TOLEDO, Ohio--(BUSINESS WIRE)--Oct. 19, 2004--Health Care REIT, Inc. (NYSE:HCN) today announced operating results for its third quarter ended September 30, 2004.
"We are pleased with our results for the quarter, which were driven by our strong investment activity and access to reasonably priced capital," commented George L. Chapman, chief executive officer of Health Care REIT, Inc. "The continued confidence of the capital markets was demonstrated this quarter through our $175 million preferred stock issuance and $50 million unsecured debt issuance, an add-on to the original issuance in the fourth quarter of 2003. We completed $297.5 million of new investments during the quarter, thereby driving our year-to-date gross and net new investment totals to $459 million and $424.1 million, respectively, and supporting our net new investment guidance for full-year 2004 of $400 million to $500 million. We are well positioned for growth given our strong investment pipeline and our continued access to capital."
The Board of Directors declared a dividend for the quarter ended September 30, 2004 of $0.60 per share as compared to $0.585 per share for the same period in 2003. The dividend represents the 134th consecutive dividend payment. The dividend will be payable November 19, 2004 to stockholders of record on November 1, 2004.
Summary of Third Quarter Results
--------------------------------
(In thousands, except per share data)
----------------------------------------------------------------------
Three Months Ended Three Months Ended
September 30, 2004 September 30, 2003
----------------------------------------------------------------------
Revenues $63,629 $49,086
----------------------------------------------------------------------
Net Income Available
to Common Stockholders $19,004 $20,601
----------------------------------------------------------------------
Funds From Operations $37,893 $29,581
----------------------------------------------------------------------
Funds From Operations - Adjusted $38,207 $32,371
----------------------------------------------------------------------
Net Income Per Diluted Share $0.37 $0.46
----------------------------------------------------------------------
FFO Per Diluted Share $0.73 $0.66
----------------------------------------------------------------------
FFO Per Diluted Share - Adjusted $0.73 $0.72
----------------------------------------------------------------------
Dividend Per Share $0.60 $0.585
----------------------------------------------------------------------
FFO Payout Ratio 82% 89%
----------------------------------------------------------------------
FFO Payout Ratio - Adjusted 82% 81%
----------------------------------------------------------------------
Net income available to common stockholders totaled $19.0 million, or $0.37 per diluted share, for the third quarter of 2004, compared with $20.6 million, or $0.46 per diluted share, for the same period in 2003. Funds from operations totaled $37.9 million, or $0.73 per diluted share, for the three months ended September 30, 2004, compared with $29.6 million, or $0.66 per diluted share, for the same period in 2003. Adjusted funds from operations, which excludes the non-cash preferred stock redemption in 2003 and impairment charges in 2004, totaled $38.2 million, or $0.73 per diluted share, for the third quarter of 2004, compared with $32.4 million, or $0.72 per diluted share, for the same period in 2003.
Summary of Year to Date Results
-------------------------------
(In thousands, except per share data)
----------------------------------------------------------------------
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2003
----------------------------------------------------------------------
Revenues $183,049 $136,970
----------------------------------------------------------------------
Net Income Available
to Common Stockholders $56,866 $53,795
----------------------------------------------------------------------
Funds From Operations $109,442 $86,255
----------------------------------------------------------------------
Funds From Operations - Adjusted $109,756 $89,045
----------------------------------------------------------------------
Net Income Per Diluted Share $1.10 $1.28
----------------------------------------------------------------------
FFO Per Diluted Share $2.11 $2.05
----------------------------------------------------------------------
FFO Per Diluted Share - Adjusted $2.12 $2.11
----------------------------------------------------------------------
Dividend Per Share $1.785 $1.755
----------------------------------------------------------------------
FFO Payout Ratio 85% 86%
----------------------------------------------------------------------
FFO Payout Ratio - Adjusted 84% 83%
----------------------------------------------------------------------
Net income available to common stockholders totaled $56.9 million, or $1.10 per diluted share, for the nine months ended September 30, 2004, compared with $53.8 million, or $1.28 per diluted share, for the same period in 2003. Funds from operations totaled $109.4 million, or $2.11 per diluted share, for the nine months ended September 30, 2004, compared with $86.3 million, or $2.05 per diluted share, for the same period in 2003. Adjusted funds from operations, which excludes the non-cash preferred stock redemption in 2003 and impairment charges in 2004, totaled $109.8 million, or $2.12 per diluted share, for the nine months ended September 30, 2004, compared with $89.0 million, or $2.11 per diluted share, for the same period in 2003.
