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. 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  ;


      uncertainties relating to the business operations of the operators of our

(ii) assets, including those relating to reimbursement by third-party payors,


      regulatory matters and occupancy levels;


       the impact of the novel coronavirus ("COVID-19") on our business and the
       business of our operators, including without limitation, the extent and

duration of the COVID-19 pandemic, increased costs and decreased occupancy

levels experienced by operators of skilled nursing facilities ("SNFs") and

(iii) assisted living facilities ("ALFs") in connection therewith, the ability of

operators to comply with new infection control and vaccine protocols, the

long-term impact of vaccination on facility infection rates, and the extent


       to which continued government support may be available to operators to
       offset such costs and the conditions related thereto;

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

(iv) 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;

our ability to re-lease, otherwise transition, or sell underperforming assets

(v) or 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) competition in long-term healthcare industry and shifts in the perception of

various types of long-term care facilities, including SNFs and ALFs;

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

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

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

in the healthcare industry;

(xiii) changes in interest rates;

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

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


      ("REITs");


       the potential impact of changes in the SNF and ALF markets or local real

(xvi) 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;

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

the effect of other factors affecting our business or the businesses of

(xviii) our operators that are beyond our or their control, including natural

disasters, other health crises or pandemics and governmental action;


         particularly in the healthcare industry.


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Overview

Omega Healthcare Investors, Inc. ("Omega") was incorporated in the State of
Maryland on March 31, 1992, and has elected to be taxed as a real estate
investment trust ("REIT") for federal income tax purposes. Omega is structured
as an umbrella partnership REIT ("UPREIT") under which all of Omega's assets are
owned directly or indirectly by, and all of Omega's operations are conducted
directly or indirectly through, its operating partnership subsidiary, OHI
Healthcare Properties Limited Partnership ("Omega OP"). Unless stated otherwise
or the context otherwise requires, the terms "Omega", the "Company," "we," "our"
and "us" refer to Omega Healthcare Investors, Inc. and its consolidated
subsidiaries, including Omega OP, references to "Parent" refer to Omega
Healthcare Properties, Inc. without regard to its consolidated subsidiaries, and
references to "Omega OP" mean OHI Healthcare Properties Limited Partnership and
its consolidated subsidiaries. As of March 31, 2021, Omega owned approximately
97% of the issued and outstanding units of partnership interest in Omega OP
("Omega OP Units"), and investors owned approximately 3% of the Omega OP Units.

Omega has one reportable segment consisting of investments in healthcare-related
real estate properties located in the United States ("U.S.") and the United
Kingdom ("U.K."). Our core business is to provide financing and capital to the
long-term healthcare industry with a particular focus on SNFs and ALFs, and to a
lesser extent, independent living facilities ("ILFs"), rehabilitation and acute
care facilities ("specialty facilities") and medical office buildings. Our core
portfolio consists of long-term leases and mortgage agreements. All of our
leases are "triple-net" leases, which require the operators (we use the term
"operator" to refer to our tenants and mortgagors and their affiliates who
manage and/or operate our properties) 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 to our operators and/or their principals to fund working capital and
capital expenditures.  These loans, which may be either unsecured or secured by
the collateral of the borrower, are classified as other investments.

COVID-19 Pandemic Update


For the year ended December 31, 2020 and for the first quarter of 2021, we have
collected substantially all of the contractual rents owed to us from our
operators (other than operators under a forbearance agreement prior to the
pandemic). However, the COVID-19 pandemic continues to have a significant impact
on our operators. As of April 27, 2021, our operators reported cases of COVID-19
within 212, or 22%, of our 949 operating facilities as of December 31, 2020,
which includes cases involving employees and residents. This represents a
meaningful decline in cases from the 614 facilities with cases, or 64% of our
959 operating facilities, that our operators reported as of December 22, 2020.
 We caution that we have not independently validated such facility virus
incidence information, it may be reported on an inconsistent basis by our
operators, and we can provide no assurance regarding its accuracy or that there
have not been any changes since the time the information was obtained from our
operators; we also undertake no duty to update this information. While we
believe the decline in reported cases noted above is due in large part to
vaccination programs for COVID-19 which have been implemented in many of our
facilities, it remains uncertain when and to what extent these vaccination
programs will continue to mitigate the effects of COVID-19 in our facilities, or
how effective existing vaccines will be against variants of the COVID-19 virus.
The impact of these programs will depend in part on the continued speed,
distribution, efficacy and delivery of the vaccine in our facilities, as well as
participation levels in vaccination programs among the residents and employees
of our operators. Our operators have reported considerable variation in
participation levels among both employees and residents, which may change over
time as additional vaccination clinics are held.

