) the cost-recovery method, and/or (b) the cash basis method.  We generally utilize the cost-recovery method for impaired loans for which impairment reserves were recorded.  We utilize the cash basis method for impaired loans for which no impairment reserves were recorded because the net present value of the discounted cash flows expected under the loan and/or the underlying collateral supporting the loan were equal to or exceeded the book value of the loan.  Under the cost-recovery method, we apply cash received against the outstanding loan balance prior to recording interest income.  Under the cash basis method, we apply cash received to principal or interest income based on the terms of the agreement.  As of June 30, 2018 and December 31, 2017, we had $177.1 million and $177.5 million, respectively, of reserves on our loans.  For additional information see Note 3 – Direct Financing Leases, Note 4 – Mortgage Notes Receivable and Note 5 – Other Investments. 

Goodwill Impairment

We assess goodwill for potential impairment during the fourth quarter of each fiscal year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the net assets of the reporting unit.  In evaluating goodwill for impairment on an interim basis, we assess qualitative factors such as a significant decline in real estate valuations, current macroeconomic conditions, state of the equity and capital markets and our overall financial and operating performance or a significant decline in the value of our market capitalization, to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value ofthe reporting unit is less than its carrying amount.  On an annual basis during the fourth quarter of each fiscal year, or on an interim basis if we conclude it is more likely than not that the fair value of the reporting unit is less than its carrying value, we perform a two-step goodwill impairment test to identify potential impairment and measure the amount of impairment we will recognize, if any. 

Noncontrolling Interests

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

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

The noncontrolling interest for Omega represents the outstanding Omega OP Units held by outside investors. 

Foreign Operations

The U.S. dollar is the functional currency for our consolidated subsidiaries operating in the U.S.  The functional currency for our consolidated subsidiaries operating in the U.K. is the British Pound (“GBP”).  For our consolidated subsidiaries whose functional currency is not the U.S. dollar (“USD”), we translate their financial statements into the USD.  We translate assets and liabilities at the exchange rate in effect as of the financial statement date.  Revenue and expense accounts are translated using an average exchange rate for the period.  Gains and losses resulting from translation are included in Omega OP’s owners’ equity and Omega’s accumulated other comprehensive loss (“AOCL”), as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interests.

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

Derivative Instruments

Cash flow hedges

During our normal course of business, we may use certain types of derivative instruments for the purpose of managing interest rate and currency risk.  To qualify for hedge accounting, derivative instruments used for risk management purposes must effectively reduce the risk exposure that they are designed to hedge.  In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions, must be, and are expected to remain, probable of occurring in accordance with the Company’s related assertions.  The Company recognizes all derivative instruments, including embedded derivatives required to be bifurcated, as assets or liabilities in the Consolidated Balance Sheets at their fair value which is determined using a market approach and Level 2 inputs.  Changes in the fair value of derivative instruments that are not designated in hedging relationships or that do not meet the criteria of hedge accounting are recognized in earnings.  For derivatives designated in qualifying cash flow hedging relationships, the gain or loss on the derivative is recognized in Omega OP’s owners’ equity and Omega’s AOCL as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interest.  We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objectives and strategy for undertaking various hedge transactions.  This process includes designating all derivatives that are part of a hedging relationship to specific forecasted transactions as well as recognized liabilities or assets on the Consolidated Balance Sheets.  We also assess and document, both at inception of the hedging relationship and on a quarterly basis thereafter, whether the derivatives are highly effective in offsetting the designated risks associated with the respective hedged items.  If it is determined that a derivative ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, we discontinue hedge accounting prospectively and record the appropriate adjustment to earnings based on the current fair value of the derivative.  As a matter of policy, we do not use derivatives for trading or speculative purposes.  At June 30, 2018 and December 31, 2017, $7.7 million and $1.5 million, respectively, of qualifying cash flow hedges were recorded at fair value in other assets on our Consolidated Balance Sheets.

Net investment hedge

The Company is exposed to fluctuations in the GBP against its functional currency, the USD, relating to its investments in healthcare-related real estate properties located in the U.K.  The Company uses a nonderivative, GBP-denominated term loan to manage its exposure to fluctuations in the GBP-USD exchange rate. The foreign currency transaction gain or loss on the nonderivative hedging instrument that is designated and qualifies as a net investment hedge is reported in Omega OP’s owners’ equity and Omega’s AOCL in our Consolidated Balance Sheets. 

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 rent receivables relate to the difference between the rental revenue recognized on a straight-line basis and the amounts currently due to us according to the contractual agreement.  Lease inducements result from value provided by us to the lessee, at the inception, modification, or renewal of the lease, and are amortized as a reduction of rental revenue over the non-cancellable lease term.

On a quarterly basis, and more frequently as appropriate, 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 any.  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, a loan recognized on an effective yield basis or the existence of lease inducements, we generally provide an allowance for straight-line, effective interest, and/or lease inducement accounts receivable when certain conditions or indicators of adverse collectability are present.  If the accounts receivable balance is subsequently deemed uncollectible, the receivable and allowance for doubtful account balance are written off. 

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

	June 30,		December 31,
	2018		2017
	(in thousands)
Contractual receivables	$	37,655	$	43,258
Effective yield interest receivables		12,384		11,673
Straight-line rent receivables		226,633		216,054
Lease inducements		48,456		16,812
Allowance		(4,988)		(8,463)
Accounts receivable – net	$	320,140	$	279,334

During the first quarter of 2018, we wrote-off approximately $7.8 million of straight-line rent receivables to provision for uncollectible accounts, as a result of facility transitions to other operators.

During the second quarter of 2018, we placed two of our operators on a cash basis and wrote-off approximately $2.8 million of straight-line rent receivables and reserved approximately $0.6 million of contractual receivables to provision for uncollectible accounts related to these two operators.  The provision for uncollectible accounts was offset by a recovery of approximately $2.8 million.  

During the first quarter of 2018, we paid an existing operator approximately $50 million in exchange for a reduction of such operator’s participation in an in-the-money purchase option.  As a result, we recorded an approximate $28 million lease inducement that will be amortized as a reduction to rental income over the remaining term of the lease.  The remaining $22 million was recorded as a reduction to the initial contingent liability which was included in accrued expenses and other liabilities on our Consolidated Balance Sheets.  

Reclassification

Certain prior quarter amounts have been reclassified to conform to the current quarter presentation.

Accounting Pronouncements Adopted in 2018

In 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers.  ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.”  While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment.  In addition, the FASB issued targeted updates to clarify specific implementation issues of ASU 2014-09.  These updates included ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients.  As a result of adopting ASU 2014-09 and its updates on January 1, 2018, the Company recognized $10.0 million of deferred gain resulting from the sale of facilities to a third-party in December 2017 through opening equity on January 1, 2018.  The Company adopted ASU 2014-09 and its subsequent updates in accordance with the modified retrospective approach.The adoption of ASU 2014-09 and its related updates did not have a material impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements and interest income from loan arrangements, both of which are specifically excluded from ASU 2014-09 and its updates.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging:Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”).  The purpose of this updated guidance is to better align the financial reporting for hedging activities with the economic objectives of those activities.  The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018.  This adoption method will require the Company to recognize the cumulative effect of initially applying ASU 2017-12 as an adjustment to accumulated other comprehensive income (loss) with a corresponding adjustment to the opening balance of equity as of the beginning of the fiscal year that an entity adopts the update.  On January 1, 2018, the Company adopted ASU 2017-12 using the modified retrospective transition method.  As a result of adopting the standard, the Company is making certain adjustments to its existing hedge designation documentation for active hedging relationships in order to take advantage of specific provisions in the new guidance and to fully align its documentation with ASU 2017-12.  The adoption of ASU 2017-12 did not have a material impact on our consolidated financial statements.   

Recent Accounting Pronouncements - Pending Adoption

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective for the Company beginning January 1, 2019.  Early adoption of ASU 2016-02 as of its issuance is permitted.  The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief.  As a result of the pending adoption of ASU 2016-02, the Company may be required to record real estate tax revenues and an equal and offsetting real estate tax expense, as a result of our operators paying real estate taxes on our behalf.  In July 2018, the FASB issued ASU 2018-11, Leases (“ASU 2018-11”): Targeted Improvements to simplify the implementation of ASU 2016-02.  This targeted improvement permits the adoption of ASU 2016-02 at the adoption date instead of the earliest comparative period presented in the financial statements and a practical expedient permitting lessors to not separate nonlease components from the associated lease component if certain conditions are met.  Upon adoption of ASU 2016-02 and its updates, we intend to transition to the new leasing accounting standard on January 1, 2019, without modifying our prior year balance sheet and recognizing the cumulative-effect adjustment to opening equity.  We continue to evaluate the other impacts of adopting ASU 2016-02 and its updates on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13,Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which changes the impairment model for most financial assets.  The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses.  ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018.  We are currently evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements.

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PROPERTIES AND INVESTMENTS

6 Months Ended

Jun. 30, 2018

Properties and Investments [Abstract]

PROPERTIES AND INVESTMENTS

NOTE 2 – PROPERTIES AND INVESTMENTS

Leased Property

Our leased real estate properties, represented by 709 SNFs, 116 ALFs, 14 specialty facilities and one medical office building at June 30, 2018, are leased under provisions of single or master operating leases with initial terms typically ranging from five to 15 years, plus renewal options.  Also see Note 3 – Direct Financing Leases for information regarding additional properties accounted for as direct financing leases.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 between 2.0% and 3.0%; (ii) an increase based on the change in pre-determined formulas from year to year (e.g., 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.

A summary of our investment in leased real estate properties is as follows:

	June 30,		December 31,
	2018		2017
	(in thousands)
Buildings	$	5,985,795	$	6,098,119
Land		782,913		795,874
Furniture, fixtures and equipment		436,680		440,737
Site improvements		230,304		227,150
Construction in progress		135,969		94,080
Total real estate investments		7,571,661		7,655,960
Less accumulated depreciation		(1,475,463)		(1,376,828)
Real estate investments - net	$	6,096,198	$	6,279,132

The following table summarizes the significant acquisitions that occurred during the first six months of 2018: 

	Number of			Total					Building & Site		Furniture		Initial
	Facilities		Country/	Investment			Land		Improvements		& Fixtures		Annual
Period	SNF	ALF	State	(in millions)									Cash Yield(3)
Q1	-	1	UK	$	4.0	(1)	$	0.9	$	2.9	$	0.2	8.5	%
Q1	-	1	UK		5.7	(2)		1.4		4.1		0.2	8.5	%
Q1	1	-	PA		7.4			1.6		5.4		0.4	9.5	%
Q1	1	-	VA		13.2			2.4		10.5		0.3	9.5	%
Q2	5	-	TX		22.8			0.5		20.4		1.9	9.5	%
Total	7	2		$	53.1		$	6.8	$	43.3	$	3.0

(1)	Omega recorded a non-cash deferred tax liability of approximately $0.4 million in connection with this acquisition.
(2)	Omega recorded a non-cash deferred tax liability of approximately $0.2 million in connection with this acquisition.
(3)	The cash yield is based on the purchase price.

For the six months ended June 30, 2018, we acquired two parcels of land (not reflected in the table above) for approximately $3.5 million with the intent of building new facilities for our existing operators.

Asset Sales, Impairments and Other

During the first quarter of 2018, we sold 14 facilities (five of which were previously held for sale at December 31, 2017) subject to operating leases for approximately $74.7 million in net cash proceeds recognizing a gain on sale of approximately $17.5 million.  In addition, we recorded impairments on real estate properties of approximately $4.9 million on 17 facilities (16 of which were subsequently reclassified to assets held for sale). 

During the second quarter of 2018, we sold 45 facilities and one ancillary building  (33 of which were previously held for sale at March 31, 2018) subject to operating leases for approximately $147.2 million in net cash proceeds recognizing a loss on sale of approximately $2.9 million.  In addition, we recorded impairments of approximately $4.1 million on nine facilities (three of which were subsequently reclassified to assets held for sale).  Our impairments were offset by $5.2 million of insurance proceeds received related to a facility destroyed in November 2017.  

Of the 45 facilities sold during the second quarter of 2018, we sold 12 SNFs on June 1, 2018 (12 of which were previously held for sale at March 31, 2018) secured by HUD mortgages to subsidiaries of an existing operator.  The Company sold the 12 SNF facilities with carrying values of approximately $62 million for approximately $78 million which consisted of $25 million of cash consideration and their assumption of approximately $53 million of our HUD mortgages.  See Note 14 – Borrowing Activities and Arrangements for additional details.  Simultaneously, subsidiaries of the operator assumed our HUD restricted cash accounts, deposits and escrows.  The Company recorded a gain on sale of approximately $11 million after approximately $5 million of closing and other transaction related costs.  In connection with this sale, we provided a principal of an existing operator an unsecured loan of approximately $39.7 million.  See Note 5 – Other Investments for details.      

Our recorded impairments were primarily the result of decisions to exit certain non-strategic facilities and/or operators.  We reduced the net book value of the impaired facilities to their estimated fair values or, with respect to the facilities reclassified to assets held for sale, to their estimated fair values less costs to sell.  To estimate the fair value of the facilities, we utilized a market approach which considered binding sale agreements (a Level 1 input) and/or Level 3 inputs (which generally consist of non-binding offers from unrelated third parties).  Also see Note 8 – Assets Held For Sale. 

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DIRECT FINANCING LEASES

6 Months Ended

Jun. 30, 2018

Direct Financing Leases [Abstract]

DIRECT FINANCING LEASES

NOTE 3 – DIRECT FINANCING LEASES

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

	June 30,		December 31,
	2018		2017
	(in thousands)
Minimum lease payments receivable	$	3,649,602	$	3,707,079
Less unearned income		(3,127,950)		(3,169,942)
Investment in direct financing leases		521,652		537,137
Less allowance for loss on direct financing lease		(172,187)		(172,172)
Investment in direct financing leases – net	$	349,465	$	364,965
Properties subject to direct financing leases		40		41
Number of direct financing leases		4		5

The following minimum rents are due under our direct financing leases for the remainder of 2018 and the subsequent five years (in thousands):

2018(1)		2019(1)		2020(1)		2021(1)		2022(1)		2023(1)
$	580	$	1,166	$	1,170	$	1,084	$	1,106	$	1,128

(1) Orianna has been excluded from the contractual minimum rent payments due under our direct financing leases as the facilities are expected to be transitioned or sold.  See below for additional information.

In June 2018, we sold one SNF with a carrying value of approximately $15.4 million subject to a direct financing lease to an unrelated third-party for approximately $15.4 million.

On November 27, 2013, we closed an aggregate $529 million purchase/leaseback transaction in connection with the acquisition of Ark Holding Company, Inc. (“Ark Holding”) by 4 West Holdings Inc.  At closing, we acquired 55 SNFs and 1 ALF operated by Ark Holding and leased the facilities back to Ark Holding, now known as New Ark Investment Inc. (“New Ark” which does business as “Orianna Health Systems” and is herein referred to as “Orianna”), pursuant to four50-year master leases with rental payments yielding 10.6% per annum over the term of the leases.  The purchase/leaseback transaction is being accounted for as a direct financing lease.

The 38 facilities remaining under our master leases with Orianna as of June 30, 2018 are located in seven states, predominantly in the southeastern U.S. (37 facilities) and Indiana (1 facility).  Our recorded investment in these direct financing leases, net of the $172.2 million allowance, amounted to $337.7 million as of June 30, 2018.  We have not recognized any direct financing lease income from Orianna for the period from July 1, 2017 through June 30, 2018.

Orianna has not satisfied the contractual payments due under the terms of the remaining two direct financing leases or the separate operating lease covering four facilities with the Company and the collectability of future amounts due is uncertain.    

In March 2018, Orianna commenced voluntary Chapter 11 proceedings in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the “Bankruptcy Court”).  As described in Orianna’s filings with the Bankruptcy Court, we entered into a Restructuring Support Agreement (“RSA”) that was expected to form the basis for Orianna’s restructuring.  The RSA provided for the recommencement, in April 2018, of partial rent payments at $1.0 million per month and established a specific timeline for the implementation of Orianna’s planned restructuring.  The RSA provided for the transition of 23 facilities to new operators and the potential sale of the remaining 19 facilities subject to the plan of reorganization as approved by the Bankruptcy Court.  On July 25, 2018, we terminated the RSA with Orianna.  See Note 19 – Subsequent Events.         

To provide liquidity to Orianna during their Chapter 11 proceedings, we entered into a senior secured superpriority debtor-in-possession (“DIP”) credit agreement with Orianna for a revolving credit and term loan DIP facility of up to $30 million, which DIP facility was approved by the Bankruptcy Court on an interim basis on March 9, 2018 and on a final basis on May 14, 2018.  On July 23, 2018, we notified Orianna that it was in default under the DIP facility.  See Note 5 – Other Investments and Note 19 – Subsequent Events.

In 2017, we recorded an allowance for loss on direct financing leases of $172.2 million with Orianna covering 38 facilities in the Southeast region of the U.S.  The amount of the allowance was determined based on the fair value of the facilities subject to the direct financing lease. To estimate the fair value of the underlying collateral, we utilized an income approach and Level 3 inputs.  Our estimate of fair value assumed annual rents ranging between $32.0 million and $38.0 million, rental yields between 9% and 10%, current and projected operating performance of the facilities, coverage ratios and bed values.  Such assumptions are subject to change based on changes in market conditions and the ultimate resolution of this matter.  Such changes could be significantly different than the currently estimated fair value and such differences could have a material impact on our financial statements.

In addition to our direct financing leases with Orianna, we own four facilities and lease them to Orianna under a master lease which expires in 2026.  The four facility lease is being accounted for as an operating lease.  We have not recognized any income on this operating lease for the period from July 1, 2017 through June 30, 2018, as Orianna did not pay the contractual amounts due and collectability is uncertain.  Our recorded investment in the four facilities subject to this operating lease was $37.3 million as of June 30, 2018.

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MORTGAGE NOTES RECEIVABLE

6 Months Ended

Jun. 30, 2018

Mortgage Notes Receivable [Abstract]

MORTGAGE NOTES RECEIVABLE

NOTE 4 – MORTGAGE NOTES RECEIVABLE

As of June 30, 2018, mortgage notes receivable relate to six fixed rate mortgage notes on 53 long-term care facilities.  The mortgage notes are secured by first mortgage liens on the borrowers' underlying real estate and personal property.  The mortgage notes receivable relate to facilities located in six states that 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 mortgage notes. 

Mortgage interest income is recognized as earned over the terms of the related mortgage notes, typically 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 the application of security deposits.

The principal amounts outstanding of mortgage notes receivable, net of allowances, were as follows:

	June 30,		December 31,
	2018		2017
	(in thousands)
Mortgage note due 2027; interest at 10.18%	$	112,500	$	112,500
Mortgage notes due 2029; interest at 9.67%(1)		529,960		476,320
Other mortgage notes outstanding (2)		65,754		87,317
Mortgage notes receivable, gross		708,214		676,137
Allowance for loss on mortgage notes receivable (3)		(4,905)		(4,905)
Total mortgages — net	$	703,309	$	671,232

(1)	Approximates the weighted average interest rate on 39 facilities.  Two notes totaling approximately $15.2 million are construction mortgages maturing in 2018 and 2019.  The remaining loan balance matures in 2029.
(2)	Other mortgage notes outstanding have a weighted average interest rate of 11.25% per annum and maturity dates between 2018 and 2028.
(3)	The allowance for loss on mortgage notes receivable relates to one mortgage with an operator.  The carrying value and fair value of the mortgage note receivable is approximately $1.5 million at June 30, 2018 and December 31, 2017.

$112.5 Million of Mortgage Note due 2027

On January 17, 2014, we entered into a $112.5 million first mortgage loan with an existing operator.  The loan is secured by 7 SNFs and 2 ALFs located in Pennsylvania (7) and Ohio (2).  The mortgage is cross-defaulted and cross-collateralized with our existing master lease with the operator.  In March 2018, we extended the maturity date to January 31, 2027 and provided an option to extend the maturity for a five year period through January 31, 2032 and a second option to extend the maturity for a two year period through September 30, 2034.        

