CALCULATION OF
REGISTRATION FEE
|
Title of Securities to be
Registered
|
Maximum Offering
Price
|
Amount of Registration Fee
(1)
|
|
Common Stock,
$0.10 par
value
|
$100,000,000
|
$5,580
|
(1) Calculated in accordance with Rule
457(r) of the Securities Act of 1933, as amended, and previously paid in
connection with unsold securities registered by the registrant on Registration
Statement on Form S-3, File No. 333-117655, filed July 26,
2004.
|
PROSPECTUS
SUPPLEMENT
(to Prospectus dated April 10,
2008)
|
Filed Pursuant to Rule
424(b)(5)
Registration No.
333-150183
|
$100,000,000
OMEGA HEALTHCARE INVESTORS,
INC.
Common Stock
We have entered into separate equity
distribution agreements with each of UBS Securities LLC, Deutsche Bank
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
which we refer to individually as a “sales agent” and collectively as the “sales
agents,” relating to shares of our common stock, par value $0.10 per share,
offered by this prospectus supplement and the accompanying
prospectus. In accordance with the terms of each equity distribution
agreement, we may offer and sell shares of our common stock having an aggregate
gross sales price of up to $100,000,000 from time to time through or to the
sales agents. Sales of the shares, if any, will be made by means of
ordinary brokers’ transactions on the New York Stock Exchange, or NYSE, or
otherwise at market prices prevailing at the time of sale or negotiated
transactions, or as otherwise agreed with the applicable sales
agent. We will pay each sales agent compensation for sales of the
shares equal to 2% of the gross sales price per share of shares sold through
such sales agent under the applicable equity distribution
agreement.
Under the terms of the equity
distribution agreements, we also may sell shares to each of UBS Securities LLC,
Deutsche Bank Securities Inc. or Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as principal for its own respective account, at a price agreed
upon at the time of sale. If we sell shares to UBS Securities LLC,
Deutsche Bank Securities Inc. or Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as principal, we will enter into a separate terms agreement with
UBS Securities LLC, Deutsche Bank Securities Inc. or Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as applicable, setting forth the terms of such
transaction, and we will describe the agreement in a separate prospectus
supplement or pricing supplement.
No sales agent is required to sell any
specific number or dollar amount of shares, but, subject to the terms and
conditions of the equity distribution agreements and unless otherwise agreed by
the sales agents and us, each sales agent will use its commercially reasonable
efforts to sell the shares offered by this prospectus supplement and the
accompanying prospectus as our agent. The offering of common stock pursuant to
each equity distribution agreement will terminate upon the earlier of (1) the
sale of all shares of common stock subject to the equity distribution
agreements, or (ii) with respect to a particular equity distribution agreement,
the termination of that equity distribution agreement by us or the applicable
sales agent.
Our common stock is listed on the NYSE
under the symbol “OHI.” On June 11, 2009, the last reported sale
price of our common stock on the NYSE was $15.73 per share.
Investing in our common stock involves a
high degree of risk. Before buying any shares of our common stock,
you should read the discussion of material risks of investing in our common
stock in “Risk factors” beginning on page S-5 of this prospectus supplement and on
page 4 of the attached prospectus, in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2008, which is incorporated herein by reference,
and any risk factors set forth in our other filings with the Securities and
Exchange Commission pursuant to Sections 13(a), 13(c), or 15(d) of the
Securities Exchange Act of 1934, as amended, as they may be amended, updated or
modified periodically in our reports filed with the Securities and Exchange
Commission.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of
these securities or determined if this prospectus supplement or the accompanying
prospectus are truthful or complete. Any representation to the
contrary is a criminal offense.
|
UBS Investment
Bank
|
Deutsche Bank
Securities
|
Merrill Lynch &
Co.
|
____________________
The date of this prospectus supplement
is June 12, 2009.
You should rely only on the information
contained or incorporated by reference in this prospectus supplement, the
accompanying prospectus and any “free writing prospectus” we authorize to be
delivered to you. We have not, and the sales agents have not,
authorized anyone to provide additional information or information different
from that contained or incorporated by reference in this prospectus supplement,
the accompanying prospectus and any such “free writing
prospectus.” If anyone provides you with different or inconsistent
information, you should not rely on it. This prospectus supplement
and the accompanying prospectus do not constitute an offer to sell, or a
solicitation of an offer to purchase, the securities offered by this prospectus
supplement and the accompanying prospectus in any jurisdiction where it is
unlawful to make such offer or solicitation. Neither the delivery of
this prospectus supplement nor the sale of shares of common stock means that
information contained or incorporated by reference in this prospectus
supplement, the accompanying prospectus and any such “free writing prospectus”
is correct after their respective dates. These documents do not
constitute an offer to sell or solicitation of any offer to buy these shares of
common stock in any circumstances under which the offer or solicitation is
unlawful.
This document is in two
parts. The first part is the prospectus supplement, which describes
the terms of this offering and adds to and updates information contained in the
accompanying prospectus. The second part, the prospectus, provides
more general information, some of which may not apply to this
offering. Generally, when we refer to this prospectus, we are
referring to both parts of this document combined. To the extent
there is a conflict between the information contained in this prospectus
supplement, on the one hand, and the information contained in the accompanying
prospectus, on the other hand, you should rely on the information contained in
this prospectus supplement.
TABLE OF CONTENTS
|
Prospectus
Supplement
|
Page
|
Prospectus Dated April 10,
2008
|
Page
|
|
|
Prospectus supplement
summary
|
S-1
|
About this
Prospectus
|
1
|
|
|
Cautionary language regarding
forward-looking
|
Where You Can find More
Information
|
1
|
||
|
statements
|
S-3
|
Cautionary Language
Regarding
|
||
|
Risk
factors
|
S-5
|
Forward-Looking
Statements
|
3
|
|
|
Use of
proceeds
|
S-7
|
Our Company
|
4
|
|
|
Additional federal income tax
considerations
|
S-8
|
Risk
Factors
|
4
|
|
|
Plan of
distribution
|
S-10
|
Ratio of Earnings to Fixed
Charges
|
5
|
|
|
Affiliations
|
S-11
|
Use of
Proceeds
|
5
|
|
|
Legal
matters
|
S-12
|
Description of
Securities
|
5
|
|
|
Experts
|
S-12
|
Certain Federal Income Tax
Considerations
|
18
|
|
|
Incorporation of certain
information by
|
Plan of
Distribution
|
28
|
||
|
reference
|
S-12
|
Validity of the
Securities
|
30
|
|
|
Where you can find more
information
|
S-13
|
Experts
|
30
|
In this prospectus supplement, unless
otherwise expressly stated or the context otherwise requires, the terms “Omega,”
“we,” “company,” “us,” and “our” refer to Omega Healthcare Investors, Inc.
and its subsidiaries.
S-ii
Prospectus supplement
summary
This
summary highlights information contained elsewhere in this prospectus supplement
and the accompanying prospectus or incorporated by reference in this prospectus
supplement and the accompanying prospectus. This summary does not
contain all of the information that you should consider before making an
investment decision. You should read carefully this entire prospectus
supplement and the accompanying prospectus, including the matters discussed in
“Risk factors” in this prospectus supplement, the accompanying prospectus, our
Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as they
may be amended, updated or modified periodically in our reports filed with the
Securities and Exchange Commission, or SEC, and the financial data and related
notes and the reports incorporated by reference in this prospectus supplement
and the accompanying prospectus, before making an investment
decision.
COMPANY OVERVIEW
We were incorporated in the State of
Maryland on March 31, 1992. We are a
self-administered real estate investment trust, or REIT, investing in
income-producing healthcare facilities, principally long-term care facilities
located in the United
States. We
provide lease or mortgage financing to qualified operators of skilled nursing
facilities, which we refer to as SNFs, and, to a lesser extent, assisted living
facilities, rehabilitation and acute care facilities.
Our portfolio of investments at March
31, 2009, consisted of 256 healthcare facilities, located in 28 states and
operated by 25 third-party operators. Our gross investment in these
facilities totaled approximately $1.5 billion at March 31, 2009, with 99% of our
real estate investments related to long-term healthcare
facilities. This portfolio is made up of (i) 227 SNFs, (ii) seven
assisted living facilities, (iii) two rehabilitation hospitals owned and leased
to third parties, (iii) two independent living facilities, (iv) fixed rate
mortgages on 15 SNF, (v) two SNF that are owned and operated by us and (vi) one
SNF that is currently held for sale by us. At March 31, 2009, we also
held other investments of approximately $26.9 million, consisting primarily of
secured loans to third-party operators of our facilities.
Our filings with the SEC including our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports are accessible free of charge on our
website at http://www.omegahealthcare.com. Information on our website
does not constitute part of this prospectus supplement.
RECENT DEVELOPMENTS
On May 28, 2009, we amended our Articles
of Incorporation to increase the number of authorized shares of our common stock
from 100,000,000 to 200,000,000 shares. The amendment was approved by
our stockholders at the Annual Meeting of Stockholders held on May 21,
2009.
Our existing credit facility is
scheduled to expire in March 2010. We are currently in the process of
renegotiating our existing credit facility and have received written commitments
from a syndicate of four lenders, three of which are affiliates of UBS
Securities LLC, Deutsche Bank Securities Inc. and Merrill Lynch, Pierce Fenner
& Smith Incorporated, respectively, for a new three-year $200 million
revolving senior secured credit facility, which we refer to as the new credit
facility. Based upon the commitments, we anticipate that the new
credit facility will reflect a lower total amount available for borrowing and
higher interest rates than our existing credit facility. We
anticipate that the new credit facility will permit the maximum amount of
borrowings thereunder to be increased to $300 million upon certain conditions.
There is no guarantee that this new credit facility will close on terms
acceptable to us or at all.
CORPORATE
INFORMATION
Our principal executive offices are
located at 200
International Circle, Suite 3500, Hunt Valley, Maryland 21030, and our telephone number is
(410) 427-1700. Additional information regarding our company is
set forth in documents on file with the SEC and incorporated by reference in
this prospectus supplement. See “Incorporation of certain information
by reference” and “Where you can find more information.”
S-1
THE OFFERING
|
Issuer
|
Omega Healthcare Investors,
Inc.
|
|
New York Stock Exchange
symbol
|
OHI
|
|
Common stock we are
offering
|
Shares having an aggregate gross
sales price of up to $100,000,000.
|
|
Manner of
offering
|
Commercially reasonable efforts,
“at-the-market” offering that may be made from time to time through UBS
Securities LLC, Deutsche Bank Securities Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated as sales agents. See “Plan of
distribution.”
|
|
Use of
proceeds
|
We intend to use the net proceeds
from the sale of the shares that we may offer under this prospectus
supplement and the accompanying prospectus, after deducting commissions
and estimated offering expenses, for working capital and general corporate
purposes. Pending the application of such proceeds, we intend
to invest the proceeds in short-term, interest bearing, investment-grade
marketable securities or money market obligations. See “Use of
proceeds.”
|
|
Risk
factors
|
You should carefully consider the
information set forth in the sections of this prospectus supplement, the
accompanying prospectus and our Annual Report on Form 10-K for the fiscal
year ended December 31, 2008 entitled “Risk factors” as well as other
information included in or incorporated by reference in this prospectus
supplement and the accompanying prospectus before deciding whether to
invest in our common
stock.
|
S-2
Cautionary language regarding
forward-looking statements
This prospectus supplement, the
accompanying prospectus and the documents incorporated by reference in this
prospectus supplement and the accompanying prospectus include forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, or Securities Act, and Section 21E of the Securities Exchange
Act of 1934, as amended, or the Exchange Act. All statements other
than statements of historical facts included in this prospectus supplement, the
accompanying prospectus and the documents incorporated by reference in this
prospectus supplement and the accompanying prospectus may constitute
forward-looking statements. 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:
|
Ø
|
those items discussed under “Risk
factors” in this prospectus supplement, the accompanying prospectus, in
Item 1A to our annual
report on Form 10-K for the year ended December 31, 2008 and as supplemented from
time-to-time in Part II, Item 1A to our quarterly reports on Form
10-Q;
|
|
Ø
|
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;
|
|
Ø
|
the ability of any operators in
bankruptcy to reject unexpired lease obligations, modify the terms of our
mortgages and impede our ability to collect unpaid rent or interest during
the process of a bankruptcy proceeding and retain security deposits for
the debtors’ obligations;
|
|
Ø
|
our ability to sell closed or
foreclosed assets on a timely basis and on terms that allow us to realize
the carrying value of these assets;
|
|
Ø
|
our ability to negotiate
appropriate modifications to the terms of our credit facility;
|
|
Ø
|
our ability to manage, re-lease or
sell any owned and operated
facilities;
|
|
Ø
|
the availability and cost of
capital;
|
|
Ø
|
our ability to maintain our credit
ratings;
|
|
Ø
|
competition in the financing of
healthcare facilities;
|
|
Ø
|
regulatory and other changes in
the healthcare sector;
|
|
Ø
|
the effect of economic and market
conditions generally and, particularly, in the healthcare
industry;
|
|
Ø
|
changes in the financial position
of our operators;
|
|
Ø
|
changes in interest
rates;
|
|
Ø
|
the amount and yield of any
additional investments;
|
|
Ø
|
changes in tax laws and
regulations affecting real estate investment
trusts;
|
|
Ø
|
our ability to maintain our status
as a real estate investment
trust;
|
S-3
Cautionary
language regarding forward-looking statements
|
Ø
|
changes in our credit ratings and
the ratings of our debt and preferred
securities;
|
|
Ø
|
the potential impact of a general
economic slowdown on governmental budgets and healthcare reimbursement
expenditures; and
|
|
Ø
|
the effect of the recent financial
crisis and severe tightening in the global credit
markets.
|
Any subsequent written or oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the cautionary statements set forth
or referred to above, as well as the risk factors incorporated by reference in
this prospectus supplement and the accompanying prospectus. Except as
required by law, we disclaim any obligation to update such statements or to
publicly announce the result of any revisions to any of the forward-looking
statements incorporated by reference in this prospectus supplement and the
accompanying prospectus to reflect future events or
developments.
S-4
Risk factors
An investment in our common stock is
subject to risk. Our business, financial condition, and results of
operations could be materially adversely affected by any of these
risks. The trading price of our common stock could decline due to any
of these risks, and you may lose all or part of your
investment. Before you decide to invest in our common stock, you
should carefully consider the risks described below and in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, as such risks
may be amended, updated or modified periodically in our reports filed with the
SEC, as well as the other information included in and incorporated by reference
in this prospectus supplement and the accompanying
prospectus.
Risks Related to Us and Our
Operations
We may not be able to refinance our
existing debt.
Our existing credit facility is
scheduled to expire in March 2010. We are currently in the process of
renegotiating our existing credit facility and have received written commitments
from a syndicate of four lenders, three of which are affiliates of UBS
Securities LLC, Deutsche Bank Securities Inc. and Merrill Lynch, Pierce, Fenner
& Smith Incorporated, respectively, for the new credit facility.
Based upon the commitments, we anticipate that the new credit facility
will reflect a lower total amount available for borrowing and higher interest
rates than our existing credit facility. Accordingly, we anticipate
incurring increased interest expense from the time that we enter into a new
credit facility. The terms and timing of a new credit facility may
vary based upon satisfaction of currently contemplated pre-closing conditions,
which may or may not be satisfied. Because the commitments are
subject to certain pre-closing conditions, there is no guarantee that the new
credit facility will close on terms acceptable to us or at
all. If we are unable to renew or refinance our existing credit
facility, our business, financial condition and results of operations may be
adversely effected.
Risks Related to Our
Stock
The market value of our common stock
could be substantially affected by various factors.
