TOLEDO, Ohio--(BUSINESS WIRE)--Oct. 18, 2005--Health Care REIT, Inc. (NYSE:HCN) announced today operating results for its third quarter ended September 30, 2005.
"We are pleased to report a 13% increase in third quarter FAD to $0.77," commented George L. Chapman, chief executive officer of Health Care REIT, Inc. "Our record quarterly earnings resulted from the $217 million of net new investments completed during the first half of 2005. We intend to maintain our disciplined approach to investing, leaving us well-positioned for 2006 and beyond."
The Board of Directors declared a dividend for the quarter ended September 30, 2005 of $0.62 per share as compared to $0.60 per share for the same period in 2004. The dividend represents the 138th consecutive dividend payment. The dividend will be payable November 21, 2005 to stockholders of record on October 31, 2005.
Summary of Third Quarter Results
--------------------------------
(In thousands, except per share data)
----------------------------------------------------------------------
Three Months Ended Three Months Ended
September 30, 2005 September 30, 2004
----------------------------------------------------------------------
Revenues $ 73,065 $ 61,801
Net Income Available to Common
Stockholders $ 19,908 $ 19,004
Funds From Operations $ 41,975 $ 37,893
Funds From Operations -
Adjusted (1) $ 41,975 $ 38,207
Funds Available for Distribution $ 41,857 $ 34,891
Funds Available for Distribution
- Adjusted (1) $ 41,857 $ 35,205
Net Income Per Diluted Share $ 0.37 $ 0.37
FFO Per Diluted Share $ 0.77 $ 0.73
FFO Per Diluted Share -
Adjusted (1) $ 0.77 $ 0.73
FAD Per Diluted Share $ 0.77 $ 0.67
FAD Per Diluted Share -
Adjusted (1) $ 0.77 $ 0.68
Dividend Per Share $ 0.62 $ 0.60
FFO Payout Ratio 81% 82%
FFO Payout Ratio - Adjusted (1) 81% 82%
FAD Payout Ratio 81% 90%
FAD Payout Ratio - Adjusted (1) 81% 88%
(1) Adjusted for impairment of assets in 3Q04.
Summary of Year to Date Results
--------------------------------
(In thousands, except per share data)
----------------------------------------------------------------------
Nine Months Ended Nine Months Ended
September 30, 2005 September 30, 2004
----------------------------------------------------------------------
Revenues $ 207,280 $ 176,684
Net Income Available to Common
Stockholders $ 36,105 $ 56,866
Funds From Operations $ 99,712 $ 109,442
Funds From Operations -
Adjusted (1) $ 118,160 $ 109,756
Funds Available for Distribution $ 95,563 $ 97,307
Funds Available for Distribution
- Adjusted (1) $ 114,011 $ 97,621
Net Income Per Diluted Share $ 0.67 $ 1.10
FFO Per Diluted Share $ 1.85 $ 2.11
FFO Per Diluted Share -
Adjusted (1) $ 2.19 $ 2.12
FAD Per Diluted Share $ 1.77 $ 1.88
FAD Per Diluted Share -
Adjusted (1) $ 2.12 $ 1.89
Dividend Per Share $ 1.84 $ 1.785
FFO Payout Ratio 99% 85%
FFO Payout Ratio - Adjusted (1) 84% 84%
FAD Payout Ratio 104% 95%
FAD Payout Ratio - Adjusted (1) 87% 94%
(1) Adjusted for loss on extinguishment of debt in 2Q05 and impairment
of assets in 3Q04.
The company had a total outstanding debt balance of $1.4 billion at September 30, 2005, as compared with $1.1 billion at September 30, 2004, and stockholders' equity of $1.3 billion. At September 30, 2005, the company's debt to total book capitalization ratio was 51% and the debt to total market capitalization ratio was 37%. For the nine months ended September 30, 2005, the company's coverage ratio of EBITDA to interest was 3.25 to 1.00 and the coverage ratio of EBITDA to fixed charges was 2.58 to 1.00, after adjusting for the one-time debt extinguishment charge of $18.4 million in the second quarter of 2005.