$530.0 Million of Mortgage Notes due 2029

On June 30, 2014, we entered into a mortgage loan agreement with Ciena Healthcare (“Ciena”) to refinance/consolidate $117 million in existing mortgages with maturity dates ranging from 2021 to 2023 on 17 facilities into one mortgage and simultaneously provide mortgage financing for an additional 14 facilities.  The $415 million mortgage (the “Master Mortgage”) matures in 2029 and is secured by 30 facilities.  The Master Mortgage note bore an initial interest rate of 9.0% per annum which increases each year by 0.225% per annum.  As of June 30, 2018, the outstanding principal balance of the Master Mortgage note is approximately $410.0 million and the interest rate is 9.68% per annum.   

Subsequent to June 30, 2014, the Company amended its Master Mortgage with Ciena to provide for additional borrowings in the form of incremental facility mortgages, construction and/or improvement mortgages with maturity dates in 2018,  2019 and 2029 with initial annual interest rates ranging between 8.5% and 10% and fixed annual escalators of 2% or 2.5% over the prior year’s interest rate, or a fixed increase of 0.225% per annum.  As of June 30, 2018 the outstanding principal balance of these mortgage notes are approximately $75.8 million.

In June 2018, we amended the Master Mortgage with the addition of a $44.7 million mortgage note related to five SNFs located in Michigan.  The mortgage note matures on June 30, 2029 and bears an initial annual interest rate of 9.5%which increases each year by 0.225%.  As of June 30, 2018 the outstanding principal balance of this mortgage note is approximately $44.2 million.  Additionally, the Company committed to fund an additional $9.6 million to Ciena if certain performance metrics are achieved by the portfolio.    

The mortgage notes with Ciena are cross-defaulted and cross-collateralized with our existing master lease and other investment notes with the operator. 

Mortgage notes paid off

In January 2018, one of our operators repaid two construction loans with a total outstanding balance of approximately $21.2 million.  These construction loans bore interest at 8.75%.

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OTHER INVESTMENTS

6 Months Ended

Jun. 30, 2018

Other Investments [Abstract]

OTHER INVESTMENTS

NOTE 5 – OTHER INVESTMENTS

A summary of our other investments is as follows:

	June 30,		December 31,
	2018		2017
	(in thousands)
Other investment notes due 2018-2022; interest at 8.29%(1)	$	39,984	$	15,115
Other investment notes due 2018-2023; interest at 10.59%(1)		39,166		40,985
Other investment notes due 2020; interest at 13.05%(1)		68,175		49,490
Other investment note due 2021; interest at 6.00%		39,689		7,000
Other investment notes due 2023-2030; interest at 7.24%(1)		62,800		64,050
Other investment note due 2023; interest at 12.00%		59,324		49,708
Other investment notes due 2024-2025; interest at 8.52%(1)		41,987		31,987
Other investment notes outstanding (2)		26,081		18,380
Other investments, gross		377,206		276,715
Allowance for loss on other investments (3)		-		(373)
Total other investments	$	377,206	$	276,342

(1)	Approximate weighted average interest rate as of June 30, 2018.
(2)	Other investment notes have a weighted average interest rate of 8.55% and maturity dates through 2028.
(3)	The allowance for loss on other investments relates to one loan with an operator that was fully reserved at December 31, 2017 and written off during the second quarter of 2018.

Other investment notes due 2018 - 2022

In March 2018, we agreed to provide senior secured superpriority DIP financing to Orianna consisting of a $14.2 million term loan and a $15.8 million revolving credit facility.  The DIP financing has been approved by the Bankruptcy Court.  The DIP financing is secured by a security interest in and liens on substantially all of Orianna’s existing and future real and personal property.  The $14.2 million term loan bears interest at 1-month LIBOR plus 5.5% per annum and matures on September 30, 2018.  Orianna has borrowed the full amount of the term loan to repay their previous secured working capital lender.  As of June 30, 2018, approximately $14.2 million is outstanding on this term loan.  The $15.8 million revolving credit facility bears interest at 1-month LIBOR plus 9.0% per annum and matures on September 30, 2018.  The borrowings under the revolving credit facility are to be used for general business expenses and other uses permitted under the loan documents.  As of June 30, 2018, approximately $10.5 million is outstanding on this revolving credit facility.  On July 23, 2018, we notified Orianna that it was in default under the DIP facility.  See Note 19 – Subsequent Events.

In May 2017, we provided Orianna an $18.8 million maximum borrowing secured revolving working capital loan that  bears interest at 9% per annum (with one-half (1/2) of all accrued interest to be paid-in-kind and added to the loan balance) and matures on April 30, 2022.  This revolving working capital loan has a default rate of 5% per annum.As of June 30, 2018, approximately $15.2 million is outstanding on this revolving working capital loan.  Pursuant to the Bankruptcy Court’s interim order approving the DIP financing, Orianna is obligated to pay one-half (1/2) of all accrued post-bankruptcy interest payable on this revolving working capital loan at the default rate.  As of June 30, 2018, our total other investments outstanding with Orianna was approximately $40.0 million.

Other investment notes due 2020

On July 29, 2016, we provided Genesis HealthCare, Inc. (“Genesis”) a $48.0 million secured term loan bearing interest at LIBOR with a floor of 1% plus 13% maturing on July 29, 2020.  The $48.0 million term loan (and the $16.0 million term loan discussed below) is secured by a perfected first priority lien on and security interest in certain collateral of Genesis.  The term loan required monthly principal payments of $0.25 million through July 2019, and $0.5 million from August 2019 through maturity.  In addition, a portion of the monthly interest accrued to the outstanding principal balance of the loan.  In November 2017, we provided Genesis forbearance through February 2018.  The forbearance allowed for the deferral of principal payments and permitted Genesis to accrue all interest due to the outstanding principal balance of the loan. 

On March 6, 2018, we amended certain terms of the $48.0 million secured term loan.  As of February 22, 2018, the $48.0 million term loan bears interest at a fixed rate of 14% per annum, of which 9% per annum will be paid-in-kind.  Additionally, the amended term loan does not require monthly payments of principal.  All principal and accrued and unpaid interest will be due at maturity on July 29, 2020.  As of June 30, 2018, approximately $52.0 million is outstanding on this term loan.   

Also on March 6, 2018, we provided Genesis an additional $16.0 million secured term loan bearing interest at a fixed rate of 10% per annum, of which 5% per annum will be paid-in-kind and matures on July 29, 2020.  As of June 30, 2018, approximately $16.2 million is outstanding on this term loan.  As of June 30, 2018, our total other investments outstanding with Genesis was approximately $68.2 million. 

Other investment note due 2021

Simultaneously, with the sale of 12 SNFs to subsidiaries of an existing operator we provided a principal of the existing operator a $39.7 million unsecured loan bearing interest at 6% per annum that matures on May 31, 2021.  Commencing October 1, 2018 and the first day of each subsequent quarter, the loan requires principal payments of $0.6 million and additional quarterly principal payments of $0.3 million in the future.  The borrower has one option to extend the loan to May 31, 2024 subject to an extension fee.  A $7.0 million loan provided to the same principal in 2017 was repaid with proceeds from the $39.7 million loan.  As of June 30, 2018, our total other investments outstanding with this principal borrower was approximately $39.7 million.    

Other investment note due 2023

On February 26, 2016, we acquired and funded a $50.0 million mezzanine loan at a discount of approximately $0.75 million.  In May 2018, the Company amended the mezzanine loan with the borrower which is secured by an equity interest in subsidiaries of the borrower.  As part of the refinancing, the Company increased the mezzanine loan by $10.0 million, extended the maturity date to May 31, 2023 and fixed the interest rate at 12% per annum.  The mezzanine loan requires semi-annual principal payments of $2.5 million commencing December 31, 2018 (payments due each December 31 and June 30).  As of June 30, 2018, our total other investments outstanding with this borrower was approximately $59.3 million.  In connection with the amendment, the Company recognized fees of approximately $1.1 million of which $0.5 million was paid at closing with the remainder due at maturity.  The discount and loan fee are deferred and recognized on an effective basis over the term of the loan.

Other investment note due 2024-2025

On September 30, 2016, we acquired and amended a term loan with a fair value of approximately $37.0 million with Agemo Holdings LLC (“Agemo” an entity formed in May 2018 to silo the leases and loans formerly held by Signature Healthcare).  A $5.0 million tranche of the term loan that bore interest at 13% per annum was repaid in August 2017.  The remaining $32.0 million tranche of the term loan bears interest at 9% per annum and currently matures on December 31, 2024.  The $32.0 million term loan (and the $25.0 million working capital loan discussed below) is secured by a security interest in the collateral of Agemo.   

On May 7, 2018, the Company provided Agemo a $25.0 million secured working capital loan bearing interest at 7% per annum that matures on April 30, 2025.  The proceeds of the working capital loan are for paying operating expenses, settlement payments, fees, taxes and other costs approved by the Company.  As of June 30, 2018, approximately $10.0 million is outstanding on this working capital loan.  Our total loans outstanding with Agemo at June 30, 2018 approximate $42.0 million.   

On May 7, 2018, the Company also provided principals of Agemo a one year unsecured $2.8 million loan.  The proceeds were used to pay down contractual receivables outstanding.     

Other investments note

On December 28, 2017, we provided $10.0 million of financing to a third-party to acquire ten SNFs previously owned by us.  The loan bears interest at 10% per annum and requires principal payments of $5.0 million in December 2018, $2.0 million in December 2019 and $3.0 million at maturity in December 2020.  In March 2018, the third-party buyer repaid $5.0 million related to this financing.

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VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2018

Variable Interest Entities [Abstract]

VARIABLE INTEREST ENTITIES

NOTE 6 –  VARIABLE INTEREST  ENTITIES

As of June 30, 2018, Orianna and Agemo are VIEs.  Below is a summary of our assets and liabilities associated with each operator as of June 30, 2018:        

	Operator
	Orianna		Agemo
		(in thousands)
Assets
Real estate investments - net	$	37,286	$	409,450
Investments in direct financing leases - net		337,705		-
Other investments - net		39,984		41,987
Contractual receivables - net		279		17,574
Straight-line rent receivables		-		28,737
Above market lease		-		4
Subtotal		415,254		497,752
Liabilities
Letters of credit		-		(9,253)
Subtotal		-		(9,253)
Collateral
Personal guarantee		-		(15,000)
Other collateral		(399,926)		(409,450)
Subtotal		(399,926)		(424,450)
Maximum exposure to loss	$	15,328	$	64,049

In determining our maximum exposure to loss from these VIEs,  we considered the underlying fair value of the real estate subject to leases with these operators and other collateral, if any, supporting our other investments, which may include accounts receivable, security deposits, letters of credit or personal guarantees, if any.  See Note 5 – Other Investments regarding the terms of other investments with these two operators.  The Company has also committed to provide Agemo with up to approximately $13.6 million of capital expenditure funding through 2021 to be used for general maintenance and capital improvements for our facilities.  As of June 30, 2018, approximately $13.1 million of the $13.6 million remains unfunded by the Company. 

The table below reflects our total revenues from Orianna and Agemo for the three and six months ended June 30, 2018:    

	Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
	Operator				Operator
	Orianna		Agemo		Orianna		Agemo
		(in thousands)
Revenue
Rental income	$	-	$	14,860	$	-	$	29,711
Other investment income		1,145		828		1,664		1,548
Total	$	1,145	$	15,688	$	1,664	$	31,259

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INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

6 Months Ended

Jun. 30, 2018

Investment in Unconsolidated Joint Venture [Abstract]

INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

NOTE 7 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

On November 1, 2016, we invested approximately $50.0 million for an approximate 15% ownership interest in a joint venture operating as Second Spring Healthcare Investments.  The other approximate 85% interest is owned by affiliates of Lindsey Goldberg LLC.  We account for our investment in the joint venture using the equity method.  On November 1, 2016, the joint venture acquired 64 SNFs for approximately $1.1 billion and leased them to Genesis.  During the second quarter of 2018, the joint venture sold 12 SNF facilities subject to an operating lease for approximately $149.3 million in net cash proceeds and recognized a loss on sale of approximately $4.4 million.

We receive asset management fees from the joint venture for services provided.  For the three months ended June 30, 2018 and 2017, we recognized $0.5 million of asset management fees in each period.  For the six months ended June 30, 2018 and 2017, we recognized $1.0 million of asset management fees in each period.  These fees are included in miscellaneous income in the accompanying Consolidated Statements of Operations.  The accounting policies for the unconsolidated joint venture are the same as those of the Company.

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ASSETS HELD FOR SALE

6 Months Ended

Jun. 30, 2018

Assets Held for Sale [Abstract]

ASSETS HELD FOR SALE

NOTE 8 – ASSETS HELD FOR SALE

The following is a summary of our assets held for sale:

	Properties Held For Sale
	Number		Net Book
	of		Value
	Properties		(in thousands)
December 31, 2017		22	$	86,699
Properties sold/other (1)		(5)		(9,307)
Properties added (2)		16		66,027
March 31, 2018		33		143,419
Properties sold/other (1)		(33)		(143,419)
Properties added (2)		3		3,782
June 30, 2018(3)		3	$	3,782

(1)	In the first quarter of 2018, we sold five facilities for approximately $13.1 million in net cash proceeds recognizing a gain on sale of approximately $3.5 million.  In the second quarter of 2018, we sold 33 facilities for approximately $96.4 million in net cash proceeds recognizing a gain on sale of approximately $3.5 million.
(2)	In the first quarter of 2018, we recorded $3.5 million of impairments to reduce 16 facilities and one ancillary building’s net book value to their estimated fair values less costs to sell before they were reclassified to assets held for sale.  In the second quarter of 2018, we recorded approximately $2.5 million of impairments to reduce three facilities net book value to their estimated fair values less cost to sell before they were reclassified to assets held for sale.
(3)	We plan to sell the facilities classified as assets held for sale at June 30, 2018 within the next twelve months.

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INTANGIBLES

6 Months Ended

Jun. 30, 2018

Intangibles [Abstract]

INTANGIBLES

NOTE 9 – INTANGIBLES

The following is a summary of our intangibles as of June 30, 2018 and December 31, 2017:

	June 30,		December 31,
	2018		2017
	(in thousands)
Assets:
Goodwill	$	644,369	$	644,690
Above market leases	$	22,426	$	22,426
In-place leases		167		167
Accumulated amortization		(17,541)		(17,059)
Net intangible assets	$	5,052	$	5,534
Liabilities:
Below market leases	$	161,286	$	164,443
Accumulated amortization		(89,584)		(83,824)
Net intangible liabilities	$	71,702	$	80,619

Above market leases and in-place leases, net of accumulated amortization, are included in other assets on our Consolidated Balance Sheets.  Below market leases, net of accumulated amortization, are included in accrued expenses and other liabilities on our Consolidated Balance Sheets. The net amortization related to the above and below market leases is included in our Consolidated Statements of Operations as an adjustment to rental income.

For the three months ended June 30, 2018 and 2017, our net amortization related to intangibles was $2.6 million and $3.1 million, respectively.  For the six months ended June 30, 2018 and 2017, our net amortization related to intangibles was $5.3 million and $6.2 million, respectively.  The estimated net amortization related to these intangibles for the remainder of 2018 and the subsequent four years is as follows: remainder of 2018 –$4.3 million; 2019 –$8.2 million; 2020 –  $8.0 million; 2021–$7.6 million and 2022 –$7.0 million.  As of June 30, 2018, the weighted average remaining amortization period of above market leases and below market leases is approximately seven years and nine years, respectively.

The following is a summary of our goodwill as of June 30, 2018:

	(in thousands)
Balance as of December 31, 2017	$	644,690
Less: foreign currency translation		(321)
Balance as of June 30, 2018	$	644,369

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CONCENTRATION OF RISK

6 Months Ended

Jun. 30, 2018

Concentration of Risk [Abstract]

CONCENTRATION OF RISK

NOTE 10 – CONCENTRATION OF RISK

As of June 30, 2018, our portfolio of real estate investments consisted of 936 healthcare facilities, located in 41 states and the U.K. and operated by 67 third-party operators.  Our investment in these facilities, net of impairments and allowances, totaled approximately $8.6 billion at June 30, 2018, with approximately 99% of our real estate investments related to long-term care facilities.  Our portfolio is made up of 748 SNFs, 117 ALFs, 14 specialty facilities, one medical office building, fixed rate mortgages on 51 SNFs and two ALFs, and three facilities that are held for sale.  At June 30, 2018, we also held other investments of approximately $377.2 million, consisting primarily of secured loans to third-party operators of our facilities and a $32.8 million investment in an unconsolidated joint venture. 

At June 30, 2018, we had investments with one operator/or manager that exceeded 10% of our total investments: Ciena.  Ciena also generated approximately 10% of our total revenues for the three and six months ended June 30, 2018 and 2017.  At June 30, 2018, the three states in which we had our highest concentration of investments were Texas (10%), Florida (10%) and Michigan (8%). 

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STOCKHOLDERS'/OWNERS' EQUITY

6 Months Ended

Jun. 30, 2018

Stockholders' / Owners' Equity [Abstract]

STOCKHOLDERS'/OWNERS' EQUITY

NOTE 11 – STOCKHOLDERS’/OWNERS’ EQUITY

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

Record	Payment	Dividend per
Date	Date	Common Share
January 31, 2018	February 15, 2018	$	0.66
April 30, 2018	May 15, 2018		0.66
July 31, 2018	August 15, 2018		0.66

On the same dates listed above, Omega OP Unit holders received the same distributions per unit as those paid to the common stockholders of Omega.   

$500 Million Equity Shelf Program

For the three months ended June 30, 2018, we issued 0.9 million shares of our common stock at an average price of $30.19 per share, net of issuance costs, generating net proceeds of $27.5 million under our $500 million Equity Shelf Program.  For the six months ended June 30, 2018, we issued 0.9 million shares of our common stock at an average price of $30.16 per share, net of issuance costs, generating net proceeds of $27.5 million under our $500 million Equity Shelf Program.

Dividend Reinvestment and Common Stock Purchase Plan

For the three months ended June 30, 2018, approximately 0.8 million shares of our common stock at an average price of $29.22 per share were issued through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $22.2 million.  For the six months ended June 30, 2018, approximately 0.9 million shares of our common stock at an average price of $28.55 per share were issued through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $27.1 million. 

Accumulated Other Comprehensive Loss

The following is a summary of our accumulated other comprehensive loss, net of tax where applicable:

	As of and For the				As of and For the
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(in thousands)
Foreign Currency Translation:
Beginning balance	$	(11,015)	$	(50,614)	$	(25,993)	$	(54,948)
Translation (loss) gain		(24,383)		10,195		(9,464)		14,468
Realized (loss) gain		(66)		79		(7)		140
Ending balance		(35,464)		(40,340)		(35,464)		(40,340)
Derivative Instruments:
Cash flow hedges:
Beginning balance		5,951		(166)		1,463		(1,420)
Unrealized gain (loss)		1,735		(1,840)		5,970		(1,350)
Realized gain(1)		53		626		306		1,390
Ending balance		7,739		(1,380)		7,739		(1,380)
Net investment hedge:
Beginning balance		(12,219)		-		(7,110)		-
Unrealized gain (loss)		8,296		(2,193)		3,187		(2,193)
Ending balance		(3,923)		(2,193)		(3,923)		(2,193)
Total accumulated other comprehensive loss for Omega OP(2)		(31,648)		(43,913)		(31,648)		(43,913)
Add: portion included in noncontrolling interest		1,491		2,010		1,491		2,010
Total accumulated other comprehensive loss for Omega	$	(30,157)	$	(41,903)	$	(30,157)	$	(41,903)

(1)	Recorded in interest expense on the Consolidated Statements of Operations.
(2)	These amounts are included in owners’ equity.

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TAXES

6 Months Ended

Jun. 30, 2018

Taxes [Abstract]

TAXES

NOTE 12 – TAXES

Omega is a REIT for United States federal income tax purposes, and Omega OP is a pass through entity for United States federal income tax purposes. 

Since our inception, Omega has elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code (“Code”).  A REIT is generally not subject to federal income tax on that portion of its REIT taxable income which is distributed to its stockholders, provided that at least 90% of such taxable income is distributed each tax year and certain other requirements are met, including asset and income tests.  So long as we qualify as a REIT under the Code, we generally will not be subject to federal income taxes on the REIT taxable income that we distribute to stockholders, subject to certain exceptions.