Market volatility may adversely affect
the market price of our common stock. As with other publically traded
securities, the share price of our common stock depends on many factors, which
may change from time to time, including:
|
·
|
the market for similar securities
issued by REITs;
|
|
·
|
changes in estimates by
analysts;
|
|
·
|
our ability to meet analysts’
estimates;
|
|
·
|
prevailing interest
rates;
|
|
·
|
our credit
rating;
|
|
·
|
general economic and financial
market conditions; and
|
|
·
|
our financial condition,
performance and prospects.
|
Our issuance of additional capital
stock, warrants or debt securities, whether or not convertible, may reduce the
market price for shares of our common stock and dilute the ownership
interests of existing stockholders.
We cannot predict the effect, if any,
that future sales of our capital stock, warrants or debt securities, including
pursuant to the equity distribution agreements, or the availability of our
securities for future sale, will have on the market price of shares of our
common stock. Sales of substantial amounts of our common stock or
preferred shares, warrants or debt securities convertible into or exercisable or
exchangeable for common stock in the public market, or the perception that such
sales might occur, could negatively impact the market price of our common stock
and the terms upon which we may obtain additional equity financing in the
future. The issuance of any additional shares of our common stock or
securities convertible into or exchangeable for common stock or that represent
the right to receive common stock, or the exercise of such securities, could be
substantially dilutive to holders of our common stock, including purchasers of
common stock in this offering.
S-5
In addition, we may issue additional
capital stock in the future to raise capital or as a result of the
following:
|
·
|
the issuance and exercise of
options to purchase our common stock (we have in the past and may in the
future issue options or other securities convertible into or exercisable
for our common stock under remuneration plans and may also issue options
or convertible securities to our employees in lieu of cash bonuses or to
our directors in lieu of director’s fees);
|
|
·
|
the issuance of shares pursuant to
our dividend reinvestment and direct stock purchase
plan;
|
|
·
|
the issuance of debt securities
exchangeable for our common stock;
|
|
·
|
the exercise of warrants that we
may issue in the future; and
|
|
·
|
lenders sometimes ask for warrants
or other rights to acquire shares in connection with providing financing,
and we cannot assure you that our lenders will not request such
rights.
|
There are no assurances of our ability
to pay dividends in the future.
In 2001, our Board of Directors
suspended dividends on shares of our common stock and all series of preferred
stock in an effort to generate cash to address then impending debt
maturities. In 2003, we paid all accrued but unpaid dividends on all
shares of series of preferred stock and reinstated dividends on shares of our
common stock and all series of preferred stock. However, our ability
to pay dividends may be adversely affected if any of the risks described herein
were to occur. Our payment of dividends is subject to compliance with
restrictions contained in our existing credit facility, the indenture relating
to our outstanding 7% senior notes due 2014, the indenture relating to our
outstanding 7% senior notes due 2016 and our outstanding preferred
stock. All dividends will be paid at the discretion of our Board of
Directors and will depend upon our earnings, our financial condition,
maintenance of our REIT status and such other factors as our Board of Directors
may deem relevant from time to time. There are no assurances of our
ability to pay dividends in the future. In addition, our dividends in
the past have included, and may in the future include, a return of
capital.
Holders of our outstanding preferred
stock have liquidation and other rights that are senior to the rights of the
holders of our common stock.
Our Board of Directors has the authority
to designate and issue preferred stock that may have dividend, liquidation and
other rights that are senior to those of our common stock. As of June
10, 2009, 4,339,500 shares of our 8.375% series D cumulative redeemable
preferred stock, or Series D Preferred Stock, were issued and
outstanding. The aggregate liquidation preference with respect to the
outstanding Series D Preferred Stock is approximately $108.5 million, and annual dividends on our
outstanding Series D Preferred Stock were approximately $9.1 million as of June
10, 2009. Holders of our Series D Preferred Stock are generally
entitled to cumulative dividends before any dividends may be declared or set
aside on our common stock. Upon our voluntary or involuntary
liquidation, dissolution or winding up, before any payment is made to holders of
our common stock, holders of our Series D Preferred Stock are entitled to
receive a liquidation preference of $25 per share, plus any accrued and unpaid
distributions. This preference will reduce the remaining amount of
our assets, if any, available to distribute to holders of our common
stock. In addition, holders of our Series D Preferred Stock have the
right to elect two additional directors to our Board of Directors if six
quarterly preferred dividends are in arrears. If this were to occur,
the holders of our Series D Preferred Stock would have significant control over
our affairs, and their interests may differ from those of our other
stockholders.
Legislative or regulatory action could
adversely affect purchasers of our common stock.
In recent years, numerous legislative,
judicial and administrative changes have been made in the provisions of the
federal income tax laws applicable to investments similar to an investment in
our common stock. Changes are likely to continue to occur in the
future, and we cannot assure you that any of these changes will not adversely
affect our stockholders’ stock. Any of these changes could have an
adverse effect on an investment in our common stock or on market value or resale
potential of our common stock. Stockholders are urged to consult with
their own tax advisor with respect to the impact that recent legislation may
have on their investment and the status of legislative, regulatory or
administrative developments and proposals and their potential effect on their
investment in our stock.
S-6
Use of proceeds
We intend to use the net proceeds from
the sale of the shares that we may offer under this prospectus supplement and
the accompanying prospectus, after deducting commissions and estimated offering
expenses, for working capital and general corporate
purposes.
Pending the application of such
proceeds, we intend to invest the proceeds in short-term, interest bearing,
investment-grade marketable securities or money market
obligations.
S-7
The rules dealing with Federal income
taxation are constantly under review by persons involved in the legislative
process and by the IRS and the U.S. Treasury Department. The Housing
and Economic Recovery Tax Act of 2008 (the “2008 Act”) was recently enacted into law. The 2008
Act’s sections that affect the REIT
provisions of the Internal Revenue Code of 1986, as amended (the “Code”), are generally effective for taxable
years beginning after the 2008 Act’s date of enactment, and for us will
generally mean that the new provisions apply
from and after January 1, 2009, except as otherwise indicated
below.
Among others, the 2008 Act made the
following changes to, or clarifications of, the REIT provisions of the Code that
could be relevant for us:
|
Ø
|
Taxable
REIT Subsidiaries. The limit on the
value of taxable REIT subsidiaries’ securities held by a REIT has been
increased from 20 percent to 25 percent of the total value of such REIT’s
assets. See “Certain Federal Income Tax Considerations –
Taxation of Omega – Asset Tests” in the accompanying
prospectus.
|
|
Ø
|
Rents
Received from a Taxable REIT Subsidiary. The rules allowing
certain rental income received by a REIT from its taxable REIT subsidiary
to be treated as qualified rents for purposes of the 75% and 95% gross
income tests has been extended to include rental income received by a REIT
with respect to a lease to its taxable REIT subsidiary of an interest in
real property that is a qualified health care property if such property is
operated on behalf of such subsidiary by a person who is an eligible
independent contractor.
|
|
Ø
|
Foreign
Currency as Cash. Foreign currency that
is the functional currency of a REIT or a qualified business unit of a
REIT and is held for use in the normal course of business of such REIT or
qualified business unit will be treated as cash for purposes of the 75%
asset test. The foreign currency must not be derived from
dealing, or engaging in substantial and regular trading in
securities. See “Certain Federal Income Tax Considerations –
Taxation of Omega – Asset Tests” in the accompanying
prospectus.
|
|
Ø
|
Foreign
Currency Gain. Under the 2008 Act,
real estate foreign exchange gain is not treated as gross income for
purposes of the 75% and 95% gross income tests. Real estate
foreign exchange gain includes gain derived from certain qualified
business units of the REIT and foreign currency gain attributable to (i)
qualifying income under the 75% gross income test, (ii) the acquisition or
ownership of obligations secured by mortgages on real property or
interests in real property, or (iii) being an obligor on an obligation
secured by mortgages on real property or on interests in real
property. In addition, passive foreign exchange gain is not
treated as gross income for purposes of the 95% gross income
test. Passive foreign exchange gain includes real estate
foreign exchange gain and foreign currency gain attributable to (i)
qualifying income under the 95% gross income test, (ii) the acquisition or
ownership of obligations, or (iii) being the obligor on obligations and
that, in the case of (ii) and (iii), does not fall within the scope of the
real estate foreign exchange
definition.
|
|
Ø
|
Expanded
Prohibited Transactions Safe Harbor. The safe harbor from
the prohibited transactions tax for certain sales of real estate assets is
expanded by reducing the required minimum holding period from four years
to two years. In addition, the exception from the prohibited
transactions rules for sales of property during a taxable year that, in
the aggregate, are not in excess of 10% of aggregate adjusted basis was
expanded to provide for an alternative test excluding sales of property
that, in the aggregate, are not in excess of either 10% of aggregate
adjusted basis or 10% of fair market value. See “Certain
Federal Income Tax Considerations –Taxation of Omega – Prohibited
Transactions” in the accompanying
prospectus.
|
|
Ø
|
Hedging
Income. Income from a hedging
transaction entered into after July 30, 2008, that complies with
identification procedures set out in Treasury regulations and hedges
indebtedness incurred or to be incurred by us to acquire or carry real
estate assets will not constitute gross income for purposes of both the
75% and 95% gross income tests. See “Certain Federal Income Tax
Considerations – Taxation of Omega –Income Tests” in the accompanying
prospectus.
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S-8
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Ø
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Reclassification
Authority. The Secretary of the
Treasury is given broad authority to determine whether particular items of
gain or income recognized after July 30, 2008, qualify or not under the
75% and 95% gross income tests, or are to be excluded from the measure of
gross income for such
purposes.
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S-9
Plan of distribution
We have entered into separate equity
distribution agreements with each of UBS Securities LLC, Deutsche Bank
Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated,
which we refer to individually as a “sales agent” and collectively as the “sales
agents,” relating to shares of our common stock, par value $0.10 per share,
offered by this prospectus supplement and the accompanying
prospectus. Pursuant to the terms of each equity distribution
agreement, we may offer and sell shares of our common stock having an aggregate
gross sales price of up to $100,000,000 from time to time through or to the
sales agents. Sales of the shares, if any, will be made by means
of ordinary brokers’ transactions on the NYSE or otherwise at market prices
prevailing at the time of sale or negotiated transactions or as otherwise agreed
with the applicable sales agent. Our sales agents will not
engage in any transactions that stabilize the price of our common
stock. No more than one of the sales agents will sell shares on the same
day. The actual number of shares issued pursuant to the equity
distribution agreements may be limited as a result of our available authorized,
unissued and unreserved shares of our common stock.
Each sales agent will offer shares of
our common stock on a daily basis or as otherwise agreed upon by us and the
applicable sales agent. We will designate the minimum price per share
at which the shares may be sold and the maximum amount of shares of common stock
to be sold through each sales agent. Subject to the terms and
conditions of the applicable equity distribution agreement, each sales agent has
agreed to use its commercially reasonable efforts to sell, on our behalf, all of
the designated shares of common stock. We or the applicable sales
agent may suspend the offering of shares of common stock being made through such
sales agent under the applicable equity distribution agreement upon proper
notice to the other party. We may instruct any sales agent not to
sell shares of common stock if the sales cannot be effected at or above the
price designated by us.
We will pay each sales agent
compensation for sales of the shares equal to 2% of the gross sales price per
share of shares sold through such sales agent under the applicable equity
distribution agreement. The remaining sales proceeds, after deducting
any expenses payable by us and any transaction fees imposed by any governmental
or self-regulatory organization in connection with the sales, will equal our net
proceeds from the sale of the shares that we may offer under this prospectus
supplement and the accompanying prospectus. We have agreed to reimburse our sales
agents for certain of their expenses in certain
circumstances.
Settlement for sales of our common stock
will occur, unless we and the applicable sales agent agree otherwise, on the
third business day following the date on which any sales were made in return for
payment of the net proceeds to us. There is no arrangement for funds
to be received in an escrow, trust or similar arrangement.
We will deliver to the NYSE copies of
this prospectus supplement and the accompanying prospectus pursuant to the rules
of the NYSE. Unless otherwise required, we will report at least
quarterly the number of shares of common stock sold through the sales agents
under the equity distribution agreements, the net proceeds to us and the
compensation paid by us to the sales agents in connection with such sales of
shares of common stock.
Under the terms of the equity
distribution agreements, we also may sell shares to each of UBS Securities LLC,
Deutsche Bank Securities Inc. or Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as principal for its own respective account, at a price agreed
upon at the time of sale. If we sell shares to UBS Securities LLC,
Deutsche Bank Securities Inc. or Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as principal, we will enter into a separate terms agreement with
UBS Securities LLC, Deutsche Bank Securities Inc. or Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as applicable, setting forth the terms of such
transaction, and we will describe the agreement in a separate prospectus
supplement or pricing supplement.
In connection with the sale of the
common stock on our behalf, each of the sales agents may be deemed to be an
“underwriter” within the meaning of the Securities Act and the compensation paid
to each of the sales agents may be deemed to be underwriting commissions or
discounts. We have agreed in the equity distribution agreements to
provide indemnification and contribution to each of the sales agents against
certain civil liabilities, including liabilities under the Securities
Act. The sales agents may engage in transactions with, or perform
other services for, us in the ordinary course of
business.
S-10
If any sales agent or we have reason to
believe that our common stock is no longer an “actively-traded security” as
defined under Rule 101(c)(1) of Regulation M under the Exchange Act, that party
will promptly notify the other parties and sales of common stock under the
equity distribution agreements and any terms agreement will be suspended until
that or other exemptive provisions have been satisfied in the judgment of the
sales agents and our company.
In compliance with the guidelines of the
Financial Industry Regulatory Authority, Inc., or FINRA, the maximum discount or
commission to be received by any FINRA member or independent broker-dealer may
not exceed 8% of the aggregate gross sales price of the securities that we may
offer under this prospectus supplement and the accompanying
prospectus.
The offering of common stock pursuant to
each equity distribution agreement will terminate upon the earlier of (1) the
sale of all shares of common stock subject to the equity distribution
agreements, or (ii) with respect to a particular equity distribution agreement,
the termination of that equity distribution agreement by us or the applicable
sales agent.
Affiliations
The sales agents or their predecessors
have, from time to time, provided commercial banking, investment banking and
other financial advisory services to us, for which they have received customary
fees. Affiliates of UBS Securities LLC, Deutsche Bank Securities Inc.
and Merrill Lynch, Pierce, Fenner & Smith Incorporated are lenders under our
existing credit facility, which we are currently renegotiating. In
addition, the sales agents or their predecessors or affiliates have provided
written commitments for the new credit facility. However, because the
commitments are subject to certain pre-closing conditions, there is no guarantee
that this new credit facility will close on terms acceptable to us or at
all.
Because affiliates of the sales agents
are lenders under our existing credit facility, and therefore may receive more
than 10% of the net proceeds of this offering when we repay the existing credit
facility, the sales agents have agreed to conduct offerings pursuant to
FINRA Rule 5110(h).
S-11
Legal matters
The validity of the common stock being
offered by this prospectus supplement and the accompanying prospectus have been
passed upon for us by Bryan Cave LLP, Atlanta, Georgia. Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York is counsel for each of UBS Securities
LLC, Deutsche Bank Securities Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated in
connection with this offering.
Experts
Ernst & Young LLP, independent
registered public accounting firm, has audited our consolidated financial
statements and schedules included in our Annual Report on Form 10-K for the year
ended December 31, 2008, and the effectiveness of our internal control over
financial reporting as of December 31, 2008, as set forth in their reports,
which are incorporated by reference in this prospectus supplement, the
accompanying prospectus and elsewhere in the registration
statement. Our financial statements and schedules are incorporated by
reference in reliance on Ernst & Young LLP’s reports, given on their
authority as experts in accounting and auditing.
