TOLEDO, Ohio--(BUSINESS WIRE)--Feb. 3, 2003--Health Care REIT, Inc. (NYSE:HCN) today announced operating results for its fourth quarter and year ended December 31, 2002. The company continues to meet its financial and operational expectations.
"We are once again pleased to be able to report strong FFO growth for the quarter, fueled by our solid investment activity. The 13 percent FFO growth over fourth quarter 2001 has allowed us to continue to drive down our payout ratio into the mid 80 percent range, one of our primary objectives for 2002," commented George L. Chapman, chief executive officer of Health Care REIT, Inc. "In addition, we accomplished many of our other objectives, including achieving our investment goal, continued seasoning of the portfolio, receiving a positive outlook from Moody's, renewing and expanding our revolving line of credit and maintaining our access to the capital markets, as evidenced by our equity and debt offerings. Currently, we see a strong acquisition pipeline and anticipate another year of continued growth in 2003."
As previously announced, the Board of Directors declared a dividend for the quarter ended December 31, 2002, of $0.585 per share. The dividend represents the 127th consecutive dividend payment. The dividend will be payable February 20, 2003, to stockholders of record on January 31, 2003.
Summary of Fourth Quarter Results
---------------------------------
(In thousands, except per share numbers)
Three Months Ended Three Months Ended
December 31, 2002 December 31, 2001
------------------- ------------------
Revenues $45,424 $33,630
Net Income Available to Common
Stockholders $12,303 $9,882
Funds From Operations (FFO) $27,479 $20,091
Net Income Per Diluted Share $0.31 $0.30
FFO Per Diluted Share $0.69 $0.61
Dividend Per Share $0.585 $0.585
FFO Payout Ratio 85% 96%
Funds from operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, totaled $27.5 million, or $0.69 per diluted share, for the fourth quarter of 2002, compared with $20.1 million, or $0.61 per diluted share, for the same period in 2001.
Summary of Year to Date Results
-------------------------------
(In thousands, except per share numbers)
Twelve Months Ended Twelve Months Ended
December 31, 2002 December 31, 2001
--------------------- --------------------
Revenues $163,118 $129,369
Net Income Available to
Common Stockholders $55,191 $47,044
Funds From Operations (FFO) $99,274 $77,741
Net Income Per Diluted Share $1.48 $1.52
FFO Per Diluted Share $2.66 $2.51
Dividend Per Share $2.34 $2.34
FFO Payout Ratio 88% 93%
FFO totaled $99.3 million, or $2.66 per diluted share for the twelve months ended December 31, 2002, compared with $77.7 million, or $2.51 per diluted share, for the same period in 2001.
The company had a total outstanding debt balance of $676.3 million at December 31, 2002, as compared with $491.2 million at December 31, 2001, and stockholders' equity of $897.2 million, which represents a debt to total capitalization ratio of 43 percent. The company's coverage ratio of EBITDA to interest was 3.65 to 1.00 for the twelve months ended December 31, 2002.
Portfolio Update. Two facilities stabilized during the quarter and three facilities in fill-up were acquired. The company ended the year with 17 assisted living facilities remaining in fill-up, representing eight percent of revenues. Only two assisted living facilities, representing two percent of revenues, have occupancy less than 50 percent.
Outlook for 2003. The company expects to report FFO in the range of $2.78 to $2.83 per share for the year 2003. The FFO guidance assumes gross investments of $275-300 million, net investments of $200 million and non-recognition of interest income on the mortgage loan with Doctors Community Health Care Corporation.
Commenting on the company's potential impact from recent operator Chapter 11 filings, Chapman stated, "As we previously announced, we have a master lease with Alterra who is current on rent. The properties covered by the master lease generate approximately $6 million per year of cash flow to Alterra. We continue to anticipate assumption of the master lease at current rental levels in the bankruptcy proceedings. We have a single mortgage loan with Doctors and anticipate the ultimate recovery of the outstanding principal balance and accrued post-petition interest based on a recent appraisal. We do not currently intend to recognize any interest on the Doctors loan if payment is not received. For this reason, we have chosen to provide a slight revision to our 2003 guidance. We will keep our stockholders informed of any further developments."