If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income taxes on its taxable income at regular corporate rates and dividends paid to our stockholders will not be deductible by us in computing taxable income. Further, we would not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which qualification is denied, unless the Internal Revenue Service grants us relief under certain statutory provisions. Failing to qualify as a REIT could materially and adversely affect the Company’s net income; however, we believe we are organized and operate in such a manner as to qualify for treatment as a REIT. We test our compliance within the REIT taxation rules to ensure that we are in compliance with the REIT rules on a quarterly and annual basis. We review our distributions and projected distributions each year to ensure we have met and will continue to meet the annual REIT distribution requirements. In 2018, we expect to pay dividends in excess of our taxable income.

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”). We have elected for two of our active subsidiaries to be treated as TRSs.  One of our TRSs is subject to federal, state and local income taxes at the applicable corporate rates and the other is subject to foreign income taxes.  As of June 30, 2018, our TRS that is subject to federal, state and local income taxes at the applicable corporate rates had a net operating loss carry-forward of approximately $5.8 million.  The loss carry-forward is fully reserved as of June 30, 2018, with a valuation allowance due to uncertainties regarding realization.  Our net operating loss carryforwards will be carried forward for no more than 20 years.

For the three months ended June 30, 2018 and 2017, we recorded approximately $0.2 million and $0.5 million, respectively, of state and local income tax provision.  For the six months ended June 30, 2018 and 2017, we recorded approximately $0.3 million and $1.5 million, respectively, of state and local income tax provision.  For the three months ended June 30, 2018 and 2017, we recorded approximately $0.6 million and $0.1 million, respectively, of tax provision for foreign income taxes.  For the six months ended June 30, 2018 and 2017, we recorded approximately $1.0 million and $0.2 million, respectively, of tax provision for foreign income taxes.  The expenses were included in income tax expense on our Consolidated Statements of Operations. 

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was enacted. The Tax Act includes numerous changes to existing U.S. tax law, including lowering the statutory U.S. federal corporate income tax rate from 35% to 21% effective January 1, 2018.  The Company has completed its preliminary assessment of these changes, and has determined that there is an immaterial impact to the consolidated financial statements.

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STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2018

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 13 – STOCK-BASED COMPENSATION

On June 8, 2018, at our Company’s Annual Meeting, our stockholders approved the 2018 Stock Incentive Plan (the “2018 Plan”), which amended and restated the Company’s 2013 Stock Incentive Plan (the “2013 Plan”).  The 2018 Plan is a comprehensive incentive compensation plan that allows for various types of equity-based compensation, including restricted stock units (including performance-based restricted stock units), stock awards (including restricted stock), deferred restricted stock units, incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, performance unit awards, certain cash-based awards (including performance-based cash awards) and other stock-based awards.  The 2018 Plan increases the number of shares of common stock available for issuance under the 2013 Plan by 4.5 million.

The following is a summary of our stock-based compensation expense for the three and six months ended June 30, 2018 and 2017, respectively: 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017			2018	2017
	(in thousands)
Stock-based compensation expense	$	4,089	$	3,734	$	8,145	$	7,478

Restricted Stock and Restricted Stock Units

Restricted stock and restricted stock units (“RSUs”) are subject to forfeiture if the holder’s service to us terminates prior to vesting, subject to certain exceptions for certain qualifying terminations of service or a change in control of the Company.  Prior to vesting, ownership of the shares/units cannot be transferred.  Restricted stock has the same dividend and voting rights as our common stock.  RSUs accrue dividend equivalents but have no voting rights.  Restricted stock and RSUs are valued at the price of our common stock on the date of grant.  We expense the cost of these awards ratably over their vesting period.  We awarded 169,900 RSUs to employees on January 1, 2018.

Performance Restricted Stock Units and LTIP Units

Performance restricted stock units (“PRSUs”) and long term incentive plan units (“LTIP Units”) are subject to forfeiture if the performance requirements are not achieved or if the holder’s service to us terminates prior to vesting, subject to certain exceptions for certain qualifying terminations of employment or a change in control of the Company.  The PRSUs and the LTIP Units have varying degrees of performance requirements to achieve vesting, and each PRSU and LTIP Units award represents the right to a variable number of shares of common stock or partnership units.  Each LTIP Unit once earned and vested is convertible into one Omega OP Unit in Omega OP, subject to certain conditions.  The vesting requirements are based on either the (i) total shareholder return (“TSR”) of Omega or (ii) Omega’s TSR relative to other real estate investment trusts in the MSCI U.S. REIT Index for awards before 2016 and in the FTSE NAREIT Equity Health Care Index for awards granted in or after 2016 (both “Relative TSR”).  Vesting, in general, requires that the employee remain employed by us until the date specified in the applicable PRSU or LTIP agreement, which may be later than the date that the TSR or Relative TSR requirements are satisfied.  We expense the cost of these awards ratably over their service period.

Prior to vesting and the distribution of shares, ownership of the PRSUs cannot be transferred.  Dividends on the PRSUs are accrued and only paid to the extent the applicable performance requirements are met.  While each LTIP Unit is unearned, the employee receives a partnership distribution equal to 10% of the quarterly approved regular periodic distributions per Omega OP Unit.  The remaining partnership distributions (which in the case of normal periodic distributions is equal to the total approved quarterly dividend on Omega’s common stock) on the LTIP Units accumulate, and if the LTIP Units are earned, the accumulated distributions are paid. 

The number of shares or units earned under the TSR PRSUs or LTIP Units depends generally on the level of achievement of Omega’s TSR over the indicated performance period.  We awarded 677,488 LTIP Units to employees on January 1, 2018.

The number of shares earned under the Relative TSR PRSUs depends generally on the level of achievement of Omega’s TSR relative to other real estate investment trusts in the MSCI U.S. REIT Index or FTSE NAREIT Equity Health Care Index TSR over the performance period indicated.  We awarded 334,544 Relative TSR PRSUs to employees on January 1, 2018.

The following table summarizes our total unrecognized compensation cost as of June 30, 2018 associated with RSUs, PRSU awards, and LTIP Unit awards to employees:

			Grant Date		Total		Weighted Average	Unrecognized
			Average		Compensation		Period of Expense	Compensation
	Grant	Shares	Fair Value		Cost		Recognition	Cost		Performance	Vesting
	Year	/ Units	Per Unit/ Share		(in millions) (1)		(in months)	(in millions)		Period	Dates
RSUs
3/17/16  RSU	2016	130,006	$	34.78	$	4.50	33	$	0.80	N/A	12/31/2018
1/1/2017  RSU	2017	140,416		31.26		4.40	36		2.20	N/A	12/31/2019
1/1/2018 RSU	2018	169,900		27.54		4.70	36		3.90	N/A	12/31/2020
Restricted Stock Units Total		440,322	$	30.86	$	13.60		$	6.90
TSR PRSUs and LTIP Units
3/31/15 2017 LTIP Units	2015	137,249	$	14.66	$	2.00	45	$	0.30	1/1/2015-12/31/2017	Quarterly in 2018
4/1/2015 2017 LTIP Units	2015	53,387		14.81		0.80	45		0.10	1/1/2015-12/31/2017	Quarterly in 2018
3/17/2016 2018 LTIP Units	2016	370,152		13.21		4.90	45		1.90	1/1/2016-12/31/2018	Quarterly in 2019
1/1/2017 2019 LTIP Units	2017	399,726		12.61		5.00	48		3.20	1/1/2017-12/31/2019	Quarterly in 2020
1/1/2018 2020 LTIP Units	2018	677,488		7.31		5.00	48		4.30	1/1/2018-12/31/2020	Quarterly in 2021
TSR PRSUs & LTIP Total		1,638,002	$	10.80	$	17.70		$	9.80
Relative TSR PRSUs
3/31/15 2017 Relative TSR	2015	137,249	$	22.50	$	3.10	45	$	0.40	1/1/2015-12/31/2017	Quarterly in 2018
4/1/2015 2017 Relative TSR	2015	53,387		22.92		1.20	45		0.20	1/1/2015-12/31/2017	Quarterly in 2018
3/17/2016 2018 Relative TSR	2016	305,563		16.44		5.00	45		2.00	1/1/2016-12/31/2018	Quarterly in 2019
1/1/2017 2019 Relative TSR	2017	285,338		18.04		5.10	48		3.20	1/1/2017-12/31/2019	Quarterly in 2020
1/1/2018 2020 Relative TSR	2018	334,544		16.65		5.60	48		4.80	1/1/2018-12/31/2020	Quarterly in 2021
Relative TSR PRSUs Total		1,116,081	$	17.97	$	20.00		$	10.60
Grand Total		3,194,405	$	16.07	$	51.30		$	27.30

(1)	Total shares/units and compensation costs are net of shares/units cancelled.
(2)	This table excludes approximately $1.5 million of unrecognized compensation costs related to outstanding director restricted stock grants.

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BORROWING ACTIVITIES AND ARRANGEMENTS

6 Months Ended

Jun. 30, 2018

Borrowing Activities and Arrangements [Abstract]

BORROWING ACTIVITIES AND ARRANGEMENTS

NOTE 14 – BORROWING ACTIVITIES AND ARRANGEMENTS

Secured and Unsecured Borrowings

The following is a summary of our borrowings:

		Annual
		Interest Rate
		as of
		June 30,	June 30,		December 31,
	Maturity	2018	2018		2017
			(in thousands)
Secured borrowings:
HUD mortgages assumed December 2011	2044	-	$	-	$	53,666
Deferred financing costs – net				-		(568)
Total secured borrowings – net(1)				-		53,098
Unsecured borrowings:
Revolving line of credit	2021	3.29%		220,000		290,000
U.S. term loan	2022	3.54%		425,000		425,000
Sterling term loan (2)	2022	1.95%		132,030		135,130
Omega OP term loan(1)	2022	3.54%		100,000		100,000
2015 term loan	2022	3.80%		250,000		250,000
Discounts and deferred financing costs – net(3)				(4,862)		(5,460)
Total term loans – net				902,168		904,670
2023 notes	2023	4.375%		700,000		700,000
2024 notes	2024	4.950%		400,000		400,000
2025 notes	2025	4.500%		400,000		400,000
2026 notes	2026	5.250%		600,000		600,000
2027 notes	2027	4.500%		700,000		700,000
2028 notes	2028	4.750%		550,000		550,000
Other	2018	-		-		1,500
Subordinated debt	2021	9.000%		20,000		20,000
Discount – net				(19,798)		(21,073)
Deferred financing costs – net				(24,313)		(26,037)
Total senior notes and other unsecured borrowings – net				3,325,889		3,324,390
Total unsecured borrowings - net				4,448,057		4,519,060
Total secured and unsecured borrowings – net (4)			$	4,448,057	$	4,572,158

(1)	These amounts represent borrowings that were incurred by Omega OP or wholly owned subsidiaries of Omega OP.
(2)	This borrowing is denominated in British Pounds Sterling.
(3)	The amount includes $0.5 million of net deferred financing costs related to the Omega OP term loan as of June 30, 2018.
(4)	All borrowings are direct borrowings of Omega unless otherwise noted.

HUD Mortgage Disposition

On June 1, 2018, subsidiaries of an existing operator assumed approximately $53 million of our indebtedness guaranteed by HUD that secured 12 separate facilities located in Arkansas.  In connection with our disposition of the mortgages we wrote-off approximately $0.6 million of unamortized deferred costs that are recorded in (Loss) gain on assets sold – net on our Consolidated Statement of Operations.  These fixed rate mortgages had a weighted average interest rate of approximately 3.06% per annum and matured in July 2044.  See Note 2 – Properties and Investments.

Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants.  As of June 30, 2018 and December 31, 2017, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings.  Omega OP, the guarantor of Parent’s outstanding senior notes, does not directly own any substantive assets other than its interest in non-guarantor subsidiaries.

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FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2018

Financial Instruments [Abstract]

FINANCIAL INSTRUMENTS

NOTE 15 – FINANCIAL INSTRUMENTS

The net carrying amount of cash and cash equivalents, restricted cash, contractual receivables and accrued expenses and other liabilities reported in the Consolidated Balance Sheets approximates fair value because of the short maturity of these instruments (Level 1). 

At June 30, 2018 and December 31, 2017, the net carrying amounts and fair values of our other financial instruments were as follows:

	June 30, 2018				December 31, 2017
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Assets:		(in thousands)
Investments in direct financing leases – net	$	349,465	$	349,465	$	364,965	$	364,965
Mortgage notes receivable – net		703,309		726,016		671,232		686,772
Other investments – net		377,206		373,842		276,342		281,031
Total	$	1,429,980	$	1,449,323	$	1,312,539	$	1,332,768
Liabilities:
Revolving line of credit	$	220,000	$	220,000	$	290,000	$	290,000
U.S. term loan		422,782		425,000		422,498		425,000
Sterling term loan		131,347		132,030		134,360		135,130
Omega OP term loan(1)		99,488		100,000		99,423		100,000
2015 term loan		248,551		250,000		248,390		250,000
4.375% notes due 2023 – net		694,059		694,736		693,474		711,190
4.95% notes due 2024 – net		394,186		406,220		393,680		420,604
4.50% notes due 2025 – net		395,021		390,337		394,640		399,874
5.25% notes due 2026 – net		594,674		605,460		594,321		625,168
4.50% notes due 2027 – net		687,248		666,345		686,516		681,007
4.75% notes due 2028 – net		540,379		529,727		539,882		550,667
HUD debt – net(1)		-		-		53,098		51,817
Subordinated debt – net		20,322		23,253		20,376		23,646
Other		-		-		1,500		1,500
Total	$	4,448,057	$	4,443,108	$	4,572,158	$	4,665,603

(1) These amounts represent borrowings that were incurred by Omega OP or wholly owned subsidiaries of Omega OP.

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 Annual Report on Form 10-K for the year ended December 31, 2017).  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.

· Direct financing leases:  The fair value of the investments in direct financing leases are estimated using a discounted cash flow analysis, using interest rates being offered for similar leases to borrowers with similar credit ratings (Level 3).  In addition, the Company may estimate the fair value of its investment based on the estimated fair value of the collateral using a market approach or an income approach which considers inputs such as, current and projected operating performance of the facilities, projected rent, prevailing capitalization rates and/or coverages and bed values (Level 3).

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

· Other investments:  Other investments are primarily comprised of notes receivable.  The fair values of notes receivable are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3).

· Revolving line of credit and term loans:  The fair value of our borrowings under variable rate agreements are estimated using a present value technique based on expected cash flows discounted using the current market rates (Level 3).

· Senior notes and subordinated debt:  The fair value of our borrowings under fixed rate agreements are estimated using a present value technique based on inputs from trading activity provided by a third-party (Level 2).

· HUD debt: The fair value of our borrowings under HUD debt agreements are estimated using an expected present value technique based on quotes obtained by HUD debt brokers (Level 2).

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 16 – COMMITMENTS AND CONTINGENCIES

Litigation

On November 16, 2017, a purported securities class action complaint captioned Dror Gronich v. Omega Healthcare Investors, Inc., C. Taylor Pickett, Robert O. Stephenson, and Daniel J. Booth was filed against the Company and certain of its officers in the United States District Court for the Southern District of New York, Case No. 1:17-cv-08983-NRB (the “Gronich Securities Class Action”).  On November 17, 2017, a second purported securities class action complaint captioned Steve Klein v. Omega Healthcare Investors, Inc., C. Taylor Pickett, Robert O. Stephenson, and Daniel J. Booth was filed against the Company and the same officers in the United States District Court for the Southern District of New York, Case No. 1:17-cv-09024-NRB (together with the Gronich Class Action, the “Securities Class Action”).  Thereafter, the Court considered a series of applications by various shareholders to be named lead plaintiff, consolidated the two actions and designated Royce Setzer as the lead plaintiff.

Pursuant to a Scheduling Order entered by the Court, lead plaintiff Setzer and additional plaintiff Earl Holtzman filed a Consolidated Amended Class Action Complaint on May 25, 2018 (the “Amended Complaint”). The Securities Class Action purports to be a class action brought on behalf of shareholders who acquired the Company’s securities between May 3, 2017 and October 31, 2017.The Securities Class Action alleges that the defendants violated the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by making materially false and/or misleading statements, and by failing to disclose material adverse facts about the Company’s business, operations, and prospects, including the financial and operating results of one of the Company’s operators, the ability of such operator to make timely rent payments, and the impairment of certain of the Company’s leases and the uncollectibility of certain receivables.  The Securities Class Action, which purports to assert claims for violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act, seeks an unspecified amount of monetary damages, interest, fees and expenses of attorneys and experts, and other relief.The Company and the officers named in the Amended Complaint filed a Motion to Dismiss on July 17, 2018.  Briefing on the Motion to Dismiss is to be completed by September 14, 2018.

Although the Company denies the material allegations of the Securities Class Action and intends to vigorously pursue its defense, we are in the very early stages of this litigation and are unable to predict the outcome of the case or to estimate the amount of potential costs.

The Company’s Board of Directors received a demand letter, dated April 9, 2018, from an attorney for a purported current shareholder of the Company relating to the subject matter covered by the Securities Class Action (the “Shareholder Demand”).  The letter demanded that the Board of Directors conduct an investigation into the statements and other matters at issue in the Securities Class Action and commence legal proceedings against each party identified as being responsible for the alleged activities. The Board of Directors is reviewing the Shareholder Demand to determine the appropriate course of action. 

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

Commitments

We have committed to fund the construction of new leased and mortgaged facilities and other capital improvements.  We expect the funding of these commitments to be completed over the next several years.  Our remaining commitments at June 30, 2018, are outlined in the table below (in thousands):

Total commitment	$	730,009
Amounts funded (1)		(450,050)
Remaining commitment	$	279,959

(1) Includes finance costs.

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EARNINGS PER SHARE/UNIT

6 Months Ended

Jun. 30, 2018

Earnings per Share/Unit [Abstract]

EARNINGS PER SHARE/UNIT

NOTE 17 – EARNINGS PER SHARE/UNIT

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

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

	Omega
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(in thousands, except per share amounts)
Numerator:
Net income	$	81,986	$	68,157	$	169,919	$	177,269
Less: net income attributable to noncontrolling interests		(3,450)		(2,900)		(7,163)		(7,572)
Net income available to common stockholders	$	78,536	$	65,257	$	162,756	$	169,697
Denominator:
Denominator for basic earnings per share		199,497		197,433		199,204		197,223
Effect of dilutive securities:
Common stock equivalents		197		467		167		407
Noncontrolling interest – Omega OP Units		8,766		8,772		8,768		8,793
Denominator for diluted earnings per share		208,460		206,672		208,139		206,423
Earnings per share – basic:
Net income available to common stockholders	$	0.39	$	0.33	$	0.82	$	0.86
Earnings per share – diluted:
Net income	$	0.39	$	0.33	$	0.82	$	0.86

	Omega OP
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(in thousands, except per share amounts)
Numerator:
Net income	$	81,986	$	68,157	$	169,919	$	177,269
Denominator:
Denominator for basic earnings per unit		208,263		206,205		207,972		206,016
Effect of dilutive securities:
Omega OP Unit equivalents		197		467		167		407
Denominator for diluted earnings per unit		208,460		206,672		208,139		206,423
Earnings per unit – basic:
Net income available to Omega OP Unit holders	$	0.39	$	0.33	$	0.82	$	0.86
Earnings per unit – diluted:
Net income	$	0.39	$	0.33	$	0.82	$	0.86

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SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS

6 Months Ended

Jun. 30, 2018

Supplemental Disclosure to Consolidated Statements of Cash Flows [Abstract]

SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTE 18 – SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS

The following are supplemental disclosures to the consolidated statements of cash flows for the six months ended June 30, 2018 and 2017: 

	Six Months Ended
	June 30,
	2018		2017
		(in thousands)
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	10,951	$	21,031
Restricted cash		2,598		12,203
Cash, cash equivalents and restricted cash at end of period	$	13,549	$	33,234
Supplemental information:
Interest paid during the period, net of amounts capitalized	$	108,317	$	97,610
Taxes paid during the period	$	2,072	$	2,032
Non cash investing activities
Non cash acquisition of real estate (See Note 2)	$	(880)	$	(9,430)
Non cash proceeds from sale of real estate investments (See Note 2)		53,118		-
Non cash investment in other investments (See Note 5)		(11,026)		-
Non cash proceeds from other investments (see Note 5)		7,000		(6,353)
Total	$	48,212	$	(15,783)
Non cash financing activities
Non cash disposition of other long-term borrowings (See Note 14)	$	(53,118)	$	-
Change in fair value of cash flow hedges		6,233		(108)
Remeasurement of debt denominated in a foreign currency		(3,100)		2,190
Total	$	(49,985)	$	2,082

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 19 – SUBSEQUENT EVENTS

On July 23, 2018, Omega notified Orianna that it was in default under the DIP facility and, as a result of such default, Omega (a) declared the amounts owing under the DIP facility to be immediately due and payable, (b) terminated the DIP facility and any further commitment of Omega to extend credit to Orianna under the DIP facility, and (c) restricted Orianna’s use of cash collateral solely to payment of those amounts contained in a budget approved by Omega.  Omega also informed Orianna that while Omega did not (as of such date) intend to immediately collect amounts owing under the DIP facility, Omega may at any time in the future exercise further rights and remedies under the DIP facility.