The company had a total outstanding debt balance of $1.1 billion at September 30, 2004, as compared with $903.2 million at September 30, 2003, and stockholders' equity of $1.3 billion, which represents a debt to total book capitalization ratio of 45 percent. The debt to total market capitalization at September 30, 2004 was 34 percent. The company's coverage ratio of EBITDA to interest was 3.24 to 1.00 for the nine months ended September 30, 2004.
Portfolio Update. Two assisted living facilities stabilized during the quarter. The company ended the quarter with two assisted living facilities remaining in fill-up, representing one percent of revenues. Both facilities have occupancy of less than 50 percent.
Straight-line Rent. The company recorded $3.0 million and $12.1 million of straight-line rent for the three and nine months ended September 30, 2004, respectively. Straight-line rent is net of $2.1 million and $5.1 million in cash payments outside the normal monthly rental payments for the three and nine month periods, respectively.
Outlook for 2004 and 2005. The company is adjusting slightly its 2004 guidance and now expects to report net income available to common stockholders in the range of $1.47 to $1.50 per diluted share, and FFO in the range of $2.85 to $2.87 per diluted share for 2004. Excluding the impact of the impairment charge, the company expects to report adjusted FFO in the range of $2.86 to $2.88 per diluted share for 2004. The company expects to record straight-line rent of approximately $16 million to $18 million for the full year 2004, before any payments outside the normal monthly rental payments. The company is also projecting net new investments for the year between $400 and $500 million.
The company is also reaffirming its 2005 guidance and expects to report net income available to common stockholders in the range of $1.47 to $1.55 per diluted share, and FFO in the range of $2.98 to $3.06 per diluted share. The guidance assumes net new investments of $250 million with leases that will not require rents to be straight-lined. The company expects to record straight-line rent of approximately $14 million to $16 million for the full year 2005, before any payments outside the normal monthly rental payments.
The company's guidance does not account for any impairments or unanticipated additions to the loan loss reserve. Additionally, the company plans to manage itself to maintain investment grade status with a capital structure consistent with its current profile. Please see Exhibit 15 for a reconciliation of the outlooks for net income and FFO.
Supplemental Reporting Measures. The company believes that net income, as defined by accounting principles generally accepted in the United States (U.S. GAAP), is the most appropriate earnings measurement. However, the company considers funds from operations (FFO) to be a useful supplemental measure 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.
In August 2003, the company adopted the SEC clarification of Emerging Issues Task Force (EITF) Topic D-42. To implement the clarified accounting pronouncement, the company's 2003 results reflect a reduction in net income available to common stockholders resulting from a non-cash, non-recurring charge of $2,790,000, or $0.06 per diluted share, due to the redemption of the company's 8.875% Series B Cumulative Redeemable Preferred Stock in July 2003. NAREIT has issued its recommendation that preferred stock redemption charges should not be added back to net income in the calculation of FFO. Although the company has adopted this recommendation, it has also disclosed FFO adjusted for the preferred stock redemption charge for enhanced clarity. Additionally, the company believes that the nature of the charge is non-recurring because there was not a similar charge during the two preceding years and the company does not anticipate a similar charge in the succeeding two years.
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. Although the company has adopted this recommendation, it has also disclosed FFO adjusted for the impairment charges for enhanced clarity.
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.
FFO 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 is an internal evaluation metric utilized by the Board of Directors to evaluate management. FFO 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 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 14 and 16 for reconciliations of FFO and EBITDA to net income.
