Exhibit 99.1
FOR IMMEDIATE RELEASE
October 19, 2004
For more information contact:
Ray Braun — (419) 247-2800
Mike Crabtree — (419) 247-2800
Scott Estes — (419) 247-2800
Health Care REIT, Inc.
Reports Third Quarter Results
Toledo, Ohio, October 19, 2004........Health Care REIT, Inc. (NYSE/HCN)today announced operating results for its third quarter ended September 30, 2004.
“We are pleased with our results for the quarter, which were driven by our strong investment activity and access to reasonably priced capital,” commented George L. Chapman, chief executive officer of Health Care REIT, Inc. “The continued confidence of the capital markets was demonstrated this quarter through our $175 million preferred stock issuance and $50 million unsecured debt issuance, an add-on to the original issuance in the fourth quarter of 2003. We completed $297.5 million of new investments during the quarter, thereby driving our year-to-date gross and net new investment totals to $459 million and $424.1 million, respectively, and supporting our net new investment guidance for full-year 2004 of $400 million to $500 million. We are well positioned for growth given our strong investment pipeline and our continued access to capital.”
The Board of Directors declared a dividend for the quarter ended September 30, 2004 of $0.60 per share as compared to $0.585 per share for the same period in 2003. The dividend represents the 134th consecutive dividend payment. The dividend will be payable November 19, 2004 to stockholders of record on November 1, 2004.
Summary of Third Quarter Results
| Three Months Ended | Three Months Ended | |||||||
| (In thousands, except per share data) | September 30, 2004 | September 30, 2003 | ||||||
| Revenues | $ | 63,629 | $ | 49,086 | ||||
| Net Income Available to Common Stockholders | $ | 19,004 | $ | 20,601 | ||||
| Funds From Operations | $ | 37,893 | $ | 29,581 | ||||
| Funds From Operations — Adjusted | $ | 38,207 | $ | 32,371 | ||||
| Net Income Per Diluted Share | $ | 0.37 | $ | 0.46 | ||||
| FFO Per Diluted Share | $ | 0.73 | $ | 0.66 | ||||
| FFO Per Diluted Share — Adjusted | $ | 0.73 | $ | 0.72 | ||||
| Dividend Per Share | $ | 0.60 | $ | 0.585 | ||||
| FFO Payout Ratio | 82 | % | 89 | % | ||||
| FFO Payout Ratio — Adjusted | 82 | % | 81 | % | ||||
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3Q04 Earnings Release | October 19, 2004 |
Net income available to common stockholders totaled $19.0 million, or $0.37 per diluted share, for the third quarter of 2004, compared with $20.6 million, or $0.46 per diluted share, for the same period in 2003. Funds from operations totaled $37.9 million, or $0.73 per diluted share, for the three months ended September 30, 2004, compared with $29.6 million, or $0.66 per diluted share, for the same period in 2003. Adjusted funds from operations, which excludes the non-cash preferred stock redemption in 2003 and impairment charges in 2004, totaled $38.2 million, or $0.73 per diluted share, for the third quarter of 2004, compared with $32.4 million, or $0.72 per diluted share, for the same period in 2003.
Summary of Year to Date Results
| Nine Months Ended | Nine Months Ended | |||||||
| (In thousands, except per share data) | September 30, 2004 | September 30, 2003 | ||||||
| Revenues | $ | 183,049 | $ | 136,970 | ||||
| Net Income Available to Common Stockholders | $ | 56,866 | $ | 53,795 | ||||
| Funds From Operations | $ | 109,442 | $ | 86,255 | ||||
| Funds From Operations — Adjusted | $ | 109,756 | $ | 89,045 | ||||
| Net Income Per Diluted Share | $ | 1.10 | $ | 1.28 | ||||
| FFO Per Diluted Share | $ | 2.11 | $ | 2.05 | ||||
| FFO Per Diluted Share — Adjusted | $ | 2.12 | $ | 2.11 | ||||
| Dividend Per Share | $ | 1.785 | $ | 1.755 | ||||
| FFO Payout Ratio | 85 | % | 86 | % | ||||
| FFO Payout Ratio — Adjusted | 84 | % | 83 | % | ||||
Net income available to common stockholders totaled $56.9 million, or $1.10 per diluted share, for the nine months ended September 30, 2004, compared with $53.8 million, or $1.28 per diluted share, for the same period in 2003. Funds from operations totaled $109.4 million, or $2.11 per diluted share, for the nine months ended September 30, 2004, compared with $86.3 million, or $2.05 per diluted share, for the same period in 2003. Adjusted funds from operations, which excludes the non-cash preferred stock redemption in 2003 and impairment charges in 2004, totaled $109.8 million, or $2.12 per diluted share, for the nine months ended September 30, 2004, compared with $89.0 million, or $2.11 per diluted share, for the same period in 2003.
