TOLEDO, Ohio--(BW HealthWire)--July 20, 1999--
Second Quarter Results Year-to-Date Highlights ---------------------- ----------------------- - $32.5 million gross income - $199 million new investments - $0.69 per diluted share FFO - $1.2 billion total assets - $0.565 per share dividends - 33% asset growth - 82% FFO payout ratio - 9% per diluted share FFO growth
Health Care REIT, Inc. (NYSE: HCN) today announced operating results for the second quarter of 1999 and six months ending June 30, 1999.
Funds from operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, achieved a record level of $19.7 million, or $0.69 per diluted share, for the three months ended June 30, 1999, a 9.5 percent per share increase from $16.2 million, or $0.63 per diluted share, for the same period in 1998. Revenues for the quarter increased 41 percent to $32.5 million from $23.2 million for the three months ended June 30, 1998. Net income available to common shareholders for the second quarter of 1999 totaled $15.8 million, or $0.56 per diluted share as compared with net income available to common shareholders of $13.9 million, or $0.54 per diluted share, for the same period in 1998.
For the six months ended June 30, 1999, FFO achieved a record level of $38.7 million, or $1.36 per diluted share, an 8.8 percent per share increase from $31.5 million, or $1.25 per diluted share, for the same period in 1998. Revenues for the six month period increased 38 percent to $61.3 million from $44.4 million a year ago. Net income available to common shareholders for the six months ended June 30, 1999 totaled $32 million, or $1.13 per diluted share as compared with net income available to common shareholders of $27.3 million, or $1.09 per diluted share, for the same period in 1998.
In addition, the company announced that upon a review of its operating results and financial condition, the Board of Directors voted to declare a dividend for the quarter ended June 30, 1999, of $0.57 per share as compared with $0.55 per share for the same period in 1998.
The dividend is a one-half cent increase from the dividend paid for the first quarter of 1999 and represents the 113th consecutive dividend payment. The dividend will be payable August 20, 1999, to shareholders of record on August 3, 1999.
Revenue growth was generated primarily by new investment activity in 1998 and the first six months of 1999, of $397.5 million and $199.2 million, respectively. Investment activity contributed to a 33 percent increase in total assets, which at June 30, 1999, totaled $1.2 billion as compared with total assets of $927 million at June 30, 1998.
Dividend payments to common shareholders for the three months ended June 30, 1999, totaled $16 million, or $0.565 per share, as compared with dividend payments of $13.8 million, or $0.545 per share for the same period in 1998. Correspondingly, the FFO payout ratio for the second quarter of 1999 was 82 percent as compared with a FFO payout ratio of 86 percent for the three months ended June 30, 1998, evidence of the company's commitment to reduce its FFO payout ratio to a level below 80 percent during the next 12 months.
``The second quarter and year-to-date operating results exceeded management's targets and were supported by strong portfolio performance,'' commented George L. Chapman, chairman and chief executive officer. ``During the past 12 months, the health care sector has been under a dark cloud of uncertainty that has taken a toll on operating company stocks and the stock valuations of health care REITs. The major factors include changes in Medicare reimbursement, the well-publicized difficulties of certain skilled nursing operators adjusting to the new reimbursement system and potential overbuilding in the assisted living sector.
``We believe the company is well positioned relative to its skilled nursing and assisted living investments,'' added Chapman. ``Skilled nursing facilities represent less than 25 percent of the company's total investments and the operators of these properties have demonstrated success in managing the changes to Medicare reimbursement. While we expect property level coverage ratios to compress slightly in the near term, facility-based revenues and operating margins remain strong and should be more than adequate to meet the company's scheduled lease and interest payments. The changes in Medicare reimbursement should not impact the company's revenue, cash flow or earnings.
``Health Care REIT was the first REIT to invest in the assisted living sector. We believe the current national demand for assisted living is strong and that long-term demand will outstrip supply in the aggregate. However, local overbuilding is a basic real estate risk component that we manage carefully. The company has mitigated the risk of local over-supply by creating a national portfolio that benefits from a high degree of tenant/operator diversification, significant security features, and strong underwriting and monitoring procedures. As a result, our assisted living properties have generally met management's underwriting targets for fill-up, occupancy and coverage.
``We believe long-term care (skilled nursing, assisted living and retirement facilities) is a local product best served by local and regional health care operators. Our company has a 29-year track record of financing and supporting well-capitalized emerging health care operators. The current and historical performance of the company's portfolio is a direct result of our active asset management approach and the conservative nature of our investment process. We expect continued success throughout the balance of 1999.''
