TOLEDO, Ohio--(BW HealthWire)--Feb. 1, 2001--Health Care REIT, Inc. (NYSE:HCN) today announced operating results for its fourth quarter and year ended December 31, 2000. The company's strategies to focus on stabilization of the assisted living portfolio and manage liquidity are successfully being implemented.
"Our operating results for the quarter are right on target as a result of our asset disposition program, which is on track to complete $200 million in sales or refinancings," commented George L. Chapman, chairman and chief executive officer. "Although the divestiture program has created a modest reduction in asset size and FFO results, this strategy has effectively preserved the company's fundamental credit qualities. Our company's low leverage of 39 percent debt to total capitalization and EBITDA coverage at 3.5 times strongly support the interest and dividend payments. We intend to maintain the dividend at its current level, with increases to resume once capital becomes available at costs that permit accretive investment activity."
Summary of Fourth Quarter Results
---------------------------------
(In thousands, except per share numbers)
Three Months Ended Three Months Ended
Dec. 31, 2000 Dec. 31, 1999
------------------ ------------------
Revenues $33,775 $33,812
Net Income Available to Common
Shareholders $11,434 $14,624
FFO (excluding charge) $18,969 $19,895
Net Income Per Diluted Share $ 0.40 $ 0.51
FFO Per Diluted Share
(excluding charge) $ 0.66 $ 0.70
Dividend Per Share $ 0.585 $ 0.575
FFO Payout Ratio
(excluding charge) 89% 82%
FFO $16,969 $19,895
FFO Per Diluted Share $ 0.59 $ 0.70
Funds from operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, totaled $17.0 million, or $0.59 per diluted share, for the latest three months, compared with $19.9 million, or $0.70 per diluted share, for the same period in 1999. Included in FFO and net income is a previously disclosed $2 million or $0.07 per diluted share charge for the non-cash, non-recurring write-off of an equity investment in Summerville. Excluding the charge, FFO per diluted share for the three months ended December 31, 2000 would have been $0.66. Revenues were mostly unchanged as a result of increased rental income from newly converted construction properties offsetting the decline in the investment base as a result of asset dispositions.
Net income available to common shareholders was reduced by about 22 percent during the quarter primarily as a result of an increase in the company's provision for depreciation, an increase in interest expense and the loss on the Summerville investment. The provision for depreciation in the fourth quarter totaled $6.1 million compared with $5.3 million for the same period in 1999. The increased provision for depreciation primarily was the result of additional investments in properties owned directly by the company. Interest expense for the latest three months was $8.5 million compared with $8.2 million for the same period in 1999. The company capitalizes certain interest costs associated with funds used to finance the construction of properties owned directly by the company. The company's interest expense is reduced by the amount capitalized. As a result of reduced construction financing, capitalized interest for the 2000 fourth quarter totaled $302,000 compared with $1.5 million for the same period in 1999.
Summary of Year-to-Date Results
-------------------------------
(In thousands, except per share numbers)
Year Ended Year Ended
Dec. 31, 2000 Dec. 31, 1999
------------------ ------------------
Revenues $136,954 $129,307
Net Income Available to
Common Shareholders $ 54,566 $ 62,824
FFO (excluding charge) $ 77,531 $ 78,441
Net Income Per Diluted Share $ 1.91 $ 2.21
FFO Per Diluted Share
(excluding charge) $ 2.71 $ 2.76
Dividend Per Share $ 2.335 $ 2.270
FFO Payout Ratio
(excluding charge) 86% 82%
FFO $ 75,531 $ 78,441
FFO Per Diluted Share $ 2.64 $ 2.76
The decline in 2000 net income available to common shareholders was primarily related to an increase in the provision for depreciation, increases in interest expense, and the loss on investment previously indicated. For the year ended 2000, the provision for depreciation totaled $22.7 million compared with $17.9 million for the same period in 1999. The increased provision for depreciation was the result of additional investments in properties owned directly by the company. During 2000, interest expense totaled $34.6 million compared with $26.9 million for the same period in the prior year, with capitalized interest totaling $3.1 million compared with $8.6 million for the same period in 1999.
Asset Dispositions Effective in Reducing Debt.
