<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
-------------------------
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -------
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ----------------
Commission file number 1-11316
OMEGA HEALTHCARE
INVESTORS, INC.
(Exact name of Registrant as specified in its charter)
Maryland 38-3041398
(State of Incorporation) (I.R.S. Employer Identification No.)
905 W. Eisenhower Circle, Suite 110, Ann Arbor, MI 48103
(Address of principal executive offices)
(313) 747-9790
(Telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 1997
Common Stock, $.l0 par value 18,975,384
---------------------------- ---------------------------------
(Class) (Number of shares)
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OMEGA HEALTHCARE INVESTORS, INC.
FORM 10-Q
MARCH 31, 1997
INDEX
<TABLE>
<CAPTION>
PART I Financial Information Page No.
- ------ --------------------- --------
<S> <C>
Item 1. Condensed Consolidated Financial Statements:
Balance Sheets -
March 31, 1997 (unaudited)
and December 31, 1996 3
Statements of Operations (unaudited) -
Three-month periods ended:
March 31, 1997
March 31, 1996 4
Statements of Cash Flows (unaudited) -
Three-month periods ended:
March 31, 1997
March 31, 1996 5
Notes to Condensed Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
PART II Other Information
- ------- -----------------
Item 4. Submission of Matters to a Vote of
Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OMEGA HEALTHCARE INVESTORS, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ -------------
(Unaudited) (See Note)
ASSETS
<S> <C> <C>
Investments in real estate:
Real estate properties - net $418,338 $343,293
Mortgage notes receivable 216,586 217,474
------------ -------------
634,924 560,767
Investments in Principal Healthcare Finance Ltd. 35,395 29,970
Other investments 31,450 19,640
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701,769 610,377
Cash and short-term investments 5,618 6,244
Goodwill and non-compete agreements - net 7,199 7,605
Other assets 10,954 10,610
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TOTAL ASSETS $725,540 $634,836
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Acquisition line of credit $98,425 $6,000
Bank term loan 25,000 25,000
Unsecured borrowings 86,381 86,384
Secured borrowings 27,765 24,275
Subordinated convertible debentures 73,225 94,810
Accrued expenses and other liabilities 11,453 15,360
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TOTAL LIABILITIES 322,249 251,829
Common stock and additional
paid-in capital 428,603 406,127
Cumulative net earnings 101,363 91,375
Cumulative dividends paid (126,130) (114,393)
Unamortized restricted stock awards (545) (102)
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TOTAL SHAREHOLDERS' EQUITY 403,291 383,007
------------ -------------
$725,540 $634,836
============ =============
</TABLE>
Note - The balance sheet at December 31, 1996, has been derived from audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See notes to condensed consolidated financial statements.
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OMEGA HEALTHCARE INVESTORS, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three months ended March 31,
1997 1996
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<S> <C> <C>
REVENUES
Rental income $11,420 $10,467
Mortgage interest income 6,999 5,375
Other investment income 1,333 1,127
Miscellaneous 260 205
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20,012 17,174
EXPENSES
Depreciation and amortization 3,569 3,375
Interest 5,320 4,632
General and administrative 1,134 976
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10,023 8,983
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NET EARNINGS $9,989 $8,191
======= =======
Net earnings per share $0.53 $0.49
======= =======
Dividends paid per share $0.645 $0.62
======= =======
Weighted average number of
shares outstanding 18,708 16,855
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5
OMEGA HEALTHCARE INVESTORS, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
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<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $9,989 $8,191
Adjustment to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization 3,569 3,375
Other non-cash charges 267 159
-------- -------
13,825 11,725
Net change in operating assets and liabilities (4,909) 1,534
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Net cash provided by operating activities 8,916 13,259
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from subordinated convertible debentures, less issue costs 92,813
Proceeds (payments) on acquisition line of credit 92,425 (70,190)
Proceeds (payments) of long-term borrowings 3,487 (9,686)
Proceeds from Dividend Reinvestment Plan 867 12,018
Dividends paid (11,737) (10,420)
Other (35)
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Net cash provided by financing activities 85,007 14,535
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of real estate (78,202) (375)
Placement of mortgage loans (573) (23,095)
Fundings of other investments (10,811) (7,874)
Advances to Principal Healthcare Finance Limited (5,425)
Collection of mortgage principal 462 107
-------- -------
Net cash used in investing activities (94,549) (31,237)
-------- -------
Increase (decrease) in cash and short-term investments ($626) ($3,443)
======== =======
</TABLE>
Note - During the three-month period ended March 31, 1997, subordinated
convertible debentures totaling $21,585,000 were converted at a
price of $28.625 per share.
See notes to condensed consolidated financial statements.
<PAGE> 6
OMEGA HEALTHCARE INVESTORS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1997
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three-month
period ended March 31, 1997, are not necessarily indicative of the results that
may be expected for the year ending December 31, 1997. For further
information, refer to the financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended December 31,
1996.
Note B - First Quarter Real Estate Investments
During the quarter the Company consummated purchase and leaseback agreements
under which four skilled nursing facilities containing 454 beds, located in
Florida, Washington Massachusetts and Idaho where acquired and leased to Sun
Healthcare Group, Inc. (Sun). The total purchase price was $25.5 million. The
initial term of the lease is fourteen years, with two options to extend for an
additional ten years each. The lease provides initial monthly rents of
approximately $223,000, and certain annual increases tied to the Consumer Price
Index.
