TOLEDO, Ohio--(BW HealthWire)--Feb. 2, 1999--
1998 Year End Results 1998 Year End Highlights --------------------- ------------------------ -- $1.1 billion total assets -- $397 million new investments -- $98 million gross income -- 46% asset growth -- $2.57 per diluted share FFO -- 10% per share FFO growth -- $2.19 per share dividends -- 85% FFO payout ratio
Health Care REIT, Inc. (NYSE:HCN) today announced the operating results for the year ended December 31, 1998. Funds From Operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, achieved a record level of $66,766,000, or $2.57 per diluted share in 1998, a 9.8 percent per diluted share increase from $51,236,000, or $2.34 per diluted share in the prior year.
"We are delighted with the company's 1998 operating results. Driven by outstanding investment activity and consistent portfolio performance, the results exceeded our business plan," commented George L. Chapman, chairman and chief executive officer. "During 1998 we capitalized on current market conditions that generated high yielding, accretive investments for the company. Our strong balance sheet continues to give the company the flexibility to finance its commitments and opportunities, while retaining excellent leverage and coverage ratios. We believe the strength of our existing portfolio and the execution of our investment strategy of providing growth capital to emerging health care companies should lead to increased earnings and profitability for the company during 1999 and beyond."
Net income available to common shareholders for the year totaled $58,149,000, or $2.24 per diluted share, on revenue of $97,992,000 as compared with net income available to common shareholders of $46,478,000, or $2.12 per diluted share, on revenue of $73,308,000 for the year ended 1997.
For the 1998 fourth quarter, FFO totaled $18,380,000, or $0.66 per diluted share, as compared with FFO of $14,375,000, or $0.60 per diluted share, for the same period in 1997, an increase of 10 percent per diluted share. Net income available to common shareholders for the fourth quarter of 1998 totaled $16,468,000, or $0.59 per diluted share, on revenue of $27,770,000, as compared with net income available to common shareholders of $12,950,000, or $0.54 per diluted share, on revenue of $19,731,000 for the three months ended December 31, 1997.
Revenue growth was generated primarily by new investment activity in 1997 and 1998, which totaled $262,646,000 and $397,500,000, respectively. Investment activity contributed to a 46 percent increase in total assets, which at December 31, 1998, totaled $1,073,424,000 as compared with total assets of $734,327,000 at December 31, 1997.
Dividend payments to common shareholders for the year ended December 31, 1998, totaled $56,556,000, or $2.19 per share, as compared with dividend payments of $45,804,000, or $2.11 per share, during 1997. Correspondingly, the FFO payout ratio for 1998 was 85 percent as compared with a FFO payout ratio of 90 percent for 1997, evidence of the company's commitment to reduce its FFO payout ratio to a level below 80 percent during the next 12 to 15 months.
On January 19, 1999, the company announced the private placement of three million shares of convertible preferred stock providing net proceeds of $73 million. The net proceeds of the offering were used to repay borrowings under the company's revolving line of credit arrangements and invest in additional health care properties.
