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Health Care REIT, Inc. Reports Third Quarter 2010 Results

11/03/2010

Click here for a PDF of the release.

Click here for Q3 2010 Supplemental Information.

TOLEDO, Ohio, Nov 03, 2010 (BUSINESS WIRE) -- Health Care REIT, Inc. (NYSE:HCN) today announced operating results for the company's third quarter ended September 30, 2010.

"Our long-standing commitment to a relationship-based investment strategy has positioned the company for a record-breaking year of investments," said George L. Chapman, chief executive officer at Health Care REIT, Inc. "At a time when access to capital for health care operators is limited, we have remained disciplined in our approach to developing partnerships with market-leading senior housing operators and health systems. Today our investment pipeline includes over $5 billion of potential transactions, approximately 94% of which are off-market, non-brokered opportunities derived primarily from our existing industry relationships. Our experienced team will leverage our full service growth platform to capitalize on this pipeline to create shareholder value and position the company as a market leader for years to come."

Recent Highlights

Increased third quarter normalized FFO and FAD per share, raising 2010 investment guidance:

 

  • Improved normalized FFO and FAD per share results by 3% year-over-year
  • Announced year-to-date gross investments totaling $1.6 billion, including $702.5 million for the third quarter
  • Closed $817 million partnership with Merrill Gardens LLC
  • Increasing 2010 gross investment guidance by $500 million to a range of $2.3 billion to $2.7 billion
  • Adjusting 2010 normalized FFO per share outlook to a range of $3.13-$3.16, solely reflecting capital markets activity

Managed our portfolio to maintain its strength and diversity:

 

  • Reported trailing twelve month payment coverage before management fees of 2.11x, highest in company history
  • Achieved solid medical office occupancy of 93% and trailing twelve month retention of 84%
  • Continued improvement in entrance fee campus occupancy, which increased 3% from the prior quarter to 64%
  • Received $82.2 million in proceeds on property sales and loan payoffs, generating $10.5 million of gains

Raised nearly $900 million of cost-effective capital during the quarter and maintained appropriate liquidity:

 

  • Issued $450 million of 7-year senior unsecured notes priced to yield 4.75%
  • Raised $449 million of equity through our September offering, equity shelf program and dividend reinvestment program
  • Prepaid $159 million of secured debt in September with a blended rate of 5.9%
  • Extended average debt maturity from 4.4 years at December 31, 2009 to 6.5 years at September 30, 2010
  • Ended the quarter with cash and line of credit availability of $1.3 billion

Key Performance Indicators

      3Q10     3Q09     Change     2010     2009     Change

Net income attributable to common stockholders (NICS) per diluted share

    $ 0.01     $ 0.17     -94%     $ 0.58     $ 1.25     -54%
Normalized FFO per diluted share     $ 0.79     $ 0.77     3%     $ 2.33     $ 2.38     -2%
Normalized FAD per diluted share     $ 0.74     $ 0.72     3%     $ 2.17     $ 2.24     -3%
Dividends per common share     $ 0.69     $ 0.68     1%     $ 2.05     $ 2.04     0%
Normalized FFO Payout Ratio       87%       88%             88%       86%      
Normalized FAD Payout Ratio       93%       94%             94%       91%      
                                             

Quarterly Earnings

          NICS   FFO   FAD
            3Q10     3Q09     Change       3Q10     3Q09     Change     3Q10     3Q09     Change
Per diluted share     $ 0.01       $ 0.17       -94 %       $ 0.33       $ 0.53       -38 %     $ 0.29       $ 0.55       -47 %
Includes impact of:                                                                    
Gain (loss) on property sales(1)     $ 0.08       $ (0.01 )                                                    
Other items, net(2)     $ (0.46 )     $ (0.25 )             $ (0.46 )     $ (0.25 )           $ (0.46 )     $ (0.25 )      

Prepaid/straight-
line rent receipts(3)

                                                  $ 0.02       $ 0.07        
Per diluted share - normalized(a)                             $ 0.79       $ 0.77       3 %     $ 0.74       $ 0.72       3 %

 

(a) Amounts may not sum due to rounding

 

(1)

$10,526,000 of gains and $806,000 of losses in 3Q10 and 3Q09, respectively.

 

(2)

See Exhibit 1.

 

(3)

$2,146,000 and $8,319,000 of receipts in 3Q10 and 3Q09, respectively.
     