On March 31, 1997, the Company entered into a purchase/leaseback agreement by
which it acquired 11 nursing homes with 1,439 beds located in Alabama, Florida,
Illinois, Louisiana and Texas. The total purchase consideration was $61
million. The initial lease of these assets with Atrium Healthcare, the
operator at the date of the purchase, provides for monthly rents of $670,000.
Note C - Asset Concentrations
As of March 31, 1997, 95.5% of the Company's real estate investments related to
long-term care facilities. The Company's facilities are located in 26 states
and are operated by 35 independent healthcare operating companies.
Approximately 51% of the Company's real estate investments are operated by 8
public companies: Advocat, Inc. (16.6%), GranCare, Inc. (8.8%), Unison
Healthcare Corp (6.6%), Sun Healthcare Group, Inc. (6.4%), Regency Health
Services, Inc. (5.5%), Res-Care, Inc. (4.2%), Integrated Health Services, Inc.
(1.6%) and Horizon/CMS Healthcare Corp. (1.6%). Of the remaining 26
independent operators, none operate investments in facilities representing more
than 8% of the total real estate
<PAGE> 7
investments.
Note D - Conversion of Subordinated Debentures
During the three-month period ended March 31, 1997 approximately $21.6 million
of subordinated convertible debentures were converted at a conversion price of
$28.625 per share. At March 31, 1997, 2,558,000 shares are reserved for
issuance upon conversion of the remaining debentures.
Note E - Net Earnings Per Share
Net earnings per share is computed based on the weighted average number of
common shares outstanding during the respective periods. The inclusion of
options using the treasury stock method and the assumed conversion of
debentures is not materially dilutive.
The Financial Accounting Standards Board recently issued statement No. 128,
"Earnings per Share". This new standard is not expected to have a material
effect on reported per share amounts, primarily because stock options are not
materially dilutive and the assumed conversion of debentures presently is
anti-dilutive.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
"SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 Statements that are not historical facts contained in
Management's Discussion and Analysis are forward-looking statements that
involve risks and uncertainties that could cause actual results to differ from
projected results. Some of the factors that could cause actual results to
differ materially include: the financial strength of the operators of the
Company's facilities as it affects their continuing ability to meet their
obligations to the Company under the terms of the Company's agreements with
such operators; changes in operators or ownership of operators; government
policy relating to the healthcare industry, including changes in the
reimbursement levels under the Medicare and Medicaid programs; operators'
continued eligibility to participate in the Medicare and Medicaid programs;
changes in reimbursement by other third party payors; occupancy levels at the
Company's facilities; the availability and cost of capital; the strength and
financial resources of the Company's competitors; the Company's ability to make
additional real estate investments at attractive yields and changes in tax laws
and regulations affecting real estate investment trusts.
Following is a discussion of the consolidated financial condition and
results of operations of the Company which should be read in conjunction with
the consolidated financial statements and accompanying notes.
Revenues for the quarter ended March 31, 1997 totaled $20.0 million, an
increase of $2.8 million over the period ending March 31, 1996. The 1997
revenue growth stems primarily from additional investments of approximately
$158 during the twelve-month period ended March 31, 1997. Real estate
investments of $671 million as of March 31, 1997 have an average yield of
12.1%.
<PAGE> 8
Expenses for the quarter ended March 31, 1997 totaled $10,023,000 an
increase of $1,040,000 over expenses of $8,983,000 for 1996. The provision for
depreciation and amortization for the three-month period ending March 31, 1997
totaled $3.6 million increasing by $194,000 over the 1996 period as a result of
additional investments.
Interest expense for the quarter ended March 31, 1997 was $5.3 million,
compared with $4.6 million for 1996. The increase in 1997 is primarily due to
higher average outstanding borrowings during the 1997 period.
General and administrative expenses for the quarters ending March 31, 1997
and 1996 totaled $1,134,000 and $976,000, respectively, and represented
approximately 5.7% of revenues for each period.
At all times, the Company intends to make and manage its investments
(including the sale or disposition of property or other investments) and to
operate in such a manner as to be consistent with the requirements of the
Internal Revenue Code of 1986, as amended (or regulations thereunder) to
qualify as a REIT, unless, because of changes in circumstance or changes in the
Code (or regulations thereunder), the Board of Directors determines that it is
no longer in the best interests of the Company to qualify as a REIT. As such,
it generally will not pay federal income taxes on the portion of its income
which is distributed to shareholders.
Net earnings were approximately $9,989,000 for the 1997 period, an
increase of approximately $1.8 million (22%) over the 1996 period as a result
of the various factors mentioned above. The weighted average outstanding
shares increased to 18.7 million shares from 16.9 million shares, as a result
of conversions of Convertible Debentures and the issuance of 1,000,000 shares
in a private placement completed in November 1996.
Funds available for distribution (FAD) for the period ending March 31,
1997 was $13,825,000, an increase of $2.1 million (18%) over the 1996
three-month period. FAD is net earnings, excluding any gains or losses from
debt restructuring and sales of property, plus depreciation and amortization
associated with real estate investments, amortization of deferred financing
cost and the net effect of all other non-cash items included in net earnings.
