PRESS RELEASE - FOR IMMEDIATE RELEASE
OMEGA ANNOUNCES FIRST QUARTER 2004 FINANCIAL RESULTS AND ADJUSTED FFO OF $0.22
PER SHARE FOR THE FIRST QUARTER
TIMONIUM, MARYLAND - APRIL 27, 2004 - Omega Healthcare Investors, Inc.
(NYSE:OHI) today announced its results of operations for the quarter ended March
31, 2004. The Company also reported Funds From Operations ("FFO") on a diluted
basis for the three months ended March 31, 2004 of ($48.2) million or ($1.16)
per common share. The ($48.2) million of FFO for the quarter includes the impact
of $51.5 million of non-cash refinancing-related charges, $6.4 million of exit
fees associated with the termination of the Company's old credit facility and
$0.3 million to adjust derivatives to its fair value and is presented in
accordance with the guidelines for the calculation and reporting of FFO issued
by the National Association of Real Estate Investment Trusts ("NAREIT").
Adjusted FFO, which excludes the impact of these charges, was $0.22 per share.
For more information, see "FFO Results" below.
GAAP NET INCOME
After adjusting for the loss from discontinued operations of $353 thousand
for the three months ended March 31, 2004, the Company reported net loss
available to common stockholders of $53.7 million or ($1.30) per fully diluted
common share on revenues of $21.3 million. This compares to net income available
to common of $956 thousand or $0.03 per fully diluted common share for the same
period in 2003. A breakout of discontinued operations is included in a schedule
attached to this Press Release.
FIRST QUARTER 2004 HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS
o Issued $118.5 million of 8.375% Series D preferred stock.
o Completed an 18.1 million share secondary offering and the sale of 2.7
million common shares, which resulted in significant shareholder
diversification and a large increase in institutional investors.
o Issued $200 million 7% 10-year senior unsecured notes.
o Closed on a new $125 million revolving credit facility.
o Received rating agency upgrades from both Moody's and S&P.
o Completed the restructuring of the Company's Sun portfolio.
o Re-leased the Company's last owned and operated facility.
o Scheduled the April 30, 2004 redemption of the 9.25% Series A preferred
stock.
o Increased common dividends 5.9% to $0.18 per common share.
FINANCING ACTIVITIES AND BORROWING ARRANGEMENTS
On February 5, 2004, the Company announced that Explorer Holdings L.P., its
then largest stockholder ("Explorer"), granted the Company an option to
repurchase up to 700,000 of the Company's 10% Convertible Series C preferred
stock ("Series C preferred stock") (which were convertible into the Company's
common shares) held by Explorer at a negotiated purchase price of $145.92 per
Series C preferred stock (or $9.12 per common share on an as converted basis).
Explorer further agreed to convert any remaining Series C preferred stock into
common stock.
On February 10, 2004, the Company announced the closing of the sale of
4,739,500 8.375% shares of Series D cumulative redeemable preferred stock
("Series D preferred stock"). The preferred stock was issued at $25 per share
and trades on the NYSE under the symbol "OHI PrD."
The Company used approximately $102.1 million of the net proceeds from the
Series D preferred stock offering to repurchase 700,000 shares of the Company's
Series C preferred stock from Explorer. In connection with the closing of the
repurchase, Explorer converted its remaining 348,420 Series C preferred stock
into approximately 5.6 million shares of the Company's common stock. Following
the repurchase and conversion, approximately 43.8 million shares of Omega common
stock were outstanding, of which Explorer held approximately 18.1 million common
shares.
The combined repurchase and conversion of the Series C preferred stock
reduced the Company's preferred dividend requirements, increased its market
capitalization and facilitated future financings by simplifying the Company's
capital structure. Under FASB-EITF Issue D-42, "The Effect on the Calculation of
Earnings per Share for the Redemption or Induced Conversion of Preferred Stock,"
the repurchase of the Series C preferred stock resulted in a non-cash charge to
net income available to common shareholders of approximately $38.7 million. This
non-cash charge did not have any effect on the Company's net worth.