The company had a total outstanding debt balance of $1.1 billion at September 30, 2004, as compared with $903.2 million at September 30, 2003, and stockholders’ equity of $1.3 billion, which represents a debt to total book capitalization ratio of 45 percent. The debt to total market capitalization at September 30, 2004 was 34 percent. The company’s coverage ratio of EBITDA to interest was 3.24 to 1.00 for the nine months ended September 30, 2004.
Portfolio Update.Two assisted living facilities stabilized during the quarter. The company ended the quarter with two assisted living facilities remaining in fill-up, representing one percent of revenues. Both facilities have occupancy of less than 50 percent.
Straight-line Rent.The company recorded $3.0 million and $12.1 million of straight-line rent for the three and nine months ended September 30, 2004, respectively. Straight-line rent is net of $2.1 million and $5.1 million in cash payments outside the normal monthly rental payments for the three and nine month periods, respectively.
Outlook for 2004 and 2005.The company is adjusting slightly its 2004 guidance and now expects to report net income available to common stockholders in the range of $1.47 to $1.50 per diluted share, and FFO in the range of $2.85 to $2.87 per diluted share for 2004. Excluding the impact of the impairment charge, the company expects to report adjusted FFO in the range of $2.86 to $2.88 per diluted share for 2004. The company expects to record straight-line rent of approximately $16 million to $18 million for the full year 2004, before any payments outside the normal monthly rental payments. The company is also projecting net new investments for the year between $400 and $500 million.
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3Q04 Earnings Release | October 19, 2004 |
The company is also reaffirming its 2005 guidance and expects to report net income available to common stockholders in the range of $1.47 to $1.55 per diluted share, and FFO in the range of $2.98 to $3.06 per diluted share. The guidance assumes net new investments of $250 million with leases that will not require rents to be straight-lined. The company expects to record straight-line rent of approximately $14 million to $16 million for the full year 2005, before any payments outside the normal monthly rental payments.
The company’s guidance does not account for any impairments or unanticipated additions to the loan loss reserve. Additionally, the company plans to manage itself to maintain investment grade status with a capital structure consistent with its current profile. Please see Exhibit 15 for a reconciliation of the outlooks for net income and FFO.
Supplemental Reporting Measures.The company believes that net income, as defined by accounting principles generally accepted in the United States (U.S. GAAP), is the most appropriate earnings measurement. However, the company considers funds from operations (FFO) to be a useful supplemental measure 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 depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
In August 2003, the company adopted the SEC clarification of Emerging Issues Task Force (EITF) Topic D-42. To implement the clarified accounting pronouncement, the company’s 2003 results reflect a reduction in net income available to common stockholders resulting from a non-cash, non-recurring charge of $2,790,000, or $0.06 per diluted share, due to the redemption of the company’s 8.875% Series B Cumulative Redeemable Preferred Stock in July 2003. NAREIT has issued its recommendation that preferred stock redemption charges should not be added back to net income in the calculation of FFO. Although the company has adopted this recommendation, it has also disclosed FFO adjusted for the preferred stock redemption charge for enhanced clarity. Additionally, the company believes that the nature of the charge is non-recurring because there was not a similar charge during the two preceding years and the company does not anticipate a similar charge in the succeeding two years.
In October 2003, NAREIT informed its member companies that the SEC had changed its position on certain aspects of the NAREIT FFO definition, including impairment charges. Previously, the SEC accepted NAREIT’s view that impairment charges were effectively an early recognition of an expected loss on an impending sale of property and thus should be excluded from FFO similar to other gains and losses on sales. However, the SEC’s clarified interpretation is that recurring impairments taken on real property may not be added back to net income in the calculation of FFO. Although the company has adopted this recommendation, it has also disclosed FFO adjusted for the impairment charges for enhanced clarity.
EBITDA stands for earnings before interest, taxes, depreciation and amortization. Additionally, the company excludes the non-cash provision for loan losses. The company believes that EBITDA, along with net income and cash flow provided from operating activities, is an important supplemental measure because it provides additional information to assess and evaluate the performance of its operations. Additionally, restrictive covenants in the company’s long-term debt arrangements contain financial ratios based on EBITDA. The company primarily utilizes EBITDA to measure its interest coverage ratio which represents EBITDA divided by interest expense.