DRIP Plan. The Company intends to modify its Dividend Reinvestment Plan (DRIP). The DRIP represents a cost-effective way to purchase additional shares of Health Care REIT, Inc. stock through reinvestment of quarterly dividends. Under the current plan, only existing stockholders may participate in the DRIP. Subject to review by the Securities and Exchange Commission, the new plan will allow anyone to buy in to the DRIP with an initial undiscounted investment limit of $15,000. The company also intends to increase the amount of additional stock that can be purchased per quarter from $5,000 to $15,000. These quarterly purchases are, and will continue to be, made at a discount (currently 4 percent) and are not subject to brokerage fees.
Conference Call Information. Health Care REIT, Inc. has scheduled a conference call on February 3, 2003, at 3:00 p.m. EST to discuss its fourth quarter and year-end 2002 performance, industry trends, portfolio performance, and its outlook for 2003. To participate on the webcast, log on to www.hcreit.com or www.ccbn.com 15 minutes before the call to download the necessary software. Replays will be available for 90 days through the same websites.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care facilities, primarily skilled nursing facilities and assisted living facilities. At December 31, 2002, the company had investments in 244 health care facilities in 33 states with 44 operators and had total assets of approximately $1.6 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 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 the possible expansion of our portfolio; the performance of our operators and properties; our ability to enter into agreements with new viable tenants for properties which we take back from financially troubled tenants, if any; our ability to make distributions; our policies and plans regarding investments, financings and other matters; our tax status as a real estate investment trust; our ability to appropriately balance the use of debt and equity; and our ability to access capital markets or other sources of funds. When we use words such as "believes," "expects," "anticipates," or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Our expected results may not be achieved, and actual results may differ materially from our expectations. This may be a result of various factors, including: 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, we assume 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)
(Amounts in thousands)
December 31
-----------------------
2002 2001
-----------------------
Assets
Real estate investments:
Real property owned
Land $ 112,044 $ 89,600
Buildings & improvements 1,288,520 947,794
Construction in progress 19,833 0
----------- -----------
1,420,397 1,037,394
Less accumulated depreciation (113,579) (80,544)
----------- -----------
Total real property owned 1,306,818 956,850
Loans receivable
Real property loans 208,016 240,126
Subdebt investments 14,578 23,448
----------- -----------
222,594 263,574
Less allowance for losses on loans receivable (4,955) (6,861)
----------- -----------
217,639 256,713
----------- -----------
Net real estate investments 1,524,457 1,213,563
Other assets:
Equity investments 7,494 6,498
Deferred loan expenses 9,291 7,190
Cash and cash equivalents 9,550 9,826
Receivables and other assets 43,318 32,766
----------- -----------
69,653 56,280
----------- -----------
Total assets $1,594,110 $1,269,843
=========== ===========
Liabilities and stockholders' equity
Liabilities:
Borrowings under line of credit obligations $ 109,500 $ 0
Senior unsecured notes 515,000 412,250
Secured debt 51,831 78,966
Accrued expenses and other liabilities 20,547 20,757
----------- -----------
Total liabilities 696,878 511,973
Stockholders' equity:
Preferred stock 127,500 150,000
Common stock 40,086 32,740
Capital in excess of par value 790,838 608,942
Cumulative net income 580,496 512,837
Cumulative dividends (638,085) (540,946)
Accumulated other comprehensive income (170) (923)
Unamortized restricted stock (3,433) (4,780)
----------- -----------
Total stockholders' equity 897,232 757,870
----------- -----------
Total liabilities and stockholders' equity $1,594,110 $1,269,843
=========== ===========
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Amounts in thousands except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------ -------------------
2002 2001 2002 2001
-------- -------- -------- --------
Revenues:
Operating lease rents $ 39,263 $ 25,323 $133,791 $ 93,237
Interest income 5,503 7,320 26,525 31,294
Commitment fees and other
income 658 987 2,802 3,848
Prepayment fees 0 0 0 990