Straight-line Rent. The company recorded $0.1 million and $4.1 million of straight-line rent for the three and nine months ended September 30, 2005, respectively. Straight-line rent is net of $2.8 million and $6.0 million in cash payments outside normal monthly rental payments for the three and nine month periods, respectively.
Outlook for 2005. The company is refining its 2005 net new investment guidance to a range of $125 to $175 million from $100 to $200 million. The net new investment guidance excludes approximately $300 million of portfolio acquisitions currently in underwriting with an average yield of 8.25%. All new investments will primarily comprise leases that will not require rents to be straight-lined. The company currently expects to report net income available to common stockholders in the range of $1.02 to $1.04 per diluted share. Excluding the loss on extinguishment of debt and any additional one-time items, the company is also narrowing its guidance for 2005 FFO to a range of $2.91 to $2.93 from $2.90 to $2.98 per diluted share. The company now expects to record straight-line rent of approximately $7 million for the full year 2005, before any additional cash payments outside normal monthly rental payments, and is revising its 2005 FAD guidance to a range of $2.78 to $2.80 from $2.72 to $2.80 per diluted share. The company also anticipates that general and administrative expenses will total between $17.8 million and $18.3 million for the full year 2005. For the fourth quarter of 2005, the company has assumed: (1) gross investments of $35 to $65 million at an average initial yield of 9.0% occurring on average during the latter half of the fourth quarter; (2) dispositions of $100 to $150 million at an average yield of 9.25%; (3) any proceeds from dispositions are used to pay down the company's outstanding line of credit balance; (4) general and administrative expenses of $4.8 to $5.3 million; and (5) no additional capital raising activities outside of the company's DRIP plan.
The company's guidance does not account for any impairments or unanticipated additions to the loan loss reserve. Additionally, the company will be managed to maintain investment grade status with a capital structure consistent with its current profile. Please see Exhibit 15 for a reconciliation of the outlook for net income to FFO and FAD.
Supplemental Reporting Measures. The company believes that net income, 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 depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FAD represents FFO excluding the non-cash straight-line rental adjustments.
EBITDA stands for earnings before interest, taxes, depreciation and amortization. Additionally, the company excludes the non-cash provision for loan losses. The company believes that EBITDA, along with net income and cash flow provided from operating activities, is an important supplemental measure because it provides additional information to assess and evaluate the performance of its operations. Additionally, restrictive covenants in the company's long-term debt arrangements contain financial ratios based on EBITDA. The company primarily utilizes EBITDA to measure its interest coverage ratio which represents EBITDA divided by interest expense.
In October 2003, NAREIT informed its member companies that the SEC had changed its position on certain aspects of the NAREIT FFO definition, including impairment charges. Previously, the SEC accepted NAREIT's view that impairment charges were effectively an early recognition of an expected loss on an impending sale of property and thus should be excluded from FFO similar to other gains and losses on sales. However, the SEC's clarified interpretation is that recurring impairments taken on real property may not be added back to net income in the calculation of FFO and FAD. Although the company has adopted this recommendation, it has also disclosed FFO and FAD adjusted for the impairment charge in 2004 for enhanced clarity.
In April 2002, the Financial Accounting Standards Board issued Statement No. 145 that requires gains and losses on extinguishments of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under Statement No. 4. The company adopted the standard effective January 1, 2003 and has properly reflected the current quarter loss on extinguishment of debt which may not be added back to net income in the calculation of FFO. Although the company has adopted this treatment, it has also disclosed FFO, FAD and EBITDA adjusted for the loss on extinguishment of debt in 2005 for enhanced clarity.
FFO, FAD and EBITDA 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, in making operating decisions and for budget planning purposes. Additionally, FFO and FAD are utilized by the Board of Directors to evaluate management. FFO, FAD and EBITDA 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, FFO, FAD and EBITDA, 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 Exhibits 13, 14 and 16 for reconciliations of FAD, FFO and EBITDA to net income.