Incorporation of certain information by
reference
The SEC allows us to “incorporate by
reference” the information we file with the SEC into this prospectus supplement,
which means that we can disclose important information to you by referring you
to another document we have filed separately with the SEC. The
information that we incorporate by reference is considered a part of this
prospectus supplement, except for any information superseded by information
contained directly in this prospectus supplement. This prospectus
supplement incorporates by reference the documents set forth below that we have
previously filed with the SEC (File No. 001-11316) as well as any filings
we will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this prospectus supplement and prior to the
termination of this offering, other than information in these documents that is
not deemed to be filed with the SEC:
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our Annual Report on
Form 10-K for the year ended December 31,
2008;
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our Quarterly Report on Form 10-Q
for the quarters ended March 31,
2009;
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the description of our common
stock contained in our Registration Statement on Form 8-A, filed on August
4, 2002, and any amendments or reports filed for the purpose of updating
that description;
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our Definitive Proxy Statement on
Schedule 14A for the 2009 Annual Meeting of Stockholders;
and
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our Current Reports* on Form 8-K
filed February 10, 2009 and June 2,
2009.
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______________________
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*
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We are not incorporating and will
not incorporate by reference into this prospectus past or future
information or reports furnished or that will be furnished under Items
2.02 and/or 7.01 of, or otherwise with, Form
8-K.
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These documents contain important
information about our financial condition. You may obtain copies of
any documents incorporated by reference in this prospectus from us, from the SEC
or from the SEC’s website as described below. Documents incorporated
by reference are available from us without charge, excluding exhibits thereto,
unless we have specifically incorporated by reference such exhibits in this
prospectus. Any person, including any beneficial owner, to whom this
prospectus is delivered, may obtain documents incorporated by reference in, but
not delivered with, this prospectus by requesting them from us in writing or by
telephone at Omega Healthcare Investors, Inc., Attention: Chief Financial
Officer, 200 International
Circle, Suite 3500,
Hunt Valley, Maryland 21030, telephone number
(410) 427-1700. You may also access our SEC filings free of
charge on our website at http://www.omegahealthcare.com, under the tab entitled “SEC
Filings.”
S-12
Where you can find more
information
We file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may
read and copy any document we file with the SEC at its public reference room at
100 F Street,
N.E., Washington, D.C. 20549. You can call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
room. Our SEC filings are also available to the public at the web
site maintained by the SEC at http://www.sec.gov, as well as on our website at
http://www.omegahealthcare.com. You may inspect information that we
file with the NYSE at the offices of the NYSE at 20 Broad Street, New York, New York 10005. Information on our website
is not incorporated by reference in this prospectus supplement and the
accompanying prospectus and our web address is included as an inactive textual
reference only.
We have filed with the SEC a
registration statement on Form S-3, referred to in this prospectus supplement as
the registration statement, to register the shares of common stock offered by
this prospectus supplement. This prospectus supplement is a part of
the registration statement. This prospectus supplement does not
include all of the information contained in the registration
statement. For further information about us and the securities
offered in this prospectus supplement, you should review the registration
statement. You can inspect or obtain a copy of the registration
statement as described in the preceding paragraph.
S-13
PROSPECTUS
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OMEGA HEALTHCARE INVESTORS,
INC.
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Debt
Securities
Preferred
Stock
Common
Stock
Warrants
Units
Omega
from time to time may offer to sell debt securities, preferred stock, common
stock, and warrants, as well as units that include any of these securities or
securities of other entities. The debt securities, preferred stock, and warrants
may be convertible into or exercisable or exchangeable for common or preferred
stock or other securities of the Company or debt or equity securities of one or
more other entities. The common stock of the Company is listed on the NYSE and
trades under the ticker symbol OHI.
The
debt securities warrants, the preferred stock warrants and the common stock
warrants are collectively referred to herein as the securities warrants. The
debt securities, the preferred stock, the common stock and the securities
warrants are collectively referred to herein as the securities. We will provide
the specific terms of these securities in supplements to this prospectus
prepared in connection with each offering. You should read this prospectus and
the prospectus supplements carefully before you invest in the
securities.
The
Company may offer and sell these securities to or through one or more
underwriters, dealers and agents, or directly to purchasers, on a continuous or
delayed basis.
See
“Risk Factors” on page 4 for a discussion of matters that you should consider
before investing in these securities.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is April 10, 2008
This
prospectus may not be used to sell securities unless accompanied by the
applicable prospectus supplement.
We
have not authorized any dealer, salesman or other person to give any information
or to make any representation other than those contained or incorporated by
reference in this prospectus. You must not rely upon any information or
representation not contained or incorporated by reference in this prospectus or
the applicable prospectus supplement. This prospectus does not constitute an
offer to sell or the solicitation of an offer to buy any securities other than
the registered securities to which they relate, nor do this prospectus nor any
applicable prospectus supplement constitute an offer to sell or the solicitation
of an offer to buy securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
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TABLE
OF CONTENTS
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3
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4
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4
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5
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5
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6
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18
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28
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i
This
prospectus is part of a registration statement that we filed with the SEC
utilizing a “shelf” registration process. Under this shelf registration process,
we may sell any combination of the securities described in this prospectus in
one or more offerings up to an indeterminate dollar amount. This prospectus
provides you with a general description of the securities we may offer. Each
time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement
together with additional information described under the heading “Where You Can
Find More Information.”
As
allowed by SEC rules, this prospectus omits various information you can find in
the registration statement or the exhibits to the registration statement. For
further information, we refer you to the registration statement, including its
exhibits and schedules. Statements contained in this prospectus about the
provisions or contents of any contract, agreement or any other document referred
to are not necessarily complete. For each of these contracts, agreements or
documents filed as an exhibit to the registration statement, we refer you to the
actual exhibit for a more complete description of the matters involved. You
should not assume that the information in this prospectus or any applicable
prospectus supplement is accurate as of any date other than the date on the
front of those documents. For further information about us or the securities
offered under this prospectus, you should refer to that registration statement,
which you can obtain from the SEC as described below under the heading “Where
You Can Find More Information.”
Unless
the context requires otherwise, the words “we,” “company,” “us” and “our” refer
to Omega Healthcare Investors, Inc. and its majority-owned
subsidiaries.
We
file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at its public reference room at 100 F Street, N.E., Washington, D.C. 20549.
You can call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference room. Our SEC filings are also available to the public
at the web site maintained by the SEC at http://www.sec.gov, as well as on our
website at http://www.omegahealthcare.com. You may inspect information that we
file with The New York Stock Exchange at the offices of The New York Stock
Exchange at 20 Broad Street, New York, New York 10005. Information on our
website is not incorporated by reference herein and our web address is included
as an inactive textual reference only.
The
SEC allows us to “incorporate by reference” the information we file with the
SEC, which means that we can disclose important information to you by referring
to the other information we have filed with the SEC. The information that we
incorporate by reference is considered a part of this prospectus and information
that we file later with the SEC will automatically update and supersede the
information contained in this prospectus. We incorporate by reference the
following documents (File No. 1-11316) we filed with the SEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
other than information in these documents that is not deemed to be filed with
the SEC:
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our
Annual Report on Form 10-K for the year ended December 31, 2007; and Part
III of our Annual Report on Form 10-K for the year ended December 31,
2006;
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the
description of our common stock contained in our Registration Statement on
Form 8-A, filed on August 4, 2002, and any amendments or reports filed for
the purpose of updating that description; and
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our
current report on Form 8-K filed April 3,
2008.
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1
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*
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This
report contains information furnished to the SEC under Items 2.02 and/or
7.01 of Form 8-K which, pursuant to General Instruction B(2) of Form 8-K,
is not deemed to be “filed” for purposes of Section 18 of the Exchange Act
and we are not subject to the liabilities imposed by that section. We are
not incorporating and will not incorporate by reference into this
prospectus past or future information or reports furnished or that will be
furnished under Items 2.02 and/or 7.01 of Form
8-K.
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All
documents we file later with the SEC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the date
of this prospectus and prior to the termination of the offering of the
securities will be deemed to be incorporated by reference into this prospectus,
other than information in the documents that is not deemed to be filed with the
SEC. A statement contained in this prospectus or in a document incorporated or
deemed to be incorporated by reference into this prospectus will be deemed to be
modified or superseded to the extent that a statement contained in any
subsequently filed document that is incorporated by reference into this
prospectus, modifies or supersedes that statement. Any statements so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
We
will provide without charge to each person to whom this prospectus is delivered,
on the request of any person, a copy of any or all the documents incorporated
herein by reference, other than exhibits to the documents, unless the exhibits
are specifically incorporated by reference into the documents that this
prospectus incorporates. Requests for copies in writing or by telephone should
be directed to:
Omega
Healthcare Investors, Inc.
9690
Deereco Road
Suite
100
Timonium,
Maryland 21093
Attn:
Chief Financial Officer
(410)
427-1700
2
This
prospectus includes forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements other than statements of
historical facts included in this prospectus may constitute forward-looking
statements. 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:
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those
items discussed under “Risk Factors” in Item 1 to our annual report on
Form 10-K and as supplemented from time-to-time in Part II, Item 1A to our
quarterly reports on Form 10-Q;
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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;
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the
ability of any operators in bankruptcy to reject unexpired lease
obligations, modify the terms of our mortgages, and impede our ability to
collect unpaid rent or interest during the process of a bankruptcy
proceeding and retain security deposits for the debtors’
obligations;
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our
ability to sell closed assets on a timely basis and on terms that allow us
to realize the carrying value of these assets;
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our
ability to negotiate appropriate modifications to the terms of our credit
facility;
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the
availability and cost of capital;
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competition
in the financing of healthcare facilities;
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regulatory
and other changes in the healthcare sector;
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the
effect of economic and market conditions generally and, particularly, in
the healthcare industry;
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changes
in interest rates;
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the
amount and yield of any additional investments;
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changes
in tax laws and regulations affecting real estate investment trusts;
and
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changes
in the ratings of our debt and preferred
securities.
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Any
subsequent written or oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements set forth or referred to above, as well as the risk
factors contained in this prospectus. Except as required by law, we disclaim any
obligation to update such statements or to publicly announce the result of any
revisions to any of the forward-looking statements contained in this prospectus
to reflect future events or developments.
3
We
are a self-administered real estate investment trust (“REIT”), investing in
income-producing healthcare facilities, principally long-term care facilities
located in the United States. We provide lease or mortgage financing to
qualified operators of skilled nursing facilities (“SNFs”) and, to a lesser
extent, assisted living facilities (“ALFs”), rehabilitation and acute care
facilities. We have historically financed investments through borrowings under
our revolving credit facilities, private placements or public offerings of debt
or equity securities, the assumption of secured indebtedness, or a combination
of these methods.
Our
portfolio of investments, as of December 31, 2007, consisted of 236 healthcare
facilities, located in 27 states and operated by 28 third-party operators. This
portfolio was made up of:
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222
long-term healthcare facilities and two rehabilitation hospitals owned and
leased to third parties;
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fixed
rate mortgages on 9 long-term healthcare facilities;
and
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3
long term care facilities as
held-for-sale.
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As
of December 31, 2007, our gross investments in these facilities, net of
impairments and before reserve for uncollectible loans, totaled approximately
$1.3 billion. In addition, we also held miscellaneous investments of
approximately $14 million at December 31, 2007, consisting primarily of secured
loans to third-party operators of our facilities.
We
were incorporated in the State of Maryland on March 31, 1992.
You should carefully consider the
following factors as well as other information contained in this prospectus and
the documents incorporated by reference herein before deciding to invest in
shares of our common stock. These risks include, but are not limited to, the
risks described in our Annual Report for the year ended December 31, 2007, and
subsequently filed documents, which are incorporated by reference in this
prospectus, and any risks that may be described in other filings we make with
the SEC.
If
our stock price is volatile, purchasers of our common stock could incur
substantial losses.
Although
our common stock is listed on the New York Stock Exchange, such listing does not
provide any assurance that an active public market for the common stock will be
sustained. No predictions can be made as to the effect, if any, that future
market sales of common stock or the availability of common stock for sale will
have on the prevailing market price of the common stock. In addition, the stock
market in recent years has experienced price and volume fluctuations that often
have been unrelated or disproportionate to the operating performance of
companies. These fluctuations, as well as general economic and market
conditions, may adversely affect the market price of our common
stock.
If
there are sales of substantial amounts of our common stock in the future, the
price of our common stock could decline.
All
of our outstanding shares of common stock are available for immediate sale
unless held by our affiliates. Sales of substantial amounts of our common stock,
or the perception that such sales could occur, could adversely affect prevailing
market prices of the common stock.
4
The
table below sets forth, for the periods indicated, our ratios of earnings to
fixed charges and our ratios of earnings to combined fixed charges and preferred
stock dividends. We have calculated the ratio of earnings to fixed charges by
adding net income (loss) from continuing operations to fixed charges and
dividing that sum by such fixed charges. Fixed charges consist of interest
expense and amortization of deferred financing costs. The ratio of earnings to
combined fixed charges and preferred stock dividends was calculated in the same
manner as the ratio of earnings to fixed charges except that accrued preferred
stock dividends were included for each of the periods shown.
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Year
Ended December 31,
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2003
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2004
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2005
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2006
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2007
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Ratio
of earnings to fixed charges
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2.2x
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1.3x
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2.1x
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2.2x
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2.5x
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Ratio
of earnings to combined fixed charges and preferred stock
dividends
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1.2x
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1.6x
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1.8x
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2.1x
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Our
earnings were insufficient to cover combined fixed charges and preferred
stock dividends by $2.393 million in the year ended December 31,
2004.
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We
intend to use the net proceeds from the sales of the securities as set for in
the applicable prospectus supplement.
We
may refer in this prospectus to one or more of the following categories of our
securities:
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shares
of our common stock, par value $0.10 per share (“common
stock”);
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shares
of our preferred stock, par value $1.00 per share, in one or more series
(the “preferred stock”);
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debt
securities, in one or more series (“debt securities”);
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common
stock warrants (the “common stock warrants”);
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preferred
stock warrants (the “preferred stock warrants”);
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debt
securities warrants (the “debt securities warrants”);
and
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any
combination of the foregoing, either individually or as
units.
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The
terms of any specific offering of securities, including the terms of any units
offered, will be set forth in a prospectus supplement relating to such
offering.
5
As
of March 31, 2008, our authorized capital stock consisted of 100,000,000 shares
of common stock, par value $0.10 per share, and 20,000,000 shares of preferred
stock, par value $1.00 per share, of which 4,739,500 shares were designated as
Series D preferred stock. As of March 31, 2008, we had 68,996,852 shares of our
common stock and 4,739,500 shares of our Series D preferred stock issued and
outstanding.
Our
common stock and Series D preferred stock are listed on the New York Stock
Exchange. We intend to apply to list for trading on the New York Stock Exchange
any additional shares of our common stock that are issued and sold hereunder. We
may also apply to list on the New York Stock Exchange any debt securities, any
additional series of preferred stock, and any securities warrants that are
offered and sold hereunder, as described in the prospectus supplement relating
to any such securities.
Unless
otherwise indicated in a prospectus supplement relating thereto, Computershare
Trust Company, N.A. is the transfer agent and registrar of the common stock and
preferred stock.
Common
Stock
All
shares of our common stock participate equally in dividends payable to
stockholders of our common stock when and as declared by our board of directors
and in net assets available for distribution to stockholders of our common stock
on liquidation or dissolution, have one vote per share on all matters submitted
to a vote of the stockholders and do not have cumulative voting rights in the
election of directors. All issued and outstanding shares of our common stock
are, and our common stock offered hereby will be upon issuance, validly issued,
fully paid and nonassessable. Holders of our common stock do not have
preference, conversion, exchange or preemptive rights. Our common stock is
listed on the New York Stock Exchange under the symbol “OHI.”