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 December 31, 1998, the company had investments in 224 health care facilities in 34 states and had total assets of approximately $1.1 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)
December 31
-----------------------------
1998 1997
-----------------------------
Assets
Real estate investments:
Real property owned:
Land $ 44,722 $ 22,445
Buildings & improvements 443,574 239,549
Construction in progress 151,317 47,050
------------ -------------
639,613 309,044
Less accumulated depreciation (19,624) (11,769)
------------ -------------
Total real property owned 619,989 297,275
Loans receivable 405,963 412,734
Direct financing leases 6,741 7,935
------------ --------------
1,032,693 717,944
Less allowance for losses on
loans receivable (4,987) (4,387)
------------ -------------
Net real estate investments 1,027,706 713,557
Other assets:
Direct investments 26,180 4,964
Marketable securities 4,106 4,671
Deferred loan expenses 2,389 2,275
Cash and cash equivalents 1,269 1,381
Receivables and other assets 11,774 7,479
------------ --------------
45,718 20,770
------------ --------------
Total assets $ 1,073,424 $ 734,327
------------ --------------
------------ --------------
Liabilities and shareholders'
equity
Liabilities:
Borrowings under line of
credit obligations $ 171,550 $ 78,400
Senior unsecured notes 240,000 162,000
Mortgages payable 7,429 8,670
Accrued expenses and
other liabilities 20,686 15,333
------------ --------------
Total liabilities $ 439,665 $ 264,403
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding -
3,000,000 in 1998 75,000
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding -
28,240,165 in 1998 and
24,341,030 in 1997 28,240 24,341
Capital in excess of par value 520,692 435,603
Undistributed net income 10,434 8,841
Accumulated other
comprehensive income 3,982 4,671
Unamortized restricted stock (4,589) (3,532)
------------ -------------
Total shareholders' equity $ 633,759 $ 469,924
------------ -------------
Total liabilities and
shareholders' equity $ 1,073,424 $ 734,327
------------ --------------
------------ --------------
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
------------------ -----------------
1998 1997 1998 1997
------------------ -----------------
Revenues:
Interest income $ 12,274 $ 12,370 $ 47,515 $ 45,999
Prepayment fees 167 52 588 529
Operating leases:
Rents 12,471 6,060 41,953 22,178
Gain on exercise
of options 1,049 0 1,049 0
Direct financing leases:
Lease income 214 166 973 1,238
Gain on exercise
of options 0 0 0 0
Loan and commitment fees 1,344 995 5,281 3,036
Other income 251 128 633 328
-------- -------- -------- --------
$ 27,770 $ 19,731 $ 97,992 $ 73,308
Expenses:
Interest expense $ 4,451 $ 3,732 $ 18,030 $ 15,365
Provision for depreciation 3,128 1,477 10,254 5,287
General and administrative 1,757 1,252 6,114 4,858
Loan expense 152 170 685 720
Provision for losses 150 150 600 600
-------- -------- -------- --------
9,638 6,781 35,683 26,830
-------- -------- -------- --------
Net Income $ 18,132 $ 12,950 $ 62,309 $ 46,478
Preferred stock dividends 1,664 0 4,160 0
-------- -------- -------- --------
Net Income Available to
Common Shareholders $ 16,468 $ 12,950 $ 58,149 $ 46,478
-------- -------- -------- --------
-------- -------- -------- --------
Average number of shares
outstanding:
Basic 27,572 23,434 25,579 21,594
Diluted 27,930 23,805 25,954 21,929
Net income per share:
Basic $ 0.60 $ 0.55 $ 2.27 $ 2.15
Diluted 0.59 0.54 2.24 2.12
Funds from operations $ 18,380 $ 14,375 $ 66,766 $ 51,236
Funds from operations per
share:
Basic $ 0.67 $ 0.61 $ 2.61 $ 2.37
Diluted 0.66 0.60 2.57 2.34
Dividends per share $ 0.555 $ 0.535 $ 2.190 $ 2.110
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
Portfolio Composition ($000's) Exhibit 1
No. No. %
Balance Sheet Data Properties Beds/Units Balance (1) Balance
---------- ---------- ----------- --------
Real Property 141 11,489 $ 619,989 59%
Loans Receivable 81 7,520 405,963 38%
Direct Financing Leases 2 193 6,741 1%
Direct Investments -na- -na- 26,180 2%
---------- ---------- ---------- ---------
Total Investments 224 19,202 $1,058,873 100%
No. No. %
Investment Data Properties Beds/Units Investment(2) Investment
---------- ---------- ------------ ----------
Assisted Living Facilities 147 9,824 $584,288 56%
Nursing Homes 54 7,005 294,414 28%
Specialty Care Facilities 6 713 91,994 9%
Retirement Centers 15 1,366 60,876 6%
Behavioral Care 2 294 10,486 1%
-------- -------- -------- --------
Real Estate Investments 224 19,202 $1,042,058 100%
Investment by No. No. %
Owner Type Properties Beds/Units Investment(2) Investment
---------- ---------- ------------- ----------
Publicly Traded 74 5,191 $ 273,391 26%
Key Private 99 9,377 574,408 55%
Privately Held 51 4,634 194,259 19%
-------- --------- ---------- ---------
Real Estate Investments 224 19,202 $1,042,058 100%
Notes: (1) Total investments include gross real estate investments
and direct investments which amounted to $1,032,693,000
and $26,180,000, respectively.
