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Click here for Q108 Supplemental Information.
TOLEDO, Ohio--(BUSINESS WIRE)--May 7, 2008--Health Care REIT, Inc. (NYSE:HCN) today announced operating results for the company's first quarter ended March 31, 2008.
"We are off to an excellent start in 2008 and expect even greater success on the investment front than was originally anticipated," commented George L. Chapman, chief executive officer of Health Care REIT, Inc. "We also expect a higher amount of selective asset sales during 2008, which should allow us to recycle capital and leave us less reliant on the capital markets to fund our growth. We believe that this capital redeployment strategy will continue to enhance the quality of real estate in our portfolio and has enabled us to increase our projected FFO growth this year to a range of 6 to 8 percent per share."
Recent Highlights.
-- Reported 1Q08 normalized FFO growth of 7% per share
-- Reported 1Q08 normalized FAD growth of 9% per share
-- Completed 1Q08 net new investments totaling $181.3 million
-- Increased 2008 common dividend 3% to $2.72 per share
-- Increasing 2008 gross investment guidance by $200 million to a
range of $1.1 to $1.4 billion
-- Increasing 2008 normalized FFO guidance to a range of $3.30 to
$3.38 from $3.27 to $3.37 per share
-- Increasing 2008 normalized FAD guidance to a range of $3.04 to
$3.12 from $3.01 to $3.11 per share
Key Performance Indicators.
1Q08 1Q07 Change
----------------------------------------------------------------------
Net income available to common
stockholders (NICS) per diluted
share $0.35 $0.32 9%
----------------------------------------------------------------------
Normalized FFO per diluted share $0.81 $0.76 7%
----------------------------------------------------------------------
Normalized FAD per diluted share $0.76 $0.70 9%
----------------------------------------------------------------------
Dividends per common share(1) $0.66 $0.64 3%
----------------------------------------------------------------------
Normalized FFO Payout Ratio 81% 84%
----------------------------------------------------------------------
Normalized FAD Payout Ratio 87% 91%
----------------------------------------------------------------------
(1) The $0.3409 prorated dividend paid on December 28, 2006 in
connection with the Windrose merger has been included in 2007.
1Q08 Earnings. The following table summarizes certain items impacting NICS, FFO and FAD:
NICS FFO
------------------ --------------------
1Q08 1Q07 Change 1Q08 1Q07 Change
--------------------------------------------------------------
Per diluted share $0.35 $0.32 9% $0.81 $0.76 7%
--------------------------------------------------------------
Includes impact of:
--------------------------------------------------------------
Gain (loss) on
sales of real
property(1) $0.00 $0.01
--------------------------------------------------------------
Non-recurring
income tax
expense(2) ($0.02)
--------------------------------------------------------------
Debt
extinguishment
gain(3) $0.02
--------------------------------------------------------------
Prepaid/straight-
line rent cash
receipts(4)
--------------------------------------------------------------
Per diluted share -
normalized(a) $0.81 $0.76 7%
--------------------------------------------------------------
FAD
--------------------
1Q08 1Q07 Change
------------------------------------------
Per diluted share $0.79 $0.73 8%
------------------------------------------
Includes impact of:
------------------------------------------
Gain (loss) on
sales of real
property(1)
------------------------------------------
Non-recurring
income tax
expense(2) ($0.02)
------------------------------------------
Debt
extinguishment
gain(3) $0.02
------------------------------------------
Prepaid/straight-
line rent cash
receipts(4) $0.03 $0.03
------------------------------------------
Per diluted share -
normalized(a) $0.76 $0.70 9%
------------------------------------------
(a) Amounts may not sum due to rounding
(1) $26,000 and $977,000 of gains in 1Q08 and 1Q07,
respectively.
(2) $1,325,000 of non-recurring income tax expense in 1Q08.
(3) $1,326,000 of debt extinguishment gains in 1Q08.
(4) $2,975,000 and $2,078,000 of receipts in 1Q08 and 1Q07,
respectively.
Dividends for First Quarter 2008. As previously announced, the Board of Directors declared a dividend for the quarter ended March 31, 2008 of $0.68 per share, as compared to $0.66 per share for the same period in 2007. The dividend will be paid on May 20, 2008 and will be the company's 148th consecutive quarterly dividend payment.