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In addition to experiencing outbreaks of positive cases and deaths of residents
and employees during the pandemic, our operators have been required to, and
continue to, adapt their operations rapidly throughout the pandemic to manage
the spread of the COVID-19 virus as well as the implementation of new treatments
and vaccines, and to implement new requirements relating to infection control,
personal protective equipment ("PPE"), quality of care, visitation protocols,
staffing levels, and reporting, among other regulations, throughout the
pandemic. Many of our operators have reported incurring significant cost
increases as a result of the COVID-19 pandemic, with dramatic increases for
facilities with positive cases. We believe these increases primarily stem from
elevated labor costs, including increased use of overtime and bonus pay, as well
as a significant increase in both the cost and usage of PPE, testing equipment
and processes and supplies, as well as implementation of new infection control
protocols and vaccination programs. In addition, many of our operators have
reported experiencing declines, in some cases that are material, in occupancy
levels as a result of the pandemic, which declines on average appear to be
stabilizing. We believe these declines may be in part due to COVID-19 related
fatalities at the facilities, the delay of SNF placement and/or utilization of
alternative care settings for those with lower level of care needs, the
suspension and/or postponement of elective hospital procedures, fewer discharges
from hospitals to SNFs and higher hospital readmittances from SNFs.

While substantial government support, primarily through the federal CARES Act in
the U.S. and distribution of PPE, vaccines and testing equipment by federal and
state governments, has been allocated to SNFs and to a lesser extent to ALFs,
further government support will likely be needed to continue to offset these
impacts. It is unclear whether and to what extent such government support will
continue to be sufficient and timely to offset these impacts. In particular, it
remains unclear as to whether unallocated funds under the Provider Relief Fund
will be distributed to our operators in any meaningful way, whether additional
funds will be added to the Provider Relief Fund or otherwise allocated to health
care operators or our operators, or whether additional Medicaid funds under the
recently enacted American Rescue Plan Act of 2021 (the "American Rescue Plan
Act") in the U.S. will ultimately support reimbursement to our operators.
Further, to the extent the cost and occupancy impacts on our operators continue
or accelerate and are not offset by continued government relief that is
sufficient and timely, we anticipate that the operating results of certain of
our operators would be materially and adversely affected, some may be unwilling
or unable to pay their contractual obligations to us in full or on a timely
basis and we may be unable to restructure such obligations on terms as favorable
to us as those currently in place. Citing in part the impact of the COVID-19
pandemic and uncertainties regarding the continuing availability of sufficient
government support, during the third and fourth quarters of 2020, four of our
operators indicated in their financial statements substantial doubt regarding
their ability to continue as going concerns.

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

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

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

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Government Regulation and Reimbursement



The healthcare industry is heavily regulated. Our operators, which are primarily
based in the U.S., are subject to extensive and complex federal, state and local
healthcare laws and regulations; we also have several U.K.-based operators that
are impacted by a variety of laws and regulations in their jurisdiction. These
laws and regulations are subject to frequent and substantial changes resulting
from the adoption of new legislation, rules and regulations, and administrative
and judicial interpretations of existing law. The ultimate timing or effect of
these changes, which may be applied retroactively, cannot be predicted. Changes
in laws and regulations impacting our operators, in addition to regulatory
non-compliance by our operators, can have a significant effect on the operations
and financial condition of our operators, which in turn may adversely impact us.
There is the potential that we may be subject directly to healthcare laws and
regulations because of the broad nature of some of these regulations, such as
the Anti-kickback Statute and False Claims Act, among others.

The following information supplements and updates, and should be read in
conjunction with, the information contained under the caption "Item 1. Business
- Government Regulation and Reimbursement" in our Annual Report on   Form 10-K
for the year ended December 31, 2020. Except as discussed below, there have been
no changes to the matters discussed therein that we believe materially impact
us.