Funds From Operations (FFO) totaled $13,754,000 ($.74 per share) for the 1997
quarter, increasing $2.0 million (17%) as compared to $11,737,000 ($0.70 per
share) for the three months ended March 31, 1996. FFO is net earnings,
excluding any gains or losses from debt restructuring and sales of property,
plus depreciation and amortization associated with real estate investments and
charges to earnings for non-cash common stock based compensation. While there
generally is very little difference between FAD and FFO for healthcare REITS,
both of these measures of cash flow are used by analysts and investors as
benchmarks for measuring profitability and capacity to sustain dividend
payments.
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
The Company continually seeks new investments in healthcare real estate
properties, primarily long-term care facilities, with the objective of
profitable growth and further diversification of the investment portfolio.
Permanent financing for future investments is expected to be provided through a
combination of both private placement and public offerings of debt and/or
equity securities. Management believes the Company's liquidity and various
sources of available capital are adequate to finance operations, fund future
investments in additional facilities, and meet debt service requirements.
The Company has demonstrated a strong capacity to access the capital
markets by raising more than $900 million in capital since it was organized in
1992. The Company raised more than $400 million in equity, including $130 from
the initial public offering in 1992, $165 million from the HEP acquisition in
1994 and two additional offerings, the latest completed in November 1996.
Additionally, nearly $500 million of debt capital has been raised, some of which
has been used to retire secured borrowing debt with higher interest rates. In
1996, the Company completed a placement of $95 million of 8.5% Convertible
Subordinated Debentures due 2001, and executed an agreement to increase its
current bank line of credit facility by $50 million and to extend the term of
the revolving credit agreement to July 1999. The increase in the credit
facility allows for an additional $25 million, plus the equivalent of $25
million in a pounds sterling denominated term loan due in October, 2000 for
total permitted borrowings of up to $150 million.
In February 1997, the Company filed two shelf registration statements with
the Securities and Exchange commission permitting the issuance of up to
$250,000,000 of securities. The Company registered up to $150,000,000 related
to common stock, unspecified debt, preferred stock, and convertible securities
which may be issued from time to time in connection with a Registration
Statement on Form S-3. Additionally, the Company registered on Form S-4 common
stock totaling $100 million to be issued in connection with future property
acquisitions.
As of March 31, 1997, the Company has total assets of $726 million,
shareholders' equity of $403 million, and long-term borrowings of $212 million
representing approximately 30% of the total capitalization. The Company
anticipates eventually attaining and then maintaining a long-term
debt-to-capitalization ratio of approximately 40%. The Company has available
permitted additional borrowings of $26.6 million under its line of credit
arrangement.
The Company distributes a large portion of the cash available from
operations. Cash dividends paid totaled $0.645 per share for the quarter ended
March 31, 1997, compared with $0.62 per share for 1996. Additionally, on April
15, 1997 , a $0.645 per share dividend was declared, payable on May 15, 1997 to
shareholders of record on May 2, 1997. The current $0.645 per quarter rate
represents an annualized rate of $2.58 per share.
<PAGE> 10
PART II - OTHER INFORMATION
Item 4. Submission of matters to a Vote of Security Holders
(a) The Company's Annual Meeting of Shareholders was held on April 15,
1997.
(b) The following directors were re-elected at the meeting for a
three-year term:
James E. Eden
Thomas F. Franke
Bernard J. Korman
The following directors were not elected at the meeting but their term
of office continued after the meeting:
Essel W. Bailey Jr.
Harold J. Kloosterman
Edward Lowenthal
Robert L. Parker
(c) The results of the vote were as follows:
Name For Withheld
---- -- --------
James E. Eden 16,877,186 106,124
Thomas F. Franke 16,873,031 110,279
Bernard J. Korman 16,872,493 110,817
(d) Not applicable
<PAGE> 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS - THE FOLLOWING EXHIBITS ARE FILED HEREWITH:
EXHIBIT DESCRIPTION
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4.1 Form of Articles Supplementary for Series A Preferred Stock
4.2 Form of Series A Preferred Stock Certificate
5 Opinion of Counsel to the Registrant regarding legality
23 Consent of Counsel to the Registrant (included in Exhibit
5)
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OMEGA HEALTHCARE INVESTORS, INC.
Registrant
Date: April 22, 1997 By: ESSEL W. BAILEY, JR.
------------------------------
Essel W. Bailey, Jr.
President
Date: April 22, 1997 By: DAVID A. STOVER
------------------------------
David A. Stover
Chief Financial Officer
<PAGE> 12
Exhibit Index
Exhibit Description
- ------- -----------
4.1 Form of Article Supplementary for Series A Preferred Stock
4.2 Form of Series A Preferred Stock Certificate
5 Opinion of Counsel to the Registrant regarding legality
23 Consent of Counsel to the Registrant (included in Exhibit 5)
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 4.1
OMEGA HEALTHCARE INVESTORS, INC.
ARTICLES SUPPLEMENTARY
Omega Healthcare Investors, Inc., a Maryland corporation ("Company"),
hereby certifies to the State Department of Assessments and Taxation of
Maryland that:
FIRST: Pursuant to authority contained in the Charter, ______________
(____________s) shares of authorized but unissued shares of the Company's
Preferred Stock have been duly classified by the Board of Directors of the
Company as authorized but unissued shares of the Company's _____% Series A
Cumulative Preferred Stock .
SECOND: A description of the _____% Series A Cumulative Preferred Stock
is as follows:
1. Designation and Number. A series of Preferred Stock, designated the
"______% Series A Cumulative Preferred Stock" (the "Series A Preferred Stock"),
is hereby established. The number of shares of the Series A Preferred Stock
shall be ________________ (___________).
