Exhibit 99.2
Exhibit 99.22Q09 SUPPLEMENTAL INFORMATION |
CORPORATE Corporate Profile | 2 Analyst Coverage | 4 Investor Relations Contacts | 4 Forward-Looking Statements and Risk Factors | 5 FINANCIAL Consolidated Balance Sheets (Unaudited) | 6 Consolidated Statements of Income (Unaudited) | 7 Funds from Operations Reconciliation | 8 Funds Available for Distribution Reconciliation | 9 Adjusted EBITDA Reconciliation | 10 Net Operating Income Reconciliation | 11 Outlook Reconciliation | 12 Revenue and Lease Maturity | 13 Debt Maturities and Principal Payments | 14 Fixed and Floating Rate Debt | 14 Current Capitalization | 15 INVESTMENT Gross Investment Activity — Quarter | 16 Gross Investment Activity — Year | N/A Investment Timing | 18 Disposition Activity | 18 Discontinued Operations | 18 PORTFOLIO Portfolio Composition | 19 Investment Metrics | 19 Portfolio Concentration | 20 Top Ten Operator Descriptions | 21 MSA and Region Concentration | 22 Portfolio Performance | 23 Same Store Revenue Growth | 23 Portfolio Performance — Independent Living/CCRC | 24 Portfolio Performance — Assisted Living | 25 Portfolio Performance — Skilled Nursing | 26 Portfolio Performance — Specialty Care | 27 Portfolio Composition — Medical Office Buildings | 28 Portfolio Performance — Medical Office Buildings | 28 Portfolio Concentration — Medical Office Buildings | 29 Development Activity | 30 Development Funding Projections | 30 Development Project Conversion Estimates | 31 Unstabilized Properties | 32 Portfolio Trends | 33 GLOSSARY Glossary | 34 Supplemental Reporting Measures | 37 |
HEALTH CARE REIT, INC., a real estate investment trust (“REIT”) with an enterprise value of $6.8 billion, invests in health care real estate, including independent living, assisted living and skilled nursing facilities, continuing care retirement communities, hospitals and medical office buildings. The company’s full service platform also offers property management and development services to its customers. Data as of: June 30, 2009 NYSE Symbol: HCN Enterprise Value: $6.8 billion Investment Concentration* Closing Price: $34.10 Gross Real Estate Assets: $6.7 billion Owned Assets: 92% 52 Week Hi/Lo: $53.98/$25.86 Debt to Market Capitalization: 40% Top 5 Customers: 24% Dividend/Yield: $2.72/7.98% Debt to Book Capitalization: 44% Top 5 States: 44% Shares Outstanding: 111.8 million Senior Debt Ratings: Baa2/BBB-/BBB * % of total investments FULL SERVICE PLATFORM Health Care REIT provides senior housing operators and health care systems with a single source for facility planning, design and turn-key development, property management and monetization or expansion of existing real estate. By extending successful relationship investment programs to health care systems across higher acuity asset classes, the company has significantly increased potential investment opportunities. |
SECURE DIVIDEND Health Care REIT maintains a commitment to investment grade ratings, conservative balance sheet management and underwriting, asset and property management protocols that ensure prudent investments and proactive management over the life of its long-term leases. The company has declared 153 consecutive quarterly dividends during its 39-year history and remains focused on delivering attractive stockholder returns. TOTAL RETURNS* 1 year -18.1% 3 years 5.6% 5 years 7.7% 10 years 12.7% 20 years 14.0% Since inception 15.3% *assumes reinvestment of dividends RELATIONSHIP FOCUSED, LONG-TERM STRATEGY With 64 operators and over 800 medical office tenants in 39 states, the company strives to provide each customer with the highest quality service and attention to detail. Throughout the company’s 39-year history, it has been a long-term capital provider to senior housing and health care systems throughout all market cycles. The relationship approach enables the company to partner with the best regionally focused operators and health systems and help them grow profitably, while concentrating on what they do best — provide quality care to patients and residents. SPEED AND CERTAINTY OF EXECUTION Health Care REIT’s experience and knowledge enable it to make investment decisions within days, rather than weeks or months. The company has accessed over $3.6 billion in capital in the last five years, including $814 million in 2008 and $386 million during the six months ended June 30, 2009. The company’s $1.15 billion line of credit ensures new investments will be funded on time. |
ANALYST COVERAGE Bank of America Securities LLC BMO Capital Markets Corp. Deutsche Bank Securities Inc. Green Street Advisors, Inc. KeyBanc Capital Markets Morgan Keegan & Co., Inc. Raymond James & Associates, Inc. Robert W. Baird & Co. Stifel Nicolaus & Company, Inc. UBS Securities INVESTOR RELATIONS ANALYST / INVESTOR CONTACT Scott A. Estes EVP & CFO sestes@hcreit.com Michael A. Crabtree SVP & Treasurer mcrabtree@hcreit.com GENERAL INQUIRIES Erin C. Ibele SVP-Administration & Corporate Secretary info@hcreit.com George L. Chapman Chairman, CEO & President Mr. Chapman is currently Chairman, Chief Executive Officer and President of the company. He has served as Chairman and Chief Executive Officer since October 1996, and previously served as President of the company from September 1995 to May 2002. From January 1992 to September 1995, he served as Executive Vice President and General Counsel of the company. Jeffrey H. Miller EVP-Operations & General Counsel Mr. Miller is currently Executive Vice President-Operations and General Counsel, He served as Executive Vice President and General Counsel from March 2006 to January 2009 and Vice President and General Counsel of the company from July 2004 to March 2006. From 1996 to June 2004, Mr. Miller was a partner in the real estate practice group of the law firm of Shumaker, Loop & Kendrick, LLP. Scott A. Estes EVP & CFO Mr. Estes is currently Executive Vice President and Chief Financial Officer. He served as Senior Vice President and Chief Financial Officer of the company since March 2006 and served as Vice President of Finance of the company from April 2003 to March 2006. From January 2000 to April 2003, Mr. Estes served as a Senior Equity Analyst and Vice President with Deutsche Bank Securities. From January 1998 to December 1999, Mr. Estes served as a Senior Equity Analyst and Vice President with Bank of America Securities. |
Forward-Looking Statements and Risk Factors This document may contain “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern and are based upon, among other things, the possible expansion of the company’s portfolio; the sale of properties; the performance of its operators/tenants and properties; its occupancy rates; its ability to acquire, develop and/or manage properties; its ability to enter into agreements with viable new tenants for vacant space or for properties that the company takes back from financially troubled tenants, if any; its ability to make distributions to stockholders; its policies and plans regarding investments, financings and other matters; its tax status as a real estate investment trust; its ability to appropriately balance the use of debt and equity; its ability to access capital markets or other sources of funds; its critical accounting policies; and its ability to meet its earnings guidance. When the company uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The company’s expected results may not be achieved, and actual results may differ materially from expectations. This may be a result of various factors, including, but not limited to: the status of the economy; the status of capital markets, including availability and cost of capital; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators’/tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care and senior housing industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; the company’s ability to transition or sell facilities with profitable results; the failure to make new investments as and when anticipated; acts of God affecting the company’s properties; the company’s ability to re-lease space at similar rates as vacancies occur; the company’s ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant bankruptcies or insolvencies; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future acquisitions; environmental laws affecting the company’s properties; changes in rules or practices governing the company’s financial reporting; and legal and operational matters, including real estate investment trust qualification and key management personnel recruitment and retention. Finally, the company assumes no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements. |