On March 8, 2004, the Company announced the closing of the underwritten
public offering of 18.1 million shares of Omega common stock at $9.85 per share
owned by Explorer. As a result of the offering, Explorer no longer owns any of
Omega's common stock. The Company did not receive any proceeds from the sale of
the shares sold by Explorer.
In connection with the 18.1 million common stock offering, the Company
issued approximately 2.7 million additional shares of Omega common stock at a
price of $9.85 per share, less underwriting discounts, to cover over-allotments
in connection with the 18.1 million secondary offering. The Company received net
proceeds of approximately $24.5 million from this offering.
Effective March 22, 2004, the Company closed on a private offering of $200
million of 7% senior unsecured notes due 2014 ("Notes") and a $125 million
revolving senior secured credit facility ("New Credit Facility") provided by
Bank of America, N.A., Deutsche Bank AG, UBS Loan Finance, LLC and GE Healthcare
Financial Services.
The Company used proceeds from the Notes offering to replace its previous
$225 million senior secured credit facility and $50 million acquisition credit
facility, which have been terminated. The remaining proceeds will be used for
working capital and general corporate purposes. The New Credit Facility will be
used for acquisitions and general corporate purposes. In connection with the
termination of the $225 million senior secured credit facility and $50 million
acquisition credit facility, the Company recorded a charge of approximately
$12.6 million, of which $6.3 million consisted of non-cash charges relating to
deferred financing costs of the previous credit facilities. The Notes are
unsecured senior obligations of Omega, which have been guaranteed by Omega's
subsidiaries. The Notes were issued in a private placement contemplating resales
in accordance with Rule 144A under the Securities Act of 1933, as amended (the
"Act"). The Notes have not been registered under the Act.
In connection with the Company's repayment and termination of the $225
million senior secured credit facility, the Company sold its $200 million
interest rate cap on March 31, 2004. Net proceeds from the sale totaled
approximately $3.5 million and resulted in a loss of approximately $6.5 million,
which was recorded during the first quarter of 2004 and included in the $19.1
million of interest expense associated with refinancing activities.
During the first quarter of 2004, the Company's preferred stock and senior
unsecured debt received upgrades from Moody's and Standard & Poors.
FIRST QUARTER 2004 RESULTS
Revenues for the three months ended March 31, 2004 were $21.3 million. Expenses
for the three months ended March 31, 2004 totaled $31.2 million, including $5.2
million of depreciation and amortization expense, $5.1 million of interest
expense and $2.0 million of general, administrative and legal expenses. In
addition, $19.1 million of interest expense associated with refinancing
activities was recorded.
During the three-month period ended March 31, 2004, the Company sold two
closed facilities in two separate transactions. The Company realized proceeds of
approximately $85 thousand, net of closing costs and other expenses, resulting
in a loss of approximately $351 thousand.
FFO RESULTS
For the three months ended March 31, 2004, reportable diluted FFO was
($48.2) million or ($1.16) per share compared to $8.9 million or $0.17 per share
for the same period in 2003 due to the factors mentioned above. The ($48.2)
million of FFO includes the impact of $51.5 million of non-cash
refinancing-related charges, $6.4 million of exit fees associated with a credit
facility and a $0.3 million adjustment to derivatives to its fair value and is
presented in accordance with the guidelines for the calculation and reporting of
FFO issued by NAREIT. However, when excluding the $57.6 million
financing-related charges and exit fees described above, adjusted FFO was $9.4
million or $0.22 per share compared to $8.1 million or $0.15 per share for the
same period in 2003. For further information, see the attached "Funds From
Operations" schedule and notes.
PORTFOLIO DEVELOPMENTS
SUN HEALTHCARE GROUP, INC.
Effective January 1, 2004, the Company re-leased five skilled nursing
facilities ("SNFs") to an existing operator under a new Master Lease, which has
a five-year term and an initial annual lease rate of $0.75 million. Four former
Sun SNFs, three located in Illinois and one located in Indiana, representing an
aggregate of 449 beds, were part of the transaction. The fifth SNF in the
transaction, located in Illinois and representing 128 beds, was the last
remaining owned and operated facility in the Company's portfolio.