2. Maturity. The Series A Preferred Stock has no stated maturity and will
not be subject to any sinking fund or mandatory redemption.
3. Rank. The Series A Preferred Stock will, with respect to dividend
rights and rights upon liquidation, dissolution or winding up of the Company,
rank (i) senior to all classes or series of Common Stock of the Company, and to
all equity securities ranking junior to the Series A Preferred Stock with
respect to dividend rights or rights upon liquidation, dissolution or winding
up of the Company; (ii) on a parity with all equity securities issued by the
Company the terms of which specifically provide that such equity
1
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securities rank on a parity with the Series A Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of the
Company; and (iii) junior to all existing and future indebtedness of the
Company. The term "equity securities" does not include convertible debt
securities, which will rank senior to the Series A Preferred Stock prior to
conversion.
4. Dividends
(a) Holders of shares of the Series A Preferred Stock are entitled to
receive, when and as declared by the Board of Directors (or a duly authorized
committee thereof), out of funds legally available for the payment of
dividends, preferential cumulative cash dividends at the rate of ______% per
annum of the Liquidation Preference (as defined below) per share (equivalent to
a fixed annual amount of $______ per share). Dividends on the Series A
Preferred Stock shall be cumulative from the date of original issue and shall
be payable quarterly in arrears for each quarterly dividend period ended April
30, July 31, October 31 and January 31, on or before the 15th day of May,
August, November and February, respectively, of each year or, if not a business
day, the next succeeding business day (each, a "Dividend Payment Date"). The
first dividend will be paid on August 15, 1997, with respect to the period
commencing on the date of issue and ending on July 31, 1997. Any dividend
payable on the Series A Preferred Stock for any partial period will be computed
on the basis of a 360-day year consisting of twelve 30-day months. Dividends
will be payable to holders of record as they appear in the stock records of the
Company at the close of business on the applicable record date, which shall be
the last day of the preceding calendar month prior to the applicable Dividend
Payment Date or on such other date designated by the Board of Directors of the
Company that is not more than 30 nor less than 10 days prior to such Dividend
Payment Date (each, a "Dividend Record Date").
(b) No dividends on shares of Series A Preferred Stock shall be declared
by the Board of Directors or paid or set apart for payment by the Company at
such time as the terms and provisions of any agreement of the Company,
including any agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
(c) Notwithstanding the foregoing, dividends on the Series A Preferred
Stock will accrue whether or not the Company has earnings, whether or not there
are funds legally available for the payment of such dividends and whether or
not such dividends are declared. Accrued but unpaid dividends on the Series A
Preferred Stock will not bear interest and holders of the Series A Preferred
Stock will not be entitled to
2
<PAGE> 3
any distributions in excess of full cumulative distributions described above.
Except as set forth in the next sentence, no dividends will be declared or paid
or set apart for payment on any capital stock of the Company or any other
series of Preferred Stock ranking, as to dividends, on a parity with or junior
to the Series A Preferred Stock (other than a dividend in shares of the
Company's Common Stock or in shares of any other class of stock ranking junior
to the Series A Preferred Stock as to dividends and upon liquidation) for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for such payment on the Series A Preferred Stock for all past
dividend periods and the then current dividend period. When dividends are not
paid in full (or a sum sufficient for such full payment is not so set apart)
upon the Series A Preferred Stock and the shares of any other series of
Preferred Stock ranking on a parity as to dividends with the Series A Preferred
Stock, all dividends declared upon the Series A Preferred Stock and any other
series of Preferred Stock ranking on a parity as to dividends with the Series A
Preferred Stock shall be declared pro rata so that the amount of dividends
declared per share of Series A Preferred Stock and such other series of
Preferred Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Series A Preferred Stock and such other
series of Preferred Stock (which shall not include any accrual in respect of
unpaid dividends for prior dividend periods if such Preferred Stock does not
have a cumulative dividend) bear to each other.
(d) Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Series A Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof is set apart for payment for all past dividend periods and
the then current dividend period, no dividends (other than in shares of Common
Stock or other shares of capital stock ranking junior to the Series A Preferred
Stock as to dividends and upon liquidation) shall be declared or paid or set
aside for payment nor shall any other distribution be declared or made upon the
Common Stock, or any other capital stock of the Company ranking junior to or on
a parity with the Series A Preferred Stock as to dividends or upon liquidation,
nor shall any shares of Common Stock, or any other shares of capital stock of
the Company ranking junior to or on a parity with the Series A Preferred Stock
as to dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for
a sinking fund for the redemption of any such shares) by the Company (except by
conversion into or exchange for other capital stock of the Company ranking
junior to the Series A Preferred Stock as to dividends and upon liquidation or
redemptions for the purpose of preserving the
3
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Company's qualification as a real estate investment trust under the
Internal Revenue Code of 1986, as amended). Holders of shares of the Series A
Preferred Stock shall not be entitled to any dividend, whether payable in cash,
property or stock, in excess of full cumulative dividends on the Series A
Preferred Stock as provided above. Any dividend payment made on shares of the
Series A Preferred Stock shall first be credited against the earliest accrued
but unpaid dividend due with respect to such shares which remains payable.
5. Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, the holders of shares
of Series A Preferred Stock are entitled to be paid out of the assets of the
Company legally available for distribution to its shareholders a liquidation
preference of $25 per share (the "Liquidation Preference"), plus an amount
equal to any accrued and unpaid dividends to the date of payment, but without
interest, before any distribution of assets is made to holders of Common Stock
or any other class or series of capital stock of the Company that ranks junior
to the Series A Preferred Stock as to liquidation rights. The Company will
promptly provide to the holders of Series A Preferred Stock written notice of
any event triggering the right to receive such Liquidation Preference. After
payment of the full amount of the Liquidation Preference, plus any accrued and
unpaid dividends to which they are entitled, the holders of Series A Preferred
Stock will have no right or claim to any of the remaining assets of the
Company. The consolidation or merger of the Company with or into any other
corporation, trust or entity or of any other corporation with or into the
Company, 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.
In determining whether a distribution (other than upon voluntary or
involuntary liquidation) by dividend, redemption or other acquisition of shares
of stock of the Company or otherwise is permitted under the Maryland General
Corporation Law (the "MGCL"), no effect shall be given to amounts that would be
needed if the Company would be dissolved at the time of the distribution, to
satisfy the preferential rights upon distribution of holders of shares of stock
of the Corporation whose preferential rights upon distribution are superior to
those receiving the distribution.
6. Redemption.
(a) The Series A Preferred Stock is not redeemable prior to July 1, 2002
subject, however, to the provisions in paragraph (9) of this Article Second.
On and after July 1, 2002, the Company, at its option, upon not less than 30
nor more than 60 days' written notice, may redeem shares of the Series A
Preferred Stock, in whole or in part, at any time or from time to time, for
cash at a redemption price of $25 per share, plus
4
<PAGE> 5
all accrued and unpaid dividends thereon to the date fixed for redemption
(except with respect to Excess Shares (as defined below)) without interest.
Holders of Series A Preferred Stock to be redeemed shall surrender such Series
A Preferred Stock at the place designated in such notice and shall be entitled
to the redemption price and any accrued and unpaid dividends payable upon such
redemption following such surrender. If notice of redemption of any shares of
Series A Preferred Stock has been given and if the funds necessary for such
redemption have been set aside by the Company in trust for the benefit of the
holders of any shares of Series A Preferred Stock so called for redemption,
then from and after the redemption date dividends will cease to accrue on such
shares of Series A Preferred Stock, such shares of Series A Preferred Stock
shall no longer be deemed outstanding and all rights of the holders of such
shares will terminate, except the right to receive the redemption price. If
less than all of the outstanding Series A Preferred Stock is to be redeemed,
the Series A Preferred Stock to be redeemed shall be selected pro rata (as
nearly as may be practicable without creating fractional shares) or by any
other equitable method determined by the Company.
(b) Unless full cumulative dividends on all shares of Series A Preferred
Stock shall have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for payment for all past
dividend periods and the then current dividend period, no shares of Series A
Preferred Stock shall be redeemed unless all outstanding shares of Series A
Preferred Stock are simultaneously redeemed and the Company shall not purchase
or otherwise acquire directly or indirectly any shares of Series A Preferred
Stock (except by exchange for capital stock of the Company ranking junior to
the Series A Preferred Stock as to dividends and upon liquidation); provided,
however, that the foregoing shall not prevent the purchase by the Company of
Excess Shares in order to ensure that the Company continues to meet the
requirements for qualification as a REIT, or the purchase or acquisition of
shares of Series A Preferred Stock pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding shares of Series A
Preferred Stock. So long as no dividends are in arrears, the Company shall be
entitled at any time and from time to time to repurchase shares of Series A
Preferred Stock in open-market transactions duly authorized by the Board of
Directors and effected in compliance with applicable laws.
(c) Notice of redemption will be mailed by the Company, postage prepaid,
not
5
<PAGE> 6
less than 30 nor more than 60 days prior to the redemption date, addressed
to the respective holders of record of the Series A Preferred Stock to be
redeemed at their respective addresses as they appear on the stock transfer
records of the Company. No failure to give such notice or any defect therein
or in the mailing thereof shall affect the validity of the proceedings for the
redemption of any shares of Series A Preferred Stock except as to the holder to
whom notice was defective or not given. Each notice shall state: (i) the
redemption date; (ii) the redemption price; (iii) the number of shares of
Series A Preferred Stock to be redeemed; (iv) the place or places where the
Series A Preferred Stock is to be surrendered for payment of the redemption
price; and (v) that dividends on the shares to be redeemed will cease to accrue
on such redemption date. If less than all of the Series A Preferred Stock held
by any holder is to be redeemed, the notice mailed to such holder shall also
specify the number of shares of Series A Preferred Stock held by such holder to
be redeemed.
(d) Immediately prior to any redemption of Series A Preferred Stock, the
Company shall pay, in cash, any accumulated and unpaid dividends through the
redemption date, unless a redemption date falls after a Dividend Record Date
and prior to the corresponding Dividend Payment Date, in which case each holder
of Series A Preferred Stock at the close of business on such Dividend Record
Date shall be entitled to the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the redemption of such
shares before such Dividend Payment Date.
e) Excess Shares may be redeemed, in whole or in part, at any time when
outstanding shares of Series A Preferred Stock are being redeemed, for cash at
a redemption price of $25 per share, but excluding accrued and unpaid dividends
on such Excess Shares, without interest. Such Excess Shares shall be redeemed
in such proportion and in accordance with such procedures as shares of Series A
Preferred Stock are being redeemed.