Year-To-Date Earnings

          NICS   FFO   FAD
            2010     2009     Change     2010     2009     Change     2010     2009     Change
Per diluted share     $ 0.58       $ 1.25       -54 %     $ 1.58       $ 2.11       -25 %     $ 1.46       $ 2.17       -33 %
Includes impact of:                                                                  
Gain (loss) on property sales(1)     $ 0.16       $ 0.24                                                    
Other items, net(2)     $ (0.76 )     $ (0.27 )           $ (0.76 )     $ (0.27 )           $ (0.76 )     $ (0.27 )      
Prepaid/straight-line rent receipts(3)                                                 $ 0.05       $ 0.21        
Per diluted share - normalized(a)                           $ 2.33       $ 2.38       -2 %     $ 2.17       $ 2.24       -3 %

 

(a) Amounts may not sum due to rounding

 

(1)

$20,559,000 and $26,907,000 of gains in 2010 and 2009, respectively.

 

(2)

See Exhibit 1.

 

(3)

$6,214,000 and $23,463,000 of receipts in 2010 and 2009, respectively.
     

Dividends for Third Quarter 2010 As previously announced, the Board of Directors declared a cash dividend for the quarter ended September 30, 2010 of $0.69 per share, as compared to $0.68 per share for the same period in 2009. The cash dividend will be paid on November 19, 2010 and will be the company's 158th consecutive quarterly dividend payment.

Outlook for 2010 The company is increasing its investment guidance for 2010. It now expects to complete acquisitions and joint venture investments of $2.0 to $2.3 billion, up from $1.5 to $1.8 billion, and dispositions of $200 million, down from $300 million. The company continues to expect funded new development of $300 to $400 million, resulting in net new investments of $2.1 to $2.5 billion.

The company is revising the midpoints of its 2010 normalized FFO and FAD guidance solely as a result of the capital transactions completed during the third quarter which were not in the previous guidance. Normalized FFO has been revised to a range of $3.13 to $3.16 per diluted share from $3.13 to $3.20 per diluted share. Normalized FAD has been revised to a range of $2.89 to $2.92 per diluted share from $2.89 to $2.96 per diluted share.

Net income attributable to common stockholders has been reduced to a range of $0.98 to $1.01 per diluted share from $1.33 to $1.40 per diluted share. The decrease in net income guidance is primarily due to the capital transactions noted above, $28.9 million of loan losses, $9.1 million of debt extinguishment losses and $18.8 million of transaction costs offset by $10.5 million of gains on sales of real property recognized in the third quarter.

The company's guidance excludes any additional capital transactions, impairments, unanticipated additions to the loan loss reserve or other additional one-time items, including any additional cash payments other than normal monthly rental payments. Please see the exhibits for a reconciliation of the outlook for net income available to common stockholders to normalized FFO and FAD.

Conference Call Information The company has scheduled a conference call on Thursday, November 4, 2010 at 10:00 a.m. Eastern Time to discuss its third quarter 2010 results, industry trends, portfolio performance and outlook for 2010. Telephone access will be available by dialing 888-346-2469 or 706-758-4923 (international). For those unable to listen to the call live, a taped rebroadcast will be available beginning two hours after completion of the call through November 18, 2010. To access the rebroadcast, dial 800-642-1687 or 706-645-9291 (international). The conference ID number is 16264752. To participate in the webcast, log on to http://www.hcreit.com or http://www.fulldisclosure.com 15 minutes before the call to download the necessary software. Replays will be available for 90 days through the same websites. This earnings release is posted on the company's website at http://www.hcreit.com under the heading News.

Supplemental Reporting Measures The company believes that net income attributable to common stockholders (NICS), as defined by U.S. generally accepted accounting principles (U.S. GAAP), is the most appropriate earnings measurement. However, the company considers funds from operations (FFO) and funds available for distribution (FAD) to be useful supplemental measures of its operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (NAREIT) created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means net income, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Normalized FFO represents FFO adjusted for certain items detailed in Exhibit 1. FAD represents FFO excluding net straight-line rental adjustments, amortization related to above/below market leases and amortization of non-cash interest expenses and less cash used to fund capital expenditures, tenant improvements and lease commissions at medical office buildings. Normalized FAD represents FAD excluding prepaid/straight-line rent cash receipts and adjusted for certain items detailed in Exhibit 1. The company believes that normalized FFO and normalized FAD are useful supplemental measures of operating performance because investors and equity analysts may use these measures to compare the operating performance of the company between periods or as compared to other REITs or other companies on a consistent basis without having to account for differences caused by unanticipated and/or incalculable items.