Conference Call Information. The company has scheduled a conference call on October 19, 2005, at 9:00 a.m. Eastern time to discuss its third quarter results, industry trends, portfolio performance and outlook for 2005. 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 Web sites. This earnings release is posted on the company's Web site under the heading Press Releases.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests primarily in skilled nursing and assisted living facilities. At September 30, 2005, the company had investments in 426 facilities in 37 states with 52 operators and had total assets of approximately $2.7 billion. The portfolio included 233 assisted living facilities, 180 skilled nursing facilities and 13 specialty care facilities. 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 performance of its operators and properties; its ability to make distributions; its policies and plans regarding investments, financings and other matters; its ability to appropriately balance the use of debt and equity; its ability to access capital markets or other sources of funds; and its ability to meet its earnings guidance. When the company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," 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; current serious issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, operators' difficulty in obtaining and maintaining adequate liability and other insurance, and competition within the health care and senior housing industries; changes in financing terms available to the company; changes in federal, state and local legislation; negative developments in the operating results or financial condition of operators, including, but not limited to, their ability to pay rent and repay loans; changes in the company's ability to transition or sell facilities with a profitable result; inaccuracies in any of the company's assumptions; and changes in rules or practices governing the company's financial reporting. 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.
FINANCIAL SCHEDULES FOLLOW
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands)
September 30
-----------------------
2005 2004
----------- -----------
Assets
Real estate investments:
Real property owned
Land $ 225,604 $ 193,802
Buildings & improvements 2,373,762 2,075,442
Real property held for sale, net of
accumulated depreciation 52,167 0
Construction in progress 1,135 24,025
----------- -----------
2,652,668 2,293,269
Less accumulated depreciation (265,478) (200,923)
----------- -----------
Total real property owned 2,387,190 2,092,346
Loans receivable
Real property loans 213,172 209,449
Subdebt investments 22,087 59,372
----------- -----------
235,259 268,821
Less allowance for losses on loans receivable (6,161) (8,725)
----------- -----------
229,098 260,096
----------- -----------
Net real estate investments 2,616,288 2,352,442
Other assets:
Equity investments 3,298 3,298
Deferred loan expenses 8,781 7,506
Cash and cash equivalents 27,119 15,419
Receivables and other assets 81,412 72,649
----------- -----------
120,610 98,872
----------- -----------
Total assets $2,736,898 $2,451,314
=========== ===========
Liabilities and stockholders' equity
Liabilities:
Borrowings under unsecured lines of credit
arrangements $ 304,000 $ 80,000
Senior unsecured notes 894,830 875,000
Secured debt 174,324 146,341
Accrued expenses and other liabilities 44,048 15,959
----------- -----------
Total liabilities 1,417,202 1,117,300
Stockholders' equity:
Preferred stock 276,989 289,294
Common stock 54,534 52,127
Capital in excess of par value 1,191,240 1,117,782
Treasury stock (1,766) (850)
Cumulative net income 798,183 724,607
Cumulative dividends (999,737) (847,922)
Accumulated other
comprehensive income 1 1
