TOLEDO, Ohio, Oct 15, 2002 (BUSINESS WIRE) -- Health Care REIT, Inc. (NYSE:HCN) today announced operating results for its third quarter of 2002. The company continues to meet its financial and operational expectations.
"Once again we are pleased to report the progress we have made during the quarter towards achieving several of our stated goals," commented George L. Chapman, chief executive officer. "As previously stated, reducing the payout ratio to the mid 80 percent level has been one of our priorities, and we attained this goal due to the 11% increase in FFO over the third quarter of 2001. We also made gross investments of $105 million, completed our revolving line of credit renewal and issued $150 million of senior notes. In addition, we increased our master lease portfolio to 85 percent and obtained a positive outlook from Moody's. Our new investments included three new operators. Given the considerable acquisition opportunities that are presently available in the market, we are raising our 2003 guidance to $2.82 to $2.87. We expect gross investments of $250 to $300 million over the next two quarters with net investments of $150 to $200 million."
The Board of Directors declared a dividend for the quarter ended September 30, 2002, of $0.585 per share. The dividend represents the 126th consecutive dividend payment. The dividend will be payable November 20, 2002, to stockholders of record on October 31, 2002.
Summary of Third Quarter Results
---------------------------------
(In thousands, except per share numbers)
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Three Months Ended Three Months Ended
September 30, 2002 September 30, 2001
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Revenues $42,373 $33,413
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Net Income Available
to Common Stockholders $16,885 $13,591
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Funds From Operations (FFO) $26,664 $20,090
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Net Income Per Diluted Share $0.43 $0.41
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FFO Per Diluted Share $0.68 $0.61
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Dividend Per Share $0.585 $0.585
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FFO Payout Ratio 86% 96%
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Funds from operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, totaled $26.7 million, or $0.68 per diluted share, for the third 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)
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Nine Months Ended Nine Months Ended
September 30, 2002 September 30, 2001
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Revenues $118,046 $96,091
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Net Income Available
to Common Stockholders $42,888 $37,163
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Funds From Operations (FFO) $71,795 $57,285
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Net Income Per Diluted Share $1.18 $1.22
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FFO Per Diluted Share $1.97 $1.89
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Dividend Per Share $1.755 $1.755
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FFO Payout Ratio 89% 93%
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FFO totaled $71.8 million, or $1.97 per diluted share for the nine months ended September 30, 2002, compared with $57.3 million, or $1.89 per diluted share, for the same period in 2001.
The company had a total outstanding debt balance of $639.5 million at September 30, 2002, as compared with $416.1 million in third quarter 2001, and stockholders' equity of $879.6 million, which represents a debt to total capitalization ratio of 42 percent. The company's coverage ratio of EBITDA to interest was 3.76 to 1.00 for the twelve months ended September 30, 2002.
Portfolio Update. The portfolio results met the company's expectations. The seasoning of the assisted living portfolio is on target. The company ended the quarter with 16 assisted living facilities remaining in fill-up, representing 9 percent of revenues. Four assisted living facilities, representing 4 percent of revenues, have occupancy less than 50 percent.
Outlook for 2002 & 2003. Based upon the investment activity through the third quarter, the company expects to report FFO in the range of $2.65 to $2.67 per share for the full year 2002 and $2.82 to $2.87 for the year 2003.
Conference Call Information. Health Care REIT, Inc. has scheduled a conference call on October 15, 2002, at 3:00 PM EST to discuss its third quarter 2002 performance, industry trends, portfolio performance, and its outlook for the remainder of 2002. 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 September 30, 2002, the company had investments in 237 health care facilities in 33 states and had total assets of approximately $1.5 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 http://www.hcreit.com.