In 2000, the company completed asset dispositions totaling $173 million to preserve its low leverage and liquidity in a tight capital market. The proceeds derived from the sales and refinancings were used to meet debt maturities, satisfy unfunded commitment obligations, and pay down the company's line of credit arrangements. The asset dispositions contributed to a 9 percent reduction in total assets, which at December 31, 2000, totaled $1.16 billion.
The company had a total outstanding debt balance of $440 million at year-end 2000, down 18 percent from 1999, and shareholders' equity of $699 million, which represents a debt to total capitalization ratio of 0.39 to 1.0. For the year ended December 31, 2000, the company's coverage ratio of EBITDA to interest was 3.5 to 1.0.
Lease Up Statistics for Assisted Living Facilities.
The company's stabilized assisted living portfolio increased significantly in 2000. Forty-four facilities with an investment balance of $196 million stabilized during the year 2000. As of December 31, 2000, 41 assisted living facilities remained in fill-up. Approximately 70 percent of these facilities were more than 50 percent occupied. The company anticipates that approximately 20 facilities with an investment balance of approximately $123 million will stabilize in the first two quarters of 2001, increasing stabilized properties to approximately 80 percent of the portfolio.
Update on Balanced Care.
Balanced Care Corporation recently announced the initiation of a restructuring plan. The company owns eight assisted living facilities and one skilled nursing facility that are leased to Balanced Care and represent approximately 5 percent of the company's portfolio. These facilities are located in Ohio, Pennsylvania, Indiana, and Tennessee. Five of the facilities are stabilized properties with an average occupancy of approximately 93 percent. Three other properties are in fill-up with an average occupancy of approximately 43 percent. One facility is under construction and is expected to open in the first quarter of 2001. Overall, the eight buildings that are open have occupancy of approximately 70 percent. The company holds letters of credit of approximately $2.2 million as security for Balanced Care's obligations.
Outlook for 2001.
The company's fourth quarter 2000 FFO was $0.66 per diluted share excluding the loss on investment. In order to provide FFO estimates for 2001, the company believes it appropriate to assume no new investment activity beyond completion of $15 to $20 million of existing operator funding commitments, additional asset dispositions of approximately $60 million, increased borrowing costs under its extended line of credit and no further reductions in interest rates. These assumptions produce a base case FFO of $0.64 to $0.65 per diluted share per quarter. As market conditions change, the company will be in a position in subsequent quarterly earnings releases and conference calls to update and adjust FFO estimates.
Conference Call Information.
Health Care REIT has scheduled a conference call on February 2, 2001 at 12:00 p.m. EST to discuss its fourth quarter 2000 performance, industry trends, portfolio performance, and its outlook for 2001. 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 December 31, 2000, the company had investments in 205 health care facilities in 34 states and had total assets of approximately $1.16 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)
December 31
--------------------------
2000 1999
----------- -----------
Assets
Real estate investments:
Real property owned
Land $ 74,319 $ 73,234
Buildings & improvements 770,660 730,337
Construction in progress 11,976 58,954
----------- -----------
856,955 862,525
Less accumulated depreciation (52,968) (35,746)
----------- -----------
Total real property owned 803,987 826,779
Loans receivable
Real property loans 301,321 401,019
Subdebt investments 21,972 19,511
----------- -----------
323,293 420,530
Less allowance for losses on loans
receivable (5,861) (5,587)
----------- -----------
317,432 414,943
----------- -----------
Net real estate investments 1,121,419 1,241,722