FFO and EBITDA are financial measures that are widely used by investors, equity and debt analysts and rating agencies in the valuation, comparison, rating and investment recommendations of companies. The company’s management uses these financial measures to facilitate internal and external comparisons to historical operating results, in making operating decisions and for budget planning purposes. Additionally, FFO is an internal evaluation metric utilized by the Board of Directors to evaluate management. FFO and
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3Q04 Earnings Release | October 19, 2004 |
EBITDA 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, FFO and EBITDA, as defined by the company, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Please see Exhibits 14 and 16 for reconciliations of FFO and EBITDA to net income.
Conference Call Information.The company has scheduled a conference call on October 20, 2004, at 9:00 a.m. Eastern time to discuss its third quarter results, industry trends, portfolio performance and outlooks for 2004 and 2005. To participate on the webcast, log on to www.hcreit.com or www.fulldisclosure.com 15 minutes before the call to download the necessary software. Replays will be available for 90 days through the same Web sites. This earnings release is posted on the company’s Web site under the heading Press Releases.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care facilities, primarily skilled nursing and assisted living facilities. At September 30, 2004, the company had investments in 379 health care facilities in 33 states with 49 operators and had total assets of approximately $2.5 billion. For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code – HCN. More information is available on the Internet at www.hcreit.com.
This document may contain “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern the possible expansion of the company’s portfolio; the performance of its operators and properties; its ability to enter into agreements with new viable tenants for properties which it takes back from financially troubled tenants, if any; its ability to make distributions; 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; and its ability to access capital markets or other sources of funds. When the company uses words such as “believe,” “expect,” “anticipate,” 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 prevailing interest rates; compliance with and changes to regulations and payment policies within the health care industry; changes in financing terms; competition within the health care and senior housing industries; and changes in federal, state and local legislation. 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.
FINANCIAL SCHEDULES FOLLOW
#####
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3Q04 Earnings Release | October 19, 2004 |
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED BALANCE SHEETS (unaudited)
| September 30 | ||||||||
| (In thousands) | 2004 | 2003 | ||||||
Assets | ||||||||
| Real estate investments: | ||||||||
| Real property owned | ||||||||
| Land | $ | 193,802 | $ | 157,608 | ||||
| Buildings & improvements | 2,075,442 | 1,656,499 | ||||||
| Construction in progress | 24,025 | 35,335 | ||||||
| 2,293,269 | 1,849,442 | |||||||
| Less accumulated depreciation | (200,923 | ) | (136,432 | ) | ||||
| Total real property owned | 2,092,346 | 1,713,010 | ||||||
| Loans receivable | ||||||||
| Real property loans | 209,449 | 200,292 | ||||||
| Subdebt investments | 59,372 | 45,028 | ||||||
| 268,821 | 245,320 | |||||||
| Less allowance for losses on loans receivable | (8,725 | ) | (5,705 | ) | ||||
| 260,096 | 239,615 | |||||||
| Net real estate investments | 2,352,442 | 1,952,625 | ||||||
| Other assets: | ||||||||
| Equity investments | 3,298 | 7,649 | ||||||
| Deferred loan expenses | 7,506 | 8,098 | ||||||
| Cash and cash equivalents | 15,419 | 8,172 | ||||||
