TOLEDO, Ohio--(BW HealthWire)--July 18, 2000--Health Care REIT, Inc. (NYSE:HCN) today announced operating results for the second quarter of 2000 and six months ending June 30, 2000.
Funds from operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, totaled $19.4 million, or $0.68 per diluted share for the three months ended June 30, 2000, as compared with $19.7 million, or $0.69 per diluted share, for the same period in 1999. Revenues for the quarter increased 6 percent to $34.3 million from $32.5 million for the three months ended June 30, 1999. Net income available to common shareholders for the second quarter of 2000 totaled $14.6 million, or $0.51 per diluted share as compared with net income available to common shareholders of $15.8 million, or $0.56 per diluted share, for the same period in 1999.
For the six months ended June 30, 2000, FFO totaled $39.3 million, or $1.38 per diluted share, as compared with $38.7 million, or $1.36 per diluted share, for the same period in 1999. Revenues for the six month period increased 13 percent to $69.3 million from $61.3 million a year ago. Net income available to common shareholders for the six months ended June 30, 2000, totaled $29.3 million, or $1.03 per diluted share, as compared with net income available to common shareholders of $32.0 million, or $1.13 per diluted share, for the same period in 1999.
Separately, the Board of Directors voted to declare a dividend for the quarter ended June 30, 2000, of $0.585 per share as compared with $0.57 per share for the same period in 1999. The dividend represents the 117th consecutive dividend payment. The dividend will be payable August 21, 2000, to shareholders of record on August 1, 2000.
Dividend payments to common shareholders during the six months ended June 30, 2000, totaled $33.3 million, or $1.165 per share, as compared with dividend payments of $31.8 million, or $1.125 per share for the same period in 1999. Correspondingly, the FFO payout ratio for the six month period for 2000 was 84 percent as compared with a FFO payout ratio of 83 percent for the six months ended June 30, 1999.
During the first six months of 2000, the company completed asset sales totaling $138 million. The proceeds derived from the sales were used to meet debt maturities, satisfy unfunded commitment obligations, and pay down the company's line of credit arrangements. The asset sales contributed to a 5 percent reduction in total assets, which at June 30, 2000, totaled $1.17 billion.
At June 30, 2000, the company had a total outstanding debt balance of $442 million, and shareholders' equity of $705 million, which represents a debt to total capitalization ratio of 0.39 to 1.0. During the first six months of 2000, the company's coverage ratio of EBITDA to interest was 3.4 to 1.0.
"The combination of asset sales and operating results were consistent with our expectations and stated objectives. We are on track to complete our $200 million asset sales program," commented George L. Chapman, chairman and chief executive officer. "The success of our asset sales has generated liquidity, enhancing the company's balance sheet and financial strength. 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, ensuring the certainty of interest and dividend payments. We have elected to maintain the dividend at its current level, with increases to resume once capital becomes available at costs that permit accretive investment activity. We are well positioned to pursue future investment opportunities as our industry recovers."
Interest expense for the three months ended June 30, 2000, was $8.6 million as compared with $6.7 million for the same period in 1999. During the six month period ended June 30, 2000, interest expense totaled $17.7 million as compared with $10.9 million for the same period in the prior year. The increase in the 2000 periods was primarily due to the issuance of $114 million of long-term debt during 1999 and higher average borrowings under the company's line of credit arrangements. The increase in the 2000 periods was offset by the amount of capitalized interest recorded.
The company capitalizes certain interest costs associated with funds used to finance the construction of properties owned directly by the company. The amount capitalized is based upon the borrowings outstanding during the construction period using the rate of interest which approximates the company's cost of financing. The company's interest expense is reduced by the amount capitalized. Capitalized interest for the second quarter of 2000, totaled $1.0 million as compared with $2.2 million for the same period in 1999. During the six month period ended June 30, 2000, capitalized interest totaled $2.0 million as compared with $5.1 million for the same period in 1999.
The decline in net income during the three and six month periods was related primarily to an increase in the company's provision for depreciation and the level of non-recurring revenue recognized in the comparable periods in 1999. For the three months ended June 30, 2000, the provision for depreciation totaled $5.3 million as compared with $4.5 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. Included in net income for the second quarter of 1999 were non-recurring gains and prepayment fees of $550,000, as compared with $451,000 for the second quarter of 2000.