On March 1, 2004, the Company entered into an agreement with Sun regarding
51 properties that are leased to various affiliates of Sun. Under the terms of a
master lease agreement, Sun will continue to operate and occupy 23 long-term
care facilities, five behavioral properties and two hospital properties through
December 31, 2013. One property, located in Washington and formerly operated by
a Sun affiliate, has already been closed and the lease relating to that property
has been terminated. With respect to the remaining 20 facilities, 17 have
already been transitioned to new operators and three are in the process of being
transferred to new operators.
Effective March 1, 2004, the Company re-leased two SNFs formerly leased by
Sun located in California and representing 117 beds, to a new operator under a
Master Lease, which has a ten-year term. The commencement date of the first
re-lease is March 1, 2004 and has an initial annual lease rate of approximately
$0.12 million. The commencement date of the second re-lease is expected to be
May 1, 2004, subject to licensing, and has an initial annual lease rate of
approximately $0.1 million.
CLAREMONT HEALTHCARE HOLDINGS, INC.
Effective March 8, 2004, the Company re-leased three SNFs formerly leased
by Claremont Health Care Holdings, Inc., located in Florida and representing 360
beds, to an existing operator at an initial annual lease rate of $2.5 million.
These facilities were added to an existing Master Lease, the initial term of
which has been extended ten years to February, 2014. The aggregate annual lease
rate under this Master Lease, inclusive of the $2.5 million, is $3.9 million.
HAVEN HEALTHCARE
Effective April 1, 2004, the Company purchased three SNFs, representing 399
beds for a total investment of $26.0 million. Two of the facilities are located
in Vermont, with the third located in Connecticut. The facilities were combined
into an existing Master Lease with a current operator. Rent under the Master
Lease was increased by approximately $2.7 million for the first lease year
commencing April 1, 2004, with annual increases thereafter. The term of the
Master Lease had been increased to ten years on January 1, 2004 and runs through
December 31, 2013, followed by two ten-year renewal options. The Company
received a security deposit equivalent to three months of the incremental rent.
TIFFANY CARE CENTERS, INC.
On April 6, 2004, the Company received approximately $4.6 million in
proceeds on a mortgage loan payoff. The Company held mortgages on five
facilities located in Missouri, representing 319 beds, which produced
approximately $0.5 million of annual interest revenue in 2003.
OTHER ASSETS
Closed Facilities
In March 2004, the Company sold two closed facilities, one located in Iowa
and the other located in Florida, realizing proceeds of approximately $85
thousand, net of closing costs and other expenses, resulting in a loss of
approximately $351 thousand. At the time of this press release, the Company has
four remaining closed facilities with a total net book value of approximately
$2.0 million.
Sun Healthcare Group, Inc. Common Stock
Under the Company's restructuring agreement with Sun, previously announced
on January 26, 2004, the Company received the right to convert deferred base
rent owed to the Company, totaling approximately $7.8 million, into 800,000
shares of Sun's common stock, subject to certain non-dilution provisions and the
right of Sun to pay cash in an amount equal to the value of that stock in lieu
of issuing stock to the Company.
On March 30, 2004, the Company notified Sun of its intention to exercise
its right to convert the deferred base rent into fully paid and non-assessable
shares of Sun's common stock. On April 16, 2004, the Company received a stock
certificate for 760,000 shares of Sun's common stock and cash in the amount of
approximately $0.5 million in exchange for the remaining 40,000 shares of Sun's
common stock.
DIVIDENDS
On April 20, 2004, the Company's Board of Directors announced a common
stock dividend of $0.18 per share, which is a $0.01 per share, or 5.9%, increase
over the previous quarter's dividend. The common stock dividend will be paid May
17, 2004 to common stockholders of record on April 30, 2004. At the date of this
release, the Company had approximately 46.3 million common shares outstanding.
On March 29, 2004, the Company's Board of Directors declared its regular
quarterly dividends for all classes of preferred stock, payable May 17, 2004 to
preferred stockholders of record on April 30, 2004. Series B and Series D
preferred stockholders of record on April 30, 2004 will be paid dividends in the
amount of $0.53906 and $0.47109, per preferred share, respectively, on May 17,
2004. The liquidation preference for each of the Company's Series B and D
preferred stock is $25.00. Regular quarterly preferred dividends represent
dividends for the period February 1, 2004 through April 30, 2004 for the Series
B preferred stock and February 10, 2004 through April 30, 2004 for the Series D
preferred stock.