Consolidated Balance Sheets (unaudited) (dollars in thousands) FINANCIAL June 30, 2009 2008 Assets Real estate investments: Real property owned Land and land improvements $518,213 $480,481 Buildings and improvements 4,715,571 4,486,489 Acquired lease intangibles 133,480 134,636 Real property held for sale, net of accumulated depreciation 48,824 42,153 Construction in progress 730,381 369,833 Gross real property owned 6,146,469 5,513,592 Less accumulated depreciation and amortization (636,325) (535,381) Net real property owned 5,510,144 4,978,211 Real estate loans receivable 488,856 497,133 Less allowance for losses on loans receivable (7,640) (7,406) Net real estate loans receivable 481,216 489,727 Net real estate investments 5,991,360 5,467,938 Other assets: Equity investments 2,531 1,287 Deferred loan expenses 23,197 27,067 Cash and cash equivalents 79,505 25,078 Restricted cash 18,833 149,694 Receivables and other assets (1) 132,233 133,950 Total other assets 256,299 337,076 Total assets $6,247,659 $5,805,014 Liabilities and equity Liabilities: Borrowings under unsecured lines of credit arrangements $342,000 $744,000 Senior unsecured notes 1,811,590 1,829,054 Secured debt 543,842 465,399 Accrued expenses and other liabilities 89,290 107,267 Total liabilities 2,786,722 3,145,720 Equity: Preferred stock 288,713 305,681 Common stock 111,733 89,981 Capital in excess of par value 3,454,399 2,575,682 Treasury stock (7,587) (5,110) Cumulative net income 1,485,798 1,267,690 Cumulative dividends (1,886,583) (1,577,301) Accumulated other comprehensive income (1,016) (8,546) Other equity 5,369 3,548 Total Health Care REIT, Inc. stockholders’ equity 3,450,826 2,651,625 Noncontrolling interests 10,111 7,669 Total equity 3,460,937 2,659,294 Total liabilities and equity $6,247,659 $5,805,014 Notes: (1) Includes straight-line receivable balance of $39,746,000 and $52,228,000 at June 30, 2009 and 2008, respectively. |
Consolidated Statements of Income (unaudited) (amounts in thousands except per share data) Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Revenues: Rental income $130,291 $118,125 $260,420 $231,203 Interest income 10,158 9,175 20,111 18,267 Other income 1,237 1,885 2,721 3,601 Total revenues 141,686 129,185 283,252 253,071 Expenses: Interest expense 26,698 33,335 53,941 67,844 Property operating expenses 11,525 10,697 22,943 21,409 Depreciation and amortization 39,608 35,437 79,297 70,637 General and administrative expenses 11,062 10,575 28,424 22,904 Gain on extinguishment of debt — — (1,678) (1,326) Provision for loan losses — — 140 - Total expenses 88,893 90,044 183,067 181,468 Income from continuing operations before income taxes 52,793 39,141 100,185 71,603 Income tax expense (21) (44) (72) (1,323) Income from continuing operations 52,772 39,097 100,113 70,280 Discontinued operations: Gain on sales of properties 10,677 118,168 27,713 118,194 Income from discontinued operations, net 1,310 3,994 3,577 8,242 Discontinued operations, net 11,987 122,162 31,290 126,436 Net income 64,759 161,259 131,403 196,716 Less: Preferred stock dividends 5,516 5,784 11,039 11,931 Net income attributable to noncontrolling interests 3 65 5 127 Net income attributable to common stockholders $59,240 $155,410 $120,359 $184,658 Average number of common shares outstanding: Basic 110,864 89,294 109,548 87,698 Diluted 111,272 89,853 109,956 88,223 Net income attributable to common stockholders per share: Basic $0.53 $1.74 $1.10 $2.11 Diluted $0.53 $1.73 $1.09 $2.09 Common dividends per share $0.68 $0.68 $1.36 $1.34 |
Funds From Operations Reconciliation (amounts in thousands except per share data) Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Net income attributable to common stockholders $59,240 $155,410 $120,359 $184,658 Depreciation and amortization (1) 40,731 39,630 82,057 79,203 GainPon sales of properties (10,677) (118,168) (27,713) (118,194) Noncontrolling interests (87) (87) (174) (174) Funds from operations 89,207 76,785 174,529 145,493 Non-recurring G&A expenses — — 3,909 - - Gain on extinguishment of debt — — (1,678) (1,326) Provision for loan losses — — 140 - - Non-recurring income tax expense — - - - 1,325 Funds from operations — normalized $89,207 $76,785 $176,900 $145,492 Average common shares outstanding: Basic 110,864 89,294 109,548 87,698 Diluted 111,272 89,853 109,956 88,223 Per share data: Net income attributable to common stockholders Basic $0.53 $1.74 $1.10 $2.11 Diluted $0.53 $1.73 $1.09 $2.09 Funds from operations Basic $0.80 $0.86 $1.59 $1.66 Diluted $0.80 $0.85 $1.59 $1.65 Funds from operations — normalized Basic $0.80 $0.86 $1.61 $1.66 Diluted $0.80 $0.85 $1.61 $1.65 FFO Payout Ratio Dividends per share $0.68 $0.68 $1.36 $1.34 FFO per diluted share $0.80 $0.85 $1.59 $1.65 FFO payout ratio 85% 80% 86% 81% FFO Payout Ratio — Normalized Dividends per share $0.68 $0.68 $1.36 $1.34 FFO per diluted share — normalized $0.80 $0.85 $1.61 $1.65 FFO payout ratio — normalized 85% 80% 84% 81% Notes: (1) Depreciation and amortization includes depreciation and amortization from discontinued operations. |
Funds Available for Distribution Reconciliation (amounts in thousands except per share data) Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Net income attributable to common stockholders $59,240 $155,410 $120,359 $184,658 Depreciation and amortization (1) 40,731 39,630 82,057 79,203 GainPon sales of properties (10,677) (118,168) (27,713) (118,194) Noncontrolling interests (16) (8) (32) (17) Gross straight-line rental income (4,897) (5,034) (9,927) (10,370) Prepaid/straight-line rent receipts 7,255 7,923 15,144 10,898 Amortization related to above/(below) market leases, net (368) (199) (724) (462) Non-cash interest expense 2,844 2,769 5,616 5,559 Cap-ex, tenant improvements, lease commissions (2,733) (1,162) (5,158) (1,927) Funds available for distribution 91,379 81,161 179,622 149,348 Non-recurring G&A expenses — — 3,909 - - Gain on extinguishment of debt — — (1,678) (1,326) Provision for loan losses — — 140 - - Non-recurring income tax expense — - - - 1,325 Prepaid/straight-line rent receipts (7,255) (7,923) (15,144) (10,898) Funds available for distribution — normalized $84,124 $73,238 $166,849 $138,449 Average common shares outstanding: Basic 110,864 89,294 109,548 87,698 Diluted 111,272 89,853 109,956 88,223 Per share data: Net income attributable to common stockholders Basic $0.53 $1.74 $1.10 $2.11 Diluted $0.53 $1.73 $1.09 $2.09 Funds available for distribution Basic $0.82 $0.91 $1.64 $1.70 Diluted $0.82 $0.90 $1.63 $1.69 Funds available for distribution — normalized Basic $0.76 $0.82 $1.52 $1.58 Diluted $0.76 $0.82 $1.52 $1.57 FAD Payout Ratio Dividends per share $0.68 $0.68 $1.36 $1.34 FAD per diluted share $0.82 $0.90 $1.63 $1.69 FAD payout ratio 83% 76% 83% 79% FAD Payout Ratio — Normalized Dividends per share $0.68 $0.68 $1.36 $1.34 FAD per diluted share — normalized $0.76 $0.82 $1.52 $1.57 FAD payout ratio — normalized 89% 83% 89% 85% Notes: (1) Depreciation and amortization includes depreciation and amortization from discontinued operations |
