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Exhibit 99.3
F O R I M M E D I A T E R E L E A S E
February 4, 1998
For more information contact:
Erin Ibele - (419) 247-2800
Ed Lange - (419) 247-2800
HEALTH CARE REIT, INC. REPORTS EARNINGS FOR THE
THREE MONTHS AND YEAR ENDED DECEMBER 31, 1997
1997 YEAR END RESULTS 1997 YEAR END HIGHLIGHTS
--------------------- ------------------------
o $734 million total assets o 23% shareholder return
o $73 million gross income o 41% asset growth
o $2.34 per share FFO o 9% per share FFO growth
o $2.11 per share dividends o 90% FFO payout ratio
Toledo, Ohio, February 4, 1998........HEALTH CARE REIT, INC. (NYSE/HCN) today
announced the operating results for the year ended December 31, 1997. Funds from
operations (FFO) achieved a record level of $51,236,000, or $2.34 per share for
the year ended December 31, 1997, a 9.3 percent per share increase from
$30,286,000, or $2.14 per share in the prior year.
"The company achieved significant milestones in 1997," commented George L.
Chapman, chairman and chief executive officer. "We funded approximately $263
million of new investments, a record level. The recapitalization plan commenced
in 1996 was completed, providing the company with an unsecured capital
structure, a new revolving credit facility and unsecured credit ratings from
Moody's Investors Service and Duff & Phelps Credit Rating Co. During 1998 we
intend to continue our investment focus on the long-term care sector and advance
our growth strategy of providing capital to emerging health care operators. The
company is well positioned for continued growth and success."
For the three months ended December 31, 1997, FFO totaled $14,375,000, or $0.60
per share, as compared with FFO of $9,143,000, or $0.55 per share, for the same
period in 1996, an increase of 9.1 percent. Net income for the fourth quarter of
1997 totaled $12,950,000, or $0.54 per share, on revenue of $19,731,000, as
compared with net income of $9,046,000, or $0.55 per share, on revenue of
$14,818,000 for the three months ended December 31, 1996.
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February 4, 1998
HEALTH CARE REIT, INC. PAGE 2
- --------------------------------------------------------------------------------
Net income for the year ended December 31, 1997, totaled $46,478,000, or $2.12
per share, on revenue of $73,308,000 as compared with net income of $30,676,000,
or $2.17 per share, on revenue of $54,402,000 for the year ended 1996.
Revenue growth was generated primarily by new investment activity in 1996 and
1997, which totaled $230,051,000 and $262,646,000, respectively. Investment
activity contributed to a 41 percent increase in total assets, which at December
31, 1997 totaled $734,327,000 as compared with total assets of $519,831,000 at
December 31, 1996.
The growth in revenue and net income for the three months and year ended
December 31, 1997 was offset by non-recurring prepayment fees and gains on the
exercise of purchase options earned during the fourth quarter and year ended
1996, which totaled $674,000 and $3,635,000, respectively, as compared with
non-recurring prepayment fees of $52,000 and $529,000 earned during the three
months and year ended December 31, 1997, respectively.
Dividend payments for the year ended December 31, 1997 totaled $45,804,000, or
$2.11 per share as compared with dividend payments of $28,427,000, or $2.08 per
share during 1996. Correspondingly, the FFO payout ratio for 1997 was 90% as
compared with a FFO payout ratio of 97% for 1996.
In compliance with the Financial Accounting Standards Board Statement No. 128,
the company's average number of shares outstanding is reported on a diluted
basis. All earnings per share amounts for all periods have been presented and,
where appropriate, restated to conform to the Statement 128 requirements.
Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate
investment trust which invests in health care facilities, primarily nursing
homes, assisted living facilities and retirement centers. At December 31, 1997,
the company had investments in 183 health care facilities in 29 states and had
total assets of approximately $734 million.
This document and supporting schedules may contain "forward-looking" statements
as defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties,
which may cause the company's actual results in the future to differ materially
from expected results. These risks and uncertainties include, among others,
competition in the financing of health care facilities, the availability of
capital, and regulatory and other changes in the health care sector, as
described in the company's filings with the Securities and Exchange Commission.