On July 25, 2018, Omega terminated the restructuring support agreement with its tenant 4 West Holdings and the sponsor of Orianna’s restructuring plan.The Company is evaluating and/or pursuing alternative courses of action to protect its assets and shareholder value, and working with operators to protect the interests of residents of the facilities.On July 1, 2018, we transitioned the legacy Orianna portfolio in Mississippi  (13 facilities) to an existing Omega operator with annual contractual rent of $12 million and  on August 1, 2018, a legacy Orianna facility in Indiana was transitioned to an existing operator with annual contractual rent of $0.5 million.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements 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.  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 filed with the SEC on February 23, 2018. 

Omega’s consolidated financial statements include the accounts of (i) Omega, (ii) Omega OP, and (iii) all direct and indirect wholly owned subsidiaries of Omega.  All intercompany transactions and balances have been eliminated in consolidation,  and Omega’s net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.   

Omega OP’s consolidated financial statements include the accounts of (i) Omega OP, and (ii) all direct and indirect wholly owned subsidiaries of Omega OP.  All intercompany transactions and balances have been eliminated in consolidation.

Variable Interest Entities

Variable Interest Entities

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

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

We consolidate a VIE when we determine that we are its primary beneficiary. We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity.  Factors considered in determining whether we are the primary beneficiary of an entity include: (i) our voting rights, if any; (ii) our involvement in day-to-day capital and operating decisions; (iii) our risk and reward sharing; (iv) the financial condition of the operator or joint venture and (iv) our representation on the VIE’s board of directors.   We perform this analysis on an ongoing basis.

As of June 30, 2018, we have not consolidated any VIEs, as we do not have the power to direct the activities of any VIEs that most significantly impact their economic performance and we do not have the obligation to absorb losses or receive benefits of the VIEs that could be significant to the entity.      

Cash and Cash Equivalents

Cash and Cash Equivalents

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

Restricted Cash

Restricted Cash

Restricted cash consists primarily of liquidity deposits escrowed for tenant obligations required by us pursuant to certain contractual terms.  Prior to June 1, 2018, restricted cash also included other deposits required by the U.S. Department of Housing and Urban Development (“HUD”) in connection with our mortgage borrowings guaranteed by HUD.   For additional information see Note 2 – Properties and Investments and Note 14 – Borrowing Activities and Arrangements.

Real Estate Investment Impairment

Real Estate Investment Impairment

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

For the three months ended June 30, 2018 and 2017, we recognized (a recovery on) impairment on real estate properties of $(1.1) million and $10.1 million, respectively.  For the six months ended June 30, 2018 and 2017, we recognized impairment on real estate properties of $3.8 million and $17.8 million, respectively.  For additional information see Note 2 – Properties and Investments.

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

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

The allowances for losses on mortgage notes receivable, other investments and direct financing leases (collectively, our “loans”) are maintained at a level believed adequate to absorb potential losses.  The determination of the allowances is based on a quarterly evaluation of these loans, including general economic conditions and estimated collectability of loan payments.  We evaluate the collectability of our loans based on a combination of factors, including, but not limited to, delinquency status, financial strength of the borrower and guarantors, if applicable, and the value of the underlying collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required.  A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreements.  Consistent with this definition, all loans on non-accrual status may be deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to full accrual status.  When management identifies potential loan impairment indicators, the loan is written down to the present value of the expected future cash flows.  In cases where expected future cash flows are not readily determinable, the loan is written down to the fair value of the underlying collateral, if applicable.  We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the sale of the collateral.   

We account for impaired loans using (a) the cost-recovery method, and/or (b) the cash basis method.  We generally utilize the cost-recovery method for impaired loans for which impairment reserves were recorded.  We utilize the cash basis method for impaired loans for which no impairment reserves were recorded because the net present value of the discounted cash flows expected under the loan and/or the underlying collateral supporting the loan were equal to or exceeded the book value of the loan.  Under the cost-recovery method, we apply cash received against the outstanding loan balance prior to recording interest income.  Under the cash basis method, we apply cash received to principal or interest income based on the terms of the agreement.  As of June 30, 2018 and December 31, 2017, we had $177.1 million and $177.5 million, respectively, of reserves on our loans.  For additional information see Note 3 – Direct Financing Leases, Note 4 – Mortgage Notes Receivable and Note 5 – Other Investments. 

Goodwill Impairment

Goodwill Impairment

We assess goodwill for potential impairment during the fourth quarter of each fiscal year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the net assets of the reporting unit.  In evaluating goodwill for impairment on an interim basis, we assess qualitative factors such as a significant decline in real estate valuations, current macroeconomic conditions, state of the equity and capital markets and our overall financial and operating performance or a significant decline in the value of our market capitalization, to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value ofthe reporting unit is less than its carrying amount.  On an annual basis during the fourth quarter of each fiscal year, or on an interim basis if we conclude it is more likely than not that the fair value of the reporting unit is less than its carrying value, we perform a two-step goodwill impairment test to identify potential impairment and measure the amount of impairment we will recognize, if any. 

Noncontrolling Interests

Noncontrolling Interests

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

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

The noncontrolling interest for Omega represents the outstanding Omega OP Units held by outside investors. 

Foreign Operations

Foreign Operations

The U.S. dollar is the functional currency for our consolidated subsidiaries operating in the U.S.  The functional currency for our consolidated subsidiaries operating in the U.K. is the British Pound (“GBP”).  For our consolidated subsidiaries whose functional currency is not the U.S. dollar (“USD”), we translate their financial statements into the USD.  We translate assets and liabilities at the exchange rate in effect as of the financial statement date.  Revenue and expense accounts are translated using an average exchange rate for the period.  Gains and losses resulting from translation are included in Omega OP’s owners’ equity and Omega’s accumulated other comprehensive loss (“AOCL”), as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interests.

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

Derivative Instruments

Derivative Instruments

Cash flow hedges

During our normal course of business, we may use certain types of derivative instruments for the purpose of managing interest rate and currency risk.  To qualify for hedge accounting, derivative instruments used for risk management purposes must effectively reduce the risk exposure that they are designed to hedge.  In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions, must be, and are expected to remain, probable of occurring in accordance with the Company’s related assertions.  The Company recognizes all derivative instruments, including embedded derivatives required to be bifurcated, as assets or liabilities in the Consolidated Balance Sheets at their fair value which is determined using a market approach and Level 2 inputs.  Changes in the fair value of derivative instruments that are not designated in hedging relationships or that do not meet the criteria of hedge accounting are recognized in earnings.  For derivatives designated in qualifying cash flow hedging relationships, the gain or loss on the derivative is recognized in Omega OP’s owners’ equity and Omega’s AOCL as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interest.  We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objectives and strategy for undertaking various hedge transactions.  This process includes designating all derivatives that are part of a hedging relationship to specific forecasted transactions as well as recognized liabilities or assets on the Consolidated Balance Sheets.  We also assess and document, both at inception of the hedging relationship and on a quarterly basis thereafter, whether the derivatives are highly effective in offsetting the designated risks associated with the respective hedged items.  If it is determined that a derivative ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, we discontinue hedge accounting prospectively and record the appropriate adjustment to earnings based on the current fair value of the derivative.  As a matter of policy, we do not use derivatives for trading or speculative purposes.  At June 30, 2018 and December 31, 2017, $7.7 million and $1.5 million, respectively, of qualifying cash flow hedges were recorded at fair value in other assets on our Consolidated Balance Sheets.

Net investment hedge

The Company is exposed to fluctuations in the GBP against its functional currency, the USD, relating to its investments in healthcare-related real estate properties located in the U.K.  The Company uses a nonderivative, GBP-denominated term loan to manage its exposure to fluctuations in the GBP-USD exchange rate. The foreign currency transaction gain or loss on the nonderivative hedging instrument that is designated and qualifies as a net investment hedge is reported in Omega OP’s owners’ equity and Omega’s AOCL in our Consolidated Balance Sheets. 

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 rent receivables relate to the difference between the rental revenue recognized on a straight-line basis and the amounts currently due to us according to the contractual agreement.  Lease inducements result from value provided by us to the lessee, at the inception, modification, or renewal of the lease, and are amortized as a reduction of rental revenue over the non-cancellable lease term.

On a quarterly basis, and more frequently as appropriate, 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 any.  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, a loan recognized on an effective yield basis or the existence of lease inducements, we generally provide an allowance for straight-line, effective interest, and/or lease inducement accounts receivable when certain conditions or indicators of adverse collectability are present.  If the accounts receivable balance is subsequently deemed uncollectible, the receivable and allowance for doubtful account balance are written off. 

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

	June 30,		December 31,
	2018		2017
	(in thousands)
Contractual receivables	$	37,655	$	43,258
Effective yield interest receivables		12,384		11,673
Straight-line rent receivables		226,633		216,054
Lease inducements		48,456		16,812
Allowance		(4,988)		(8,463)
Accounts receivable – net	$	320,140	$	279,334

During the first quarter of 2018, we wrote-off approximately $7.8 million of straight-line rent receivables to provision for uncollectible accounts, as a result of facility transitions to other operators.

During the second quarter of 2018, we placed two of our operators on a cash basis and wrote-off approximately $2.8 million of straight-line rent receivables and reserved approximately $0.6 million of contractual receivables to provision for uncollectible accounts related to these two operators.  The provision for uncollectible accounts was offset by a recovery of approximately $2.8 million.  

During the first quarter of 2018, we paid an existing operator approximately $50 million in exchange for a reduction of such operator’s participation in an in-the-money purchase option.  As a result, we recorded an approximate $28 million lease inducement that will be amortized as a reduction to rental income over the remaining term of the lease.  The remaining $22 million was recorded as a reduction to the initial contingent liability which was included in accrued expenses and other liabilities on our Consolidated Balance Sheets.  

Reclassification

Reclassification

Certain prior quarter amounts have been reclassified to conform to the current quarter presentation.

Accounting Pronouncement Adopted in 2018

Accounting Pronouncements Adopted in 2018

In 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers.  ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.”  While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment.  In addition, the FASB issued targeted updates to clarify specific implementation issues of ASU 2014-09.  These updates included ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12, Narrow-Scope Improvements and Practical Expedients.  As a result of adopting ASU 2014-09 and its updates on January 1, 2018, the Company recognized $10.0 million of deferred gain resulting from the sale of facilities to a third-party in December 2017 through opening equity on January 1, 2018.  The Company adopted ASU 2014-09 and its subsequent updates in accordance with the modified retrospective approach.The adoption of ASU 2014-09 and its related updates did not have a material impact on our consolidated financial statements, as a substantial portion of our revenue consists of rental income from leasing arrangements and interest income from loan arrangements, both of which are specifically excluded from ASU 2014-09 and its updates.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging:Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”).  The purpose of this updated guidance is to better align the financial reporting for hedging activities with the economic objectives of those activities.  The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018.  This adoption method will require the Company to recognize the cumulative effect of initially applying ASU 2017-12 as an adjustment to accumulated other comprehensive income (loss) with a corresponding adjustment to the opening balance of equity as of the beginning of the fiscal year that an entity adopts the update.  On January 1, 2018, the Company adopted ASU 2017-12 using the modified retrospective transition method.  As a result of adopting the standard, the Company is making certain adjustments to its existing hedge designation documentation for active hedging relationships in order to take advantage of specific provisions in the new guidance and to fully align its documentation with ASU 2017-12.  The adoption of ASU 2017-12 did not have a material impact on our consolidated financial statements.   

Recent Accounting Pronouncements - Pending Adoption

Recent Accounting Pronouncements - Pending Adoption

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective for the Company beginning January 1, 2019.  Early adoption of ASU 2016-02 as of its issuance is permitted.  The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief.  As a result of the pending adoption of ASU 2016-02, the Company may be required to record real estate tax revenues and an equal and offsetting real estate tax expense, as a result of our operators paying real estate taxes on our behalf.  In July 2018, the FASB issued ASU 2018-11, Leases (“ASU 2018-11”): Targeted Improvements to simplify the implementation of ASU 2016-02.  This targeted improvement permits the adoption of ASU 2016-02 at the adoption date instead of the earliest comparative period presented in the financial statements and a practical expedient permitting lessors to not separate nonlease components from the associated lease component if certain conditions are met.  Upon adoption of ASU 2016-02 and its updates, we intend to transition to the new leasing accounting standard on January 1, 2019, without modifying our prior year balance sheet and recognizing the cumulative-effect adjustment to opening equity.  We continue to evaluate the other impacts of adopting ASU 2016-02 and its updates on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13,Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which changes the impairment model for most financial assets.  The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses.  ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019 and early adoption is permitted for annual and interim periods beginning after December 15, 2018.  We are currently evaluating the impact of adopting ASU 2016-13 on our consolidated financial statements.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2018

Basis of Presentation and Significant Accounting Policies [Abstract]

Schedule of Net Accounts Receivable

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

	June 30,		December 31,
	2018		2017
	(in thousands)
Contractual receivables	$	37,655	$	43,258
Effective yield interest receivables		12,384		11,673
Straight-line rent receivables		226,633		216,054
Lease inducements		48,456		16,812
Allowance		(4,988)		(8,463)
Accounts receivable – net	$	320,140	$	279,334

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PROPERTIES AND INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Properties and Investments [Abstract]

Schedule of Investment in Leased Real Estate Properties

A summary of our investment in leased real estate properties is as follows:

	June 30,		December 31,
	2018		2017
	(in thousands)
Buildings	$	5,985,795	$	6,098,119
Land		782,913		795,874
Furniture, fixtures and equipment		436,680		440,737
Site improvements		230,304		227,150
Construction in progress		135,969		94,080
Total real estate investments		7,571,661		7,655,960
Less accumulated depreciation		(1,475,463)		(1,376,828)
Real estate investments - net	$	6,096,198	$	6,279,132

Schedule of Significant Acquisitions

The following table summarizes the significant acquisitions that occurred during the first six months of 2018: 

	Number of			Total					Building & Site		Furniture		Initial
	Facilities		Country/	Investment			Land		Improvements		& Fixtures		Annual
Period	SNF	ALF	State	(in millions)									Cash Yield(3)
Q1	-	1	UK	$	4.0	(1)	$	0.9	$	2.9	$	0.2	8.5	%
Q1	-	1	UK		5.7	(2)		1.4		4.1		0.2	8.5	%
Q1	1	-	PA		7.4			1.6		5.4		0.4	9.5	%
Q1	1	-	VA		13.2			2.4		10.5		0.3	9.5	%
Q2	5	-	TX		22.8			0.5		20.4		1.9	9.5	%
Total	7	2		$	53.1		$	6.8	$	43.3	$	3.0

(1)	Omega recorded a non-cash deferred tax liability of approximately $0.4 million in connection with this acquisition.
(2)	Omega recorded a non-cash deferred tax liability of approximately $0.2 million in connection with this acquisition.
(3)	The cash yield is based on the purchase price.

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DIRECT FINANCING LEASES (Tables)

6 Months Ended

Jun. 30, 2018

Direct Financing Leases [Abstract]

Schedule of Components of Investment in Direct Financing Leases

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

	June 30,		December 31,
	2018		2017
	(in thousands)
Minimum lease payments receivable	$	3,649,602	$	3,707,079
Less unearned income		(3,127,950)		(3,169,942)
Investment in direct financing leases		521,652		537,137
Less allowance for loss on direct financing lease		(172,187)		(172,172)
Investment in direct financing leases – net	$	349,465	$	364,965
Properties subject to direct financing leases		40		41
Number of direct financing leases		4		5

Schedule of Rents Due Under Direct Financing Leases

The following minimum rents are due under our direct financing leases for the remainder of 2018 and the subsequent five years (in thousands):

2018(1)		2019(1)		2020(1)		2021(1)		2022(1)		2023(1)
$	580	$	1,166	$	1,170	$	1,084	$	1,106	$	1,128

(1) Orianna has been excluded from the contractual minimum rent payments due under our direct financing leases as the facilities are expected to be transitioned or sold.  See below for additional information.

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MORTGAGE NOTES RECEIVABLE (Tables)

6 Months Ended

Jun. 30, 2018

Mortgage Notes Receivable [Abstract]

Schedule of Outstanding Principal Amounts of Mortgage Notes Receivable, net of Allowances

The principal amounts outstanding of mortgage notes receivable, net of allowances, were as follows:

	June 30,		December 31,
	2018		2017
	(in thousands)
Mortgage note due 2027; interest at 10.18%	$	112,500	$	112,500
Mortgage notes due 2029; interest at 9.67%(1)		529,960		476,320
Other mortgage notes outstanding (2)		65,754		87,317
Mortgage notes receivable, gross		708,214		676,137
Allowance for loss on mortgage notes receivable (3)		(4,905)		(4,905)
Total mortgages — net	$	703,309	$	671,232

(1)	Approximates the weighted average interest rate on 39 facilities.  Two notes totaling approximately $15.2 million are construction mortgages maturing in 2018 and 2019.  The remaining loan balance matures in 2029.
(2)	Other mortgage notes outstanding have a weighted average interest rate of 11.25% per annum and maturity dates between 2018 and 2028.
(3)	The allowance for loss on mortgage notes receivable relates to one mortgage with an operator.  The carrying value and fair value of the mortgage note receivable is approximately $1.5 million at June 30, 2018 and December 31, 2017.

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OTHER INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Other Investments [Abstract]

Schedule of other investments

A summary of our other investments is as follows:

	June 30,		December 31,
	2018		2017
	(in thousands)
Other investment notes due 2018-2022; interest at 8.29%(1)	$	39,984	$	15,115
Other investment notes due 2018-2023; interest at 10.59%(1)		39,166		40,985
Other investment notes due 2020; interest at 13.05%(1)		68,175		49,490
Other investment note due 2021; interest at 6.00%		39,689		7,000
Other investment notes due 2023-2030; interest at 7.24%(1)		62,800		64,050
Other investment note due 2023; interest at 12.00%		59,324		49,708
Other investment notes due 2024-2025; interest at 8.52%(1)		41,987		31,987
Other investment notes outstanding (2)		26,081		18,380
Other investments, gross		377,206		276,715
Allowance for loss on other investments (3)		-		(373)
Total other investments	$	377,206	$	276,342

(1)	Approximate weighted average interest rate as of June 30, 2018.
(2)	Other investment notes have a weighted average interest rate of 8.55% and maturity dates through 2028.
(3)	The allowance for loss on other investments relates to one loan with an operator that was fully reserved at December 31, 2017 and written off during the second quarter of 2018.

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VARIABLE INTEREST ENTITIES (Tables)

6 Months Ended

Jun. 30, 2018

Variable Interest Entities [Abstract]

Schedule of Variable Interest Entities

As of June 30, 2018, Orianna and Agemo are VIEs.  Below is a summary of our assets and liabilities associated with each operator as of June 30, 2018:        

	Operator
	Orianna		Agemo
		(in thousands)
Assets
Real estate investments - net	$	37,286	$	409,450
Investments in direct financing leases - net		337,705		-
Other investments - net		39,984		41,987
Contractual receivables - net		279		17,574
Straight-line rent receivables		-		28,737
Above market lease		-		4
Subtotal		415,254		497,752
Liabilities
Letters of credit		-		(9,253)
Subtotal		-		(9,253)
Collateral
Personal guarantee		-		(15,000)
Other collateral		(399,926)		(409,450)
Subtotal		(399,926)		(424,450)
Maximum exposure to loss	$	15,328	$	64,049

In determining our maximum exposure to loss from these VIEs,  we considered the underlying fair value of the real estate subject to leases with these operators and other collateral, if any, supporting our other investments, which may include accounts receivable, security deposits, letters of credit or personal guarantees, if any.  See Note 5 – Other Investments regarding the terms of other investments with these two operators.  The Company has also committed to provide Agemo with up to approximately $13.6 million of capital expenditure funding through 2021 to be used for general maintenance and capital improvements for our facilities.  As of June 30, 2018, approximately $13.1 million of the $13.6 million remains unfunded by the Company. 