Outlook for 2008. The company is increasing its investment guidance for 2008 to a range of $1.1 billion to $1.4 billion from $900 million to $1.2 billion. Acquisition guidance has been increased to a range of $700 to $900 million from $500 to $700 million of acquisitions, while development funding remains unchanged within a range of $400 to $500 million. Disposition guidance has also been increased to a range of $300 to $400 million from $100 to $200 million. Net investment guidance remains unchanged at a range of $700 million to $1.1 billion.
The company is revising its 2008 earnings guidance. Normalized FFO has been increased to a range of $3.30 to $3.38 per diluted share from $3.27 to $3.37 per diluted share. Normalized FAD has been increased to a range of $3.04 to $3.12 per diluted share from $3.01 to $3.11 per diluted share. Due to an increase in projected depreciation and amortization arising from the increased acquisition guidance, net income available to common stockholders has been revised to a range of $1.50 to $1.58 per diluted share from $1.55 to $1.65 per diluted share.
The company's guidance excludes any 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 FFO and FAD.
New Supplemental Information Report Available. The company's quarterly supplemental information is now located in a separate report under the News & Events heading of the company's website. The report can be accessed at www.hcreit.com/supplement.
Conference Call Information. The company has scheduled a conference call on Thursday, May 8, 2008 at 9:00 a.m. Eastern Time to discuss its first quarter 2008 results, industry trends, portfolio performance and outlook for 2008. Telephone access will be available by dialing 888-686-9703 or 913-312-0975 (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 May 22, 2008. To access the rebroadcast, dial 888-203-1112 or 719-457-0820 (international). The conference ID number is 5309542. To participate in the webcast, log on to www.hcreit.com or www.earnings.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 under the heading News & Events.
Supplemental Reporting Measures. The company believes that net income available 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 unusual and non-recurring items. FAD represents FFO excluding net straight-line rental adjustments, rental income related to above/below market leases and amortization of deferred loan expenses and less cash used to fund capital expenditures, tenant improvements and lease commissions. Normalized FAD represents FAD excluding prepaid/straight-line rent cash receipts and adjusted for unusual and non-recurring items.
The company's supplemental reporting measures are financial measures that are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating 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.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is an equity real estate investment trust that invests across the full spectrum of senior housing and health care real estate, including independent living/continuing care retirement communities, assisted living facilities, skilled nursing facilities, hospitals, long-term acute care hospitals and medical office buildings. Founded in 1970, the company was the first real estate investment trust to invest exclusively in health care facilities. The company also offers a full array of property management and development services. As of March 31, 2008, the company's broadly diversified portfolio consisted of 646 properties in 38 states. More information is available on the Internet at 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 and properties; its occupancy rates; its ability to acquire or develop properties; its ability to manage properties; its ability to enter into agreements with new viable tenants for vacant space or for properties that the company takes back from financially troubled tenants, if any; its ability to make distributions; 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 prevailing interest rates; 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 and senior housing 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; the failure of closings to occur 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 bankruptcies or insolvencies; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; 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 Supplement
CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands)
March 31,
-------------------------
2008 2007
-------------------------
Assets
Real estate investments:
Real property owned
Land and land improvements $ 454,474 $ 394,002
Buildings and improvements 4,329,405 3,783,163
Acquired lease intangibles 134,388 85,110