Other equity 252 (1,025)
----------- -----------
Total stockholders' equity 1,319,696 1,334,014
----------- -----------
Total liabilities and stockholders' equity $2,736,898 $2,451,314
=========== ===========
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues:
Rental income $ 67,295 $ 55,648 $189,289 $157,615
Interest income 4,997 5,560 15,249 17,196
Transaction fees and other
income 773 593 2,742 1,873
--------- --------- --------- ---------
Gross revenues 73,065 61,801 207,280 176,684
Expenses:
Interest expense 21,205 17,376 59,924 51,663
Provision for depreciation 21,176 18,088 60,665 50,038
General and administrative 4,640 3,618 12,993 10,339
Loan expense 673 805 2,209 2,568
Impairment of assets 0 314 0 314
Loss on extinguishment of
debt 0 0 18,448 0
Provision for loan losses 300 300 900 900
--------- --------- --------- ---------
Total expenses 47,994 40,501 155,139 115,822
--------- --------- --------- ---------
Income from continuing
operations 25,071 21,300 52,141 60,862
Discontinued operations:
Gain (loss) on sales of
properties 0 0 (134) 1,129
Income (loss) from
discontinued operations,
net 226 507 359 2,170
--------- --------- --------- ---------
226 507 225 3,299
--------- --------- --------- ---------
Net income 25,297 21,807 52,366 64,161
Preferred dividends 5,389 2,803 16,261 7,295
--------- --------- --------- ---------
Net income (loss) available
to common stockholders $ 19,908 $ 19,004 $ 36,105 $ 56,866
========= ========= ========= =========
Average number of common
shares outstanding:
Basic 54,038 51,538 53,498 51,200
Diluted 54,359 52,008 53,867 51,787
Net income (loss) available
to common stockholders per
share:
Basic $ 0.37 $ 0.37 $ 0.67 $ 1.11
Diluted 0.37 0.37 0.67 1.10
Dividends per share $ 0.62 $ 0.60 $ 1.84 $ 1.785
HEALTH CARE REIT, INC.
Financial Supplement - September 30, 2005
----------------------------------------------------------------------
Portfolio Composition ($000's) Exhibit 1
------------------------------
Balance Sheet # # %
Data Properties Beds/Units Balance Balance
------------------------------------------------------
Real Property 406 39,149 $2,387,190 91%
Loans
Receivable (1) 20 2,383 213,172 8%
Subdebt
Investments 0 0 22,087 1%
------------------------------------------------------
Total
Investments 426 41,532 $2,622,449 100%
# # %
Investment Data Properties Beds/Units Investment (2) Investment
------------------------------------------------------
Assisted Living
Facilities 233 15,639 $1,325,489 50%
Skilled Nursing
Facilities 180 24,626 1,093,750 42%
Specialty Care
Facilities 13 1,267 205,660 8%
------------------------------------------------------
Real Estate
Investments 426 41,532 $2,624,899 100%
Notes: (1) Includes $22,005,000 of loans on non-accrual.
(2) Real Estate Investments include gross real estate
investments and credit enhancements which amounted to
$2,622,449,000 and $2,450,000, respectively.
----------------------------------------------------------------------
----------------------------------------------------------------------
Revenue Composition ($000's) Exhibit 2
----------------------------
Three Months Ended Nine Months Ended
September 30, 2005 September 30, 2005
------------------- -------------------
Revenue by Investment Type (1)
Real Property $69,546 93% $196,184 93%
Loans Receivable 4,529 6% 13,670 6%
Subdebt Investments 526 1% 1,924 1%
------------------- -------------------
Total $74,601 100% $211,778 100%
Revenue by Facility Type (1)
Assisted Living Facilities $36,586 49% $109,685 52%
Skilled Nursing Facilities 32,931 44% 88,678 42%
Specialty Care Facilities 5,084 7% 13,415 6%
------------------- -------------------
Total $74,601 100% $211,778 100%
Notes: (1) Revenues include gross revenues and revenues from
discontinued operations.