Other assets:
Equity investments 5,450 6,713
Deferred loan expenses 2,939 3,311
Cash and cash equivalents 2,844 2,129
Receivables and other assets 24,252 17,296
----------- -----------
35,485 29,449
----------- -----------
Total assets $ 1,156,904 $ 1,271,171
=========== ===========
Liabilities and shareholders'
equity
Liabilities:
Borrowings under line of credit
obligations $ 119,900 $ 177,500
Senior unsecured notes 255,000 290,000
Secured debt 64,852 71,342
Accrued expenses and other
liabilities 18,545 25,333
----------- -----------
Total liabilities $ 458,297 $ 564,175
Shareholders' equity:
Preferred Stock 150,000 150,000
Common Stock 28,806 28,532
Capital in excess of par value 528,138 524,204
Undistributed net income (3,388) 8,883
Accumulated other
comprehensive income (744) 593
Unamortized restricted stock (4,205) (5,216)
----------- -----------
Total shareholders' equity $ 698,607 $ 706,996
----------- -----------
Total liabilities and shareholders'
equity $ 1,156,904 $ 1,271,171
=========== ===========
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
--------------------- ---------------------
2000 1999 2000 1999
--------------------- ---------------------
Revenues:
Operating
lease rents $ 22,328 $ 20,872 $ 88,312 $ 72,700
Interest income 9,655 11,575 41,064 48,076
Commitment
fees and
other income 1,179 1,365 5,837 6,263
Prepayment
fees 0 0 57 1,565
Gain on sale
of properties 613 0 1,684 703
-------- -------- -------- --------
Gross Revenues 33,775 33,812 136,954 129,307
Expenses:
Interest
expense $ 8,529 $ 8,234 $ 34,622 $ 26,916
Provision for
depreciation 6,148 5,271 22,706 17,885
Loss on
investment 2,000 0 2,000 0
General and
administrative 1,751 1,932 7,405 7,359
Loan expense 287 250 1,165 909
Provision for
losses 250 150 1,000 600
-------- -------- -------- --------
Total Expenses 18,965 15,837 68,898 53,669
-------- -------- -------- --------
Net Income 14,810 17,975 68,056 75,638
Preferred stock
dividends 3,376 3,351 13,490 12,814
-------- -------- -------- --------
Net Income
Available to
Common
Shareholders $ 11,434 $ 14,624 $ 54,566 $ 62,824
======== ======== ======== ========
Average number of
common shares
outstanding:
Basic 28,537 28,216 28,418 28,128
Diluted 28,762 28,457 28,643 28,384
Net income per
share:
Basic $ 0.40 $ 0.52 $ 1.92 $ 2.23
Diluted 0.40 0.51 1.91 2.21
Funds from
operations: $ 16,969 $ 19,895 $ 75,531 $ 78,441
Funds from
operations per
share:
Basic $ 0.59 $ 0.71 $ 2.66 $ 2.79
Diluted 0.59 0.70 2.64 2.76
Funds from
operations
excluding loss on
investment: $ 18,969 $ 19,895 $ 77,531 $ 78,441
Funds from
operations per
share excluding
loss on
investment:
Basic $ 0.66 $ 0.71 $ 2.73 $ 2.79
Diluted 0.66 0.70 2.71 2.76
Dividends per
share $ 0.585 $ 0.575 $ 2.335 $ 2.270
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 2000
Portfolio Composition ($000's) Exhibit 1
------------------------------
Balance Sheet
Data No. Properties No. Beds/Units Balance % Balance
----------------------------------------------------
Real Property 156 12,400 $ 803,987 71%
Loans Receivable 49 5,377 301,321 27%
Subdebt
Investments -na- -na- 21,972 2%
----------------------------------------------------
Total Investments 205 17,777 $1,127,280 100%
Investment
Data No. Properties No. Beds/Units Investment(1) %Investment
----------------------------------------------------
Assisted Living
Facilities 150 10,150 $ 749,334 66%
Nursing Homes 47 6,625 299,364 26%
Specialty Care
Facilities 6 708 82,918 7%
Behavioral Care 2 294 7,609 1%
----------------------------------------------------
Real Estate
Investments 205 17,777 $1,139,225 100%
Investment by
Owner Type No. Properties No. Beds/Units Investment(1) %Investment
----------------------------------------------------
Publicly Traded 72 4,316 $ 271,096 24%
Key Private 88 8,789 655,868 57%
Privately Held 45 4,672 212,261 19%
----------------------------------------------------
Real Estate
Investments 205 17,777 $1,139,225 100%
Notes: (1) Real Estate Investments include gross real estate
investments and credit enhancements which amounted to $1,127,280,000
and $11,945,000, respectively.