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At June 30, 1999, the company had investments in 239 health care facilities in 35 states and had total assets of approximately $1.2 billion.
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, competition in the financing of health care facilities, the availability of capital, 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
For more information on Health Care REIT, Inc.,
via facsimile at no cost, dial 1-800-PRO-INFO
and enter the company code -- HCN
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED BALANCE SHEETS (unaudited)
(Amounts in thousands)
June 30
---------------------------
1999 1998
---------------------------
Assets
Real estate investments:
Real property owned:
Land $ 60,847 $ 39,305
Buildings & improvements 636,149 385,031
Construction in progress 100,794 87,905
----------- -----------
797,790 512,241
Less accumulated depreciation (27,505) (15,930)
----------- -----------
Total real property owned 770,285 496,311
Loans receivable 421,612 390,683
Direct financing leases 1,108 7,722
----------- -----------
1,193,005 894,716
Less allowance for losses on
loans receivable (5,287) (4,687)
----------- -----------
Net real estate investments 1,187,718 890,029
Other assets:
Direct investments 27,654 21,790
Marketable securities 1,504 3,832
Deferred loan expenses 3,575 2,582
Cash and cash equivalents 907 1,270
Receivables and other assets 14,155 7,484
----------- -----------
47,795 36,958
----------- -----------
Total assets $ 1,235,513 $ 926,987
----------- -----------
----------- -----------
Liabilities and shareholders' equity
Liabilities:
Borrowings under line of
credit obligations $ 156,600 $ 89,600
Senior unsecured notes 290,000 240,000
Secured debt 57,386 7,467
Accrued expenses and
other liabilities 24,175 19,313
----------- -----------
Total liabilities $ 528,161 $ 356,380
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding -
6,000,000 in 1999
and 3,000,000 in 1998 150,000 75,000
Common Stock, $1.00 par value:
Authorized - 75,000,000 shares
Issued and outstanding -
28,378,791 in 1999
and 25,456,788 in 1998 28,379 25,457
Capital in excess of par value 521,362 460,700
Undistributed net income 10,621 8,985
Accumulated other
comprehensive income 1,213 3,831
Unamortized restricted stock (4,223) (3,366)
----------- -----------
Total shareholders' equity $ 707,352 $ 570,607
----------- -----------
Total liabilities and shareholders' equity $ 1,235,513 $ 926,987
----------- -----------
----------- -----------
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
--------------------- --------------------
1999 1998 1999 1998
--------------------- --------------------
Revenues:
Operating lease rents $ 18,134 $ 9,625 $ 32,274 $ 17,269
Interest income 12,142 11,831 23,937 23,947
Direct financing
lease income 46 214 146 428
Loan and commitment fees 1,445 1,286 3,146 2,512
Other income 227 203 472 229
Prepayment fees 475 658
Gain on sale of properties 75 703
--------- -------- -------- --------
$ 32,544 $ 23,159 $ 61,336 $ 44,385
Expenses:
Interest expense $ 6,680 $ 4,461 $ 10,949 $ 8,701
Provision for
depreciation 4,451 2,292 8,006 4,162
General and
administrative 1,872 1,336 3,546 2,717
Loan expense 252 181 418 357
Provision for losses 150 150 300 300
--------- -------- -------- --------
13,405 8,420 23,219 16,237
--------- -------- -------- --------
Net Income 19,139 14,739 38,117 28,148
Preferred stock dividends 3,352 832 6,111 832
--------- -------- -------- --------
Net Income Available to
Common Shareholders $ 15,787 $ 13,907 $ 32,006 $ 27,316
--------- -------- -------- --------
--------- -------- -------- --------
Average number of
common shares outstanding:
Basic 28,145 25,272 28,111 24,768
Diluted 28,440 25,612 28,431 25,130
Net income per share:
Basic $ 0.56 $ 0.55 $ 1.14 $ 1.10
Diluted 0.56 0.54 1.13 1.09
Funds from operations $ 19,688 $ 16,199 $ 38,651 $ 31,478
Funds from operations
per share:
Basic $ 0.70 $ 0.64 $ 1.37 $ 1.27
Diluted 0.69 0.63 1.36 1.25
Dividends per share $ 0.565 $ 0.545 $ 1.125 $ 1.085
HEALTH CARE REIT, INC.
