Exhibit 99.1
F O R I M M E D I A T E R E L E A S E
January 31, 2005
For more information contact:
Ray Braun — (419) 247-2800
Mike Crabtree — (419) 247-2800
Scott Estes — (419) 247-2800
Health Care REIT, Inc.
Reports Fourth Quarter and Year End Results
Increases 2005 Quarterly Dividend Rate
Toledo, Ohio, January 31, 2005........Health Care REIT, Inc. (NYSE/HCN)today announced operating results for its fourth quarter and year ended December 31, 2004.
“We enhanced the foundation for the future growth of Health Care REIT during 2004,” commented George L. Chapman, chief executive officer of Health Care REIT, Inc. “We incorporated a new contingency-based rental escalator in our lease structure, which provides for internal growth in FFO and FAD. We are pleased to have added $522 million of net new investments and six new operators. While we are disappointed that unanticipated G&A expenses and asset dispositions and transitions have caused us to miss our earnings estimate for 2004 and reduce our guidance for 2005, the company is positioned to generate strong recurring FAD per share growth in the range of 10-14% in 2005. As a result of this positive outlook, the Board of Directors approved an increase in the common stock dividend to $0.62 per quarter from $0.60 per quarter commencing with the May 2005 dividend.”
As previously announced, the Board of Directors declared a dividend for the quarter ended December 31, 2004 of $0.60 per share as compared to $0.585 per share for the same period in 2003. The dividend represents the 135th consecutive dividend payment. The dividend will be payable February 22, 2005 to stockholders of record on January 31, 2005.
Page 1 of 16
4Q04 Earnings Release | January 31, 2005 | |
Summary of Fourth Quarter Results
(In thousands, except per share data)
Three Months Ended | Three Months Ended | |||||||||||
December 31, 2004 | December 31, 2003 | |||||||||||
Revenues | $ | 68,794 | $ | 60,215 | ||||||||
Net Income Available to Common Stockholders | $ | 15,767 | $ | 16,935 | ||||||||
Funds From Operations | $ | 37,299 | $ | 33,205 | ||||||||
Funds From Operations - Adjusted(1) | $ | 37,299 | $ | 35,997 | ||||||||
Funds Available for Distribution | $ | 35,642 | $ | 25,302 | ||||||||
Funds Available for Distribution - Adjusted(1) | $ | 35,642 | $ | 28,094 | ||||||||
Net Income Per Diluted Share | $ | 0.30 | $ | 0.34 | ||||||||
FFO Per Diluted Share | $ | 0.71 | $ | 0.66 | ||||||||
FFO Per Diluted Share - Adjusted(1) | $ | 0.71 | $ | 0.72 | ||||||||
FAD Per Diluted Share | $ | 0.68 | $ | 0.50 | ||||||||
FAD Per Diluted Share - Adjusted(1) | $ | 0.68 | $ | 0.56 | ||||||||
Dividend Per Share | $ | 0.60 | $ | 0.585 | ||||||||
FFO Payout Ratio | 85 | % | 89 | % | ||||||||
FFO Payout Ratio - Adjusted(1) | 85 | % | 81 | % | ||||||||
FAD Payout Ratio | 88 | % | 117 | % | ||||||||
FAD Payout Ratio - Adjusted(1) | 88 | % | 104 | % | ||||||||
(1) Excludes impairment charges in 2003.
Summary of Year to Date Results
(In thousands, except per share data)
Year Ended | Year Ended | |||||||||||
December 31, 2004 | December 31, 2003 | |||||||||||
Revenues | $ | 251,395 | $ | 196,739 | ||||||||
Net Income Available to Common Stockholders | $ | 72,634 | $ | 70,732 | ||||||||
Funds From Operations | $ | 146,742 | $ | 119,463 | ||||||||
Funds From Operations - Adjusted(1) | $ | 147,056 | $ | 125,045 | ||||||||
Funds Available for Distribution | $ | 132,950 | $ | 104,535 | ||||||||
Funds Available for Distribution - Adjusted(1) | $ | 133,264 | $ | 110,117 | ||||||||
Net Income Per Diluted Share | $ | 1.39 | $ | 1.60 | ||||||||
FFO Per Diluted Share | $ | 2.82 | $ | 2.70 | ||||||||
FFO Per Diluted Share - Adjusted(1) | $ | 2.82 | $ | 2.83 | ||||||||
FAD Per Diluted Share | $ | 2.55 | $ | 2.36 | ||||||||
FAD Per Diluted Share - Adjusted(1) | $ | 2.56 | $ | 2.49 | ||||||||
Dividend Per Share | $ | 2.385 | $ | 2.34 | ||||||||
FFO Payout Ratio | 85 | % | 87 | % | ||||||||
FFO Payout Ratio - Adjusted(1) | 85 | % | 83 | % | ||||||||
FAD Payout Ratio | 94 | % | 99 | % | ||||||||
FAD Payout Ratio - Adjusted(1) | 93 | % | 94 | % | ||||||||
(1) Excludes preferred stock redemption charge in 2003 and impairment charges in 2003 and 2004.