The U.S. Department of Health and Human Services ("HHS") declared a public
health emergency on January 31, 2020 following the World Health Organization's
decision to declare COVID-19 a public health emergency of international concern.
This declaration, which has been extended through July 20, 2021,  allows HHS to
provide temporary regulatory waivers and new reimbursement rules designed to
equip providers with flexibility to respond to the COVID-19 pandemic by
suspending various Medicare patient coverage criteria and documentation and care
requirements, including, for example, suspension of the three-day prior hospital
stay coverage requirement and expanding the list of approved services which may
be provided via telehealth. These regulatory actions could contribute to a
change in census volumes and skilled nursing mix that may not otherwise have
occurred. It remains uncertain when federal and state regulators will resume
enforcement of those regulations which are waived or otherwise not being
enforced during the public health emergency due to the exercise of enforcement
discretion.

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

A significant portion of our operators' revenue is derived from
government-funded reimbursement programs, consisting primarily of Medicare and
Medicaid. As federal and state governments continue to focus on healthcare
reform initiatives, efforts to reduce costs by government payors will likely
continue. Significant limits on the scope of services reimbursed and/or
reductions of reimbursement rates could therefore have a material adverse effect
on our operators' results of operations and financial condition. Additionally,
new and evolving payor and provider programs that are tied to quality and
efficiency could adversely impact our tenants' and operators' liquidity,
financial condition or results of operations, and there can be no assurance that
payments under any of these government health care programs are currently, or
will be in the future, sufficient to fully reimburse the property operators for
their operating and capital expenses.

The following is a discussion of recent developments regarding certain U.S. laws
and regulations generally applicable to our operators, and in certain cases, to
us, and their impact. This discussion supplements and should be read in
conjunction with the information under the heading "Item 1. Business -
Government Regulation and Reimbursement" in our Annual Report on   Form 10-K
for the year ended December 31, 2020.

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Reimbursement Changes Related to COVID-19:

U.S. Federal Stimulus Funds, through the CARES Act and Provider Relief Fund,
Appropriating $178 Billion to Health Care Providers. In response to the
pandemic, Congress enacted a series of economic stimulus and relief measures
throughout 2020. On March 18, 2020, the Families First Coronavirus Response Act
was enacted in the U.S., providing a temporary 6.2% increase to each qualifying
state and territory's Medicaid Federal Medical Assistance Percentage ("FMAP")
effective January 1, 2020. The temporary FMAP increase will extend through the
last day of the calendar quarter in which the public health emergency
terminates. States will make individual determinations about how this additional
Medicaid reimbursement will be applied to SNFs, if at all.

In a further response to the pandemic, the CARES Act authorized approximately
$178 Billion to be distributed through the Public Health and Social Services
Emergency Fund ("Provider Relief Fund") to reimburse eligible healthcare
providers for health care related expenses or lost revenues that are
attributable to coronavirus. The Provider Relief Fund is administered under the
broad authority and discretion of HHS and recipients are not required to repay
distributions received to the extent they are used in compliance with applicable
requirements.

HHS began distributing Provider Relief Fund grants in April 2020 and has made
grants available to various provider groups in three general phases. In May
2020, HHS announced that approximately $9.5 Billion in targeted distributions
would be made available to eligible skilled nursing facilities, approximately
$2.5 Billion of which were composed of performance-based incentive payments tied
to a facility's infection rate. Approximately $8.5 billion in additional funds
were added to the Provider Relief Fund through the American Rescue Plan Act
enacted on March 11, 2021; however, these funds are limited to rural providers
and suppliers.

As of March 15, 2021, based on data published by HHS, it appears that less than
$29 billion of the Provider Relief Fund remains unallocated. HHS continues to
evaluate and provide allocations of, and issue regulations and guidance
regarding, grants made under the CARES Act and related legislation. There are
substantial uncertainties regarding the extent to which our operators will
receive funds which have not been allocated, whether additional funds will be
allocated to the Provider Relief Fund, health care providers or senior care
providers and whether additional payments will be distributed to providers, the
financial impact of receiving any of these funds on their operations or
financial condition, and whether operators will be able to meet the compliance
requirements associated with the funds. HHS continues to evaluate and provide
allocations of, and issue regulation and guidance regarding, grants made under
the CARES Act.

The CARES Act and related legislation also made other forms of financial
assistance available to healthcare providers, which have the potential to impact
our operators to varying degrees. This assistance includes Medicare and Medicaid
payment adjustments and an expansion of the Medicare Accelerated and Advance
Payment Program, which made available accelerated payments of Medicare funds in
order to increase cash flow to providers. These payments are loans that
providers must repay.  Additionally, CMS suspended Medicare sequestration
payment adjustments, which would have otherwise reduced payments to Medicare
providers by 2%, from May 1, 2020 through December 31, 2021, but also extended
sequestration through 2030.  While not limited to healthcare providers, the
CARES Act additionally provided payroll tax relief for employers, allowing them
to defer payment of employer Social Security taxes that are otherwise owed for
wage payments made after March 27, 2020 through December 31, 2020 to December
31, 2021 with respect to 50% of the payroll taxes owed, with the remaining 50%
deferred until December 31, 2022.