-------- -------- -------- --------
Gross revenues 45,424 33,630 163,118 129,369
Expenses:
Interest expense 11,611 7,880 41,085 30,359
Provision for depreciation 11,801 8,823 39,311 28,725
General and administrative 2,624 2,122 9,665 8,078
Loan expense 618 563 2,373 1,775
Impairment of assets 1,748 0 2,298 0
Provision for losses 250 250 1,000 1,000
-------- -------- -------- --------
Total expenses 28,652 19,638 95,732 69,937
-------- -------- -------- --------
Income from continuing
operations and
before extraordinary item 16,772 13,992 67,386 59,432
Discontinued operations:
Gain (loss) on sale of
properties (1,616) (1,374) (1,032) (1,250)
Income from discontinued
operations, net 19 640 1,708 2,580
-------- -------- -------- --------
(1,597) (734) 676 1,330
-------- -------- -------- --------
Income before extraordinary
item 15,175 13,258 68,062 60,762
Loss on extinguishment of debt 0 0 (403) (213)
-------- -------- -------- --------
Net income 15,175 13,258 67,659 60,549
Preferred dividends 2,872 3,376 12,468 13,505
-------- -------- -------- --------
Net income available to
common stockholders $ 12,303 $ 9,882 $ 55,191 $ 47,044
======== ======== ======== ========
Average number of common
shares outstanding:
Basic 39,403 32,356 36,702 30,534
Diluted 39,896 33,071 37,301 31,027
Net income per share:
Basic $ 0.31 $ 0.31 $ 1.50 $ 1.54
Diluted 0.31 0.30 1.48 1.52
Funds from operations: $ 27,479 $ 20,091 $ 99,274 $ 77,741
Funds from operations per
share:
Basic $ 0.70 $ 0.62 $ 2.70 $ 2.55
Diluted 0.69 0.61 2.66 2.51
Dividends per share $ 0.585 $ 0.585 $ 2.34 $ 2.34
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 2002
----------------------------------------------------------------------
Portfolio Composition ($000's) Exhibit 1
------------------------------
# # %
Balance Sheet Data Properties Beds/Units Balance Balance
-------------------------------------------------
Real Property 220 19,618 $1,306,818 85%
Loans Receivable 24 2,778 208,016 14%
Subdebt Investments 0 0 14,578 1%
-------------------------------------------------
Total Investments 244 22,396 $1,529,412 100%
Investment Data # # Investment %
Properties Beds/Units (1) Investment
-------------------------------------------------
Assisted Living
Facilities 160 10,610 $ 877,954 57%
Skilled Nursing
Facilities 76 10,482 539,904 35%
Specialty Care
Facilities 8 1,304 118,249 8%
-------------------------------------------------
Real Estate
Investments 244 22,396 $1,536,107 100%
Investment by Owner # # Investment %
Type Properties Beds/Units (1) Investment
-------------------------------------------------
Publicly Traded 58 3,106 $ 206,105 13%
Key Private 86 10,368 668,282 44%
Privately Held 100 8,922 661,720 43%
-------------------------------------------------
Real Estate
Investments 244 22,396 $1,536,107 100%
Notes: (1) Real Estate Investments include gross real estate
investments and credit enhancements which amounted to
$1,529,412,000 and $6,695,000, respectively.
----------------------------------------------------------------------
Revenue Composition ($000's) Exhibit 2
----------------------------
Three Months Ended Twelve Months Ended
December 31, 2002 December 31, 2002
------------------- -------------------
Revenue by Investment Type (1)
Real Property $39,655 87% $139,073 83%
Loans Receivable & Other 5,397 12% 25,891 16%
Subdebt Investments 411 1% 1,917 1%
------------------- -------------------
Total $45,463 100% $166,881 100%
Revenue by Facility Type (1)
Assisted Living Facilities $26,637 59% $105,185 63%
Skilled Nursing Facilities 17,222 38% 55,504 33%
Specialty Care Facilities 1,604 3% 6,192 4%
------------------- -------------------
Total $45,463 100% $166,881 100%
Revenue by Owner Type (1)
Publicly Traded $6,760 15% $30,435 18%
Key Private 19,703 43% 74,808 45%
Privately Held 19,000 42% 61,638 37%
------------------- -------------------
Total $45,463 100% $166,881 100%
Notes: (1) Revenues include gross revenues and revenues from
discontinued operations.
----------------------------------------------------------------------
Revenue Composition (Continued) ($000's) Exhibit 3
---------------------------------------
Operating Lease Expirations & Loan Maturities
Current Current
Lease Interest Interest
Revenue Revenue and Lease
Year (1) (1) Revenue % of Total
---------------------------------------------------------------
2003 $ 3,670 $ 581 $ 4,251 2%
2004 410 1,475 1,885 1%
2005 0 4,742 4,742 3%
2006 5,348 4,545 9,893 6%
2007 10,810 2,412 13,222 7%
Thereafter 135,751 9,931 145,682 81%
-------- ------- -------- ---------
Total $155,989 $23,686 $179,675 100%
Notes: (1) Revenue impact by year, annualized.