(2) Real Estate Investments include gross real estate
investments and credit enhancements which amounted to
$1,032,693,000 and $9,365,000, respectively.
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
Revenue Composition ($000's) Exhibit 2
Three Months Ended Twelve Months Ended
December 31, 1998 December 31, 1998
------------------- -------------------
Revenue by Investment Type
Mortgage & Other Loans $12,388 45% $48,415 49%
Real Property 14,522 52% 46,517 48%
Direct Investments 644 1% 2,081 2%
Direct Financing Leases 216 2% 979 1%
------- ------- ------- -------
Total $27,770 100% $97,992 100%
Revenue by Facility Type
Assisted Living Facilities $13,289 48% $46,828 48%
Nursing Homes 9,498 34% 33,935 35%
Specialty Care Facilities 2,992 11% 11,823 12%
Retirement Centers 1,991 7% 5,206 5%
Behavioral Care 0 0% 200 0%
------- ------- ------- -------
Total $27,770 100% $97,992 100%
Revenue by Owner Type
Publicly Traded $ 8,578 31% $29,649 30%
Key Private 13,210 48% 46,495 48%
Privately Held 5,982 21% 21,848 22%
------- ------- ------- -------
Total $27,770 100% $97,992 100%
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
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
-------- --------------- ---------------- ------------- ----------
1999 $ 1,260 $ 82 $ 1,342 1%
2000 0 1,716 1,716 2%
2001 0 2,507 2,507 2%
2002 873 609 1,482 1%
2003 3,408 2,858 6,266 6%
Thereafter 63,555 36,174 99,729 88%
-------- -------- -------- --------
Total $ 69,096 $ 43,946 $113,042 100%
Notes: (1) Revenue impact by year, annualized.
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
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 147 9,824 $ 710,619 $ 72,335
Nursing Homes 54 7,005 316,994 45,253
Retirement Centers 15 1,366 73,310 53,668
Specialty Care Facilities 6 713 91,994 129,024
Behavioral Care 2 294 10,486 35,667
----- -------- ---------- ----------
Total 224 19,202 $1,203,403 n/a
Notes: (1) Committed Balance includes real estate investments, credit
enhancements and unfunded commitments for which initial
funding had commenced.
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
Operator Concentration ($000's) Exhibit 5
Concentration by No. %
Investment Properties Investment Investment
---------- ---------- ----------
Atria Senior Quarters 11 $ 94,066 9%
CareMatrix Corp. 8 82,295 8%
Olympus Healthcare Group, Inc. 13 78,549 8%
Life Care Centers of America, Inc. 12 75,334 7%
Alternative Living Services 29 50,514 5%
Remaining Operators 151 661,301 63%
--------- --------- ---------
Total 224 $ 1,042,059 100%
No.
Concentration by Revenue Properties Revenue(1) % Revenue
---------- ---------- ---------
Atria Senior Quarters 11 $ 9,700 10%
Olympus Healthcare Group, Inc. 13 8,153 8%
Life Care Centers of America, Inc. 12 7,737 8%
Doctors Corp. of America 3 6,108 6%
Alternative Living Services 29 5,525 6%
Remaining Operators 156 60,769 62%
------- ------- --------
Total 224 $97,992 100%
Notes: (1) Year ended December 31, 1998.
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
Capitalization Data & Other Credit Support ($000's) Exhibit 6
---------------------------------------------------
Year Ended December 31
--------------------------
Current Capitalization 1998 Adjusted (1) % Balance
---------------------- ---------------------------------------
Long-Term Debt
Obligations $ 247,429 $ 247,429 24%
Borrowings Under
Bank Lines 171,550 98,550 9%
Shareholders' Equity 633,759 706,759 67%
---------------------------------------
Total Book
Capitalization $1,052,738 $1,052,738 100%
Equity Market
Capitalization(2) $ 805,710 $ 880,710
Leverage (1) & Performance Ratios
Debt/Total Book Capitalization 33% Interest Coverage 3.97x 4th Qtr.
