EX-99.1 2 a05-13976_1ex99d1.htm EX-99.1

 

Exhibit 99.1

 

NEWS RELEASE

 

HEALTH CARE PROPERTY INVESTORS, INC.

REPORTS RESULTS FOR THE QUARTER ENDED JUNE 30, 2005

 

LONG BEACH, CA, August 1, 2005 — Health Care Property Investors, Inc. (the “Company”) (NYSE:HCP), a healthcare real estate investment trust (“REIT”), today announced operating results for the quarter ended June 30, 2005. Net income applicable to common shares for the quarter ended June 30, 2005, was $37.8 million, or $0.28 per diluted share of common stock. This compares with net income applicable to common shares of $36.3 million, or $0.27 per diluted share of common stock for the quarter ended June 30, 2004.  Net income applicable to common shares for the six months ended June 30, 2005, was $75.9 million, or $0.56 per diluted share of common stock, compared to $77.9 million, or $0.59 per diluted share of common stock in the year ago period.

 

Funds From Operations (“FFO”) applicable to common shares was $64.3 million, or $0.47 per diluted share of common stock, for the quarter ended June 30, 2005, compared to FFO applicable to common shares of $58.0 million, or $0.44 per diluted share of common stock, for the quarter ended June 30, 2004. FFO applicable to common shares for the six months ended June 30, 2005, was $123.2 million, or $0.91 per diluted share of common stock, compared to $112.0 million, or $0.84 per diluted share of common stock in the year ago period.  Prior to impairment charges, FFO applicable to common shares was $0.45 and $0.86 per diluted share of common stock for the three and six months ended June 30, 2004, respectively.  No impairment charges were incurred in 2005.  FFO is a supplemental non-GAAP financial measure that the Company believes is helpful in evaluating the operating performance of real estate investment trusts.

 

RECENT DEVELOPMENTS

 

•                  Year-to-date, the Company has made secured loans and acquired interests in properties aggregating $441 million, including the following:

 

•                  On July 22, 2005, the Company acquired twelve independent and assisted living facilities for approximately $252 million, including assumed debt valued at approximately $52 million, through a sale-leaseback transaction.  These facilities have an initial lease term of 15 years, with three ten-year renewal options.  The initial annual lease rate is approximately 7.1% with annual escalators based on the Consumer Price Index (“CPI”) that have a floor of 3%.  Eleven of the facilities have an average occupancy of 91%.  One facility will be placed into service in August 2005 and is currently 34% pre-leased.

 


 

•                  On July 1, 2005, the Company acquired an assisted living facility for approximately $16 million through a sale-leaseback transaction. The facility has an initial lease term of 15 years, with two ten-year renewal options.  The initial annual lease rate is approximately 8.75% with annual CPI-based escalators that have a floor of 2.75%.  The property is currently 96% occupied and a 60-unit expansion is planned.

 

•                  As previously announced, on April 28, 2005, the Company acquired five medical office buildings for approximately $81 million, including assumed debt valued at $29 million. The initial yield is 7.0% with two properties currently in lease-up.  The yield following lease-up is expected to be 8.2%.  The medical office buildings include approximately 537,000 rentable square feet.

 

•                  As previously announced, on April 20, 2005, the Company acquired five assisted living facilities for $58 million through a sale-leaseback transaction. These facilities have an initial lease term of 15 years, with two ten-year renewal options. The initial annual lease rate is approximately 9.0% with annual CPI-based escalators that have a floor of 2.75%. These properties are included in a new master lease along with five other properties currently leased to the operator.

 

•                  Year-to-date, the Company sold interests in ten properties for approximately $48 million and recognized a gain of approximately $9 million. During the quarter ended June 30, 2005, the Company sold interests in six properties for approximately $13 million and recognized a gain of approximately $4 million.

 

•                  On April 27, 2005, the Company issued $250 million of 5 5/8% senior unsecured notes due 2017. The notes were priced at 99.585% of the principal amount for an effective yield of 5.673%.  The Company received proceeds of $247 million, which were used to repay borrowings under the bank line of credit and for general corporate purposes.

 

•                  On July 27, 2005, the Company announced that its Board declared a quarterly cash dividend of $0.42 per share of common stock. The common stock cash dividend will be paid on August 19, 2005, to stockholders of record as of the close of business on August 8, 2005.

 

FUTURE OPERATIONS

 

For the full year 2005, the Company presently expects net income applicable to common shares to range between $1.04 and $1.08 per diluted common share, and FFO applicable to common shares to range between $1.82 and $1.86 per diluted common share.