----------------------------------------------------------------------
Committed Investment Balances Exhibit 4
-----------------------------
($000's except Investment per Bed/Unit)
# # Committed Investment
Properties Beds/Units Balance (1) per Bed/Unit
----------------------------------------------------
Assisted Living
Facilities 160 10,610 $ 901,744 $ 84,990
Skilled Nursing
Facilities 76 10,482 539,904 51,508
Specialty Care
Facilities 8 1,304 137,344 105,325
-------------- ------------ ---------- --------
Total 244 22,396 $1,578,992 -na-
Notes: (1) Committed Balance includes gross real estate investments,
credit enhancements and unfunded commitments for which
initial funding had commenced.
----------------------------------------------------------------------
Operator Concentration ($000's) Exhibit 5
------------------------------
# %
Concentration by Investment Properties Investment Investment
---------------------------------------
Commonwealth Communities L.L.C. 14 $ 195,552 13%
Merrill Gardens L.L.C. 18 137,094 9%
Life Care Centers of America,
Inc. 17 119,054 8%
Home Quality Management, Inc. 19 116,664 8%
Alterra Healthcare Corp. 45 106,319 7%
Remaining Operators 131 861,424 55%
---------------------------------------
Total 244 $1,536,107 100%
# %
Concentration by Revenue Properties Revenue (1) Revenue
---------------------------------------
Merrill Gardens L.L.C. 18 $ 16,271 10%
Commonwealth Communities L.L.C. 14 15,987 10%
Alterra Healthcare Corp. 45 14,207 9%
Home Quality Management, Inc. 19 13,948 8%
Life Care Centers of America,
Inc. 17 10,548 6%
Remaining Operators 131 95,920 57%
---------------------------------------
Total 244 $ 166,881 100%
Notes: (1) Twelve months ended December 31, 2002.
----------------------------------------------------------------------
Selected Facility Data Exhibit 6
----------------------
Coverage Data
% Payor Mix --------------------
------------------ Before After
Census Private Medicare Mgt. Fees Mgt. Fees
-------------------------------------------------
Assisted Living
Facilities 86% 100% 0% 1.31x 1.11x
Skilled Nursing
Facilities 85% 21% 15% 1.76x 1.33x
Specialty Care
Facilities 66% 14% 33% 2.54x 1.93x
----------------------
Weighted Averages 1.57x 1.25x
----------------------------------------------------------------------
Credit Support ($000's) Exhibit 7
-----------------------
Balance % Investment
---------------------------
Cross Defaulted $1,487,803 97% of gross real estate
investments
Cross Collateralized 169,277 81% of loans receivable
Master Leases 1,144,392 88% of real property owned
Current Capitalization ($000's) Leverage & Performance
------------------------------- Ratios
Balance % Balance -----------------------
-------------------------
Borrowings Under Debt/Total
Bank Lines $ 109,500 7% Book Cap 43%
Long-Term Debt Debt/Total
Obligations 566,831 36% Mkt. Cap 36%
Stockholders' Equity 897,232 57% Interest
------------------------- Coverage 3.36x 4th Qtr.
Total Book 3.65x L12M
Capitalization $1,573,563 100% FFO Payout
Ratio 85% 4th Qtr.
88% L12M
----------------------------------------------------------------------
Debt Maturities and Principal Payments ($000's) Exhibit 8
----------------------------------------------
Lines of Senior Secured
Year Credit (1) Notes Debt (1) Total
------------------------------------------------------------------
2003 $ 25,000 $ 0 $ 400 $ 25,400
2004 0 40,000 64,475 104,475
2005 175,000 0 860 175,860
2006 0 50,000 398 50,398
2007 0 175,000 430 175,430
2008 0 100,000 464 100,464
2009 0 0 501 501
Thereafter 0 150,000 44,303 194,303
-------- -------- -------- -----------
Total $200,000 $515,000 $111,831 $ 826,831
Notes: (1) Lines of Credit reflect 100% capacity.