This document and supporting schedules 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 obtain 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
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CONSOLIDATED BALANCE SHEETS (unaudited)
(Amounts in thousands)
September 30
---------------------------------
2002 2001
---------------------------------
Assets
Real estate investments:
Real property owned
Land $ 105,480 $ 79,861
Buildings & improvements 1,187,408 836,867
Construction in progress 12,791 8,995
------------ ------------
1,305,679 925,723
Less accumulated depreciation (102,286) (71,564)
------------ ------------
Total real property owned 1,203,393 854,159
Loans receivable
Real property loans 236,046 234,886
Subdebt investments 23,057 23,426
------------ ------------
259,103 258,312
Less allowance for losses on loans
receivable (7,611) (6,611)
------------ ------------
251,492 251,701
------------ ------------
Net real estate investments 1,454,885 1,105,860
Other assets:
Equity investments 7,215 6,585
Deferred loan expenses 9,708 7,266
Cash and cash equivalents 21,440 43,564
Receivables and other assets 36,255 32,012
------------ ------------
74,618 89,427
------------ ------------
Total assets $1,529,503 $1,195,287
============ ============
Liabilities and stockholders' equity
Liabilities:
Borrowings under line of credit
obligations $72,600 $0
Senior unsecured notes 515,000 412,250
Secured debt 51,937 3,801
Accrued expenses and other
liabilities 10,324 16,250
------------ ------------
Total liabilities 649,861 432,301
Stockholders' equity:
Preferred stock 127,500 150,000
Common stock 39,057 32,490
Capital in excess of par value 764,261 603,705
Cumulative net income 565,321 499,579
Cumulative dividends (612,365) (518,501)
Accumulated other
comprehensive income (370) (873)
Unamortized restricted stock (3,762) (3,414)
------------ ------------
Total stockholders' equity 879,642 762,986
------------ ------------
Total liabilities and
stockholders' equity $1,529,503 $1,195,287
============ ============
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Amounts in thousands except per share data)
Three Months Ended Nine Months Ended
September 30 September 30
--------------------------------------------
2002 2001 2002 2001
--------------------------------------------
Revenues:
Operating lease rents $34,407 $24,436 $94,880 $68,266
Interest income 7,127 7,187 21,022 23,974
Commitment fees and
other income 839 934 2,144 2,861
Prepayment fees 0 856 0 990
--------- --------- --------- ---------
Gross revenues 42,373 33,413 118,046 96,091
Expenses:
Interest expense 9,990 7,353 29,537 22,562
Provision for
depreciation 10,158 6,969 27,916 20,195
General and
administrative 2,496 2,070 7,040 5,956
Loan expense 599 447 1,756 1,212
Impairment of assets 0 0 550 0
Provision for losses 250 250 750 750
--------- --------- --------- ---------
Total expenses 23,493 17,089 67,549 50,675
--------- --------- --------- ---------
Income from continuing
operations and before
extraordinary item 18,880 16,324 50,497 45,416
Discontinued operations:
Gain on sale of properties 439 101 584 124
Income from discontinued
operations, net 444 755 1,806 1,964
--------- --------- --------- ---------
883 856 2,390 2,088
--------- --------- --------- ---------
Income before
extraordinary item 19,763 17,180 52,887 47,504
Loss on extinguishment
of debt 0 (213) (403) (213)
--------- --------- --------- ---------
Net income 19,763 16,967 52,484 47,291
Preferred dividends 2,878 3,376 9,596 10,128
--------- --------- --------- ---------
Net income available to
common stockholders $16,885 $13,591 $42,888 $37,163
========= ========= ========= =========
Average number of common
shares outstanding:
Basic 38,628 32,205 35,695 29,946
Diluted 39,324 32,763 36,451 30,358
Net income per share:
Basic $ 0.44 $ 0.42 $ 1.20 $ 1.24
Diluted 0.43 0.41 1.18 1.22
Funds from operations: $26,664 $20,090 $71,795 $57,285
Funds from operations
per share:
Basic $ 0.69 $ 0.62 $ 2.01 $ 1.91
Diluted 0.68 0.61 1.97 1.89
Dividends per share $ 0.585 $ 0.585 $ 1.755 $ 1.755
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Portfolio Composition ($000's) Exhibit 1
------------------------------
Balance Sheet Data # #
Properties Beds/Units Balance % Balance
---------------------------------------------------
Real Property 207 18,146 $1,203,393 82%
Loans Receivable 30 3,778 236,046 16%
Subdebt Investments 0 0 23,057 2%
---------------------------------------------------
Total Investments 237 21,924 $1,462,496 100%
Investment Data # # Investment %
Properties Beds/Units (1) Investment
---------------------------------------------------
Assisted Living
Facilities 154 10,396 $845,797 57%
Skilled Nursing
Facilities 75 10,202 523,668 36%
Specialty Care
Facilities 8 1,326 103,891 7%
---------------------------------------------------
Real Estate
Investments 237 21,924 $1,473,356 100%
Investment by # # Investment %
Owner Type Properties Beds/Units (1) Investment
---------------------------------------------------
Publicly Traded 58 3,106 $207,548 14%
Key Private 84 9,113 654,569 44%
Privately Held 95 9,705 611,239 42%
---------------------------------------------------
Real Estate
Investments 237 21,924 $1,473,356 100%
Notes: (1) Real Estate Investments include gross real estate
investments and credit enhancements which amounted to $1,462,496,000
and $10,860,000, respectively.