7. Voting Rights.
(a) Holders of the Series A Preferred Stock will not have any voting
rights, except as set forth below.
(b) Whenever dividends on any shares of Series A Preferred Stock shall be
in arrears for eighteen or more months (a "Preferred Dividend Default"), the
number of directors then constituting the Board of Directors shall be increased
by two (if not already increased by reason of a similar arrearage respect to
any Parity Preferred (as hereinafter defined). The holders of such shares of
Series A Preferred Stock (voting separately as a class with all other series of
Preferred Stock ranking on a parity with the Series A Preferred Stock as to
dividends or upon liquidation ("Parity Preferred") upon which like
6
<PAGE> 7
voting rights have been conferred and are exercisable) will be entitled to vote
separately as a class, in order to fill the vacancies thereby created, for the
election of a total of two additional directors of the Company (the "Preferred
Stock Directors") at a special meeting called by the holders of record of at
least 20% of the Series A Preferred Stock or the holders of record of at least
20% of any series of Parity Preferred so in arrears (unless such request is
received less than 90 days before the date fixed for the next annual or special
meeting of the shareholders) or at the next annual meeting of shareholders, and
at each subsequent annual meeting until all dividends accumulated on such
shares of Series A Preferred Stock and Parity Preferred for the past dividend
periods and the dividend for the then current dividend period shall have been
fully paid or declared and a sum sufficient for the payment thereof set aside
for payment. In the event the directors of the Company are divided into
classes, each such vacancy shall be apportioned among the classes of directors
to prevent stacking in any one class and to insure that the number of directors
in each of the classes of directors, are as equal as possible. Each Preferred
Stock Director, as a qualification for election as such (and regardless of how
elected) shall submit to the Board of Directors of the Company a duly executed,
valid, binding and enforceable letter of resignation from the Board of
Directors, to be effective upon the date upon which all dividends accumulated
on such shares of Series A Preferred Stock and Parity Preferred for the past
dividend periods and the dividend for the then current dividend period shall
have been fully paid or declared and a sum sufficient for the payment thereof
set aside for payment, whereupon the terms of office of all persons elected as
Preferred Stock Directors by the holders of the Series A Preferred Stock and
any Parity Preferred shall, upon the effectiveness of their respective letters
of resignation, forthwith terminate, and the number of directors then
constituting the Board of Directors shall be reduced accordingly. A quorum for
any such meeting shall exist if at least a majority of the outstanding shares
of Series A Preferred Stock and shares of Parity Preferred upon which like
voting rights have been conferred and are exercisable are represented in person
or by proxy at such meeting. Such Preferred Stock Directors shall be elected
upon the affirmative vote of a plurality of the shares of Series A Preferred
Stock and such Parity Preferred present and voting in person or by proxy at a
duly called and held meeting at which a quorum is present. If and when all
accumulated dividends and the dividend for the then current dividend period on
the Series A Preferred Stock shall have been paid in full or declared and set
aside for payment in full, the holders thereof shall be divested of the
foregoing voting rights (subject to revesting in the event of each and every
Preferred Dividend Default) and, if all accumulated dividends and the dividend
for the then current dividend period have been paid in full or set aside for
payment in full on all series of Parity Preferred upon which like voting rights
have been conferred and are exercisable, the term
7
<PAGE> 8
of office of each Preferred Stock Director so elected shall terminate.
Any Preferred Stock Director may be removed at any time with or without cause
by, and shall not be removed otherwise than by the vote of, the holders of
record of a majority of the outstanding shares of the Series A Preferred Stock
when they have the voting rights described above (voting separately as a class
with all series of Parity Preferred upon which like voting rights have been
conferred and are exercisable). So long as a Preferred Dividend Default shall
continue, any vacancy in the office of a Preferred Stock Director may be filled
by written consent of the Preferred Stock Director remaining in office, or if
none remains in office, by a vote of the holders of record of a majority of the
outstanding shares of Series A Preferred Stock when they have the voting rights
described above (voting separately as a class with all series of Parity
Preferred upon which like voting rights have been conferred and are
exercisable). The Preferred Stock Directors shall each be entitled to one vote
per director on any matter.
(c) So long as any shares of Series A Preferred Stock remain outstanding,
the Company will not, without the affirmative vote or consent of the holders of
at least two-thirds of the shares of the Series A Preferred Stock outstanding
at the time, given in person or by proxy, either in writing or at a meeting
(voting separately as a class), amend, alter or repeal the provisions of the
Charter or the Articles Supplementary, whether by merger, consolidation or
otherwise (an "Event"), so as to materially and adversely affect any right,
preference, privilege or voting power of the Series A Preferred Stock or the
holders thereof; including without limitation, the creation of any series of
Preferred Stock ranking senior to the Series A Preferred Stock with respect to
payment of dividends or the distribution of assets upon liquidation, dissolution
or winding up; provided, however, that with respect to the occurrence of any
Event set forth above, so long as the Series A Preferred Stock (or any
equivalent class or series of stock issued by the surviving corporation in any
merger or consolidation to which the Company became a party) remains
outstanding with the terms thereof materially unchanged, the occurrence of any
such Event shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting power of holders of the Series A Preferred
Stock and provided, further that (i) any increase in the amount of the
authorized Preferred Stock or the creation or issuance of any other series of
Preferred Stock, or (ii) any increase in the amount of authorized shares of
such series, in each case ranking on a parity with or junior to the Series A
Preferred Stock with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers.