| Receivables and other assets | 72,649 | 55,067 | ||||||
| 98,872 | 78,986 | |||||||
Total assets | $ | 2,451,314 | $ | 2,031,611 | ||||
Liabilities and stockholders’ equity | ||||||||
| Liabilities: | ||||||||
| Borrowings under unsecured lines of credit arrangements | $ | 80,000 | $ | 143,000 | ||||
| Senior unsecured notes | 875,000 | 615,000 | ||||||
| Secured debt | 146,341 | 145,164 | ||||||
| Accrued expenses and other liabilities | 15,959 | 7,323 | ||||||
| Total liabilities | 1,117,300 | 910,487 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | 289,294 | 145,150 | ||||||
| Common stock | 52,127 | 48,016 | ||||||
| Capital in excess of par value | 1,117,782 | 1,006,983 | ||||||
| Treasury stock | (850 | ) | 0 | |||||
| Cumulative net income | 724,607 | 641,366 | ||||||
| Cumulative dividends | (847,922 | ) | (718,174 | ) | ||||
| Accumulated other comprehensive income | 1 | 128 | ||||||
| Other equity | (1,025 | ) | (2,345 | ) | ||||
Total stockholders’ equity | 1,334,014 | 1,121,124 | ||||||
Total liabilities and stockholders’ equity | $ | 2,451,314 | $ | 2,031,611 | ||||
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3Q04 Earnings Release | October 19, 2004 |
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| (In thousands, except per share data) | 2004 | 2003 | 2004 | 2003 | ||||||||||||
| Revenues: | ||||||||||||||||
| Rental income | $ | 57,476 | $ | 42,417 | $ | 163,980 | $ | 118,935 | ||||||||
| Interest income | 5,560 | 5,797 | 17,196 | 15,927 | ||||||||||||
| Transaction fees and other income | 593 | 872 | 1,873 | 2,108 | ||||||||||||
| Gross revenues | 63,629 | 49,086 | 183,049 | 136,970 | ||||||||||||
| Expenses: | ||||||||||||||||
| Interest expense | 17,896 | 12,801 | 53,372 | 36,194 | ||||||||||||
| Provision for depreciation | 18,889 | 12,599 | 53,133 | 33,921 | ||||||||||||
| General and administrative | 3,618 | 2,995 | 10,339 | 8,452 | ||||||||||||
| Loan expense | 805 | 717 | 2,568 | 2,032 | ||||||||||||
| Impairment of assets | 314 | 0 | 314 | 0 | ||||||||||||
| Provision for loan losses | 300 | 250 | 900 | 750 | ||||||||||||
| Total expenses | 41,822 | 29,362 | 120,626 | 81,349 | ||||||||||||
| Income from continuing operations | 21,807 | 19,724 | 62,423 | 55,621 | ||||||||||||
| Discontinued operations: | ||||||||||||||||
| Gain (loss) on sales of properties | 0 | 4,278 | 1,129 | 4,312 | ||||||||||||
| Income (loss) from discontinued operations, net | 0 | 1,299 | 609 | 3,726 | ||||||||||||
| 0 | 5,577 | 1,738 | 8,038 | |||||||||||||
| Net income | 21,807 | 25,301 | 64,161 | 63,659 | ||||||||||||
| Preferred dividends | 2,803 | 1,910 | 7,295 | 7,074 | ||||||||||||
| Preferred stock redemption charge | 0 | 2,790 | 0 | 2,790 | ||||||||||||
| Net income available to common stockholders | $ | 19,004 | $ | 20,601 | $ | 56,866 | $ | 53,795 | ||||||||
| Average number of common shares outstanding: | ||||||||||||||||
| Basic | 51,538 | 44,181 | 51,200 | 41,602 | ||||||||||||
| Diluted | 52,008 | 44,833 | 51,787 | 42,165 | ||||||||||||
| Net income available to common stockholders per share: | ||||||||||||||||
| Basic | $ | 0.37 | $ | 0.47 | $ | 1.11 | $ | 1.29 | ||||||||
| Diluted | 0.37 | 0.46 | 1.10 | 1.28 | ||||||||||||
| Funds from operations | $ | 37,893 | $ | 29,581 | $ | 109,442 | $ | 86,255 | ||||||||
| Funds from operations - adjusted | 38,207 | 32,371 | 109,756 | 89,045 | ||||||||||||
| Funds from operations per share: | ||||||||||||||||
| Basic | $ | 0.74 | $ | 0.67 | $ | 2.14 | $ | 2.07 | ||||||||
| Diluted | 0.73 | 0.66 | 2.11 | 2.05 | ||||||||||||
| Funds from operations per share - adjusted: | ||||||||||||||||
| Basic | $ | 0.74 | $ | 0.73 | $ | 2.14 | $ | 2.14 | ||||||||
| Diluted | 0.73 | 0.72 | 2.12 | 2.11 | ||||||||||||
| Dividends per share | $ | 0.60 | $ | 0.585 | $ | 1.785 | $ | 1.755 | ||||||||
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3Q04 Earnings Release | October 19, 2004 |
HEALTH CARE REIT, INC.