----------------------------------------------------------------------
----------------------------------------------------------------------
Operator Concentration ($000's) Exhibit 3
-------------------------------
Concentration by Investment # Properties Investment % Investment
--------------------------------------
Emeritus Corporation 50 $ 364,607 14%
Southern Assisted Living, Inc. 43 197,285 8%
Commonwealth Communities
Management LLC 13 192,536 7%
Delta Health Group, Inc. 25 174,347 7%
Home Quality Management, Inc. 29 159,928 6%
Remaining operators (47) 266 1,536,196 58%
--------------------------------------
Total 426 $2,624,899 100%
----------------------------------------------------------------------
----------------------------------------------------------------------
Geographic Concentration ($000's) Exhibit 4
---------------------------------
Concentration by Region # Properties Investment % Investment
------------ ------------ ------------
South 265 $1,426,761 54%
Northeast 62 529,928 20%
West 52 314,004 12%
Midwest 47 354,206 14%
------------ ----------- ------------
Total 426 $2,624,899 100%
Concentration by State # Properties Investment % Investment
------------ ------------ ------------
Florida 61 $ 385,367 15%
Massachusetts 36 354,079 13%
Texas 48 221,741 8%
North Carolina 42 193,537 7%
Ohio 19 163,428 6%
Remaining States (32) 220 1,306,747 51%
------------ ----------- ------------
Total 426 $2,624,899 100%
----------------------------------------------------------------------
----------------------------------------------------------------------
Committed Investment Balances Exhibit 5
-----------------------------
($000's except Investment per Bed/Unit)
Committed Investment
# Properties # Beds/Units Balance (1) per Bed/Unit
---------------------------------------------------
Assisted Living
Facilities 233 15,639 $1,326,549 $ 84,823
Skilled Nursing
Facilities 180 24,626 1,093,750 44,414
Specialty Care
Facilities 13 1,267 205,660 162,320
---------------------------------------------------
Total 426 41,532 $2,625,959 -na-
Notes: (1) Committed Balance includes gross real estate investments,
credit enhancements and unfunded construction commitments
for which initial funding had commenced.
----------------------------------------------------------------------
----------------------------------------------------------------------
Selected Facility Data Exhibit 6
-----------------------
Coverage Data
-------------------
% Payor Mix Before After
--------------------------
Census Private Medicare Medicaid Mgt. Fees Mgt. Fees
-------------------------------------------------------
Assisted Living
Facilities 88% 85% 0% 15% 1.51x 1.28x
Skilled Nursing
Facilities 86% 15% 16% 69% 2.20x 1.65x
Specialty Care
Facilities 67% 29% 39% 32% 3.53x 2.91x
-------------------
Weighted Averages 1.91x 1.54x
Notes: Data as of June 30, 2005
----------------------------------------------------------------------
----------------------------------------------------------------------
Credit Support ($000's) Exhibit 7
-----------------------
Balance % Investment
--------------------------------------
Cross Defaulted $2,536,220 97% of gross real estate investments
Cross Collateralized 184,363 86% of real property loans receivable
Master Leases 2,036,478 85% of real property owned
Current Capitalization
($000's except share price) Leverage & Performance Ratios
--------------------------------------- ------------------------------
Balance % Balance
--------------------
Borrowings Under
Bank Lines $ 304,000 11% Debt/Total Book Cap 51%
Long-Term Debt Debt/Undepreciated
Obligations 1,069,154 40% Book Cap 46%
Stockholders'
Equity 1,319,696 49% Debt/Total Market Cap 37%
--------------------
Total Book
Capitalization $2,692,850 100%
Common Shares Interest
Outstanding Coverage 3.25x 3rd Qtr.
(000's) 54,630 2.96x YTD
Period-End Share
Price $ 37.09
----------- Interest
Common Stock Coverage 3.25x 3rd Qtr.
Market Value $2,026,227 55% - adjusted 3.25x YTD
Preferred Stock 276,989 8% Fixed Charge
Borrowings Under Coverage 2.60x 3rd Qtr.
Bank Lines 304,000 8% 2.34x YTD
Long-Term Debt
Obligations 1,069,154 29% Fixed Charge
-------------------- Coverage 2.60x 3rd Qtr.
Total Market - adjusted 2.58x YTD
Capitalization $3,676,370 100%
----------------------------------------------------------------------
----------------------------------------------------------------------
Revenue Maturities ($000's) Exhibit 8
---------------------------
Operating Lease Expirations & Loan Maturities
Current Lease Current Interest Lease and %
Year Revenue (1) Revenue (1) Interest Revenue of Total
----------------------------------------------------------------------
2005 $ 7,339 $ 652 $ 7,991 3%
2006 0 1,592 1,592 1%
2007 0 1,188 1,188 0%
2008 0 4,855 4,855 2%
2009 906 2,006 2,912 1%
Thereafter 266,144 9,017 275,161 93%
----------------------------------------------------------
Total $ 274,389 $ 19,310 $ 293,699 100%
Notes: (1) Revenue impact by year, annualized.