(d) 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 Series A Preferred Stock shall
have been redeemed or called for redemption upon proper notice and sufficient
funds shall have been deposited in trust to effect such redemption.
8
<PAGE> 9
(e) Except as expressly stated in these Articles Supplementary, the Series
A Preferred Stock shall not have any relative, participating, optional or other
special voting rights and powers and the consent of the holders thereof shall
not be required for the taking of any corporate action, including but not
limited to, any merger or consolidation involving the Corporation or a sale of
all or substantially all of the assets of the Corporation, irrespective of the
effect that such merger, consolidation or sale may have upon the rights,
preferences or voting power of the holders of the Series A Preferred Stock.
8. Conversion. The Series A Preferred Stock is not convertible into or
exchangeable for any other property or securities of the Company.
9. Restrictions on Ownership and Transfer. Once there is a completed
public offering of the Series A Preferred Stock, if the Board of Directors
shall, at any time and in good faith, be of the opinion that actual or
constructive ownership of at least 9.9% or more of the value of the outstanding
capital stock of the Company has or may become concentrated in the hands of one
owner, the Board of Directors shall have the power (i) by means deemed
equitable by the Board of Directors, and pursuant to written notice, to call
for the purchase from any shareholder of the corporation a number of shares of
Series A Preferred Stock sufficient, in the opinion of the Board of Directors,
to maintain or bring the actual or constructive ownership of such owner
to no more than 9.9% of the value of the outstanding capital stock of the
corporation, and (ii) to refuse to transfer or issue shares of Series A
Preferred Stock to any person whose acquisition of such Series A Preferred
stock would, in the opinion of the Board of Directors, result in the actual or
constructive ownership by that person of more than 9.9% of the value of the
outstanding capital stock of the Company. The purchase price for any shares
of Series A Preferred Stock shall 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 shall be equal to the
redemption price of such shares of Series A Preferred Stock. Payment of the
purchase price shall be made within thirty days following the date set forth in
the notice of call for purchase, and shall be made in such manner as may be
determined by the Board of Directors of the Company. From and after the date
fixed for purchase by the Board of Directors, as set forth in the notice, the
holder of any shares so called for purchase shall cease to be entitled to
distributions, and other benefits with respect to such shares, excepting only
the right to payment of the purchase price fixed as aforesaid. Any transfer of
Series A Preferred Stock that would create an actual or constructive owner of
more
9
<PAGE> 10
EXHIBIT 4.1
than 9.9% of the value of the outstanding shares of capital stock of this
Company shall be deemed void ab initio and the intended transferee shall be
deemed never to have had an interest therein. If the foregoing provision is
determined to be void or invalid by virtue of any legal decision, statute, rule
or regulation, then the transferee of such Series A Preferred Stock shall be
deemed, at the option of the Company, to have acted as agent on behalf of
the Company in acquiring such shares and to hold such shares on behalf of
the Company.
Notwithstanding anything herein to the contrary, the Company and its
transfer agent may refuse to transfer any shares of Series A Preferred Stock,
passing either by voluntary transfer, by operation of law, or under the last
will and testament of any shareholder if such transfer would or might, in the
opinion of the Board of Directors or counsel to the Company, disqualify the
Company as a Real Estate Investment Trust under the Internal Revenue Code.
Nothing herein contained shall limit the ability of the corporation to impose
or to seek judicial or other imposition of additional restrictions if deemed
necessary or advisable to preserve the Company's tax status as a qualified Real
Estate Investment Trust. Nothing herein contained shall preclude settlement of
any transaction entered into through the facilities of the New York Stock
Exchange.
THIRD: The classification of authorized but unissued shares as set forth
in these Articles Supplementary does not increase the authorized capital of the
Company` or the aggregate par value thereof.
FOURTH: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
FIFTH: The undersigned President of the Company acknowledges these
Articles Supplementary to be the corporate act of the Company and, as to all
matters or facts required to be verified under oath, the undersigned President
of the Company acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Company has caused these Articles Supplementary to
be executed under seal in its name and on its behalf by its President and
attested to by its Secretary on this _____ day of ______________________, 1997.
ATTEST OMEGA HEALTHCARE INVESTORS, INC.
__________________________ By: _________________________________
Title: Secretary Title: President
10
<PAGE> 1
EXHIBIT 4.2
<TABLE>
<S><C>
Temporary Certificate--Exchangeable for Definitive Certificate When Ready for Delivery
PREFERRED STOCK PREFERRED STOCK
[NUMBER] [OMEGA LOGO] [SHARES]
INCORPORATED UNDER THE LAWS THE SHARES EVIDENCED HEREBY ARE
OF THE STATE OF MARYLAND SUBJECT TO RESTRICTIONS ON OWNERSHIP
OMEGA HEALTHCARE INVESTORS, INC. AND TRANSFER AS MORE FULLY DESCRIBED
ON THE REVERSE SIDE HEREOF.
This certifies that
is the owner of
FULLY PAID AND NONASSESSABLE SHARES OF THE __%, SERIES A CUMULATIVE PREFERRED STOCK, LIQUIDATION PREFERENCE $___ PER SHARE OF
OMEGA HEALTHCARE INVESTORS, INC.