Financial Supplement – September 30, 2004
| Exhibit 1 |
| Portfolio Composition ($000’s) | # Properties | # Beds/Units | Balance | % Balance | ||||||||||||
Balance Sheet Data | ||||||||||||||||
| Real Property | 356 | 32,940 | $ | 2,092,346 | 89 | % | ||||||||||
| Loans Receivable | 23 | 2,786 | 209,449 | 9 | % | |||||||||||
| Subdebt Investments | 0 | 0 | 59,372 | 2 | % | |||||||||||
| Total Investments | 379 | 35,726 | $ | 2,361,167 | 100 | % | ||||||||||
| # Properties | # Beds/Units | Investment (1) | % Investment | |||||||||||||
Investment Data | ||||||||||||||||
| Assisted Living Facilities | 235 | 15,786 | $ | 1,341,872 | 57 | % | ||||||||||
| Skilled Nursing Facilities | 136 | 18,829 | 871,128 | 37 | % | |||||||||||
| Specialty Care Facilities | 8 | 1,111 | 151,362 | 6 | % | |||||||||||
| Real Estate Investments | 379 | 35,726 | $ | 2,364,362 | 100 | % | ||||||||||
Notes: (1) | Real Estate Investments include gross real estate investments and credit enhancements which amounted to $2,361,167,000 and $3,195,000, respectively. |
| Exhibit 2 |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Revenue Composition ($000’s) | September 30, 2004 | September 30, 2004 | ||||||||||||||
Revenue by Investment Type (1) | ||||||||||||||||
| Real Property | $ | 57,946 | 91 | % | $ | 167,144 | 91 | % | ||||||||
| Loans Receivable | 4,273 | 7 | % | 13,894 | 8 | % | ||||||||||
| Subdebt Investments | 1,410 | 2 | % | 3,633 | 1 | % | ||||||||||
| Total | $ | 63,629 | 100 | % | $ | 184,671 | 100 | % | ||||||||
Revenue by Facility Type (1) | ||||||||||||||||
| Assisted Living Facilities | $ | 33,862 | 53 | % | $ | 102,814 | 56 | % | ||||||||
| Skilled Nursing Facilities | 26,434 | 42 | % | 70,276 | 38 | % | ||||||||||
| Specialty Care Facilities | 3,333 | 5 | % | 11,581 | 6 | % | ||||||||||
| Total | $ | 63,629 | 100 | % | $ | 184,671 | 100 | % | ||||||||
Notes: (1) Revenues include gross revenues and revenues from discontinued operations.
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3Q04 Earnings Release | October 19, 2004 |
| Exhibit 3 |
| Operator Concentration ($000’s) | # Properties | Investment | % Investment | |||||||||
Concentration by Investment | ||||||||||||
| Emeritus Corporation | 48 | $ | 363,823 | 15 | % | |||||||
| Southern Assisted Living, Inc. | 45 | 207,317 | 9 | % | ||||||||
| Commonwealth Communities L.L.C. | 14 | 200,785 | 8 | % | ||||||||
| Delta Health Group, Inc. | 25 | 179,512 | 8 | % | ||||||||
| Home Quality Management, Inc. | 32 | 178,662 | 8 | % | ||||||||
| Remaining Operators (44) | 215 | 1,234,263 | 52 | % | ||||||||
| Total | 379 | $ | 2,364,362 | 100 | % | |||||||
| Exhibit 4 |
| Geographic Concentration ($000’s) | # Properties | Investment | % Investment | |||||||||
Concentration by Region | ||||||||||||
| South | 244 | $ | 1,298,962 | 55 | % | |||||||
| Northeast | 45 | 433,186 | 18 | % | ||||||||
| West | 49 | 325,421 | 14 | % | ||||||||
| Midwest | 41 | 306,793 | 13 | % | ||||||||
| Total | 379 | $ | 2,364,362 | 100 | % | |||||||
| # Properties | Investment | % Investment | ||||||||||
Concentration by State | ||||||||||||
| Florida | 57 | $ | 366,947 | 16 | % | |||||||
| Massachusetts | 27 | 290,495 | 12 | % | ||||||||
| North Carolina | 43 | 201,253 | 9 | % | ||||||||
| Texas | 36 | 154,647 | 7 | % | ||||||||
| Tennessee | 27 | 145,615 | 6 | % | ||||||||
| Remaining States (28) | 189 | 1,205,405 | 50 | % | ||||||||
| Total | 379 | $ | 2,364,362 | 100 | % | |||||||
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3Q04 Earnings Release | October 19, 2004 |
| Exhibit 5 | ||
| Committed Investment Balances | Committed | Investment | ||||||||||||||
| ($000’s except Investment per Bed/Unit) | # Properties | # Beds/Units | Balance (1) | per Bed/Unit | ||||||||||||
| Assisted Living Facilities | 235 | 15,786 | $ | 1,347,686 | $ | 85,372 | ||||||||||
| Skilled Nursing Facilities | 136 | 18,829 | 871,128 | 46,265 | ||||||||||||
| Specialty Care Facilities | 8 | 1,111 | 151,362 | 136,239 | ||||||||||||
| Total | 379 | 35,726 | $ | 2,370,176 | -na- | |||||||||||
Notes: (1) | Committed Balance includes gross real estate investments, credit enhancements and unfunded construction commitments for which initial funding had commenced. |
| Exhibit 6 |
| Average Months | ||||||||||||||||
| Lease Up Statistics on Assisted Living Facilities ($000’s) | # Properties | in Operation | Revenue (1) | % Revenue | ||||||||||||
Occupancy | ||||||||||||||||
| 0% - 50% | 2 | 11 | $ | 1,823 | 1 | % | ||||||||||
| 50% - 70% | -na- | -na- | 0 | 0 | % | |||||||||||
| 70% + | -na- | -na- | 0 | 0 | % | |||||||||||
| 2 | -na- | $ | 1,823 | 1 | % | |||||||||||
Notes: (1) Interest and rental income for the nine months ended September 30, 2004.