Adjusted EBITDA Reconciliation (dollars in thousands) Twelve Months Ended June 30, September 30, December 31, March 31, June 30, 2008 2008 2008 2009 2009 Net income $274,047 $303,603 $283,425 $314,613 $218,112 Interest expense (3) 150,031 147,596 141,059 131,750 122,927 Income tax expense 1,569 1,439 1,306 77 54 Depreciation and amortization (3) 159,422 160,975 163,045 164,797 165,898 Stock-based compensation (4) 7,853 8,024 8,530 11,360 11,034 Provision for loan losses - — 94 234 234 Gain on extinguishment of debt (2,407) (3,175) (2,094) (2,446) (2,446) Adjusted EBITDA $590,515 $618,462 $595,365 $620,385 $515,813 Interest Coverage Ratio (1) Interest expense (3) $150,031 $147,596 $141,059 $131,750 $122,927 Capitalized interest (5) 17,860 21,062 25,029 29,727 35,690 Non-cash interest expense (11,047) (11,325) (11,231) (11,214) (11,289) Total interest $156,844 $157,333 $154,857 $150,263 $147,328 Adjusted EBITDA $590,515 $618,462 $595,365 $620,385 $515,813 Adjusted interest coverage ratio 3.76x 3.93x 3.84x 4.13x 3.50x Fixed Charge Coverage Ratio (2) Total interest (3) $156,844 $157,333 $154,857 $150,263 $147,328 Secured debt principal amortization 8,066 8,137 8,119 8,232 8,592 Preferred dividends 24,427 23,840 23,201 22,579 22,311 Total fixed charges $189,337 $189,310 $186,177 $181,074 $178,231 Adjusted EBITDA $590,515 $618,462 $595,365 $620,385 $515,813 Adjusted fixed charge coverage ratio 3.12x 3.27x 3.20x 3.43x 2.89x Notes: (1) A comparable covenant in our senior unsecured notes is a minimum of 1.50 times. (2) A comparable covenant in our unsecured line of credit arrangement is a minimum of 1.75 times. (3) Interest expense and depreciation and amortization include discontinued operations. (4) Stock-based compensation expense was $1,080,000 and $7,659,000 for the three and six months ended June 30, 2009. (5) Capitalized interest was $11,026,000 and $20,891,000 for the three and six months ended June 30, 2009. |
Net Operating Income Reconciliation (dollars in thousands) Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Total revenues: Investment properties: Rental income: (1) Independent living/CCRCs $20,001 $14,881 $39,997 $28,295 Assisted living facilities 28,392 31,071 56,100 61,299 Skilled nursing facilities 41,598 40,260 83,329 80,360 Specialty care facilities 11,293 10,595 23,970 18,786 Sub-total rental income 101,284 96,807 203,396 188,740 Interest income 10,158 9,175 20,111 18,267 Other income 640 1,533 1,534 2,829 Total investment property income 112,082 107,515 225,041 209,836 Medical office buildings: Rental income (1) 32,593 33,003 65,846 66,236 Other income 234 237 447 447 Total MOB income 32,827 33,240 66,293 66,683 Non-segment/corporate other income 363 115 740 325 Total revenues 145,272 140,870 292,074 276,844 Property operating expenses: Investment properties — — - - -Medical office buildings (1) 12,044 11,375 24,026 22,742 Non-segment/corporate — — - - - Total property operating expenses 12,044 11,375 24,026 22,742 Net operating income: Investment properties 112,082 107,515 225,041 209,836 Medical office buildings 20,783 21,865 42,267 43,941 Non-segment/corporate 363 115 740 325 Net operating income $133,228 $129,495 $268,048 $254,102 Note: (1) The three months ended June 30, 2009 includes the following amounts (in thousands): Rental income from discontinued operations: Independent living/CCRCs $796 Assisted living facilities $357 Skilled nursing facilities 1,809 Medical office buildings 624 Total $3,586 Non-cash rental income from continuing operations: Independent living/CCRCs $1,409 Assisted living facilities 1,119 Skilled nursing facilities 974 Specialty care facilities 379 Medical office buildings 1,509 Total $5,390 Property operating expenses from discontinued operations: Medical office buildings $519 |
Outlook Reconciliation (amounts in thousands except per share data) Year Ended December 31, 2009 Low High Investments: Acquisitions $ — $ — Development 600,000 600,000 Gross new investments 600,000 600,000 Dispositions (300,000) (200,000) Net new investments 300,000 400,000 FFO Reconciliation: Net income attributable to common stockholders $200,592 $208,342 Loss (gain) on sales of properties (27,713) (27,713) Depreciation and amortization (1) 170,000 170,000 Funds from operations $342,879 $350,629 Loss (gain) on extinguishment of debt (1,678) (1,678) Provision for loan losses 140 140 Non-recurring G&A expenses (2) 3,909 3,909 Funds from operations — normalized $345,250 $353,000 Per share data (diluted): Net income attributable to common stockholders $1.81 $1.88 Funds from operations 3.09 3.16 Funds from operations — normalized 3.11 3.18 FAD Reconciliation: Net income attributable to common stockholders $200,592 $208,342 Loss (gain) on sales of properties (27,713) (27,713) Depreciation and amortization (1) 170,000 170,000 Gross straight-line rental income (18,000) (18,000) Prepaid/straight-line rent receipts 15,144 15,144 Amortization related to above (below) market leases, net (1,300) (1,300) Non-cash interest expense 11,700 11,700 Cap-ex, tenant improvements, lease commissions (10,000) (10,000) Funds available for distribution $340,423 $348,173 Loss (gain) on extinguishment of debt (1,678) (1,678) Provision for loan losses 140 140 Non-recurring G&A expenses (2) 3,909 3,909 Prepaid/straight-line rent receipts (15,144) (15,144) Funds available for distribution — normalized $327,650 $335,400 Per share data (diluted): Net income attributable to common stockholders $1.81 $1.88 Funds available for distribution 3.07 3.14 Funds available for distribution — normalized 2.95 3.02 Notes: (1) Depreciation and amortization includes depreciation and amortization from discontinued operations. (2) Expenses recognized in connection with the departure of Raymond Braun. |
Revenue and Lease Maturity (amounts in thousands except per share data) Rental Income (1) Independent Assisted Skilled Specialty Medical Total Rental Interest Total % of Year Living / CCRC Living Nursing Care Office Income Income (2) Revenues Total 2009 $ — $ — $5,263 $ — 6,496 $ $11,759 $7,102 $18,861 3.4% 2010 - — — — 8,744 8,744 3,302 12,046 2.2% 2011 — 1,305 — — 10,729 12,034 13,628 25,662 4.7% 2012 4,933 3,431 6,921 — 12,165 27,450 2,724 30,174 5.5% 2013 7,880 567 — — 8,286 16,733 12,727 29,460 5.4% 2014 — 2,859 6,276 — 9,970 19,105 1,323 20,428 3.7% 2015 — — 1,922 — 8,150 10,072 355 10,427 1.9% 2016 — - 6,374 — 13,562 19,936 126 20,062 3.7% 2017 — 14,742 3,632 2,082 5,469 25,925 2,888 28,813 5.3% 2018 3,604 33,908 16,467 2,350 2,139 58,468 1,334 59,802 10.9% Thereafter 63,285 56,499 117,777 37,945 11,494 287,000 4,689 291,689 53.3% $79,702 $113,311 $164,632 $42,377 $97,204 $497,226 $50,198 $547,424 100.0% Notes: (1) Rental income represents annualized base rent for effective lease agreements. The amounts are derived from the current contracted monthly base rent including straight-line for leases with fixed escalators or annual cash rent for leases with contingent escalators, net of collectability reserves, if applicable. Rental income does not include common area maintenance charges or the amortization of above/below market lease intangibles. (2) Reflects contract rate of interest for loans, net of collectability reserves if applicable. |
Debt Maturities and Principal Payments (dollars in thousands) %of Year Line of Credit (1) Senior Notes (2,4)Secured Debt (2,5) Total Total 2009 $ — $ -$4,699$4,699 0.2% 2010 — — 16,662 16,662 0.6% 2011 342,000 — 53,954 395,954 14.6% 2012 — 238,277 15,431 253,708 9.4% 2013 — 300,000 64,052 364,052 13.4% 2014 — — 124,344 124,344 4.6% 2015 — 250,000 72,751 322,751 11.9% Thereafter — 1,035,000 193,765 1,228,765 45.3% Totals $342,000 $1,823,277$545,658$2,710,935 100.0% Weighted Avg Interest Rate (3) 0.9% 5.8% 6.0% 5.2% Weighted Avg Maturity (4) 2.3 10.2 6.6 8.5 Fixed and Floating Rate Debt (dollars in thousands) Principal % of Debt Fixed Rate Debt Senior notes (2) $1,823,277 67.3% Secured debt (2) $545,658 20.1% Total fixed $2,368,935 87.4% Floating Rate Debt Line of credit (1) $342,000 12.6% Total floating $342,000 12.6% Total debt $2,710,935 100.0% Notes: (1) Current line of credit capacity of $1.15 billion with remaining availability of $808 million at June 30, 2009. Line of credit currently matures on August 5, 2011 but can be extended for one year at our discretion. (2) Amounts above represent principal amounts due and do not include unamortized premiums/discounts or other fair value adjustments as reflected on the balance sheet. (3) Line of credit interest rate represents 1-month LIBOR + 60 bps at June 30, 2009. Senior notes and secured debt average interest rate represents the face value note rate. (4) $340 million of convertible senior notes are puttable on December 1, 2011 and $395 million of convertible senior notes are puttable on July 15, 2012. Weighted average maturities would be 4.2 years and 4.5 years for senior notes and total debt, respectively, using the puttable dates. (5) $6,256,000 of secured debt that matures in 2013 and $8,138,000 of secured debt that matures in 2015 relates to assets-held-for sale. Weighted-average maturities would be 6.8 years and 8.5 years for secured debt and total debt, respectively, if one used a 12/31/09 extinguishment date. |