Financial Supplement - June 30, 1999
Portfolio Composition ($000's) Exhibit 1
------------------------------
Balance Sheet Data No. No.
Properties Beds/Units Balance (1) % Balance
-------------------------------------------------
Real Property 164 13,293 $ 770,285 63%
Loans Receivable
& Other 75 7,492 422,720 35%
Direct Investments -na- -na- 27,654 2%
-------------------------------------------------
Total Investments 239 20,785 $1,220,659 100%
Investment Data No. No. %
Properties Beds/Units Investment (2) Investment
-------------------------------------------------
Assisted Living
Facilities 166 11,380 $ 739,794 61%
Nursing Homes 50 7,079 290,999 24%
Retirement Centers 15 1,319 70,316 6%
Specialty Care
Facilities 6 713 91,618 8%
Behavioral Care 2 294 9,203 1%
-------------------------------------------------
Real Estate Investments 239 20,785 $1,201,930 100%
Investment by No. No. %
Owner Type Properties Beds/Units Investment (2) Investment
-------------------------------------------------
Publicly Traded 86 6,055 $ 363,756 30%
Key Private 108 10,498 659,507 55%
Privately Held 45 4,232 178,667 15%
-------------------------------------------------
Real Estate Investments 239 20,785 $1,201,930 100%
Notes: (1) Total investments include gross real estate investments
and direct investments which amounted to $1,193,005,000
and $27,654,000, respectively.
(2) Real Estate Investments include gross real estate
investments and credit enhancements which amounted to
$1,193,005,000 and $8,925,000, respectively.
Revenue Composition ($000's) Exhibit 2
----------------------------
Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999
------------------- ----------------
Revenue by Investment Type
Real Property $19,364 60% $35,275 58%
Loans Receivable & Other 12,515 38% 24,727 40%
Direct Investments 665 2% 1,334 2%
------- ----- ------- -----
Total $32,544 100% $61,336 100%
Revenue by Facility Type
Assisted Living Facilities $19,368 60% $34,461 56%
Nursing Homes 8,425 26% 17,755 29%
Specialty Care Facilities 3,081 9% 6,096 10%
Retirement Centers 1,670 5% 3,024 5%
Behavioral Care 0 0% 0 0%
------- ----- ------- -----
Total $32,544 100% $61,336 100%
Revenue by Owner Type
Publicly Traded $11,010 34% $18,364 30%
Key Private 16,557 51% 31,765 52%
Privately Held 4,977 15% 11,207 18%
------- ----- ------- -----
Total $32,544 100% $61,336 100%
Revenue Composition (Continued) ($000's) Exhibit 3
----------------------------------------
Operating Lease Expirations & Loan Maturities
Current Lease Current Interest and
Year Revenue(1) Interest Lease Revenue % of Total
Revenue(1)
----------------------------------------------------------------------
1999 $ 1,260 $ 1 $ 1,261 1%
2000 0 1,272 1,272 1%
2001 0 1,015 1,015 1%
2002 873 1,101 1,974 1%
2003 3,408 2,846 6,254 5%
Thereafter 80,768 38,803 119,571 91%
---------------------------------------------------------
Total $ 86,309 $ 45,038 $131,347 100%
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 166 11,380 $ 854,741 $ 75,109
Nursing Homes 50 7,079 315,484 44,566
Retirement Centers 15 1,319 81,938 62,121
Specialty Care
Facilities 6 713 91,618 128,497
Behavioral Care 2 294 9,203 31,301
---------------------------------------------
Total 239 20,785 $1,352,984 n/a
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 No.
Investment Properties Investment % Investment
--------------------------------------------
CareMatrix Corp. 9 $101,945 8%
Atria Senior Quarters 11 93,485 8%
Alterra Healthcare 38 87,489 7%
Life Care Centers of
America, Inc. 13 84,073 7%
Olympus Healthcare Group, Inc. 12 83,523 7%
Remaining Operators 156 751,415 63%
--------------------------------------------
Total 239 $1,201,930 100%
No.
Concentration by Revenue Properties Revenue (1) % Revenue
---------------------------------------
Atria Senior Quarters 11 $ 4,951 8%
Olympus Healthcare Group, Inc. 12 4,730 8%
Life Care Centers of 13 3,920 6%
America, Inc.