The company had a total outstanding debt balance of $1.2 billion at December 31, 2004, as compared with $1.0 billion at December 31, 2003, and stockholders’ equity of $1.3 billion, which represents a debt to total book capitalization ratio of 47 percent. The debt to total market capitalization at December 31, 2004 was 34 percent. The company’s coverage ratio of EBITDA to interest was 3.24 to 1.00 for the twelve months ended December 31, 2004. The company’s coverage ratio of EBITDA to fixed charges was 2.77 to 1.00 for the twelve months ended December 31, 2004.
Impairments and Write-offs.During the fourth quarter of 2004, the company transitioned a portfolio of 11 properties from an underperforming operator to three new operators. As a result of the transition, the company incurred a $3.8 million write-off relating to outstanding loans with the prior operator. In addition, during the third quarter of 2004, the company incurred an impairment charge of $314,000 on one property to reduce its book value to fair market value.
Straight-line Rent.The company recorded $1.7 million and $13.8 million of straight-line rent for the three and twelve months ended December 31, 2004, respectively. Straight-line rent is net of $3.0 million and $8.1 million in cash payments outside the normal monthly rental payments for the three and twelve month periods, respectively.
Page 2 of 16
4Q04 Earnings Release | January 31, 2005 | |
2004 Earnings Shortfall.During the fourth quarter, general and administrative expenses totaled $6.2 million, representing a $2.6 million increase compared to third quarter expenses. Of this $2.6 million sequential increase, approximately $2.0 million, or $0.04 per share, was not anticipated in the company’s previous 2004 guidance. Approximately half of this $2.0 million is comprised of professional services fees, with additional taxes, compensation expenses and transition costs associated with the removal of an underperforming operator comprising the remainder. The company anticipates that general and administrative expenses will total approximately $17.5 to $18.5 million for the full-year 2005.
Outlook for 2005.The company is reducing its 2005 guidance and now expects to report net income available to common stockholders in the range of $1.39 to $1.47 per diluted share and FFO in the range of $2.90 to $2.98 per diluted share. The guidance assumes net new investments of $200 million with leases that will not require rents to be straight-lined. The company expects to record straight-line rent of approximately $14 million for the full year 2005, before any payments outside the normal monthly rental payments. There are three primary factors that have contributed to the eight cent reduction in the company’s forecast relative to its previous expectations.
First, the company now anticipates dispositions of two high-yielding investments during early 2005 that were not in the previous guidance. These investments total approximately $50 million and generate a blended yield of 12.5%. Accordingly, the company has adjusted its net new investment guidance to $200 million, down from the previous estimate of $250 million. Based on an assumption that proceeds would be initially used to pay down a portion of the line of credit balance then later reinvested at an initial yield of 9.0-9.5%, this factor would represent an approximately $1.6 million, or $0.03 per share, reduction to the company’s 2005 forecast.
Second, as a result of ongoing professional services fees, the company’s current anticipated 2005 general and administrative expense of $17.5 to $18.5 million is approximately $1.0 million, or $0.02 per share, higher than previously estimated.
Third, through a successful transition process to replace an underperforming operator during the fourth quarter of 2004, the company provided one of the three replacement operators with a rent deferral during the first six months of 2005. This will result in an incremental reduction to the company’s 2005 forecast during the deferral period of approximately $1.65 million, or $0.03 per share.
Due to the increased focus on FAD, the company has now provided a reconciliation of FAD within this press release and forecasts 2005 FAD in a range of $2.65 to $2.73 per share based on estimated straight-line rent of $14 million in 2005. This $2.65 to $2.73 per share FAD guidance for 2005 represents strong 10-14% growth over 2004 recurring FAD of $2.40 per share, excluding the impact of any potential one-time cash payments the company may receive in 2005 and the actual $8.1 million in one-time cash payments received during calendar year 2004.
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, FFO and FAD.
Dividends for 2005.The Board of Directors approved a new quarterly dividend rate of $0.62 per share per quarter ($2.48 per share annually), commencing with the May 2005 dividend, up from $0.60, the rate during 2004. The company’s dividend policy is reviewed annually during the Board of Director’s January planning session. The declaration and payment of quarterly dividends remains subject to the review and approval of the Board of Directors.
Page 3 of 16
4Q04 Earnings Release | January 31, 2005 | |
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) and funds available for distribution (FAD) 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. FAD represents FFO excluding the non-cash straight-line rental adjustments.
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 and FAD 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 and FAD 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, FAD 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 and FAD are internal evaluation metrics utilized by the Board of Directors to evaluate management. FFO, FAD and 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, FAD 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 13, 14, 15 and 16 for reconciliations of FAD, FFO and EBITDA to net income.