For the six months ended June 30, 2000, the provision for depreciation totaled $10.6 million as compared with $8 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. Included in net income for the first half of 1999 were non-recurring gains and prepayment fees of $1.4 million, as compared with $574,000 for the first half of 2000.
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, 2000, the company had investments in 215 health care facilities in 34 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.
FINANCIAL SCHEDULES FOLLOW
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.
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED BALANCE SHEETS (unaudited)
(Amounts in thousands)
June 30
------------------------
2000 1999
------------------------
Assets
Real estate investments:
Real property owned
Land $ 72,374 $ 60,847
Buildings & improvements 740,290 636,149
Construction in progress 27,462 100,794
----------- -----------
840,126 797,790
Less accumulated depreciation (41,952) (27,505)
----------- -----------
Total real property owned 798,174 770,285
Loans receivable
Real property loans 318,259 422,720
Subdebt investments 26,541 21,313
----------- -----------
344,800 444,033
Less allowance for losses
on loans receivable (6,087) (5,287)
----------- -----------
338,713 438,746
----------- -----------
Net real estate investments 1,136,887 1,209,031
Other assets:
Equity investments 5,790 7,845
Deferred loan expenses 3,273 3,575
Cash and cash equivalents 3,022 907
Receivables and other assets 20,354 14,155
----------- -----------
32,439 26,482
----------- -----------
Total assets $1,169,326 $1,235,513
----------- -----------
----------- -----------
Liabilities and shareholders' equity
Liabilities:
Borrowings under line
of credit obligations $ 122,800 $ 156,600
Senior unsecured notes 255,000 290,000
Secured debt 64,882 57,386
Accrued expenses and other liabilities 21,932 24,175
----------- -----------
Total liabilities $ 464,614 $ 528,161
Shareholders' equity:
Preferred Stock 150,000 150,000
Common Stock 28,660 28,379
Capital in excess of par value 525,980 521,362
Undistributed net income 4,956 10,621
Accumulated other
comprehensive income (413) 1,213
Unamortized restricted stock (4,471) (4,223)
----------- -----------
Total shareholders' equity $ 704,712 $ 707,352
----------- -----------
Total liabilities
and shareholders' equity $1,169,326 $1,235,513
----------- -----------
----------- -----------
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
--------------------- -------------------
2000 1999 2000 1999
--------------------- -------------------
Revenues:
Operating lease rents $22,087 $18,134 $43,718 $32,274
Interest income 10,192 12,142 21,713 23,937
Commitment fees and
other income 1,591 1,718 3,266 3,764
Prepayment fees 57 475 57 658
Gain on sale of properties 394 75 517 703
------- ------- ------- -------
Gross Revenues 34,321 32,544 69,271 61,336
Expenses:
Interest expense $ 8,581 $ 6,680 $17,682 $10,949
Provision for depreciation 5,311 4,451 10,574 8,006
General and administrative 1,930 1,872 3,830 3,546
Loan expense 286 252 603 418
Provision for losses 250 150 500 300
------- ------- ------- -------
Total Expenses 16,358 13,405 33,189 23,219
------- ------- ------- -------
Net Income 17,963 19,139 36,082 38,117
Preferred stock dividends 3,376 3,352 6,738 6,111
------- ------- ------- -------
Net Income Available to
Common Shareholders $14,587 $15,787 $29,344 $32,006
------- ------- ------- -------
------- ------- ------- -------
Average number of common
shares outstanding:
Basic 28,384 28,145 28,350 28,111
Diluted 28,613 28,440 28,579 28,431
Net income per share:
Basic $ 0.51 $ 0.56 $ 1.04 $ 1.14
Diluted 0.51 0.56 1.03 1.13
Funds from operations $19,447 $19,688 $39,344 $38,651
Funds from operations
per share:
Basic $ 0.69 $ 0.70 $ 1.39 $ 1.37
Diluted 0.68 0.69 1.38 1.36
Dividends per share $ 0.585 $ 0.565 $ 1.165 $ 1.125
HEALTH CARE REIT, INC.
Financial Supplement - June 30, 2000
Portfolio Composition ($000's) Exhibit 1
-----------------------------
Balance Sheet Data No. No.
Properties Beds/Units Balance %Balance
-----------------------------------------------
Real Property 156 12,448 $ 798,174 70%
Loans Receivable 59 5,911 318,259 28%
Subdebt Investments -na- -na- 26,541 2%
-----------------------------------------------
Total Investments 215 18,359 $1,142,974 100%
Investment Data No. No.
