TOLEDO, Ohio--(BW HealthWire)--July 17, 2001--Health Care REIT, Inc. (NYSE:HCN) today announced operating results for its second quarter of 2001. The company continues to meet financial and operational expectations.
"This was a very productive quarter for us," commented George L. Chapman, chairman and chief executive officer. "First and foremost, we completed a highly successful equity offering. The proceeds from the offering, in part, allowed us to purchase five very attractive nursing home assets, capitalizing on the growing opportunities in that market. On the assisted living side, we made substantial progress in stabilizing our portfolio and are on track for achieving our 2001 occupancy goals. We also realized equity REIT status in the second quarter, positioning the company to reap the benefits of a broader investor universe. Finally, our credit profile improved with the favorable revision in outlook by Fitch.
"The fundamentals for the health care REIT sector and the company continue to improve. These improved fundamentals renewed our access to capital, positioning us to make accretive investments over the next several quarters."
The Board of Directors voted to declare a dividend for the quarter ended June 30, 2001, of $0.585 per share. The dividend represents the 121st consecutive dividend payment. The dividend will be payable August 20, 2001, to shareholders of record on July 31, 2001.
In late June, Health Care REIT completed an equity offering of 3,450,000 shares for total gross proceeds of $78,487,500. Net proceeds from the offering have been, and will be, used to invest in additional health care properties. Pending such use, the proceeds will be used to repay borrowings under the company's revolving line of credit arrangements.
Summary of Second Quarter Results
---------------------------------
(In thousands, except per share numbers)
----------------------------------------------------------------------
Three Months Ended Three Months Ended
June 30, 2001 June 30, 2000
----------------------------------------------------------------------
Revenues $32,765 $34,321
----------------------------------------------------------------------
Net Income Available to
Common Shareholders $11,747 $14,587
----------------------------------------------------------------------
Funds From Operations (FFO) $18,716 $19,447
----------------------------------------------------------------------
Net Income Per Diluted Share $ 0.40 $ 0.51
----------------------------------------------------------------------
FFO Per Diluted Share $ 0.64 $ 0.68
----------------------------------------------------------------------
Dividend Per Share $ 0.585 $ 0.585
----------------------------------------------------------------------
FFO Payout Ratio 91% 86%
----------------------------------------------------------------------
Funds from operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, totaled $18.7 million, or $0.64 per diluted share, for the second three months of 2001, compared with $19.4 million, or $0.68 per diluted share, for the same period in 2000. The decrease was attributable to the decline in revenues generated by the smaller asset base, which resulted from the recently completed asset disposition program.
Summary of Year to Date Results
-------------------------------
(In thousands, except per share numbers)
----------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, 2001 June 30, 2000
----------------------------------------------------------------------
Revenues $65,342 $69,271
----------------------------------------------------------------------
Net Income Available to
Common Shareholders $23,574 $29,343
----------------------------------------------------------------------
Funds From Operations (FFO) $37,195 $39,343
----------------------------------------------------------------------
Net Income Per Diluted Share $ 0.81 $ 1.03
----------------------------------------------------------------------
FFO Per Diluted Share $ 1.28 $ 1.38
----------------------------------------------------------------------
Dividend Per Share $ 1.170 $ 1.165
----------------------------------------------------------------------
FFO Payout Ratio 91% 84%
----------------------------------------------------------------------
FFO totaled $37.2 million, or $1.28 per diluted share for the six months ended June 30, 2001, compared with $39.3 million, or $1.38 per diluted share, for the same period in 2000.
The company had a total outstanding debt balance of $371 million at June 30, 2001, down from $443 million in second quarter 2000, and shareholders' equity of $765 million, which represents a debt to total capitalization ratio of 33 percent. The company's coverage ratio of EBITDA to interest was 3.68 to 1.0 for the twelve months ended June 30, 2001.
New Facility Investments. The company acquired approximately $30 million of nursing facilities during the quarter. The five facilities, with a total of 609 beds, are located in Tennessee and Florida and are leased to two operators. All of the facilities are stabilized with average occupancy of 96 percent and average coverage after management fees of 1.67 times.