FINANCIAL SCHEDULES FOLLOW
For more information on Health Care REIT, Inc., via facsimile at no cost,
dial 1-800-PRO-INFO and enter the company code -- HCN
#####
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HEALTH CARE REIT, INC.
FINANCIAL SUPPLEMENT
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(AMOUNTS IN THOUSANDS)
December 31
-----------------------------
1997 1996
-----------------------------
ASSETS
Real estate investments:
Real property owned:
Land $ 22,445 $ 12,949
Buildings & improvements 239,549 136,256
Construction in progress 47,050 10,900
--------- ---------
309,044 160,105
Less accumulated depreciation (11,769) (6,482)
--------- ---------
Total real property owned 297,275 153,623
Loans receivable 412,734 358,182
Direct financing leases 7,935 10,876
--------- ---------
717,944 522,681
Less allowance for losses (4,387) (9,787)
--------- ---------
Net real estate investments 713,557 512,894
Other Assets:
Deferred loan expenses 2,275 1,432
Cash and cash equivalents 1,381 581
Investment securities 9,635 768
Receivables and other assets 7,479 4,156
--------- ---------
20,770 6,937
--------- ---------
Total assets $ 734,327 $ 519,831
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Borrowings under line of credit obligations $ 78,400 $ 92,125
Senior unsecured notes 162,000 82,000
Bonds and mortgages payable 8,670 10,270
Accrued expenses and other liabilities 15,333 9,900
--------- ---------
Total liabilities $ 264,403 $ 194,295
Shareholders' equity:
Preferred Stock, $1.00 par value:
Authorized - 10,000,000 shares
Issued and outstanding - None
Common Stock, $1.00 par value:
Authorized - 40,000,000 shares
Issued and outstanding - 24,341,030
in 1997 and 18,320,291 in 1996 24,341 18,320
Capital in excess of par value 435,603 298,281
Undistributed net income 8,841 8,167
Unrealized gains on investment securities
available for sale 4,671 768
Unamortized restricted stock (3,532)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY $ 469,924 $ 325,536
--------- ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 734,327 $ 519,831
========= =========
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HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(Amounts in thousands except per share data)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
---------------------------------- ---------------------------------
1997 1996 1997 1996
----------------- ---------------- ---------------- ----------------
Revenues:
Interest on loans receivable $ 12,370 $ 9,970 $ 45,999 $ 36,735
Prepayment fees 52 674 529 3,059
Operating leases:
Rents 6,060 3,134 22,178 9,848
Gain on exercise of options 155
Direct financing leases:
Lease income 166 366 1,238 1,464
Gain on exercise of options 421
Loan and commitment fees 955 661 3,036 2,607
Other income 128 13 328 113
-------------- ----------- ------------ -----------
$ 19,731 $ 14,818 $ 73,308 $ 54,402
Expenses:
Interest expense $ 3,732 $ 3,372 $ 15,365 $ 14,635
Provision for depreciation 1,477 771 5,287 2,427
General and administrative 1,252 1,264 4,858 4,448
Loan expense 170 215 720 808
Provision for losses 150 150 600 600
Disposition of investments 808
-------------- ----------- ------------ -----------
6,781 5,772 26,830 23,726
-------------- ----------- ------------ -----------
Net Income $ 12,950 $ 9,046 $ 46,478 $ 30,676
============== =========== ============ ===========
Average number of shares outstanding:
Basic 23,434 16,410 21,594 14,093
Diluted 23,805 16,496 21,929 14,150
Net income per share:
Basic $ 0.55 $ 0.55 $ 2.15 $ 2.18
Diluted 0.54 0.55 2.12 2.17
Funds from operations $ 14,375 $ 9,143 $ 51,236 $ 30,286
Funds from operations per share:
Basic $ 0.61 $ 0.56 $ 2.37 $ 2.15
Diluted 0.60 0.55 2.34 2.14
Dividends per share $ 0.535 $ 0.520 $ 2.110 $ 2.080
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HEALTH CARE REIT, INC.