The Company's Board of Directors also authorized the redemption of all
shares outstanding of its 9.25% Series A preferred stock ("Series A preferred
stock") (NYSE:OHI PrA; CUSIP: 681936209). The Company expects the shares to be
redeemed on April 30, 2004 for $25.00 per share, plus $0.57813 per share in
accrued and unpaid dividends through the redemption date, for an aggregate
redemption price of $25.57813 per share. Dividends on the shares of Series A
preferred stock will cease to accrue from and after the redemption date, after
which the Series A preferred stock will no longer be outstanding and holders of
the Series A preferred stock will have only the right to receive the redemption
price.
A notice of redemption and related materials was mailed to holders of
Series A preferred stock on March 29, 2004. EquiServe Trust Company
("EquiServe"), located at 66 Brooks Drive, Braintree, MA 02184, will act as the
Company's redemption agent. Requests for copies of the materials or questions
relating to the notice of redemption and related materials should be directed to
EquiServe at 800-251-4215 or to Bob Stephenson, the Company's Chief Financial
Officer, at 410-427-1700. On or before the redemption date, the Company will
deposit with EquiServe the aggregate redemption price, to be held in trust for
the benefit of the holders of the Series A preferred stock. Holders of the
Series A preferred stock who hold shares through the Depository Trust Company
will be redeemed in accordance with the Depository Trust Company's procedures.
2004 AND 2005 ADJUSTED FFO GUIDANCE
The Company currently expects its 2004 adjusted FFO to be between $0.88 and
$0.90 per diluted share. The 2005 adjusted FFO is expected to be between $0.96
and $0.98 per diluted share.
The Company's FFO guidance (and related GAAP earnings projections) for 2004
and 2005 excludes gains and losses on the sales of assets and the impact of
acquisitions, additional divestitures, one-time revenue and expense items and
capital transactions.
Reconciliation of the FFO guidance to the Company's projected GAAP earnings
is provided on a schedule attached to this Press Release. The Company may, from
time to time, update its publicly announced FFO guidance, but it is not
obligated to do so.
The Company's FFO guidance is based on a number of assumptions, which are
subject to change and many of which are outside the control of the Company. If
actual results vary from these assumptions, the Company's expectations may
change. There can be no assurance that the Company will achieve these results.
CONFERENCE CALL
The Company will be conducting a conference call on Tuesday, April 27,
2004, at 10 a.m. EDT to review the Company's 2004 first quarter results and
current developments. To listen to the conference call via webcast, log on to
www.omegahealthcare.com and click the "earnings call" icon on the Company's home
page. Webcast replays of the call will be available on the Company's website for
two weeks following the call.
* * * * * *
Omega is a Real Estate Investment Trust investing in and providing
financing to the long-term care industry. At March 31, 2004, the Company owned
or held mortgages on 209 skilled nursing and assisted living facilities with
approximately 21,400 beds located in 28 states and operated by 40 third-party
healthcare operating companies.
FOR FURTHER INFORMATION, CONTACT
Bob Stephenson, CFO at (410) 427-1700
------------------------
This announcement includes forward-looking statements. All forward-looking
statements included herein are based on information available to the Company on
the date hereof. Such statements only speak as of the date hereof and the
Company assumes no obligation to update such forward-looking statements. Such
forward-looking statements should be regarded solely as reflections of the
Company's current operating plans and estimates. Actual results may differ
materially from those reflected in such forward-looking statements as a result
of a variety of factors, including, among other things: (i) uncertainties
relating to the business operations of the operators of the Company's
properties, including those relating to reimbursement by third-party payors,
regulatory matters and occupancy levels; (ii) regulatory and other changes in
the healthcare sector, including without limitation, changes in Medicare
reimbursement; (iii) changes in the financial position of the Company's
operators; (iv) the ability of operators in bankruptcy to reject unexpired lease
obligations, modify the terms of the Company's mortgages, and impede the ability
of the Company to collect unpaid rent or interest during the pendency of a
bankruptcy proceeding and retain security deposits for the debtor's obligations;
(v) the availability and cost of capital; (vi) competition in the financing of
healthcare facilities; and (vii) other factors identified in the Company's
filings with the Securities and Exchange Commission.
OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, DECEMBER 31,
--------------------------------
2004 2003
--------------------------------
(UNAUDITED)
ASSETS
Real estate properties
Land and buildings at cost............................... $ 692,365 $ 692,454
Less accumulated depreciation............................ (139,437) (134,477)
--------------------------------
Real estate properties - net........................... 552,928 557,977
Mortgage notes receivable - net.......................... 119,225 119,815
--------------------------------
672,153 677,792
Other investments - net..................................... 29,965 29,787
--------------------------------
Total investments........................................ 702,118 707,579
Cash and cash equivalents................................... 62,315 3,094
Accounts receivable - net................................... 2,818 1,893
Interest rate cap........................................... -- 5,537
Other assets................................................ 20,006 8,562
--------------------------------
Total assets............................................. $ 787,257 $ 726,665
================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving lines of credit................................... $ 10,000 $ 177,074
Unsecured borrowings........................................ 300,000 100,000
Other long-term borrowings.................................. 3,520 3,520
Accrued expenses and other liabilities...................... 23,787 9,836
--------------------------------
Total liabilities........................................ 337,307 290,430
--------------------------------
Preferred stock............................................. 225,988 212,342
Common stock and additional paid-in-capital................. 546,227 485,196
Cumulative net earnings..................................... 163,977 174,275
Cumulative dividends paid................................... (447,499) (431,123)
Cumulative dividends - redemption........................... (38,743) --
Accumulated other comprehensive loss........................ -- (4,455)
--------------------------------
Total stockholders' equity............................... 449,950 436,235
--------------------------------
Total liabilities and stockholders' equity............... $ 787,257 $ 726,665
================================
OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2004 2003
--------------------------
REVENUES
Rental income.................................................... $ 17,123 $ 16,419
Mortgage interest income......................................... 3,366 4,392
Other investment income - net.................................... 641 990
Litigation settlement............................................ -- 2,187
Miscellaneous.................................................... 149 321
--------------------------
21,279 24,309
EXPENSES
Nursing home revenues and expenses of owned and operated assets -- 1,333
- net..........................................................
Depreciation and amortization.................................... 5,224 5,208
Interest......................................................... 4,693 4,420
Interest - amortization of deferred financing costs.............. 454 692
Interest - refinancing costs..................................... 19,106 --
General and administrative....................................... 1,514 1,629
Legal............................................................ 490 558
Provisions for impairment........................................ -- 4,618
Adjustment of derivatives to fair value.......................... (257) --
--------------------------
31,224 18,458
--------------------------
(LOSS) INCOME FROM CONTINUING OPERATIONS............................ (9,945) 5,851
(Loss) gain from discontinued operations............................ (353) 134
--------------------------
NET (LOSS) INCOME................................................... (10,298) 5,985
Preferred stock dividends........................................... (4,687) (5,029)
Series C preferred stock conversion charges......................... (38,743) --
--------------------------
NET (LOSS) INCOME AVAILABLE TO COMMON............................... $ (53,728) $ 956
==========================
(LOSS) INCOME PER COMMON SHARE:
Basic:
(Loss) income from continuing operations......................... $ (1.29) $ 0.02
==========================
Net (loss) income................................................ $ (1.30) $ 0.03
==========================
Diluted:
(Loss) income from continuing operations......................... $ (1.29) $ 0.02
==========================
Net (loss) income................................................ $ (1.30) $ 0.03
==========================
Dividends declared and paid per common share........................ $ 0.17 $ --
==========================
Weighted-average shares outstanding, basic.......................... 41,459 37,145
==========================
Weighted-average shares outstanding, diluted........................ 41,459 37,145
==========================
COMPONENTS OF OTHER COMPREHENSIVE INCOME:
Net (loss) income................................................... $ (10,298) $ 5,985
Unrealized gain (loss) on hedging contracts...................... 4,455 (623)
--------------------------
Total comprehensive (loss) income................................... $ (5,843) $ 5,362
==========================
OMEGA HEALTHCARE INVESTORS, INC.