Portfolio Update. The portfolio results met the company's expectations. The company achieved equity REIT status with over 75 percent owned real estate. The seasoning of the assisted living portfolio is on target. By stabilizing 20 facilities with an investment balance of $115 million, management met its goal to stabilize between $100-$125 million of facilities during the first half of the year. The company ended the second quarter with only 24 assisted living facilities remaining in fill-up representing less than 20 percent of revenues. Only eight assisted living facilities have occupancy less than 50 percent.
Outlook for 2001 and 2002. The company previously announced FFO guidance of $0.64 to $0.65 per diluted share per quarter for 2001. With the recent secondary equity offering, the company believes FFO will be $0.62 to $0.63 in third quarter 2001 and $0.64 to $0.65 in fourth quarter 2001. The near term dilution is due to the timing of the redeployment of the equity proceeds.
The company expects the 2002 FFO run rate to increase to $2.64 assuming no further capital or investment activity in 2002.
Conference Call Information. Health Care REIT has scheduled a conference call on July 18, 2001, at 11:00 A.M. EST to discuss its second quarter 2001 performance, industry trends, portfolio performance, and its outlook for the remainder of 2001 and 2002. To participate on the webcast, log on to www.hcreit.com or www.streetfusion.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 nursing homes and assisted living facilities. At June 30, 2001, the company had investments in 203 health care facilities in 33 states and had total assets of approximately $1.2 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. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the company's actual results in the future to differ materially from expected results. These risks and uncertainties include, among others, general economic conditions, the availability of capital, competition within the financial services and real estate markets, the performance of operators within Health Care REIT's portfolio, and regulatory and other changes in the health care sector, as described in the company's filings with the Securities and Exchange Commission.
FINANCIAL SCHEDULES FOLLOW
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED BALANCE SHEETS (unaudited)
(Amounts in thousands)
June 30
--------------------------
2001 2000
--------------------------
Assets
Real estate investments:
Real property owned
Land $ 77,622 $ 72,374
Buildings & improvements 812,767 740,290
Construction in progress 10,314 27,462
----------- -----------
900,703 840,126
Less accumulated depreciation (65,443) (41,952)
----------- -----------
Total real property owned 835,260 798,174
Loans receivable
Real property loans 255,367 318,259
Subdebt investments 23,269 26,541
----------- -----------
278,636 344,800
Less allowance for losses on loans
receivable (6,361) (6,087)
----------- -----------
272,275 338,713
----------- -----------
Net real estate investments 1,107,535 1,136,887
Other assets:
Equity investments 5,924 5,790
Deferred loan expenses 3,549 3,273
Cash and cash equivalents 5,854 3,022
Receivables and other assets 29,891 20,354
----------- -----------
45,218 32,439
----------- -----------
Total assets $ 1,152,753 $ 1,169,326
=========== ===========
Liabilities and shareholders' equity
Liabilities:
Borrowings under line of credit
obligations $ 61,500 $ 122,800