Current Capitalization (amounts in thousands except per share data)Balance% of TotalBook Capitalization (1)Line of credit342,000$5.6%Long-term debt obligations2,355,432 38.2% Debt to total book capitalization2,697,432 43.8%Total equity3,460,937 56.2% Total book capitalization6,158,369$100.0%Undepreciated Book CapitalizationLine of credit342,000$5.0%Long-term debt obligations2,355,432 34.7% Debt to undepreciated book capitalization2,697,432 39.7%Accumulated depreciation and amortization636,325 9.4%Total equity3,460,937 50.9% Total undepreciated book capitalization6,794,694$100.0%Enterprise ValueLine of credit342,000$5.0%Long-term debt obligations2,355,432 34.6% Debt to total enterprise value2,697,432 39.6%Common shares outstanding111,779 Period end share price34.10$ Common equity market capitalization3,811,664 56.0%Noncontrolling interests10,111 0.1%Preferred stock288,713 4.3% Total enterprise value6,807,920$100.0%Secured Debt as % of Total Assets (2)Secured debt543,842$8.7%Total assets6,247,659$ Total Debt as % of Total Assets (3)Total debt2,697,432$43.2%Total assets6,247,659$ Unencumbered Assets as % of Unsecured Debt (4)Unencumbered assets5,865,131$272.3%Unsecured debt2,153,590$ Current Capitalization Notes: (1) A comparable covenant in our unsecured line of credit arrangement is a maximum of 60%. (2) A comparable covenant in our senior unsecured notes is a maximum of 40%. A comparable covenant in our unsecured line of credit arrangement is a maximum of 30%. (3) A comparable covenant in our senior unsecured notes is a maximum of 60%. (4) A comparable covenant in our unsecured line of credit arrangement is a minimum of 167%. A comparable covenant in our seniorunsecured notes is a minimum of 150%. |
Gross Investment Activity PropertiesAmount ($000)Investment Per Bed / Unit / Square FootInitial Cash YieldConstruction in ProgressDevelopment projects:CCRC — entrance fee3757 units22,789$ CCRC — rental132 units422 Combination — entrance fee4548 units22,636 Combination - rental141,725 units44,220 Freestanding dementia care2157 units2,109 Freestanding skilled nursing1120 beds2,461 Specialty care3212 beds29,645 Medical office5749,845 sf19,444 Total development projects33143,726 Expansion projects:CCRC — entrance fee331 units397 Combination — entrance fee419 units500 Total expansion projects7897 Total construction in progress40144,623 Capital improvements to existing properties 2,224 10.6%Loan advances30,812 9.3%Gross investments177,659$ Second Quarter 2009 Beds / Units / Square Feet |
Gross Investment Activity Year-To-Date 2009 PropertiesAmount ($000)Investment Per Bed / Unit / Square FootInitial Cash Yield Beds / Units / Square Feet Construction in ProgressDevelopment projects:CCRC — entrance fee3757 units50,797$ CCRC — rental132 units905 Combination — entrance fee4548 units44,340 Combination — rental161,725 units99,814 Freestanding dementia care3157 units4,583 Freestanding skilled nursing1120 beds5,559 Specialty care3212 beds51,855 Medical office5749,845 sf45,749 Total development projects36303,602 Expansion projects:CCRC — entrance fee331 units1,830 Combination — entrance fee419 units1,183 Total expansion projects73,013 Total construction in progress43306,615 Capital improvements to existing properties 7,762 9.9%Loan advances37,046 9.6% Gross investments351,423 |
Investment Timing (dollars in thousands) Initial Cash Loan Initial Cash Construction Initial Cash Acquisitions Yield Advances Yield Conversions Yield Dispositions Yield on Sale January $ — 0.0% $2,226 11.5% $10,639 9.3% $26,211 9.8% February — 0.0% 2,485 10.7% - - 0.0% 3,427 8.9% March — 0.0% 1,523 11.7% 26,790 9.0% 14,630 12.6% April — 0.0% 1,472 10.5% 242 8.8% 4,259 10.1% May - 0.0% 26,806 9.1% 28,825 9.0% 11,293 8.5% June — 0.0% 2,534 11.0% 149,157 8.0% 63,192 11.2% Total $ — 0.0% $37,046 9.6% $215,653 8.3% $123,012 10.5% Disposition Activity (dollars in thousands) Second Quarter 2009 Year-To-Date 2009 Amount % of Total Amount % of Total Dispositions by Investment Type Real property $60,304 76.6% $104,572 85.0% Real estate loans receivable 18,440 23.4% 18,440 15.0% Total $78,744 100.0% $123,012 100.0% Dispositions by Property Type CCRC — rental $24,341 30.9% $24,341 19.8% Combination — rental 21,497 27.3% 21,497 17.5% Freestanding assisted living 1,857 2.4% 1,857 1.5% Freestanding dementia care 2,385 3.0% 5,812 4.7% Freestanding skilled nursing 10,224 13.0% 10,224 8.3% Specialty care facility — 0.0% 40,841 33.2% Real estate loans receivable 18,440 23.4% 18,440 15.0% Total $78,744 100.0% $123,012 100.0% Discontinued Operations (dollars in thousands) Second Quarter Year-To-Date 2009 2008 2009 2008 Revenues Rental income $3,586 $11,685 $8,822 $23,773 Expenses Interest expense 634 2,820 1,402 5,632 Property operating expenses 519 678 1,083 1,333 Depreciation and amortization 1,123 4,193 2,760 8,566 Income / (loss) from discontinued operations, net $1,310 $3,994 $3,577 $8,242 |
Portfolio Composition(dollars in thousands) Properties Investment Balance % of Total Committed Balance % of TotalBalance Sheet DataReal property588 5,510,144$91.9%5,968,955$92.4%Loans32 488,856 8.1%488,856 7.6%Total620 5,999,000$100.0%6,457,811$100.0%Investment Concentration — By Predominant Service TypeIndependent living / CCRC61 1,157,784$19.2%1,245,098$19.3%Assisted living179 1,257,232 21.0%1,325,425 20.5%Skilled nursing223 1,569,326 26.2%1,577,749 24.4%Specialty care28 609,628 10.2%822,970 12.8%Medical office129 1,405,030 23.4%1,486,569 23.0%Total620 5,999,000$100.0%6,457,811$100.0%Investment Concentration — Senior Housing & Care and Medical FacilitiesSenior housing & care portfolioCCRC — entrance fee6 337,978$5.6%384,183$5.9%CCRC — rental10 148,445 2.5%150,909 2.3%Combination — entrance fee9 347,225 5.8%385,871 6.0%Combination — rental124 1,141,720 19.0%1,210,672 18.8%Subtotal combination / CCRC149 1,975,368 32.9%2,131,635 33.0%Freestanding independent living22 156,218 2.6%156,218 2.4%Freestanding assisted living65 223,940 3.7%223,940 3.5%Freestanding dementia care31 156,280 2.6%163,943 2.5%Freestanding skilled nursing185 1,145,060 19.1%1,145,060 17.8%Subtotal freestanding303 1,681,498 28.0%1,689,161 26.2%Land 5 16,509 0.3%16,509 0.3%Other loans6 310,967 5.2%310,967 4.7%Senior housing & care total463 3,984,342 66.4%4,148,272 64.2%Medical facilities portfolioLong-term acute care14 186,627 3.1%186,627 2.9%Acute care7 230,353 3.8%443,695 6.9%Inpatient rehab5 135,451 2.3%135,451 2.1%Land 2 13,550 0.2%13,550 0.2%Other loans- 43,647 0.8%43,647 0.7%Subtotal specialty care28 609,628 10.2%822,970 12.8%Medical office 129 1,405,030 23.4%1,486,569 23.0%Medical facilities total157 2,014,658 33.6%2,309,539 35.8%Total portfolio620 5,999,000$100.0%6,457,811$100.0% Committed Balance ($000) Per Bed / Unit / Square Foot Investment MetricsIndependent living / CCRC7,156 units1,245,098$173,994$ Assisted living11,022 units1,325,425 120,253 Skilled nursing30,223 beds1,577,749 52,204 Specialty care1,629 beds822,970 505,199 Medical office5,667,620 sf1,486,569 262 Total6,457,811$ Bed / Unit / Square Foot |