Revenue Composition ($000's) Exhibit 2
----------------------------
Three Months Ended Year Ended
December 31, 2000 December 31, 2000
--------------------- ---------------------
Revenue by
Investment Type
Real Property $ 23,303 69% $ 93,185 68%
Loans Receivable
& Other 9,781 29% 42,566 31%
Subdebt
Investments 691 2% 1,203 1%
--------------------- ---------------------
Total $ 33,775 100% $136,954 100%
Revenue by
Facility Type
Assisted Living
Facilities $ 22,162 66% $ 91,614 67%
Nursing Homes 8,805 26% 34,097 25%
Specialty Care
Facilities 2,808 8% 11,243 8%
Behavioral Care 0 0% 0 0%
--------------------- ---------------------
Total $ 33,775 100% $136,954 100%
Revenue by Owner
Type
Publicly Traded $ 8,246 24% $ 32,239 24%
Key Private 20,264 60% 84,049 61%
Privately Held 5,265 16% 20,666 15%
--------------------- ---------------------
Total $ 33,775 100% $136,954 100%
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 $ 1,994 $ 1,818 $ 3,812 4%
2002 1,738 6,524 8,262 6%
2003 2,770 1,480 4,250 3%
2004 410 5,213 5,623 4%
Thereafter 86,143 20,922 107,065 83%
----------------------------------------------------------
Total $ 93,055 $ 35,957 $ 129,012 100%
Notes: (1) Revenue impact by year, annualized
Committed Investment Balances Exhibit 4
------------------------------
($000's except Investment per Bed/Unit)
Committed Investment
No. Properties No. Beds/Units Balance(1) per Bed/Unit
-----------------------------------------------------
Assisted Living
Facilities 150 10,150 $ 763,997 $ 75,271
Nursing Homes 47 6,625 299,364 45,187
Specialty Care
Facilities 6 708 82,918 117,116
Behavioral Care 2 294 7,609 25,880
----------------------------------------------------
Total 205 17,777 $1,153,888 -na-
Notes: (1) Committed Balance includes 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 $ 126,791 11%
Life Care Centers of
America, Inc. 13 86,654 8%
Alterra Healthcare 38 85,961 8%
Atria Senior Quarters 9 82,426 7%
Balanced Care 9 53,977 5%
Remaining Operators 117 703,416 61%
----------------------------------------
Total 205 $1,139,225 100%
Concentration by Revenue No. Properties Revenue (1) % Revenue
----------------------------------------
Merrill Gardens 18 $ 12,941 10%
Alterra Healthcare 38 10,482 8%
Atria Senior Quarters 9 10,426 8%
Life Care Centers of
America, Inc. 13 9,189 7%
Olympus Healthcare Group 11 7,069 5%
Remaining Operators 116 86,847 62%
----------------------------------------
Total 205 $136,954 100%
Notes: (1) Year ended December 31, 2000
Selected Facility Data Exhibit 6
----------------------
Coverage Data
---------------------
% Payor Mix
----------------- Before After
Census Private Medicare Mgt. Fees Mgt. Fees
-------------------------- ---------------------
Nursing Homes 81% 24% 12% 1.71x 1.21x
Assisted Living
Facilities 91% 100% 0% 1.35x 1.17x
Specialty Care
Facilities 65% 22% 50% 2.42x 1.88x
Behavioral Care 53% 34% 66% 3.82x 1.90x
---------------------
Weighted Averages 1.62x 1.27x
Notes: Data as of September 30, 2000
Security Deposits & Other Credit Support ($000's) Exhibit 7
-------------------------------------------------
Balance % Investment
----------------------------
Cross Defaulted $ 1,054,315 92% of gross real
estate investments
Cross Collateralized 274,554 92% of mortgage loans
Bank Letters of Credit
& Cash 30,767 3% of investment
balance
Current
Capitalization ($000's) Balance % Balance
------------------------ --------------------------
Borrowings Under Bank Lines $ 119,900 11%
Long-Term Debt Obligations 319,852 28%
Shareholders' Equity 698,607 61%
--------------------------
Total Book Capitalization $ 1,138,359 100%
Leverage & Performance Ratios
-----------------------------
Debt/Total Book Cap 39%
Debt/Equity 63%
Interest Coverage 3.66x 4th Qtr.
3.51x L12M
FFO Payout Ratio 89% 4th Qtr.