Alterra Healthcare 38 3,661 6%
CareMatrix Corp. 9 3,457 6%
Remaining Operators 156 40,617 66%
---------------------------------------
Total 239 $61,336 100%
Notes: (1) Six months ended June 30, 1999
Selected Facility Data Exhibit 6
----------------------
% Payor Mix Coverage Data
----------------- --------------------
Before After
Census Private Medicare Mgt. Fees Mgt. Fees
-------------------------------------------------
Nursing Homes 85% 21% 14% 2.14x 1.63x
Assisted Living
Facilities 90% 100% 0% 1.37x 1.19x
Retirement Centers 92% 100% 0% 1.84x 1.61x
Specialty Care
Facilities 56% 22% 31% 3.35x 2.83x
Behavioral Care n/a 11% 89% 3.92x 1.70x
-----------------
Weighted Averages 2.03x 1.63x
Notes: (1) Data as of March 31, 1999
Security Deposits & Other Credit Support ($000's) Exhibit 7
-------------------------------------------------
Balance % Investment
------------------------
Cross Defaulted $1,096,190 92% of gross real estate investments
Cross Collateralized 396,041 94% of mortgage loans
Bank Letters of
Credit & Cash 50,203 4% of committed balance
Current Capitalization Leverage & Performance
($000's) Balance % Balance Ratios
--------------------- ------------------ -----------------------------
Borrowings Under Bank
Lines $156,600 12% Debt/Total Mkt. Cap 38%
Long-Term Debt
Obligations 347,386 26% Debt/Mkt. Cap 62%
Equity Market Interest
Capitalization 813,359 62% Coverage 3.75x 2nd Qtr.
---------------- 3.87x LTM
Total Market
Capitalization $1,317,345 100% FFO Payout Ratio 82% 2nd Qtr.
84% LTM
Debt Maturities and Principal Payments ($000's) Exhibit 8
-----------------------------------------------
Year Bank Lines of Senior Notes Secured Debt Total
Credit
----------------------------------------------------------------------
1999 $ 0 $ 0 $ 47 $ 47
2000 15,000 35,000 99 50,099
2001 175,000 10,000 109 185,109
2002 0 20,000 121 20,121
2003 0 35,000 133 35,133
2004 0 40,000 50,186 90,186
2005 0 0 549 549
Thereafter 0 150,000 6,142 156,142
----------------------------------------------------------
Total $190,000 $ 290,000 $ 57,386 $ 537,386
Investment Activity ($000's) Exhibit 9
----------------------------
Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999
---------------------- -------------------
Funding by Investment Type
Real Property $ 38,348 39% $ 74,322 37%
Mortgage & Other Loans 11,291 11% 12,511 6%
Construction Advances 47,407 47% 107,623 54%
Direct Investments 2,868 3% 4,750 3%
--------------------- -------------------
Total $ 99,914 100% $199,206 100%
Real Estate Investments
Assisted Living
Facilities $ 84,661 87% $164,130 84%
Nursing Homes 7,398 8% 17,195 9%
Retirement Centers 4,987 5% 13,131 7%
Behavioral Care 0 0% 0 0%
Specialty Care
Facilities 0 0% 0 0%
-------- -------- -------- -------
Total $ 97,046 100% $194,456 100%
Geographic Concentration ($000's) Exhibit 10
---------------------------------
Concentration by Region No.
Properties Investment % Investment
------------------------------------------
South 142 $617,669 51%
Northeast 40 295,015 25%
West 30 169,495 14%
Midwest 27 119,751 10%
------------------------------------------
Total 239 $1,201,930 100%
Concentration by State No.
Properties Investment % Investment
------------------------------------------
Texas 48 $191,214 16%
Florida 29 137,997 12%
Massachusetts 14 98,723 8%
North Carolina 18 85,861 7%
Pennsylvania 14 79,509 7%
Remaining States 116 608,626 50%
------------------------------------------
Total 239 $1,201,930 100%
No.
Revenue by State Properties Revenue (1) % Revenue
------------------------------------------
Texas 48 $10,315 17%
Florida 29 5,763 9%
Massachusetts 14 5,568 9%
Ohio 12 4,594 7%
Pennsylvania 14 4,115 7%
Remaining States 122 30,981 51%
------------------------------------------
Total 239 $61,336 100%
Notes: (1) Six months ended June 30, 1999
Contact:
Health Care REIT, Inc.
Erin Ibele, 419/247-2800
Ed Lange, 419/247-2800