Senior unsecured notes 245,000 255,000
Secured debt 64,818 64,882
Accrued expenses and other
liabilities 15,988 21,932
----------- -----------
Total liabilities $ 387,306 $ 464,614
Shareholders' equity:
Preferred Stock 150,000 150,000
Common Stock 32,389 28,660
Capital in excess of par value 601,501 525,980
Undistributed (overdistributed)
net income (13,564) 4,956
Accumulated other
comprehensive income (1,159) (413)
Unamortized restricted stock (3,720) (4,471)
----------- -----------
Total shareholders' equity $ 765,447 $ 704,712
----------- -----------
Total liabilities and shareholders'
equity $ 1,152,753 $ 1,169,326
=========== ===========
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Amounts in thousands except per share data)
Three months ended Six months ended
June 30 June 30
------------------- -------------------
2001 2000 2001 2000
------------------- -------------------
Revenues:
Operating lease
rents $23,863 $22,087 $46,471 $43,718
Interest income 7,842 10,192 16,787 21,713
Commitment fees and
other income 1,037 1,591 1,927 3,266
Prepayment fees 0 57 134 57
Gain on sale of
properties 23 394 23 517
------- ------- ------- -------
Gross Revenues 32,765 34,321 65,342 69,271
Expenses:
Interest expense $ 7,977 $ 8,581 $16,089 $17,682
Provision for
depreciation 6,992 5,311 13,778 10,574
General and
administrative 2,034 1,930 3,885 3,830
Loan expense 389 286 764 604
Provision for
losses 250 250 500 500
------- ------- ------- -------
Total Expenses 17,642 16,358 35,016 33,190
------- ------- ------- -------
Net Income 15,123 17,963 30,326 36,081
Preferred stock
dividends 3,376 3,376 6,752 6,738
------- ------- ------- -------
Net Income Available
to Common
Shareholders $11,747 $14,587 $23,574 $29,343
======= ======= ======= =======
Average number of
common shares
outstanding:
Basic 28,985 28,384 28,802 28,350
Diluted 29,402 28,613 29,137 28,579
Net income per share:
Basic $ 0.41 $ 0.51 $ 0.82 $ 1.04
Diluted 0.40 0.51 0.81 1.03
Funds from operations: $18,716 $19,447 $37,195 $39,343
Funds from operations
per share:
Basic $ 0.65 $ 0.69 $ 1.29 $ 1.39
Diluted 0.64 0.68 1.28 1.38
Dividends per share $ 0.585 $ 0.585 $ 1.170 $ 1.165
HEALTH CARE REIT, INC.
Financial Supplement - June 30, 2001
Portfolio Composition ($000's) Exhibit 1
------------------------------
No. No.
Balance Sheet Data Properties Beds/Units Balance % Balance
------------------------------------------------
Real Property 160 12,747 $ 835,260 75%
Loans Receivable 43 4,903 255,367 23%
Subdebt Investments -na- -na- 23,269 2%
------------------------------------------------
Total Investments 203 17,650 $1,113,896 100%
No. No. Investment %
Investment Data Properties Beds/Units (1) Investment
------------------------------------------------
Assisted Living
Facilities 146 9,784 $ 737,447 66%
Nursing Homes 48 6,477 273,689 24%
Specialty Care
Facilities 9 1,389 114,185 10%
------------------------------------------------
Real Estate Investments 203 17,650 $1,125,321 100%
Investment by Owner No. No. Investment %
Type Properties Beds/Units (1) Investment
------------------------------------------------
Publicly Traded 70 3,992 $ 257,022 23%
Key Private 79 7,770 567,439 50%
Privately Held 54 5,888 300,860 27%
------------------------------------------------
Real Estate Investments 203 17,650 $1,125,321 100%
Notes: (1) Real Estate Investments include gross real estate
investments and credit enhancements which amounted to
$1,113,896,000 and $11,425,000, respectively.