Preferred
Stock
The
terms of any series of the preferred stock offered by any prospectus supplement
will be as described in such prospectus supplement. The following description of
the terms of the preferred stock, except as modified in a prospectus supplement,
sets forth certain general terms and provisions of the preferred stock. The
description of certain provisions of the preferred stock set forth below and in
any prospectus supplement does not purport to be complete and is subject to and
qualified in its entirety by reference to the company’s articles of
incorporation, as amended, and the board of directors’ resolution or articles
supplementary relating to each series of the preferred stock which will be filed
with the Securities and Exchange Commission and incorporated by reference as an
exhibit to the registration statement of which this prospectus is a part at or
prior to the time of the issuance of such series of the preferred
stock.
General
Under
the articles of incorporation, the board of directors of the company is
authorized without further stockholder action to provide for the issuance of
shares of preferred stock of the company, up to the amount of shares of
preferred stock authorized under the articles of incorporation but not issued or
reserved for issuance thereunder, in one or more series, with such designations,
preferences, powers and relative participating, optional or other special rights
and qualifications, limitations or restrictions thereon, including, but not
limited to, dividend rights, dividend rate or rates, conversion rights, voting
rights, rights and terms of redemption (including sinking fund provisions),
redemption price or prices, and liquidation preferences as shall be stated in
the resolution providing for the issue of a series of such stock, adopted, at
any time or from time to time, by the board of directors of the
company.
The
preferred stock shall have the dividend, liquidation, redemption and voting
rights set forth below unless otherwise provided in a prospectus supplement
relating to a particular series of the preferred stock. Reference
is
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made to
the prospectus supplement relating to the particular series of the preferred
stock offered thereby for specific terms, including:
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the
designation and stated value per share of such preferred stock and the
number of shares offered;
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the
amount of liquidation preference per share;
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the
initial public offering price at which such preferred stock will be
issued;
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the
dividend rate (or method of calculation), the dates on which dividends
shall be payable and the dates from which dividends shall commence to
cumulate, if any;
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any
redemption or sinking fund provisions;
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any
conversion rights; and
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any
additional voting, dividend, liquidation, redemption, sinking fund and
other rights, preferences, privileges, limitations and
restrictions.
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The
preferred stock will, when issued, be fully paid and nonassessable and will have
no preemptive rights. Unless otherwise stated in a prospectus supplement
relating to a particular series of the preferred stock, each series of the
preferred stock will rank on a parity as to dividends and distributions of
assets with each other series of the preferred stock. The rights of the holders
of each series of the preferred stock will be subordinate to those of the
company’s general creditors.
Dividend
Rights
Holders
of the preferred stock of each series will be entitled to receive, when, as and
if declared by the board of directors of the company, out of funds of the
company legally available therefor, cash dividends on such dates and at such
rates as will be set forth in, or as are determined by, the method described in
the prospectus supplement relating to such series of the preferred stock. Such
rate may be fixed or variable or both. Each such dividend will be payable to the
holders of record as they appear on the stock books of the company on such
record dates, fixed by the board of directors of the company, as specified in
the prospectus supplement relating to such series of preferred
stock.
Dividends
on any series of preferred stock may be cumulative or noncumulative, as provided
in the applicable prospectus supplement. If the board of directors of the
company fails to declare a dividend payable on a dividend payment date on any
series of preferred stock for which dividends are noncumulative, then the
holders of such series of preferred stock will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment date,
and the company shall have no obligation to pay the dividend accrued for such
period, whether or not dividends on such series are declared payable on any
future dividend payment dates. Dividends on the shares of each series of
preferred stock for which dividends are cumulative will accrue from the date on
which the company initially issues shares of such series.
So
long as the shares of any series of the preferred stock shall be outstanding,
unless
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full
dividends (including if such preferred stock is cumulative, dividends for
prior dividend periods) shall have been paid or declared and set apart for
payment on all outstanding shares of the preferred stock of such series
and all other classes and series of preferred stock of the company (other
than “junior stock” as defined below), and
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the
company is not in default or in arrears with respect to the mandatory or
optional redemption or mandatory repurchase or other mandatory retirement
of, or with respect to any sinking or other analogous fund for, any shares
of preferred stock of such series or any shares of any other preferred
stock of the company of any class or series (other than junior
stock),
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the
company may not declare any dividends on any shares of common stock of the
company or any other stock of the company ranking as to dividends or
distributions of assets junior to such series of preferred stock (the common
stock and any such other stock being herein referred to as “junior stock”), or
make any payment on account of,
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or set
apart money for, the purchase, redemption or other retirement of, or for a
sinking or other analogous fund for, any shares of junior stock or make any
distribution in respect thereof, whether in cash or property or in obligations
or stock of the company, other than junior stock which is neither convertible
into, nor exchangeable or exercisable for, any securities of the company other
than junior stock.
Liquidation
Preference
In
the event of any liquidation, dissolution or winding up of the company,
voluntary or involuntary, the holders of each series of the preferred stock will
be entitled to receive out of the assets of the company available for
distribution to stockholders, before any distribution of assets is made to the
holders of common stock or any other shares of stock of the company ranking
junior as to such distribution to such series of preferred stock, the amount set
forth in the prospectus supplement relating to such series of the preferred
stock. If, upon any voluntary or involuntary liquidation, dissolution or winding
up of the company, the amounts payable with respect to the preferred stock of
any series and any other shares of preferred stock of the company (including any
other series of the preferred stock) ranking as to any such distribution on a
parity with such series of the preferred stock are not paid in full, the holders
of the preferred stock of such series and of such other shares of preferred
stock of the company will share ratably in any such distribution of assets of
the company in proportion to the full respective preferential amounts to which
they are entitled. After payment to the holders of the preferred stock of each
series of the full preferential amounts of the liquidating distribution to which
they are entitled, the holders of each such series of the preferred stock will
be entitled to no further participation in any distribution of assets by the
company.
If
liquidating distributions shall have been made in full to all holders of shares
of preferred stock, the remaining assets of the company shall be distributed
among the holders of junior stock, according to their respective rights and
preferences and in each case according to their respective number of shares. For
such purposes, the consolidation or merger of the company with or into any other
corporation, or the sale, lease or conveyance of all or substantially all of the
property or business of the company, shall not be deemed to constitute a
liquidation, dissolution or winding up of the company.
Redemption
A
series of the preferred stock may be redeemable, in whole or from time to time
in part, at the option of the company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the time and at the redemption prices set forth in the prospectus supplement
relating to such series. Shares of the preferred stock redeemed by the company
will be restored to the status of authorized but unissued shares of preferred
stock of the company.
In
the event that fewer than all of the outstanding shares of a series of the
preferred stock are to be redeemed, whether by mandatory or optional redemption,
the number of shares to be redeemed will be determined by lot or pro rata
(subject to rounding to avoid fractional shares) as may be determined by the
company or by any other method as may be determined by the company in its sole
discretion to be equitable. From and after the redemption date (unless default
shall be made by the company in providing for the payment of the redemption
price plus accumulated and unpaid dividends, if any), dividends shall cease to
accumulate on the shares of the preferred stock called for redemption and all
rights of the holders thereof (except the right to receive the redemption price
plus accumulated and unpaid dividends, if any) shall cease.
So
long as any dividends on shares of any series of the preferred stock or any
other series of preferred stock of the company ranking on a parity as to
dividends and distribution of assets with such series of the preferred stock are
in arrears, no shares of any such series of the preferred stock or such other
series of preferred stock of the company will be redeemed (whether by mandatory
or optional redemption) unless all such shares are simultaneously redeemed, and
the company will not purchase or otherwise acquire any such shares; provided,
however, that the foregoing will not prevent the purchase or acquisition of such
shares pursuant to a purchase or exchange offer made on the same terms to
holders of all such shares outstanding.
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Conversion
Rights
The
terms and conditions, if any, upon which shares of any series of preferred stock
are convertible into common stock will be set forth in the applicable prospectus
supplement relating thereto. Such terms will include the number of shares of
common stock into which the preferred stock is convertible, the conversion price
(or manner of calculation thereof), the conversion period, provisions as to
whether conversion will be at the option of the holders of preferred stock or
the company, the events requiring an adjustment of the conversion price and
provisions affecting conversion.
Voting
Rights
Except
as indicated below or in a prospectus supplement relating to a particular series
of the preferred stock, or except as required by applicable law, the holders of
the preferred stock will not be entitled to vote for any purpose.
So
long as any shares of the preferred stock of a series remain outstanding, the
consent or the affirmative vote of the holders of at least 80% of the votes
entitled to be cast with respect to the then outstanding shares of such series
of the preferred stock together with any “parity preferred” (as defined below),
voting as one class, either expressed in writing or at a meeting called for that
purpose, will be necessary (i) to permit, effect or validate the authorization,
or any increase in the authorized amount, of any class or series of shares of
the company ranking prior to the preferred stock of such series as to dividends,
and (ii) to repeal, amend or otherwise change any of the provisions applicable
to the preferred stock of such series in any manner which adversely affects the
powers, preferences, voting power or other rights or privileges of such series
of the preferred stock. In case any series of the preferred stock would be so
affected by any such action referred to in clause (ii) above in a different
manner than one or more series of the parity preferred then outstanding, the
holders of shares of the preferred stock of such series, together with any
series of the parity preferred which will be similarly affected, will be
entitled to vote as a class, and the company will not take such action without
the consent or affirmative vote, as above provided, of at least 80% of the total
number of votes entitled to be cast with respect to each such series of the
preferred stock and the parity preferred, then outstanding, in lieu of the
consent or affirmative vote hereinabove otherwise required.
With
respect to any matter as to which the preferred stock of any series is entitled
to vote, holders of the preferred stock of such series and any other series of
preferred stock of the company ranking on a parity with such series of the
preferred stock as to dividends and distributions of assets and which by its
terms provides for similar voting rights (the “parity preferred”) will be
entitled to cast the number of votes set forth in the prospectus supplement with
respect to that series of preferred stock. As a result of the provisions
described in the preceding paragraph requiring the holders of shares of a series
of the preferred stock to vote together as a class with the holders of shares of
one or more series of parity preferred, it is possible that the holders of such
shares of parity preferred could approve action that would adversely affect such
series of preferred stock, including the creation of a class of capital stock
ranking prior to such series of preferred stock as to dividends, voting or
distributions of assets.
The
foregoing voting provisions will not apply if, at or prior to the time when the
act with respect to which such vote would otherwise be required shall be
effected, all outstanding shares of the preferred stock shall have been redeemed
or called for redemption and sufficient funds shall have been deposited in trust
to effect such redemption.
Redemption
and Business Combination Provisions
If
our board of directors is, at any time and in good faith, of the opinion that
actual or constructive ownership of at least 9.9% or more of the value of our
outstanding capital stock has or may become concentrated in the hands of one
owner, our board of directors will have the power:
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by
means deemed equitable by it, to call for the purchase from any of our
stockholders a number of voting shares sufficient, in the opinion of our
board of directors, to maintain or bring the actual or constructive
ownership of such owner to a level of no more than 9.9% of the value of
our outstanding capital stock; and
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to
refuse to transfer or issue voting shares of our capital stock to any
person whose acquisition of such voting shares would, in the opinion of
our board of directors, result in the actual or constructive ownership by
that person of more than 9.9% of the value of our outstanding capital
stock.
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Subject
to the rights of the preferred stock described below, the purchase price for any
voting shares of our capital stock so redeemed will be equal to the fair market
value of the shares reflected in the closing sales prices for the shares, if
then listed on a national securities exchange, or the average of the closing
sales prices for the shares if then listed on more than one national securities
exchange, or if the shares are not then listed on a national securities
exchange, the latest bid quotation for the shares if then traded
over-the-counter, on the last business day immediately preceding the day on
which we send notices of such acquisitions, or, if no such closing sales prices
or quotations are available, then the purchase price shall be equal to the net
asset value of such stock as determined by our board of directors in accordance
with the provisions of applicable law. The purchase price for shares of Series D
preferred stock will be equal to the fair market value of the shares reflected
in the closing sales price for the shares, if then listed on a national
securities exchange, or if the shares are not then listed on a national
securities exchange, the purchase price will be equal to the liquidation
preference of such shares of Series D preferred stock. From and after the date
fixed for purchase by our board of directors, the holder of any shares so called
for purchase will cease to be entitled to distributions, voting rights and other
benefits with respect to such shares, except the right to payment of the
purchase price for the shares. Further, any transfer of shares, options,
warrants, or other securities convertible into voting shares that would create a
beneficial owner of more than 9.9% of the value of our outstanding capital stock
will be deemed void ab initio and the intended transferee will be deemed never
to have had an interest therein.
Our
articles of incorporation require that, except in certain circumstances,
business combinations between us and a beneficial holder of 10% or more of our
outstanding voting stock, a related person, be approved by the affirmative vote
of at least 80% of our outstanding voting shares.
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A
“business combination” is defined in the articles of incorporation
as:
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any
merger or consolidation of our company with or into a related
person;
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any
sale, lease, exchange, transfer or other disposition, including without
limitation a mortgage or any other security device, of all or any
“substantial part,” as defined below, of our assets including, without
limitation, any voting securities of a subsidiary to a related
person;
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any
merger or consolidation of a related person with or into our
company;
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any
sale, lease, exchange, transfer or other disposition of all or any
substantial part of the assets of a related person to our
company;
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the
issuance of any securities (other than by way of pro rata distribution to
all stockholders) of our company to a related person;
and
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any
agreement, contract or other arrangement providing for any of the
transactions described in the definition of business
combination.
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The
term “substantial part” is defined as more than 10% of the book value of our
total assets as of the end of our most recent fiscal year ending prior to the
time the determination is being made.
The
80% voting requirement described above will not be applicable if (i) our board
of directors has unanimously approved in advance the acquisition of our stock
that caused a related person to become a related person, or (ii) the business
combination is solely between us and a wholly owned subsidiary.
Under
the terms of our articles of incorporation, as amended, our board of directors
is classified into three classes. Each class of directors serves for a term of
three years, with one class being elected each year.
The
foregoing provisions of the articles of incorporation and certain other matters
may not be amended without the affirmative vote of at least 80% of our
outstanding voting shares.
The
foregoing provisions may have the effect of discouraging unilateral tender
offers or other takeover proposals which certain stockholders might deem in
their interests or in which they might receive a substantial
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premium.
Our board of directors’ authority to issue and establish the terms of currently
authorized preferred stock, without stockholder approval, may also have the
effect of discouraging takeover attempts. The provisions could also have the
effect of insulating current management against the possibility of removal and
could, by possibly reducing temporary fluctuations in market price caused by
accumulation of shares, deprive stockholders of opportunities to sell at a
temporarily higher market price. However, our board of directors believes that
inclusion of the business combination provisions in the articles of
incorporation may help assure fair treatment of stockholders and preserve our
assets.
The
foregoing summary of certain provisions of the articles of incorporation does
not purport to be complete or to give effect to provisions of statutory or
common law. The foregoing summary is subject to, and qualified in its entirety
by reference to, the provisions of applicable law and the articles of
incorporation, a copy of which is incorporated by reference as an exhibit to the
registration statement of which this prospectus is a part.
Termination
of Stockholder Rights Plan
On
May 12, 1999, our board of directors authorized the adoption of a stockholder
rights plan and declared a dividend distribution of one right for each common
share outstanding on May 24, 1999. We terminated the stockholder rights plan on
April 3, 2008, and the associated rights expired on that date. The plan was
neither adopted nor terminated in response to any specific attempt to acquire
control of our company.