Financial Supplement - December 31, 1997
PORTFOLIO COMPOSITION ($000's) Exhibit 1
BALANCE SHEET DATA # Properties # Beds/Units Balance % Balance
-------------------- ------------------- -------------------- -----------------
Loans Receivable 86 8,948 $ 412,735 58%
Real Property 94 7,112 297,274 41%
Direct Financing Leases 3 243 7,935 1%
-------------------- ------------------ --------------------- -----------------
Gross Real Estate Invest. 183 16,303 $ 717,944 100%
INVESTMENT DATA # Properties # Beds/Units Investment (1) % Investment
-------------------- ------------------ --------------------- -----------------
Assisted Living Facilities 116 7,812 $ 350,159 48%
Nursing Homes 49 6,430 233,103 32%
Retirement Centers 10 1,054 47,332 6%
Specialty Care Facilities 6 713 92,591 13%
Behavioral Care 2 294 10,324 1%
-------------------- ------------------ --------------------- -----------------
183 16,303 $ 733,509 100%
INVESTMENT BY OWNER TYPE # Properties # Beds/Units Investment (1) % Investment
-------------------- ------------------ --------------------- -----------------
Publicly Traded 89 6,589 $ 321,438 44%
Key Private 53 5,167 254,215 35%
Privately Held 41 4,547 157,856 21%
-------------------- ------------------ --------------------- -----------------
183 16,303 $ 733,509 100%
Notes: (1) Total investments include real estate investments and credit
enhancements which amounted to $717,944,000 and $15,565,000
respectively.
REVENUE COMPOSITION ($000's) Exhibit 2
Three Months Ended Year Ended
December 31, 1997 December 31, 1997
---------------------------------- ------------------------------
REVENUE BY INVESTMENT TYPE
Mortg. Loans & Other Loans $ 12,885 65% $ 48,605 66%
Real Property 6,678 34% 23,460 32%
Direct Financing Leases 168 1% 1,243 2%
----------------- ---------------- ---------------- --------------
$ 19,731 100% $ 73,308 100%
REVENUE BY FACILITY TYPE
Nursing Homes $ 7,249 37% $ 29,829 41%
Assisted Living Facilities 8,508 43% 28,348 38%
Specialty Care Facilities 2,834 14% 10,979 15%
Retirement Centers 1,140 6% 4,152 6%
Behavioral Care 0 0% 0 0%
----------------- ---------------- ---------------- --------------
$ 19,731 100% $ 73,308 100%
REVENUE BY OWNER TYPE
Publicly Traded $ 8,240 42% $ 29,624 40%
Key Private 7,462 38% 27,002 37%
Privately Held 4,029 20% 16,682 23%
----------------- ---------------- ---------------- --------------
$ 19,731 100% $ 73,308 100%
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REVENUE COMPOSITION (CONTINUED) ($000's) Exhibit 3
OPERATING LEASE EXPIRATIONS & LOAN MATURITIES
Current Lease Current Interest Interest and
Year Revenue (1) Revenue (1) Lease Revenue % of Total
- ------------------ ------------------------ ----------------------- ------------------------ ------------------
1998 $ 850 $ 0 $ 850 1%
1999 400 843 1,243 2%
2000 380 1,683 2,063 3%
2001 0 3,732 3,732 5%
2002 224 1,725 1,949 2%
Thereafter 31,652 38,060 69,712 87%
------------------------ ----------------------- ------------------------ ------------------
$ 33,506 $ 46,043 $ 79,549 100%
Notes: (1) Revenue impact by year, annualized
COMMITTED INVESTMENT BALANCES ($000's)
Exhibit 4
Committed Balance Investment per
# Properties # Beds/Units (1) Bed/Unit
-------------------- ------------------- -------------------- ------------------
Assisted Living Facilities 116 7,812 $ 521,313 $ 66,732
Nursing Homes 49 6,430 245,776 38,223
Retirement Centers 10 1,054 52,496 49,807
Specialty Care Facilities 6 713 92,591 129,861
Behavioral Care 2 294 10,324 35,115
-------------------- ------------------ --------------------- ------------------
183 16,303 $ 922,500 n/a
Notes: (1) Committed Balance includes real estate investments, credit
enhancements and unfunded commitments for which initial funding had
commenced.