----------------------------------------------------------------------
Investment Activity ($000's) Exhibit 9
-------------------------------
Three Months Ended Twelve Months Ended
December 31, 2002 December 31, 2002
------------------- -------------------
Funding by Investment Type
Real Property $119,769 94% $412,510 90%
Mortgage & Other Loans 5,565 4% 41,226 9%
Subdebt Investments 1,556 2% 3,386 1%
------------------- -------------------
Total $126,890 100% $457,122 100%
Funding by Facility Type
Assisted Living Facilities $ 53,911 43% $211,450 46%
Skilled Nursing Facilities 53,659 42% 209,778 46%
Specialty Care Facilities 19,320 15% 35,894 8%
------------------- -------------------
Total $126,890 100% $457,122 100%
----------------------------------------------------------------------
Geographic Concentration ($000's) Exhibit 10
--------------------------------
Concentration by Region # Properties Investment % Investment
--------------------------------------
South 133 $ 646,420 42%
Northeast 40 380,626 25%
West 34 263,108 17%
Midwest 37 245,953 16%
--------------------------------------
Total 244 $1,536,107 100%
Concentration by State # Properties Investment % Investment
--------------------------------------
Massachusetts 21 $ 235,343 15%
Florida 30 149,807 10%
Texas 32 117,118 8%
Ohio 13 105,804 7%
Tennessee 15 86,992 6%
Remaining States 133 841,043 54%
--------------------------------------
Total 244 $1,536,107 100%
Revenue by State (1) # Properties Revenue (1) % Revenue
--------------------------------------
Massachusetts 21 $ 20,457 12%
Florida 30 19,404 12%
Texas 32 13,791 8%
California 10 12,692 8%
Ohio 13 11,074 7%
Remaining States 138 89,463 53%
--------------------------------------
Total 244 $ 166,881 100%
Notes: (1) Twelve months ended December 31, 2002.
----------------------------------------------------------------------
Funds From Operations Computation ($000's) Exhibit 11
------------------------------------------
Three Months Twelve Months
Ended Ended
December 31, December 31,
2002 2002
--------------- --------------
Net Income Available to Common
Stockholders $12,303 $55,191
Add: Depreciation Expense 11,801 39,311
Depreciation Expense-
Discontinued Ops 11 1,039
Loss on Extinguishment 0 403
Asset Impairment 1,748 2,298
Deduct: Gain (Loss) on Sale of Assets (1,616) (1,032)
Prepayment Fees 0 0
--------------- --------------
Funds From Operations (FFO) $27,479 $99,274
Average Common Shares Outstanding:
Basic 39,403 36,702
Diluted 39,896 37,301
FFO Per Common Share:
Basic $ 0.70 $ 2.70
Diluted 0.69 2.66
----------------------------------------------------------------------
Disposition Activity Exhibit 12
--------------------
Three Months Ended Twelve Months Ended
December 31, 2002 December 31, 2002
---------------------- ----------------------
Dispositions by
Investment Type
Real Property $ 4,396 17% $ 52,819 48%
Mortgage & Other Loans 21,084 83% 57,167 52%
------- ---- -------- ----
Total $25,480 100% $109,986 100%
Dispositions by Facility Type
Assisted Living
Facilities $22,109 87% $106,615 97%
Skilled Nursing
Facilities 0 0% 0 0%
Specialty Care
Facilities 3,371 13% 3,371 3%
------- ---- -------- ----
Total $25,480 100% $109,986 100%
----------------------------------------------------------------------
Lease Up Statistics on Assisted Living Facilities Exhibit 13
-------------------------------------------------
# Months in % of
Occupancy Properties Operation Revenue (1) Revenue
---------------------------------------------------
00% - 50% 2 23 $ 3,155 2%
50% - 70% 9 21 6,242 4%
70% + 6 30 3,183 2%
---------------------------------------------------
17 -na- $12,580 8%
Notes: (1) Interest and rental income for the twelve months
ended December 31, 2002.
----------------------------------------------------------------------
Discontinued Operations Computation ($000's) Exhibit 14
--------------------------------------------
Three Months Ended Twelve Months Ended
December 31, 2002 December 31, 2002
------------------- -------------------
Revenues:
Operating lease rents $ 39 $3,763
Expenses:
Interest expense 9 1,016
Provision for depreciation 11 1,039
------- ---------
Income from discontinued
operations, net $ 19 $1,708
Contact:
Health Care REIT, Inc.
Ray Braun, 419/247-2800
Mike Crabtree, 419/247-2800
Source: Health Care REIT, Inc.