----------------------------------------------------------------------
----------------------------------------------------------------------
Debt Maturities and Principal Payments ($000's) Exhibit 9
-----------------------------------------------
Year Lines of Credit (1) Senior Notes Secured Debt Total
----------------------------------------------------------------------
2005 $ 0 $ 0 $ 977 $ 977
2006 40,000 0 3,332 43,332
2007 0 52,500 15,337 67,837
2008 500,000 42,330 10,577 552,907
2009 0 0 34,126 34,126
2010 0 0 9,083 9,083
2011 0 0 20,860 20,860
Thereafter 0 800,000 80,032 880,032
------------------------------------------------------------
Total $ 540,000 $ 894,830 $ 174,324 $1,609,154
Notes: (1) Reflected at 100% capacity.
----------------------------------------------------------------------
----------------------------------------------------------------------
Investment Activity ($000's) Exhibit 10
----------------------------
Three Months Ended Nine Months Ended
September 30, 2005 September 30, 2005
------------------- --------------------
Funding by Investment Type
Real Property $ 16,884 98% $248,393 93%
Loans Receivable 357 2% 19,456 7%
Subdebt Investments 0% 0%
------------------- --------------------
Total $ 17,241 100% $267,849 100%
Funding by Facility Type
Assisted Living Facilities $ 10,684 62% $ 65,877 25%
Skilled Nursing Facilities 5,333 31% 140,718 53%
Specialty Care Facilities 1,224 7% 61,254 22%
------------------- --------------------
Total $ 17,241 100% $267,849 100%
----------------------------------------------------------------------
----------------------------------------------------------------------
Disposition Activity ($000's) Exhibit 11
-----------------------------
Three Months Ended Nine Months Ended
September 30, 2005 September 30, 2005
------------------- --------------------
Dispositions by Investment
Type
Real Property 0% $ 10,034 24%
Loans Receivable $ 9,017 100% 13,044 31%
Subdebt Investments 0% 19,467 45%
---------- -------- ---------- ---------
Total $ 9,017 100% $ 42,545 100%
Dispositions by Facility Type
Assisted Living Facilities $ 9,017 100% $ 41,566 98%
Skilled Nursing Facilities 0% 0%
Specialty Care Facilities 0% 979 2%
---------- -------- ---------- ---------
Total $ 9,017 100% $ 42,545 100%
----------------------------------------------------------------------
----------------------------------------------------------------------
Discontinued Operations ($000's) Exhibit 12
--------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
------------------- --------------------
2005 2004 2005 2004
--------- --------- --------- ----------
Revenues
Rental income $ 1,536 $ 1,828 $ 4,498 $ 7,987
Expenses
Interest expense 419 520 1,331 2,150
Provision for depreciation 891 801 2,808 3,667
--------- --------- --------- ----------
Income (loss) from
discontinued operations, net $ 226 $ 507 $ 359 $ 2,170
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----------------------------------------------------------------------
Funds Available For Distribution Reconciliation Exhibit 13
------------------------------------------------
(Amounts in 000's except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ --------------------
2005 2004 2005 2004
--------- --------- --------- ----------
Net income (loss) available
to common stockholders $ 19,908 $ 19,004 $ 36,105 $ 56,866
Provision for depreciation (1) 22,067 18,889 63,473 53,705
Loss (gain) on sales of
properties 0 0 134 (1,129)
Rental income in excess of
cash received (118) (3,002) (4,149) (12,135)
