HUNT VALLEY - Omega Healthcare Investors, Inc. (NYSE: OHI) (the 'Company' or 'Omega') announced that it has entered into a new two-year $400 million senior unsecured term loan (the 'Term Loan').
The Term Loan matures on August 8, 2025, with two options by the Company to extend the maturity by 12 additional months for each option, subject to certain conditions. The Term Loan includes an 'accordion feature' that permits the Company to expand its borrowing capacity to an aggregate of up to $500 million.
The Term Loan will bear interest at a rate consistent with the Company's existing $50 million term loan equal to (a) Term or Daily Simple SOFR plus a spread of between 0.85% and 1.85% or (b) the base rate plus a spread between 0.00% and 0.85%, with each spread determined based on the Company's credit rating. The Company also executed $400 million of variable-to-fixed interest rate swaps that fix the Secured Overnight Financing Rate ('SOFR') variable component of the Term Loan at 4.015% for four years. Based on the Company's current 'BBB-' credit rating and giving effect to the related swaps, the Term Loan will bear interest at an all-in fixed rate of 5.565%. The entire amount of the Term Loan will be funded on August 14, 2023, concurrent with the starting of the forward swaps.
The Term Loan commitments were provided by a syndication of 14 financial institutions to the Company. BofA Securities, Inc. is Joint Lead Arranger and Sole Book Runner. Bank of America, N.A. is the Administrative Agent. Citizens Bank, National Association, Credit Agricole Corporate and Investment Bank, JPMorgan Chase Bank, N.A. and Wells Fargo Bank, N.A., are Joint Lead Arrangers and Co-Syndication Agents. The Bank of Nova Scotia, The Huntington National Bank, M&T Bank, MUFG Bank LTD., Regions Bank, Royal Bank of Canada and Truist Bank are Co-Documentation Agents.
Bob Stephenson, Omega's Chief Financial Officer, stated, 'The new Term Loan will fully replenish the $350 million of cash we used to repay our August 1st bond maturity. This transaction further enhances our strong balance sheet, providing additional liquidity, interest rate certainty, and financial flexibility.' Mr. Stephenson continued, 'In addition to the balance sheet cash provided by the Term Loan, we have our entire $1.45 billion revolving credit facility and over $700 million remaining under our ATM equity shelf program available to fund future investments and repay debt maturities, including our $400 million in debt due in April 2024.'
Mr. Stephenson concluded, 'We appreciate our banking relationships and their strong support throughout the execution of this Term Loan. We have enjoyed strong relationships with most of these financial institutions for many years and look forward to our continued partnerships as we strive to deliver further value to our shareholders.'
Omega is a real estate investment trust that invests in the long-term healthcare industry, primarily in skilled nursing and assisted living facilities. Its portfolio of assets is operated by a diverse group of healthcare companies, predominantly in a triple-net lease structure. The assets span all regions within the US, as well as in the UK.
This press release includes forward-looking statements within the meaning of the federal securities laws. All statements regarding Omega's or its tenants', operators', borrowers' or managers' expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, facility transitions, growth opportunities, expected lease income, continued qualification as a real estate investment trust ('REIT'), plans and objectives of management for future operations and statements that include words such as 'anticipate,' 'if,' 'believe,' 'plan,' 'estimate,' 'expect,' 'intend,' 'may,' 'could,' 'should,' 'will' and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ from Omega's expectations.
Omega's actual results may differ materially from those reflected in such forward-looking statements as a result of a variety of factors, including, among other things: (i) uncertainties relating to the business operations of the operators of Omega's properties, including those relating to reimbursement by third-party payors, regulatory matters and occupancy levels; (ii) the impact of novel coronavirus ('COVID-19') on our business and the business of our operators, including without limitation, the termination of the federally declared public health emergency and related government and regulatory support on May 11, 2023, the levels of staffing shortages, increased costs and decreased occupancy experienced by operators of skilled nursing facilities ('SNFs') and assisted living facilities ('ALFs') arising from the pandemic, the ability of operators to comply with new infection control and vaccine protocols, and the extent to which continued government support may be available to operators to offset such costs and the conditions related thereto; (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) Omega's ability to re-lease, otherwise transition or sell underperforming assets or assets held for sale on a timely basis and on terms that allow Omega to realize the carrying value of these assets; (v) the availability and cost of capital to us; (vi) changes in Omega's credit ratings and the ratings of its debt securities; (vii) competition in the financing of healthcare facilities; (viii) competition in the long-term healthcare industry and shifts in the perception of various types of long-term care facilities, including SNFs and ALFs; (ix) additional 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 timing, amount and yield of any additional investments; (xiv) changes in tax laws and regulations affecting REITs; (xv) the potential impact of changes in the SNF and ALF market or local real estate conditions on the Company's 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; (xvi) Omega's ability to maintain its status as a REIT; (xvii) the effect of other factors affecting our business or the businesses of 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, and (xviii) other factors identified in Omega's filings with the SEC. Statements regarding future events and developments and Omega's future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward looking statements.
We caution you that the foregoing list of important factors may not contain all the material factors that are important to you. Accordingly, readers should not place undue reliance on those statements. All forward-looking statements are based upon information available to us on the date of this release. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
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