Conference Call Information. The company has scheduled a conference call on October 20, 2004, at 9:00 a.m. Eastern time to discuss its third quarter results, industry trends, portfolio performance and outlooks for 2004 and 2005. To participate on the webcast, log on to www.hcreit.com or www.fulldisclosure.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 in health care facilities, primarily skilled nursing and assisted living facilities. At September 30, 2004, the company had investments in 379 health care facilities in 33 states with 49 operators and had total assets of approximately $2.5 billion. For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code - HCN. 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 the possible expansion of the company's portfolio; the performance of its operators and properties; its ability to enter into agreements with new viable tenants for properties which it 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; and its ability to access capital markets or other sources of funds. When the company uses words such as "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; compliance with and changes to regulations and payment policies within the health care industry; changes in financing terms; competition within the health care and senior housing industries; and changes in federal, state and local legislation. 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
-----------------------
2004 2003
-----------------------
Assets
Real estate investments:
Real property owned
Land $ 193,802 $ 157,608
Buildings & improvements 2,075,442 1,656,499
Construction in progress 24,025 35,335
----------- -----------
2,293,269 1,849,442
Less accumulated depreciation (200,923) (136,432)
----------- -----------
Total real property owned 2,092,346 1,713,010
Loans receivable
Real property loans 209,449 200,292
Subdebt investments 59,372 45,028
----------- -----------
268,821 245,320
Less allowance for losses on
loans receivable (8,725) (5,705)
----------- -----------
260,096 239,615
----------- -----------
Net real estate investments 2,352,442 1,952,625
Other assets:
Equity investments 3,298 7,649
Deferred loan expenses 7,506 8,098
Cash and cash equivalents 15,419 8,172
Receivables and other assets 72,649 55,067
----------- -----------
98,872 78,986
----------- -----------
Total assets $2,451,314 $2,031,611
=========== ===========
Liabilities and stockholders' equity
Liabilities:
Borrowings under unsecured lines
of credit arrangements $ 80,000 $ 143,000
Senior unsecured notes 875,000 615,000
Secured debt 146,341 145,164
Accrued expenses and other liabilities 15,959 7,323
----------- -----------
Total liabilities 1,117,300 910,487
Stockholders' equity:
Preferred stock 289,294 145,150
Common stock 52,127 48,016
Capital in excess of par value 1,117,782 1,006,983
Treasury stock (850) 0
Cumulative net income 724,607 641,366
Cumulative dividends (847,922) (718,174)
Accumulated other comprehensive income 1 128
Other equity (1,025) (2,345)
----------- -----------
Total stockholders' equity 1,334,014 1,121,124
----------- -----------
Total liabilities and stockholders' equity $2,451,314 $2,031,611
=========== ===========
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- -------------------
2004 2003 2004 2003
--------- --------- -------- --------
Revenues:
Rental income $ 57,476 $ 42,417 $163,980 $118,935
Interest income 5,560 5,797 17,196 15,927
Transaction fees and
other income 593 872 1,873 2,108
-------- -------- -------- --------
Gross revenues 63,629 49,086 183,049 136,970
Expenses:
Interest expense 17,896 12,801 53,372 36,194
Provision for depreciation 18,889 12,599 53,133 33,921
General and administrative 3,618 2,995 10,339 8,452
Loan expense 805 717 2,568 2,032
Impairment of assets 314 0 314 0
Provision for loan losses 300 250 900 750
-------- -------- -------- --------
Total expenses 41,822 29,362 120,626 81,349
-------- -------- -------- --------
Income from continuing
operations 21,807 19,724 62,423 55,621
Discontinued operations:
Gain (loss) on sales
of properties 0 4,278 1,129 4,312
Income (loss) from
discontinued operations, net 0 1,299 609 3,726
-------- -------- -------- --------
0 5,577 1,738 8,038
-------- -------- -------- --------
Net income 21,807 25,301 64,161 63,659
Preferred dividends 2,803 1,910 7,295 7,074
Preferred stock redemption
charge 0 2,790 0 2,790
-------- -------- -------- --------
Net income available to
common stockholders $ 19,004 $ 20,601 $ 56,866 $ 53,795
======== ======== ======== ========
Average number of common
shares outstanding:
Basic 51,538 44,181 51,200 41,602
Diluted 52,008 44,833 51,787 42,165
Net income available to
common stockholders per
share:
Basic $ 0.37 $ 0.47 $ 1.11 $ 1.29
Diluted 0.37 0.46 1.10 1.28
Funds from operations $ 37,893 $ 29,581 $109,442 $ 86,255
Funds from operations -
adjusted 38,207 32,371 109,756 89,045
Funds from operations per
share:
Basic $ 0.74 $ 0.67 $ 2.14 $ 2.07
Diluted 0.73 0.66 2.11 2.05
Funds from operations per
share - adjusted:
Basic $ 0.74 $ 0.73 $ 2.14 $ 2.14
Diluted 0.73 0.72 2.12 2.11
Dividends per share $ 0.60 $ 0.585 $ 1.785 $ 1.755
HEALTH CARE REIT, INC.