--------- --------- --------- ----------
Funds available for
distribution 41,857 34,891 95,563 97,307
Impairment of assets 0 314 0 314
Loss on extinguishment of debt 0 0 18,448 0
--------- --------- --------- ----------
Funds available for
distribution - adjusted 41,857 35,205 114,011 97,621
Non-recurring rental cash
payments (2,832) (2,122) (6,044) (5,108)
--------- --------- --------- ----------
Funds available for
distribution - recurring $ 39,025 $ 33,083 $107,967 $ 92,513
Average common shares
outstanding:
Basic 54,038 51,538 53,498 51,200
Diluted 54,359 52,008 53,867 51,787
Per share data:
Net income (loss) available
to common stockholders
Basic $ 0.37 $ 0.37 $ 0.67 $ 1.11
Diluted 0.37 0.37 0.67 1.10
Funds available for
distribution
Basic $ 0.77 $ 0.68 $ 1.79 $ 1.90
Diluted 0.77 0.67 1.77 1.88
Funds available for
distribution - adjusted
Basic $ 0.77 $ 0.68 $ 2.13 $ 1.91
Diluted 0.77 0.68 2.12 1.89
Funds available for
distribution - recurring
Basic $ 0.72 $ 0.64 $ 2.02 $ 1.81
Diluted 0.72 0.64 2.00 1.79
FAD Payout Ratio
Dividends per share $ 0.62 $ 0.60 $ 1.84 $ 1.785
FAD per diluted share $ 0.77 $ 0.67 $ 1.77 $ 1.88
--------- --------- --------- ----------
FAD payout ratio 81% 90% 104% 95%
FAD Payout Ratio - Adjusted
Dividends per share $ 0.62 $ 0.60 $ 1.84 $ 1.785
FAD per diluted share -
adjusted $ 0.77 $ 0.68 $ 2.12 $ 1.89
--------- --------- --------- ----------
FAD payout ratio - adjusted 81% 88% 87% 94%
FAD Payout Ratio - Recurring
Dividends per share $ 0.62 $ 0.60 $ 1.84 $ 1.785
FAD per diluted share -
recurring $ 0.72 $ 0.64 $ 2.00 $ 1.79
--------- --------- --------- ----------
FAD payout ratio - recurring 86% 94% 92% 100%
Notes: (1) Provision for depreciation includes provision for
depreciation from discontinued operations.
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----------------------------------------------------------------------
Funds From Operations Reconciliation Exhibit 14
--------------------------------------
(Amounts in 000's except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- --------------------
2005 2004 2005 2004
--------- --------- --------- ----------
Net income (loss) available
to common stockholders $ 19,908 $ 19,004 $ 36,105 $ 56,866
Provision for depreciation (1) 22,067 18,889 63,473 53,705
Loss (gain) on sales of
properties 0 0 134 (1,129)
--------- --------- --------- ----------
Funds from operations 41,975 37,893 99,712 109,442
Impairment of assets 0 314 0 314
Loss on extinguishment of debt 0 0 18,448 0
--------- --------- --------- ----------
Funds from operations -
adjusted $ 41,975 $ 38,207 $118,160 $ 109,756
Average common shares
outstanding:
Basic 54,038 51,538 53,498 51,200
Diluted 54,359 52,008 53,867 51,787
Per share data:
Net income (loss) available
to common stockholders
Basic $ 0.37 $ 0.37 $ 0.67 $ 1.11
Diluted 0.37 0.37 0.67 1.10
Funds from operations
Basic $ 0.78 $ 0.74 $ 1.86 $ 2.14
Diluted 0.77 0.73 1.85 2.11
Funds from operations -
adjusted
Basic $ 0.78 $ 0.74 $ 2.21 $ 2.14
Diluted 0.77 0.73 2.19 2.12
FFO Payout Ratio
Dividends per share $ 0.62 $ 0.60 $ 1.84 $ 1.785
FFO per diluted share $ 0.77 $ 0.73 $ 1.85 $ 2.11
--------- --------- --------- ----------
FFO payout ratio 81% 82% 99% 85%
FFO Payout Ratio - Adjusted
Dividends per share $ 0.62 $ 0.60 $ 1.84 $ 1.785
FFO per diluted share -
adjusted $ 0.77 $ 0.73 $ 2.19 $ 2.12
--------- --------- --------- ----------
FFO payout ratio - adjusted 81% 82% 84% 84%
Notes: (1) Provision for depreciation includes provision for
depreciation from discontinued operations.