| Exhibit 7 |
| % Payor Mix | Coverage Data | |||||||||||||||||||
| Before | After | |||||||||||||||||||
| Selected Facility Data | Census | Private | Medicare | Mgt. Fees | Mgt. Fees | |||||||||||||||
| Assisted Living Facilities | 86 | % | 85 | % | 0 | % | 1.44x | 1.22x | ||||||||||||
| Skilled Nursing Facilities | 86 | % | 17 | % | 15 | % | 2.06x | 1.59x | ||||||||||||
| Specialty Care Facilities | 67 | % | 16 | % | 47 | % | 2.20x | 1.67x | ||||||||||||
| Weighted Averages | 1.71x | 1.38x | ||||||||||||||||||
Notes: Data as of June 30, 2004.
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3Q04 Earnings Release | October 19, 2004 |
Credit Support ($000’s) | Exhibit 8 |
| Balance | % Investment | |||||||||
| Cross Defaulted | $ | 2,249,803 | 95 | % | of gross real estate investments | |||||
| Cross Collateralized | 162,467 | 78 | % | of real property loans receivable | ||||||
| Master Leases | 1,744,336 | 83 | % | of real property owned | ||||||
Current Capitalization ($000’s)
| Balance | % Balance | |||||||
| Borrowings Under Bank Lines | $ | 80,000 | 3 | % | ||||
| Long-Term Debt Obligations | 1,021,341 | 42 | % | |||||
| Stockholders’ Equity | 1,334,014 | 55 | % | |||||
| Total Book Capitalization | $ | 2,435,355 | 100 | % | ||||
| Leverage & Performance Ratios | ||||||||||||
| Debt/Total Book Cap | 45 | % | ||||||||||
| Debt/Total Market Cap | 34 | % | ||||||||||
| Interest Coverage | 3.31 | x | 3rd Qtr. | |||||||||
| 3.24 | x | YTD | ||||||||||
| FFO Payout Ratio | 82 | % | 3rd Qtr. | |||||||||
| 85 | % | YTD | ||||||||||
| FFO Payout Ratio | 82 | % | 3rd Qtr. | |||||||||
| - Adjusted | 84 | % | YTD | |||||||||
Revenue Maturities ($000’s) | Exhibit 9 |
Operating Lease Expirations & Loan Maturities
| Current Lease | Current Interest | Lease and | ||||||||||||||
| Year | Revenue (1) | Revenue (1) | Interest Revenue | % of Total | ||||||||||||
| 2004 | $ | 0 | $ | 151 | $ | 151 | 0 | % | ||||||||
| 2005 | 0 | 1,292 | 1,292 | 0 | % | |||||||||||
| 2006 | 0 | 4,166 | 4,166 | 2 | % | |||||||||||
| 2007 | 0 | 3,651 | 3,651 | 1 | % | |||||||||||
| 2008 | 0 | 3,969 | 3,969 | 2 | % | |||||||||||
| Thereafter | 242,146 | 8,886 | 251,032 | 95 | % | |||||||||||
| Total | $ | 242,146 | $ | 22,115 | $ | 264,261 | 100 | % | ||||||||
Notes: (1) Revenue impact by year, annualized.
Debt Maturities and Principal Payments ($000’s) | Exhibit 10 |
| Year | Lines of Credit (1) | Senior Notes | Secured Debt | Total | ||||||||||||
| 2004 | $ | 0 | $ | 0 | $ | 643 | $ | 643 | ||||||||
| 2005 | 30,000 | 0 | 6,021 | 36,021 | ||||||||||||
| 2006 | 310,000 | 50,000 | 2,702 | 362,702 | ||||||||||||
| 2007 | 0 | 175,000 | 14,709 | 189,709 | ||||||||||||
| 2008 | 0 | 100,000 | 9,879 | 109,879 | ||||||||||||
| 2009 | 0 | 0 | 12,938 | 12,938 | ||||||||||||
| 2010 | 0 | 0 | 8,948 | 8,948 | ||||||||||||
| Thereafter | 0 | 550,000 | 90,501 | 640,501 | ||||||||||||
| Total | $ | 340,000 | $ | 875,000 | $ | 146,341 | $ | 1,361,341 | ||||||||
Notes: (1) Reflected at 100% capacity.