The company's supplemental reporting measures and similarly entitled financial measures are widely used by investors and equity analysts in the valuation, comparison and investment recommendations of companies. The company's management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions. Additionally, they are utilized by the Board of Directors to evaluate management. The supplemental reporting measures do not represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental reporting measures, as defined by the company, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Please see the exhibits for reconciliations of the supplemental reporting measures.

About Health Care REIT, Inc. Health Care REIT, Inc., an S&P 500 company with headquarters in Toledo, Ohio, is a real estate investment trust that invests across the full spectrum of senior housing and health care real estate. The company also provides an extensive array of property management and development services. As of September 30, 2010, the company's broadly diversified portfolio consisted of 641 properties in 39 states. More information is available on the company's website at http://www.hcreit.com.

This document may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern and are based upon, among other things, the possible expansion of the company's portfolio; the sale of properties; the performance of its operators/tenants and properties; its occupancy rates; its ability to acquire, develop and/or manage properties; its ability to enter into agreements with viable new tenants for vacant space or for properties that the company takes back from financially troubled tenants, if any; its ability to make distributions to stockholders; its policies and plans regarding investments, financings and other matters; its tax status as a real estate investment trust; its ability to appropriately balance the use of debt and equity; its ability to access capital markets or other sources of funds; its critical accounting policies; and its ability to meet its earnings guidance. When the company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The company's expected results may not be achieved, and actual results may differ materially from expectations. This may be a result of various factors, including, but not limited to: the status of the economy; the status of capital markets, including availability and cost of capital; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators'/tenants' difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care, senior housing and life science industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; the company's ability to transition or sell facilities with profitable results; the failure to make new investments as and when anticipated; acts of God affecting the company's properties; the company's ability to re-lease space at similar rates as vacancies occur; the company's ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant or joint venture partner bankruptcies or insolvencies; the cooperation of joint venture partners; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; regulatory approval and market acceptance of the products and technologies of life science tenants; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future acquisitions; environmental laws affecting the company's properties; changes in rules or practices governing the company's financial reporting; and legal and operational matters, including real estate investment trust qualification and key management personnel recruitment and retention. Finally, the company assumes no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements.

HEALTH CARE REIT, INC.
Financial Exhibits

   
Consolidated Balance Sheets (unaudited)
(in thousands)
          September 30,
          2010   2009
Assets            
Real estate investments:            
  Real property owned:            
    Land and land improvements   $ 668,135     $ 523,107  
    Buildings and improvements     6,350,167       4,933,561  
    Acquired lease intangibles     223,349       121,059  
    Real property held for sale, net of accumulated depreciation     16,928      

37,118

 
    Construction in progress     286,366       638,507  
          7,544,945      

6,253,352

 
    Less accumulated depreciation and intangible amortization     (804,651 )     (664,415 )
      Net real property owned     6,740,294      

5,588,937

 
  Real estate loans receivable:            
    Loans receivable     416,570       494,877  
    Less allowance for losses on loans receivable     (1,190 )     (7,640 )
      Net real estate loans receivable     415,380       487,237  
    Net real estate investments     7,155,674      

6,076,174

 
                   
Other assets:            
    Equity investments     213,163       3,020  
    Deferred loan expenses     29,529       24,755  
    Cash and cash equivalents     181,147       102,353  
    Restricted cash     61,224       17,493  
    Receivables and other assets     252,330      

179,523

 
          737,393      

327,144

 
Total assets   $ 7,893,067     $ 6,403,318  
             
Liabilities and equity            
Liabilities:            
    Borrowings under unsecured lines of credit arrangements   $ -     $ 143,000  
    Senior unsecured notes     2,585,961       1,651,916  
    Secured debt     885,494       625,571  
    Accrued expenses and other liabilities     201,529      

146,681

 
Total liabilities     3,672,984      

2,567,168

 
             
Equity:            
    Preferred stock     275,000       288,683  
    Common stock     135,046       122,870  
    Capital in excess of par value     4,429,425       3,878,872  
    Treasury stock     (11,352 )     (7,619 )
    Cumulative net income     1,636,589      

1,510,449

 
    Cumulative dividends     (2,329,215 )     (1,968,336 )
    Accumulated other comprehensive income     (11,459 )     (4,942 )
    Other equity     5,972       5,551  
      Total Health Care REIT, Inc. stockholders' equity     4,130,006      