Page 4 of 16
4Q04 Earnings Release | January 31, 2005 | |
Conference Call Information.The company has scheduled a conference call on February 1, 2005, at 9:00 a.m. Eastern time to discuss its fourth quarter and year end results, industry trends, portfolio performance and outlook for 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 December 31, 2004, the company had investments in 394 health care facilities in 35 states with 50 operators and had total assets of approximately $2.5 billion. The portfolio included 234 assisted living facilities, 152 skilled nursing facilities and eight specialty care hospitals. 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; its ability to access capital markets or other sources of funds; and its ability to meet its earnings guidance. When the company uses words such as “may,” “will,” “intend,” “should,” “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; serious issues facing the health care industry, including compliance with, and changes to, regulations and payment policies and operators’ difficulty in obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care and senior housing industries; changes in federal, state and local legislation; negative developments in the operating results or financial condition of operators, including, but not limited to, their ability to pay rent and repay loans; the company’s ability to transition or sell facilities with a profitable results; and changes in rules or practices governing the company’s financial reporting. 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
#####
Page 5 of 16
4Q04 Earnings Release | January 31, 2005 | |
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands)
December 31 | ||||||||
2004 | 2003 | |||||||
Assets | ||||||||
Real estate investments: | ||||||||
Real property owned | ||||||||
Land | $ | 208,173 | $ | 166,408 | ||||
Buildings & improvements | 2,176,327 | 1,712,868 | ||||||
Construction in progress | 25,463 | 14,701 | ||||||
2,409,963 | 1,893,977 | |||||||
Less accumulated depreciation | (219,536 | ) | (152,440 | ) | ||||
Total real property owned | 2,190,427 | 1,741,537 | ||||||
Loans receivable | ||||||||
Real property loans | 213,067 | 213,480 | ||||||
Subdebt investments | 43,739 | 45,254 | ||||||
256,806 | 258,734 | |||||||
Less allowance for losses on loans receivable | (5,261 | ) | (7,825 | ) | ||||
251,545 | 250,909 | |||||||
Net real estate investments | 2,441,972 | 1,992,446 | ||||||
Other assets: | ||||||||
Equity investments | 3,298 | 3,299 | ||||||
Deferred loan expenses | 6,958 | 10,331 | ||||||
Cash and cash equivalents | 19,763 | 124,496 | ||||||
Receivables and other assets | 77,652 | 52,159 | ||||||
107,671 | 190,285 | |||||||
Total assets | $ | 2,549,643 | $ | 2,182,731 | ||||
Liabilities and stockholders’ equity | ||||||||
Liabilities: | ||||||||
Borrowings under unsecured lines of credit arrangements | $ | 151,000 | $ | 0 | ||||
Senior unsecured notes | 875,000 | 865,000 | ||||||
Secured debt | 160,225 | 148,184 | ||||||
Accrued expenses and other liabilities | 28,139 | 19,868 | ||||||
Total liabilities | 1,214,364 | 1,033,052 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock | 283,751 | 120,761 | ||||||
Common stock | 52,860 | 50,298 | ||||||
Capital in excess of par value | 1,139,723 | 1,069,887 | ||||||
Treasury stock | (1,286 | ) | (523 | ) | ||||
Cumulative net income | 745,817 | 660,446 | ||||||
Cumulative dividends | (884,890 | ) | (749,166 | ) | ||||
Accumulated other comprehensive income | 1 | 1 | ||||||
Other equity | (697 | ) | (2,025 | ) | ||||
Total stockholders’ equity | 1,335,279 | 1,149,679 | ||||||
Total liabilities and stockholders’ equity | $ | 2,549,643 | $ | 2,182,731 | ||||
Page 6 of 16
4Q04 Earnings Release | January 31, 2005 | |
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data)
Three Months Ended | Year Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenues: | ||||||||||||||||
