888491--2/23/2007--OMEGA_HEALTHCARE_INVESTORS

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Risks Related to the Operators of Our Facilities The bankruptcy, insolvency or financial deterioration of our operators could delay our ability to collect unpaid rents or require us to find new operators for rejected facilities. A debtor may have the right to assume or reject a lease with us under bankruptcy law and his or her decision could delay or limit our ability to collect rents thereunder. With respect to our mortgage loans, the imposition of an automatic stay under bankruptcy law could negatively impact our ability to foreclose or seek other remedies against a mortgagor. If an operator files bankruptcy, our leases with the debtor could be recharacterized as a financing agreement, which could negatively impact our rights under the lease. Operators that fail to comply with the requirements of governmental reimbursement programs such as Medicare or Medicaid, licensing and certification requirements, fraud and abuse regulations or new legislative developments may be unable to meet their obligations to us. Our operators depend on reimbursement from governmental and other third-party payors and reimbursement rates from such payors may be reduced. Our operators may be subject to significant legal actions that could subject them to increased operating costs and substantial uninsured liabilities, which may affect their ability to pay their lease and mortgage payments to us. Increased competition as well as increased operating costs have resulted in lower revenues for some of our operators and may affect the ability of our tenants to meet their payment obligations to us. Risks Related to Us and Our Operations We rely on external sources of capital to fund future capital needs, and if we encounter difficulty in obtaining such capital, we may not be able to make future investments necessary to grow our business or meet maturing commitments. Our ability to raise capital through sales of equity is dependent, in part, on the market price of our common stock, and our failure to meet market expectations with respect to our business could negatively impact the market price of our common stock and limit our ability to sell equity. We are subject to risks associated with debt financing, which could negatively impact our business, limit our ability to make distributions to our stockholders and to repay maturing debt. Certain of our operators account for a significant percentage of our real estate investment and revenues. Unforeseen costs associated with the acquisition of new properties could reduce our profitability. Our assets may be subject to impairment charges. We may not be able to sell certain closed facilities for their book value. Our substantial indebtedness could adversely affect our financial condition. Our real estate investments are relatively illiquid. As an owner or lender with respect to real property, we may be exposed to possible environmental liabilities. The industry in which we operate is highly competitive. This competition may prevent us from raising prices at the same pace as our costs increase. We are named as defendants in litigation arising out of professional liability and general liability claims relating to our previously owned and operated facilities that if decided against us, could adversely affect our financial condition. We are subject to significant anti-takeover provisions. We may change our investment strategies and policies and capital structure. If we fail to maintain our REIT status, we will be subject to federal income tax on our taxable income at regular corporate rates. To maintain our REIT status, we must distribute at least 90% of our taxable income each year. Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. Complying with REIT requirements may affect our profitability. We depend upon our key employees and may be unable to attract or retain sufficient numbers of qualified personnel. In the event we are unable to satisfy regulatory requirements relating to internal controls, or if these internal controls over financial reporting are not effective, our business could suffer. In connection with the restatement of our financial statements for the year ended December 31, 2005, we identified a material weakness in our internal control over financial reporting, which could materially and adversely affect our business and financial condition. Risks Related to Our Stock The market value of our stock could be substantially affected by various factors. Our issuance of additional capital stock, warrants or debt securities, whether or not convertible, may reduce the market price for our shares. There are no assurances of our ability to pay dividends in the future. Holders of our outstanding preferred stock have liquidation and other rights that are senior to the rights of the holders of our common stock. Legislative or regulatory action could adversely affect purchasers of our stock. Recent changes in taxation of corporate dividends may adversely affect the value of our stock. We have submitted to the Internal Revenue Service a request for a closing agreement and may not be able to obtain a closing agreement on satisfactory terms.

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888491--2/23/2007--OMEGA_HEALTHCARE_INVESTORS_INC