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----------------------------------------------------------------------
Revenue Composition ($000's) Exhibit 2
----------------------------
Three Months Ended Nine Months Ended
September 30, 2002 September 30, 2002
------------------ ------------------
Revenue by Investment Type (1)
Real Property $ 36,332 83% $100,003 82%
Loans Receivable & Other 6,681 15% 20,493 17%
Subdebt Investments 761 2% 1,506 1%
------------------ ------------------
Total $ 43,774 100% $122,002 100%
Revenue by Facility Type (1)
Assisted Living Facilities $ 27,557 63% $ 77,256 63%
Skilled Nursing Facilities 14,257 33% 40,158 33%
Specialty Care Facilities 1,960 4% 4,588 4%
------------------ ------------------
Total $ 43,774 100% $122,002 100%
Revenue by Owner Type (1)
Publicly Traded $ 7,863 18% $ 24,600 20%
Key Private 20,259 46% 56,029 46%
Privately Held 15,652 36% 41,373 34%
------------------ ------------------
Total $ 43,774 100% $122,002 100%
Notes: (1) Revenues include gross revenues, gain on sales, and
revenues from discontinued operations.
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----------------------------------------------------------------------
Revenue Composition (Continued) ($000's) Exhibit 3
----------------------------------------
Operating Lease Expirations & Loan Maturities
Current Current Interest
Lease Interest and
Revenue Revenue Lease % of
Year (1) (1) Revenue Total
--------------------------------------------------------------------
2002 $ 0 $ 905 $ 905 1%
2003 3,670 0 3,670 2%
2004 410 2,974 3,384 2%
2005 0 5,077 5,077 3%
2006 5,044 5,336 10,380 6%
Thereafter 124,688 13,687 138,375 86%
--------------------------------------------------
Total $133,812 $ 27,979 $161,791 100%
Notes: (1) Revenue impact by year, annualized.
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----------------------------------------------------------------------
Committed Investment Balances Exhibit 4
-----------------------------
($000's except Investment per Bed/Unit)
Investment
# # Committed per
Properties Beds/Units Balance (1) Bed/Unit
---------------------------------------------------
Assisted Living
Facilities 154 10,396 $ 868,113 $83,505
Skilled Nursing
Facilities 75 10,202 522,223 51,188
Specialty Care
Facilities 8 1,326 125,966 94,997
---------------------------------------------------
Total 237 21,924 $1,516,302 -na-
Notes: (1) Committed Balance includes gross real estate investments,
credit enhancements and unfunded commitments for which initial funding
had commenced.
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----------------------------------------------------------------------
Operator Concentration ($000's) Exhibit 5
-------------------------------
Concentration by Investment # %
Properties Investment Investment
--------------------------------------
Commonwealth Communities 10 $ 145,930 10%
Merrill Gardens 20 145,409 10%
Home Quality Management 19 114,932 8%
Alterra Healthcare 45 107,081 7%
Life Care Centers
of America, Inc. 16 101,289 7%
Remaining Operators 127 858,715 58%
--------------------------------------
Total 237 $1,473,356 100%
Concentration by Revenue # %
Properties Revenue (1) % Revenue
--------------------------------------
Merrill Gardens 20 $ 13,073 11%
Alterra Healthcare 45 10,995 9%
Commonwealth Communities 10 10,679 9%
Home Quality Management 19 10,176 8%
Life Care Centers
of America, Inc. 16 7,212 6%
Remaining Operators 127 69,867 57%
--------------------------------------
Total 237 $ 122,002 100%
Notes: (1) Nine months ended September 30, 2002.
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Selected Facility Data Exhibit 6
-----------------------
Coverage Data
----------------
% Payor Mix
----------------- Before After
Mgt. Mgt.
Census Private Medicare Fees Fees
----------------------------------------------------------------------
Assisted Living Facilities 86% 100% 0% 1.32x 1.12x
Skilled Nursing Facilities 84% 21% 15% 1.77x 1.33x
Specialty Care Facilities 65% 15% 31% 2.57x 1.97x
----------------
Weighted Averages 1.58x 1.28x
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Credit Support ($000's) Exhibit 7
-----------------------
%
Balance Investment
-------------------------
Cross Defaulted $1,408,301 96% of gross real estate investments
Cross Collateralized 192,121 81% of loans receivable
Master Leases 1,024,811 85% of real property owned
Current Capitalization ($000's) Leverage & Performance Ratios
------------------------------- -----------------------------
Balance % Balance
-------------------
Borrowings Under
Bank Lines $ 72,600 5% Debt/Total Book Cap 42%
Long-Term Debt
Obligations 566,937 37% Debt/Total Mkt. Cap 35%
Stockholders'
Equity 879,642 58% Interest
Coverage 3.94x 3rd Qtr.
Total Book 3.76x L12M
Capitalization $1,519,179 100% FFO Payout
Ratio 86% 3rd Qtr.
90% L12M
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----------------------------------------------------------------------
Debt Maturities and Principal Payments ($000's) Exhibit 8
-----------------------------------------------
Lines of Senior Secured
Year Credit (1) Notes Debt (1) Total
--------------------------------------------------------------------
2002 $ 0 $ 0 $ 271 $ 271
2003 25,000 0 400 25,400
2004 0 40,000 64,474 104,474
2005 175,000 0 862 175,862
2006 0 50,000 398 50,398
2007 0 175,000 430 175,430
2008 0 100,000 464 100,464
Thereafter 0 150,000 44,638 194,638
---------------------------------------------------
Total $200,000 $515,000 $111,937 $826,937
Notes: (1) Lines of Credit reflect 100% capacity.