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





In addition to COVID-19 reimbursement changes, several regulatory initiatives
announced in 2020 and the first quarter of 2021 focused on addressing quality of
care in long-term care facilities, including those related to COVID-19 testing
and infection control protocols, vaccine protocols, staffing levels, reporting
requirements, and visitation policies, as well as increased inspection of
nursing homes. For example, recent updates to the Nursing Home Care website and
the Five Star Quality Rating System include revisions to the inspection process,
adjustment of staffing rating thresholds and the implementation of new quality
measures. Although the American Rescue Plan Act did not allocate specific funds
to SNF or assisted living facility providers, approximately $200 million was
allocated to quality improvement organizations to provide infection control and
vaccination uptake support to SNFs.



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

Reimbursement Generally:

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

Medicare.  Payments to providers continue to be increasingly tied to quality and
efficiency.  The Patient Driven Payment Model ("PDPM"), which was designed by
CMS to improve the incentives to treat the needs of the whole patient, became
effective October 1, 2019. Prior to COVID-19, we believed that certain of our
operators could realize efficiencies and cost savings from increased concurrent
and group therapy under PDPM and some had reported early positive results. Given
the ongoing impacts of COVID-19, many operators are and may continue to be
restricted from pursuing concurrent and group therapy and unable to realize
these benefits. Additionally, our operators continue to adapt to the
reimbursement changes and other payment reforms resulting from the value based
purchasing programs applicable to SNFs under the 2014 Protecting Access to
Medicare Act, which became effective on October 1, 2018. These reimbursement
changes have had and may, together with any further reimbursement changes to
PDPM, in the future have an adverse effect on the operations and financial
condition of some operators and could adversely impact the ability of operators
to meet their obligations to us.

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Department of Justice and Other Enforcement Actions:



SNFs are under intense scrutiny for ensuring the quality of care being rendered
to residents and appropriate billing practices conducted by the facility. The
Department of Justice ("DOJ") has historically used the False Claims Act to
civilly pursue nursing homes that bill the federal government for services not
rendered or care that is grossly substandard. For example, California
prosecutors announced in March 2021 an investigation into a skilled nursing
provider that is affiliated with one of our operators, alleging the chain
manipulated the submission of staffing level data in order to improve its Five
Star rating. In 2020, the DOJ launched a National Nursing Home Initiative to
coordinate and enhance civil and criminal enforcement actions against nursing
homes with grossly substandard deficiencies. Such enforcement activities are
unpredictable and may develop over lengthy periods of time. An adverse
resolution of any of these enforcement activities or investigations incurred by
our operators may involve injunctive relief and/or substantial monetary
penalties, either or both of which could have a material adverse effect on their
reputation, business, results of operations and cash flows.

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, 2020.  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 2020 Annual Report on   Form 10-K   for
the year ended December 31, 2020, in Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations.

There have been no material changes to our critical accounting policies or
estimates since December 31, 2020.  See also Note 2 - Summary of Significant
Accounting Policies to our Annual Report on   Form 10-K   for the year ended
December 31, 2020.

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 March 31, 2021 and 2020

Revenues



Our revenues for the three months ended March 31, 2021 totaled $273.8 million,
an increase of approximately $20.7 million over the same period in 2020. The
$20.7 million increase was primarily the result of (i) a $26.8 million increase
in rental income resulting from facility acquisitions, facilities placed in
service, and facility transitions, (ii) a $4.9 million increase in rental income
resulting from the acceleration of certain in-place lease liabilities, and (iii)
a $1.0 million increase in other investment income primarily related to new
mortgages or notes and additional funding to existing operators. These increases
were partially offset by (i) a $8.6 million decrease in rental income resulting
from placing operators on cash basis of revenue recognition and (ii) a $3.6
million decrease in rental income resulting from facility sales and facility
transitions.