 

COMPANY INFORMATION

 

Health Care Property Investors, Inc. has scheduled a conference call and webcast for Tuesday, August 2, 2005 at 9:00 a.m. Pacific Time (12:00 p.m. Eastern Time) in order to present the Company’s performance and operating results for the quarter ended June 30, 2005. The conference call is accessible by dialing 800-901-5241 (U.S.) and 617-786-2963 (International). The participant pass code is 65700216. The webcast is accessible via the Company’s Internet web site at www.hcpi.com. A webcast replay of the conference call will be available after 2:00 p.m. Eastern Time on August 2, 2005 through August 16, 2005 on the Company’s web site. The Company’s supplemental information package for the current period will also be available on the Company’s web site in the “Presentations” section of the “Investor Relations” tab.

 

Health Care Property Investors, Inc. (NYSE:HCP) is a self-administered REIT that invests directly or through joint ventures in healthcare facilities. As of June 30, 2005, the Company’s portfolio of properties, excluding assets held for sale but including investments through joint ventures and mortgage loans, included 529 properties in 42 states and consisted of 28 hospitals, 165 skilled nursing facilities, 121 assisted living and continuing care retirement communities, 191 medical office buildings and 24 other healthcare facilities. For more information on Health Care Property Investors, Inc., visit the Company’s web site at www.hcpi.com.

 

###

 

2


 

Contact:

Health Care Property Investors, Inc., Long Beach, California

 

Talya Nevo-Hacohen

Senior Vice President – Strategic Development and Treasurer

(562) 733-5100

 

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this release which are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include the Company’s estimate of net income per diluted common share and FFO per diluted common share for the full year 2005. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include competition for the acquisition and financing of healthcare facilities, competition for lessees and mortgagors (including new leases and mortgages and the renewal or rollover of existing leases); continuing operational difficulties in the skilled nursing and assisted living sectors; the Company’s ability to acquire, sell or lease facilities and the timing of acquisitions, sales and leasings; changes in healthcare laws and regulations and other changes in the healthcare industry which affect the operations of the Company’s lessees or mortgagors; changes in management; costs of compliance with building regulations; changes in tax laws and regulations; changes in the financial position of the Company’s lessees and mortgagors; changes in rules governing financial reporting, including new accounting pronouncements; and changes in economic conditions, including changes in interest rates and the availability and cost of capital, which affect opportunities for profitable investments.  Some of these risks, and other risks, are described from time to time in Health Care Property Investors, Inc.’s Securities and Exchange Commission filings.

 

3


 

HEALTH CARE PROPERTY INVESTORS, INC.

 

Summary of Information

 

In thousands, except per share data

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

Revenues and other income

 

$

118,542

 

$

103,926

 

$

226,763

 

$

198,729

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common shares

 

$

37,764

 

$

36,302

 

$

75,939

 

$

77,854

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.28

 

$

0.28

 

$

0.57

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.28

 

$

0.27

 

$

0.56

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to calculate diluted earnings per common share

 

135,214

 

132,856

 

134,871

 

132,778

 

 

 

 

 

 

 

 

 

 

 

Funds from operations applicable to common shares (1)

 

$

64,294

 

$

57,998

 

$

123,208

 

$

111,975

 

 

 

 

 

 

 

 

 

 

 

Basic funds from operations per common share (1)

 

$

0.48

 

$

0.44

 

$

0.92

 

$

0.85

 

 

 

 

 

 

 

 

 

 

 

Diluted funds from operations per common share (1)

 

$

0.47

 

$

0.44

 

$

0.91

 

$

0.84

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to calculate diluted funds from operations per common share

 

140,246

 

138,115

 

139,903

 

135,407

 

 

 

 

 

 

 

 

 

 

 

Impairments

 

$

—

 

$

2,462

 

$

—

 

$

3,437

 

 

 

 

 

 

 

 

 

 

 

Per common share impact of impairments on diluted funds from operations

 

$

—

 

$

0.01

 

$

—

 

$

0.02

 

 

 

 

 

 

 

 

 

 

 

 

(1)          The Company believes that Funds From Operations (“FFO”) applicable to common shares and Basic and Diluted Funds From Operations per common share are important supplemental measures of operating performance for a real estate investment trust. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that use historical cost accounting for depreciation could be less informative. The term FFO was designed by the real estate investment trust industry to address this issue.

 

FFO is defined as net income (computed in accordance with U.S. generally accepted accounting principles), excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization, with adjustments for joint ventures. Adjustments for joint ventures are calculated to reflect FFO on the same basis. FFO does not represent cash generated from operating activities in accordance with U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income.  A reconciliation of net income applicable to common shares to FFO applicable to common shares is provided herein.

 

4


 

HEALTH CARE PROPERTY INVESTORS, INC.

