Good morning and welcome to the Omega Healthcare Investors, Inc. Third Quarter Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference over to Michele Reber. Please go ahead.

Thanks and good morning. With me today are Omega’s CEO, Taylor Pickett; CFO, Bob Stephenson; and COO, Dan Booth. Comments made during this conference call that are not historical facts may be forward-looking statements, such as statements regarding our financial and FFO projections, dividend policy, portfolio restructuring, rent payments, financial condition or prospects of our operators, contemplated acquisition and our business and portfolio outlook generally. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially. Please see our press releases and our filings with the Securities and Exchange Commission, including without limitation our most recent report on Form 10-K, which identifies specific factors that may cause actual results or events to differ materially from those described in forward-looking statements. During the call today, we will refer to some non-GAAP financial measures such as FFO, adjusted FFO, FAD and EBITDA. Reconciliations of these non-GAAP measures to the most comparable measure under Generally Accepted Accounting Principles, as well as an explanation of the usefulness of the non-GAAP measures, are available under the Financial Information section of our website at www.omegahealthcare.com, and in the case of FFO and adjusted FFO, in our press release issued today. I will now turn the call over to Taylor.

Thanks, Michele. Good morning and thank you for joining Omega’s third quarter 2013 earnings conference call. Adjusted FFO for the third quarter is $0.63 per share, which is a 17% increase over 2012 third quarter adjusted FFO of $0.54 per share. Normalized funds available for distribution, FAD, for the quarter is $0.57 per share. We increased our quarterly common dividend to $0.48 per share. This is a 2.2% increase from the last quarter and a 12% increase from the third quarter of 2012. We’ve now increased the dividend five consecutive quarters. The dividend payout ratio is 76% of adjusted FFO and 84% of FAD. We expect our dividend payout ratio for 2013 to be between 75% and to 85% of adjusted FFO and less than 85% of FAD. We’ve maintained our 2013 adjusted FFO guidance range of $2.48 to $2.51 per share, and 2013 FAD guidance range of $2.23 to $2.26 per share. In September, we announced that we committed to enter into a $525 million 56 facility sale/leaseback transaction in connection with the proposed acquisition of Ark Holding Company. At this time, the regulatory and third-party reporting remains on pace for a December closing. Bob will now review our third quarter financial results.

Thank you, Taylor, and good morning. Our reportable FFO on a diluted basis was $70.3 million or $0.59 per share for the quarter, as compared to $56.7 million or $0.52 per quarter in the third quarter of 2012. As Taylor mentioned, our adjusted FFO was $74.2 million or $0.63 per share for the quarter and excludes a $2.3 million provision for uncollectible straight-line accounts receivable and $1.5 million of non-cash stock-based compensation expense. Further information regarding the calculation of FFO is included in our earnings release and on our website. Operating revenue for the quarter was $103.3 million versus $87.1 million for the third quarter of 2012. The increase was primarily a result of incremental lease revenue from a combination of acquisitions completed since July, 2012, capital improvements made to our facilities and lease amendments made during that same time period. The $103.3 million of revenue for the quarter includes approximately $7.6 million of non-cash revenue. We expect the non-cash revenue component to remain between $7 million and $8 million for the fourth quarter of 2013. Operating expense for the third quarter of 2013 when excluding acquisition related costs, stock-based compensation expense and the provision for uncollectible accounts receivable increased by $4.2 million as compared to the third quarter of 2012. The increase was primarily a result of increased depreciation and amortization expense related to the closing of approximately $515 million of new investments since July, 2012, and a slight increase in our G&A expense. We project our 2013 fourth quarter G&A expense to be in line with our third quarter assuming no extraordinary transactions or unusual events. As outlined in our press release yesterday during the third quarter we recorded a $2.3 million provision for uncollectible straight-line accounts receivable resulting from the transition of 11 Arkansas facilities from Advocat…

Thanks, Bob, and good morning everyone. As of September 30, 2013, Omega had a core asset portfolio of 477 facilities with approximately 53,000 operating beds distributed among 48 third-party operators located within 33 states. Trailing 12-month operator EBITDARM coverage dipped slightly during the second quarter of 2013 to 1.9 times versus two times as of March 31. Trailing 12-month operator EBITDAR coverage however remains stable at 1.5 times as of June 30, 2013. The dip in EBITDARM coverage proved to be a consistent trend throughout the country during the summer months and was attributable to a slight drop in quality census and the Medicare Sequestration cost. Turning to new investments. Omega did not complete any new acquisitions during the third quarter of 2013. However, subsequent to September 30, the company closed on two separate acquisitions totaling approximately $33 million. The investments involved a single 97-unit assisted-living facility in Florida and four skilled-nursing facilities in Indiana with 384 beds. The facilities were simultaneously leased to two existing tenants of Omega. In addition to these two new investments on September 16, Omega filed an 8-K indicating of the company had committed to invest $525 million in the proposed acquisition of Ark Holding Company by 4 West Holdings. The acquisition involved 56 nursing facilities located in 12 states. The acquisition is subject to the receipt of acceptable third-party reports and the transfer of all necessary licenses and permits. To-date, we have received a majority of the third-party reports and have not been awarded to any material issues which would prevent Omega from closing. In addition, all license applications have been filed with each respective state. While timing of license or approval is difficult to predict we are targeting a December close. The company intends to use a combination of revolver availability and cash to fund the Ark acquisition. In addition to the aforementioned new investments in the Ark transaction, Omega maintains an active pipeline of investment opportunities some of which could close in the fourth quarter of 2013. As of today, Omega have a combination of revolver availability and cash totaling $632 million.