Debt
Securities
The
terms of any debt securities offered by any prospectus supplement will be as
described in such prospectus supplement, and as provided herein to the extent
not modified in the prospectus supplement. Debt securities may be issued from
time to time in series under an Indenture (the “Indenture”) to be entered into
between the company and a trustee to be identified in the applicable prospectus
supplement (the “Trustee”). As used under this caption, unless the context
otherwise requires, offered debt securities shall mean the debt securities
offered by this prospectus and the accompanying prospectus supplement. The
statements under this caption are brief summaries of certain provisions
contained in the Indenture, do not purport to be complete and are qualified in
their entirety by reference to the Indenture, including the definition therein
of certain terms, a copy of which is incorporated by reference as an exhibit to
the registration statement of which this prospectus is a part. The following
sets forth certain general terms and provisions of the debt securities. Further
terms of the offered debt securities will be set forth in the prospectus
supplement.
General
The
Indenture provides for the issuance of debt securities in series, and does not
limit the principal amount of debt securities which may be issued
thereunder.
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Reference
is made to the prospectus supplement for the following terms of the
offered debt securities:
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the
specific title of the offered debt securities;
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the
aggregate principal amount of the offered debt
securities;
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the
percentage of the principal amount at which the offered debt securities
will be issued;
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the
date on which the offered debt securities will mature;
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the
rate or rates per annum or the method for determining such rate or rates,
if any, at which the offered debt securities will bear
interest;
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the
times at which any such interest will be payable;
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any
provisions relating to optional or mandatory redemption of the offered
debt securities at the option of the company or pursuant to sinking fund
or analogous provisions;
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the
denominations in which the offered debt securities are authorized to be
issued if other than $100,000;
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any
provisions relating to the conversion or exchange of the offered debt
securities into common stock or into debt securities of another
series;
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the
portion of the principal amount, if less than the principal amount,
payable on acceleration;
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the
place or places at which the company will make payments of principal (and
premiums, if any) and interest, if any, and the method of
payment;
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whether
the offered debt securities will be issued in whole or in part in global
form;
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any
additional covenants and events of default and the remedies with respect
thereto not currently set forth in the Indenture;
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the
identity of the Trustee for the debt securities, and if not the Trustee,
the identity of each paying agent and the debt securities
Registrar;
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the
currency or currencies other than United States Dollars in which any
series of debt securities will be issued; and
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any
other specific terms of the offered debt
securities.
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One
or more series of the debt securities may be issued as discounted debt
securities (bearing no interest or bearing interest at a rate which at the time
of issuance is below market rates) to be sold at a substantial discount below
their stated principal amount. Tax and other special considerations applicable
to any such discounted debt securities will be described in the prospectus
supplement relating thereto.
Status
of Debt Securities
The
status and ranking of the debt securities will be as set forth in the prospectus
supplement. Except as otherwise set forth in the prospectus supplement, the debt
securities will be unsecured obligations of the company ranking on a parity with
all other unsecured and unsubordinated indebtedness.
Conversion
Rights
The
terms, if any, on which debt securities of a series may be exchanged for or
converted into shares of common stock, preferred stock or debt securities of
another series will be set forth in the prospectus supplement relating thereto.
To protect the company’s status as a REIT, a beneficial holder may not convert
any debt security, and such debt security shall not be convertible by any
holder, if as a result of such conversion any person would then be deemed to
beneficially own, directly or indirectly, 9.9% or more of the company’s shares
of common stock.
Absence
of Restrictive Covenants
Except
as noted below under “Dividends, Distributions and Acquisitions of Capital
Stock,” the company is not restricted by the Indenture from paying dividends or
from incurring, assuming or becoming liable for any type of debt or other
obligations or from creating liens on its property for any purpose. The
Indenture does not require the maintenance of any financial ratios or specified
levels of net worth or liquidity. Except as may be set forth in the prospectus
supplement, there are no provisions of the Indenture which afford holders of the
debt securities protection in the event of a highly leveraged transaction
involving the company.
Optional
Redemption
The
debt securities will be subject to redemption, in whole or from time to time in
part, at any time for certain reasons intended to protect the company’s status
as a REIT, at the option of the company in the manner specified in the Indenture
at a redemption price equal to 100% of the principal amount, premium, if any,
plus interest accrued to the date of redemption. The Indenture does not contain
any provision requiring the company to repurchase the debt securities at the
option of the holders thereof in the event of a leveraged buyout,
recapitalization or similar restructuring of the company.
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Dividends,
Distributions and Acquisitions of Capital Stock
The
Indenture provides that the company will not (i) declare or pay any dividend or
make any distribution on its capital stock or to holders of its capital stock
(other than dividends or distributions payable in its capital stock or other
than as the company determines is necessary to maintain its status as a REIT),
or (ii) purchase, redeem or otherwise acquire or retire for value any of its
capital stock, or any warrants, rights or options or other securities to
purchase or acquire any shares of its capital stock (other than the debt
securities) or permit any subsidiary to do so, if at the time of such action an
event of default (as defined in the Indenture) has occurred and is continuing or
would exist immediately after giving effect to such action.
Events
of Default
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An
event of default with respect to debt securities of any series is defined
in the Indenture as being:
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failure
to pay principal of or any premium on any debt security of that series
when due;
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failure
to pay any interest on any debt security of that series when due,
continued for 30 days;
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failure
to deposit any sinking fund payment when due, in respect of any debt
security of that series;
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failure
to perform any other covenant of the company in the Indenture (other than
a covenant included in the Indenture solely for the benefit of one or more
series of debt securities other than that series), continued for 60 days
after written notice as provided in the Indenture;
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certain
events of bankruptcy, insolvency, conservatorship, receivership or
reorganization; and
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any
other event of default provided with respect to the debt securities of
that series.
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If
an event of default with respect to the outstanding debt securities of any
series occurs and is continuing, either the Trustee or the holders of at least
25% in aggregate principal amount of the outstanding debt securities of that
series may declare the principal amount (or, if the debt securities of that
series are original issue discount debt securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
outstanding debt securities of that series to be due and payable immediately. At
any time after the declaration of acceleration with respect to the debt
securities of any series has been made, but before a judgment or decree based on
acceleration has been obtained, the holders of a majority in aggregate principal
amount of the outstanding debt securities of that series may, under certain
circumstances, rescind and annul such acceleration.
The
Indenture provides that, subject to the duty of the Trustee during default to
act with the required standard of care, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request or
direction of any of the holders, unless such holders shall have offered to the
Trustee reasonable indemnity. Subject to such provisions for the indemnification
of the Trustee and subject to certain limitations, the holders of a majority in
aggregate principal amount of the outstanding debt securities of any series will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, with respect to the debt securities of that
series.
The
company is required to furnish to the Trustee annually a statement as to the
performance by the company of certain of its obligations under the Indenture and
as to any default in such performance.
Modifications
and Waiver
Modifications
and amendments of the Indenture may be made by the company and the Trustee
without the consent of any holders to, among other things,
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evidence
the succession of another corporation to the company;
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add
to the covenants of the company or surrender any right or power conferred
upon the company;
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establish
the form or terms of debt securities, including any subordination
provisions;
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cure
any ambiguity, correct or supplement any provision which may be defective
or inconsistent or make any other provisions with respect to matters or
questions arising under the Indenture, provided that such action does not
adversely affect the interests of the holders of debt securities of any
series in any material respect;
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to
add to, delete, or revise conditions, limitations and restrictions on the
authorized amounts, terms or purpose of debt securities, as set forth in
the Indenture; or
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evidence
and provide for a successor
Trustee.
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Modifications
and amendments of the Indenture may be made by the company and the Trustee with
the consent of the holders of a majority in aggregate principal amount of the
outstanding debt securities of each series affected by such modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding debt security affected
thereby:
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change
the stated maturity date of the principal of, or any installment of
principal of or interest, if any, on any debt security;
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reduce
the principal amount of, or premium or interest if any, on any debt
security;
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reduce
the amount of principal of an original issue discount debt security
payable upon acceleration of the maturity thereof;
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change
the currency of payment of the principal of, or premium or interest, if
any, on any debt security;
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impair
the right to institute suit for the enforcement of any payment on or with
respect to any debt security;
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modify
the conversion provisions, if any, of any debt security in a manner
adverse to the holder of that debt security; or
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reduce
the percentage in principal amount of the outstanding debt security of any
series, the consent of whose holders is required for modification or
amendment of that Indenture or for waiver of compliance with certain
provisions of that Indenture or for waiver of certain
defaults.
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The
holders of a majority in aggregate principal amount of the outstanding debt
security of each series may, on behalf of all holders of the debt securities of
that series, waive, insofar as that series is concerned, compliance by the
company with certain restrictive provisions of the Indenture. The holders of a
majority in aggregate principal amount of the outstanding debt securities of
each series may, on behalf of all holders of the debt securities of that series,
waive any past default under the Indenture with respect to the debt securities
of that series, except a default in the payment of principal or premium or
interest, if any, or a default in respect of a covenant or provision which under
the terms of the Indenture cannot be modified or amended without the consent of
the holder of each outstanding debt security of the series
affected.
Consolidation,
Merger and Sale of Assets
The
Indenture provides that the company, without the consent of the holders of any
of the debt securities, may consolidate or merge with or into or transfer its
assets substantially as an entirety to, any entity organized under the laws of
the United States or any state, provided that the successor entity assumes the
company’s obligations under the Indenture, that after giving effect to the
transaction no event of default, and no event which, after notice or lapse of
time, would become an event of default, shall have occurred and be continuing,
and that certain other conditions are met.
Global
Securities
The
debt securities of a series may be issued in whole or in part in global form
(the “Global Securities”). Except as set forth in a prospectus supplement, the
terms and provisions with respect to any Global Securities will be as set forth
in this section captioned “Global Securities.” The Global Securities will be
deposited with a depositary (the “Depositary”), or with a nominee for a
Depositary, identified in the prospectus supplement. In such case,
one
14
or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of outstanding debt
securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for debt
securities in definitive form, a Global Security may not be transferred except
as a whole by the Depositary for such Global Security to a nominee of such
Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
The
specific material terms of the depositary arrangement with respect to any
portion of a series of debt securities to be represented by a Global Security
will be described in the prospectus supplement. The company anticipates that the
following provisions will apply to all depositary arrangements.
Upon
the issuance of a Global Security, the Depositary for such Global Security will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the debt securities represented by such Global Security to
the accounts of persons that have accounts with such Depositary
(“participants”). The accounts to be credited shall be designated by any
underwriters or agents participating in the distribution of such debt
securities. Ownership of beneficial interests in a Global Security will be
limited to participants or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depositary for such Global Security (with respect to interests of
participants) or by participants or persons that hold through participants (with
respect to interests of persons other than participants). So long as the
Depositary for a Global Security, or its nominee, is the registered owner of
such Global Security, such Depositary or such nominee, as the case may be, will
be considered the sole owner or holder of the debt securities represented by
such Global Security for all purposes under the Indenture; provided, however,
that for the purposes of obtaining any consents or directions required to be
given by the holders of the debt securities, the company, the Trustee and its
agents will treat a person as the holder of such principal amount of debt
securities as specified in a written statement of the Depositary. Except as set
forth herein or otherwise provided in the prospectus supplement, owners of
beneficial interests in a Global Security will not be entitled to have the debt
securities represented by such Global Security registered in their names, will
not receive physical delivery of such debt securities in definitive form and
will not be considered the registered owners or holders thereof under the
Indenture, but the beneficial owners and holders only.
Principal,
premium, if any, and interest payments on debt securities represented by a
Global Security registered in the name of a Depositary or its nominee will be
made to such Depositary or its nominee, as the case may be, as the registered
owner of such Global Security. None of the company, the Trustee or any Paying
Agent for such debt securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in such Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership
interests.
The
company expects that the Depositary for any debt securities represented by a
Global Security, upon receipt of any payment of principal, premium, if any, or
interest will immediately credit participants’ accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of such Depositary. The company
also expects that payments by participants will be governed by standing
instructions and customary practices, as is now the case with the securities
held for the accounts of customers registered in “street names” and will be the
responsibility of such participants.
If
the Depositary for any debt securities represented by a Global Security is at
any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by the company within 90 days, the company will
issue such debt securities in definitive form in exchange for such Global
Security. In addition, the company may at any time and in its sole discretion
determine not to have any of the debt securities of a series represented by one
or more Global Securities and, in such event, will issue debt securities of such
series in definitive form in exchange for all of the Global Security or
securities representing such debt securities.
The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in debt securities represented by Global
Securities.
15
Securities
Warrants
The
terms of any securities warrants offered by any prospectus supplement will be as
described in such prospectus supplement, and as provided herein to the extent
not modified in the prospectus supplement. The company may issue securities
warrants for the purchase of common stock, preferred stock or debt securities.
securities warrants may be issued independently or together with common stock,
preferred stock or debt securities offered by any prospectus supplement and may
be attached to or separate from such common stock, preferred stock, or debt
securities. Each series of securities warrants will be issued under a separate
warrant agreement (a “Securities Warrant Agreement”) to be entered into between
the company and a bank or trust company, as securities warrant agent, all as set
forth in the prospectus supplement relating to the particular issue of offered
securities warrants. The securities warrant agent will act solely as an agent of
the company in connection with the securities warrants of such series and will
not assume any obligation or relationship of agency or trust for or with any
holders or beneficial owners of securities warrants. The following summaries of
certain provisions of the Securities Warrant Agreement and securities warrants
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Securities Warrant Agreement
and the securities warrants relating to each series of securities warrants which
will be filed with the Securities and Exchange Commission and incorporated by
reference as an exhibit to the registration statement of which this prospectus
is a part at or prior to the time of the issuance of such series of securities
warrants.
In
the case of securities warrants for the purchase of common stock or preferred
stock, the applicable prospectus supplement will describe the terms of such
securities warrants, including the following where applicable:
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the
offering price;
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the
aggregate number of shares purchasable upon exercise of such securities
warrants, the exercise price, and in the case of securities warrants for
preferred stock the designation, aggregate number and terms of the series
of preferred stock purchasable upon exercise of such securities
warrants;
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the
designation and terms of any series of preferred stock with which such
securities warrants are being offered and the number of such securities
warrants being offered with such preferred stock;
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the
date, if any, on and after which such securities warrants and the related
series of preferred stock or common stock will be transferable
separately;
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the
date on which the right to exercise such securities warrants shall
commence and the Expiration Date;
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any
special United States Federal income tax consequences;
and
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any
other terms of such securities
warrants.
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If
securities warrants for the purchase of debt securities are offered, the
applicable prospectus supplement will describe the terms of such securities
warrants, including the following where applicable:
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the
offering price;
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the
denominations and terms of the series of debt securities purchasable upon
exercise of such securities warrants;
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the
designation and terms of any series of debt securities, with which such
securities warrants are being offered with each such debt
securities;
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the
date, if any, on and after which such securities warrants and the related
series of debt securities will be transferable
separately;
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the
principal amount of the series of debt securities purchasable upon
exercise of each such securities warrant and the price at which such
principal amount of debt securities of such series may be purchased upon
such exercise;
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the
date on which the right shall expire (the “Expiration
Date”);
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whether
the securities warrants will be issued in registered or bearer
form;
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any
special United States Federal income tax consequences;
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the
terms, if any, on which the company may accelerate the date by which the
securities warrants must be exercised; and
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any
other terms of such securities
warrants.