The table below reflects our total revenues from Orianna and Agemo for the three and six months ended June 30, 2018:    

	Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
	Operator				Operator
	Orianna		Agemo		Orianna		Agemo
		(in thousands)
Revenue
Rental income	$	-	$	14,860	$	-	$	29,711
Other investment income		1,145		828		1,664		1,548
Total	$	1,145	$	15,688	$	1,664	$	31,259

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INTANGIBLES (Tables)

6 Months Ended

Jun. 30, 2018

Intangibles [Abstract]

Schedule of Intangibles

The following is a summary of our intangibles as of June 30, 2018 and December 31, 2017:

	June 30,		December 31,
	2018		2017
	(in thousands)
Assets:
Goodwill	$	644,369	$	644,690
Above market leases	$	22,426	$	22,426
In-place leases		167		167
Accumulated amortization		(17,541)		(17,059)
Net intangible assets	$	5,052	$	5,534
Liabilities:
Below market leases	$	161,286	$	164,443
Accumulated amortization		(89,584)		(83,824)
Net intangible liabilities	$	71,702	$	80,619

Schedule of Reconciliation of Goodwill

The following is a summary of our goodwill as of June 30, 2018:

	(in thousands)
Balance as of December 31, 2017	$	644,690
Less: foreign currency translation		(321)
Balance as of June 30, 2018	$	644,369

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STOCKHOLDERS'/OWNERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2018

Stockholders' / Owners' Equity [Abstract]

Schedule of common stock dividends

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

Record	Payment	Dividend per
Date	Date	Common Share
January 31, 2018	February 15, 2018	$	0.66
April 30, 2018	May 15, 2018		0.66
July 31, 2018	August 15, 2018		0.66

Schedule of Accumulated Other Comprehensive Loss

The following is a summary of our accumulated other comprehensive loss, net of tax where applicable:

	As of and For the				As of and For the
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(in thousands)
Foreign Currency Translation:
Beginning balance	$	(11,015)	$	(50,614)	$	(25,993)	$	(54,948)
Translation (loss) gain		(24,383)		10,195		(9,464)		14,468
Realized (loss) gain		(66)		79		(7)		140
Ending balance		(35,464)		(40,340)		(35,464)		(40,340)
Derivative Instruments:
Cash flow hedges:
Beginning balance		5,951		(166)		1,463		(1,420)
Unrealized gain (loss)		1,735		(1,840)		5,970		(1,350)
Realized gain(1)		53		626		306		1,390
Ending balance		7,739		(1,380)		7,739		(1,380)
Net investment hedge:
Beginning balance		(12,219)		-		(7,110)		-
Unrealized gain (loss)		8,296		(2,193)		3,187		(2,193)
Ending balance		(3,923)		(2,193)		(3,923)		(2,193)
Total accumulated other comprehensive loss for Omega OP(2)		(31,648)		(43,913)		(31,648)		(43,913)
Add: portion included in noncontrolling interest		1,491		2,010		1,491		2,010
Total accumulated other comprehensive loss for Omega	$	(30,157)	$	(41,903)	$	(30,157)	$	(41,903)

(1)	Recorded in interest expense on the Consolidated Statements of Operations.
(2)	These amounts are included in owners’ equity.

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2018

Stock-Based Compensation [Abstract]

Schedule of Stock-based Compensation Expense

The following is a summary of our stock-based compensation expense for the three and six months ended June 30, 2018 and 2017, respectively: 

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017			2018	2017
	(in thousands)
Stock-based compensation expense	$	4,089	$	3,734	$	8,145	$	7,478

Schedule of Unrecognized Compensation Awards

The following table summarizes our total unrecognized compensation cost as of June 30, 2018 associated with RSUs, PRSU awards, and LTIP Unit awards to employees:

			Grant Date		Total		Weighted Average	Unrecognized
			Average		Compensation		Period of Expense	Compensation
	Grant	Shares	Fair Value		Cost		Recognition	Cost		Performance	Vesting
	Year	/ Units	Per Unit/ Share		(in millions) (1)		(in months)	(in millions)		Period	Dates
RSUs
3/17/16  RSU	2016	130,006	$	34.78	$	4.50	33	$	0.80	N/A	12/31/2018
1/1/2017  RSU	2017	140,416		31.26		4.40	36		2.20	N/A	12/31/2019
1/1/2018 RSU	2018	169,900		27.54		4.70	36		3.90	N/A	12/31/2020
Restricted Stock Units Total		440,322	$	30.86	$	13.60		$	6.90
TSR PRSUs and LTIP Units
3/31/15 2017 LTIP Units	2015	137,249	$	14.66	$	2.00	45	$	0.30	1/1/2015-12/31/2017	Quarterly in 2018
4/1/2015 2017 LTIP Units	2015	53,387		14.81		0.80	45		0.10	1/1/2015-12/31/2017	Quarterly in 2018
3/17/2016 2018 LTIP Units	2016	370,152		13.21		4.90	45		1.90	1/1/2016-12/31/2018	Quarterly in 2019
1/1/2017 2019 LTIP Units	2017	399,726		12.61		5.00	48		3.20	1/1/2017-12/31/2019	Quarterly in 2020
1/1/2018 2020 LTIP Units	2018	677,488		7.31		5.00	48		4.30	1/1/2018-12/31/2020	Quarterly in 2021
TSR PRSUs & LTIP Total		1,638,002	$	10.80	$	17.70		$	9.80
Relative TSR PRSUs
3/31/15 2017 Relative TSR	2015	137,249	$	22.50	$	3.10	45	$	0.40	1/1/2015-12/31/2017	Quarterly in 2018
4/1/2015 2017 Relative TSR	2015	53,387		22.92		1.20	45		0.20	1/1/2015-12/31/2017	Quarterly in 2018
3/17/2016 2018 Relative TSR	2016	305,563		16.44		5.00	45		2.00	1/1/2016-12/31/2018	Quarterly in 2019
1/1/2017 2019 Relative TSR	2017	285,338		18.04		5.10	48		3.20	1/1/2017-12/31/2019	Quarterly in 2020
1/1/2018 2020 Relative TSR	2018	334,544		16.65		5.60	48		4.80	1/1/2018-12/31/2020	Quarterly in 2021
Relative TSR PRSUs Total		1,116,081	$	17.97	$	20.00		$	10.60
Grand Total		3,194,405	$	16.07	$	51.30		$	27.30

(1)	Total shares/units and compensation costs are net of shares/units cancelled.
(2)	This table excludes approximately $1.5 million of unrecognized compensation costs related to outstanding director restricted stock grants.

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BORROWING ACTIVITIES AND ARRANGEMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Borrowing Activities and Arrangements [Abstract]

Schedule of Borrowings

The following is a summary of our borrowings:

		Annual
		Interest Rate
		as of
		June 30,	June 30,		December 31,
	Maturity	2018	2018		2017
			(in thousands)
Secured borrowings:
HUD mortgages assumed December 2011	2044	-	$	-	$	53,666
Deferred financing costs – net				-		(568)
Total secured borrowings – net(1)				-		53,098
Unsecured borrowings:
Revolving line of credit	2021	3.29%		220,000		290,000
U.S. term loan	2022	3.54%		425,000		425,000
Sterling term loan (2)	2022	1.95%		132,030		135,130
Omega OP term loan(1)	2022	3.54%		100,000		100,000
2015 term loan	2022	3.80%		250,000		250,000
Discounts and deferred financing costs – net(3)				(4,862)		(5,460)
Total term loans – net				902,168		904,670
2023 notes	2023	4.375%		700,000		700,000
2024 notes	2024	4.950%		400,000		400,000
2025 notes	2025	4.500%		400,000		400,000
2026 notes	2026	5.250%		600,000		600,000
2027 notes	2027	4.500%		700,000		700,000
2028 notes	2028	4.750%		550,000		550,000
Other	2018	-		-		1,500
Subordinated debt	2021	9.000%		20,000		20,000
Discount – net				(19,798)		(21,073)
Deferred financing costs – net				(24,313)		(26,037)
Total senior notes and other unsecured borrowings – net				3,325,889		3,324,390
Total unsecured borrowings - net				4,448,057		4,519,060
Total secured and unsecured borrowings – net (4)			$	4,448,057	$	4,572,158

(1)	These amounts represent borrowings that were incurred by Omega OP or wholly owned subsidiaries of Omega OP.
(2)	This borrowing is denominated in British Pounds Sterling.
(3)	The amount includes $0.5 million of net deferred financing costs related to the Omega OP term loan as of June 30, 2018.
(4)	All borrowings are direct borrowings of Omega unless otherwise noted.

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FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2018

Financial Instruments [Abstract]

Schedule of Financial Instruments

At June 30, 2018 and December 31, 2017, the net carrying amounts and fair values of our other financial instruments were as follows:

	June 30, 2018				December 31, 2017
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Assets:		(in thousands)
Investments in direct financing leases – net	$	349,465	$	349,465	$	364,965	$	364,965
Mortgage notes receivable – net		703,309		726,016		671,232		686,772
Other investments – net		377,206		373,842		276,342		281,031
Total	$	1,429,980	$	1,449,323	$	1,312,539	$	1,332,768
Liabilities:
Revolving line of credit	$	220,000	$	220,000	$	290,000	$	290,000
U.S. term loan		422,782		425,000		422,498		425,000
Sterling term loan		131,347		132,030		134,360		135,130
Omega OP term loan(1)		99,488		100,000		99,423		100,000
2015 term loan		248,551		250,000		248,390		250,000
4.375% notes due 2023 – net		694,059		694,736		693,474		711,190
4.95% notes due 2024 – net		394,186		406,220		393,680		420,604
4.50% notes due 2025 – net		395,021		390,337		394,640		399,874
5.25% notes due 2026 – net		594,674		605,460		594,321		625,168
4.50% notes due 2027 – net		687,248		666,345		686,516		681,007
4.75% notes due 2028 – net		540,379		529,727		539,882		550,667
HUD debt – net(1)		-		-		53,098		51,817
Subordinated debt – net		20,322		23,253		20,376		23,646
Other		-		-		1,500		1,500
Total	$	4,448,057	$	4,443,108	$	4,572,158	$	4,665,603

(1) These amounts represent borrowings that were incurred by Omega OP or wholly owned subsidiaries of Omega OP.

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COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies [Abstract]

Schedule of Remaining Commitments

Our remaining commitments at June 30, 2018, are outlined in the table below (in thousands):

Total commitment	$	730,009
Amounts funded (1)		(450,050)
Remaining commitment	$	279,959

(1) Includes finance costs.

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EARNINGS PER SHARE/UNIT (Tables)

6 Months Ended

Jun. 30, 2018

Earnings per Share/Unit [Abstract]

Schedule of Computation of Basic and Diluted Earnings per Share

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

	Omega
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(in thousands, except per share amounts)
Numerator:
Net income	$	81,986	$	68,157	$	169,919	$	177,269
Less: net income attributable to noncontrolling interests		(3,450)		(2,900)		(7,163)		(7,572)
Net income available to common stockholders	$	78,536	$	65,257	$	162,756	$	169,697
Denominator:
Denominator for basic earnings per share		199,497		197,433		199,204		197,223
Effect of dilutive securities:
Common stock equivalents		197		467		167		407
Noncontrolling interest – Omega OP Units		8,766		8,772		8,768		8,793
Denominator for diluted earnings per share		208,460		206,672		208,139		206,423
Earnings per share – basic:
Net income available to common stockholders	$	0.39	$	0.33	$	0.82	$	0.86
Earnings per share – diluted:
Net income	$	0.39	$	0.33	$	0.82	$	0.86

	Omega OP
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(in thousands, except per share amounts)
Numerator:
Net income	$	81,986	$	68,157	$	169,919	$	177,269
Denominator:
Denominator for basic earnings per unit		208,263		206,205		207,972		206,016
Effect of dilutive securities:
Omega OP Unit equivalents		197		467		167		407
Denominator for diluted earnings per unit		208,460		206,672		208,139		206,423
Earnings per unit – basic:
Net income available to Omega OP Unit holders	$	0.39	$	0.33	$	0.82	$	0.86
Earnings per unit – diluted:
Net income	$	0.39	$	0.33	$	0.82	$	0.86

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SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS (Tables)

6 Months Ended

Jun. 30, 2018

Supplemental Disclosure to Consolidated Statements of Cash Flows [Abstract]

Schedule of Cash Flow Supplemental Disclosures

The following are supplemental disclosures to the consolidated statements of cash flows for the six months ended June 30, 2018 and 2017: 

	Six Months Ended
	June 30,
	2018		2017
		(in thousands)
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	10,951	$	21,031
Restricted cash		2,598		12,203
Cash, cash equivalents and restricted cash at end of period	$	13,549	$	33,234
Supplemental information:
Interest paid during the period, net of amounts capitalized	$	108,317	$	97,610
Taxes paid during the period	$	2,072	$	2,032
Non cash investing activities
Non cash acquisition of real estate (See Note 2)	$	(880)	$	(9,430)
Non cash proceeds from sale of real estate investments (See Note 2)		53,118		-
Non cash investment in other investments (See Note 5)		(11,026)		-
Non cash proceeds from other investments (see Note 5)		7,000		(6,353)
Total	$	48,212	$	(15,783)
Non cash financing activities
Non cash disposition of other long-term borrowings (See Note 14)	$	(53,118)	$	-
Change in fair value of cash flow hedges		6,233		(108)
Remeasurement of debt denominated in a foreign currency		(3,100)		2,190
Total	$	(49,985)	$	2,082

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Detail)	6 Months Ended
	Jun. 30, 2018 segment
Basis of Presentation and Significant Accounting Policies [Abstract]
Number of reportable segment	1

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Narrative1) (Detail) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jan. 01, 2018	Dec. 31, 2017
Basis Of Presentation And Significant Accounting Policies [Line Items]
Recovery Impairment of Real Estate, Net	$ (1,097,000)		$ 10,135,000	$ 3,817,000	$ 17,773,000
Loan loss reserves	177,100,000			177,100,000			$ 177,500,000
Cash, FDIC Insured Amount	250,000			250,000
Payment made to operator to buyout out in money purchase option		$ 50,000,000
Amount of lease inducement that will be amortized as a reduction to rental income		28,000,000
Amount of reduction to initial contingent liability		22,000,000
Provisions for uncollectible accounts	564,000	$ 7,800,000	$ 2,673,000	8,378,000	$ 5,077,000
Allowance for doubtful accounts receivable, recoveries	2,800,000
Contractual Receivable [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Provisions for uncollectible accounts	600,000
Straight-Line Rent Receivable [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Provisions for uncollectible accounts	2,800,000
Accounting Standards Update 2014-09 [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Deferred gain resulting from sale of facilities to third party through retained earnings						$ 10,000,000
Cash Flow Hedging [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Cash flow hedges recorded at fair value	$ 7,700,000			$ 7,700,000			$ 1,500,000
Omega Op Units [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Percentage of limited partnership interests owned	96.00%			96.00%
Other Investors [Member] | Omega Op Units [Member]
Basis Of Presentation And Significant Accounting Policies [Line Items]
Percentage of limited partnership interests owned	4.00%			4.00%

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Schedule of Net Accounts Receivable) (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Organization, Consolidation and Presentation Of Financial Statements [Abstract]
Contractual receivables	$ 37,655	$ 43,258
Effective yield interest receivables	12,384	11,673
Straight-line rent receivables	226,633	216,054
Lease inducements	48,456	16,812
Allowance	(4,988)	(8,463)
Accounts receivable - net	$ 320,140	$ 279,334

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PROPERTIES AND INVESTMENTS Leased Property (Narrative) (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($) property
Real Estate Properties [Line Items]
Number of real estate properties	936
Minimum [Member] | Property Available For Operating Lease [Member]
Real Estate Properties [Line Items]
Lease term	5 years
Increase in the specific annual percentage over the prior year's rent	2.00%
Maximum [Member] | Property Available For Operating Lease [Member]
Real Estate Properties [Line Items]
Lease term	15 years
Increase in the specific annual percentage over the prior year's rent	3.00%
Acquisitions 2018 [Member] | Land [Member]
Real Estate Properties [Line Items]
Number of real estate properties	2
Cash payment to acquire facilities | $	$ 3.5
Skilled Nursing Facilities [Member] | Property Available For Operating Lease [Member]
Real Estate Properties [Line Items]
Number of real estate properties	709
Assisted Living Facilities [Member] | Property Available For Operating Lease [Member]
Real Estate Properties [Line Items]
Number of real estate properties	116
Specialty [Member] | Property Available For Operating Lease [Member]
Real Estate Properties [Line Items]
Number of real estate properties	14
Medical Office Building [Member] | Property Available For Operating Lease [Member]
Real Estate Properties [Line Items]
Number of real estate properties	1

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PROPERTIES AND INVESTMENTS Assets Sold or Held for Sale (Narrative) (Detail) $ in Millions	3 Months Ended
	Jun. 30, 2018 USD ($) property	Mar. 31, 2018 USD ($) property	Dec. 31, 2017 property
Real Estate Properties [Line Items]
Number of facilities sold | property	45	14
Total proceeds	$ 147.2	$ 74.7
Amount of gain (loss) from sale of facilities	(2.9)	$ 17.5
Number of previously classified as held for sale | property		33	5
Provision for impairment on real estate properties	$ 4.1	$ 4.9
Number of facilities with impairment charges | property	9	17
Number of subsequently reclassified as held for sale | property	3	16
Impairment offset by insurance recovery	$ 5.2
Ancillary Building [Member]
Real Estate Properties [Line Items]
Number of facilities sold | property	1
AR | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Number of facilities sold | property	12
Carrying amount of facility	$ 62.0
Total proceeds	78.0
Amount of gain (loss) from sale of facilities	11.0
Number of previously classified as held for sale | property		12
Cash consideration	25.0
Assumption of HUD mortgages	53.0
Closing cost	5.0
Unsecured loan to principal	$ 39.7

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PROPERTIES AND INVESTMENTS (Schedule of Investment in Leased Real Estate Properties) (Detail) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Total real estate investments	$ 7,571,661	$ 7,655,960
Less accumulated depreciation	(1,475,463)	(1,376,828)
Real estate investments - net	6,096,198	6,279,132
Building [Member]
Property, Plant and Equipment [Line Items]
Total real estate investments	5,985,795	6,098,119
Land [Member]
Property, Plant and Equipment [Line Items]
Total real estate investments	782,913	795,874
Furniture, fixtures and equipment [Member]
Property, Plant and Equipment [Line Items]
Total real estate investments	436,680	440,737
Site Improvements And Equipment [Member]
Property, Plant and Equipment [Line Items]
Total real estate investments	230,304	227,150
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Total real estate investments	$ 135,969	$ 94,080