(the "Corporation"), transferable only on the books of the Corporation by the holder hereof in person or by duly authorized attorney
upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be
held subject to all of the provisions of the Amended and Restated Articles of Incorporation and Articles Supplementary
(the"Charter"), and its Bylaws, to all of which the holder, by acceptance hereof, assents. This Certificate is not valid unless
countersigned and registered by the Transfer Agent and Registrar.
In witness whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers.
Dated:
[SIG] [SIG]
PRESIDENT AND SECRETARY VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
COUNTERSIGNED AND REGISTERED:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
TRANSFER AGENT AND REGISTRAR,
BY: [SIG]
AUTHORIZED SIGNATURE
</TABLE>
<PAGE> 2
<TABLE>
<S><C>
OMEGA HEALTHCARE INVESTORS, INC.
The Corporation has the authority to issue Preferred Stock. The Corporation will furnish to any stockholder on request and
without charge a full statement of the preferences, conversion and other rights, voting powers, limitations as to dividends,
qualifications, terms and conditions of redemption of the stock of each Class the Corporation is authorized to issue. The Preferred
Stock is subject to redemption by the Corporation on and after May 1, 2002.
The transfer of these shares to any person who would thereby hold beneficial interest of more than 9.9% of the value of the
outstanding capital stock of the Corporation may be prohibited or void or subject to other transfer restrictions or redemption
rights as set forth in the Charter. The Corporation will furnish information concerning such restrictions to any stockholder on
request and without charge.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR DESTROYED THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY
AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - .........................Custodian...................
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act..................................................
in common (State)
UNIF TAF MIN ACT - ................Custodian (until age................)
(Cust)
..............................under Uniform Transfers
(Minor)
to Minors Act........................................
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, __________________________________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________
| |
| |
|______________________________________|
____________________________________________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
_____________________________________________________________________________________________________________________________ Shares
of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
____________________________________________________________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated____________________________________________________________
X ___________________________________________________________
X ___________________________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN
Signature(s) Guaranteed EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
By_________________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM). PURSUANT TO S.E.C. RULE 17Ad-15.
</TABLE>
<PAGE> 1
EXHIBIT 5
VENABLE, BAETJER AND HOWARD, LLP
Including professional corporations
1800 Mercantile Bank & Trust Building
Two Hopkins Plaza
Baltimore, Maryland 21201-2978
(410) 244-7400, Fax (410) 244-7742
April 22, 1997
Omega Healthcare Investors, Inc.
905 West Eisenhower Circle, Suite 101
Ann Arbor, MI 48103
Re: Registration Statement on Form S-3
(Reg. No. 33-20967)
----------------------------------
Ladies and Gentlemen:
We have acted as Maryland counsel to Omega Healthcare Investors, Inc., a
Maryland corporation (the "Company"), in connection with its proposed public
offering of up to 3,000,000 shares of its _____% Series A Cumulative Preferred
Stock, $1.00 par value ("Series A Preferred Stock") pursuant to a Registration
Statement filed on Form S-3 (Registration No. 33-20967) ("Registration
Statement").
In that connection, we have examined originals or copies of such
documents, corporate records and other instruments as we have deemed necessary
or appropriate for purposes of this opinion including the Underwriting
Agreement, the Articles of Incorporation, as amended, By-laws of the Company
and the proposed Articles Supplementary establishing the Series A Preferred
Stock. We have assumed without independent verification the
<PAGE> 2
Omega Healthcare Investors
April 22, 1997
Page 2
genuineness of signatures, the authenticity of documents, and the conformity
with originals of copies.
Based on the foregoing, we are of the opinion that the shares of Series A
Preferred Stock being sold by the Company, when issued and sold in accordance
with the terms of the resolutions to be adopted by the Pricing Committee
established by the Board of Directors of the Company and the Underwriting
Agreement in substantially the same form provided to us and upon filing with,
and acceptance by, the State Department of Assessments and Taxation of Maryland
of the duly executed Articles Supplementary establishing the Series A Preferred
Stock, will be validly issued, fully paid and non-assessable.
This letter expresses our opinion with respect to the Maryland General
Corporation Law and it does not extend to the securities or "blue sky" laws of
Maryland, to federal securities laws or to other laws.
We hereby consent to the use of this opinion as an exhibit to the Form
10-Q, the incorporation by reference of this opinion into the Registration
Statement and the reference to our firm under "Legal Matters" in the Prospectus
Supplement comprising a part of the Registration Statement.
By giving the foregoing consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933.
Very truly yours,
VENABLE, BAETJER AND HOWARD, LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AND STATEMENT OF OPERATIONS FILED AS PART OF THE QUARTERLY REPORT
ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY
REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,618
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 725,540
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 725,540
<SALES> 0
<TOTAL-REVENUES> 20,012
<CGS> 0
<TOTAL-COSTS> 8,889
<OTHER-EXPENSES> 1,134
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,320
<INCOME-PRETAX> 9,989
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,989
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.53<F1>
<FN>
<F1>EPS-DILUTED NOT SEPARATELY REPORTED BECAUSE INCLUSION OF OPTIONS USING TREASURY
STOCK METHOD AND THE ASSUMED CONVERSION OF DEBENTURES OUTSTANDING NOT
MATERIALLY DILUTIVE.
</FN>
</TABLE>