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Securities
warrant certificates may be exchanged for new securities warrant certificates of
different denominations, may (if in registered form) be presented for
registration of transfer, and may be exercised at the corporate trust office of
the securities warrant agent or any other office indicated in the applicable
prospectus supplement. Prior to the exercise of any securities warrant to
purchase debt securities, holders of such securities warrants will not have any
of the rights of holders of the debt securities purchasable upon such exercise,
including the right to receive payments of principal or premium, if any, or
interest, if any, on such debt securities or to enforce covenants in the
applicable indenture. Prior to the exercise of any securities warrants to
purchase common stock or preferred stock, holders of such securities warrants
will not have any rights of holders of such common stock or preferred stock,
including the right to receive payments of dividends, if any, on such common
stock or preferred stock, or to exercise any applicable right to
vote.
Exercise
of Securities Warrants
Each
securities warrant will entitle the holder thereof to purchase a number of
shares of common stock, preferred stock or such principal amount of debt
securities, as the case may be, at such exercise price as shall in each case be
set forth in, or calculable from, the prospectus supplement relating to the
offered securities warrants. After the close of business on the Expiration Date
(or such later date to which such Expiration Date may be extended by the
company), unexercised securities warrants will become void.
Securities
warrants may be exercised by delivering to the securities warrant agent payment
as provided in the applicable prospectus supplement of the amount required to
purchase the common stock, preferred stock or debt securities, as the case may
be, purchasable upon such exercise together with certain information set forth
on the reverse side of the securities warrant certificate. securities warrants
will be deemed to have been exercised upon receipt of payment of the exercise
price, subject to the receipt within five (5) business days, of the securities
warrant certificate evidencing such securities warrants. Upon receipt of such
payment and the securities warrant certificate properly completed and duly
executed at the corporate trust office of the securities warrant agent or any
other office indicated in the applicable prospectus supplement, the company
will, as soon as practicable, issue and deliver the common stock, preferred
stock or debt securities, as the case may be, purchasable upon such exercise. If
fewer than all of the securities warrants represented by such securities warrant
certificate are exercised, a new securities warrant certificate will be issued
for the remaining amount of securities warrants.
Amendments
and Supplements to Securities Warrant Agreement
The
Securities Warrant Agreements may be amended or supplemented without the consent
of the holders of the securities warrants issued thereunder to effect changes
that are not inconsistent with the provisions of the securities warrants and
that do not adversely affect the interests of the holders of the securities
warrants.
Common
Stock Warrant Adjustments
Unless
otherwise indicated in the applicable prospectus supplement, the exercise price
of, and the number of shares of common stock covered by a common stock warrant
are subject to adjustment in certain events, including:
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payment
of a dividend on the common stock payable in capital stock and stock
splits, combinations or reclassifications of the common
stock;
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issuance
to all holders of common stock of rights or warrants to subscribe for or
purchase shares of common stock at less than their current market price
(as defined in the Securities Warrant Agreement for such series of common
stock warrants); and
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certain
distributions of evidences of indebtedness or assets (including cash
dividends or distributions paid out of consolidated earnings or retained
earnings or dividends payable in common stock) or of subscription rights
and warrants (excluding those referred to
above).
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No
adjustment in the exercise price of, and the number of shares of common stock
covered by a common stock warrant will be made for regular quarterly or other
periods of recurring cash dividends or distributions or for cash dividends or
distributions to the extent paid from consolidated earnings or retained
earnings. No adjustment will be required unless such adjustment would require a
change of at least 1% in the exercise price then in effect. Except as stated
above, the exercise price of, and the number of shares of common stock covered
by, a common stock warrant will not be adjusted for the issuance of common stock
or any securities convertible into or exchangeable for common stock, or carrying
the right or option to purchase or otherwise acquire the foregoing in exchange
for cash, other property or services.
In
the event of any (i) consolidation or merger of the company with or into any
entity (other than a consolidation or a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
common stock), (ii) sale, transfer, lease or conveyance of all or substantially
all of the assets of the company, or (iii) reclassification, capital
reorganization or change of the common stock (other than solely a change in par
value or from par value to no par value), then any holder of a common stock
warrant will be entitled, on or after the occurrence of any such event, to
receive on exercise of such common stock warrant the kind and amount of shares
of stock or other securities, cash or other property (or any combination
thereof) that the holder would have received had such holder exercised such
holder’s common stock warrant immediately prior to the occurrence of such event.
If the consideration to be received upon exercise of the common stock warrant
following any such event consists of common stock of the surviving entity, then
from and after the occurrence of such event, the exercise price of such common
stock warrant will be subject to the same anti-dilution and other adjustments
described in the second preceding paragraph, applied as if such common stock of
the surviving entity were common stock.
Consequences
of an Investment in Our Securities
The
following is a general summary of material U.S. federal income tax
considerations applicable to us, and to the purchasers of our securities and our
election to be taxed as a REIT. It is not tax advice. The summary is not
intended to represent a detailed description of the U.S. federal income tax
consequences applicable to a particular stockholder in view of any person’s
particular circumstances, nor is it intended to represent a detailed description
of the U.S. federal income tax consequences applicable to stockholders subject
to special treatment under the federal income tax laws such as insurance
companies, tax-exempt organizations, financial institutions, securities
broker-dealers, investors in pass-through entities, expatriates and taxpayers
subject to alternative minimum taxation.
The
following discussion relating to an investment in our securities was based on
consultations with Powell Goldstein LLP, our special counsel. In the opinion of
Powell Goldstein LLP, the following discussion, to the extent it constitutes
matters of law or legal conclusions (assuming the facts, representations, and
assumptions upon which the discussion is based are accurate), accurately
represents the material U.S. federal income tax considerations relevant to
purchasers of our securities. Powell Goldstein LLP has not rendered any opinion
regarding any effect of such issuance on purchasers of our securities. The
sections of the Code relating to the qualification and operation as a REIT are
highly technical and complex. The following discussion sets forth the material
aspects of the Code sections that govern the federal income tax treatment of a
REIT and its stockholders. The information in this section is based on the Code;
current, temporary, and proposed Treasury regulations promulgated under the
Code; the legislative history of the Code; current administrative
interpretations and practices of the Internal Revenue Service, or IRS; and court
decisions, in each case, as of the date of this prospectus. In addition, the
administrative interpretations and practices of the IRS include its practices
and policies as expressed in private letter rulings which are not binding on the
IRS, except with respect to the particular taxpayers who requested and received
these rulings.
18
Taxation
of Omega
General. We have elected to
be taxed as a real estate investment trust, or a REIT, under Sections 856
through 860 of the Code beginning with our taxable year ended December 31, 1992.
We believe that we have been organized and operated in such a manner as to
qualify for taxation as a REIT under the Code and we intend to continue to
operate in such a manner, but no assurance can be given that we have operated or
will be able to continue to operate in a manner so as to qualify or remain
qualified as a REIT.
The
sections of the Code that govern the federal income tax treatment of a REIT are
highly technical and complex. The following sets forth the material aspects of
those sections. This summary is qualified in its entirety by the applicable Code
provisions, rules and regulations promulgated thereunder, and administrative and
judicial interpretations thereof.
In
the opinion of Powell Goldstein LLP, which opinion has been filed as an exhibit
to the registration statement of which this prospectus is a part, we are
organized in conformity with the requirements for qualification as a REIT, and
our current and proposed method of operation will enable us to continue to meet
the requirements for continued qualification and taxation as a REIT under the
Code. This opinion is based on various assumptions and is conditioned upon
certain representations made by us as to factual matters concerning our business
and properties. Moreover, such qualification and taxation as a REIT depends upon
our ability to meet, through actual annual operating results, distribution
levels and diversity of stock ownership, the various qualification tests imposed
under the Code discussed below, the results of which will not be reviewed by
Powell Goldstein LLP on an ongoing basis. Accordingly, no assurance can be given
that the various results of our operation for any particular taxable year will
satisfy such requirements. Further, such requirements may be changed, perhaps
retroactively, by legislative or administrative actions at any time. We have
neither sought nor obtained any formal ruling from the IRS regarding our
qualification as a REIT and presently have no plan to apply for any such ruling.
See “— Failure to Qualify.”
If
we qualify for taxation as a REIT, we generally will not be subject to federal
corporate income taxes on our net income that is currently distributed to
stockholders. This treatment substantially eliminates the “double taxation”
(i.e., taxation at both the corporate and the stockholder levels) that generally
results from an investment in a corporation. However, we will be subject to
federal income taxation as follows: First, we will be taxed at regular corporate
rates on any undistributed REIT taxable income, including undistributed net
capital gains; provided, however, that if we have a net capital gain, we will be
taxed at regular corporate rates on our undistributed REIT taxable income,
computed without regard to net capital gain and the deduction for capital gains
dividends, plus a 35% tax on undistributed net capital gain, if our tax as thus
computed is less than the tax computed in the regular manner. Second, under
certain circumstances, we may be subject to the “alternative minimum tax” on our
items of tax preference that we do not distribute or allocate to our
stockholders. Third, if we have (i) net income from the sale or other
disposition of “foreclosure property” which is held primarily for sale to
customers in the ordinary course of business, or (ii) other nonqualifying income
from foreclosure property, we will be subject to tax at the highest regular
corporate rate on such income. Fourth, if we have net income from prohibited
transactions (which are, in general, certain sales or other dispositions of
property (other than foreclosure property) held primarily for sale to customers
in the ordinary course of business by us, (i.e., when we are acting as a
dealer)), such income will be subject to a 100% tax. Fifth, if we should fail to
satisfy the 75% gross income test or the 95% gross income test (as discussed
below), but have nonetheless maintained our qualification as a REIT because
certain other requirements have been met, we will be subject to a 100% tax on an
amount equal to (a) the gross income attributable to the greater of the amount
by which we fail the 75% or 95% test, multiplied by (b) a fraction intended to
reflect our profitability. Sixth, if we should fail to distribute by the end of
each year at least the sum of (i) 85% of our REIT ordinary income for such year,
(ii) 95% of our REIT capital gain net income for such year, and (iii) any
undistributed taxable income from prior periods, we will be subject to a 4%
excise tax on the excess of such required distribution over the amounts actually
distributed. Seventh, we will be subject to a 100% excise on transactions with a
taxable REIT subsidiary, or TRS, that are not conducted on an arm’s-length
basis. Eighth, if we acquire any asset, which is defined as a “built-in gain
asset” from a C corporation that is not a REIT (i.e., generally a corporation
subject to full corporate-level tax) in a transaction in which the basis of the
built-in gain asset in our hands is determined by reference to the basis of the
asset (or any other property) in the hands of the C corporation, and we
recognize gain on the disposition of such asset during the 10-year period, which
is defined as the “recognition
19
period,”
beginning on the date on which such asset was acquired by us, then, such gain,
but not more than built-in gain (i.e., the excess of (a) the fair market value
of such asset on the date such asset was acquired by us over (b) our adjusted
basis in such asset on such date), will be subject to tax at the highest regular
corporate rate. The results described above with respect to the recognition of
built-in gain assume that we will not make an election pursuant to Treasury
Regulations. Section 1.337(d)-7(c)(5).
Requirements for Qualification.
The Code defines a REIT as a domestic corporation, trust or association:
(1) which is managed by one or more trustees or directors; (2) the beneficial
ownership of which is evidenced by transferable shares, or by transferable
certificates of beneficial interest; (3) which would be taxable as a domestic
corporation, but for Sections 856 through 859 of the Code; (4) which is neither
a financial institution nor an insurance company subject to the provisions of
the Code; (5) the beneficial ownership of which is held by 100 or more persons;
(6) during the last half year of each taxable year not more than 50% in value of
the outstanding stock of which is owned, actually or constructively, by five or
fewer individuals (as defined in the Code to include certain entities); and (7)
which meets certain other tests, described below, regarding the nature of its
income and assets and the amount of its annual distributions to stockholders.
The Code provides that conditions (1) to (4), inclusive, must be met during the
entire taxable year and that condition (5) must be met during at least 335 days
of a taxable year of twelve months, or during a proportionate part of a taxable
year of less than twelve months. For purposes of conditions (5) and (6), pension
funds and certain other tax-exempt entities are treated as individuals, subject
to a “look-through” exception in the case of condition (6). We may avoid
disqualification as a REIT for a failure to satisfy any of these tests if such
failure is due to reasonable cause and not willful neglect, and we pay a penalty
of $50,000 for each such failure.
Income Tests. In order to
maintain our qualification as a REIT, we annually must satisfy two gross income
requirements. First, at least 75% of our gross income (excluding gross income
from prohibited transactions) for each taxable year must be derived directly or
indirectly from investments relating to real property or mortgages on real
property (including generally “rents from real property,” interest on mortgages
on real property and gains on sale of real property and real property mortgages,
other than property described in Section 1221 of the Code) and income derived
from certain types of temporary investments. Second, at least 95% of our gross
income (excluding gross income from prohibited transactions) for each taxable
year must be derived from such real property investments, dividends, interest,
and gain from the sale or disposition of stock or securities other than property
held for sale to customers in the ordinary course of business.
Rents
received by us will qualify as “rents from real property” in satisfying the
gross income requirements for a REIT described above only if several conditions
are met. First, the amount of the rent must not be based in whole or in part on
the income or profits of any person. However, any amount received or accrued
generally will not be excluded from the term “rents from real property” solely
by reason of being based on a fixed percentage or percentages of receipts or
sales. Second, the Code provides that rents received from a tenant will not
qualify as “rents from real property” in satisfying the gross income tests if we
or an owner (actually or constructively) of 10% or more of the value of our
stock, actually or constructively owns 10% or more of such tenant, which is
defined as a related party tenant. Third, if rent attributable to personal
property, leased in connection with a lease of real property, is greater than
15% of the total rent received under the lease, then the portion of rent
attributable to such personal property will not qualify as “rents from real
property.” Finally, for rents received to qualify as “rents from real property,”
we generally must not operate or manage the property or furnish or render
services to the tenants of such property, other than through an independent
contractor from which we derive no revenue. We may, however, directly perform
certain services that are “usually or customarily rendered” in connection with
the rental of space for occupancy and that are not otherwise considered
“rendered to the occupant” of the property. In addition, we may provide a
minimal amount of “non-customary” services to the tenants of a property, other
than through an independent contractor, as long as our income from the services
does not exceed 1% of our income from the related property. Furthermore, we may
own up to 100% of the stock of a TRS, which may provide customary and
noncustomary services to our tenants without tainting our rental income from the
related properties.
The
term “interest” generally does not include any amount received or accrued
(directly or indirectly) if the determination of such amount depends in whole or
in part on the income or profits of any person. However, an amount received or
accrued generally will not be excluded from the term “interest” solely by reason
of being based on a fixed percentage or percentages of gross receipts or sales.
In addition, an amount that is based on the income
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or
profits of a debtor will be qualifying interest income as long as the debtor
derives substantially all of its income from the real property securing the debt
as a result of leasing substantially all of its interest in such real property,
but only to the extent that the amounts received by the debtor would be
qualifying “rents from real property” if received directly by a
REIT.
If
a loan contains a provision that entitles us to a percentage of the borrower’s
gain upon the sale of the real property securing the loan or a percentage of the
appreciation in the property’s value as of a specific date, income attributable
to that loan provision will be treated as gain from the sale of the property
securing the loan, which generally is qualifying income for purposes of both
gross income tests.
Interest
on debt secured by mortgages on real property or on interests in real property
generally is qualifying income for purposes of the 75% gross income test.
However, if the highest principal amount of a loan outstanding during a taxable
year exceeds the fair market value of the real property securing the loan as of
the date we agreed to originate or acquire the loan, a portion of the interest
income from such loan will not be qualifying income for purposes of the 75%
gross income test, but will be qualifying income for purposes of the 95% gross
income test. The portion of the interest income that will not be qualifying
income for purposes of the 75% gross income test will be equal to the portion of
the principal amount of the loan that is considered not to be secured by real
property.