3,825,528

 
    Noncontrolling interests     90,077       10,622  
Total equity     4,220,083      

3,836,150

 
Total liabilities and equity   $ 7,893,067     $ 6,403,318  
                 
Consolidated Statements of Income (unaudited)
(in thousands, except per share data)
          Three Months Ended   Nine Months Ended
          September 30,   September 30,
          2010   2009   2010   2009
Revenues:                        
Rental income   $ 152,127     $ 128,527     $ 441,337     $ 379,326  
Resident fees and service     12,809       -       12,809       -  
Interest income     10,054       10,528       28,437       30,639  
Other income     1,156       1,089       4,802       3,810  
Gross revenues     176,146       140,144       487,385       413,775  
                               
Expenses:                        
Interest expense     44,408       27,595       110,703       79,428  
Property operating expenses     20,849       12,153       45,859       34,441  
Depreciation and amortization     48,565       39,187       138,321       114,446  
General and administrative expenses     11,628       10,363       40,331      

38,784

 
Transaction costs     18,835       -       27,301       -  
Loss (gain) on extinguishment of debt     9,099       26,374       34,171       24,697  
Provision for loan losses     28,918       -       28,918       140  
Total expenses     182,302       115,672       425,604      

291,936

 
                               
Income from continuing operations before income taxes                                
and income from unconsolidated joint ventures     (6,156 )     24,472       61,781       121,839  
                               
Income tax (expense) benefit     (52 )     55       (325 )     (17 )
Income (loss) from unconsolidated joint ventures     1,899       -       4,496       -  
Income from continuing operations     (4,309 )     24,527       65,952      

121,822

 
                         
Discontinued operations:                        
Gain (loss) on sales of properties     10,526       (806 )     20,559      

26,907

 
Impairment of assets     (947 )     (1,873 )     (947 )     (1,873 )
Income (loss) from discontinued operations, net     511       2,837       2,973       9,233  
            10,090       158       22,585      

34,267

 
Net income     5,781       24,685       88,537       156,089  

Less: Preferred dividends

    5,347       5,520       16,340       16,560  
Net income (loss) attributable to noncontrolling interests     (690 )     35       (383 )     40  
Net income attributable to common stockholders   $ 1,124     $ 19,130     $ 72,580     $ 139,489  
                               
Average number of common shares outstanding:                        
Basic     125,298       114,874       124,132       111,345  
Diluted     125,842       115,289       124,660       111,749  
                               
Net income attributable to common stockholders per share:                        
Basic   $ 0.01     $ 0.17     $ 0.58     $ 1.25  
Diluted     0.01       0.17       0.58       1.25  
                               
Common dividends per share   $ 0.69     $ 0.68     $ 2.05     $ 2.04  
                         
 

Normalizing Items

          Exhibit 1
  (in thousands, except per share data)                                      
                            Three Months Ended         Nine Months Ended
                            September 30,         September 30,
                            2010   2009         2010   2009
  Impairment of assets                   $

947

(1)

  $ 1,873         $ 947     $ 1,873
  Transaction costs                    

18,835

(2)

    -           27,301       -
  Non-recurring G&A expenses                     -       -           2,853       3,909
  Loss (gain) on extinguishment of debt                    

9,099

(3)

    26,374           34,171       24,697
  Provision for loan losses                    

28,918

(4)

    -           28,918       140
  Held for sale hospital operating expenses                    

522

(5)

    -           1,400       -
  Non-recurring other income                     -       -           (1,000 )     -
  Total                   $ 58,321     $ 28,247         $ 94,590     $ 30,619
                                                 
  Average diluted shares outstanding                     125,842       115,289           124,660       111,749
  Net amount per diluted share                   $ 0.46     $ 0.25         $ 0.76     $ 0.27
                                                       
Notes:  

(1)

Represents impairments on two medical office buildings classified as held for sale to adjust for current sales price expectations.

       

(2)

Represents costs incurred with Merrill Gardens partnership and other transactions completed during the quarter.

       

(3)

Represents extinguishment charges in connection with the early repayment of $159 million of secured debt with a blended rate of 5.9%.

       

(4)

Represents loan write-offs relating primarily to early stage senior housing and CCRC development projects no longer being actively pursued. Real estate loan non-accrual balance reduced to $10.9 million.

       

(5)

Represents expenses incurred in connection with a hospital classified as held for sale.