Portfolio Concentration (dollars in thousands) Total Investment % of Total % of Properties Balance Balances Revenues (1) Revenues By Operator / Tenant Senior Living Communities, LLC 10 $385,455 6.4% $5,101 3.5% Signature Healthcare LLC 34 310,812 5.2% 10,010 6.9% Brookdale Senior Living, Inc. 86 305,329 5.1% 9,743 6.8% Emeritus Corporation 21 242,764 4.0% 7,388 5.1% Life Care Centers of America, Inc. 20 207,640 3.5% 8,285 5.8% Merrill Gardens LLC 13 167,613 2.8% 5,401 3.7% One Lantern Senior Living LLC 9 156,181 2.6% 3,606 2.5% Gulf Coast Health Care 25 154,976 2.6% 4,478 3.1% Lyric Health Care, LLC 27 145,592 2.4% 4,607 3.2% Vibra Healthcare, LLC 5 143,758 2.4% 3,456 2.4% Remaining portfolio 370 3,778,880 63.0% 81,960 57.0% Total 620 $5,999,000 100.0% $144,035 100.0% Independent Assisted Skilled Specialty Medical Total Investment % of Living / CCRC Living Nursing Care Office Properties Balance Total Balances By State Florida $186,840 $53,372 $281,832 $ — $265,456 88 $787,500 13.1% Texas 17,841 91,769 173,177 169,793 200,127 76 652,707 10.9% California 164,923 57,793 — 137,011 124,203 29 483,930 8.1% Massachusetts 71,043 117,686 222,724 13,550 — 36 425,003 7.1% Tennessee — 37,592 209,106 — 65,305 32 312,003 5.2% Ohio 72,442 39,270 178,527 13,785 7,176 30 311,200 5.2% South Carolina 235,808 6,531 — — 16,740 13 259,079 4.3% North Carolina 45,916 160,066 — — 23,678 53 229,660 3.8% Illinois — 120,780 26,502 49,469 16,654 15 213,405 3.6% Wisconsin 24,917 77,346 - 24,198 68,968 12 195,429 3.3% Remaining portfolio 338,054 495,027 477,458 201,822 616,723 236 2,129,084 35.4% Total $1,157,784 $1,257,232 $1,569,326 $609,628 $1,405,030 620 $5,999,000 100.0% Independent Assisted Skilled Specialty Medical Total Total % of Living / CCRC Living Nursing Care Office Properties Revenues (1) Total Revenues By State Florida $3,959 $1,091 $8,932 $ — $6,021 88 $20,003 13.9% Texas 598 2,637 4,527 4,249 4,674 76 16,685 11.6% California 4,610 1,884 — 1,842 3,304 29 11,640 8.1% Tennessee - 966 6,831 67 1,986 32 9,850 6.8% Massachusetts 112 2,929 6,063 614 - 36 9,718 6.7% North Carolina 1,252 5,620 - — 475 53 7,347 5.1% Ohio - 1,004 4,967 387 223 30 6,581 4.6% Indiana 2,418 180 989 857 605 14 5,049 3.5% Georgia 1,930 112 499 - 2,072 23 4,613 3.2% Illinois — 1,264 728 1,201 537 15 3,730 2.6% Remaining Portfolio 5,893 13,844 13,019 3,367 12,696 224 48,819 33.9% Total $20,772 $31,531 $46,555 $12,584 $32,593 620 $144,035 100.0% Notes: (1) Revenues represent rent and interest income including rent from discontinued operations for the three months ended June 30, 2009. Revenues exclude other income totaling $1,237,000 for the three months ended June 30, 2009. |
Top Ten Operator Descriptions Senior Living Communities, LLC, located in Charlotte, NC, operates premier continuing care retirement communities (CCRCs) throughout the southeastern United States. The company operates ten campuses in four states. As of June 30, 2009, the HCN portfolio consisted of ten properties in four states with an investment balance of $385.5 million. Signature Healthcare LLC, located in Palm Beach Gardens, FL, is a private operator of skilled nursing facilities spread among seven states. The company operates 64 skilled nursing facilities with 7,674 beds. As of June 30, 2009, the HCN portfolio consisted of 34 properties in four states with an investment balance of $310.8 million. Brookdale Senior Living, Inc. (NYSE:BKD), located in Chicago, IL, is a national public provider of independent living and assisted living services. The company operates 550 facilities in 35 states with the ability to serve over 51,000 residents. As of June 30, 2009, the HCN portfolio consisted of 86 properties in 16 states with an investment balance of $305.3 million. Emeritus Corporation (AMEX:ESC), located in Seattle, WA, is a national public provider of independent living, assisted living and Alzheimer’s services. The company operates 288 communities representing capacity for approximately 30,000 residents in 37 states. As of June 30, 2009, the HCN portfolio consisted of 21 properties in 16 states with an investment balance of $242.8 million. Life Care Centers of America, Inc., located in Cleveland, TN, is one of the largest private owners and operators of skilled nursing facilities in the country. The company has grown to more than 330 skilled nursing, assisted living, retirement, home care and Alzheimer’s centers in 28 states. As of June 30, 2009, the HCN portfolio consisted of 20 properties in 11 states with an investment balance of $207.6 million. Merrill Gardens LLC, located in Seattle, WA, is a privately held corporation organized under the laws of Washington State. The company owns, operates and/or manages 53 IL/AL facilities with 6,455 units in eight states. As of June 30, 2009, the HCN portfolio consisted of 13 properties in seven states with an investment balance of $167.6 million. One Lantern Senior Living, LLC, a fully owned subsidiary of Lazard Real Estate Partners, LP, located in New York, NY, is a privately held corporation organized under the laws of New York. The company owns, operates and manages more than 29 assisted living and skilled nursing facilities with 3,336 units in six states. As of June 30, 2009, the HCN portfolio consisted of nine properties in three states with an investment balance of $156.2 million. Gulf Coast Health Care, located in Pensacola, FL, is a private operator of skilled nursing facilities. The company operates 43 skilled nursing facilities with 5,480 beds/units located in Florida, Alabama, and Mississippi. As of June 30, 2009, the HCN portfolio consisted of 25 properties in three states with an investment balance of $155.0 million. Lyric Health Care, LLC, located in Columbia, MD, is a private operator of 31 skilled nursing facilities and long term acute care hospitals with 3,800 beds/units in 10 states and has a management agreement with Encore Healthcare LLC to operate the facilities. As of June 30, 2009, the HCN portfolio consisted of 27 properties in nine states with an investment balance of $145.6 million. Vibra Healthcare, LLC, located in Mechanicsburg, PA, is a private operator of inpatient rehabilitation facilities and long term acute care hospitals in nine states. The company operates 15 properties with 998 beds. As of June 30, 2009, the HCN portfolio consisted of five properties in three states with an investment balance of $143.8 million. |
Metropolitan Statistical Area Concentration * (dollars in thousands) Top 31 Top 75 Top 100 Independent living / CCRC $296,687 $529,354 $726,940 % of independent living / CCRC 25.6%45.7%62.8% Assisted living 461,600 707,728 746,571 % of assisted living 36.7% 56.3% 59.4% Skilled nursing 481,305 843,426 923,922 % of skilled nursing 30.7% 53.7% 58.9% Specialty care 269,700 463,501 501,099 % of specialty care 44.2% 76.0% 82.2% Medical office 996,401 1,285,776 1,287,641 % of medical office 70.9% 91.5% 91.6% Total portfolio $2,505,693 $3,829,785 $4,186,173 % of total portfolio 41.8% 63.8%69.8% * Metropolitan statistical areas are as defined by the U.S. Census Bureau. Top 31, 75 and 100 classifications are reported per the National Investment Center Market Area Profiles Subscription Service. Region Concentration (dollars in thousands) Total Investment % of Properties Balance Total By Region* South Atlantic 196 $1,579,143 26.3% East North Central 72 911,703 15.2% West South Central 108 777,522 13.0% Pacific 38 621,933 10.4% East South Central 68 548,922 9.2% Mountain 45 524,944 8.8% New England 48 485,813 8.1% Middle Atlantic 34 369,678 6.2% West North Central 11 179,342 2.8% Total 620 $5,999,000 100.0% *Region definitions are derived from census bureau definitions and are itemized in the glossary. |
Portfolio Performance Facility Revenue Mix TTM TTM Age Occupancy CBMF (1) CAMF (1) Private Pay Medicaid Medicare Stable Portfolio* Independent living / CCRC 11 88.9% 1.28x 1.08x 92.1% 1.8% 6.1% Assisted living 11 88.0% 1.57x 1.34x 86.5% 11.2% 2.3% Skilled nursing 24 84.2% 2.20x 1.61x 19.6% 49.0% 31.4% Specialty care 12 55.0% 2.33x 2.01x 31.7% 2.5% 65.8% Medical office 13 90.6% n/a n/a 100.0% 0.0% 0.0% Total 15 1.94x 1.51x * Data as of June 30, 2009 for medical office and March 31, 2009 for remaining asset types. Notes: (1) Represents trailing twelve month coverage metrics. Same Store Revenue Growth (dollars in thousands) 2Q08 Same Store 2Q09 Same Store Properties (1) Revenue* Revenue* % Change Same Store Portfolio Independent living / CCRC 48 $11,404 $11,590 1.6% Assisted living 157 23,383 24,036 2.8% Skilled nursing 219 40,225 40,660 1.1% Specialty care 17 6,875 6,693 -2.6% Total 441 $81,887 $82,979 1.3% * Same store revenue represents cash-only rent or interest income excluding the impact of lease or loan basis changes (e.g., rent-producing capital improvement additions for leases and principal draws or paydowns for loans). Notes: (1) Represents those properties in the portfolio (both stable and unstable) for the 15 months preceding the end of the portfolio performance period. |