Prohibited Transactions. We
will incur a 100% tax on the net income derived from any sale or other
disposition of property, other than foreclosure property, that we hold primarily
for sale to customers in the ordinary course of a trade or business. We believe
that none of our assets is held for sale to customers and that a sale of any of
our assets would not be in the ordinary course of our business. Whether a REIT
holds an asset primarily for sale to customers in the ordinary course of a trade
or business depends, however, on the facts and circumstances in effect from time
to time, including those related to a particular asset. Nevertheless, we will
attempt to comply with the terms of safe-harbor provisions in the federal income
tax laws prescribing when an asset sale will not be characterized as a
prohibited transaction. We cannot assure you, however, that we can comply with
the safe-harbor provisions or that we will avoid owning property that may be
characterized as property that we hold primarily for sale to customers in the
ordinary course of a trade or business.
Foreclosure Property. We will
be subject to tax at the maximum corporate rate on any income from foreclosure
property, other than income that otherwise would be qualifying income for
purposes of the 75% gross income test, less expenses directly connected with the
production of that income. However, gross income from foreclosure property will
qualify for purposes of the 75% and 95% gross income tests. Foreclosure property
is any real property, including interests in real property, and any personal
property incident to such real property:
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that
is acquired by a REIT as the result of the REIT having bid in such
property at foreclosure, or having otherwise reduced such property to
ownership or possession by agreement or process of law, after there was a
default or default was imminent on a lease of such property or on
indebtedness that such property secured;
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for
which the related loan or lease was acquired by the REIT at a time when
the default was not imminent or anticipated; and
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for
which the REIT markets a proper election to treat the property as
foreclosure property.
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Property
generally ceases to be foreclosure property at the end of the third taxable year
following the taxable year in which the REIT acquired the property, or longer if
an extension is granted by the Secretary of the Treasury. This grace period
terminates and foreclosure property ceases to be foreclosure property on the
first day:
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on
which a lease is entered into for the property that, by its terms, will
give rise to income that does not qualify for purposes of the 75% gross
income test, or any amount is received or accrued, directly or indirectly,
pursuant to a lease entered into on or after such day that will give rise
to income that does not qualify for purposes of the 75% gross income
test;
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on
which any construction takes place on the property, other than completion
of a building or any other improvement, where more than 10% of the
construction was completed before default became imminent;
or
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which
is more than 90 days after the day on which the REIT acquired the property
and the property is used in a trade or business which is conducted by the
REIT, other than through an independent contractor from whom the REIT
itself does not derive or receive any
income.
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Beginning
on January 1, 2001, foreclosure property also includes any “qualified health
care property,” as defined in Code Section 856(e)(6) acquired by us as the
result of the termination or expiration of a lease of such property. We may
operate a qualified healthcare facility, acquired in this manner for two years
or longer if an extension is granted. At present, we do not own property with
respect to which we have made foreclosure property elections. Properties that
are taken back in a foreclosure or bankruptcy and operated for our own account
are treated as foreclosure properties for income tax purposes, pursuant to
Internal Revenue Code Section 856(e). Gross income from foreclosure properties
is “good income” for purposes of the annual REIT income tests. Once this
election is made on the tax return, it is “good income” for a period of three
years, or until the properties are no longer operated for our own account. An
election to extend the foreclosure status period for an additional three years
can be made. In all cases of the foreclosure property, we utilize an independent
contractor to conduct day-to-day operations in order to maintain REIT status. In
certain cases, we may operate facilities through a taxable REIT subsidiary. For
those properties operated through the taxable REIT subsidiary, we utilize an
eligible independent contractor to conduct day-to-day operations to maintain
REIT status. As a result of the foregoing, we do not believe that our
participation in the operation of nursing homes will increase the risk that we
will fail to qualify as a REIT. Through our 2007 taxable year, we have not paid
any tax on our foreclosure property because those properties have been producing
losses. However, in the future, our income from foreclosure property could be
significant and we could be required to pay a significant amount of tax on that
income.
Hedging
Transactions. From time to time, we enter into hedging transactions with
respect to one or more of our assets or liabilities. Our hedging activities may
include entering into interest rate swaps, caps, and floors, options to purchase
these items, and futures and forward contracts. To the extent that we enter into
an interest rate swap or cap contract, option, futures contract, forward rate
agreement, or any similar financial instrument to hedge our indebtedness
incurred to acquire or carry “real estate assets,” any periodic income or gain
from the disposition of that contract will be excluded from gross income (both
the numerator and the denominator) for purposes of the 95% gross income test,
but will not be qualifying gross income (not included in the numerator but
included in the denominator) for purposes of the 75% gross income test. To the
extent that we hedge with other types of financial instruments, or in other
situations, it is not entirely clear how the income from those transactions will
be treated for purposes of the gross income tests. We have structured and intend
to continue to structure any hedging transactions in a manner that does not
jeopardize our status as a REIT.
TRS
Income. A TRS may earn income that would not be qualifying income if
earned directly by the parent REIT. Both the subsidiary and the REIT must
jointly elect to treat the subsidiary as a TRS. If a TRS directly or indirectly
owns more than 35% of the voting power or value of the stock of another
corporation, the other corporation also will automatically be treated as a TRS
as well. Overall, no more than 20% of the value of a REIT’s assets may consist
of securities of one or more TRSs. However, a corporation which directly or
indirectly (i) operates or manages a health care (or lodging) facility, or (ii)
provides to any other person (under a franchise, license, or otherwise) rights
to any brand name under which a health care (or lodging) facility is operated,
cannot be a TRS. A TRS will pay income tax at regular corporate rates on any
income that it earns. In addition, the new rules limit the deductibility of
interest paid or accrued by a TRS to its parent REIT to assure that the TRS is
subject to an appropriate level of corporate taxation. The rules also impose a
100% excise tax on transactions between a TRS and its parent REIT or the REIT’s
tenants that are not conducted on an arm’s-length basis. We have made a TRS
election with respect to Omega TRS I, Inc., which previously owned all of the
preferred stock of Omega Worldwide. This entity will pay corporate income tax on
their taxable income and their after-tax next income will be available for
distribution to us, if any.
Failure
to Satisfy Income Tests. If we fail to satisfy one or both of the 75% or
95% gross income tests for any taxable year, we may nevertheless qualify as a
REIT for such year if we are entitled to relief under certain provisions of the
Code. These relief provisions will be generally available if our failure to meet
such tests was due to reasonable cause and not due to willful neglect, we attach
a schedule of the sources of our income to our tax return, and any incorrect
information on the schedule was not due to fraud with intent to evade tax. It is
not possible,
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however,
to state whether in all circumstances we would be entitled to the benefit of
these relief provisions. Even if these relief provisions apply, we would incur a
100% tax on the gross income attributable to the greater of the amounts by which
we fail the 75% and 95% gross income tests, multiplied by a fraction intended to
reflect our profitability.
Asset
Tests. At the close of each quarter of our taxable year, we must also
satisfy the following tests relating to the nature of our assets. First, at
least 75% of the value of our total assets must be represented by (i) real
estate assets, including (i) our allocable share of real estate assets held by
partnerships in which we own an interest, and (ii) stock or debt instruments
held for not more than one year purchased with the proceeds of a stock offering
or long-term (at least five years) debt offering of our company), cash, cash
items and government securities. Second, of our investments not included in the
75% asset class, the value of our interest in any one issuer’s securities may
not exceed 5% of the value of our total assets. Third, we may not own more than
10% of the voting power or value of any one issuer’s outstanding securities.
Fourth, no more than 20% of the value of our total assets may consist of the
securities of one or more TRSs. Fifth, no more than 25% of the value of our
total assets may consist of the securities of TRSs and other non-TRS taxable
subsidiaries and other assets that are not qualifying assets for purposes of the
75% asset test.
For
purposes of the second and third asset tests, the term “securities” does not
include any security in another REIT, debt or equity securities of a qualified
REIT subsidiary or TRS, any loan to an individual or an estate, any Code Section
467 rental agreement, any obligation to pay rents from real property, certain
government issued securities, certain debt securities of a partnership, or
equity interest in any partnership. The term “securities,” however, generally
includes debt securities issued by another REIT or a partnership, except that
debt securities of a partnership are not treated as securities for purposes of
the 10% value test if we own at least a 20% profits interest in the
partnership.
We
may own up to 100% of the stock of one or more TRSs. However, overall, no more
than 20% of the value of our assets may consist of securities of one or more
TRSs, and no more than 25% of the value of our assets may consist of the
securities of TRSs and other non-TRS taxable subsidiaries (including stock in
non-REIT C Corporations) and other assets that are not qualifying assets for
purposes of the 75% asset test.
If
the outstanding principal balance of a mortgage loan exceeds the fair market
value of the real property securing the loan, a portion of such loan likely will
not be a qualifying real estate asset under the federal income tax laws. The
non-qualifying portion of that mortgage loan will be equal to the portion of the
loan amount that exceeds the value of the associated real property.
After
initially meeting the asset tests at the close of any quarter, we will not lose
our status as a REIT for failure to satisfy any of the asset tests at the end of
a later quarter solely by reason of changes in asset values. If the failure to
satisfy the asset tests results from an acquisition of securities or other
property during a quarter, the failure can be cured by disposition of sufficient
non-qualifying assets within 30 days after the close of that quarter. We have
maintained and intend to continue to maintain adequate records of the value of
our assets to ensure compliance with the asset tests and to take such other
action within 30 days after the close of any quarter as may be required to cure
any noncompliance.
Failure
to Satisfy Asset Tests. Subject to certain deminimis exceptions, we may
avoid disqualification as a REIT in the event of certain failures to satisfy the
asset tests provided that our failure to meet such tests was due to reasonable
cause and not due to willful neglect, we attach a schedule with our return that
contains a description of each asset that caused the failure, we dispose of the
assets generally within six (6) months of the last day of the quarter in which
identification of the failure occurred, and we pay a tax on the failure equal to
the greater of (a) $50,000, and (b) the product of the net income for the period
beginning on the date of the failure and ending generally on the date of
disposition of the asset that was generated by the assets that caused the
failure multiplied by the highest applicable corporate tax rate.
Annual
Distribution Requirements. 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 noncash
income.
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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.
Furthermore,
if we fail to distribute during a calendar year, or by the end of January
following the calendar year in the case of distributions with declaration and
record dates falling in the last three months of the calendar year, at least the
sum of:
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85%
of our REIT ordinary income for such year;
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95%
of our REIT capital gain income for such year; and
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any
undistributed taxable income from prior
periods,
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we will
incur a 4% nondeductible excise tax on the excess of such required distribution
over the amounts we actually distribute. We may elect to retain and pay income
tax on the net long-term capital gain we receive in a taxable year. If we so
elect, we will be treated as having distributed any such retained amount for
purposes of the 4% excise tax described above. We have made, and we intend to
continue to make, timely distributions sufficient to satisfy the annual
distribution requirements. We may also be entitled to pay and deduct deficiency
dividends in later years as a relief measure to correct errors in determining
our taxable income. Although we may be able to avoid income tax on amounts
distributed as deficiency dividends, we will be required to pay interest to the
IRS based upon the amount of any deduction we take for deficiency
dividends.
Our
ability to make distributions in amounts sufficient to meet the requirements set
forth in the previous paragraph may be dependent, in part, on our ability to
claim,, among other things, depreciation deductions with respect to owned
facilities. This treatment for federal income tax purposes depends upon
classification of the leases with respect to such owned facilities as “true
leases” rather than financing arrangements. The question of whether we are the
owner of such facilities and whether the leases are true leases for federal tax
purposes is essentially based upon factual matters. We believe that we will be
treated as the owner of each of the facilities that we lease, and such leases
will be treated as “true leases” for federal income tax purposes. However, no
assurances can be given that the IRS will not successfully challenge our status
as the owner of our facilities subject to leases, and the status of such leases
as true leases, asserting that the purchase of the facilities by us and the
leasing of such facilities merely constitute steps in secured financing
transactions in which the lessees are owners of the facilities and we are merely
a secured creditor. In such event, we would not be entitled to claim
depreciation deductions with respect to any of the affected facilities. As a
result, we might fail to meet the 90% distribution requirement or, if such
requirement is met, we might be subject to corporate income tax or the 4% excise
tax.
Failure
to Qualify
If
we fail to qualify as a REIT in any taxable year, and the relief provisions do
not apply, we will be subject to tax (including any applicable alternative
minimum tax) on our taxable income at regular corporate rates. Distributions to
stockholders in any year in which we fail to qualify will not be deductible and
our failure to qualify as a REIT would reduce the cash available for
distribution by us to our stockholders. In addition, if we fail to qualify as a
REIT, all distributions to stockholders will be taxable as ordinary income, to
the extent of current and accumulated earnings and profits, and, subject to
certain limitations of the Code, corporate distributees may be eligible for the
dividends received deduction. Unless entitled to relief under specific statutory
provisions, we would also be disqualified from taxation as a REIT for the four
taxable years following the year during which qualification was lost. It is not
possible to state whether in all circumstances we would be entitled to such
statutory relief. Failure to qualify could result in our incurring indebtedness
or liquidating investments in order to pay the resulting taxes.
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Other
Tax Matters
We
own and operate a number of properties through subsidiaries, known as qualified
REIT subsidiaries, or “QRSs”. Code Section 856(i) provides that a corporation
which is a qualified REIT subsidiary shall not be treated as a separate
corporation, and all assets, liabilities, and items of income, deduction, and
credit of a qualified REIT subsidiary shall be treated as assets, liabilities
and such items (as the case may be) of the REIT. Thus, in applying the tests for
REIT qualification described in this prospectus under the heading “Taxation of
Omega,” the QRSs will be ignored, and all assets, liabilities and items of
income, deduction, and credit of such QRSs will be treated as our assets,
liabilities and items of income, deduction, and credit.
In
the case of a REIT that is a partner in a partnership, the REIT is treated as
owning its proportionate share of the assets of the partnership and as earning
its allocable share of the gross income of the partnership for purposes of the
applicable REIT qualification tests. Thus, our proportionate share of the
assets, liabilities, and items of income of any partnership, joint venture, or
limited liability company that is treated as a partnership for federal income
tax purposes in which we own an interest, directly or indirectly, will be
treated as our assets and gross income for purposes of applying the various REIT
qualification requirements.
Taxation
of Stockholders
Taxation
of Domestic Stockholders. As long as we qualify as a REIT, if you are a
taxable U.S. stockholder, distributions made to you out of current or
accumulated earnings and profits (and not designated as capital gain dividends)
will be taken into account by you as ordinary income and will not be eligible
for the dividends received deduction for corporations or the special 15% tax
rate applicable to individuals and certain other taxpayers in the case of
dividends paid by a regular C corporation. However, to the extent that any of
our income represents income on which we have paid tax at corporate income tax
rates or dividend income from a regular C corporation, including dividend income
from a TRS that we own, your proportionate share of such dividend income will be
eligible for such special 15% tax rate. Distributions that are designated as
capital gain dividends will be taxed as long-term capital gains (to the extent
they do not exceed our actual net capital gain for the taxable year) and
eligible for the special 15% maximum tax rate on capital gain income applicable
to individuals and certain other tax payers (unless such capital gain income is
attributable to unrecaptured Section 1250 gain, in which case the applicable
maximum tax rate will be 25%, instead of 15%), without regard to the period for
which you have held our stock. However, if you are a corporation, you may be
required to treat up to 20% of certain capital gain dividends as ordinary
income. Further, if we designate a dividend as a capital gain dividend to you
and you dispose of your shares in a sale or exchange in which you recognize a
loss, and have held those shares for six (6) months or less, you will be
required to treat the loss from the sale of your shares as long-term (instead of
short-term) capital loss to the extent of the of the dividend distributions you
received from us that were designated as capital gain distributions that were
permitted to treat as long-term capital gains.