Properties Beds/Units Investment(1) %Investment
------------------------------------------------
Assisted Living
Facilities 159 10,638 $ 774,988 67%
Nursing Homes 48 6,719 289,616 25%
Specialty Care
Facilities 6 708 83,370 7%
Behavioral Care 2 294 7,425 1%
-----------------------------------------------
Real Estate Investments 215 18,359 $1,155,399 100%
Investment by Owner No. No.
Type Properties Beds/Units Investment(1) %Investment
------------------------------------------------
Publicly Traded 74 4,408 $ 271,402 24%
Key Private 101 9,119 680,758 59%
Privately Held 40 4,832 203,239 17%
-----------------------------------------------
Real Estate Investments 215 18,359 $1,155,399 100%
Note:
(1) Real Estate Investments include gross real estate investments and
credit enhancements which amounted to $1,142,974,000 and
$12,425,000, respectively.
Revenue Composition ($000's) Exhibit 2
---------------------------
Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000
-------------------- -------------------
Revenue by Investment Type
Real Property $23,506 68% $46,409 67%
Loans Receivable & Other 10,211 30% 21,733 31%
Subdebt Investments 604 2% 1,129 2%
-------------------- -------------------
Total $34,321 100% $69,271 100%
Revenue by Facility Type
Assisted Living
Facilities $23,346 68% $47,157 68%
Nursing Homes 8,166 24% 16,519 24%
Specialty Care
Facilities 2,809 8% 5,595 8%
Behavioral Care 0 0% 0 0%
-------------------- -------------------
Total $34,321 100% $69,271 100%
Revenue by Owner Type
Publicly Traded $ 8,133 24% $15,889 23%
Key Private 20,727 60% 43,106 62%
Privately Held 5,461 16% 10,276 15%
-------------------- -------------------
Total $34,321 100% $69,271 100%
Revenue Composition (Continued) ($000's) Exhibit 3
---------------------------------------
Operating Lease Expirations & Loan Maturities
Current
Current Lease Interest Interest and
Year Revenue(1) Revenue(1) Lease Revenue % of Total
-------------------------------------------------------------------
2000 $ 2,241 $ 312 $ 2,553 2%
2001 0 1,812 1,812 1%
2002 1,738 6,119 7,857 7%
2003 2,770 1,488 4,258 3%
2004 410 5,069 5,479 4%
Thereafter 84,950 23,120 108,070 83%
-------------------------------------------------------
Total $92,109 $37,920 $130,029 100%
Notes: (1) Revenue impact by year, annualized
Committed Investment Balances Exhibit 4
-----------------------------
($000's except Investment per Bed/Unit)
No. No. Committed Investment
Properties Beds/Units Balance(1) per Bed/Unit
-----------------------------------------------
Assisted Living
Facilities 159 10,638 $ 795,575 $74,786
Nursing Homes 48 6,719 290,531 43,240
Specialty Care
Facilities 6 708 83,370 117,754
Behavioral Care 2 294 7,426 25,257
-----------------------------------------------
Total 215 18,359 $1,176,902 -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
------------------------------
No. %
Concentration by Investment Properties Investment Investment
------------------------------------------
Summerville Healthcare 12 $ 144,501 12%
Atria Senior Quarters 11 92,320 8%
Life Care Centers of
America, Inc. 13 87,773 8%
Alterra Healthcare 38 87,177 8%
Merrill Gardens 15 67,455 6%
Remaining Operators 126 676,173 58%
------------------------------------------
Total 215 $1,155,399 100%
No. %
Concentration by Revenue Properties Revenue(1) Revenue
------------------------------------------
Summerville Healthcare 12 $ 7,711 11%
Atria Senior Quarters 11 5,391 8%
Alterra Healthcare 38 5,169 8%
Olympus Healthcare
Group, Inc. 3 4,337 5%
Life Care Centers of
America, Inc. 13 4,005 6%
Remaining Operators 138 42,658 62%
------------------------------------------
Total 215 $ 69,271 100%
Notes: (1) Six months ended June 30, 2000
Selected Facility Data Exhibit 6
----------------------
Coverage Data
---------------------
% Payor Mix
-------------------- Before After
Census Private Medicare Mgt. Fees Mgt. Fees
------------------------------------------------------
Nursing Homes 83% 25% 15% 1.90x 1.39x
Assisted Living
Facilities 91% 100% 0% 1.38x 1.19x
Specialty Care
Facilities 65% 21% 30% 3.22x 2.62x
Behavioral Care 51% 33% 67% 3.39x 2.01x
--------------------
Weighted Averages 1.81x 1.45x
Notes: Data as of March 31, 2000
Security Deposits & Other Credit Support ($000's) Exhibit 7
------------------------------------------------
Balance %Investment
----------------------------
Cross Defaulted $1,032,348 91% of gross real
estate investments
Cross Collateralized 300,423 94% of mortgage loans
Bank Letters of
Credit & Cash 34,539 3% of investment balance
Current Capitalization Balance % Balance Leverage & Performance
($000's) Ratios
---------------------- ------------------- ----------------------
Borrowings Under
Bank Lines $ 122,800 11% Debt/Total Book Cap 39%
Long-Term Debt
Obligations 319,882 28% Debt/Equity 63%
Shareholders' Equity 704,712 61% Interest
Coverage 3.5x 2nd Qtr.