Page 10 of 13
3Q04 Earnings Release | October 19, 2004 |
Investment Activity ($000’s) | Exhibit 11 |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2004 | September 30, 2004 | |||||||||||||||
Funding by Investment Type | ||||||||||||||||
| Real Property | $ | 276,516 | 93 | % | $ | 431,923 | 94 | % | ||||||||
| Loans Receivable | 178 | 0 | % | 5,795 | 1 | % | ||||||||||
| Subdebt Investments | 20,826 | 7 | % | 21,339 | 5 | % | ||||||||||
| Total | $ | 297,520 | 100 | % | $ | 459,057 | 100 | % | ||||||||
Funding by Facility Type | ||||||||||||||||
| Assisted Living Facilities | $ | 166,620 | 56 | % | $ | 206,231 | 45 | % | ||||||||
| Skilled Nursing Facilities | 130,330 | 44 | % | 247,055 | 54 | % | ||||||||||
| Specialty Care Facilities | 570 | 0 | % | 5,771 | 1 | % | ||||||||||
| Total | $ | 297,520 | 100 | % | $ | 459,057 | 100 | % | ||||||||
Disposition Activity ($000’s) | Exhibit 12 |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2004 | September 30, 2004 | |||||||||||||||
Dispositions by Investment Type | ||||||||||||||||
| Real Property | $ | 33,808 | 97 | % | ||||||||||||
| Loans Receivable | $ | 1,110 | 100 | % | 1,110 | 3 | % | |||||||||
| Total | $ | 1,110 | 100 | % | $ | 34,918 | 100 | % | ||||||||
Dispositions by Facility Type | ||||||||||||||||
| Assisted Living Facilities | $ | 1,110 | 100 | % | $ | 21,116 | 60 | % | ||||||||
| Skilled Nursing Facilities | 3,447 | 10 | % | |||||||||||||
| Specialty Care Facilities | 10,355 | 30 | % | |||||||||||||
| Total | $ | 1,110 | 100 | % | $ | 34,918 | 100 | % | ||||||||
Discontinued Operations ($000’s) | Exhibit 13 |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenues | ||||||||||||||||
| Rental income | $ | 0 | $ | 2,430 | $ | 1,622 | $ | 8,696 | ||||||||
Expenses | ||||||||||||||||
| Interest expense | 0 | 472 | 441 | 2,119 | ||||||||||||
| Provision for depreciation | 0 | 659 | 572 | 2,851 | ||||||||||||
| Income (loss) from discontinued operations, net | $ | 0 | $ | 1,299 | $ | 609 | $ | 3,726 | ||||||||
Page 11 of 13
3Q04 Earnings Release | October 19, 2004 |
Funds From Operations Reconciliation | Exhibit 14 |
(Amounts in 000’s except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| Net income available to common stockholders | $ | 19,004 | $ | 20,601 | $ | 56,866 | $ | 53,795 | ||||||||
| Provision for depreciation (1) | 18,889 | 13,258 | 53,705 | 36,772 | ||||||||||||
| Loss (gain) on sales of properties | 0 | (4,278 | ) | (1,129 | ) | (4,312 | ) | |||||||||
| Funds from operations | 37,893 | 29,581 | 109,442 | 86,255 | ||||||||||||
| Impairment of assets | 314 | 0 | 314 | 0 | ||||||||||||
| Preferred stock redemption charge | 0 | 2,790 | 0 | 2,790 | ||||||||||||
| Funds from operations - adjusted | $ | 38,207 | $ | 32,371 | $ | 109,756 | $ | 89,045 | ||||||||
| Average common shares outstanding: | ||||||||||||||||
| Basic | 51,538 | 44,181 | 51,200 | 41,602 | ||||||||||||
| Diluted | 52,008 | 44,833 | 51,787 | 42,165 | ||||||||||||
| Per share data: | ||||||||||||||||
| Net income available to common stockholders | ||||||||||||||||
| Basic | $ | 0.37 | $ | 0.47 | $ | 1.11 | $ | 1.29 | ||||||||
| Diluted | 0.37 | 0.46 | 1.10 | 1.28 | ||||||||||||
| Funds from operations | ||||||||||||||||
| Basic | $ | 0.74 | $ | 0.67 | $ | 2.14 | $ | 2.07 | ||||||||
| Diluted | 0.73 | 0.66 | 2.11 | 2.05 | ||||||||||||