 

Consolidated Statements of Income

 

In thousands, except per share data

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

Revenues and other income:

 

 

 

 

 

 

 

 

 

Rental revenues

 

$

112,465

 

$

93,097

 

$

215,268

 

$

178,140

 

Equity income from unconsolidated joint ventures

 

88

 

849

 

299

 

2,086

 

Interest and other income

 

5,989

 

9,980

 

11,196

 

18,503

 

 

 

118,542

 

103,926

 

226,763

 

198,729

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Interest

 

25,372

 

19,743

 

48,610

 

40,957

 

Depreciation and amortization

 

27,253

 

20,457

 

50,997

 

40,318

 

Operating

 

15,419

 

9,894

 

28,742

 

19,139

 

General and administrative

 

8,827

 

8,554

 

16,146

 

15,405

 

Impairments

 

—

 

1,216

 

—

 

1,216

 

 

 

76,871

 

59,864

 

144,495

 

117,035

 

 

 

 

 

 

 

 

 

 

 

Income before minority interests

 

41,671

 

44,062

 

82,268

 

81,694

 

Minority interests

 

(3,031

)

(3,289

)

(6,178

)

(6,153

)

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

38,640

 

40,773

 

76,090

 

75,541

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Operating income

 

241

 

1,771

 

1,511

 

4,830

 

Gain (loss) on sales of real estate, net of impairments

 

4,166

 

(960

)

8,904

 

8,048

 

 

 

4,407

 

811

 

10,415

 

12,878

 

 

 

 

 

 

 

 

 

 

 

Net income

 

43,047

 

41,584

 

86,505

 

88,419

 

Preferred stock dividends

 

(5,283

)

(5,282

)

(10,566

)

(10,565

)

 

 

 

 

 

 

 

 

 

 

Net income applicable to common shares

 

$

37,764

 

$

36,302

 

$

75,939

 

$

77,854

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.25

 

$

0.27

 

$

0.49

 

$

0.50

 

Discontinued operations

 

0.03

 

0.01

 

0.08

 

0.09

 

Net income applicable to common shares

 

$

0.28

 

$

0.28

 

$

0.57

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.25

 

$

0.27

 

$

0.49

 

$

0.49

 

Discontinued operations

 

0.03

 

—

 

0.07

 

0.10

 

Net income applicable to common shares

 

$

0.28

 

$

0.27

 

$

0.56

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to calculate earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

134,445

 

131,653

 

133,968

 

131,196

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

135,214

 

132,856

 

134,871

 

132,778

 

 

5


 

HEALTH CARE PROPERTY INVESTORS, INC.

 

Funds From Operations Information

 

In thousands, except per share data

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common shares

 

$

37,764

 

$

36,302

 

$

75,939

 

$

77,854

 

Real estate depreciation and amortization:

 

 

 

 

 

 

 

 

 

Continuing operations

 

27,253

 

20,457

 

50,997

 

40,318

 

Discontinued operations

 

141

 

720

 

381

 

2,158

 

Gain on real estate dispositions

 

(4,166

)

(286

)

(8,904

)

(10,269

)

Equity income from unconsolidated joint ventures

 

(88

)

(849

)

(299

)

(2,086

)

FFO from unconsolidated joint ventures

 

3,708

 

1,954

 

5,730

 

4,491

 

Minority interests

 

3,031

 

3,289

 

6,178

 

6,153

 

Minority interests in FFO

 

(3,349

)

(3,589

)

(6,814

)

(6,644

)

Funds from operations applicable to common shares (1)

 

$

64,294

 

$

57,998

 

$

123,208

 

$

111,975

 

 

 

 

 

 

 

 

 

 

 

Distributions on convertible units

 

$

2,113

 

$

2,195

 

$

4,233

 

$

2,195

 

 

 

 

 

 

 

 

 

 

 

Diluted funds from operations applicable to common shares  (1)

 

$

66,407

 

$

60,193

 

$

127,441

 

$

114,170

 

 

 

 

 

 

 

 

 

 

 

Basic funds from operations per common share (1)

 

$

0.48

 

$

0.44

 

$

0.92

 

$

0.85

 

 

 

 

 

 

 

 

 

 

 

Diluted funds from operations per common share (1)

 

$

0.47

 

$

0.44

 

$

0.91

 

$

0.84

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used to calculate diluted funds from operations per common share

 

140,246

 

138,115

 

139,903

 

135,407

 

 

 

 

 

 

 

 

 

 

 

Impairments

 

$

—

 

$

2,462

 

$

—

 

$

3,437

 

 

 

 

 

 

 

 

 

 

 

Per common share impact of impairments on diluted funds from operations

 

$

—

 

$

0.01

 

$

—

 

$

0.02

 

 

(1)          The Company believes that Funds From Operations (“FFO”) applicable to common shares, Diluted Funds From Operations applicable to common shares and Basic and Diluted Funds From Operations per common share are important supplemental measures of operating performance for a real estate investment trust. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that use historical cost accounting for depreciation could be less informative. The term FFO was designed by the real estate investment trust industry to address this issue.

