- $860 Million Purchase Price for 143 Long Term Care Facilities

CHEVY CHASE, Md., Nov. 17 /PRNewswire-FirstCall/ -- CapitalSource Inc. (NYSE: CSE) today announced that it has entered into a definitive agreement to sell substantially all of its healthcare net lease portfolio to Omega Healthcare Investors, Inc. (NYSE: OHI), subject to usual and customary closing conditions and adjustments. The sale, covering 143 long term care facilities, will be completed in a series of closings. Expected net proceeds to CapitalSource include $280 million cash and $51 million of OHI stock. Omega is expected to assume or pay off $529 million of debt related to the assets being purchased. CapitalSource owns 38 additional long term care facilities not included in this sale, but which the Company expects to sell separately.

"This transaction is another important step in our ongoing transformation to a bank model," commented John K. Delaney, CapitalSource Chairman and CEO. "We intend to use the cash proceeds principally to pay down debt, which further strengthens our balance sheet and liquidity. After exploring a number of alternatives in recent months, we believe this direct asset sale is the best result for our shareholders," concluded Delaney.

"As we have been saying for quite some time, we anticipated that realizing the equity value in our net lease portfolio could be a process that stretched out over many months. This transaction will permit us to more quickly capture that value, recognize a gain and further simplify our business, as we seek to finalize the monetization of the remaining facilities within this portfolio," added James J. Pieczynski, President of the CapitalSource Health Care Real Estate business.

The sale to Omega will be completed in three steps. The first two are expected to be completed by the end of the second quarter of 2010 and will result in net proceeds to CapitalSource of $250 million in cash and $51 million of Omega stock. The first closing, expected to occur in late December or January, will cover 40 facilities for a purchase price of $269 million and will also include Omega's payment of $25 million for an option to purchase 63 facilities for an additional $295 million or a total purchase price of $320 million. The second closing is expected to occur in the second quarter of 2010 and will cover 40 facilities for a purchase price of $271 million. Omega will assume a total of $264 million of indebtedness relating to the facilities sold in the first two transactions.

The third closing for the remaining 63 facilities, at a purchase price of $320 million, would occur upon Omega's exercise of its purchase option prior to 12/31/11. The consideration would consist largely of the extinguishment of $265 million of indebtedness relating to the facilities sold in the transaction, plus $30 million in cash, in addition to the previously paid purchase option of $25 million.

Wells Fargo Securities LLC acted as lead advisor to CapitalSource on the transaction.

A conference call will be hosted on Tuesday, November 17, 2009 at 11:00 a.m. EST. Analysts and investors interested in participating are invited to call (866) 843-0890 from within the United States or (412) 317-9250 from outside the United States, with pass code 7193742. A webcast of the call will be available on the Investor Relations section of the CapitalSource web site at http://www.capitalsource.com.

A slide presentation that provides additional detail about the transaction, and will be referred to on the conference call, will be posted to the Investor Relations homepage of the CapitalSource website prior to the call at the following address: http://www.capitalsource.com/investor_relations.

A telephonic replay will also be available from approximately 2 p.m. EST November 17, 2009 through February 18, 2010. Please call (877) 344-7529 from the United States or (412) 317-0088 from outside the United States with pass code 435866. An audio replay will also be available on the Investor Relations section of the CapitalSource website.

About CapitalSource

CapitalSource Inc. (NYSE: CSE) is a commercial lender that provides financial products to middle market businesses and offers depository products and services in southern and central California through its wholly owned subsidiary CapitalSource Bank. As of September 30, 2009, CapitalSource had total commercial assets of $10.4 billion and $4.4 billion in deposits. The Company is headquartered in Chevy Chase, MD. Visit www.capitalsource.com for more information.

Forward Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections and including statements about the proposed sale transaction of substantially all of our healthcare net lease portfolio, including the purchase option, the implications for our business, our intended use of proceeds from the sale transaction, our intention to monetize the remaining facilities in our healthcare net lease portfolio, and our transformation to a bank model, all of which are subject to numerous conditions, requirements, adjustments, options, assumptions, risks, and uncertainties, including the counterparty's discretion regarding whether to exercise its purchase option. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words "anticipate," "assume," "intend," "believe," "expect," "estimate," "plan," "goal," "will," "outlook," "continue," "look forward," "should," and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and closings and their results) involve risks, uncertainties and contingencies, many of which are beyond our control which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. Actual results could differ materially from those contained or implied by such statements for a variety of factors, including without limitation: the proposed transactions may not be completed on the proposed terms and schedule or at all; changes in economic or market conditions; continued or worsening recession in the overall economy or disruptions in credit and other markets; movements in interest rates and lending spreads; continued or worsening credit losses, charge-offs, reserves and delinquencies; our ability to successfully and cost effectively operate our business; competitive and other market pressures on product pricing and services; success and timing of our business strategies; the nature, extent, and timing of governmental actions and reforms; changes in tax laws or regulations affecting our business; and other factors described in CapitalSource's 2008 Annual Report on Form 10-K and documents subsequently filed by CapitalSource with the Securities and Exchange Commission. All forward-looking statements included in this news release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

SOURCE CapitalSource Inc.

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