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Expenses


Expenses for the three months ended March 31, 2021 totaled $191.2 million, an
increase of approximately $28.8 million over the same period in 2020. The $28.8
million increase was primarily due to: (i) a $25.1 million increase in
impairment on real estate properties related to four facilities in the first
quarter of 2021 (compared to three facilities during the same period in 2020) to
reduce their book values to their estimated fair value less costs to sell or
fair value, (ii) a $3.1 million increase in interest expense primarily resulting
from the issuance during the fourth quarter of 2020 of the $700 million of
Senior Notes due 2031 and the issuance during the first quarter of 2021 of the
$700 million of Senior Notes due 2033, partially offset by the retirement of
term loans in the fourth quarter of 2020, (iii) a $2.2 million increase in
depreciation expense primarily resulting from facility acquisitions and capital
additions, offset by facility sales and facilities reclassified to assets held
for sale, and (iv) a $2.0 million increase in acquisition, merger and transition
related costs primarily resulting from the Daybreak transition. These increases
were partially offset by (i) a $1.0 million recovery for credit losses primarily
resulting from decreases in average time to maturity, decreases in loss rates,
and decreases in loan balances compared to a $1.5 million provision for credit
losses during the same period in 2020 and (ii) a $0.9 million decrease in real
estate taxes primarily related to facility sales and transitions.

Other Income (Expense)



For the three months ended March 31, 2021, total other income was $70.9 million,
an increase of approximately $69.9 million over the same period in 2020. The
increase was mainly due to a $98.5 million increase in gain on assets sold
related to the sale of 24 facilities in the first quarter of 2021 compared to
the sale of six facilities during the same period in 2020 offset by a $29.7
million increase in loss on debt extinguishment primarily related to fees,
premiums, and expenses related to the purchase of $350 million of the 4.375%
Senior Notes due 2023 during the first quarter of 2021.

National Association of Real Estate Investment Trusts Funds From Operations

Our funds from operations ("Nareit FFO") for the three months ended March 31, 2021 was $170.2 million compared to $181.0 million for the same period in 2020.



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 and changes in the fair value of
warrants. Adjustments for unconsolidated partnerships and joint ventures are
calculated to reflect funds from operations on the same basis. 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 months ended March 31, 2021 and 2020:


                                                             Three Months Ended
                                                                 March 31,
                                                             2021           2020

                                                               (in thousands)
Net income                                                $   164,366    $   92,279

Deduct gain from real estate dispositions                   (100,342)

(1,838)


Deduct gain from real estate dispositions -
unconsolidated joint ventures                                (14,924)

(117)


                                                               49,100

90,324

Elimination of non-cash items included in net income: Depreciation and amortization

                                  84,849

82,643


Depreciation - unconsolidated joint ventures                    3,361

3,632


Add back impairments on real estate properties                 28,689

3,639


Add back impairments on real estate properties -
unconsolidated joint ventures                                   4,178

-


Add back unrealized loss on warrants                               72      

    775
Nareit FFO                                                $   170,249    $  181,013

Portfolio and Recent Developments

The following table summarizes the significant asset acquisitions that occurred during the first three months of 2021:




              Number of                                                           Total              Initial
              Facilities                        Country/                       Investment             Annual

Period    SNF ALF Specialty                      State                     

  (in millions)       Cash Yield(1)
  Q1        -  17         7    AZ, CA, FL, IL, NJ, OR, PA, TN, TX, VA, WA    $         511.3 (2)            8.43 %
  Q1        6   -         -                        FL                                   83.1                9.25 %
Total       6  17         7                                                  $         594.4

(1) The initial annual cash yield reflects the initial cash rent divided by the

purchase price.

On January 20, 2021, we acquired 24 facilities from Healthpeak Properties,

(2) Inc. The acquisition involved the assumption of an in-place master lease with

Brookdale Senior Living Inc.

Other Recent Developments


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

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



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Asset Held for Sale

As of March 31, 2021, we have 6 facilities, totaling $7.9 million classified as assets held for sale. We expect to sell these facilities over the next twelve months.

Asset Sales, Impairments, Contractual Receivables and Other Receivables and Lease Inducements

Asset Sales



During the first quarter of 2021, we sold 24 facilities subject to operating
leases for approximately $188.3 million in net cash proceeds, recognizing a net
gain of approximately $100.3 million.

Impairments



During the first quarter of 2021, we recorded impairments on real estate
properties of approximately $28.7 million on four facilities (three were
subsequently reclassified to assets held for sale). 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
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 non-binding offers from
unrelated third parties and/or broker quotes (a Level 3 input).