 

FFO is defined as net income (computed in accordance with U.S. generally accepted accounting principles), excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization, with adjustments for joint ventures. Adjustments for joint ventures are calculated to reflect FFO on the same basis. FFO does not represent cash generated from operating activities in accordance with U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income.

 

6


 

HEALTH CARE PROPERTY INVESTORS, INC.

 

Consolidated Balance Sheet

 

In thousands, except share and per share data

 

 

 

June 30,

 

December 31,

 

 

 

2005

 

2004

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Real estate:

 

 

 

 

 

Buildings and improvements

 

$

3,141,240

 

$

3,025,707

 

Developments in process

 

13,590

 

25,777

 

Land

 

306,761

 

299,461

 

Less accumulated depreciation and amortization

 

565,559

 

533,764

 

Net real estate

 

2,896,032

 

2,817,181

 

 

 

 

 

 

 

Loans receivable, net:

 

 

 

 

 

Joint venture partners

 

7,006

 

6,473

 

Others

 

140,643

 

139,919

 

Investments in and advances to unconsolidated joint ventures

 

48,694

 

60,506

 

Accounts receivable, net of allowance of $1,174 and $1,070, respectively

 

13,629

 

14,834

 

Cash and cash equivalents

 

18,890

 

16,962

 

Restricted cash

 

16,904

 

3,593

 

Intangibles, net

 

19,725

 

18,872

 

Other assets, net

 

26,237

 

24,294

 

 

 

 

 

 

 

Total assets

 

$

3,187,760

 

$

3,102,634

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Bank line of credit

 

$

115,300

 

$

300,100

 

Senior unsecured notes

 

1,284,476

 

1,046,690

 

Mortgage debt

 

165,933

 

139,416

 

Accounts payable and accrued liabilities

 

62,764

 

59,905

 

Deferred revenue

 

18,430

 

15,300

 

Total liabilities

 

1,646,903

 

1,561,411

 

 

 

 

 

 

 

Minority interests

 

120,436

 

121,781

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, $1.00 par value: 50,000,000 shares authorized; 11,820,000 shares issued and outstanding, liquidation preference of $25 per share

 

285,173

 

285,173

 

Common stock, $1.00 par value: 750,000,000 shares authorized; 135,629,718 and 133,658,318 shares issued and outstanding, respectively

 

135,630

 

133,658

 

Additional paid-in capital

 

1,440,380

 

1,403,335

 

Cumulative net income

 

1,434,594

 

1,348,089

 

Cumulative dividends

 

(1,863,313

)

(1,739,859

)

Other equity

 

(12,043

)

(10,954

)

 

 

 

 

 

 

Total stockholders’ equity

 

1,420,421

 

1,419,442

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

3,187,760

 

$

3,102,634

 

 

7


 

HEALTH CARE PROPERTY INVESTORS, INC.

 

Projected Funds From Operations (1)

(Unaudited)

 

PROJECTED FUTURE OPERATIONS (Full Year 2005):

 

 

 

Low

 

High

 

Diluted earnings per common share

 

$

1.04

 

$

1.08

 

Gain on real estate dispositions

 

(0.11

)

(0.11

)

Real estate depreciation and amortization

 

0.83

 

0.83

 

Joint venture adjustments

 

0.06

 

0.06

 

 

 

 

 

 

 

Diluted funds from operations per common share (2)

 

$

1.82

 

$

1.86

 

 

(1)          The foregoing projections involve numerous assumptions including rental rates, occupancy levels and selling prices of properties, the sale of certain securities in an operator in our existing portfolio, as well as real estate acquisition and disposition related volume, yields and timing. The projection ranges do not include the effects of any future impairments. By definition, FFO does not include real estate-related depreciation and amortization or gains and losses associated with real estate disposition activities, but does include impairment charges. There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth above. The aforementioned ranges represent management’s best estimate of results based upon the underlying assumptions as of the date of this press release.

 

(2)          The Company believes that Diluted Funds From Operations per common share is an important supplemental measure of operating performance for a real estate investment trust. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that use historical cost accounting for depreciation could be less informative. The term FFO was designed by the real estate investment trust industry to address this issue.

 

FFO is defined as net income (computed in accordance with U.S. generally accepted accounting principles), excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization, with adjustments for joint ventures. Adjustments for joint ventures are calculated to reflect FFO on the same basis. FFO does not represent cash generated from operating activities in accordance with U.S. generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income.  A reconciliation of net income applicable to common shares to FFO applicable to common shares is provided herein.

 

.

 

8