Financial Supplement - September 30, 2004
----------------------------------------------------------------------
Portfolio Composition ($000's) Exhibit 1
------------------------------
Balance Sheet Data # Properties # Beds/Units Balance % Balance
-------------------------------------------------
Real Property 356 32,940 $ 2,092,346 89%
Loans Receivable 23 2,786 209,449 9%
Subdebt Investments 0 0 59,372 2%
-------------------------------------------------
Total
Investments 379 35,726 $ 2,361,167 100%
%
Investment Data # Properties # Beds/Units Investment(1) Investment
----------------------------------------------------
Assisted Living
Facilities 235 15,786 $ 1,341,872 57%
Skilled Nursing
Facilities 136 18,829 871,128 37%
Specialty Care
Facilities 8 1,111 151,362 6%
----------------------------------------------------
Real Estate
Investments 379 35,726 $ 2,364,362 100%
Notes: (1) Real Estate Investments include gross real estate
investments and credit enhancements which amounted to
$2,361,167,000 and $3,195,000, respectively.
----------------------------------------------------------------------
Revenue Composition ($000's) Exhibit 2
----------------------------
Three Months Ended Nine Months Ended
September 30, 2004 September 30, 2004
------------------ ------------------
Revenue by Investment Type (1)
Real Property $ 57,946 91% $ 167,144 91%
Loans Receivable 4,273 7% 13,894 8%
Subdebt Investments 1,410 2% 3,633 1%
----------------- ------------------
Total $ 63,629 100% $ 184,671 100%
Revenue by Facility Type (1)
Assisted Living Facilities $ 33,862 53% $ 102,814 56%
Skilled Nursing Facilities 26,434 42% 70,276 38%
Specialty Care Facilities 3,333 5% 11,581 6%
----------------- ------------------
Total $ 63,629 100% $ 184,671 100%
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 48 $ 363,823 15%
Southern Assisted Living, Inc. 45 207,317 9%
Commonwealth Communities L.L.C. 14 200,785 8%
Delta Health Group, Inc. 25 179,512 8%
Home Quality Management, Inc. 32 178,662 8%
Remaining Operators (44) 215 1,234,263 52%
-------------------------------------
Total 379 $2,364,362 100%
----------------------------------------------------------------------
Geographic Concentration ($000's) Exhibit 4
---------------------------------
Concentration by Region # Properties Investment % Investment
-------------- ------------ ------------
South 244 $1,298,962 55%
Northeast 45 433,186 18%
West 49 325,421 14%
Midwest 41 306,793 13%
-------------- ------------ ------------
Total 379 $2,364,362 100%
Concentration by State # Properties Investment % Investment
-------------- ------------ ------------
Florida 57 $ 366,947 16%
Massachusetts 27 290,495 12%
North Carolina 43 201,253 9%
Texas 36 154,647 7%
Tennessee 27 145,615 6%
Remaining States (28) 189 1,205,405 50%
-------------- ------------ ------------
Total 379 $2,364,362 100%
----------------------------------------------------------------------
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 235 15,786 $1,347,686 $85,372
Skilled Nursing
Facilities 136 18,829 871,128 46,265
Specialty Care
Facilities 8 1,111 151,362 136,239
------------------------------------------------------
Total 379 35,726 $2,370,176 -na-
Notes: (1) Committed Balance includes gross real estate investments,
credit enhancements and unfunded construction commitments
for which initial funding had commenced.
----------------------------------------------------------------------
Lease Up Statistics on Assisted Living Facilities ($000's) Exhibit 6
----------------------------------------------------------
Average Months
Occupancy # Properties in Operation Revenue(1) % Revenue
----------------------------------------------------
0% - 50% 2 11 $1,823 1%
50% - 70% -na- -na- 0 0%
70% + -na- -na- 0 0%
----------------------------------------------------
2 -na- $1,823 1%
Notes: (1) Interest and rental income for the nine months ended
September 30, 2004.
----------------------------------------------------------------------
Selected Facility Data Exhibit 7
----------------------
Coverage Data
--------------
% Payor Mix Before After
----------------- Mgt. Mgt.
Census Private Medicare Fees Fees
-----------------------------------------
Assisted Living Facilities 86% 85% 0% 1.44x 1.22x
Skilled Nursing Facilities 86% 17% 15% 2.06x 1.59x
Specialty Care Facilities 67% 16% 47% 2.20x 1.67x
--------------
Weighted Averages 1.71x 1.38x
Notes: Data as of June 30, 2004.