Same Store (21 properties) Portfolio Performance — Independent Living / CCRC Stable Trailing Twelve Month Payment Coverage Before Management Fees Occupancy Revenue per Occupied Unit Expense per Occupied Unit |
Same Store (138 properties) Stable Portfolio Performance — Assisted Living |
Same Store (209 properties) Portfolio Performance — Skilled Nursing Stable |
Same Store (6 properties) Stable Portfolio Performance — Specialty Care* |
Portfolio Composition — Medical Office Buildings (dollars in thousands) Investment Total Operating Properties Square Feet Balance Revenues Expenses NOI Age Occupancy On Campus 45 2,472,450 $666,747 $17,824 $6,386 $11,438 13 92.1% Off Campus-Affiliated 21 839,921 188,515 5,675 2,224 3,451 14 93.3% Off Campus 41 1,331,059 364,604 8,704 2,915 5,789 14 86.2% Subtotal 107 4,643,430 1,219,866 32,203 11,525 20,678 13 90.6% Held-for-sale 14 274,345 21,843 624 519 105 Development 5 749,845 142,521 Land 3 20,800 Total 129 5,667,620 $1,405,030 $32,827 $12,044 $20,783 Portfolio Performance — Medical Office Buildings (dollars in thousands) 2Q08A 3Q08A 4Q08A 1Q09A 2Q09A Total MOB Performance Properties* 104 107 107 107 107 Square feet* 4,427,527 4,642,366 4,642,366 4,643,283 4,643,430 Investment balance* $1,186,447 $1,249,177 $1,240,302 $1,229,461 $1,219,866 Occupancy* 91.9% 91.5% 90.4% 90.2% 90.6% Total revenue* $31,979 $33,226 $32,779 $32,811 $32,203 Operating expenses* $10,691 $11,178 $11,389 $11,418 $11,525 NOI from continuing operations* $21,288 $22,048 $21,390 $21,393 $20,678 NOI from discontinued operations $577 $304 $(49) $91 $105 Total cap-ex / TI / LC $1,162 $1,555 $2,865 $2,425 $2,733 Expired (square feet)* 166,180 123,621 188,367 169,133 139,034 Retained (square feet)* 139,994 82,760 145,349 121,932 115,048 Retention rate* 84.2% 66.9% 77.2% 72.1% 82.7% 2Q08A 3Q08A 4Q08A 1Q09A 2Q09A Same Store Performance* Properties 103 103 103 103 103 Square feet 4,401,065 4,401,065 4,401,065 4,401,065 4,401,065 Investment balance $1,180,222 $1,169,175 $1,161,057 $1,150,967 $1,142,082 Occupancy 91.8% 91.1% 89.9% 89.7% 90.1% Total revenue $31,874 $32,315 $30,977 $30,865 $29,999 Operating expenses $10,688 $11,092 $10,948 $10,977 $10,873 NOI $21,186 $21,223 $20,029 $19,888 $19,126 2009 2010 2011 2012 2013 Remaining Lease Expirations* Square feet 202,164 425,927 466,111 575,776 370,831 % of total portfolio 4.4% 9.2% 10.0% 12.4% 8.0% * Results and forecasts include month-to-month and holdover leases and exclude terminations and discontinued operations. |
Portfolio Concentration — Medical Office Buildings Square Feet % of Total By Tenant* Tenet Health Systems 286,288 6.2% Baptist Health System, Inc 161,933 3.5% United HealthCare Services, Inc 160,855 3.5% Community Health Systems 155,365 3.3% Cooper Health Systems 98,651 2.1% Remaining Portfolio 3,780,338 81.4% Total 4,643,430 100.0% *Excludes development and held-for-sale properties. Investment Balance per Properties Square Feet % of Total Balance ($000) Square Foot By Region* South Atlantic 54 1,554,753 27.4% $388,675 $250 West South Central 17 884,514 15.6% 212,239 240 Middle Atlantic 13 781,458 13.8% 173,532 222 East South Central 13 711,676 12.6% 130,748 184 Mountain 16 700,583 12.4% 217,061 310 Pacific 9 508,997 9.0% 152,339 299 East North Central 6 475,483 8.4% 114,390 241 West North Central 1 50,156 0.8% 16,046 320 Total 129 5,667,620 100.0% $1,405,030 $248 *Region definitions are derived from U.S. Census Bureau definitions and are itemized in the glossary. Investment Balance per Properties Square Feet % of Total Balance ($000) Square Foot By State Florida 27 935,943 16.5% $265,456 $284 Texas 16 839,711 14.8% 200,127 238 California 8 445,833 7.9% 124,203 279 New Jersey 5 406,938 7.2% 93,151 229 Georgia 15 358,556 6.3% 74,808 209 Arizona 6 339,205 6.0% 99,072 292 Nevada 9 324,992 5.7% 110,935 341 Alabama 5 304,021 5.4% 42,776 141 Tennessee 7 295,017 5.2% 65,305 221 Wisconsin 1 293,629 5.2% 68,968 235 Remaining portfolio 30 1,123,775 19.8% 260,229 232 Total 129 5,667,620 100.0% $1,405,030 $248 |
Development Activity (dollars in thousands) Beds / Units / CIP Balance 2009 YTD 2009 YTD CIP Balance Projects Square Feet at 12/31/08 Funding Conversions at 6/30/09 Development Properties CCRC — entrance fee 3 757 $167,925 $50,797 $ (48,128) $170,594 CCRC — rental 1 32 231 905 — 1,136 Combination — entrance fee 4 548 106,958 44,340 (54,493) 96,805 Combination — rental 16 1,725 162,215 99,814 (84,231) 177,798 Freestanding dementia care 3 157 13,994 4,583 (10,639) 7,938 Freestanding skilled nursing 1 120 9,002 5,559 (14,561) -Specialty care 3 212 75,509 51,855 - 127,364 Medical office 5 749,845 96,772 45,749 — 142,521 Total 36 $632,606 $303,602 $(212,052) $724,156 Expansion Projects CCRC — entrance fee 3 31 $3,814 $1,830 $(3,103) $2,541 Combination — entrance fee 4 19 2,999 1,183 (498) 3,684 Total 7 6,8133,013 (3,601) 6,225 Development Total 43 $639,419 $306,615 $(215,653) $730,381 Development Funding Projections (dollars in thousands) Projected Future Funding Beds / Units / Square Initial 2009 2010 Funding Unfunded Committed Projects Feet Yield Funding Funding Thereafter Commitments Balances Development Properties CCRC — entrance fee 2 613 10.0% 28,836 $$15,300 $- $44,136 $214,730 CCRC — rental 1 32 10.5% 2,464 - - — 2,464 3,600 Combination — entrance fee 3 404 8.5% 21,003 15,117 — 36,120 132,925 Combination - rental 11 1,388 8.0% 54,812 14,140 — 68,952 246,750 Freestanding dementia care 2 101 9.0% 7,652 11 - - 7,663 15,601 Specialty care 3 212 9.4% 73,693 101,690 37,959 213,342 340,706 Medical office 5 749,845 7.5% 76,562 4,977 — 81,539 224,060 Total 27 8.8% $265,022 $151,235 $37,959 $454,216 $1,178,372 Expansion Projects CCRC — entrance fee 3 29 9.4% 2,069 $$- $-$2,069 $4,610 Combination — entrance fee 4 19 8.7% 1,489 151 886 2,526 6,210 Total 7 9.0% 3,558 151 8864,595 10,820 Development Total 34 8.8% 268,580 $ $151,386 $38,845 $458,811 $1,189,192 |
Development Project Conversion Estimates* (dollars in thousands) Quarterly Conversions Annual Conversions Projected Initial Projected Initial Amount Cash Yields (1) Amount Cash Yields (1) 1Q09 actual $37,072 9.1% 2009 estimate $662,236 8.3% 2Q09 actual 174,980 8.1% 2010 estimate 517,688 9.1% 3Q09 estimate 177,145 8.0% 2011 estimate 210,500 9.3% 4Q09 estimate 273,039 8.5% 2012 estimate — 0.0% 1Q10 estimate 210,206 8.8% 2013+ estimate — 0.0% 2Q10 estimate 199,026 9.4% Total $1,390,424 8.7% 3Q10 estimate 108,456 9.2% 4Q10 estimate — 0.0% Total $1,179,924 8.6% * Excludes expansion projects Notes: (1) Actual initial yields may be higher if the underlying market rates increase. |
Unstabilized Properties (dollars in thousands) 3/31/09 Construction Acquisitions/ 6/30/09 Properties Stabilized Conversions Expansions Properties Property Type CCRC — entrance fee 3 0 1 0 4 CCRC — rental 5 (1) 0 0 4 Combination — entrance fee 4 0 1 0 5 Combination — rental 11 (1) 2 0 12 Freestanding assisted living 2 0 0 0 2 Freestanding dementia care 6 0 0 0 6 Freestanding skilled nursing 3 (1) 1 0 3 Long Term Acute Care Hospital 5 (1) 0 0 4 Acute Care Hospital 1 0 0 0 1 Total 40 (4) 5 0 41 6/30/09 Investment % of Total Properties Beds / Units Balance Investment Property Type CCRC — entrance fee 4 745 $164,844 2.7% CCRC — rental 4 727 87,268 1.5% Combination - entrance fee 5 1,013 228,985 3.8% Combination — rental 12 1,230 228,281 3.8% Freestanding assisted living 2 101 11,785 0.2% Freestanding dementia care 6 271 58,737 1.0% Freestanding skilled nursing 3 404 44,601 0.7% Long Term Acute Care Hospital 4 212 68,258 1.1% Acute Care Hospital 1 40 33,804 0.6% Total 414,743 $926,56315.4% 3/31/09 Construction Acquisitions/ 6/30/09 Properties Stabilized Conversions Expansions Progressions Properties Occupancy 0 — 50% 18 0 5 0 0 23 50% — 70% 6 (1) 0 0 0 5 70% + 16 (3) 0 0 0 13 Total 40 (4) 5 0 0 41 6/30/09 Months In % of Total Investment % of Total Properties Operation Revenues Revenues (1) Balance Investment Occupancy 0 — 50% 23 11 $37,479 6.8% $510,576 8.5% 50% — 70% 5 25 10,844 2.0% 104,774 1.7% 70% + 13 28 27,480 5.0% 311,213 5.2% Total 41 18 $75,803 13.8% $926,56315.4% Notes: (1) Includes annualized revenues as presented on page 13. |