FUNDS FROM OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2004 2003
--------------------------
NET (LOSS) INCOME AVAILABLE TO COMMON...................... $ (53,728) $ 956
Add back loss from real estate dispositions.............. 351 --
--------------------------
Sub-total.............................................. (53,377) 956
Elimination of non-cash items included in net income (loss):
Depreciation and amortization.......................... 5,225 5,329
--------------------------
FUNDS FROM OPERATIONS, BASIC............................... (48,152) 6,285
Series C Preferred Dividends............................... -- 2,621
--------------------------
FUNDS FROM OPERATIONS, DILUTED............................. $ (48,152) 8,906
==========================
Weighted-average common shares outstanding, basic.......... 41,459 37,145
Assumed conversion of Series C Preferred Stock........... -- 16,775
Assumed exercise of stock options........................ 841 3
--------------------------
Weighted-average common shares outstanding, diluted........ 42,300 53,923
==========================
FFO PER SHARE, BASIC....................................... $ (1.16) $ 0.17
FFO PER SHARE, DILUTED *................................... $ (1.16) $ 0.17
ADJUSTED FUNDS FROM OPERATIONS:
Funds from operations, diluted........................... $ (48,152) $ 8,906
Add back Series C preferred stock conversion charges..... 38,743 --
Add back old credit facility exit fees................... 6,378 --
Add back write-off of old credit facility deferred
financing costs........................................ 6,253 --
Add back loss on sale of interest rate cap............... 6,475 --
Add back nursing home revenues and expenses - net........ -- 1,333
Deduct adjustment of derivatives to fair value........... (257) --
Deduct legal settlement.................................. -- (2,187)
--------------------------
ADJUSTED FUNDS FROM OPERATIONS............................. $ 9,440 $ 8,052
==========================
* Lower of basic or diluted FFO per share.
The Company believes that Funds From Operations ("FFO") is an important
supplemental measure of the Company's operating performance. Because the
historical cost accounting convention used for real estate assets requires
depreciation (except on land), such accounting presentation implies that the
value of real estate assets diminishes predictably over time, while real estate
values instead have historically risen or fallen with market conditions. The
term FFO was designed by the real estate industry to address this issue. The
Company calculates and reports FFO in accordance with the definition and
interpretive guidelines issued by the National Association of Real Estate
Investment Trusts ("NAREIT"). The Company defines FFO as net income available to
common stockholders, adjusted for the effects of asset dispositions and certain
non-cash items, primarily depreciation and amortization. NAREIT's implementation
guidance provides that impairment write-downs associated with previously
depreciable operators' property should be added back to GAAP net income to
calculate FFO. FFO herein is not necessarily comparable to FFO of other REITs
that do not use the same definition or implementation guidelines or interpret
the standards differently from the Company. Diluted FFO is adjusted for the
assumed conversion of Series C preferred stock and the exercise of in-the-money
stock options.
Adjusted FFO is calculated as diluted FFO less revenues and expenses
related to nursing home operations, non-cash refinancing-related charges, exit
fees related to the termination of a credit facility and certain other
non-recurring revenue or expense items. The Company's computation of adjusted
FFO is not comparable to the NAREIT definition of FFO or to similar measures
reported by other REITs, but the Company believes it is an appropriate measure
for this Company. The Company believes that adjusted FFO provides an enhanced
measure of the operating performance of the Company's core portfolio as a REIT
by adjusting for the effects of certain items arising from the Company's
refinancing activities and in view of the disposition of all but one of the
Company's owned and operated assets.
Neither FFO nor adjusted FFO represents cash generated from operating
activities in accordance with GAAP, and therefore, should not be considered
alternatives to net income as indications of operating performance or to net
cash flow from operating activities, as determined by GAAP, as a measure of
liquidity, and such measures are not necessarily indicative of cash available to
fund cash needs or dividends. The Company believes that in order to facilitate a
clear understanding of the consolidated historical operating results of the
Company, FFO and adjusted FFO should be examined in conjunction with net income
as presented elsewhere in this press release.