Contractual Receivables, Other Receivables and Lease Inducements

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




                                            March 31,       December 31,
                                               2021             2020

                                                   (in thousands)

Contractual receivables - net              $     11,428    $        10,408

Effective yield interest receivables $ 11,884 $ 12,195 Straight-line rent receivables

                  143,599            139,046
Lease inducements                                81,186             83,425
Other receivables and lease inducements    $    236,669    $       234,666


During the first quarter of 2021, we wrote-off approximately $2.7 million of
straight-line rent receivables to rental income as a result of transitioning one
facility and placing one operator on a cash basis due to changes in our
evaluation of the collectibility of future rent payments due under the lease
agreement.

Other Investments

Genesis

On March 6, 2018, we amended certain terms of our $48.0 million secured term
loan with Genesis. The $48.0 million term loan bears interest at a fixed rate of
14% per annum, of which 9% per annum is paid-in-kind and was initially scheduled
to mature on July 29, 2020. The maturity date of this loan was extended during
the first quarter of 2021 to January 1, 2024. This term loan (and the $16.0
million term loan discussed below) is secured by a first priority lien on and
security interest in certain collateral of Genesis. As of March 31, 2021,
approximately $66.7 million is outstanding on this term loan.

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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 is paid-in-kind, and was initially scheduled to mature on July 29, 2020.
The maturity date of this loan was extended during the first quarter of 2021 to
January 1, 2024. As of March 31, 2021, approximately $18.6 million is
outstanding on this term loan.

Daybreak


During the first quarter of 2021, we transitioned 14 Daybreak facilities to
existing operators and sold two Daybreak facilities. As of March 31, 2021, we
had two remaining Daybreak facilities with a net book value of approximately
$0.7 million, which we expect to sell during the second quarter of 2021. The
total annual rent or rent equivalents achieved through transitioning the
Daybreak portfolio equal $16.6 million. On April 6, 2021, we terminated the
Daybreak master lease and exited that relationship.

We continue to closely monitor the performance of all of our operators, as well as industry trends and developments generally.

Liquidity and Capital Resources

At March 31, 2021, we had total assets of $9.8 billion, total equity of $4.1 billion and debt of $5.5 billion, representing approximately 56.9% of total capitalization.

Financing Activities and Borrowing Arrangements

$700 Million 3.250% Senior Notes due 2033



In March 2021, we issued $700 million aggregate principal amount of our 3.250%
Senior Notes due 2033 (the "2033 Senior Notes"). The 2033 Senior Notes mature on
April 15, 2033. The 2033 Senior Notes were sold at an issue price of 99.304% of
their face value before the underwriters' discount. We used the proceeds from
this offering to pay down outstanding borrowings on the Revolving Line of
Credit, repay the Sterling term loan, and fund the tender offer to purchase $350
million of the 4.375% Senior Notes due 2023 and the payment of accrued interest
and related fees, premiums and expenses. In connection with this transaction, we
recorded approximately $29.7 million in related fees, premiums, and expenses
which were recorded as Loss on debt extinguishment in our Consolidated Statement
of Operations.

$400 Million Forward Starting Swaps



On March 27, 2020, we entered into five forward starting swaps totaling $400
million. We designated the forward starting swaps as cash flow hedges of
interest rate risk associated with interest payments on a forecasted issuance of
fixed rate long-term debt, initially expected to occur within the next five
years. The swaps are effective on August 1, 2023 and expire on August 1, 2033
and were issued at a fixed rate of approximately 0.8675%. In March 2021, in
conjunction with the issuance of $700 million aggregate principal amount of our
3.25% Senior Notes due 2033, we discontinued hedge accounting for these five
forward starting swaps. Amounts reported in Accumulated Other Comprehensive
Income related to these discontinued cash flow hedging relationships will be
reclassified to interest expense over a ten year term. Simultaneously, we
re-designated these swaps in new cash flow hedging relationships of interest
rate risk associated with interest payments on another forecasted issuance of
long-term debt. We are hedging our exposure to the variability in future cash
flows for forecasted transactions over a maximum period of 46 months (excluding
forecasted transactions related to the payment of variable interest on existing
financial instruments).

