TOLEDO, Ohio--(BW HealthWire)--April 20, 1999--
First Quarter Results First Quarter Highlights
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-- $1.2 billion total assets -- $99 million new investments
-- $29 million gross income -- 39% asset growth
-- $0.67 per diluted share FFO -- 8% per share FFO growth
-- $0.56 per share dividends -- 84% FFO payout ratio
Health Care REIT, Inc. (NYSE:HCN) today reported record operating results for the first quarter of 1999. Funds from operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, achieved a record level of $18,963,000, or $0.67 per diluted share, for the three months ended March 31, 1999, an 8 percent per share increase from $15,279,000, or $0.62 per diluted share, in the prior year.
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 March 31, 1999, of $0.565 per share as compared with $0.545 per share for the same period in 1998.
The dividend is a one-half cent increase from the dividend paid for the fourth quarter of 1998 and represents the 112th consecutive dividend payment. The dividend will be payable May 20, 1999, to shareholders of record on May 4, 1999.
"We are pleased with the company's first quarter operating results. The level of earnings and investment activity were consistent with management's expectations and represent a great start for 1999," commented George L. Chapman, chairman and chief executive officer. "During 1998 the company demonstrated its ability to maximize yield opportunities and raise capital effectively. The continued availability of high yielding investments combined with our careful capital management program have produced outstanding net spreads for the company's investments. We expect continued success throughout the balance of 1999."
Net income available to common shareholders for the first quarter of 1999 totaled $16,219,000 or $0.57 per diluted share, on revenue of $28,792,000, as compared with net income available to common shareholders of $13,409,000, or $0.54 per diluted share, on revenue of $21,226,000 for the three months ended March 31, 1998.
Revenue growth was generated primarily by new investment activity in 1998 and the first quarter of 1999, which totaled $397,500,000 and $99,293,000, respectively. Investment activity contributed to a 39 percent increase in total assets, which at March 31, 1999, totaled $1,160,045,000 as compared with total assets of $836,006,000 at March 31, 1998.
Dividend payments to common shareholders for the three months ended March 31, 1999, totaled $15,819,000, or $0.56 per share, as compared with dividend payments of $13,148,000, or $0.54 per share for the same period in 1998. Correspondingly, the FFO payout ratio for the first quarter of 1999 was 84 percent as compared with a FFO payout ratio of 87 percent for the first three months of 1998, evidence of the company's commitment to reduce its FFO payout ratio to a level below 80 percent during the next 12 months.
In January 1999, the company announced the private placement of three million shares of convertible preferred stock, providing net proceeds of $73 million.
In February 1999, the company closed a $50 million secured credit facility with Bank United. The credit facility has a five-year term, may be prepaid at any time at par and bears interest at the lender's prime rate or LIBOR plus 2 percent, with a floor rate of 7 percent. The credit facility is secured primarily by assets that are in the development phase of the company's investment process. At March 31, 1999, $44 million was advanced under the credit facility.
In March 1999, the company announced the sale of $50 million of 8.17 percent senior unsecured notes due March 15, 2006. The notes are rated "Ba1" by Moody's Investor Service, "BBB-" by Standard & Poor's Corporation and "BBB-" by Duff & Phelps Credit Rating Co.
The net proceeds derived from the company's capital formation activities were used to repay borrowings under the company's revolving line of credit arrangements and invest in additional health care properties.
In other developments, the company announced today that R. Scott Trumbull has been elected a Class I director. Mr. Trumbull's term will continue through April 2002.
Mr. Trumbull is Executive Vice President International Operations & Corporate Development of Owens-Illinois, Inc. Mr. Trumbull is a member of the Board of Franklin Electric Company.
"Scott brings to the Health Care REIT Board a wealth of public company operational and managerial expertise," commented George L. Chapman. "We look forward to Scott's long-term association with our company."