In February 2004, NAREIT informed its member companies that it was adopting
the position of the Securities and Exchange Commission ("SEC") with respect to
asset impairment charges and would no longer recommend that impairment
write-downs be excluded from FFO. In the tables included in this disclosure, we
have applied this interpretation and have not excluded asset impairment charges
in calculating our FFO. As a result, the Company's basic FFO, diluted FFO and
FFO per diluted share and adjusted FFO may not be comparable to similar measures
reported in previous disclosures. According to NAREIT, there is inconsistency
among NAREIT member companies as to the adoption of this interpretation of FFO.
Therefore, a comparison of the Company's FFO results to another company's FFO
results may not be meaningful.
The following table presents the Company's projected FFO per diluted share
for the years ended December 2004 and 2005:
2004 PROJECTED FFO 2005 PROJECTED FFO
-------------------------------------------
PER DILUTED SHARE:
Net (loss) income available to common....................... $(0.83) - $(0.81) $0.52 - $0.54
ADJUSTMENTS:
Depreciation and amortization........................... 0.44 - 0.44 0.44 - 0.44
-------------------------------------------
FUNDS FROM OPERATIONS....................................... $(0.35) - $(0.37) $0.96 - $0.98
ADJUSTMENTS:
Series C preferred stock conversion/ redemption charges... 0.82 - 0.82 -- - --
Old credit facility exit fees............................. 0.14 - 0.14 -- - --
Old credit facility deferred financing costs write-off.... 0.13 - 0.13 -- - --
Loss on sale of interest rate cap......................... 0.14 - 0.14 -- - --
Adjustment of derivatives to fair value................... (0.01) - (0.01) -- - --
Series A preferred stock redemption....................... 0.05 - 0.05 -- - --
-------------------------------------------
ADJUSTED FUNDS FROM OPERATIONS.............................. $ 0.88 - $ 0.90 $0.96 - $0.98
===========================================
The following table summarizes the results of operations of facilities sold
during the three months ended March 31, 2004 and 2003, respectively.
THREE MONTHS ENDED
MARCH 31,
--------------------------
2004 2003
--------------------------
(IN THOUSANDS)
REVENUES
Rental income........................................... $ -- $ 255
--------------------------
-- 255
--------------------------
EXPENSES
Depreciation and amortization........................... 2 121
--------------------------
2 121
--------------------------
(Loss) income before (loss) gain on sale of assets.......... (2) 134
(Loss) gain on assets sold - net............................ (351) --
--------------------------
(LOSS) GAIN FROM DISCONTINUED OPERATIONS.................... $ (353) $ 134
==========================
The table below summarizes the Company's number of properties and
investment by category for the quarter ended March 31, 2004:
TOTAL
PURCHASE/ MORTGAGES OWNED & CLOSED HEALTHCARE
FACILITY COUNT LEASEBACK RECEIVABLE OPERATED FACILITIES FACILITIES
- -----------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2003...................... 153 51 1 6 211
Properties closed................................. - - - - -
Properties sold/mortgages paid.................... - - - (2) (2)
Transition leasehold interest..................... - - - - -
Properties leased/mortgages placed................ - - - - -
Properties transferred to purchase/leaseback...... 1 - (1) - -
- -----------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2004....................... 154 51 - 4 209
=======================================================================================================================
INVESTMENT ($000'S)
- -----------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2003...................... $682,562 $119,815 $ 5,295 $4,597 $812,269
Properties closed................................. - - - - -
Properties sold/mortgages paid.................... - - - (509) (509)
Transition leasehold interest..................... - - - - -
Properties leased/mortgages placed................ - - - - -
Properties transferred to purchase/leaseback...... 5,295 - (5,295) - -
Impairment on properties.......................... - - - - -
Capex and other................................... 420 (590) - - (170)
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Balance at March 31, 2004....................... $688,277 $119,225 $ - $4,088 $811,590
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