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PROPERTIES AND INVESTMENTS (Schedule of Significant Acquisitions) (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2018 USD ($) property
Real Estate Properties [Line Items]
Number of Facilities | property	936
Total Investment	$ 53.1
Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Number of properties acquired | property	7
Number of Facilities | property	748
Assisted Living Facilities [Member]
Real Estate Properties [Line Items]
Number of properties acquired | property	2
Number of Facilities | property	117
Land [Member]
Real Estate Properties [Line Items]
Total Investment	$ 6.8
Building Improvements [Member]
Real Estate Properties [Line Items]
Total Investment	43.3
Furniture, fixtures and equipment [Member]
Real Estate Properties [Line Items]
Total Investment	$ 3.0
First Quarter [Member] | VIRGINIA | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Number of properties acquired | property	1
Total Investment	$ 13.2
Initial Annual Cash Yield (%)	9.50%
First Quarter [Member] | VIRGINIA | Land [Member] | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	$ 2.4
First Quarter [Member] | VIRGINIA | Building Improvements [Member] | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	10.5
First Quarter [Member] | VIRGINIA | Furniture, fixtures and equipment [Member] | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	$ 0.3
First Quarter [Member] | UNITED KINGDOM | Assisted Living Facilities [Member]
Real Estate Properties [Line Items]
Number of properties acquired | property	1
Total Investment	$ 4.0
Initial Annual Cash Yield (%)	8.50%
Deferred tax liability	$ 0.4
First Quarter [Member] | UNITED KINGDOM | Land [Member] | Assisted Living Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	0.9
First Quarter [Member] | UNITED KINGDOM | Building Improvements [Member] | Assisted Living Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	2.9
First Quarter [Member] | UNITED KINGDOM | Furniture, fixtures and equipment [Member] | Assisted Living Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	$ 0.2
First Quarter [Member] | UNITED KINGDOM | Assisted Living Facilities [Member]
Real Estate Properties [Line Items]
Number of properties acquired | property	1
Total Investment	$ 5.7
Initial Annual Cash Yield (%)	8.50%
Deferred tax liability	$ 0.2
First Quarter [Member] | UNITED KINGDOM | Land [Member] | Assisted Living Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	1.4
First Quarter [Member] | UNITED KINGDOM | Building Improvements [Member] | Assisted Living Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	4.1
First Quarter [Member] | UNITED KINGDOM | Furniture, fixtures and equipment [Member] | Assisted Living Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	$ 0.2
First Quarter [Member] | PENNSYLVANIA | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Number of properties acquired | property	1
Total Investment	$ 7.4
Initial Annual Cash Yield (%)	9.50%
First Quarter [Member] | PENNSYLVANIA | Land [Member] | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	$ 1.6
First Quarter [Member] | PENNSYLVANIA | Building Improvements [Member] | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	5.4
First Quarter [Member] | PENNSYLVANIA | Furniture, fixtures and equipment [Member] | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	$ 0.4
Second Quarter [Member] | TX | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Number of properties acquired | property	5
Total Investment	$ 22.8
Initial Annual Cash Yield (%)	9.50%
Second Quarter [Member] | TX | Land [Member] | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	$ 0.5
Second Quarter [Member] | TX | Building Improvements [Member] | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	20.4
Second Quarter [Member] | TX | Furniture, fixtures and equipment [Member] | Skilled Nursing Facilities [Member]
Real Estate Properties [Line Items]
Total Investment	$ 1.9

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DIRECT FINANCING LEASES (Narrative) (Detail)		1 Months Ended		3 Months Ended			6 Months Ended		12 Months Ended
	Nov. 27, 2013 USD ($) contract property	Jun. 30, 2018 USD ($) state property	Mar. 31, 2018 USD ($) property	Jun. 30, 2018 USD ($) state property	Mar. 31, 2018 USD ($) property	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) state contract property	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) state property	Dec. 31, 2017 USD ($)
Capital Leased Assets [Line Items]
Purchase price of beds acquired paid in cash							$ 53,100,000
Rental income				$ 192,850,000		$ 193,997,000	$ 386,799,000	$ 386,534,000
Number of facilities owned | property		936		936			936		936
Number of states | state		41		41			41		41
Number of facilities sold | property		45	14	45	14		45		45
Impairment on real estate properties							$ 8,992,000	17,773,000
Income from direct financing leases				$ 497,000		$ 15,462,000	$ 1,110,000	$ 31,108,000
Total proceeds				$ 147,200,000	$ 74,700,000
Orianna
Capital Leased Assets [Line Items]
Purchase price of beds acquired paid in cash	$ 529,000,000
Number of leases | contract	4
Master lease term	50 years
Operating lease expiration year							2026
Rental income									$ 0
Interest on lease per annum	10.60%
Number of states | state		7		7			7		7
Allowance for loss under direct financing leases							$ 172,200,000
Number of remaining facilities | property							38
Recorded investment in direct financing leases							$ 337,700,000
Recorded investment in operating lease		$ 37,300,000		$ 37,300,000			$ 37,300,000		$ 37,300,000
Orianna | Minimum [Member]
Capital Leased Assets [Line Items]
Fair value of annual rents										$ 32,000,000
Rental yields										9.00%
Orianna | Maximum [Member]
Capital Leased Assets [Line Items]
Fair value of annual rents										$ 38,000,000
Rental yields										10.00%
Orianna | Restructuring Support Agreement ("RSA")
Capital Leased Assets [Line Items]
Number of facilities to be sold | property			19		19
Number of facilities transitioned | property			23		23
Monthly rent payment under restructuring			$ 1,000,000
Amount committed as debtor in possession financing			$ 30,000,000		$ 30,000,000
Orianna | Direct Financing Leases [Member]
Capital Leased Assets [Line Items]
Number of leases | contract							2
Orianna | Operating Lease [Member]
Capital Leased Assets [Line Items]
Number of leases | contract							1
Number of facilities leased | property							4
Orianna | Southeast [Member]
Capital Leased Assets [Line Items]
Number of remaining facilities | property							37
Orianna | INDIANA
Capital Leased Assets [Line Items]
Number of remaining facilities | property							1
Skilled Nursing Facilities [Member]
Capital Leased Assets [Line Items]
Number of facilities sold | property		1		1			1		1
Carrying amount of facility		$ 15,400,000		$ 15,400,000			$ 15,400,000		$ 15,400,000
Total proceeds		$ 15,400,000
Skilled Nursing Facilities [Member] | Orianna
Capital Leased Assets [Line Items]
Number of facilities owned | property	55
Assisted Living Facilities [Member] | Orianna
Capital Leased Assets [Line Items]
Number of facilities owned | property	1

XML

DIRECT FINANCING LEASES (Schedule of Components of Investment in Direct Financing Leases) (Detail) $ in Thousands	Jun. 30, 2018 USD ($) contract property	Dec. 31, 2017 USD ($) contract property
Direct Financing Leases [Abstract]
Minimum lease payments receivable	$ 3,649,602	$ 3,707,079
Less unearned income	(3,127,950)	(3,169,942)
Investment in direct financing leases	521,652	537,137
Less allowance for loss on direct financing lease	(172,187)	(172,172)
Investment in direct financing leases - net	$ 349,465	$ 364,965
Properties subject to direct financing leases | property	40	41
Number of direct financing leases | contract	4	5

XML

DIRECT FINANCING LEASES (Schedule of Rents Due Under Direct Financing Leases) (Detail) $ in Thousands	Jun. 30, 2018 USD ($)
Direct Financing Leases [Abstract]
2018	$ 580
2019	1,166
2020	1,170
2021	1,084
2022	1,106
2023	$ 1,128

XML

MORTGAGE NOTES RECEIVABLE (Narrative) (Detail) $ in Thousands		1 Months Ended			6 Months Ended	12 Months Ended	47 Months Ended
	Jun. 30, 2014 USD ($) contract property	Jun. 30, 2018 USD ($) state entity property	Mar. 31, 2018	Jan. 31, 2018 USD ($) loan	Jun. 30, 2018 USD ($) state entity contract property	Dec. 31, 2017 USD ($)	May 31, 2018	Jan. 17, 2014 USD ($) property
Mortgage Loans on Real Estate [Line Items]
Mortgage notes receivable		$ 703,309			$ 703,309	$ 671,232
Number of states | state		41			41
Mortgage Receivable [Member]
Mortgage Loans on Real Estate [Line Items]
Number of fixed rate mortgages | property		6			6
Number of long term care facilities | property		53			53
Number of states | state		6			6
Number of independent healthcare operating companies | entity		5			5
Mortgage Note Due 2027 [Member]
Mortgage Loans on Real Estate [Line Items]
Financing receivable, face amount								$ 112,500
Mortgage loans on real estate, interest rate					10.18%
Mortgage loans on real estate, maturity date			Jan. 31, 2027
Maturity year					2027
Mortgage Note Due 2027 [Member] | Tranche One [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage loans on real estate, maturity date			Jan. 31, 2032
Mortgage Note Due 2027 [Member] | Tranche Two [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage loans on real estate, maturity date			Sep. 30, 2034
Mortgage Note Due 2029 [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage loans on real estate, interest rate					9.67%
Mortgage Note Due 2029 [Member] | Master Mortgage [Member]
Mortgage Loans on Real Estate [Line Items]
Financing receivable, face amount	$ 415,000
Mortgage notes receivable	$ 117,000	$ 410,000			$ 410,000
Number of fixed rate mortgages | contract	1
Number of long term care facilities | property	17	30			30
Number of additional facilities for mortgage financing | property	14
Mortgage loans on real estate, interest rate	9.00%				9.68%
Percentage of mortgage loan interest rate increase per annum	0.225%
Maturity year	2029
Mortgage Note Due 2029 [Member] | Master Mortgage [Member] | Minimum [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year	2021
Mortgage Note Due 2029 [Member] | Master Mortgage [Member] | Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year	2023
Mortgage Note Due 2029 [Member] | Amended Master Mortgage [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage notes receivable		$ 75,800			$ 75,800
Percentage of mortgage loan interest rate increase per annum					0.225%
Mortgage loans on real estate, maturity date		Jun. 30, 2029
Mortgage Note Due 2029 [Member] | Amended Master Mortgage [Member] | Minimum [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage loans on real estate, interest rate					8.50%
Percentage of mortgage loan fixed annual escalators		2.00%			2.00%
Mortgage Note Due 2029 [Member] | Amended Master Mortgage [Member] | Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage loans on real estate, interest rate					10.00%
Percentage of mortgage loan fixed annual escalators		2.50%			2.50%
Mortgage Note Due 2029 [Member] | Amended Master Mortgage [Member] | Tranche One [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year					2018
Mortgage Note Due 2029 [Member] | Amended Master Mortgage [Member] | Tranche Two [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year					2019
Mortgage Note Due 2029 [Member] | Amended Master Mortgage [Member] | Tranche Three [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year							2029
Mortgage Note Due 2029 [Member] | Second Amended Master Mortgage [Member]
Mortgage Loans on Real Estate [Line Items]
Financing receivable, face amount		$ 44,700			$ 44,700
Mortgage notes receivable		44,200			44,200
Mortgage receivable, additional funds committed		$ 9,600			$ 9,600
Mortgage loans on real estate, interest rate		9.50%
Percentage of mortgage loan interest rate increase per annum		0.225%
Mortgage Note Due 2029 [Member] | Second Amended Master Mortgage [Member] | MI
Mortgage Loans on Real Estate [Line Items]
Number of additional facilities for mortgage financing | property		5			5
Mortgage Note Due 2029 [Member] | Construction Loans [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage loans on real estate, number of loans | contract					2
Maturity year					2029	2029
Mortgage Note Due 2029 [Member] | Construction Loans [Member] | Minimum [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year					2018	2018
Mortgage Note Due 2029 [Member] | Construction Loans [Member] | Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year					2019	2019
Other Mortgage Notes Member
Mortgage Loans on Real Estate [Line Items]
Mortgage loans on real estate, interest rate					11.25%
Other Mortgage Notes Member | Minimum [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year					2018	2018
Other Mortgage Notes Member | Maximum [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year					2028	2028
Mortgage Notes Paid Off [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage notes receivable				$ 21,200
Mortgage loans on real estate, number of loans | loan				2
Mortgage loans on real estate, interest rate				8.75%
Skilled Nursing Facilities [Member] | Mortgage Note Due 2027 [Member] | PENNSYLVANIA | Collateral Pledged [Member]
Mortgage Loans on Real Estate [Line Items]
Number of long term care facilities | property								7
Assisted Living Facilities [Member] | Mortgage Note Due 2027 [Member] | OH | Collateral Pledged [Member]
Mortgage Loans on Real Estate [Line Items]
Number of long term care facilities | property								2

XML

MORTGAGE NOTES RECEIVABLE (Schedule of Receivables) (Details) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018 USD ($) contract property	Dec. 31, 2017 USD ($) contract
Mortgage Loans on Real Estate [Line Items]
Mortgage notes receivable, gross	$ 708,214	$ 676,137
Allowance for loss on mortgage notes receivable	(4,905)	(4,905)
Total mortgages - net	703,309	671,232
Mortgage Note Due 2027 [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage notes receivable, gross	$ 112,500	112,500
Mortgage loans on real estate, interest rate	10.18%
Maturity year	2027
Mortgage Note Due 2029 [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage notes receivable, gross	$ 529,960	476,320
Mortgage loans on real estate, interest rate	9.67%
Number of facilities used in weighted average interest rate | property	39
Other Mortgage Notes Member
Mortgage Loans on Real Estate [Line Items]
Mortgage notes receivable, gross	$ 65,754	$ 87,317
Mortgage loans on real estate, interest rate	11.25%
Minimum [Member] | Other Mortgage Notes Member
Mortgage Loans on Real Estate [Line Items]
Maturity year	2018	2018
Maximum [Member] | Other Mortgage Notes Member
Mortgage Loans on Real Estate [Line Items]
Maturity year	2028	2028
Construction Loans [Member] | Mortgage Note Due 2029 [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage notes receivable, gross	$ 15,200
Mortgage loans on real estate, number of loans | contract	2
Maturity year	2029	2029
Construction Loans [Member] | Minimum [Member] | Mortgage Note Due 2029 [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year	2018	2018
Construction Loans [Member] | Maximum [Member] | Mortgage Note Due 2029 [Member]
Mortgage Loans on Real Estate [Line Items]
Maturity year	2019	2019
Commercial Borrower [Member]
Mortgage Loans on Real Estate [Line Items]
Mortgage notes receivable, gross	$ 1,500	$ 1,500
Mortgage loans on real estate, number of loans | contract	1	1

XML

OTHER INVESTMENTS (Narrative) (Details) $ in Thousands						1 Months Ended							3 Months Ended		6 Months Ended
	Jun. 03, 2018 property	Mar. 06, 2018 USD ($)	Jul. 29, 2016 USD ($)	Jul. 29, 2016 USD ($)	Jun. 01, 2016 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	May 31, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 28, 2017 USD ($) property	May 31, 2017 USD ($)	Jun. 30, 2018 USD ($) property	Mar. 31, 2018 USD ($) property	Jun. 30, 2018 USD ($) property	Jun. 01, 2018 USD ($)	May 07, 2018 USD ($)	Feb. 22, 2018	Dec. 31, 2017 USD ($)	Aug. 31, 2017 USD ($)	Sep. 30, 2016 USD ($)	Feb. 26, 2016 USD ($)
Schedule of Investments [Line Items]
Other investments													$ 377,206		$ 377,206				$ 276,342
Other investments, gross													$ 377,206		$ 377,206				276,715
Number of leased real estate properties | property													936		936
Amount repaid by third party buyer															$ 5,000
Number of properties sold | property													33	5
Orianna
Schedule of Investments [Line Items]
Other investments													$ 40,000		$ 40,000
Other Investment Note Due 2018 Through 2022 [Member]
Schedule of Investments [Line Items]
Debt instrument, interest rate, stated percentage													8.29%		8.29%
Other investments, gross													$ 39,984		$ 39,984				15,115
Other Investment Note Due 2018 Through 2022 [Member] | Term Loan [Member] | Orianna | London Interbank Offered Rate (LIBOR) [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount										$ 14,200				$ 14,200
Other investments													14,200		14,200
Basis spread on variable interest rate										5.50%				5.50%
Investment Maturity Date										Sep. 30, 2018
Other Investment Note Due 2018 Through 2022 [Member] | Revolving Credit Facility | Orianna | London Interbank Offered Rate (LIBOR) [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount										$ 15,800				$ 15,800
Other investments													10,500		10,500
Basis spread on variable interest rate										9.00%				9.00%
Investment Maturity Date										Sep. 30, 2018
Other Investment Note Due 2018 Through 2022 [Member] | Revolving Working Capital Loan [Member] | Orianna
Schedule of Investments [Line Items]
Financing receivable, face amount												$ 18,800
Other investments													$ 15,200		$ 15,200
Loans Receivable Fixed Rate												9.00%
Investment Maturity Date												Apr. 30, 2022
Loan Receivable Default Rate												5.00%
Other Investment Note Due 2018 Through 2023 [Member]
Schedule of Investments [Line Items]
Debt instrument, interest rate, stated percentage													10.59%		10.59%
Other investments, gross													$ 39,166		$ 39,166				40,985
Other Investment Note Due 2020 [Member]
Schedule of Investments [Line Items]
Debt instrument, interest rate, stated percentage													13.05%		13.05%
Other investments, gross													$ 68,175		$ 68,175				49,490
Other Investment Note Due 2020 [Member] | Secured Term Loan [Member] | Genesis Healthcare [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount		$ 16,000
Other investments													16,200		16,200
Loans Receivable Fixed Rate		10.00%
Loans Receivable Interest Paid-In-Kind		5.00%
Investment Maturity Date		Jul. 29, 2020
Other Investment Note Due 2020 [Member] | Secured Term Loan [Member] | Genesis Healthcare [Member] | London Interbank Offered Rate (LIBOR) [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount			$ 48,000	$ 48,000
Other investments													$ 52,000		$ 52,000
Loans Receivable Fixed Rate																		14.00%
Loans Receivable Interest Paid-In-Kind																		9.00%
Investment Maturity Date			Jul. 29, 2020
LIBOR with floor rate			1.00%
Basis Spread on Variable Rate			13.00%
Other Investment Note Due 2021 [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount																			7,000
Debt instrument, interest rate, stated percentage													6.00%		6.00%
Other investments, gross													$ 39,689		$ 39,689				7,000
Other Investment Note Due 2021 [Member] | Unsecured Loan [Member] | Existing Operator [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount																$ 39,700
Loans Receivable Fixed Rate																6.00%
Investment Maturity Date					May 31, 2021
Notes Receivable Principal Payment					$ 600
Notes Receivable Additional Principal Payment					$ 300
Other Investment Note Due 2023 Through 2030 Interest [Member]
Schedule of Investments [Line Items]
Debt instrument, interest rate, stated percentage													7.24%		7.24%
Other investments, gross													$ 62,800		$ 62,800				64,050
Other Investment Note Due 2023 [Member]
Schedule of Investments [Line Items]
Debt instrument, interest rate, stated percentage													12.00%		12.00%
Other investments, gross													$ 59,324		$ 59,324				49,708
Other Investment Note Due 2023 [Member] | Mezzanine Loan [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount																						$ 50,000
Notes Receivable, Discount																						$ 750
Loan increase (decrease)									$ 10,000
Loans Receivable Fixed Rate													12.00%		12.00%
Investment Maturity Date															May 31, 2023
Notes Receivable Principal Payment									2,500
Notes Receivable, Fees Revenue									1,100
Notes Receivable, Fees Revenue Cash Received At Closing									$ 500
Other Investment Note Due 2024 Through 2025 [Member]
Schedule of Investments [Line Items]
Debt instrument, interest rate, stated percentage													8.52%		8.52%
Other investments, gross													$ 41,987		$ 41,987				31,987
Other Investment Note Due 2024 Through 2025 [Member] | Term Loan [Member] | Agemo Holdings LLC [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount																					$ 37,000
Other Investment Note Due 2024 Through 2025 [Member] | Term Loan [Member] | Agemo Holdings LLC [Member] | Tranche One [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount																				$ 5,000
Debt instrument, interest rate, stated percentage																				13.00%
Other Investment Note Due 2024 Through 2025 [Member] | Term Loan [Member] | Agemo Holdings LLC [Member] | Tranche Two [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount																					$ 32,000
Investment Maturity Date															Dec. 31, 2024
Debt instrument, interest rate, stated percentage																					9.00%
Other Investment Note Due 2024 Through 2025 [Member] | Secured Working Capital Loan [Member] | Agemo Holdings LLC [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount																	$ 25,000
Investment Maturity Date															Apr. 30, 2025
Debt instrument, interest rate, stated percentage																	7.00%
Other investments, gross													$ 10,000		$ 10,000
Other Investment Note Due 2024 Through 2025 [Member] | Unsecured Loan [Member]
Schedule of Investments [Line Items]
Financing receivable, face amount																	$ 2,800
Other Investment Notes Outstanding [Member]
Schedule of Investments [Line Items]
Other investments											$ 10,000
Loans Receivable Fixed Rate											10.00%
Debt instrument, interest rate, stated percentage													8.55%		8.55%
Other investments, gross													$ 26,081		$ 26,081				$ 18,380
Number of properties acquired | property											10
Skilled Nursing Facilities [Member]
Schedule of Investments [Line Items]
Number of leased real estate properties | property													748		748
Number of properties acquired | property															7
Number of properties sold | property	12
Debt Instrument, Redemption, Period One [Member] | Other Investment Note Due 2020 [Member] | Secured Term Loan [Member] | Genesis Healthcare [Member] | London Interbank Offered Rate (LIBOR) [Member]
Schedule of Investments [Line Items]
Notes Receivable Principal Payment				250
Debt Instrument, Redemption, Period One [Member] | Other Investment Notes Outstanding [Member]
Schedule of Investments [Line Items]
Notes Receivable Principal Payment								$ 5,000
Debt Instrument, Redemption, Period Two [Member] | Other Investment Note Due 2020 [Member] | Secured Term Loan [Member] | Genesis Healthcare [Member] | London Interbank Offered Rate (LIBOR) [Member]
Schedule of Investments [Line Items]
Principal payments				$ 500
Debt Instrument, Redemption, Period Two [Member] | Other Investment Notes Outstanding [Member] | Scenario, Plan [Member]
Schedule of Investments [Line Items]
Notes Receivable Principal Payment							$ 2,000
Debt Instrument, Redemption, Period Three [Member] | Other Investment Notes Outstanding [Member] | Scenario, Plan [Member]
Schedule of Investments [Line Items]
Notes Receivable Principal Payment						$ 3,000