-------------------- 3.5x L12M
Total Book
Capitalization $1,147,394 100%
FFO Payout
Ratio 86% 2nd Qtr.
83% L12M
Debt Maturities and Principal Payments ($000's) Exhibit 8
----------------------------------------------
Lines of
Year Credit(1) Senior Notes Secured Debt Total
-------------------------------------------------------------------
2000 $ 0 $ 0 $ 31 $ 31
2001 200,000 10,000 67 210,067
2002 0 20,000 75 20,075
2003 0 35,000 84 35,084
2004 0 40,000 64,133 104,133
2005 0 0 492 492
2006 0 0 0 0
Thereafter 0 150,000 0 150,000
-------------------------------------------------------
Total $200,000 $255,000 $ 64,882 $519,882
Notes: (1) Lines of Credit reflect 100% capacity
Investment Activity ($000's) Exhibit 9
----------------------------
Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000
-------------------- --------------------
Funding by Investment
Type
Real Property $11,703 48% $11,886 28%
Mortgage & Other Loans 0 0% 0 0%
Construction Advances 8,452 35% 20,535 48%
Direct Investments 4,094 17% 9,941 24%
-------------------- --------------------
Total $24,248 100% $42,362 100%
Real Estate Investments
Assisted Living
Facilities $18,551 77% $35,626 84%
Nursing Homes 5,697 23% 6,736 16%
Behavioral Care 0 0% 0 0%
Specialty Care
Facilities 0 0% 0 0%
-------------------- --------------------
Total $24,248 100% $42,362 100%
Geographic Concentration ($000's) Exhibit 10
---------------------------------
Concentration by Region No. Properties Investment % Investment
-------------------------------------------
South 126 $ 580,420 50%
Northeast 31 250,779 22%
West 32 195,740 17%
Midwest 26 128,460 11%
-------------------------------------------
Total 215 $1,155,399 100%
Concentration by State No. Properties Investment % Investment
-------------------------------------------
Texas 36 $ 143,240 13%
Florida 29 142,839 13%
Massachusetts 14 107,025 9%
North Carolina 16 82,597 7%
New York 10 64,791 6%
Remaining States 110 614,907 52%
-------------------------------------------
Total 215 $1,155,399 100%
Revenue by State No. Properties Revenue (1) % Revenue
-------------------------------------------
Texas 36 $ 10,534 15%
Florida 29 7,001 10%
Massachusetts 14 6,138 9%
North Carolina 16 4,673 7%
California 10 4,446 6%
Remaining States 110 36,479 53%
-------------------------------------------
Total 215 $ 69,271 100%
Notes: (1) Six months ended June 30, 2000
Funds From Operations Computation ($000's) Exhibit 11
------------------------------------------
Three Months Ended Six Months Ended
June 30, 2000 June 30, 2000
-------------------------------------
Net Income Available to Common
Shareholders $14,588 $29,345
Add: Depreciation Expense 5,311 10,574
Loss on Sale of Assets 0 0
Asset Impairment Charges 0 0
Deduct: Gain on Sale of Assets (394) (517)
Prepayment Fees (57) (57)
-------------------------------------
Funds From Operations (FFO) $19,448 $39,345
Average Common Shares Outstanding:
Basic 28,384 28,350
Diluted 28,613 28,579
FFO Per Common Share:
Basic $ 0.69 $ 1.39
Diluted $ 0.68 $ 1.38
CONTACT: Health Care REIT, Inc.
Ray Braun, 419/247-2800
Mike Crabtree, 419/247-2800