Thanks, Dan, and that concludes our prepared comments. We’ll now open the call for questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question will come from Nick Yulico of UBS. Please go ahead.

Turning to the Ark acquisition, what was the -- I know it’s on the contract but or -- but what was the cash yield on that? What that could be the first year cash yield?

We haven’t talked about the cash yield. And as we’ve discussed previously, we announced that the financing commitment for this transaction because it’s relatively significant but we obviously haven’t closed and there is a process that we have to go through to get to the closing and at which point we’ll go at a full detailed disclosure. At this time we’re limited under our confidentiality agreement with all the various parties. I will say this, however, that the deal is consistent with our typical underwriting where you look at cash yields of 9% to 10% and you will get coverage about 1.4 times in a normal transaction and this transaction is right in the middle of our underwriting.

Okay. And so it sounds like you’re saying it somewhere I mean in the 9% type range perhaps?

Yeah, as we’ve talked previously that’s where larger transactions are pricing in the market today.

Okay. And this is going to be -- this would be the 10.7 yield would be a -- that would be a straight-line, that would be the FFO and then we have to -- the difference would be for -- versus if it’s a 9 would be your adjustment for AFFO next year?

Correct.

Okay.

For FAD, yeah.

For FAD, right, okay. Can you talk a little bit about again I know it’s not official, but could you talk a little bit about I mean what’s going on, a little bit more about the operator there I mean it sounds like there might be and there has been some reports that you might be transitioning back to a new operator. Could you just - I mean as much as you could talk about that?

Yeah, at this point there is not a whole lot to say. I will say that the Ark management team, at least at this point, will for the most part stay in place. There is a financial advisor that will sort of oversee the operations but for the most part the existing company; the existing management team will be staying in place for Ark.

Okay. And then as far as you said the funding of this you are talking about the -- using your line of credit and cash. How should we then think about I mean you then go to plan a unsecured bond raise in the first quarter to take down your line of credit? And where is pricing today you think for that if you are doing that?

The bond pricing today is going to be in the south of 5.5% for a 10-year unsecured bond. The -- we’ll do what we always have done, which is the cash to go on the line of credit and then we look at the various alternatives we have to take that down whether via equity or a bond and we’re not going to know that until the time comes, and frankly we’re not going to know that until the deal closes. And as Dan had mentioned, we are targeting December but we still have to get through the regulatory process.

Okay. And then could you just remind us how much is left on your ATM that you can issue, how much share?

We have a $110 million left in the ATM.

$110 million left in the ATM?

Yes.

The next question will come from Jeff Theiler of Green Street Advisors. Please go ahead.

Could you talk a little bit I know it was pretty small but about the transition to assets $0.11, what was the story there? And what was the rent due on the old lease versus what you expect to get on the new lease?

So that transition actually was a win-win for both sides. We had a tenant in Diversicare that really was looking to exit the state of Arkansas. And we had a local operator in Arkansas that was one of the larger operators was familiar with the state and had a large presence in the state that really was looking for a new facility. So we perceived that as an overall win-win and the economics were slightly better in our new deals than they were in the old.

Okay. Dan, just a question on coverages. It dipped a little bit this quarter, it’s kind of hard to figure out since -- there is only one decimal place reported, what the magnitude of that was? And would you expect a similar magnitude dip next quarter as another quarter rolls on to the sequester?

It’s hard to predict quarter-to-quarter but it’s pretty flat, I mean, even because we round that the actual dip was negligible just as because of rounding that it actually fell off at all. But as far as third quarter goes I don't -- at this point, it’s too early to say with any surety but it looks like it will remain flat.

Okay. And then as you think about going into the future here, what kind of blended rate increases do you think you need for operators to maintain stable coverages as your leases continue to escalate? I mean, is it at the 1% range, 2% range, can they cut costs 0% or how do you think about it going forward?

I don't think there is a lot of room for cost cutting, Jeff. I think the whole industry is kind of been through the process of shaking out where they can -- efficiencies on the expense side. So in order to meet -- its either going to be through rates or continued shift in quality mix and increases in occupancy. So if you maintain them essentially stable you probably are looking at, as you said, somewhere between 1% and 2% revenue increases over time. Now that’s not to say that if you had a year where it was 0% you’re going to immediately see it come through coverage because everybody is going to work a little bit harder on the expense side. But I think it will from a long-term perspective somewhere between 1% and 2% rate increases to maintain coverage ratios is where we would be.

Our next question will come from Daniel Bernstein of Stifel. Please go ahead.