Revenue Composition ($000's) Exhibit 2
----------------------------
Three Months Ended Six Months Ended
June 30, 2001 June 30, 2001
------------------ ----------------
Revenue by Investment Type
Real Property $24,458 75% $47,521 73%
Loans Receivable & Other 7,617 23% 16,769 25%
Subdebt Investments 690 2% 1,052 2%
------------------ ----------------
Total $32,765 100% $65,342 100%
Revenue by Facility Type
Assisted Living
Facilities $21,797 66% $43,090 66%
Nursing Homes 8,272 26% 15,343 24%
Specialty Care
Facilities 2,696 8% 6,909 10%
------------------ ----------------
Total $32,765 100% $65,342 100%
Revenue by Owner Type
Publicly Traded $ 8,139 25% $16,079 25%
Key Private 16,745 51% 34,878 53%
Privately Held 7,881 24% 14,385 22%
------------------ ----------------
Total $32,765 100% $65,342 100%
Revenue Composition (Continued) ($000's) Exhibit 3
----------------------------------------
Operating Lease Expirations & Loan Maturities
Current Lease Current Interest Interest and
Year Revenue (1) Revenue (1) Lease Revenue % of Total
----------------------------------------------------------------------
2001 $ 1,993 $ 1,785 $ 3,778 3%
2002 1,738 6,608 8,346 7%
2003 2,770 0 2,770 2%
2004 410 4,637 5,047 4%
Thereafter 90,869 17,723 108,592 84%
----------------------------------------------------------------------
Total $ 97,780 $ 30,753 $128,533 100%
Notes: (1) Revenue impact by year, annualized
Committed Investment Balances Exhibit 4
------------------------------
($000's except Investment per Bed/Unit)
Committed Investment
No. No. Balance per
Properties Beds/Units (1) Bed/Unit
---------------------------------------------------
Assisted Living
Facilities 146 9,784 $ 743,303 $ 75,971
Nursing Homes 48 6,477 273,689 42,256
Specialty Care
Facilities 9 1,389 114,185 82,206
---------------------------------------------------
Total 203 17,650 $ 1,131,177 -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 No. Properties Investment % Investment
----------------------------------------
Merrill Gardens 19 $ 127,373 11%
Life Care Centers of
America, Inc. 13 85,531 8%
Alterra Healthcare 38 84,744 7%
Atria Senior Quarters 9 79,223 7%
Commonwealth Communities 6 67,595 6%
Remaining Operators 118 680,855 61%
----------------------------------------
Total 203 $ 1,125,321 100%
Concentration by Revenue No. Properties Revenue (1) % Revenue
----------------------------------------
Merrill Gardens 19 $ 6,989 11%
Alterra Healthcare 38 5,312 8%
Life Care Centers of
America, Inc. 13 4,796 7%
Atria Senior Quarters 9 4,749 7%
Commonwealth Communities 6 3,222 5%
Remaining Operators 118 40,274 62%
----------------------------------------
Total 203 $ 65,342 100%
Notes: (1) Six months ended June 30, 2001
Selected Facility Data Exhibit 6
----------------------
Coverage Data
% Payor Mix ----------------------
------------------ Before After
Census Private Medicare Mgt. Fees Mgt. Fees
----------------------------------------------------
Nursing Homes 83% 23% 13% 1.58x 1.19x
Assisted Living
Facilities 90% 100% 0% 1.29x 1.11x
Specialty Care
Facilities 58% 16% 37% 2.00x 1.52x
----------------------
Weighted Averages 1.45x 1.18x
Notes: Data as of March 31, 2001
Security Deposits & Other Credit Support ($000's) Exhibit 7
-------------------------------------------------
Balance % Investment
-----------------------
Cross Defaulted $ 996,126 89% of gross real estate investments
Cross Collateralized 193,523 76% of mortgage loans
Bank Letters of
Credit & Cash 21,604 2% of investment balance
Current Capitalization Leverage & Performance
($000's) Balance % Balance Ratios
------------------- --------------------- ----------------------
Borrowings Under Debt/Total Book Cap 33%
Bank Lines $ 61,500 6% Debt/Total Mkt. Cap 29%
Long-Term Debt Interest
Obligations 309,818 27% Coverage 3.76x 2nd Qtr.
Shareholders' Equity 765,447 67% 3.68x L12M
--------------------- FFO Payout
Total Book Ratio 91% 2nd Qtr.