OPERATOR CONCENTRATION ($000's)
Exhibit 5
CONCENTRATION BY INVESTMENT # Properties Investment % Investment
----------------------- ----------------------- -----------------------
Life Care Centers of America, Inc.. 12 $ 75,212 10%
Olympus Healthcare Group, Inc. 11 63,064 9%
Kapson Senior Quarters 6 59,156 8%
Greenbriar Corporation 15 57,866 8%
Doctors Corporation of America 3 49,311 7%
Remaining Operators 136 428,900 58%
----------------------- ----------------------- -----------------------
183 $ 733,509 100%
CONCENTRATION BY REVENUE # Properties Revenue (1) % Revenue
----------------------- ----------------------- -----------------------
Olympus Healthcare Group, Inc. 11 $ 9,253 13%
Life Care Centers of America, Inc. 12 7,536 10%
Doctors Corporation of America 3 5,908 8%
Kapson Senior Quarters 6 4,975 7%
Alternative Living Services 27 4,909 7%
Remaining Operators 124 40,727 55%
----------------------- ----------------------- -----------------------
183 $ 73,308 100%
Notes: (1) Year ended December 31, 1997
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SELECTED FACILITY DATA
Exhibit 6
% Private Pay Coverage Before Coverage After
Occupancy and Medicare Mgt. Fees Mgt. Fees
----------------- --------------------- ---------------------- --------------------
Nursing Homes 85% 39% 2.17x 1.60x
Assisted Living Facilities 89% 100% 1.44x 1.26x
Retirement Centers 96% 100% 1.88x 1.63x
Specialty Care Facilities 44% 64% 3.50x 3.01x
Behavioral Care n/a n/a n/a n/a
---------------------- --------------------
2.20x 1.79x
Notes: (1) Facility Data reported as of September 30, 1997
SECURITY DEPOSITS & OTHER CREDIT SUPPORT ($000's) Exhibit 7
Balance % Investment
--------------- -----------------
Cross Defaulted $ 587,428 82% of gross real estate investments
Cross Collateralized 329,101 81% of mortgage loans
Bank Letters of Credit & Cash 39,159 4% of committed balance
CURRENT CAPITALIZATION ($000's) Balance % Balance Leverage & Performance Ratios
--------------- ----------------- ----------------------------------------
Borrowings Under Bank Lines $ 78,400 9% Debt/Total Mkt. Cap 27%
Long-Term Debt Obligations 170,670 18% Debt/Mkt. Cap 36%
Market Capitalization 684,591 73% Interest Coverage 4.07x 4th Qtr.
--------------- -----------------
Total Market Capitalization $ 933,661 100% 3.97x LTM
FFO Payout Ratio 90%
DEBT MATURITIES AND PRINCIPAL PAYMENTS ($000's)
Exhibit 8
Year Bank Lines of Credit Senior Notes Other Debt Total
- ------------------ ------------------------ ----------------------- ------------------------ ------------------
1998 $ 0 $ 22,000 $ 1,242 $ 23,242
1999 5,400 0 90 5,490
2000 73,000 35,000 99 108,099
2001 0 10,000 109 10,109
2002 0 20,000 121 20,121
2003 0 35,000 133 35,133
2004 0 40,000 186 40,186
2005 0 0 549 549
Thereafter 0 0 6,141 6,141
------------------------ ----------------------- ------------------------ ------------------
$ 78,400 $ 162,000 $ 8,670 $ 249,070
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INVESTMENT ACTIVITY ($000's)
Exhibit 9
Three Months Ended Year Ended
December 31, 1997 December 31, 1997
--------------------------------- ---------------------------------
FUNDING BY INVESTMENT TYPE
Mortgage Loans & Other Loans $ 11,551 14% $ 46,231 18%
Real Property 17,988 23% 66,779 25%
Construction Advances 46,465 58% 144,672 55%
Equity Related Investments 4,078 5% 4,964 2%
----------------- --------------- ---------------- ----------------
Total $ 80,082 100% $ 262,646 100%
FUNDING BY FACILITY TYPE
Nursing Homes $ 4,549 6% $ 28,432 11%
Assisted Living Facilities 61,152 76% 183,271 70%
Retirement Centers 10,145 13% 21,752 8%
Specialty Care Facilities 0 0% 24,940 9%
Behavioral Care 4,236 5% 4,251 2%
----------------- --------------- ---------------- ----------------
Total $ 80,082 100% $ 262,646 100%