Omega Healthcare Announces Pricing of $118.5 Million of its 8.375% Series D Cumulative Redeemable Preferred Shares
Friday February 6, 9:17 am ET

TIMONIUM, Md.--(BUSINESS WIRE)--Feb. 6, 2004--Omega Healthcare Investors, Inc. (NYSE:OHI - News)
    Portion of Proceeds to Be Used to Exercise the Option to Repurchase
    700,000 Shares of the Series C Preferred Stock for $102.1 Million

Omega Healthcare Investors, Inc. (NYSE:OHI - News) today announced that it has priced an offering of 4,739,500 8.375% Series D cumulative redeemable preferred shares to a number of institutional investors and other purchasers pursuant to a registered direct placement. The preferred shares will be sold at $25 per share and the Company expects to issue the shares on February 10, 2004. Net proceeds to the Company, after fees and expenses, are expected to be approximately $114.9 million. The Company has applied to list the Series D preferred shares on the New York Stock Exchange under the symbol "OHI PrD." The Series D preferred shares may be redeemed at par at the Company's election on or after the fifth anniversary of the original issue date. These securities will rank pari passu with the Series A and Series B preferred shares and are not convertible into any other securities of the Company. The Series D preferred shares have no stated maturity and will not be subject to a sinking fund or mandatory redemption.

As announced yesterday, Explorer Holdings, L.P., the Company's largest stockholder ("Explorer"), granted the Company an option to repurchase from Explorer up to 700,000 shares of the Company's Series C preferred shares (which are convertible into the Company's common stock) at a negotiated purchase price of $145.92 per Series C preferred share. The Company intends to exercise its option and expects to use approximately $102.1 million of the net proceeds from the sale of the Series D preferred shares to repurchase 700,000 shares of the Company's Series C preferred shares. The balance of the net proceeds will be used for general corporate purposes, which may include repaying existing indebtedness, redeeming Series A preferred shares or funding new investments by the Company.

Following the Company's exercise of the repurchase option, Explorer will convert its remaining 348,420 Series C preferred shares into approximately 5.6 million shares of common stock. Following the repurchase and conversion, the Company will have approximately 43.6 million shares of common stock outstanding, of which Explorer will hold 18.1 million common shares; thereby, reducing its ownership of the Company from 53.5% to 41.5%.

"We are very pleased to announce the pricing of our $118.5 million offering which marks a strong return by Omega to the capital markets. The offering was placed with a diverse group of high quality institutions, many of which are new investors to the Company," said C. Taylor Pickett, President and CEO of Omega Healthcare Investors, Inc. "In addition, we have taken advantage of a great window of opportunity, with the help of our majority stockholder, to retire our Series C preferred shares. As a result of these transactions, we have greatly simplified our capital structure and have positioned the Company for growth in the future. We also expect this transaction to be accretive to our annual projected FFO per share, excluding the one-time deal related charge, reflecting our enhanced capital structure."

As part of the accounting for this transaction under FASB-EITF Issue D-42, "The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock," the repurchase of the Series C preferred shares will result in a one-time charge in the first quarter to net income available to common shareholders and FFO estimated at approximately $40 million. This non-recurring charge will not have any effect on the Company's net worth and will be recorded upon the completion of the offering and the repurchase. The agent bank for the Company's credit facility has confirmed that this non-recurring charge will be excluded from the calculation of the maximum cash dividend payments permitted under the Company's credit facility. Mr. Pickett noted, "It is important for all of our stockholders and other constituents to understand that these one-time accounting entries will have no affect on our net worth or cash flow."

Cohen & Steers Capital Advisors, LLC acted as placement agent in the sale of the securities. Legg Mason Wood Walker, Inc. acted as financial advisor to the Company with respect to financial matters relating to the offering.

The Company is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At December 31, 2003, the Company owned or held mortgages on 211 skilled nursing and assisted living facilities with approximately 21,500 beds located in 28 states and operated by 39 third-party healthcare operating companies.

This announcement includes forward-looking statements. All forward-looking statements included herein are based on information available to the Company on the date hereof. Actual results may differ materially from those reflected in such forward-looking statements as a result of a variety of factors, including, among other things: (i) the ability of the Company to exercise the repurchase option on a timely basis; (ii) the availability of funds to the Company to repurchase the Series C preferred shares; (iii) conditions in the capital markets that may affect the availability and cost of capital; (iv) uncertainties relating to the business operations of the operators of the Company's properties, including those relating to reimbursement by third-party payors, regulatory matters and occupancy levels; (v) regulatory and other changes in the healthcare sector, including without limitation, changes in Medicare reimbursement; (vi) changes in the financial position of the Company's operators; and (vii) other factors identified in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such statements only speak as of the date hereof and the Company assumes no obligation to update such forward-looking statements.