           
 

Funds From Operations Reconciliation

    Exhibit 2
  (in thousands, except per share data)                        
            Three Months Ended   Nine Months Ended
            September 30,   September 30,
            2010   2009   2010   2009
 

Net income attributable to common
stockholders

  $ 1,124     $ 19,130     $ 72,580     $ 139,489  
  Depreciation and amortization(1)     49,106       41,085       140,137       123,143  
  Loss (gain) on sales of properties     (10,526 )     806       (20,559 )    

(26,907

)
  Noncontrolling interests(2)     (1,292 )     (88 )     (1,547 )     (262 )
  Unconsolidated joint ventures(3)     2,696       -       5,794       -  
  Funds from operations     41,108       60,933       196,405      

235,463

 
  Normalizing items, net(4)     58,321       28,247       94,590       30,619  
  Funds from operations - normalized   $ 99,429     $ 89,180     $ 290,995     $

266,082

 
                           
  Average common shares outstanding:                        
  Basic     125,298       114,874       124,132       111,345  
  Diluted     125,842       115,289       124,660       111,749  
                                 
  Per share data:                        
 

Net income attributable to common
stockholders

                       
  Basic   $ 0.01     $ 0.17     $ 0.58     $ 1.25  
  Diluted     0.01       0.17       0.58       1.25  
                                 
  Funds from operations                        
  Basic   $ 0.33     $ 0.53     $ 1.58     $ 2.11  
  Diluted     0.33       0.53       1.58       2.11  
                                 
  Funds from operations - normalized                        
  Basic   $ 0.79     $ 0.78     $ 2.34     $ 2.39  
  Diluted     0.79       0.77       2.33       2.38  
                                 
  FFO Payout Ratio:                        
  Dividends per common share   $ 0.69     $ 0.68     $ 2.05     $ 2.04  
  FFO per diluted share   $ 0.33     $ 0.53     $ 1.58     $ 2.11  
  FFO payout ratio     209 %     128 %     130 %     97 %
                                 
  FFO Payout Ratio - Normalized:                        
  Dividends per common share   $ 0.69     $ 0.68     $ 2.05     $ 2.04  
  FFO per diluted share - normalized   $ 0.79     $ 0.77     $ 2.33     $ 2.38  
  FFO payout ratio - normalized     87 %     88 %     88 %     86 %
                                 
Notes:  

(1)

Depreciation and amortization includes depreciation and amortization from discontinued operations.

       

(2)

Represents noncontrolling interests' share of depreciation and amortization.

       

(3)

Represents HCN's share of depreciation and amortization from unconsolidated joint ventures.

       

(4)

See Exhibit 1.

           
 

Funds Available for Distribution Reconciliation

 

 

 

 

 

 

    Exhibit 3
  (in thousands, except per share data)                        
            Three Months Ended   Nine Months Ended
            September 30,   September 30,
            2010   2009   2010   2009
  Net income attributable to common stockholders   $ 1,124     $ 19,130     $ 72,580     $ 139,489  
  Depreciation and amortization(1)     49,106       41,085       140,137       123,143  
  Loss (gain) on sales of properties     (10,526 )     806       (20,559 )    

(26,907

)
  Noncontrolling interests(2)     (1,343 )     (99 )     (1,633 )     (311 )
  Unconsolidated joint ventures(3)     1,120       -       2,335       -  
  Gross straight-line rental income     (3,816 )     (4,571 )     (12,414 )     (14,499 )
  Prepaid/straight-line rent receipts     2,146       8,319       6,214       23,463  
  Amortization related to above (below) market leases, net     (816 )     (620 )     (2,112 )     (1,344 )
  Non-cash interest expense     4,258       2,895       10,759       8,511  
  Cap-ex, tenant improvements, lease commissions     (4,840 )     (3,637 )     (13,671 )     (8,795 )
  Funds available for distribution     36,413       63,308       181,636      

242,750

 
  Normalizing items, net(4)     58,321       28,247       94,590       30,619  
  Prepaid/straight-line rent receipts     (2,146 )     (8,319 )     (6,214 )     (23,463 )
  Funds available for distribution - normalized   $ 92,588     $ 83,236     $ 270,012     $

249,906

 
                           
  Average common shares outstanding:                        
  Basic     125,298       114,874       124,132       111,345  
  Diluted     125,842       115,289       124,660       111,749  
                                 
  Per share data:                        
  Net income attributable to common stockholders                        
  Basic   $ 0.01     $ 0.17     $ 0.58     $ 1.25  
  Diluted     0.01       0.17       0.58       1.25  
                                 
  Funds available for distribution                        
  Basic   $ 0.29     $ 0.55     $ 1.46     $ 2.18  
  Diluted     0.29       0.55       1.46       2.17  
                                 