Rental income | $ | 62,564 | $ | 53,723 | $ | 226,095 | $ | 172,212 | ||||||||
Interest income | 5,622 | 4,841 | 22,818 | 20,768 | ||||||||||||
Transaction fees and other income | 558 | 1,651 | 2,432 | 3,759 | ||||||||||||
Prepayment fees | 50 | 0 | 50 | 0 | ||||||||||||
Gross revenues | 68,794 | 60,215 | 251,395 | 196,739 | ||||||||||||
Expenses: | ||||||||||||||||
Interest expense | 18,721 | 16,731 | 71,994 | 52,811 | ||||||||||||
Provision for depreciation | 20,236 | 15,642 | 73,036 | 49,349 | ||||||||||||
General and administrative | 6,247 | 3,032 | 16,585 | 11,483 | ||||||||||||
Loan expense | 825 | 889 | 3,393 | 2,921 | ||||||||||||
Impairment of assets | 0 | 2,792 | 314 | 2,792 | ||||||||||||
Provision for loan losses | 300 | 2,120 | 1,200 | 2,870 | ||||||||||||
Total expenses | 46,329 | 41,206 | 166,522 | 122,226 | ||||||||||||
Income from continuing operations | 22,465 | 19,009 | 84,873 | 74,513 | ||||||||||||
Discontinued operations: | ||||||||||||||||
Gain (loss) on sales of properties | (1,272 | ) | (173 | ) | (143 | ) | 4,139 | |||||||||
Income (loss) from discontinued operations, net | 16 | 243 | 641 | 4,088 | ||||||||||||
(1,256 | ) | 70 | 498 | 8,227 | ||||||||||||
Net income | 21,209 | 19,079 | 85,371 | 82,740 | ||||||||||||
Preferred dividends | 5,442 | 2,144 | 12,737 | 9,218 | ||||||||||||
Preferred stock redemption charge | 0 | 0 | 0 | 2,790 | ||||||||||||
Net income available to common stockholders | $ | 15,767 | $ | 16,935 | $ | 72,634 | $ | 70,732 | ||||||||
Average number of common shares outstanding: | ||||||||||||||||
Basic | 52,326 | 49,440 | 51,544 | 43,572 | ||||||||||||
Diluted | 52,784 | 50,119 | 52,082 | 44,201 | ||||||||||||
Net income available to common stockholders per share: | ||||||||||||||||
Basic | $ | 0.30 | $ | 0.34 | $ | 1.41 | $ | 1.62 | ||||||||
Diluted | 0.30 | 0.34 | 1.39 | 1.60 | ||||||||||||
Dividends per share | $ | 0.60 | $ | 0.585 | $ | 2.385 | $ | 2.34 |
Page 7 of 16
4Q04 Earnings Release | January 31, 2005 | |
HEALTH CARE REIT, INC.
Financial Supplement – December 31, 2004
Exhibit 1
Portfolio Composition ($000’s)
# Properties | # Beds/Units | Balance | % Balance | |||||||||||||
Balance Sheet Data | ||||||||||||||||
Real Property | 373 | 35,219 | $ | 2,190,427 | 90 | % | ||||||||||
Loans Receivable (1) | 21 | 2,643 | 213,067 | 9 | % | |||||||||||
Subdebt Investments | 0 | 0 | 43,739 | 1 | % | |||||||||||
Total Investments | 394 | 37,862 | $ | 2,447,233 | 100 | % | ||||||||||
# Properties | # Beds/Units | Investment (2) | % Investment | |||||||||||||
Investment Data | ||||||||||||||||
Assisted Living Facilities | 234 | 15,776 | $ | 1,335,717 | 54 | % | ||||||||||
Skilled Nursing Facilities | 152 | 20,975 | 965,328 | 39 | % | |||||||||||
Specialty Care Facilities | 8 | 1,111 | 151,833 | 7 | % | |||||||||||
Real Estate Investments | 394 | 37,862 | $ | 2,452,878 | 100 | % |
Notes: (1) | Includes $35,918,000 of loans on non-accrual. |
(2) | Real Estate Investments include gross real estate investments and credit enhancements which amounted to $2,447,233,000 and $5,645,000, respectively. |
Exhibit 2
Revenue Composition ($000’s)
Three Months Ended | Year Ended | |||||||||||||||
December 31, 2004 | December 31, 2004 | |||||||||||||||
Revenue by Investment Type (1) | ||||||||||||||||
Real Property | $ | 63,134 | 92 | % | $ | 230,278 | 91 | % | ||||||||
Loans Receivable | 4,588 | 7 | % | 18,482 | 7 | % | ||||||||||
Subdebt Investments | 1,183 | 1 | % | 4,817 | 2 | % | ||||||||||
Total | $ | 68,905 | 100 | % | $ | 253,577 | 100 | % | ||||||||
Revenue by Facility Type (1) | ||||||||||||||||
Assisted Living Facilities | $ | 36,625 | 53 | % | $ | 139,440 | 55 | % | ||||||||
Skilled Nursing Facilities | 28,401 | 41 | % | 98,677 | 39 | % | ||||||||||
Specialty Care Facilities | 3,879 | 6 | % | 15,460 | 6 | % | ||||||||||
Total | $ | 68,905 | 100 | % | $ | 253,577 | 100 | % |
Notes: (1) Revenues include gross revenues and revenues from discontinued operations.