----------------------------------------------------------------------
Credit Support ($000's) Exhibit 8
-----------------------
Balance % Investment
-------------------------
Cross Defaulted $2,249,803 95% of gross real estate investments
Cross Collateralized 162,467 78% of real property loans receivable
Master Leases 1,744,336 83% of real property owned
Current Capitalization ($000's) Leverage & Performance Ratios
------------------------------- ------------------------------
Balance % Balance
--------------------
Borrowings Under
Bank Lines $ 80,000 3% Debt/Total Book Cap 45%
Long-Term Debt
Obligations 1,021,341 42% Debt/Total Market Cap 34%
Stockholders'
Equity 1,334,014 55% Interest Coverage 3.31x 3rd Qtr.
-------------------- 3.24x YTD
Total Book
Capitalization $2,435,355 100% FFO Payout Ratio 82% 3rd Qtr.
85% YTD
FFO Payout Ratio 82% 3rd Qtr.
- Adjusted 84% YTD
----------------------------------------------------------------------
Revenue Maturities ($000's) Exhibit 9
----------------------------
Operating Lease Expirations & Loan Maturities
Current Lease Current Interest Lease and %
Year Revenue(1) Revenue(1) Interest Revenue of Total
----------------------------------------------------------------------
2004 $ 0 $ 151 $ 151 0%
2005 0 1,292 1,292 0%
2006 0 4,166 4,166 2%
2007 0 3,651 3,651 1%
2008 0 3,969 3,969 2%
Thereafter 242,146 8,886 251,032 95%
------------------------------------------------------------
Total $242,146 $22,115 $264,261 100%
Notes: (1) Revenue impact by year, annualized.
----------------------------------------------------------------------
Debt Maturities and Principal Payments ($000's) Exhibit 10
-----------------------------------------------
Year Lines of Credit(1) Senior Notes Secured Debt Total
----------------------------------------------------------------------
2004 $ 0 $ 0 $ 643 $ 643
2005 30,000 0 6,021 36,021
2006 310,000 50,000 2,702 362,702
2007 0 175,000 14,709 189,709
2008 0 100,000 9,879 109,879
2009 0 0 12,938 12,938
2010 0 0 8,948 8,948
Thereafter 0 550,000 90,501 640,501
------------------------------------------------------------
Total $340,000 $875,000 $146,341 $1,361,341
Notes: (1) Reflected at 100% capacity.
----------------------------------------------------------------------
Investment Activity ($000's) Exhibit 11
----------------------------
Three Months Ended Nine Months Ended
September 30, 2004 September 30, 2004
-------------------- -------------------
Funding by Investment Type
Real Property $276,516 93% $431,923 94%
Loans Receivable 178 0% 5,795 1%
Subdebt Investments 20,826 7% 21,339 5%
-------------------- -------------------
Total $297,520 100% $459,057 100%
Funding by Facility Type
Assisted Living Facilities $166,620 56% $206,231 45%
Skilled Nursing Facilities 130,330 44% 247,055 54%
Specialty Care Facilities 570 0% 5,771 1%
-------------------- -------------------
Total $297,520 100% $459,057 100%
----------------------------------------------------------------------
Disposition Activity ($000's) Exhibit 12
-----------------------------
Three Months Ended Nine Months Ended
September 30, 2004 September 30, 2004
------------------- -------------------
Dispositions by Investment Type
Real Property $33,808 97%
Loans Receivable $1,110 100% 1,110 3%
--------- ------- --------- ------
Total $1,110 100% $34,918 100%
Dispositions by Facility Type
Assisted Living Facilities $1,110 100% $21,116 60%
Skilled Nursing Facilities 3,447 10%
Specialty Care Facilities 10,355 30%
--------- ------- --------- ------
Total $1,110 100% $34,918 100%
----------------------------------------------------------------------
Discontinued Operations ($000's) Exhibit 13
--------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
------------------ ------------------
2004 2003 2004 2003
--------- -------- --------- --------
Revenues
Rental income $0 $2,430 $1,622 $8,696
Expenses
Interest expense 0 472 441 2,119
Provision for depreciation 0 659 572 2,851