Portfolio Trends Notes: (1) Operator concentration trend based on investment balances for the dates presented. (2) Property type trend based on committed investment balances for the dates presented. (3) Payor mix is weighted by investment balance including stable and unstabilized properties. |
Age: Current year, less the year built, adjusted for major renovations. Assisted Living: Assisted living facilities are state regulated rental properties that provide the same services as independent living facilities, but also provide supportive care from trained employees to residents who require assistance with activities of daily living, including management of medications, bathing, dressing, toileting, ambulating and eating. CAMF: Coverage after management fees represents the ratio of EBITDAR to contractual rent for leases or interest and principal payments for loans. CAMF is a measure of a property’s ability to generate sufficient cash flows for the operator/borrower to pay rent and meet other obligations. The coverage shown excludes properties that are unstabilized, closed or for which data is not available or meaningful. Cap-ex, Tenant Improvements, Leasing Commissions: Represents amounts paid in cash for: 1) recurring and non-recurring capital expenditures required to maintain and re-tenant our properties, 2) second generation tenant improvements and 3) leasing commissions paid to third party leasing agents to secure new tenants. CBMF: C overage before management fees represents the ratio of EBITDARM to contractual rent for leases or interest and principal payments for loans. CBMF is a measure of a property’s ability to generate sufficient cash flows for the operator/borrower to pay rent and meet other obligations, assuming that management fees are not paid. The coverage shown excludes properties that are unstabilized, closed or for which data is not available or meaningful. CCRC: C ontinuing care retirement communities include a combination of detached homes, an independent living facility, an assisted living facility and/or a skilled nursing facility on one campus. Resident payment plans vary, but can include entrance fees, condominium fees and rental fees. Many of these communities also charge monthly maintenance fees in exchange for a living unit, meals and some health services. Combination: A property that offers two or more levels of care (i.e. independent living, assisted living, dementia and skilled nursing), but does not meet the definition of a CCRC. Committed Balance: Represents investment balance plus unfunded construction commitments for which initial funding has commenced. Construction Conversion: Represents completed construction projects that were placed into service and began earning rent. Dementia Care: C ertain assisted living facilities may include state licensed settings that specialize in caring for those afflicted with Alzheimer’s disease and/or similar forms of dementia. EBITDAR: Earnings before interest, taxes, depreciation, amortization and rent. Management fees are imputed at 5% of revenues for independent living, assisted living, skilled nursing and CCRCs and at 3% for specialty care which the company believes represent typical management fees. The company uses unaudited, periodic financial information provided solely by tenants/borrowers to calculate EBITDAR and has not independently verified the information. EBITDAR is used to calculate CAMF. EBITDARM: E arnings before interest, taxes, depreciation, amortization, rent and management fees. The company uses unaudited, periodic financial information provided solely by tenants/borrowers to calculate EBITDARM and has not independently verified the information. EBITDARM is used to calculate CBMF. Entrance Fee: A property where the resident pays a substantial upfront fee and an ongoing monthly service fee for the right to occupy a unit. Typically, a portion of the upfront fee is refundable. Expense per Occupied Unit: R epresents the ratio of revenue less EBITDARM to occupied units based on the most recent quarter of available data and excludes properties that are unstabilized, closed, or for which data is not available or meaningful. The company uses unaudited, periodic financial information provided solely by te nants/borrowers to calculate expense per occupied unit and has not independently verified the information. |
Freestanding: A property that offers one level of service. Independent Living: Independent living facilities are age-restricted multi-family properties with central dining facilities that provide residents access to28meals and other services such as housekeeping, linen service, transportation and social and recreational activities. Initial Cash Yield: Represents annualized contractual income to be received in cash at date of investment divided by investment amount. Investment Amount: Acquisitions — Represents purchase price. New loans — Represents face amount of new loan. Construction conversion — Represents book balance converted from CIP to real property upon completion. Capital improvements to existing properties — Represents cash funded to tenants under an existing lease agreement. Loan advances — Represents cash funded to operators under an existing loan agreement. Investment Balance: Represents net book value of real estate investments as reflected on the company’s balance sheet. Medical Office: M edical office buildings are office and clinic facilities, often located near hospitals or on hospital campuses, specifically constructed and designed for use by physicians and other health care personnel to provide services to their patients. They may also include ambulatory surgery centers that are used for general or specialty surgical procedures not requiring an overnight stay in a hospital. Medical office buildings typically contain sole and group physician practices and may provide laboratory and other patient services. Metropolitan Statistical Area: Metropolitan statistical areas are geographic entities defined by the U.S. Office of Management and Budget (OMB) for use by Federal statistical agencies in collecting, tabulating and publishing Federal statistics. The NIC MAP™ Data and Analysis Service provides revenue, supply and demographic information for the IL/CCRC, assisted living, and skilled nursing service types and commonly aggregates the information for the top 31, top 75 and top 100 MSAs. The company provides investment balance information in the same categories as another measure of geographic concentration. Occupancy: M edical office occupancy represents the percentage of total rentable square feet leased and occupied, including month-to-month leases, as of the date reported. Occupancy for all other property types represents average quarterly operating occupancy based on the most recent quarter of available data and excludes properties that are unstabilized, closed or for which data is not available or meaningful. The company uses unaudited, periodic financial information provided solely by tenants/borrowers to calculate occupancy and has not independently verified the information. Off Campus: Properties that are neither on campus nor off campus affiliated. Off Campus-Affiliated: Properties not on campus are considered affiliated with a hospital or health system if one or more of the following conditions are met: 1) a ground lease is maintained with a hospital or system entity; 2) a master lease is maintained with a hospital or system entity; 3) significant square footage is leased to a hospital or system entity; or 4) the property includes an ambulatory surgery center with a hospital partnership interest. On Campus: Properties are considered on campus if one or more of the following criteria are met: 1) the land parcel is contained within the physical boundaries of a hospital campus; 2) the land parcel is located adjacent to the campus; or 3) the building is physically connected to the hospital regardless of the land ownership structure. |