Page 8 of 16
4Q04 Earnings Release | January 31, 2005 |
Exhibit 3
Operator Concentration ($000’s) | ||||||||||||
Concentration by Investment | # Properties | Investment | % Investment | |||||||||
Emeritus Corporation | 48 | $ | 361,367 | 15 | % | |||||||
Southern Assisted Living, Inc. | 43 | 200,750 | 8 | % | ||||||||
Commonwealth Communities L.L.C. | 13 | 196,560 | 8 | % | ||||||||
Delta Health Group, Inc. | 25 | 178,221 | 7 | % | ||||||||
Home Quality Management, Inc. | 32 | 176,081 | 7 | % | ||||||||
Remaining Operators (45) | 233 | 1,339,899 | 55 | % | ||||||||
Total | 394 | $ | 2,452,878 | 100 | % |
Exhibit 4
Geographic Concentration ($000’s) | ||||||||||||
Concentration by Region | # Properties | Investment | % Investment | |||||||||
South | 244 | $ | 1,285,128 | 52 | % | |||||||
Northeast | 56 | 499,171 | 20 | % | ||||||||
West | 49 | 322,758 | 13 | % | ||||||||
Midwest | 45 | 345,821 | 15 | % | ||||||||
Total | 394 | $ | 2,452,878 | 100 | % |
Concentration by State | # Properties | Investment | % Investment | |||||||||
Florida | 59 | $ | 376,115 | 15 | % | |||||||
Massachusetts | 33 | 341,935 | 14 | % | ||||||||
North Carolina | 42 | 197,036 | 8 | % | ||||||||
Ohio | 17 | 158,283 | 6 | % | ||||||||
Texas | 36 | 145,529 | 6 | % | ||||||||
Remaining States (30) | 207 | 1,233,980 | 51 | % | ||||||||
Total | 394 | $ | 2,452,878 | 100 | % |
Page 9 of 16
4Q04 Earnings Release | January 31, 2005 | |
Exhibit 5
Committed Investment Balances
($000’s except Investment per Bed/Unit)
Committed | Investment | |||||||||||||||
# Properties | # Beds/Units | Balance (1) | per Bed/Unit | |||||||||||||
Assisted Living Facilities | 234 | 15,776 | $ | 1,339,550 | $ | 84,911 | ||||||||||
Skilled Nursing Facilities | 152 | 20,975 | 965,328 | 46,023 | ||||||||||||
Specialty Care Facilities | 8 | 1,111 | 151,833 | 136,663 | ||||||||||||
Total | 394 | 37,862 | $ | 2,456,711 | -na- |
Notes: (1) | Committed Balance includes gross real estate investments, credit enhancements and unfunded construction commitments for which initial funding had commenced. |
Exhibit 6
Selected Facility Data
Coverage Data | ||||||||||||||||||||
% Payor Mix | Before | After | ||||||||||||||||||
Census | Private | Medicare | Mgt. Fees | Mgt. Fees | ||||||||||||||||
Assisted Living Facilities | 87 | % | 86 | % | 0 | % | 1.45x | 1.23x | ||||||||||||
Skilled Nursing Facilities | 87 | % | 16 | % | 15 | % | 2.11x | 1.62x | ||||||||||||
Specialty Care Facilities | 66 | % | 23 | % | 40 | % | 2.69x | 2.08x | ||||||||||||
Weighted Averages | 1.78x | 1.44x |
Notes: Data as of September 30, 2004.
Exhibit 7
Credit Support ($000’s)
Balance | % Investment | |||||
Cross Defaulted | $ | 2,344,328 | 96% of gross real estate investments | |||
Cross Collateralized | 165,589 | 78% of real property loans receivable | ||||
Master Leases | 1,852,702 | 85% of real property owned |
Current Capitalization ($000’s except share price)
Balance | % Balance | |||||||
Borrowings Under Bank Lines | $ | 151,000 | 6 | % | ||||
Long-Term Debt Obligations | 1,035,225 | 41 | % | |||||
Stockholders’ Equity | 1,335,279 | 53 | % | |||||
Total Book Capitalization | $ | 2,521,504 | 100 | % | ||||
Common Shares Outstanding (000’s) | 52,925 | |||||||
Year-end Share Price | $ | 38.15 | ||||||
Common Stock Market Value | $ | 2,019,089 | 58 | % | ||||
Preferred Stock | 283,751 | 8 | % | |||||
Borrowings Under Bank Lines | 151,000 | 4 | % | |||||
Long-Term Debt Obligations | 1,035,225 | 30 | % | |||||
Total Market Capitalization | $ | 3,489,065 | 100 | % |
Leverage & Performance Ratios
Debt/Total Book Cap | 47 | % | ||
Debt/Total Market Cap | 34 | % | ||
Interest Coverage | 3.25x 4th Qtr. | |||
3.24x YTD | ||||
Fixed Charge Coverage | 2.53x 4th Qtr. | |||
2.77x YTD |
Page 10 of 16
4Q04 Earnings Release | January 31, 2005 | |
Exhibit 8
Revenue Maturities ($000’s)
Operating Lease Expirations & Loan Maturities
Current Lease | Current Interest | Lease and | ||||||||||||||
Year | Revenue (1) | Revenue (1) | Interest Revenue | % of Total | ||||||||||||
2005 | $ | 0 | $ | 718 | $ | 718 | 0 | % | ||||||||
2006 | 0 | 2,880 | 2,880 | 1 | % | |||||||||||
2007 | 0 | 4,825 | 4,825 | 2 | % | |||||||||||
2008 | 0 | 4,219 | 4,219 | 2 | % | |||||||||||
2009 | 0 | 3,046 | 3,046 | 1 | % | |||||||||||
Thereafter | 251,480 | 5,846 | 257,326 | 94 | % | |||||||||||
Total | $ | 251,480 | $ | 21,534 | $ | 273,014 | 100 | % |
Notes: (1) Revenue impact by year, annualized.