| Funds from operations - adjusted | ||||||||||||||||
| Basic | $ | 0.74 | $ | 0.73 | $ | 2.14 | $ | 2.14 | ||||||||
| Diluted | 0.73 | 0.72 | 2.12 | 2.11 | ||||||||||||
FFO Payout Ratio | ||||||||||||||||
| Dividends per share | $ | 0.60 | $ | 0.585 | $ | 1.785 | $ | 1.755 | ||||||||
| FFO per diluted share | $ | 0.73 | $ | 0.66 | $ | 2.11 | $ | 2.05 | ||||||||
| FFO payout ratio | 82 | % | 89 | % | 85 | % | 86 | % | ||||||||
FFO Payout Ratio - Adjusted | ||||||||||||||||
| Dividends per share | $ | 0.60 | $ | 0.585 | $ | 1.785 | $ | 1.755 | ||||||||
| FFO per diluted share - adjusted | $ | 0.73 | $ | 0.72 | $ | 2.12 | $ | 2.11 | ||||||||
| FFO payout ratio - adjusted | 82 | % | 81 | % | 84 | % | 83 | % | ||||||||
Notes: (1) Provision for depreciation includes provision for depreciation from discontinued operations.
Page 12 of 13
3Q04 Earnings Release | October 19, 2004 |
FFO Outlook Reconciliation | Exhibit 15 |
(Amounts in 000’s except per share data)
| Year Ended | Year Ended | |||||||||||||||
| December 31, 2004 | December 31, 2005 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
| Net income available to common stockholders | $ | 76,665 | $ | 77,765 | $ | 80,900 | $ | 85,300 | ||||||||
| Loss (gain) on sales of properties | (1,129 | ) | (1,129 | ) | ||||||||||||
| Provision for depreciation (1) | 72,850 | 72,850 | 83,000 | 83,000 | ||||||||||||
| Funds from operations | 148,386 | 149,486 | 163,900 | 168,300 | ||||||||||||
| Impairment of assets | 314 | 314 | ||||||||||||||
| Funds from operations - adjusted | $ | 148,700 | $ | 149,800 | $ | 163,900 | $ | 168,300 | ||||||||
| Average common shares outstanding (diluted) | 52,000 | 52,000 | 55,000 | 55,000 | ||||||||||||
| Per share data (diluted): | ||||||||||||||||
| Net income available to common stockholders | $ | 1.47 | $ | 1.50 | $ | 1.47 | $ | 1.55 | ||||||||
| Funds from operations | 2.85 | 2.87 | 2.98 | 3.06 | ||||||||||||
| Funds from operations - adjusted | 2.86 | 2.88 | ||||||||||||||
Notes: (1) Provision for depreciation includes provision for depreciation from discontinued operations.
EBITDA Reconciliation ($000’s) | Exhibit 16 |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
| Net income | $ | 21,807 | $ | 25,301 | $ | 64,161 | $ | 63,659 | ||||||||
| Provision for depreciation (1) | 18,889 | 13,258 | 53,705 | 36,772 | ||||||||||||
| Interest expense (1) | 17,896 | 13,273 | 53,813 | 38,313 | ||||||||||||
| Capitalized interest | 254 | 490 | 590 | 1,128 | ||||||||||||
| Amortization (2) | 1,021 | 931 | 3,231 | 2,855 | ||||||||||||
| Provision for loan losses | 300 | 250 | 900 | 750 | ||||||||||||
| EBITDA | $ | 60,167 | $ | 53,503 | $ | 176,400 | $ | 143,477 | ||||||||
Interest Coverage Ratio | ||||||||||||||||
| Interest expense (1) | $ | 17,896 | $ | 13,273 | $ | 53,813 | $ | 38,313 | ||||||||
| Capitalized interest | 254 | 490 | 590 | 1,128 | ||||||||||||
| Total interest | 18,150 | 13,763 | 54,403 | 39,441 | ||||||||||||
| EBITDA | $ | 60,167 | $ | 53,503 | $ | 176,400 | $ | 143,477 | ||||||||
| Interest coverage ratio | 3.31x | 3.89x | 3.24x | 3.64x | ||||||||||||
Notes: | (1 | ) | Provision for depreciation and interest expense include provision for depreciation and interest expense from discontinued operations. | |||
| (2 | ) | Amortization includes amortization of deferred loan expenses, restricted stock and stock options. |
Page 13 of 13