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£174 Million Foreign Exchange Forward Starting Swaps


From the issuance date of our GBP borrowings through the prepayment date in
March 2021, we used a nonderivative, GBP-denominated term loan and line of
credit totaling £174 million to hedge a portion of our net investments in
foreign operations. During March 2021 and concurrent with the settlement of our
GBP-denominated term loan and repayment of our GBP denominated borrowings under
our line of credit, we entered into four foreign currency forwards that mature
on March 8, 2024 to hedge a portion of our net investments in foreign
operations, effectively replacing the terminated net investment hedge. For these
derivatives that are designated and qualify as net investment hedges, the gain
or loss on the derivative is reported in Accumulated Other Comprehensive Income
as part of the cumulative translation adjustment. Amounts are reclassified out
of Accumulated Other Comprehensive Income into earnings when the hedged net
investment is either sold or substantially liquidated.

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

Supplemental Guarantor Information


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

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

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

$500 Million Equity Shelf Program

The table below presents information regarding the shares issued under the Equity Shelf Program for the three months ended March 31, 2020 and 2021:




                   Shares issued  Average Price   Net Proceeds

Three Months Ended (in millions) Per Share (in millions)


  March 31, 2020             0.1 $         37.58 $          1.8
  March 31, 2021             1.6           37.16           60.1


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Dividend Reinvestment and Common Stock Purchase Plan

The table below presents information regarding the shares issued under the Dividend Reinvestment and Common Stock Purchase Plan for the three months ended March 31, 2020 and 2021:




                   Shares issued  Gross Proceeds

Three Months Ended (in millions) (in millions)


  March 31, 2020             0.1 $            3.7
  March 31, 2021             0.4             15.5


Commitments

We have committed to fund the construction of new leased and mortgaged
facilities, capital improvements and other commitments. We expect the funding of
these commitments to be completed over the next several years. Our remaining
commitments at March 31, 2021, are outlined in the table below (in thousands):



Total commitments             $   596,615
Amounts funded to date (1)      (454,837)
Remaining commitments (2)     $   141,778

(1) Includes finance costs.

(2) This amount excludes our remaining commitments to fund under our other

investments of approximately $81.0 million.

Dividends


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

For the three months ended March 31, 2021, we paid dividends of approximately
$158.3 million to our common stockholders. On February 16, 2021, we paid
dividends of $0.67 per outstanding common share to the common stockholders of
record as of the close of business on February 8, 2021.

Liquidity



We believe our liquidity and various sources of available capital, including
cash from operations, our existing availability under our credit facilities,
existing equity sales programs, facility sales and expected proceeds from
mortgage and other investment payoffs are adequate to finance operations, meet
recurring debt service requirements and fund future investments through the

next
twelve months.

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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 $55.9 million as of March 31,
2021, a decrease of $111.7 million as compared to the balance at December 31,
2020. The following is a discussion of changes in cash, cash equivalents and
restricted cash due to operating, investing and financing activities, which are
presented in our Consolidated Statements of Cash Flows.

Operating Activities - Operating activities generated $176.0 million of net cash
flow for the three months ended March 31, 2021, as compared to $139.1 million
for the same period in 2020, an increase of $36.9 million, which is primarily
due to facility acquisitions and transitions, investments in mortgages and other
investments, and a reduction in lease inducements provided to our operators.

Investing Activities - Net cash flow from investing activities was an outflow of
$396.3 million for the three months ended March 31, 2021, as compared to an
outflow of $55.2 million for the same period in 2020. The $341.1 million change
in cash flow from investing activities related primarily to a $575.4 million
increase in real estate acquisitions, offset by (i) a $170.2 million increase in
proceeds from the sales of real estate investments, (ii) a $35.0 million change
in other investments - net, (iii) a $26.7 million decrease in investment in
construction in progress and capital expenditures and (iv) a $2.5 million refund
of an acquisition related deposit in the first quarter of 2021.

Financing Activities - Net cash flow from financing activities was an inflow of
$108.6 million for the three months ended March 31, 2021, as compared to an
inflow of $235.2 million for the same period in 2020. The $126.6 million change
in cash provided by financing activities was primarily related to (i) a $364.0
million change in our credit facility borrowings - net, (ii) a $33.8 million
increase in payment of financing related costs and (iii) a $3.7 million increase
in dividends paid, offset by (i) a $206.8 million change in other long-term
borrowings - net, (ii) a $58.3 million increase in cash proceeds from the
issuance of common stock in 2021, as compared to the same period in 2020 and
(iii) a $11.7 million increase in net proceeds from our dividend reinvestment
plan in 2021, as compared to the same period in 2020.

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