Exhibit 9
Debt Maturities and Principal Payments ($000’s)
Year | Lines of Credit (1) | Senior Notes | Secured Debt | Total | ||||||||||||
2005 | $ | 30,000 | $ | 0 | $ | 6,276 | $ | 36,276 | ||||||||
2006 | 310,000 | 50,000 | 2,977 | 362,977 | ||||||||||||
2007 | 0 | 175,000 | 15,004 | 190,004 | ||||||||||||
2008 | 0 | 100,000 | 10,194 | 110,194 | ||||||||||||
2009 | 0 | 0 | 13,278 | 13,278 | ||||||||||||
2010 | 0 | 0 | 9,313 | 9,313 | ||||||||||||
2011 | 0 | 0 | 21,149 | 21,149 | ||||||||||||
Thereafter | 0 | 550,000 | 82,034 | 632,034 | ||||||||||||
Total | $ | 340,000 | $ | 875,000 | $ | 160,225 | $ | 1,375,225 |
Notes: (1) Reflected at 100% capacity.
Page 11 of 16
4Q04 Earnings Release | January 31, 2005 | |
Exhibit 10
Investment Activity ($000’s)
Three Months Ended | Year Ended | |||||||||||||||
December 31, 2004 | December 31, 2004 | |||||||||||||||
Funding by Investment Type | ||||||||||||||||
Real Property | $ | 125,179 | 99 | % | $ | 554,102 | 95 | % | ||||||||
Loans Receivable | 643 | 1 | % | 9,438 | 2 | % | ||||||||||
Subdebt Investments | 53 | 0 | % | 21,391 | 3 | % | ||||||||||
Total | $ | 125,875 | 100 | % | $ | 584,931 | 100 | % | ||||||||
Funding by Facility Type | ||||||||||||||||
Assisted Living Facilities | $ | 22,135 | 18 | % | $ | 228,365 | 39 | % | ||||||||
Skilled Nursing Facilities | 103,207 | 82 | % | 350,262 | 60 | % | ||||||||||
Specialty Care Facilities | 533 | 0 | % | 6,304 | 1 | % | ||||||||||
Total | $ | 125,875 | 100 | % | $ | 584,931 | 100 | % |
Exhibit 11
Disposition Activity ($000’s)
Three Months Ended | Year Ended | |||||||||||||||
December 31, 2004 | December 31, 2004 | |||||||||||||||
Dispositions by Investment Type | ||||||||||||||||
Real Property | $ | 3,902 | 14 | % | $ | 37,710 | 60 | % | ||||||||
Loans Receivable | 9,881 | 36 | % | 10,992 | 18 | % | ||||||||||
Subdebt Investments | 13,882 | 50 | % | 13,882 | 22 | % | ||||||||||
Total | $ | 27,665 | 100 | % | $ | 62,584 | 100 | % | ||||||||
Dispositions by Facility Type | ||||||||||||||||
Assisted Living Facilities | $ | 18,772 | 68 | % | $ | 39,889 | 64 | % | ||||||||
Skilled Nursing Facilities | 8,893 | 32 | % | 12,340 | 20 | % | ||||||||||
Specialty Care Facilities | 10,355 | 16 | % | |||||||||||||
Total | $ | 27,665 | 100 | % | $ | 62,584 | 100 | % |
Exhibit 12
Discontinued Operations ($000’s)
Three Months Ended | Year Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenues | ||||||||||||||||
Rental income | $ | 111 | $ | 1,033 | $ | 2,182 | $ | 10,175 | ||||||||
Expenses | ||||||||||||||||
Interest expense | 21 | 335 | 562 | 2,566 | ||||||||||||
Provision for depreciation | 74 | 455 | 979 | 3,521 | ||||||||||||
Income (loss) from discontinued operations, net | $ | 16 | $ | 243 | $ | 641 | $ | 4,088 |
Page 12 of 16
4Q04 Earnings Release | January 31, 2005 | |
Exhibit 13
Funds Available For Distribution Reconciliation
(Amounts in 000’s except per share data)