--------- -------- --------- --------
Income (loss) from discontinued
operations, net $0 $1,299 $ 609 $3,726
----------------------------------------------------------------------
Funds From Operations Reconciliation Exhibit 14
------------------------------------
(Amounts in 000's except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
------------------- ------------------
2004 2003 2004 2003
---------- -------- --------- --------
Net income available to common
stockholders $19,004 $20,601 $ 56,866 $53,795
Provision for depreciation(1) 18,889 13,258 53,705 36,772
Loss (gain) on sales of
properties 0 (4,278) (1,129) (4,312)
--------- -------- --------- --------
Funds from operations 37,893 29,581 109,442 86,255
Impairment of assets 314 0 314 0
Preferred stock redemption
charge 0 2,790 0 2,790
--------- -------- --------- --------
Funds from operations -
adjusted $38,207 $32,371 $109,756 $89,045
Average common shares
outstanding:
Basic 51,538 44,181 51,200 41,602
Diluted 52,008 44,833 51,787 42,165
Per share data:
Net income available to common
stockholders
Basic $ 0.37 $ 0.47 $ 1.11 $ 1.29
Diluted 0.37 0.46 1.10 1.28
Funds from operations
Basic $ 0.74 $ 0.67 $ 2.14 $ 2.07
Diluted 0.73 0.66 2.11 2.05
Funds from operations - adjusted
Basic $ 0.74 $ 0.73 $ 2.14 $ 2.14
Diluted 0.73 0.72 2.12 2.11
FFO Payout Ratio
Dividends per share $ 0.60 $ 0.585 $ 1.785 $ 1.755
FFO per diluted share $ 0.73 $ 0.66 $ 2.11 $ 2.05
--------- -------- --------- --------
FFO payout ratio 82% 89% 85% 86%
FFO Payout Ratio - Adjusted
Dividends per share $ 0.60 $ 0.585 $ 1.785 $ 1.755
FFO per diluted share -
adjusted $ 0.73 $ 0.72 $ 2.12 $ 2.11
--------- -------- --------- --------
FFO payout ratio - adjusted 82% 81% 84% 83%
Notes: (1) Provision for depreciation includes provision for
depreciation from discontinued operations.
---------------------------------------------------------------------
FFO Outlook Reconciliation Exhibit 15
--------------------------
(Amounts in 000's except per share data)
Year Ended Year Ended
December 31, 2004 December 31, 2005
------------------- -------------------
Low High Low High
--------- --------- --------- ---------
Net income available to
common stockholders $ 76,665 $ 77,765 $ 80,900 $ 85,300
Loss (gain) on sales
of properties (1,129) (1,129)
Provision for depreciation(1) 72,850 72,850 83,000 83,000
--------- --------- --------- ---------
Funds from operations 148,386 149,486 163,900 168,300
Impairment of assets 314 314
--------- --------- --------- ---------
Funds from operations -
adjusted $148,700 $149,800 $163,900 $168,300
Average common shares
outstanding (diluted) 52,000 52,000 55,000 55,000
Per share data (diluted):
Net income available to
common stockholders $ 1.47 $ 1.50 $ 1.47 $ 1.55
Funds from operations 2.85 2.87 2.98 3.06
Funds from operations -
adjusted 2.86 2.88
Notes: (1) Provision for depreciation includes provision for
depreciation from discontinued operations.
----------------------------------------------------------------------
EBITDA Reconciliation ($000's) Exhibit 16
------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Net income $21,807 $25,301 $ 64,161 $ 63,659
Provision for depreciation(1) 18,889 13,258 53,705 36,772
Interest expense(1) 17,896 13,273 53,813 38,313
Capitalized interest 254 490 590 1,128
Amortization(2) 1,021 931 3,231 2,855
Provision for loan losses 300 250 900 750
--------- --------- --------- ---------
EBITDA $60,167 $53,503 $176,400 $143,477
Interest Coverage Ratio
Interest expense(1) $17,896 $13,273 $ 53,813 $ 38,313
Capitalized interest 254 490 590 1,128
--------- --------- --------- ---------
Total interest 18,150 13,763 54,403 39,441
EBITDA $60,167 $53,503 $176,400 $143,477
--------- --------- --------- ---------
Interest coverage ratio 3.31x 3.89x 3.24x 3.64x
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.
CONTACT: Health Care REIT, Inc.
Ray Braun, Mike Crabtree or Scott Estes, 419-247-2800
SOURCE: Health Care REIT, Inc.