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust which invests in health care facilities, primarily nursing homes, assisted living facilities and retirement centers. At March 31, 1999, the company had investments in 232 health care facilities in 34 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)
March 31
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1999 1998
------------------------
Assets
Real estate investments:
Real property owned:
Land $ 57,763 $ 27,654
Buildings & improvements 588,713 300,451
Construction in progress 80,285 62,676
----------- -----------
726,761 390,781
Less accumulated depreciation (23,179) (13,638)
----------- -----------
Total real property owned 703,582 377,143
Loans receivable 412,368 429,686
Direct financing leases 1,139 7,825
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1,117,089 814,654
Less allowance for losses on
loans receivable (5,137) (4,537)
---------- -----------
Net real estate investments 1,111,952 810,117
Other assets:
Direct investments 25,888 8,680
Marketable securities 2,233 5,009
Deferred loan expenses 3,440 2,584
Cash and cash equivalents 1,231 1,689
Receivables and other assets 15,301 7,927
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48,093 25,889
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Total assets $1,160,045 $ 836,006
---------- -----------
---------- -----------
Liabilities and shareholders' equity
Liabilities:
Borrowings under line of credit
obligations $ 89,200 $ 49,000
Senior unsecured notes 290,000 262,000
Secured debt 51,408 8,650
Accrued expenses and other liabilities 22,743 19,255
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Total liabilities $ 453,351 $ 338,905
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - 6,000,000
in 1999 150,000
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding - 28,317,475
in 1999 and 25,367,997 in 1998 28,317 25,368
Capital in excess of par value 519,982 461,102
Undistributed net income 10,834 9,104
Accumulated other
comprehensive income 2,109 5,008
Unamortized restricted stock (4,548) (3,481)
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Total shareholders' equity $ 706,694 $ 497,101
----------- -----------
Total liabilities and shareholders'
equity $1,160,045 $ 836,006
----------- -----------
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HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Amounts in thousands except per share data)
Three months ended
March 31
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1999 1998
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Revenues:
Operating lease rents $14,140 $ 7,644
Interest income 11,795 12,116
Direct financing lease income 100 214
Loan and commitment fees 1,701 1,226
Other income 245 26
Prepayment fees 183 0
Gain on sale of properties 628 0
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$28,792 $21,226
Expenses:
Interest expense $ 4,269 $ 4,240
Provision for depreciation 3,555 1,870
General and administrative 1,674 1,381
Loan expense 166 176
Provision for losses 150 150
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9,814 7,817
------- ------
Net Income 18,978 13,409
Preferred stock dividends 2,759 0
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Net Income Available to
Common Shareholders $16,219 $13,409
------- ------
------- ------
Average number of common shares
outstanding:
Basic 28,077 24,259
Diluted 28,393 24,642
Net income per share:
Basic $ 0.58 $ 0.55
Diluted 0.57 0.54
Funds from operations $18,963 $15,279
Funds from operations per share:
Basic $ 0.68 $ 0.63
Diluted 0.67 0.62
Dividends per share $ 0.560 $ 0.540
HEALTH CARE REIT, INC.
Financial Supplement - March 31, 1999
Portfolio Composition ($000's) Exhibit 1
-----------------------------
No. No.
Balance Sheet Data Properties Beds/Units Balance (1) % Balance
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Real Property 154 12,623 $ 703,582 62%
Loans Receivable &
Other 78 7,820 413,507 36%
Direct Investments -na- -na- 25,888 2%
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Total Investments 232 20,443 $1,142,977 100%
No. No. Investment %
Investment Data Properties Beds/Units (2) Investment
-----------------------------------------------
Assisted Living
Facilities 154 10,621 $ 663,778 59%
Nursing Homes 53 7,349 291,054 26%
Retirement Centers 17 1,466 69,149 6%
Specialty Care Facilities 6 713 91,837 8%
Behavioral Care 2 294 10,636 1%
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Real Estate Investments 232 20,443 $1,126,454 100%
Investment by Owner No. No. Investment %
Type Properties Beds/Units (2) Investment
-----------------------------------------------
Publicly Traded 79 5,717 $ 319,949 28%
Key Private 104 10,208 619,672 55%
Privately Held 49 4,518 186,833 17%
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Real Estate Investments 232 20,443 $1,126,454 100%
Notes:
(1) Total investments include gross real estate investments and
direct investments which amounted to $1,117,089,000 and
$25,888,000, respectively.
(2) Real Estate Investments include gross real estate investments and
credit enhancements which amounted to $1,117,089,000 and
$9,365,000, respectively.
Revenue Composition ($000's) Exhibit 2
---------------------------
Three Months Ended
March 31, 1999 Year-to-Date
-------------------- -------------------
Revenue by Investment Type
Mortg. Loans & Other $12,212 43%
Real Property 15,912 55% (Not Applicable)
Direct Investments 668 2%
-------------------- -------------------
Total $28,792 100%
Revenue by Facility Type
Assisted Living Facilities $15,093 53%
Nursing Homes 9,329 32%
Specialty Care Facilities 3,015 10%
Retirement Centers 1,355 5%
Behavioral Care 0 0%
-------------------- -------------------