Three Months Ended | Year Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Net income available to common stockholders | $ | 15,767 | $ | 16,935 | $ | 72,634 | $ | 70,732 | ||||||||
Provision for depreciation (1) | 20,310 | 16,097 | 74,015 | 52,870 | ||||||||||||
Loss (gain) on sales of properties | 1,272 | 173 | 143 | (4,139 | ) | |||||||||||
Prepayments fees | (50 | ) | 0 | (50 | ) | 0 | ||||||||||
Rental income in excess of cash received | (1,657 | ) | (7,903 | ) | (13,792 | ) | (14,928 | ) | ||||||||
Funds available for distribution | 35,642 | 25,302 | 132,950 | 104,535 | ||||||||||||
Impairment of assets | 0 | 2,792 | 314 | 2,792 | ||||||||||||
Preferred stock redemption charge | 0 | 0 | 0 | 2,790 | ||||||||||||
Funds available for distribution - adjusted | 35,642 | 28,094 | 133,264 | 110,117 | ||||||||||||
Non-recurring rental cash payments | (3,036 | ) | (197 | ) | (8,144 | ) | (6,271 | ) | ||||||||
Funds available for distribution - recurring | $ | 32,606 | $ | 27,897 | $ | 125,120 | $ | 103,846 | ||||||||
Average common shares outstanding: | ||||||||||||||||
Basic | 52,326 | 49,440 | 51,544 | 43,572 | ||||||||||||
Diluted | 52,784 | 50,119 | 52,082 | 44,201 | ||||||||||||
Per share data: | ||||||||||||||||
Net income available to common stockholders | ||||||||||||||||
Basic | $ | 0.30 | $ | 0.34 | $ | 1.41 | $ | 1.62 | ||||||||
Diluted | 0.30 | 0.34 | 1.39 | 1.60 | ||||||||||||
Funds available for distribution | ||||||||||||||||
Basic | $ | 0.68 | $ | 0.51 | $ | 2.58 | $ | 2.40 | ||||||||
Diluted | 0.68 | 0.50 | 2.55 | 2.36 | ||||||||||||
Funds available for distribution - adjusted | ||||||||||||||||
Basic | $ | 0.68 | $ | 0.57 | $ | 2.59 | $ | 2.53 | ||||||||
Diluted | 0.68 | 0.56 | 2.56 | 2.49 | ||||||||||||
Funds available for distribution - recurring | ||||||||||||||||
Basic | $ | 0.62 | $ | 0.56 | $ | 2.43 | $ | 2.38 | ||||||||
Diluted | 0.62 | 0.56 | 2.40 | 2.35 | ||||||||||||
FAD Payout Ratio | ||||||||||||||||
Dividends per share | $ | 0.60 | $ | 0.585 | $ | 2.385 | $ | 2.34 | ||||||||
FAD per diluted share | $ | 0.68 | $ | 0.50 | $ | 2.55 | $ | 2.36 | ||||||||
FAD payout ratio | 88 | % | 117 | % | 94 | % | 99 | % | ||||||||
FAD Payout Ratio - Adjusted | ||||||||||||||||
Dividends per share | $ | 0.60 | $ | 0.585 | $ | 2.385 | $ | 2.34 | ||||||||
FAD per diluted share - adjusted | $ | 0.68 | $ | 0.56 | $ | 2.56 | $ | 2.49 | ||||||||
FAD payout ratio - adjusted | 88 | % | 104 | % | 93 | % | 94 | % | ||||||||
FAD Payout Ratio - Recurring | ||||||||||||||||
Dividends per share | $ | 0.60 | $ | 0.585 | $ | 2.385 | $ | 2.34 | ||||||||
FAD per diluted share - recurring | $ | 0.62 | $ | 0.56 | $ | 2.40 | $ | 2.35 | ||||||||
FAD payout ratio - recurring | 97 | % | 104 | % | 99 | % | 100 | % | ||||||||
Notes: (1) Provision for depreciation includes provision for depreciation from discontinued operations.