Real property held for sale, net of
accumulated depreciation 2,150 4,236
Construction in progress 369,582 169,782
------------ ------------
5,289,999 4,436,293
Less accumulated depreciation and
intangible amortization (517,487) (381,448)
------------ ------------
Total real property owned 4,772,512 4,054,845
Loans receivable 388,250 256,945
Less allowance for losses on loans
receivable (7,406) (7,406)
------------ ------------
380,844 249,539
------------ ------------
Net real estate investments 5,153,356 4,304,384
Other assets:
Equity investments 1,168 4,700
Deferred loan expenses 28,817 19,767
Cash and cash equivalents 32,282 31,293
Receivables and other assets 171,833 98,510
------------ ------------
234,100 154,270
------------ ------------
Total assets $ 5,387,456 $ 4,458,654
============ ============
Liabilities and stockholders' equity
Liabilities:
Borrowings under unsecured lines of
credit arrangements $ 432,500 $ 381,000
Senior unsecured notes 1,847,709 1,542,103
Secured debt 478,228 377,013
Liability to subsidiary trust issuing
preferred securities 0 52,205
Accrued expenses and other
liabilities 110,715 95,595
------------ ------------
Total liabilities 2,869,152 2,447,916
Minority interests 9,697 2,354
Stockholders' equity:
Preferred stock 327,897 338,993
Common stock 88,992 73,931
Capital in excess of par value 2,510,260 1,902,186
Treasury stock (3,986) (3,941)
Cumulative net income 1,110,854 962,526
Cumulative dividends (1,510,296) (1,267,462)
Accumulated other comprehensive
income (18,474) (135)
Other equity 3,360 2,286
------------ ------------
Total stockholders' equity 2,508,607 2,008,384
------------ ------------
Total liabilities and stockholders' equity $ 5,387,456 $ 4,458,654
============ ============
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
-------------------
2008 2007
-------------------
Revenues:
Rental income $125,044 $103,496
Interest income 9,092 5,149
Other income 1,716 1,592
--------- ---------
Gross revenues 135,852 110,237
Expenses:
Interest expense 34,329 31,330
Property operating expenses 11,367 7,168
Depreciation and amortization 39,555 32,682
General and administrative expenses 12,328 9,782
Loan expense 1,772 1,267
Loss (gain) on extinguishment of debt (1,326) 0
--------- ---------
Total expenses 98,025 82,229
--------- ---------
Income from continuing operations before income
taxes and minority interests 37,827 28,008
Income tax (expense) benefit (1,279) (11)
--------- ---------
Income from continuing operations before minority
interests 36,548 27,997
Minority interests (62) (126)
--------- ---------
Income from continuing operations 36,486 27,871
Discontinued operations:
Gain (loss) on sales of properties 26 977
Income (loss) from discontinued operations, net 87 825
--------- ---------
113 1,802
--------- ---------
Net income 36,599 29,673
Preferred dividends 6,147 6,317
--------- ---------
Net income available to common stockholders $ 30,452 $ 23,356
========= =========
Average number of common shares outstanding:
Basic 86,100 73,224
Diluted 86,610 73,791
Net income available to common stockholders per
share:
Basic $ 0.35 $ 0.32
Diluted 0.35 0.32
Common dividends per share $ 0.66 $ 0.2991
Funds From Operations Reconciliation
----------------------------------------------------------------------
(Amounts in 000's except per share data)
Three Months Ended
March 31,
------------------
2008 2007
--------- --------
Net income available to common
stockholders $30,452 $23,356
Depreciation and amortization (1) 39,574 33,860
Loss (gain) on sales of properties (26) (977)
Minority interests (87) (32)
--------- --------
Funds from operations 69,913 56,207
Loss (gain) on extinguishment of debt (1,326) 0
Non-recurring income tax expense 1,325 0
--------- --------
Funds from operations - normalized $69,912 $56,207
Average common shares outstanding:
Basic 86,100 73,224
Diluted 86,610 73,791
Per share data:
Net income available to common
stockholders
Basic $ 0.35 $ 0.32
Diluted 0.35 0.32
Funds from operations
Basic $ 0.81 $ 0.77
Diluted 0.81 0.76
Funds from operations - normalized
Basic $ 0.81 $ 0.77
Diluted 0.81 0.76
FFO Payout Ratio
Dividends per common share (2) $ 0.66 $ 0.64
FFO per diluted share $ 0.81 $ 0.76
--------- --------
FFO payout ratio 81% 84%
FFO Payout Ratio - Normalized
Dividends per share (2) $ 0.66 $ 0.64
FFO per diluted share - normalized $ 0.81 $ 0.76
--------- --------
FFO payout ratio - normalized 81% 84%
Notes: (1) Depreciation and amortization includes depreciation and
amortization from discontinued operations.
(2) The $0.3409 prorated dividend paid on December 28, 2006 in
connection with the Windrose merger has been included in
2007.