XML

OTHER INVESTMENTS (Schedule of Receivables) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Dec. 28, 2017
Schedule of Investments [Line Items]
Other investments, gross	$ 377,206	$ 276,715
Allowance for loss on other investments		(373)
Total other investments	377,206	276,342
Other Investment Note Due 2018 Through 2022 [Member]
Schedule of Investments [Line Items]
Other investments, gross	$ 39,984	15,115
Interest rate	8.29%
Other Investment Note Due 2018 Through 2022 [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Maturity year	2018
Other Investment Note Due 2018 Through 2022 [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Maturity year	2022
Other Investment Note Due 2018 Through 2023 [Member]
Schedule of Investments [Line Items]
Other investments, gross	$ 39,166	40,985
Interest rate	10.59%
Other Investment Note Due 2018 Through 2023 [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Maturity year	2018
Other Investment Note Due 2018 Through 2023 [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Maturity year	2023
Other Investment Note Due 2020 [Member]
Schedule of Investments [Line Items]
Other investments, gross	$ 68,175	49,490
Interest rate	13.05%
Maturity year	2020
Other Investment Note Due 2021 [Member]
Schedule of Investments [Line Items]
Other investments, gross	$ 39,689	7,000
Interest rate	6.00%
Maturity year	2021
Other Investment Note Due 2023 Through 2030 Interest [Member]
Schedule of Investments [Line Items]
Other investments, gross	$ 62,800	64,050
Interest rate	7.24%
Other Investment Note Due 2023 Through 2030 Interest [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Maturity year	2023
Other Investment Note Due 2023 Through 2030 Interest [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Maturity year	2030
Other Investment Note Due 2023 [Member]
Schedule of Investments [Line Items]
Other investments, gross	$ 59,324	49,708
Interest rate	12.00%
Maturity year	2023
Other Investment Note Due 2024 Through 2025 [Member]
Schedule of Investments [Line Items]
Other investments, gross	$ 41,987	31,987
Interest rate	8.52%
Other Investment Note Due 2024 Through 2025 [Member] | Minimum [Member]
Schedule of Investments [Line Items]
Maturity year	2024
Other Investment Note Due 2024 Through 2025 [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Maturity year	2025
Other Investment Notes Outstanding [Member]
Schedule of Investments [Line Items]
Other investments, gross	$ 26,081	$ 18,380
Total other investments			$ 10,000
Interest rate	8.55%
Other Investment Notes Outstanding [Member] | Maximum [Member]
Schedule of Investments [Line Items]
Maturity year	2028

XML

VARIABLE INTEREST ENTITIES (Detail) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)
Variable Interest Entity [Line Items]
Variable Interest Entity Possible Future Committed Capital Expenditure Funding	$ 13,600	$ 13,600
Variable Interest Entity Committed Capital Expenditure Funding	13,100	13,100
Orianna
Variable Interest Entity [Line Items]
Assets subtotal	415,254	415,254
Maximum exposure to loss	15,328	15,328
Revenue total	1,145	1,664
Orianna | Investment Income [Member]
Variable Interest Entity [Line Items]
Revenue total	1,145	1,664
Orianna | Other Collateral [Member]
Variable Interest Entity [Line Items]
Liabilities subtotal	(399,926)	(399,926)
Orianna | Collateral Pledged [Member]
Variable Interest Entity [Line Items]
Liabilities subtotal	(399,926)	(399,926)
Orianna | Real Estate Investments [Member]
Variable Interest Entity [Line Items]
Assets subtotal	37,286	37,286
Orianna | Investments In Direct Financing Leases [Member]
Variable Interest Entity [Line Items]
Assets subtotal	337,705	337,705
Orianna | Other Investments [Member]
Variable Interest Entity [Line Items]
Assets subtotal	39,984	39,984
Orianna | Accounts Receivable [Member]
Variable Interest Entity [Line Items]
Assets subtotal	279	279
Agemo Holdings LLC [Member]
Variable Interest Entity [Line Items]
Assets subtotal	497,752	497,752
Liabilities subtotal	(9,253)	(9,253)
Maximum exposure to loss	64,049	64,049
Revenue total	15,688	31,259
Agemo Holdings LLC [Member] | Rental Income [Member]
Variable Interest Entity [Line Items]
Revenue total	14,860	29,711
Agemo Holdings LLC [Member] | Investment Income [Member]
Variable Interest Entity [Line Items]
Revenue total	828	1,548
Agemo Holdings LLC [Member] | Personal Guarantee Collateral [Member]
Variable Interest Entity [Line Items]
Liabilities subtotal	(15,000)	(15,000)
Agemo Holdings LLC [Member] | Other Collateral [Member]
Variable Interest Entity [Line Items]
Liabilities subtotal	(409,450)	(409,450)
Agemo Holdings LLC [Member] | Collateral Pledged [Member]
Variable Interest Entity [Line Items]
Liabilities subtotal	(424,450)	(424,450)
Agemo Holdings LLC [Member] | Real Estate Investments [Member]
Variable Interest Entity [Line Items]
Assets subtotal	409,450	409,450
Agemo Holdings LLC [Member] | Other Investments [Member]
Variable Interest Entity [Line Items]
Assets subtotal	41,987	41,987
Agemo Holdings LLC [Member] | Straight-Line Rent Receivables [Member]
Variable Interest Entity [Line Items]
Assets subtotal	28,737	28,737
Agemo Holdings LLC [Member] | Above Market Lease [Member]
Variable Interest Entity [Line Items]
Assets subtotal	4	4
Agemo Holdings LLC [Member] | Accounts Receivable [Member]
Variable Interest Entity [Line Items]
Assets subtotal	17,574	17,574
Agemo Holdings LLC [Member] | Letters of Credit [Member]
Variable Interest Entity [Line Items]
Liabilities subtotal	$ (9,253)	$ (9,253)

XML

INVESTMENT IN UNCONSOLIDATED JOINT VENTURE (Narrative) (Details) $ in Thousands		3 Months Ended			6 Months Ended
	Nov. 01, 2016 USD ($) property	Jun. 30, 2018 USD ($) property	Mar. 31, 2018 USD ($) property	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) property	Jun. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)
Schedule of Equity Method Investments [Line Items]
Investment in unconsolidated joint venture		$ 32,820			$ 32,820		$ 36,516
Assets management fees recognized		$ 500		$ 500	$ 1,000	$ 1,000
Number Of Facilities Sold | property		45	14		45
Proceeds from Sale of Property, Plant, and Equipment		$ 147,200	$ 74,700
Gain (loss) on assets sold - net		$ (2,900)	$ 17,500
Skilled Nursing Facilities [Member]
Schedule of Equity Method Investments [Line Items]
Number of properties acquired | property					7
Second Spring Healthcare Investments [Member]
Schedule of Equity Method Investments [Line Items]
Investment in unconsolidated joint venture	$ 50,000
Percentage of ownership interest	15.00%
Second Spring Healthcare Investments [Member] | Skilled Nursing Facilities [Member]
Schedule of Equity Method Investments [Line Items]
Number of properties acquired | property	64
Payments to acquire facilities	$ 1,100,000
Number Of Facilities Sold | property		12			12
Proceeds from Sale of Property, Plant, and Equipment		$ 149,300
Gain (loss) on assets sold - net		$ (4,400)
Second Spring Healthcare Investments [Member] | Affiliates Of Lindsey Goldberg Llc [Member]
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest	85.00%

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ASSETS HELD FOR SALE (Schedule of Properties Held-for-Sale) (Details) $ in Thousands		3 Months Ended
	Jun. 03, 2018 property	Jun. 30, 2018 USD ($) property	Mar. 31, 2018 USD ($) property
Number Of Properties
Beginning Balance		33	22
Properties sold/other		(33)	(5)
Properties added		3	16
Ending balance		3	33
Net Book Value
Beginning Balance | $		$ 143,419	$ 86,699
Properties sold/other | $		(143,419)	(9,307)
Properties added | $		3,782	66,027
Ending balance | $		$ 3,782	$ 143,419
Number of facilities held for sale sold		33	5
Net proceeds from sale of facilities held for sale | $		$ 96,400	$ 13,100
Gain (loss) from sale of facilities | $		3,500	3,500
Impairment charges | $		$ 2,500	$ 3,500
Number of facilities impaired		3	16
Ancillary Building [Member]
Net Book Value
Number of property reclassified			1
Skilled Nursing Facilities [Member]
Number Of Properties
Properties sold/other	(12)

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INTANGIBLES (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Intangibles [Abstract]
Amortization of intangible assets	$ (2.6)	$ (3.1)	$ (5.3)	$ (6.2)
Remainder of 2018	(4.3)		(4.3)
2019	(8.2)		(8.2)
2020	(8.0)		(8.0)
2021	(7.6)		(7.6)
2022	$ (7.0)		$ (7.0)
Weighted average remaining amortization			7 years
Below market leases, weighted average remaining amortization			9 years

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INTANGIBLES (Schedule of Intangibles) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets:
Goodwill	$ 644,369	$ 644,690
Accumulated amortization	(17,541)	(17,059)
Net intangible assets	5,052	5,534
Liabilities:
Below market leases	161,286	164,443
Accumulated amortization	(89,584)	(83,824)
Net intangible liabilities	71,702	80,619
Above Market Lease [Member]
Assets:
Gross intangible assets	22,426	22,426
In-place leases
Assets:
Gross intangible assets	$ 167	$ 167

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INTANGIBLES (Schedule of Reconciliation of Goodwill) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Goodwill [Roll Forward]
Balance	$ 644,690
Less: foreign currency translation	(321)
Balance	$ 644,369

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CONCENTRATION OF RISK (Narrative) (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($) state contract property	Dec. 31, 2017 USD ($)
Concentration Risk [Line Items]
Number of facilities owned	936
Number of states | state	41
Number of operators | contract	67
Gross investment in facilities, net of impairments and before reserve for uncollectible loans | $	$ 8,600,000
Percentage share of real estate investments related to long-term care facilities	99.00%
Number of facilities held-for-sale/closed	3
Other investments | $	$ 377,206	$ 276,342
Investment in unconsolidated joint venture | $	$ 32,820	$ 36,516
FL
Concentration Risk [Line Items]
Concentration percent by state	10.00%
TX
Concentration Risk [Line Items]
Concentration percent by state	10.00%
MI
Concentration Risk [Line Items]
Concentration percent by state	8.00%
Skilled Nursing Facilities [Member]
Concentration Risk [Line Items]
Number of facilities owned	748
Number of facilities under fixed rate mortgage loan	51
Assisted Living Facilities [Member]
Concentration Risk [Line Items]
Number of facilities owned	117
Number of facilities under fixed rate mortgage loan	2
Specialty [Member]
Concentration Risk [Line Items]
Number of facilities owned	14
Medical Office Building [Member]
Concentration Risk [Line Items]
Number of facilities owned	1
Ciena Healthcare [Member]
Concentration Risk [Line Items]
Revenues from operations	10.00%

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STOCKHOLDERS'/OWNERS' EQUITY (Narrative) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017
Equity Shelf Program
Issuance of common stock (in shares)		912
Gross proceeds from issuance of common stock		$ 27,509	$ 6,634
Equity Shelf Usd 500 Million 2015 Program [Member]
Equity Shelf Program
Issuance of common stock, average price per share	$ 30.19	$ 30.16
Sales price, equity distribution agreement	$ 500,000	$ 500,000
Issuance of common stock (in shares)	900	900
Gross proceeds from issuance of common stock	$ 27,500	$ 27,500
Dividend Reinvestment And Common Stock Purchase Plan [Member]
Equity Shelf Program
Issuance of common stock, average price per share	$ 29.22	$ 28.55
Issuance of common stock (in shares)	800	900
Gross proceeds from issuance of common stock	$ 22,200	$ 27,100

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STOCKHOLDERS'/OWNERS' EQUITY (Schedule of Common Stock Dividends) (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Dividend [Line Items]
Common Stock, Dividends, Per Share, Declared	$ 0.66	$ 0.63	$ 1.32	$ 1.25
Dividend Record Date 31 January 2018 [Member]
Dividend [Line Items]
Dividends Declared, Date Of Record			Jan. 31, 2018
Dividends Declared, Date Of Payment			Feb. 15, 2018
Common Stock, Dividends, Per Share, Declared			$ 0.66
Dividend Record Date 30 April 2018 [Member]
Dividend [Line Items]
Dividends Declared, Date Of Record			Apr. 30, 2018
Dividends Declared, Date Of Payment			May 15, 2018
Common Stock, Dividends, Per Share, Declared			$ 0.66
Dividend Record Date 31 July 2018 [Member]
Dividend [Line Items]
Dividends Declared, Date Of Record			Jul. 31, 2018
Dividends Declared, Date Of Payment			Aug. 15, 2018
Common Stock, Dividends, Per Share, Declared			$ 0.66

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STOCKHOLDERS'/OWNERS' EQUITY (Schedule of Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Ending balance : Accumulated other comprehensive loss for Omega OP	$ (31,648)	$ (43,913)	$ (31,648)	$ (43,913)
Add: portion included in noncontrolling interest	1,491	2,010	1,491	2,010
Total accumulated other comprehensive loss for Omega	(30,157)	(41,903)	(30,157)	(41,903)	$ (30,150)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance : Accumulated other comprehensive loss for Omega OP	(11,015)	(50,614)	(25,993)	(54,948)
Translation (loss) gain	(24,383)	10,195	(9,464)	14,468
Realized (loss) gain	(66)	79	(7)	140
Ending balance : Accumulated other comprehensive loss for Omega OP	(35,464)	(40,340)	(35,464)	(40,340)
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance : Accumulated other comprehensive loss for Omega OP	5,951	(166)	1,463	(1,420)
Unrealized gain (loss)	1,735	(1,840)	5,970	(1,350)
Realized (loss) gain	53	626	306	1,390
Ending balance : Accumulated other comprehensive loss for Omega OP	7,739	(1,380)	7,739	(1,380)
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance : Accumulated other comprehensive loss for Omega OP	(12,219)		(7,110)
Unrealized gain (loss)	8,296	(2,193)	3,187	(2,193)
Ending balance : Accumulated other comprehensive loss for Omega OP	$ (3,923)	$ (2,193)	$ (3,923)	$ (2,193)

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TAXES (Narrative) (Details) $ in Millions		3 Months Ended		6 Months Ended
	Dec. 22, 2017	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2017 USD ($)
Income Tax Contingency [Line Items]
Percentage of minimum taxable income is distributed		90.00%		90.00%
Permitted ownership of a taxable REIT subsidiary ("TRS"), maximum percentage		100.00%		100.00%
Net operating loss carry-forward		$ 5.8		$ 5.8
Net operating loss carryforwards period				carried forward for no more than 20 years
Number of subsidiary elected for treated as TRSs		2		2
State and local income tax provision		$ 0.2	$ 0.5	$ 0.3	$ 1.5
Provision (benefit) for foreign income taxes		$ 0.6	$ 0.1	$ 1.0	$ 0.2
Tax Year 2017 [Member]
Income Tax Contingency [Line Items]
U.S. federal corporate income tax rate under TCJA	35.00%
Latest Tax Year [Member]
Income Tax Contingency [Line Items]
U.S. federal corporate income tax rate under TCJA	21.00%

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STOCK-BASED COMPENSATION (Narrative) (Detail) - USD ($) $ in Thousands		6 Months Ended
	Jun. 08, 2018	Jun. 30, 2018	Jan. 01, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
2018 Plan increase of shares outstanding available	4,500,000
Shares of restricted stock awarded		3,194,405
Percentage of operating partnership units distributions		10.00%
Unrecognized compensation cost		$ 27,300
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock awarded		440,322
Unrecognized compensation cost		$ 6,900
RSUs | 1/1/2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock awarded		169,900	169,900
Unrecognized compensation cost		$ 3,900
LTIPs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock awarded		1,638,002
Unrecognized compensation cost		$ 9,800
Relative TSR PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock awarded		1,116,081
Unrecognized compensation cost		$ 10,600
2020 LTIP Units | LTIPs | 1/1/2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock awarded		677,488	677,488
Unrecognized compensation cost		$ 4,300
2020 TSR | Relative TSR PRSUs | 1/1/2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of restricted stock awarded		334,544	334,544
Unrecognized compensation cost		$ 4,800

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STOCK-BASED COMPENSATION (Schedule of Stock-based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Stock-Based Compensation [Abstract]
Stock-based compensation expense	$ 4,089	$ 3,734	$ 8,145	$ 7,478

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STOCK-BASED COMPENSATION (Schedule of Unrecognized Compensation Awards) (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jan. 01, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares/Units	3,194,405
Grant Date Average Fair Value Per Unit/ Share	$ 16.07
Total Compensation Cost	$ 51,300
Unrecognized Compensation Cost	$ 27,300
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares/Units	440,322
Grant Date Average Fair Value Per Unit/ Share	$ 30.86
Total Compensation Cost	$ 13,600
Unrecognized Compensation Cost	$ 6,900
LTIPs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares/Units	1,638,002
Grant Date Average Fair Value Per Unit/ Share	$ 10.80
Total Compensation Cost	$ 17,700
Unrecognized Compensation Cost	$ 9,800
Relative TSR PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares/Units	1,116,081
Grant Date Average Fair Value Per Unit/ Share	$ 17.97
Total Compensation Cost	$ 20,000
Unrecognized Compensation Cost	$ 10,600
3/17/2016 | RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2016
Shares/Units	130,006
Grant Date Average Fair Value Per Unit/ Share	$ 34.78
Total Compensation Cost	$ 4,500
Weighted Average Period of Expense Recognition	33 months
Unrecognized Compensation Cost	$ 800
Performance Period	N/A
Vesting Dates	12/31/2018
3/17/2016 | 2018 LTIP Units | LTIPs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2016
Shares/Units	370,152
Grant Date Average Fair Value Per Unit/ Share	$ 13.21
Total Compensation Cost	$ 4,900
Weighted Average Period of Expense Recognition	45 months
Unrecognized Compensation Cost	$ 1,900
Performance Period	1/1/2016-12/31/2018
Vesting Dates	Quarterly in 2019
3/17/2016 | 2018 TSR | Relative TSR PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2016
Shares/Units	305,563
Grant Date Average Fair Value Per Unit/ Share	$ 16.44
Total Compensation Cost	$ 5,000
Weighted Average Period of Expense Recognition	45 months
Unrecognized Compensation Cost	$ 2,000
Performance Period	1/1/2016-12/31/2018
Vesting Dates	Quarterly in 2019
1/1/2017 | RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2017
Shares/Units	140,416
Grant Date Average Fair Value Per Unit/ Share	$ 31.26
Total Compensation Cost	$ 4,400
Weighted Average Period of Expense Recognition	36 months
Unrecognized Compensation Cost	$ 2,200
Performance Period	N/A
Vesting Dates	12/31/2019
1/1/2017 | 2019 LTIP Units | LTIPs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2017
Shares/Units	399,726
Grant Date Average Fair Value Per Unit/ Share	$ 12.61
Total Compensation Cost	$ 5,000
Weighted Average Period of Expense Recognition	48 months
Unrecognized Compensation Cost	$ 3,200
Performance Period	1/1/2017-12/31/2019
Vesting Dates	Quarterly in 2020
1/1/2017 | 2019 TSR | Relative TSR PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2017
Shares/Units	285,338
Grant Date Average Fair Value Per Unit/ Share	$ 18.04
Total Compensation Cost	$ 5,100
Weighted Average Period of Expense Recognition	48 months
Unrecognized Compensation Cost	$ 3,200
Performance Period	1/1/2017-12/31/2019
Vesting Dates	Quarterly in 2020
1/1/2018 | RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2018
Shares/Units	169,900	169,900
Grant Date Average Fair Value Per Unit/ Share	$ 27.54
Total Compensation Cost	$ 4,700
Weighted Average Period of Expense Recognition	36 months
Unrecognized Compensation Cost	$ 3,900
Performance Period	N/A
Vesting Dates	12/31/2020
1/1/2018 | 2020 LTIP Units | LTIPs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2018
Shares/Units	677,488	677,488
Grant Date Average Fair Value Per Unit/ Share	$ 7.31
Total Compensation Cost	$ 5,000
Weighted Average Period of Expense Recognition	48 months
Unrecognized Compensation Cost	$ 4,300
Performance Period	1/1/2018-12/31/2020
Vesting Dates	Quarterly in 2021
1/1/2018 | 2020 TSR | Relative TSR PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2018
Shares/Units	334,544	334,544
Grant Date Average Fair Value Per Unit/ Share	$ 16.65
Total Compensation Cost	$ 5,600
Weighted Average Period of Expense Recognition	48 months
Unrecognized Compensation Cost	$ 4,800
Performance Period	1/1/2018-12/31/2020
Vesting Dates	Quarterly in 2021
3/31/2015 | 2017 LTIP Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2015
Shares/Units	137,249
Grant Date Average Fair Value Per Unit/ Share	$ 14.66
Total Compensation Cost	$ 2,000
Weighted Average Period of Expense Recognition	45 months
Unrecognized Compensation Cost	$ 300
Performance Period	1/1/2015-12/31/2017
Vesting Dates	Quarterly in 2018
3/31/2015 | 2017 TSR | Relative TSR PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2015
Shares/Units	137,249
Grant Date Average Fair Value Per Unit/ Share	$ 22.50
Total Compensation Cost	$ 3,100
Weighted Average Period of Expense Recognition	45 months
Unrecognized Compensation Cost	$ 400
Performance Period	1/1/2015-12/31/2017
Vesting Dates	Quarterly in 2018
4/1/2015 | 2017 LTIP Units | LTIPs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2015
Shares/Units	53,387
Grant Date Average Fair Value Per Unit/ Share	$ 14.81
Total Compensation Cost	$ 800
Weighted Average Period of Expense Recognition	45 months
Unrecognized Compensation Cost	$ 100
Performance Period	1/1/2015-12/31/2017
Vesting Dates	Quarterly in 2018
4/1/2015 | 2017 TSR | Relative TSR PRSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant Year	2015
Shares/Units	53,387
Grant Date Average Fair Value Per Unit/ Share	$ 22.92
Total Compensation Cost	$ 1,200
Weighted Average Period of Expense Recognition	45 months
Unrecognized Compensation Cost	$ 200
Performance Period	1/1/2015-12/31/2017
Vesting Dates	Quarterly in 2018
Board of Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized Compensation Cost	$ 1,500