Page 13 of 16
4Q04 Earning Release | January 31, 2005 |
Funds From Operations Reconciliation | Exhibit 14 | |
(Amounts in 000’s except per share data) |
Three Months Ended | Year Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Net income available to common stockholders | $ | 15,767 | $ | 16,935 | $ | 72,634 | $ | 70,732 | ||||||||
Provision for depreciation (1) | 20,310 | 16,097 | 74,015 | 52,870 | ||||||||||||
Loss (gain) on sales of properties | 1,272 | 173 | 143 | (4,139 | ) | |||||||||||
Prepayments fees | (50 | ) | 0 | (50 | ) | 0 | ||||||||||
Funds from operations | 37,299 | 33,205 | 146,742 | 119,463 | ||||||||||||
Impairment of assets | 0 | 2,792 | 314 | 2,792 | ||||||||||||
Preferred stock redemption charge | 0 | 0 | 0 | 2,790 | ||||||||||||
Funds from operations — adjusted | $ | 37,299 | $ | 35,997 | $ | 147,056 | $ | 125,045 | ||||||||
Average common shares outstanding: | ||||||||||||||||
Basic | 52,326 | 49,440 | 51,544 | 43,572 | ||||||||||||
Diluted | 52,784 | 50,119 | 52,082 | 44,201 | ||||||||||||
Per share data: | ||||||||||||||||
Net income available to common stockholders | ||||||||||||||||
Basic | $ | 0.30 | $ | 0.34 | $ | 1.41 | $ | 1.62 | ||||||||
Diluted | 0.30 | 0.34 | 1.39 | 1.60 | ||||||||||||
Funds from operations | ||||||||||||||||
Basic | $ | 0.71 | $ | 0.67 | $ | 2.85 | $ | 2.74 | ||||||||
Diluted | 0.71 | 0.66 | 2.82 | 2.70 | ||||||||||||
Funds from operations — adjusted | ||||||||||||||||
Basic | $ | 0.71 | $ | 0.73 | $ | 2.85 | $ | 2.87 | ||||||||
Diluted | 0.71 | 0.72 | 2.82 | 2.83 | ||||||||||||
FFO Payout Ratio | ||||||||||||||||
Dividends per share | $ | 0.60 | $ | 0.585 | $ | 2.385 | $ | 2.34 | ||||||||
FFO per diluted share | $ | 0.71 | $ | 0.66 | $ | 2.82 | $ | 2.70 | ||||||||
FFO payout ratio | 85 | % | 89 | % | 85 | % | 87 | % | ||||||||
FFO Payout Ratio — Adjusted | ||||||||||||||||
Dividends per share | $ | 0.60 | $ | 0.585 | $ | 2.385 | $ | 2.34 | ||||||||
FFO per diluted share — adjusted | $ | 0.71 | $ | 0.72 | $ | 2.82 | $ | 2.83 | ||||||||
FFO payout ratio — adjusted | 85 | % | 81 | % | 85 | % | 83 | % |
Notes: (1) Provision for depreciation includes provision for depreciation from discontinued operations.
Page 14 of 16
4Q04 Earning Release | January 31, 2005 |
FFO Outlook Reconciliation | Exhibit 15 | |
(Amounts in 000’s except per share data) |
Year Ended | ||||||||
December 31, 2005 | ||||||||
Low | High | |||||||
Net income available to common stockholders | $ | 76,500 | $ | 80,900 | ||||
Provision for depreciation (1) | 83,000 | 83,000 | ||||||
Funds from operations | 159,500 | 163,900 | ||||||
Rental income in excess of cash received | (14,000 | ) | (14,000 | ) | ||||
Funds available for distribution | $ | 145,500 | $ | 149,900 | ||||
Average common shares outstanding (diluted) | 55,000 | 55,000 | ||||||
Per share data (diluted): | ||||||||
Net income available to common stockholders | $ | 1.39 | $ | 1.47 | ||||
Funds from operations | 2.90 | 2.98 | ||||||
Funds available for distribution | 2.65 | 2.73 |
Notes: (1) Provision for depreciation includes provision for depreciation from discontinued operations.
Page 15 of 16
4Q04 Earning Release | January 31, 2005 |
EBITDA Reconciliation ($000’s) | Exhibit 16 |
Three Months Ended | Year Ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Net income | $ | 21,209 | $ | 19,079 | $ | 85,371 | $ | 82,740 | ||||||||
Provision for depreciation (1) | 20,310 | 16,097 | 74,015 | 52,870 | ||||||||||||
Interest expense (1) | 18,742 | 17,066 | 72,556 | 55,377 | ||||||||||||
Capitalized interest | 285 | 407 | 875 | 1,535 | ||||||||||||
Amortization (2) | 1,016 | 1,102 | 4,247 | 3,957 | ||||||||||||
Provision for loan losses | 300 | 2,120 | 1,200 | 2,870 | ||||||||||||
EBITDA | $ | 61,862 | $ | 55,871 | $ | 238,264 | $ | 199,349 | ||||||||
Interest Coverage Ratio | ||||||||||||||||
Interest expense (1) | $ | 18,742 | $ | 17,066 | $ | 72,556 | $ | 55,377 | ||||||||
Capitalized interest | 285 | 407 | 875 | 1,535 | ||||||||||||
Total interest | 19,027 | 17,473 | 73,431 | 56,912 | ||||||||||||
EBITDA | $ | 61,862 | $ | 55,871 | $ | 238,264 | $ | 199,349 | ||||||||
Interest coverage ratio | 3.25 | x | 3.20 | x | 3.24 | x | 3.50 | x | ||||||||
Fixed Charge Coverage Ratio | ||||||||||||||||
Total interest (1) | $ | 19,027 | $ | 17,473 | $ | 73,431 | $ | 56,912 | ||||||||
Preferred dividends | 5,442 | 2,144 | 12,737 | 9,218 | ||||||||||||
Total fixed charges | 24,469 | 19,617 | 86,168 | 66,130 | ||||||||||||
EBITDA | $ | 61,862 | $ | 55,871 | $ | 238,264 | $ | 199,349 | ||||||||
Fixed charge coverage ratio | 2.53 | x | 2.85 | x | 2.77 | x | 3.01 | x |
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 16 of 16