Total $28,792 100%
Revenue by Owner Type
Publicly Traded $ 7,622 26%
Key Private 16,019 56%
Privately Held 5,151 18%
-------------------- -------------------
Total $28,792 100%
Revenue Composition (Continued) ($000's) Exhibit 3
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Operating Lease Expirations & Loan Maturities
Current
Current Lease Interest Interest and %
Year Revenue (1) Revenue (1) Lease Revenue of Total
-------------------------------------------------------------------
1999 $ 1,260 $ 61 $ 1,321 1%
2000 0 1,730 1,730 1%
2001 0 1,772 1,772 2%
2002 873 676 1,549 1%
2003 3,408 2,852 6,260 5%
Thereafter 72,964 37,195 110,159 90%
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Total $78,505 $44,286 $122,791 100%
Notes: (1) Revenue impact by year, annualized
Committed Investment Balances Exhibit 4
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($000's except Investment per Bed/Unit)
Investment
No. No. Committed per
Properties Beds/Units Balance (1) Bed/Unit
-----------------------------------------------
Assisted Living
Facilities 154 10,621 $ 779,300 $ 73,373
Nursing Homes 53 7,349 320,137 43,562
Retirement Centers 17 1,466 80,399 54,843
Specialty Care Facilities 6 713 91,837 128,804
Behavioral Care 2 294 10,636 36,176
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Total 232 20,443 $1,282,309 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
Investment No. Properties Investment % Investment
------------------------------------------
CareMatrix Corp. 9 $ 100,623 9%
Atria Senior Quarters 11 93,792 8%
Life Care Centers of
America, Inc. 14 84,012 7%
Olympus Healthcare Group, Inc. 12 78,544 7%
Torch Health Care 15 56,825 5%
Remaining Operators 171 712,658 64%
------------------------------------------
Total 232 $1,126,454 100%
Concentration by Revenue No. Properties Revenue (1) % Revenue
------------------------------------------
Atria Senior Quarters 11 $ 2,471 9%
Olympus Healthcare Group, Inc. 12 2,398 8%
Life Care Centers of
America, Inc. 14 1,932 7%
Doctors Corporation of America 3 1,559 5%
Torch Health Care 15 1,493 5%
Remaining Operators 177 18,939 66%
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Total 232 $ 28,792 100%
Notes:
(1) Three months ended March 31, 1999
Selected Facility Data Exhibit 6
----------------------
% Private Coverage Coverage
Pay Before After
Occupancy and Medicare Mgt. Fees Mgt. Fees
------------------------------------------------
Nursing Homes 83% 39% 1.92x 1.40x
Assisted Living
Facilities 89% 100% 1.33x 1.14x
Retirement Centers 94% 100% 1.90x 1.64x
Specialty Care
Facilities 52% 58% 3.55x 3.01x
Behavioral Care n/a 86% 3.00x 1.58x
-------------------------
1.97x 1.56x
Notes:
(1) Facility Data LTM as of Dec. 31, 1998
Security Deposits & Other Credit Support ($000's) Exhibit 7
------------------------------------------------
Balance % Investment
------------------------
Cross Defaulted $1,018,166 90% of gross real estate investments
Cross Collateralized 379,726 92% of mortgage loans
Bank Letters of
Credit & Cash 45,801 4% of committed balance
Current
Capitalization Leverage & Performance
($000's) Balance % Balance Ratios
------------------- ---------------------- -----------------------
Borrowings Under
Bank Lines $89,200 7% Debt/Total Mkt. Cap 36%
Long-Term Debt
Obligations 341,408 29% Debt/Mkt. Cap 57%
Equity Market
Capitalization 758,816 64% Interest Coverage 4.06x
-------------------- 1st Qtr.
Total Market 3.88x LTM
Capitalization $1,189,424 100% FFO Payout Ratio 84%
1st Qtr.
84% LTM
Debt Maturities and Principal Payments ($000's) Exhibit 8
----------------------------------------------
Bank Lines
Year of Credit Senior Notes Secured Debt Total
-------------------------------------------------------------------
1999 $ 0 $ 0 $ 69 $ 69
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 44,186 84,186
2005 0 0 549 549
Thereafter 0 150,000 6,142 156,142
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Total $190,000 $290,000 $ 51,408 $531,408
Investment Activity ($000's) Exhibit 9
---------------------------
Three Months Ended
March 31, 1999 Year-to-Date
-------------------- --------------------
Funding by Investment Type
Real Property $35,974 36%
Mortgage & Other Loans 1,220 1% (Not Applicable)
Construction Advances 60,217 61%
Direct Investments 1,882 2%
-------------------- --------------------
Total $99,293 100%
Real Estate Investments
Assisted Living
Facilities $79,977 80%
Nursing Homes 9,797 10%
Retirement Centers 9,519 10%
Behavioral Care 0 0%
Specialty Care Facilities 0 0%
------------------- --------------------
Total $99,293 100%
Geographic Concentration ($000's) Exhibit 10
---------------------------------
Concentration by Region No. Properties Investment % Investment
------------------------------------------
South 138 $ 585,945 52%
Northeast 38 277,805 25%
West 26 147,160 13%
Midwest 30 115,544 10%
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Total 232 $1,126,454 100%
Concentration by State No. Properties Investment % Investment
------------------------------------------
Texas 47 $ 189,274 17%
Florida 30 138,743 12%
Massachusetts 14 93,825 8%
North Carolina 18 79,618 7%
Pennsylvania 13 71,248 7%
Remaining States 110 553,746 49%
------------------------------------------
Total 232 $1,126,454 100%
Revenue by State No. Properties Revenue (1) % Revenue
------------------------------------------
Texas 47 $ 4,939 17%
Massachusetts 14 2,816 10%
Pennsylvania 13 1,902 7%
Florida 30 2,488 9%
New York 7 2,077 7%
Remaining States 121 14,570 50%
------------------------------------------
Total 232 $ 28,792 100%
Notes: (1) Three months ended March 31, 1999
CONTACT: Health Care REIT, Inc.
Erin Ibele, 419/247-2800
Ed Lange, 419/247-2800