Region Definitions: E ight divisions as established by the Census Bureau. New England — Connecticut , Maine , Massachusetts, New Hampshire, Rhode Island, Vermont. Middle Atlantic — New Jersey, New York, Pennsylvania. East North Central — Indiana, Illinois, Michigan, Ohio, Wisconsin. West North Central — Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota. South Atlantic — Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia. East South Central — Alabama, Kentucky, Mississippi, Tennessee. West South Central — Arkansas, Louisiana, Oklahoma, Texas. Mountain — Arizona, Colorado, Idaho, New Mexico, Montana, Utah, Nevada, Wyoming. Pacific — Alaska, California, Hawaii, Oregon, Washington. Renewal Rate: T he ratio of total square feet expiring and available for lease to total renewed square feet. Renewed Square Feet: S quare feet expiring during the reporting period upon which a lease is executed by the current occupant. Rental: A property where the resident pays a monthly market rate for the level of care provided, but is not required to pay a substantial upfront fee. Revenue per Occupied Unit: R epresents the ratio of total revenue to occupied units based on the most recent quarter of available data and excludes properties that are unstabilized, closed, or for which data is not available or meaningful. The company uses unaudited, periodic financial information provided solely by tenants/borrowers to calculate revenue per occupied unit and has not independently verified the information. Same Store: F or the medical office building portfolio, same store is defined as those properties owned for the entire previous five quarters. Properties acquired, developed or classified in discontinued operations are excluded from the same store amounts. For all other property types, same store is defined as those properties in the stable portfolio for the 24 months preceding the end of the portfolio performance reporting period, unless otherwise noted. Skilled Nursing: S killed nursing facilities are licensed daily rate or rental properties where the majority of individuals require 24-hour nursing and/or medical care. Generally, these properties are licensed for Medicaid and/or Medicare reimbursement. Specialty Care: S pecialty care facilities generally include acute care hospitals, long-term acute care hospitals and other specialty care facilities. Acute care hospitals provide a wide range of inpatient and outpatient services, including, but not limited to, surgery, rehabilitation, therapy and clinical laboratories. Long-term acute care hospitals provide inpatient services for patients with complex medical conditions who require more intensive care, monitoring or emergency support than that available in most skilled nursing facilities. Other specialty care facilities typically provide specialized inpatient and outpatient care for specific illnesses or diseases, including, among others, orthopedic and neurologic care. Square Feet: Net rentable square feet calculated utilizing Building Owners and Managers Association measurement standards. Stable: A facility will generally enter the stable portfolio after it has generated CAMF of 1.10x or greater for three consecutive months. Additionally, a facility will enter the stable portfolio if a facility fails to meet the above criteria in the 12 months following the budgeted stabilization date. Unstabilized: An acquisition that does not meet the stable criteria upon closing or a construction property that has opened but not yet reached stabilization. Yield on Sale: Represents annualized contractual income that was being received in cash at date of disposition divided by disposition cash proceeds. |
The company believes that net income attributable to common stockholders (NICS), as defined by U.S. generally accepted accounting principles (U.S. GAAP), is the most appropriate earnings measurement. However, the company considers funds from operations (FFO) and funds available for distribution (FAD) to be useful supplemental measures of its operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (NAREIT) created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means net income, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Normalized FFO represents FFO adjusted for unusual and non-recurring items. FAD represents FFO excluding net straight-line rental adjustments, amortization related to above/below market leases and amortization of non-cash interest expenses and less cash used to fund capital expenditures, tenant improvements and lease commissions at medical office buildings. Normalized FAD represents FAD excluding prepaid/straight-line rent cash receipts and adjusted for unusual and non-recurring items. EBITDA stands for earnings before interest, taxes, depreciation and amortization. A covenant in our line of credit arrangement contains a financial ratio based on a definition of EBITDA that is specific to that agreement. Failure to satisfy this covenant could result in an event of default that could have a material adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our consolidated results of operations, liquidity and/or financial condition. Due to the materiality of this debt agreement and the financial covenant, we have disclosed Adjusted EBITDA, which represents EBITDA as defined above and adjusted for stock-based compensation expense, provision for loan losses and gain/loss on extinguishment of debt. We use Adjusted EBITDA to measure our adjusted fixed charge coverage ratio, which represents Adjusted EBITDA divided by fixed charges on a trailing twelve months basis. Fixed charges include total interest (excluding capitalized interest and non-cash interest expenses), secured debt principal amortization and preferred dividends. Our covenant requires an adjusted fixed charge ratio of at least 1.75 times. Net operating income (NOI) is used to evaluate the operating performance of the company’s properties. The company defines NOI as total revenues, including tenant reimbursements and discontinued operations, less property operating expenses, which exclude depreciation and amortization, general and administrative expenses, impairments and interest expense. The company believes NOI provides investors relevant and useful information because it measures the operating performance of the company’s properties at the property level on an unleveraged basis. The company uses NOI to make decisions about resource allocations and to assess the property level performance of our properties. Other than Adjusted EBITDA, the company’s supplemental reporting measures and similarly entitled financial measures are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. Th e company’s management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions. Additionally, these measures are utilized by the Board of Directors to evaluate management. Adjusted EBITDA is used solely to determine our compliance with a financial covenant of our line of credit arrangement and is not being presented for use by investors for any other purpose. The supplemental reporting measures do not represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental reporting measures, as defined by the company, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Multi-period amounts may not equal the sum of the individual quarterly amounts due to rounding. |
HEALTH CARE REIT, INC. One SeaGate, Suite 1500 P. O. Box 1475 Toledo, OH 43603-1475 419.247.2800 main 419.247.2826 fax www.hcreit.com |