I just want to ask a little bit more about the pipeline in terms of -- in competition of what you’re seeing out there, I mean probably you’re seeing Aviv, but who else is out there bidding on skilled nursing assets? So are the non-traded REITs active at all in this sector?

Yeah, we’re seeing the private guys active, Aviv obviously, Formation always, it’s really the same (inaudible) folks that we’ve seen over the last couple of years.

Are you seeing any cap rate pressure or cap rates moving one way or another be -- due to the lack of competition for assets?

Well I think certainly had itself at the beginning of the year along with the overall interest rate environment, but we’ve seen the pressure of that ease up a little bit as of late.

Okay. And then on the SGR, sustainable growth rate fix, that’s been popping up in the news lately that they maybe looking at a more permanent fix. What are you hearing from the operators in terms of whether they would be happy to see that or are you hearing anything from Washington, just trying to get your perspective on the SGR?

Yes, I don't -- we haven’t heard anything more from Washington than anybody else that it’s legislative and who knows if we’re going to get that through Congress. From the operator perspective, the bulk of our operators would welcome a permanent fix and knowing what it is they have to deal with in terms of what that fix meant in terms of future rates. I think the -- every year band-aid is just a very tough way to manage the business.

Okay, okay. And then again I know you are limited on what you could say about the Covenant Dove transaction, but if you had to relate that property portfolio to what you have in your portfolio today, how would you compare the portfolio to each other? I mean, is it similar or is it a much better portfolio than what you’re looking at?

Dan, are you talking in terms of the physical plan or just overall?

It could be physical plan, it could be mix I mean is it -- when you integrate Covenant Dove, are your metrics going to change much in terms of skilled mix or how you want to describe that, but location -- just trying to understand what attracted you to the portfolio?

A lot of things, there is -- it’s a good group of assets, the physical plans are at least as good as what we have today in our portfolio perhaps slightly better, the mix is very similar, the geographic footprint is similar although we are entering into a few new states which are states that we’ve always wanted to be in. So there was all the host of reasons why this deal was attractive for us and including scale of course.

(Operator Instructions) The next question will come from Harold Schafer, a Private Investor. Please go ahead.

Hi, I would like to comment management first on the operation of OHI. As a stockholder, I’m quite pleased. The question I have is two. How many shares are outstanding as of this moment? And secondly, how do you perceive of the sequester a new healthcare were affecting OHI, will it be bit more beneficial, less beneficial, in your opinion what do you think about it?

The number of shares outstanding today are at 123.3 million shares.

And then in terms of the Affordable Care Act and the impact on our specific business, it’s pretty limited. Most of our residents are already covered in one way or another, either via private insurance through the Medicare program or through the Medicaid program. So we think about the Affordable Care Act and extending insurance typically to a younger crowd. That really has limited effect in terms of what happens inside skilled nursing facilities and what we do today and our economics. That being said, there is one element of the Affordable Care Act that will affect our tenant partners and that’s the cost of insurance. And it’s not terribly significant, but it will affect the expense equation for a number of our operators having to meet the mandate. Again, it's not going to really move coverages in a material way but it’s something that they all have to think about.

Mr. Schafer, was that your final question, sir?

Yes, I was quite pleased with all of the answers. Thank you very much.

Thank you.

Our next question will come from David Shamis of Jefferies. Please go ahead.

Just quick follow-up on the Advocat transition, I know you were saying that Advocat was looking to care of Arkansas. Just wondering if part of the rationale behind that transition had to do with the operator maybe underperforming? And I was just wondering if you could provide a little bit more color about their coverage, the coverage of the new operator, and then maybe if there is any operators within your portfolio that are sort of on your watchlist?

So, no, we were not concerned about the coverage or the performance or the ability to pay of Advocat at all, they are quite frankly a good tenant. They wanted to exit the State of Arkansas because it happens to be a big liability state. The new operator, obviously, they’ve taken over the same operations but they do have expectations of improving the performance of the portfolio and they’ve shown to us the facilities that they currently operate, do quite well. So we expect that transition that has gone well to-date and we expect them to perform. But as far as Diversicare we were not concerned all about their performance or their ability to pay or anything of that nature. This was really once again a win-win we took a portfolio of facilities that Diversicare really wanted to exit and putting them in the hands of somebody that really wanted to grab.

And just to make sure everyone on the call realizes, Advocat or Diversicare continues to remain a substantial tenant. This was just part of a master lease. They came to us looking to exit. So we negotiated a modest amendment to that master lease to move those facilities to an operator that we think is highly capable and have proven themselves highly capable of operating in the state. Dan, the second half of that question about any potential operators that, there was a concern or what.

Yes, at this point, no, I think while we had a slight dip in the EBITDARM coverage. As we noted, all the operators’ performance has been very stable and coverage have not swung and we really don't have any of our big operators or small operators for that mater that are closer or anywhere near the one-to-one work you start to get concerned.

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Taylor Pickett for his closing remarks.

Thanks, and thank you for joining our call this morning. Bob Stephenson will be available for any follow-up questions you may have.

Ladies and gentlemen the conference has now concluded. We thank you for attending today’s presentation. You may now disconnect your line.