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----------------------------------------------------------------------
Investment Activity ($000's) Exhibit 9
----------------------------
Three Months Ended Nine Months Ended
September 30, 2002 September 30, 2002
-------------------- --------------------
Funding by Investment Type
Real Property $ 85,811 82% $292,742 89%
Mortgage & Other Loans 18,286 17% 35,660 10%
Subdebt Investments 718 1% 1,830 1%
-------------------- --------------------
Total $104,815 100% $330,232 100%
Real Estate Investments
Assisted Living Facilities $ 22,490 21% $157,539 48%
Skilled Nursing Facilities 74,353 71% 156,120 47%
Specialty Care Facilities 7,972 8% 16,573 5%
-------------------- --------------------
Total $104,815 100% $330,232 100%
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----------------------------------------------------------------------
Geographic Concentration ($000's) Exhibit 10
---------------------------------
Concentration by Region # %
Properties Investment Investment
------------ ------------ ------------
South 129 $ 640,925 43%
Northeast 38 351,852 24%
West 33 247,647 17%
Midwest 37 232,932 16%
------------ ------------ ------------
Total 237 $1,473,356 100%
Concentration by State # %
Properties Investment Investment
------------ ------------ ------------
Massachusetts 17 $ 187,920 13%
Florida 31 153,272 10%
Texas 32 120,971 8%
Ohio 13 103,520 7%
California 10 85,186 6%
Remaining States 134 822,487 56%
------------ ------------ ------------
Total 237 $1,473,356 100%
Revenue by State (1) # %
Properties Revenue (1) Revenue
------------ ------------ ------------
Florida 31 $ 14,489 12%
Massachusetts 17 14,594 12%
Texas 32 9,920 8%
Ohio 13 9,365 8%
North Carolina 9 7,050 5%
Remaining States 135 66,584 55%
------------ ------------ ------------
Total 237 $ 122,002 100%
Notes: (1) Nine months ended September 30, 2002.
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----------------------------------------------------------------------
Funds From Operations Computation ($000's) Exhibit 11
Three Months Ended Nine Months Ended
September 30, 2002 September 30, 2002
------------------ ------------------
Net Income Available
to Common Stockholders $16,885 $42,888
Add: Depreciation Expense 10,158 27,916
Depreciation Expense-
Discontinued Ops 60 622
Loss on Extinguishment 0 403
Loss on Sale of Assets 0 0
Asset Impairment 0 550
Deduct: Gain on Sale of Assets 439 584
Prepayment Fees 0 0
------------------ ------------------
Funds From Operations (FFO) $26,664 $71,795
Average Common Shares Outstanding:
Basic 38,628 35,695
Diluted 39,324 36,451
FFO Per Common Share:
Basic $ 0.69 $ 2.01
Diluted 0.68 1.97
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----------------------------------------------------------------------
Disposition Activity Exhibit 12
--------------------
Three Months Ended Nine Months Ended
September 30, 2002 September 30, 2002
------------------ ------------------
Dispositions by Investment Type
Real Property $47,069 91% $48,423 57%
Mortgage & Other Loans 4,627 9% 36,083 43%
---------- ------- ----------- ------
Total $51,696 100% $84,506 100%
Real Estate Investments
Assisted Living Facilities $51,696 100% $84,506 100%
Skilled Nursing Facilities 0 0% 0 0%
Specialty Care Facilities 0 0% 0 0%
---------- ------- ----------- ------
Total $51,696 100% $84,506 100%
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Lease Up Statistics on Assisted Living Facilities Exhibit 13
Months in Revenue % of
Occupancy Facilities Operation (1) Revenue
---------------------------------------------
00%-50% 4 17 $ 4,399 4%
50%-70% 4 21 2,812 2%
70%+ 8 32 3,226 3%
---------------------------------------------
16 -na- $10,437 9%
Notes: (1) Interest and rental income for the nine months ended
September 30, 2002.
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----------------------------------------------------------------------
Discontinued Operations Computation ($000's) Exhibit 14
--------------------------------------------
Three Months Ended Nine Months Ended
September 30, 2002 September 30, 2002
-------------------- --------------------
Revenues:
Operating lease rents $ 962 $ 3,372
Expenses:
Interest expense 458 944
Provision for depreciation 60 622
-------------------- --------------------
Income from discontinued
operations, net $ 444 $ 1,806
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CONTACT: Health Care REIT, Inc.
Ray Braun or Mike Crabtree, 419/247-2800