Capitalization $1,136,765 100% 90% L12M
Debt Maturities and Principal Payments ($000's) Exhibit 8
-----------------------------------------------
Lines of
Year Credit (1) Senior Notes Secured Debt Total
---------------------------------------------------------------------
2001 $ 0 $ 0 $ 33 $ 33
2002 25,000 20,000 75 45,075
2003 150,000 35,000 84 185,084
2004 0 40,000 64,133 104,133
2005 0 0 493 493
2006 0 50,000 0 50,000
2007 0 0 0 0
Thereafter 0 100,000 0 100,000
---------------------------------------------------------
Total $175,000 $245,000 $64,818 $484,818
Notes: (1) Lines of Credit reflect 100% capacity
Investment Activity ($000's) Exhibit 9
----------------------------
Three Months Ended Six Months Ended
June 30, 2001 June 30, 2001
------------------ ------------------
Funding by Investment Type
Real Property $32,595 87% $34,759 75%
Mortgage & Other Loans 0 0% 0 0%
Construction Advances 3,549 10% 10,326 22%
Subdebt Investments 1,302 3% 1,575 3%
------------------ ------------------
Total $37,446 100% $46,660 100%
Real Estate Investments
Assisted Living Facilities $ 4,628 12% $10,384 22%
Nursing Homes 32,818 88% 36,276 78%
Specialty Care Facilities 0 0% 0 0%
------------------ ------------------
Total $37,446 100% $46,660 100%
Geographic Concentration ($000's) Exhibit 10
---------------------------------
Concentration by Region No. Properties Investment % Investment
---------------------------------------------
South 115 $ 531,417 47%
Northeast 31 262,930 23%
West 31 199,186 18%
Midwest 26 131,788 12%
---------------------------------------------
Total 203 $ 1,125,321 100%
Concentration by State No. Properties Investment % Investment
---------------------------------------------
Florida 27 $ 142,239 13%
Massachusetts 14 124,236 11%
Texas 31 107,905 10%
New York 6 58,819 5%
California 9 58,266 5%
Remaining States 116 633,856 56%
---------------------------------------------
Total 203 $ 1,125,321 100%
Revenue by State (1) No. Properties Revenue (1) % Revenue
---------------------------------------------
Texas 31 $ 8,209 13%
Florida 27 7,311 11%
Massachusetts 14 6,127 9%
California 9 4,016 6%
New York 6 3,419 5%
Remaining States 116 36,260 56%
---------------------------------------------
Total 203 $ 65,342 100%
Notes: (1) Six months ended June 30, 2001
Funds From Operations Computation ($000's) Exhibit 11
------------------------------------------
Three Months Ended Six Months Ended
June 30, 2001 June 30, 2001
-----------------------------------
Net Income Available
to Common Shareholders $ 11,747 $ 23,574
Add: Depreciation Expense 6,992 13,778
Asset Impairment Charges 0 0
Deduct: Gain on Sale of Assets (23) (23)
Prepayment Fees 0 (134)
-----------------------------------
Funds From Operations (FFO) $ 18,716 $ 37,195
Average Common Shares Outstanding:
Basic 28,985 28,802
Diluted 29,402 29,137
FFO Per Common Share:
Basic $ 0.65 $ 1.29
Diluted $ 0.64 $ 1.28
Disposition Activity Exhibit 12
--------------------
Three Months Ended Six Months Ended
June 30, 2001 June 30, 2001
------------------ ------------------
Dispositions by Investment Type
Real Property $11,588 44% $11,588 24%
Mortgage & Other Loans 14,850 56% 36,505 76%
------- ------- ------- -------
Total $26,438 100% $48,093 100%
======= ======= ======= =======
Real Estate Investments
Assisted Living Facilities $15,991 60% $15,991 33%
Nursing Homes 0 0% 0 0%
Specialty Care Facilities 10,447 40% 32,102 67%
------- ------- ------- -------
Total $26,438 100% $48,093 100%
======= ======= ======= =======
Lease Up Statistics on Assisted Living Facilities Exhibit 13
-------------------------------------------------
Months in
Occupancy Facilities Operation Revenue (1) % of Revenue
---------------------------------------------------
00% - 50% 8 11 $4,082 6%
50% - 70% 12 17 $5,812 9%
70% + 4 21 $2,334 4%
Notes: (1) Interest and rental income for six months ended June 30,
2001.
--30--fkb/clv* djl/clv slb/clv
| CONTACT: | Health Care REIT, Inc. |
|---|---|
| Ray Braun, 419/247-2800 | |
| Mike Crabtree, 419/247-2800 |