(excluding loss on investment) 86% L12M
Debt Maturities and Principal Payments ($000's) Exhibit 8
-----------------------------------------------
Year Lines of Credit(1) Senior Notes Secured Debt Total
----------------------------------------------------------------------
2001 $ 25,000 $ 10,000 $ 67 $ 35,067
2002 0 20,000 75 20,075
2003 150,000 35,000 84 185,084
2004 0 40,000 64,133 104,133
2005 0 0 493 493
2006 0 0 0 0
Thereafter 0 150,000 0 150,000
-----------------------------------------------------------
Total $ 175,000 $ 255,000 $ 64,852 $ 494,852
Notes: (1) Lines of Credit reflect 100% capacity
Investment Activity ($000's) Exhibit 9
----------------------------
Three Months Ended Year Ended
December 31, 2000 December 31, 2000
------------------ ------------------
Funding by
Investment Type
Real Property $ 4,097 21% $18,113 25%
Mortgage &
Other Loans 5,199 26% 5,199 7%
Construction
Advances 6,125 31% 33,957 47%
Subdebt
Investments 4,510 22% 15,523 21%
------------------ ------------------
Total $19,931 100% $72,792 100%
Real Estate
Investments
Assisted Living
Facilities $16,852 87% $60,014 82%
Nursing Homes 3,079 13% 12,778 18%
Behavioral Care 0 0% 0 0%
Specialty Care
Facilities 0 0% 0 0%
------------------ ------------------
Total $19,931 100% $72,792 100%
Geographic Concentration ($000's) Exhibit 10
---------------------------------
Concentration by Region No. Properties Investment % Investment
-------------------------------------------
South 116 $ 546,678 48%
Northeast 31 260,826 23%
West 32 200,338 17%
Midwest 26 131,383 12%
-------------------------------------------
Total 205 $1,139,225 100%
Concentration by State No. Properties Investment % Investment
-------------------------------------------
Texas 34 $ 138,562 12%
Florida 28 137,811 12%
Massachusetts 14 119,318 10%
New York 6 61,639 5%
California 9 63,110 6%
Remaining States 114 618,785 55%
-------------------------------------------
Total 205 $1,139,225 100%
Revenue by State No. Properties Revenue (1) % Revenue
-------------------------------------------
Texas 34 $ 18,995 14%
Florida 28 14,647 11%
Massachusetts 14 12,627 9%
California 9 9,339 7%
North Carolina 9 8,451 6%
Remaining States 111 72,895 53%
-------------------------------------------
Total 205 $136,954 100%
Notes: (1) Year ended December 31, 2000
Funds From Operations Computation ($000's) Exhibit 11
------------------------------------------
Three Months Ended Year Ended
December 31, 2000 December 31, 2000
----------------- -----------------
Net Income Available to Common
Shareholders $ 11,434 $ 54,566
Add: Depreciation Expense 6,148 22,706
Asset Impairment Charges 0 0
Deduct: Gain on Sale of Assets (613) (1,684)
Prepayment Fees (0) (57)
----------------- -----------------
Funds From Operations (FFO) $ 16,969 $ 75,531
FFO Excluding Loss on Investment $ 18,969 $ 77,531
Average Common Shares Outstanding:
Basic 28,537 28,418
Diluted 28,762 28,643
FFO Per Common Share:
Basic $ .59 $ 2.66
Diluted $ .59 $ 2.64
FFO Per Common Share Excluding
Loss on Investment:
Basic $ .66 $ 2.73
Diluted $ .66 $ 2.71
Disposition Activity Exhibit 12
--------------------
Three Months Ended Year Ended
December 31, 2000 December 31, 2000
------------------- -------------------
Dispositions by
Investment Type
Real Property $ 0 0% $107,179 62%
Mortgage & Other
Loans 12,586 100% 65,963 38%
-------- -------- -------- --------
Total $ 12,586 100% $173,142 100%
======== ======== ======== ========
Real Estate
Investments
Assisted Living
Facilities $ 12,586 100% $170,743 99%
Nursing Homes 0 0% 2,399 1%
-------- -------- -------- --------
Total $ 12,586 100% $173,142 100%
======== ======== ======== ========
Lease Up Statistics on Assisted Living Facilities Exhibit 13
-------------------------------------------------
Occupancy Facilities Months in Operation Revenue(1) % of Revenue
--------------------------------------------------------
00% - 50% 12 13.8 $3,110 9%
50% - 70% 15 17.2 $2,949 9%
70% + 14 18.1 $1,880 6%
Notes: (1) Interest and rental income for year ended
December 31, 2000.
--30--fkb/clv*
| CONTACT: | Health Care REIT, Inc. |
|---|---|
| Ray Braun, 419/247-2800 | |
| Mike Crabtree, 419/247-2800 |