  Funds available for distribution - normalized                        
  Basic   $ 0.74     $ 0.72     $ 2.18     $ 2.24  
  Diluted     0.74       0.72       2.17       2.24  
                                 
  FAD Payout Ratio:                        
  Dividends per common share   $ 0.69     $ 0.68     $ 2.05     $ 2.04  
  FAD per diluted share   $ 0.29     $ 0.55     $ 1.46     $ 2.17  
  FAD payout ratio     238 %     124 %     140 %     94 %
                                 
  FAD Payout Ratio - Normalized:                        
  Dividends per common share   $ 0.69     $ 0.68     $ 2.05     $ 2.04  
  FAD per diluted share - normalized   $ 0.74     $ 0.72     $ 2.17     $ 2.24  
  FAD payout ratio - normalized     93 %     94 %     94 %     91 %
                           
Notes:  

(1)

Depreciation and amortization includes depreciation and amortization from discontinued operations.

       

(2)

Represents noncontrolling interests' share of net FAD adjustments.

       

(3)

Represents HCN's share of net FAD adjustments from unconsolidated joint ventures.

       

(4)

See Exhibit 1.

           
 

Outlook Reconciliations

    Exhibit 4
  (in thousands, except per share data)                        
            Prior Outlook   Current Outlook
            Year Ended   Year Ended
            December 31, 2010   December 31, 2010
            Low   High   Low   High
  FFO Reconciliation:                        
  Net income attributable to common stockholders   $ 165,699     $ 174,449     $ 124,304     $ 128,054  
  Loss (gain) on sales of properties     (10,033 )     (10,033 )     (20,559 )     (20,559 )
  Depreciation and amortization(1)     193,500       193,500       194,400       194,400  
  Noncontrolling interests(2)     (2,185 )     (2,185 )     (3,235 )     (3,235 )
  Unconsolidated joint ventures(3)     8,500       8,500       8,500       8,500  
  Funds from operations     355,481       364,231       303,410       307,160  
  Normalizing items, net(4)     36,269       36,269       94,590       94,590  
  Funds from operations - normalized   $ 391,750     $ 400,500     $ 398,000     $ 401,750  
                           
  Per share data (diluted):                        
  Net income attributable to common stockholders   $ 1.33     $ 1.40     $ 0.98     $ 1.01  
  Funds from operations     2.84       2.91       2.38       2.41  
  Funds from operations - normalized     3.13       3.20       3.13       3.16  
                                 
  FAD Reconciliation:                        
  Net income attributable to common stockholders   $ 165,699     $ 174,449     $ 124,304     $ 128,054  
  Loss (gain) on sales of properties     (10,033 )     (10,033 )     (20,559 )     (20,559 )
  Depreciation and amortization(1)     193,500       193,500       194,400       194,400  
  Noncontrolling interests(2)     (2,225 )     (2,225 )     (3,275 )     (3,275 )
  Unconsolidated joint ventures(3)     3,500       3,500       3,500       3,500  
  Gross straight-line rental income     (16,500 )     (16,500 )     (16,000 )     (16,000 )
  Prepaid/straight-line rent receipts     4,068       4,068       6,214       6,214  
  Amortization related to above (below) market leases, net     (3,300 )     (3,300 )     (3,200 )     (3,200 )
  Non-cash interest expense     14,000       14,000       14,750       14,750  
  Cap-ex, tenant improvements, lease commissions     (20,000 )     (20,000 )     (20,000 )     (20,000 )
  Funds available for distribution     328,709       337,459       280,134       283,884  
  Normalizing items, net(4)     36,269       36,269       94,590       94,590  
  Prepaid/straight-line rent receipts     (4,068 )     (4,068 )     (6,214 )     (6,214 )
  Funds available for distribution - normalized   $ 360,910     $ 369,660     $ 368,510     $ 372,260  
                           
  Per share data (diluted):                        
  Net income attributable to common stockholders   $ 1.33     $ 1.40     $ 0.98     $ 1.01  
  Funds available for distribution     2.63       2.70       2.20       2.23  
  Funds available for distribution - normalized     2.89       2.96       2.89       2.92  
                                 
Notes:  

(1)

Depreciation and amortization includes depreciation and amortization from discontinued operations.

       

(2)

Represents noncontrolling interests' share of FFO/FAD adjustments.

       

(3)

Represents HCN's share of FFO/FAD adjustments from unconsolidated joint ventures.

       

(4)

See Exhibit 1.

SOURCE: Health Care REIT, Inc.

Health Care REIT, Inc.
Scott Estes, 419-247-2800
Mike Crabtree, 419-247-2800