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BORROWING ACTIVITIES AND ARRANGEMENTS (Schedule of Borrowings) (Details) $ in Thousands	3 Months Ended		6 Months Ended		18 Months Ended
	Jun. 30, 2018 USD ($) property	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) property	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) property	Mar. 31, 2018 property	Dec. 31, 2017 USD ($)
Debt Instrument [Line Items]
Total secured borrowings - net							$ 53,098
Revolving line of credit	$ 220,000		$ 220,000		$ 220,000		290,000
Total term loans - net	902,168		902,168		902,168		904,670
Discount - net	(19,798)		(19,798)		(19,798)		(21,073)
Deferred financing costs - net	(24,313)		(24,313)		(24,313)		(26,037)
Total senior notes and other unsecured borrowings - net	3,325,889		3,325,889		3,325,889		3,324,390
Total unsecured borrowings - net	4,448,057		4,448,057		4,448,057		4,519,060
Total secured and unsecured borrowings - net	$ 4,448,057		$ 4,448,057		$ 4,448,057		4,572,158
Debt instrument, covenant compliance			we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings
Debt instrument, covenant description			Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants. As of June 30, 2018 and December 31, 2017, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings. Omega OP, the guarantor of Parent's outstanding senior notes, does not directly own any substantive assets other than its interest in non-guarantor subsidiaries.
Number Of Facilities Sold | property	45		45		45	14
Gain (Loss) on Disposition of Assets	$ (2,891)	$ (622)	$ 14,609	$ 6,798
Secured Debt [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross							53,098
Unsecured Debt [Member] | Revolving Credit Facility
Debt Instrument [Line Items]
Maturity					2021
Rate	3.29%		3.29%		3.29%
Long-term Debt, Gross	$ 220,000		$ 220,000		$ 220,000		290,000
Subordinated Debt [Member]
Debt Instrument [Line Items]
Maturity					2021
Rate	9.00%		9.00%		9.00%
Long-term Debt, Gross	$ 20,000		$ 20,000		$ 20,000		20,000
Hud Mortgages Assumed December 2011 [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Maturity					2044
Long-term Debt, Gross							53,666
Deferred Financing Costs - Net [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Long-term Debt, Gross							(568)
Term Loan [Member] | Unsecured Debt [Member]
Debt Instrument [Line Items]
Discounts and deferred financing costs - net	(4,862)		(4,862)		$ (4,862)		(5,460)
Total term loans - net	$ 902,168		$ 902,168		$ 902,168		904,670
U.S. term loan | Unsecured Debt [Member]
Debt Instrument [Line Items]
Maturity					2022
Rate	3.54%		3.54%		3.54%
Long-term Debt, Gross	$ 425,000		$ 425,000		$ 425,000		425,000
Sterling term loan | Unsecured Debt [Member]
Debt Instrument [Line Items]
Maturity					2022
Rate	1.95%		1.95%		1.95%
Long-term Debt, Gross	$ 132,030		$ 132,030		$ 132,030		135,130
Omega OP Term Loan | Unsecured Debt [Member]
Debt Instrument [Line Items]
Maturity					2022
Rate	3.54%		3.54%		3.54%
Long-term Debt, Gross	$ 100,000		$ 100,000		$ 100,000		100,000
2015 Term Loan | Unsecured Debt [Member]
Debt Instrument [Line Items]
Maturity					2022
Rate	3.80%		3.80%		3.80%
Long-term Debt, Gross	$ 250,000		$ 250,000		$ 250,000		$ 250,000
4.375% notes due 2023
Debt Instrument [Line Items]
Rate	4.375%		4.375%		4.375%		4.375%
4.375% notes due 2023 | Senior Notes [Member]
Debt Instrument [Line Items]
Maturity					2023
Rate	4.375%		4.375%		4.375%
Long-term Debt, Gross	$ 700,000		$ 700,000		$ 700,000		$ 700,000
4.95% notes due 2024
Debt Instrument [Line Items]
Rate	4.95%		4.95%		4.95%		4.95%
4.95% notes due 2024 | Senior Notes [Member]
Debt Instrument [Line Items]
Maturity					2024
Rate	4.95%		4.95%		4.95%
Long-term Debt, Gross	$ 400,000		$ 400,000		$ 400,000		$ 400,000
4.50% notes due 2025
Debt Instrument [Line Items]
Rate	4.50%		4.50%		4.50%		4.50%
4.50% notes due 2025 | Senior Notes [Member]
Debt Instrument [Line Items]
Maturity					2025
Rate	4.50%		4.50%		4.50%
Long-term Debt, Gross	$ 400,000		$ 400,000		$ 400,000		$ 400,000
5.25% notes due 2026
Debt Instrument [Line Items]
Rate	5.25%		5.25%		5.25%		5.25%
5.25% notes due 2026 | Senior Notes [Member]
Debt Instrument [Line Items]
Maturity					2026
Rate	5.25%		5.25%		5.25%
Long-term Debt, Gross	$ 600,000		$ 600,000		$ 600,000		$ 600,000
4.50% notes due 2027
Debt Instrument [Line Items]
Rate	4.50%		4.50%		4.50%		4.50%
4.50% notes due 2027 | Senior Notes [Member]
Debt Instrument [Line Items]
Maturity					2027
Rate	4.50%		4.50%		4.50%
Long-term Debt, Gross	$ 700,000		$ 700,000		$ 700,000		$ 700,000
4.75% notes due 2028
Debt Instrument [Line Items]
Rate	4.75%		4.75%		4.75%		4.75%
4.75% notes due 2028 | Senior Notes [Member]
Debt Instrument [Line Items]
Maturity					2028
Rate	4.75%		4.75%		4.75%
Long-term Debt, Gross	$ 550,000		$ 550,000		$ 550,000		$ 550,000
Other Debt [Member] | Unsecured Debt [Member]
Debt Instrument [Line Items]
Maturity					2018
Long-term Debt, Gross							1,500
Omega OP
Debt Instrument [Line Items]
Total secured borrowings - net							53,098
Total term loans - net	99,488		99,488		$ 99,488		$ 99,423
Gain (Loss) on Disposition of Assets	(2,891)	$ (622)	14,609	$ 6,798
Omega OP | Term Loan [Member] | Unsecured Debt [Member]
Debt Instrument [Line Items]
Deferred financing costs - net	500		$ 500		$ 500
AR | Skilled Nursing Facilities [Member]
Debt Instrument [Line Items]
Sale Of Property, Assumption of Liabilities by Acquirer On Transaction	$ 53,000
Number Of Facilities Sold | property	12		12		12
Gain (Loss) on Disposition of Assets	$ 600
Debt weighted average interest rate	3.06%		3.06%		3.06%
Debt Instrument, Maturity Date	Jul. 01, 2044

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FINANCIAL INSTRUMENTS (Schedule of Financial Instruments) (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Assets:
Investments in direct financing leases - net	$ 349,465	$ 364,965
Mortgage notes receivable - net	703,309	671,232
Other investments - net	377,206	276,342
Total, assets fair value	1,429,980	1,312,539
Liabilities:
Revolving line of credit	220,000	290,000
U.S. term loan	422,782	422,498
Sterling term loan	131,347	134,360
Omega OP term loan	99,488	99,423
2015 Term loan	248,551	248,390
HUD debt - net		53,098
Subordinated debt - net	20,322	20,376
Other		1,500
Total, liabilities fair value	$ 4,448,057	4,572,158
HUD debt - net		53,098
Fair value, option, methodology and assumptions	The following methods and assumptions were used in estimating fair value disclosures for financial instruments.Direct financing leases: The fair value of the investments in direct financing leases are estimated using a discounted cash flow analysis, using interest rates being offered for similar leases to borrowers with similar credit ratings (Level 3). In addition, the Company may estimate the fair value of its investment based on the estimated fair value of the collateral using a market approach or an income approach which considers inputs such as, current and projected operating performance of the facilities, projected rent, prevailing capitalization rates and/or coverages and bed values (Level 3).Mortgage notes receivable: The fair value of the mortgage notes receivables are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3).Other investments: Other investments are primarily comprised of notes receivable. The fair values of notes receivable are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3).Revolving line of credit and term loans: The fair value of our borrowings under variable rate agreements are estimated using a present value technique based on expected cash flows discounted using the current market rates (Level 3).Senior notes and subordinated debt: The fair value of our borrowings under fixed rate agreements are estimated using a present value technique based on inputs from trading activity provided by a third-party (Level 2).HUD debt: The fair value of our borrowings under HUD debt agreements are estimated using an expected present value technique based on quotes obtained by HUD debt brokers (Level 2)
4.375% notes due 2023
Liabilities:
Notes Payable	$ 694,059	$ 693,474
Notes issued, interest rate	4.375%	4.375%
4.95% notes due 2024
Liabilities:
Notes Payable	$ 394,186	$ 393,680
Notes issued, interest rate	4.95%	4.95%
4.50% notes due 2025
Liabilities:
Notes Payable	$ 395,021	$ 394,640
Notes issued, interest rate	4.50%	4.50%
5.25% notes due 2026
Liabilities:
Notes Payable	$ 594,674	$ 594,321
Notes issued, interest rate	5.25%	5.25%
4.50% notes due 2027
Liabilities:
Notes Payable	$ 687,248	$ 686,516
Notes issued, interest rate	4.50%	4.50%
4.75% notes due 2028
Liabilities:
Notes Payable	$ 540,379	$ 539,882
Notes issued, interest rate	4.75%	4.75%
Estimate Of Fair Value, Fair Value Disclosure [Member]
Assets:
Investments in direct financing leases - net	$ 349,465	$ 364,965
Mortgage notes receivable - net	726,016	686,772
Other investments - net	373,842	281,031
Total, assets fair value	1,449,323	1,332,768
Liabilities:
Revolving line of credit	220,000	290,000
U.S. term loan	425,000	425,000
Sterling term loan	132,030	135,130
Omega OP term loan	100,000	100,000
2015 Term loan	250,000	250,000
HUD debt - net		51,817
Subordinated debt - net	23,253	23,646
Other		1,500
Total, liabilities fair value	4,443,108	4,665,603
Estimate Of Fair Value, Fair Value Disclosure [Member] | 4.375% notes due 2023
Liabilities:
Notes Payable	694,736	711,190
Estimate Of Fair Value, Fair Value Disclosure [Member] | 4.95% notes due 2024
Liabilities:
Notes Payable	406,220	420,604
Estimate Of Fair Value, Fair Value Disclosure [Member] | 4.50% notes due 2025
Liabilities:
Notes Payable	390,337	399,874
Estimate Of Fair Value, Fair Value Disclosure [Member] | 5.25% notes due 2026
Liabilities:
Notes Payable	605,460	625,168
Estimate Of Fair Value, Fair Value Disclosure [Member] | 4.50% notes due 2027
Liabilities:
Notes Payable	666,345	681,007
Estimate Of Fair Value, Fair Value Disclosure [Member] | 4.75% notes due 2028
Liabilities:
Notes Payable	$ 529,727	$ 550,667

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COMMITMENTS AND CONTINGENCIES (Narrative) (Details)	6 Months Ended
	Jun. 30, 2018
Gronich Securities Class Action [Member]
Loss Contingency, Lawsuit Filing Date	November 16, 2017
Loss Contingency, Name of Defendant	Omega Healthcare Investors, Inc., C. Taylor Pickett, Robert O. Stephenson, and Daniel J. Booth
Loss Contingency, Name of Plaintiff	Dror Gronich
Loss Contingency, Domicile of Litigation	United States District Court for the Southern District of New York
Steve Klein Class Action [Member]
Loss Contingency, Lawsuit Filing Date	November 17, 2017
Loss Contingency, Name of Defendant	Omega Healthcare Investors, Inc., C. Taylor Pickett, Robert O. Stephenson, and Daniel J. Booth
Loss Contingency, Name of Plaintiff	Steve Klein
Loss Contingency, Domicile of Litigation	United States District Court for the Southern District of New York
Consolidated Amended Class Action Complaint [Member]
Loss Contingency, Lawsuit Filing Date	May 25, 2018
Loss Contingency, Name of Plaintiff	Setzer and additional plaintiff Earl Holtzman
Loss Contingency, Allegations	alleges that the defendants violated the Securities Exchange Act of 1934, as amended (the "Exchange Act"), by making materially false and/or misleading statements, and by failing to disclose material adverse facts about the Company's business, operations, and prospects, including the financial and operating results of one of the Company's operators, the ability of such operator to make timely rent payments, and the impairment of certain of the Company's leases and the uncollectibility of certain receivables. The Securities Class Action, which purports to assert claims for violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act, seeks an unspecified amount of monetary damages, interest, fees and expenses of attorneys and experts, and other relief.
Loss Contingency, Laws Affected	purports to assert claims for violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act, seeks an unspecified amount of monetary damages, interest, fees and expenses of attorneys and experts, and other relief. The Company and the officers named in the Amended Complaint filed a Motion to Dismiss on July 17, 2018. Briefing on the Motion to Dismiss is to be completed by September 14, 2018.

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COMMITMENTS AND CONTINGENCIES (Schedule of Remaining Commitments) (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Commitments and Contingencies [Abstract]
Total commitment	$ 730,009
Amounts funded	(450,050)
Remaining commitment	$ 279,959

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EARNINGS PER SHARE/UNIT (Schedule of Computation of Basic and Diluted Earnings per Share) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net income	$ 81,986	$ 68,157	$ 169,919	$ 177,269
Less: net income attributable to noncontrolling interests	(3,450)	(2,900)	(7,163)	(7,572)
Net income available to common stockholders	$ 78,536	$ 65,257	$ 162,756	$ 169,697
Denominator:
Denominator for basic earnings per share	199,497	197,433	199,204	197,223
Effect of dilutive securities:
Common stock equivalents	197	467	167	407
Noncontrolling interest - Omega OP Units	8,766	8,772	8,768	8,793
Denominator for diluted earnings per share	208,460	206,672	208,139	206,423
Earnings per share - basic:
Net income available to common stockholders	$ 0.39	$ 0.33	$ 0.82	$ 0.86
Earnings per share - diluted:
Net income	$ 0.39	$ 0.33	$ 0.82	$ 0.86

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EARNINGS PER SHARE/UNIT (Omega Op Schedule of Computation of Basic and Diluted Earnings per Share) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net income	$ 81,986	$ 68,157	$ 169,919	$ 177,269
Less: net income attributable to noncontrolling interests	(3,450)	(2,900)	(7,163)	(7,572)
Net income available to common stockholders	$ 78,536	$ 65,257	$ 162,756	$ 169,697
Denominator:
Denominator for basic earnings per share	199,497	197,433	199,204	197,223
Effect of dilutive securities:
Common stock equivalents	197	467	167	407
Omega OP Unit equivalents	8,766	8,772	8,768	8,793
Denominator for diluted earnings per share	208,460	206,672	208,139	206,423
Earnings per share - basic:
Net income available to common stockholders	$ 0.39	$ 0.33	$ 0.82	$ 0.86
Earnings per share - diluted:
Net income	$ 0.39	$ 0.33	$ 0.82	$ 0.86
Omega OP
Numerator:
Net income	$ 81,986	$ 68,157	$ 169,919	$ 177,269
Denominator:
Denominator for basic earnings per unit	208,263	206,205	207,972	206,016
Effect of dilutive securities:
Omega OP Unit equivalents	197	467	167	407
Denominator for diluted earnings per unit	208,460	206,672	208,139	206,423
Earnings per unit - basic:
Net income available to Omega OP Unit holders	$ 0.39	$ 0.33	$ 0.82	$ 0.86
Earnings per unit - diluted:
Net income	$ 0.39	$ 0.33	$ 0.82	$ 0.86

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SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS (Schedule of Cash Flow Supplemental Disclosures) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Dec. 31, 2016
Supplemental Disclosure to Consolidated Statements of Cash Flows [Abstract]
Cash and cash equivalents	$ 10,951	$ 21,031	$ 85,937
Restricted cash	2,598	12,203	10,871
Cash, cash equivalents and restricted cash at end of period	13,549	33,234	$ 96,808	$ 107,276
Interest paid during the period, net of amounts capitalized	108,317	97,610
Taxes paid during the period	2,072	2,032
Non cash investing activities
Non cash acquisition of real estate (See Note 2)	(880)	(9,430)
Non cash proceeds from sale of real estate investments (See Note 2)	53,118
Non cash investment in other investments (See Note 5)	(11,026)
Non cash proceeds from other investments (see Note 5)	7,000	(6,353)
Total	48,212	(15,783)
Non cash financing activities
Non cash dispostion of other long-term borrowings (See Note 14)	(53,118)
Change in fair value of cash flow hedges	6,233	(108)
Remeasurement of debt denominated in a foreign currency	(3,100)	2,190
Total	$ (49,985)	$ 2,082

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SUBSEQUENT EVENTS (Narrative) (Details) $ in Millions				6 Months Ended
	Aug. 01, 2018 USD ($) property	Jul. 23, 2018	Jul. 01, 2018 USD ($) property	Jun. 30, 2018
Subsequent Event [Line Items]
Debt instrument, covenant compliance				we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings
Orianna | Subsequent Event [Member]
Subsequent Event [Line Items]
Debt instrument, covenant compliance		Omega notified Orianna that it was in default under the DIP facility and, as a result of such default
INDIANA | Subsequent Event [Member]
Subsequent Event [Line Items]
Provision of contractual rent | $	$ 0.5
Number of facilities transitioned | property	1
MISSISSIPPI | Subsequent Event [Member]
Subsequent Event [Line Items]
Provision of contractual rent | $			$ 12.0
Number of facilities transitioned | property			13