Distributions
in excess of current and accumulated earnings and profits will not be taxable to
you to the extent that they do not exceed the adjusted basis of your shares, but
rather will reduce the adjusted basis of those shares. To the extent that
distributions in excess of current and accumulated earnings and profits exceed
the adjusted basis of your shares, you will include the distributions in income
as long-term capital gain (or short-term capital gain if you have held the
shares for one year or less) assuming the shares are a capital asset in your
hands. In addition, any distribution declared by us in October, November, or
December of any year payable to you as a stockholder of record on a specified
date in any of these months shall be treated as both paid by us and received by
you on December 31 of that year, provided that the distribution is actually paid
by us during January of the following calendar year. You may not include in your
individual income tax returns any of our net operating losses or capital
losses.
Backup
Withholding
Assuming
that you are a U.S. stockholder, we will report to you and the IRS the amount of
distributions paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, you may be subject to backup
withholding with respect to distributions paid unless you:
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are
a corporation or come within certain other exempt categories and when
required, demonstrate this fact; or
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provide
a taxpayer identification number, certify as to no loss of exemption from
backup withholding, and otherwise comply with applicable requirements of
the backup withholding rules.
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If
you do not provide us with your correct taxpayer identification number, you may
also be subject to penalties imposed by the IRS. Any amount paid as backup
withholding will be creditable against your income tax liability. In addition,
we may be required to withhold a portion of capital gain distributions to you,
if you fail to certify your nonforeign status to us. See “— Taxation of
Stockholders — Taxation of Foreign Stockholders.”
Treatment
of Tax-Exempt Stockholders. If you are a tax-exempt employee pension
trust or other domestic tax-exempt stockholder, our distributions to you
generally will not constitute “unrelated business taxable income,” or UBTI,
unless you have borrowed to acquire or carry our common stock. However,
qualified trusts that hold more than 10% (by value) of certain REITs may be
required to treat a certain percentage of that REIT’s distributions as UBTI.
This requirement will apply only if:
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the
REIT would not qualify for federal income tax purposes but for the
application of a “look-through” exception to the “five or fewer”
requirement applicable to shares held by qualified trusts;
and
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the
REIT is “predominantly held” by qualified trusts.
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A
REIT is predominantly held if either:
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a
single qualified trust holds more than 25% by value of the REIT interests;
or
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one
or more qualified trusts, each owning more than 10% by value of the REIT
interests, hold in the aggregate more than 50% by value of the REIT
interests.
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The
percentage of any REIT dividend treated as UBTI is equal to the ratio of the
UBTI earned by the REIT (treating the REIT as if it were a qualified trust and
therefore subject to tax on UBTI) to the total gross income (less certain
associated expenses) of the REIT.
A
de minimis exception applies where the ratio set forth in the preceding sentence
is less than 5% for any year. For those purposes, a qualified trust is any trust
described in section 401(a) of the Internal Revenue Code and exempt from tax
under section 501(a) of the Internal Revenue Code. The provisions requiring
qualified trusts to treat a portion of REIT distributions as UBTI will not apply
if the REIT is able to satisfy the “five or fewer” requirement without relying
upon the “look-through” exception. The restrictions on ownership of our common
stock in our Amended and Restated Articles of Incorporation, as amended,
generally will prevent application of the provisions treating a portion of REIT
distributions as UBTI to tax-exempt entities purchasing our common stock, absent
approval by our board of directors.
Taxation
of Foreign Stockholders. The rules governing U.S. federal income taxation
of nonresident alien individuals, foreign corporations, foreign partnerships and
other foreign stockholders (collectively, Non-U.S. Stockholders) are complex and
no attempt will be made herein to provide more than a summary of these rules.
Prospective Non-U.S. Stockholders should consult with their own tax advisors to
determine the impact of federal, state and local income tax laws with regard to
an investment in shares, including any reporting requirements.
If
you are a Non-U.S. Stockholder, the following discussion will apply to you.
Distributions that are not attributable to gain from our sales or exchanges of
U.S. real property interests and not designated by us as capital gains dividends
will be treated as dividends of ordinary income to the extent that they are made
out of our current or accumulated earnings and profits. Such distributions will
ordinarily be subject to a withholding tax equal to 30% of the gross amount of
the distribution unless an applicable tax treaty reduces or eliminates that
tax.
However,
if income from the investment in the shares is treated as effectively connected
with your conduct of a U.S. trade or business, you generally will be subject to
a tax at graduated rates, in the same manner as U.S. stockholders are taxed with
respect to the distributions (and may also be subject to the 30% branch profits
tax if you are a foreign corporation). We expect to withhold U.S. income tax at
the rate of 30% on the gross amount of any distributions made to you
unless:
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a
lower treaty rate applies, you file an IRS Form W-8BEN with us and other
conditions are met; or
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you
file an IRS Form W-8ECI with us claiming that the distribution is
effectively connected income, and other conditions are
met.
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Distributions
in excess of our current and accumulated earnings and profits will not be
taxable to you to the extent that the distributions do not exceed the adjusted
basis of your shares, but rather will reduce the adjusted basis of the shares.
To the extent that distributions in excess of current accumulated earnings and
profits exceed the adjusted basis of your shares, these distributions will give
rise to tax liability if you would otherwise be subject to tax on any gain from
the sale or disposition of your shares in us, as described below. If it cannot
be determined at the time a distribution is made whether or not the distribution
will be in excess of current and accumulated earnings and profits, the
distributions will be subject to withholding at the same rate as dividends.
However, amounts withheld can be refundable if the Non-U.S. stockholder files a
U.S. tax return if it is subsequently reporting that a distribution was, in
fact, in excess of our current and accumulated earnings and
profits.
For
any year in which we qualify as a REIT, distributions that are attributable to
gain from our sales or exchanges of U.S. real property interests will be taxed
to you under the provisions of the Foreign Investment in Real Property Tax Act
of 1980, or FIRPTA. Under FIRPTA, distributions attributable to gain from sales
of U.S. real property interests are taxed to you as if the gain were effectively
connected with a U.S. business. You would thus be taxed at the normal capital
gain rates applicable to U.S. stockholders (subject to applicable alternative
minimum tax and a special alternative minimum tax in the case of nonresident
alien individuals). Also, distributions subject to FIRPTA may be subject to a
30% branch profits tax in the hands of a foreign corporate stockholder not
entitled to a treaty exemption. We are required by applicable Treasury
Regulations to withhold 35% of any distribution that could be designated by us
as a capital gains dividend. This amount is creditable against your FIRPTA tax
liability. Notwithstanding the foregoing, in the case of any distribution
attributable to gain from a sale by us of U.S. real property interests, if the
distribution is with respect to a class of our stock that is regularly traded on
an established securities market, you do not own more than 5% of that class of
stock at any time during the one-year period ending on the date of the
distribution, and we are a “domestically controlled REIT” as defined below, then
the distribution will be exempted from the application of the FIRPTA rules and
the distribution will be subject to the withholding rules for ordinary income,
i.e., subject to a 30%
withholding tax unless the a Form W-8BEN has been filed (indicating that a lower
treaty rate applies) or a Form W-8ECI has been filed (indicating that the
distribution is effectively connected income).
Gain
recognized by you upon a sale of shares generally will not be taxed under FIRPTA
if we are a “domestically controlled REIT,” defined generally as a REIT in which
at all times during a specified testing period less than 50% in value of the
stock was held directly or indirectly by foreign persons. It is currently
anticipated that we will be a “domestically controlled REIT,” although there can
be no assurance that we will retain that status. If we are not “domestically
controlled,” gain recognized by you will continue to be exempt under FIRPTA if
you at no time owned more than five percent of our common stock. However, gain
not subject to FIRPTA will be taxable to you if:
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investment
in the shares is effectively connected with your U.S. trade or business,
in which case you will be subject to the same treatment as U.S.
stockholders with respect to the gain; or
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you
are a nonresident alien individual who was present in the United States
for more than 182 days during the taxable year and other applicable
requirements are met, in which case you will be subject to a 30% tax on
your capital gains.
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If
the gain on the sale of shares were to be subject to taxation under FIRPTA, you
will be subject to the same treatment as U.S. stockholders with respect to the
gain (subject to applicable alternative minimum tax and a special alternative
minimum tax in the case of nonresident alien individuals).
If
the proceeds of a sale of shares by you are paid by or through a U.S. office of
a broker, the payment is subject to information reporting and to backup
withholding unless you certify as to your name, address and non-U.S. status or
otherwise establish an exemption. Generally, U.S. information reporting and
backup withholding will not apply to a payment of disposition proceeds if the
payment is made outside the U.S. through a non-U.S. office of a
non-U.S.
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broker.
U.S. information reporting requirements (but not backup withholding) will apply,
however, to a payment of disposition proceeds outside the U.S. if:
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the
payment is made through an office outside the U.S. of a broker that is:
(a) a U.S. person; (b) a foreign person that derives 50% or more of its
gross income for certain periods from the conduct of a trade or business
in the U.S.; or (c) a “controlled foreign corporation” for U.S. federal
income tax purposes; and
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the
broker fails to initiate documentary evidence that you are a Non-U.S.
Stockholder and that certain conditions are met or that you otherwise are
entitled to an exemption.
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Possible
Legislative or Other Actions Affecting Tax Consequences
Prospective
holders of our securities should recognize that the present federal income tax
treatment of investment in our company may be modified by legislative, judicial
or administrative action at any time and that any of these actions may affect
investments and commitments previously made. The rules dealing with federal
income taxation are constantly under review by persons involved in the
legislative process and by the IRS and the Treasury Department, resulting in
revisions of regulations and revised interpretations of established concepts as
well as statutory changes. Revisions in federal tax laws and interpretations
thereof could adversely affect the tax consequences of investment in our
company.
State
and Local Taxes
We
may be and you may be subject to state or local taxes in other jurisdictions
such as those in which we may be deemed to be engaged in activities or own
property or other interests. The state and local tax treatment of us may not
conform to the federal income tax consequences discussed above.
We
may sell the securities covered by this prospectus from time to time.
Registration of the securities covered by this prospectus does not mean,
however, that those securities will necessarily be offered or sold.
We
may sell the securities separately or together:
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through
one or more underwriters or dealers in a public offering and sale by
them;
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directly
to investors; or
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through
agents.
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We
may sell the securities from time to time:
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in
one or more transactions at a fixed price or prices, which may be changed
from time to time;
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at
market prices prevailing at the times of sale;
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at
price related to such prevailing market prices; or
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at
negotiated prices.
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We
will describe the method of distribution of the securities and the terms of the
offering in the prospectus supplement.
If
underwriters are used in the sale of any securities, the securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions described above. The securities
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may be
either offered to the public through underwriting syndicates represented by
managing underwriters, or directly by underwriters. Generally, the underwriters’
obligations to purchase the securities will be subject to conditions precedent
and the underwriters will be obligated to purchase all of the securities being
distributed if they purchase any of the securities.
We
may authorize underwriters, dealers or agents to solicit offers by certain
purchasers to purchase the securities from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. The
contracts will be subject only to those conditions set forth in the prospectus
supplement, and the prospectus supplement will set forth any commissions we pay
for solicitation of these contracts.
We
may enter into derivative transactions with third parties, or sell securities
not covered by this prospectus to third parties in privately negotiated
transactions. If the applicable prospectus supplement indicates, in connection
with those derivatives, the third parties may sell securities covered by this
prospectus and the applicable prospectus supplement, including in short sale
transactions. If so, the third party may use securities pledged by us or
borrowed from us or others to settle those sales or to close out any related
open borrowings of stock, and may use securities received from us in settlement
of those derivatives to close out any related open borrowings of stock. The
third party in such sale transactions will be an underwriter and will be
identified in the applicable prospectus supplement or in a post-effective
amendment.
If
so indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers or other persons to solicit offers by certain institutions
to purchase offered securities from us at the public offering price set forth in
the applicable prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a future date or dates. Institutions with
which these contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others. The obligations of any purchasers under any
delayed delivery contract will not be subject to any conditions
except:
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the
purchase of the offered securities must not at the time of delivery be
prohibited under the laws of the jurisdiction to which the purchaser is
subject; and
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if
the offered securities are also being sold to underwriters, we will have
sold to the underwriters the offered securities not sold for delayed
delivery.
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The
underwriters, dealers and other persons will not have any responsibility for the
validity or performance of these contracts. The prospectus supplement relating
to the contracts will set forth the price to be paid for securities under the
contracts, the commission payable for solicitation of the contracts and the date
or dates in the future for delivery of offered securities under the
contracts.
Underwriters,
dealers and agents may be entitled to indemnification by us against certain
civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments made by the underwriters, dealers or
agents, under agreements between us and the underwriters, dealers and
agents.
We
may grant underwriters who participate in the distribution of securities an
option to purchase additional securities in connection with the
distribution.
Underwriters,
dealers or agents may receive compensation in the form of discounts, concessions
or commissions from us or our purchasers, as their agents in connection with the
sale of securities. These underwriters, dealers or agents may be considered to
be underwriters under the Securities Act. As a result, discounts, commissions or
profits on resale received by the underwriters, dealers or agents may be treated
as underwriting discounts and commissions. The prospectus supplement will
identify any such underwriter, dealer or agent and describe any compensation
received by them from us. In no event will the aggregate discounts, concessions
and commissions
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to any
underwriters, dealers or agents exceed eight percent of the gross proceeds. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Shares
of our common stock are listed on the New York Stock Exchange. Unless otherwise
specified in the related prospectus supplement, all securities we offer, other
than common stock, will be new issues of securities with no established trading
market. Any underwriter may make a market in these securities, but will not be
obligated to do so and may discontinue any market making at any time without
notice. We may apply to list any series of debt securities, preferred stock or
warrants on an exchange, but we are not obligated to do so. Therefore, there may
not be liquidity or a trading market for any series of securities.
In
connection with an offering, the underwriters may purchase and sell securities
in the open market. These transactions may include short sales, stabilizing
transactions and purchases to cover positions created by short sales. Short
sales involve the sale by the underwriters of a greater number of securities
than they are required to purchase in an offering. Stabilizing transactions
consist of certain bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the securities while an offering is
in progress.
The
underwriters may also impose a penalty bid. This occurs when a particular
underwriter repays to the underwriters a portion of the underwriting discount
received by it because the underwriters have repurchased securities sold by or
for the account of that underwriter in stabilizing or short-covering
transactions.
These
activities by the underwriters may stabilize, maintain or otherwise affect the
market price of the securities. As a result, the price of the securities may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the underwriters at any
time. These transactions may be effected on an exchange or automated quotation
system, if the securities are listed on that exchange or admitted for trading on
that automated quotation system, or in the over-the-counter market or
otherwise.
Underwriters,
dealers or agents who may become involved in the sale of our securities may
engage in transactions with and perform other services for us in the ordinary
course of their business for which they receive compensation.
In
connection with particular offerings of the securities in the future, and if
stated in the applicable prospectus supplements, the validity of those
securities may be passed upon for the Company by Powell Goldstein LLP and for
any underwriters or agents by counsel named in the applicable prospectus
supplement.
Ernst
& Young LLP, independent registered public accounting firm, has audited our
consolidated financial statements and schedules included in our Annual Report on
Form 10-K for the year ended December 31, 2007, and the effectiveness of our
internal control over financial reporting as of December 31, 2007, as set forth
in their reports, which are incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements and schedules
are incorporated by reference in reliance on Ernst & Young LLP’s reports,
given on their authority as experts in accounting and auditing.
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OMEGA HEALTHCARE INVESTORS,
INC.
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