Funds Available For Distribution Reconciliation
----------------------------------------------------------------------
(Amounts in 000's except per share data)
Three Months Ended
March 31,
------------------
2008 2007
--------- --------
Net income available to common stockholders $30,452 $23,356
Depreciation and amortization (1) 39,574 33,860
Loss (gain) on sales of properties (26) (977)
Minority interests (8) (5)
Gross straight-line rental income (5,336) (4,231)
Prepaid/straight-line rent receipts 2,975 2,078
Amortization related to above (below)
market leases, net (263) (460)
Amortization of deferred loan expenses 1,772 1,267
Cap Ex, tenant improvements, lease
commissions (765) (1,063)
--------- --------
Funds available for distribution 68,375 53,825
Loss (gain) on extinguishment of debt (1,326) 0
Non-recurring income tax expense 1,325 0
Prepaid/straight-line rent receipts (2,975) (2,078)
--------- --------
Funds available for distribution -
normalized $65,399 $51,747
Average common shares outstanding:
Basic 86,100 73,224
Diluted 86,610 73,791
Per share data:
Net income available to common stockholders
Basic $ 0.35 $ 0.32
Diluted 0.35 0.32
Funds available for distribution
Basic $ 0.79 $ 0.74
Diluted 0.79 0.73
Funds available for distribution -
normalized
Basic $ 0.76 $ 0.71
Diluted 0.76 0.70
FAD Payout Ratio
Dividends per common share (2) $ 0.66 $ 0.64
FAD per diluted share $ 0.79 $ 0.73
--------- --------
FAD payout ratio 84% 88%
FAD Payout Ratio - Normalized
Dividends per common share (2) $ 0.66 $ 0.64
FAD per diluted share - normalized $ 0.76 $ 0.70
--------- --------
FAD payout ratio - normalized 87% 91%
Notes: (1) Depreciation and amortization includes depreciation and
amortization from discontinued operations.
(2) The $0.3409 prorated dividend paid on December 28, 2006 in
connection with the Windrose merger has been included in
2007.
Outlook Reconciliations
----------------------------------------------------------------------
(Amounts in 000's except per share data)
Previous Outlook Current Outlook
---------------------------------------
Year Ended Year Ended
December 31, 2008 December 31, 2008
---------------------------------------
Low High Low High
--------- --------- --------- ---------
FFO Reconciliation:
--------------------------
Net income available to
common stockholders $143,000 $152,000 $135,677 $142,927
Loss (gain) on sales of
properties 0 (26) (26)
Depreciation and
amortization (1) 158,000 158,000 163,000 163,000
--------- --------- --------- ---------
Funds from operations 301,000 310,000 298,651 305,901
Loss (gain) on
extinguishment of debt (1,326) (1,326)
Non-recurring income tax
expense 1,325 1,325
--------- --------- --------- ---------
Funds from operations -
normalized $301,000 $310,000 $298,650 $305,900
Average common shares
outstanding (diluted) 92,000 92,000 90,500 90,500
Per share data (diluted):
Net income available to
common stockholders $ 1.55 $ 1.65 $ 1.50 $ 1.58
Funds from operations 3.27 3.37 3.30 3.38
Funds from operations -
normalized 3.27 3.37 3.30 3.38
FAD Reconciliation:
--------------------------
Net income available to
common stockholders $143,000 $152,000 $135,677 $142,927
Loss (gain) on sales of
properties (26) (26)
Depreciation and
amortization (1) 158,000 158,000 163,000 163,000
Gross straight-line
rental income (22,500) (22,500) (22,500) (22,500)
Prepaid/straight-line
rent receipts 2,975 2,975
Amortization related to
above/below market
leases (1,000) (1,000) (1,000) (1,000)
Amortization of deferred
loan expenses 7,250 7,250 7,250 7,250
Cap Ex, tenant
improvements, lease
commissions (7,500) (7,500) (7,500) (7,500)
--------- --------- --------- ---------
Funds available for
distribution 277,250 286,250 277,876 285,126
Loss (gain) on
extinguishment of debt (1,326) (1,326)
Non-recurring income tax
expense 1,325 1,325
Prepaid/straight-line
rent receipts (2,975) (2,975)
--------- --------- --------- ---------
Funds available for
distribution -
normalized $277,250 $286,250 $274,900 $282,150
Average common shares
outstanding (diluted) 92,000 92,000 90,500 90,500
Per share data (diluted):
Net income available to
common stockholders $ 1.55 $ 1.65 $ 1.50 $ 1.58
Funds available for
distribution 3.01 3.11 3.07 3.15
Funds available for
distribution -
normalized 3.01 3.11 3.04 3.12
Notes: (1) Depreciation and amortization includes depreciation and
amortization from discontinued operations.
CONTACT: Health Care REIT, Inc.
Scott Estes, 419-247-2800
Mike Crabtree, 419-247-2800
SOURCE: Health Care REIT, Inc.