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Outlook Reconciliations Exhibit 15
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(Amounts in 000's except per share data)
Year Ended
December 31, 2005
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Low High
----------- -----------
Net income available to
common stockholders $ 55,056 $ 56,156
Loss (gain) on sales of properties (1,404) (1,404)
Provision for depreciation (1) 85,000 85,000
----------- -----------
Funds from operations 138,652 139,752
Loss on extinguishment of debt 18,448 18,448
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Funds from operations - adjusted 157,100 158,200
Rental income in excess of
cash received (7,000) (7,000)
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Funds available for
distribution - adjusted $ 150,100 $ 151,200
Average common shares
outstanding (diluted) 54,000 54,000
Per share data (diluted):
Net income available to
common stockholders $ 1.02 $ 1.04
Funds from operations 2.57 2.59
Funds from operations - adjusted 2.91 2.93
Funds available for
distribution - adjusted 2.78 2.80
Notes: (1) Provision for depreciation includes provision for
depreciation from discontinued operations.
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EBITDA Reconciliation ($000's) Exhibit 16
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Three Months Ended Nine Months Ended
September 30 September 30
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2005 2004 2005 2004
--------- --------- --------- ----------
Net income $ 25,297 $ 21,807 $ 52,366 $ 64,161
Provision for depreciation (1) 22,067 18,889 63,473 53,705
Interest expense (1) 21,624 17,896 61,255 53,813
Capitalized interest 12 254 626 590
Amortization (2) 911 1,021 4,267 3,231
Provision for loan losses 300 300 900 900
--------- --------- --------- ----------
EBITDA 70,211 60,167 182,887 176,400
Loss on extinguishment of debt 0 0 18,448 0
--------- --------- --------- ----------
EBITDA - adjusted $ 70,211 $ 60,167 $201,335 $ 176,400
Interest Coverage Ratio
Interest expense (1) $ 21,624 $ 17,896 $ 61,255 $ 53,813
Capitalized interest 12 254 626 590
--------- --------- --------- ----------
Total interest 21,636 18,150 61,881 54,403
EBITDA $ 70,211 $ 60,167 $182,887 $ 176,400
--------- --------- --------- ----------
Interest coverage ratio 3.25x 3.31x 2.96x 3.24x
EBITDA - adjusted $ 70,211 $ 60,167 $201,335 $ 176,400
--------- --------- --------- ----------
Interest coverage ratio - 3.25x 3.31x 3.25x 3.24x
adjusted
Fixed Charge Coverage Ratio
Total interest (1) $ 21,636 $ 18,150 $ 61,881 $ 54,403
Preferred dividends 5,389 2,803 16,261 7,295
--------- --------- --------- ----------
Total fixed charges 27,025 20,953 78,142 61,698
EBITDA $ 70,211 $ 60,167 $182,887 $ 176,400
--------- --------- --------- ----------
Fixed charge coverage ratio 2.60x 2.87x 2.34x 2.86x
EBITDA - adjusted $ 70,211 $ 60,167 $201,335 $ 176,400
--------- --------- --------- ----------
Fixed charge coverage ratio 2.60x 2.87x 2.58x 2.86x
- adjusted
Notes: (1) Provision for depreciation and interest expense include
provision for depreciation and interest expense from
discontinued operations.
(2) Amortization includes amortization of deferred loan
expenses, restricted stock and stock options.
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CONTACT: Health Care REIT, Inc.
Ray Braun, 419-247-2800
Mike Crabtree, 419-247-2800
Scott Estes, 419-247-2800
SOURCE: Health Care REIT, Inc.