Debt/Book Equity 49% 3.83x LTM
Debt/Total Mkt. Capitalization 28% FFO Payout Ratio 84% 4th Qtr.
Debt/Equity Mkt. Capitalization 39% 85% LTM
Credit Enhancements Balance % Investments
----------------------------- ---------- ---------------------
Cross Defaulted $ 932,206 89% of gross real
estate investments
Cross Collateralized 391,361 96% of mortgage loans
Bank Letters of Credit & Cash 48,260 4% of committed balance
Notes: (1) Adjusted for 3.0 million convertible preferred shares
announced January 19, 1999.
(2) Inclusive of outstanding preferred stock.
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
Debt Maturities and Principal Payments ($000's) Exhibit 7
Year Bank Lines of Credit(1) Senior Notes Other Debt Total
---------------------------------------------------------------------
1999 0 0 90 90
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 40,000 186 40,186
2005 0 0 549 549
Thereafter 0 100,000 6,142 106,142
--------------------------------------------------------
Total $ 190,000 $ 240,000 $ 7,429 $437,429
Notes: (1) Represents total line capacity.
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
Selected Facility Data Exhibit 8
Coverage Coverage
% % Before After
Occupancy Medicare Private Pay Mgt. Fees Mgt. Fees
------------------------------------------------------
Nursing Homes 83% 13% 25% 1.84x 1.32x
Assisted Living
Facilities 90% 0% 95% 1.36x 1.18x
Retirement Centers 94% 0% 97% 2.52x 2.22x
Specialty Care
Facilities n/a 31% 25% 4.04x 3.51x
Behavioral Care n/a 89% 11% 2.93x 1.48x
--------------------
2.07x 1.65x
Notes: Facility Data reported as LTM through September 30, 1998.
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
Investment Activity ($000's) Exhibit 9
Three Months Ended Twelve Months Ended
December 31, 1998 December 31, 1998
------------------ -------------------
Funding by Investment Type
Real Property $ 31,012 28% $110,432 28%
Mortgage & Other Loans 15,309 14% 52,987 13%
Construction Advances 63,053 56% 211,968 53%
Direct Investments 2,375 2% 22,203 6%
------------------ -------------------
Total $111,749 100% $397,500 100%
Real Estate Investments
Assisted Living
Facilities $ 74,592 68% $263,253 70%
Nursing Homes 29,500 27% 94,128 25%
Retirement Centers 5,282 5% 16,217 4%
Behavioral Care 0 0% 1,699 1%
Specialty Care Facilities 0 0% 0 0%
------------------ -------------------
Total $109,374 100% $375,297 100%
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1998
Geographic Concentration ($000's) Exhibit 10
Concentration by Region No. Properties Investment % Investment
---------------------------------------
South 132 $ 528,422 49%
Northeast 37 263,595 27%
West 25 131,054 13%
Midwest 30 118,988 11%
---------------------------------------
Total 224 $ 1,042,059 100%
Concentration by State No. Properties Investment % Investment
---------------------------------------
Texas 46 $ 176,229 17%
Florida 27 120,460 12%
Massachusetts 15 93,911 9%
North Carolina 16 70,743 7%
New York 7 70,344 7%
Remaining States 113 510,372 48%
---------------------------------------
Total 224 $ 1,042,059 100%
Revenue by State No. Properties Revenue(1) % Revenue
---------------------------------------
Texas 46 $ 17,624 18%
Massachusetts 15 9,268 9%
Florida 27 8,798 9%
New York 7 7,336 7%
Pennsylvania 11 6,646 7%
Remaining States 118 48,320 50%
---------------------------------------
Total 224 $ 97,992 100%
Notes: (1) Year ended December 31, 1998.
CONTACT: Health Care REIT, Inc.
Erin Ibele, 419/247-2800
Ed Lange, 419/247-2800