EX-99.1 2 Ex99-1.htm EARNINGS RELEASE  

 

hcreit_logo_k_sm

 

FOR IMMEDIATE RELEASE

August 1, 2014

For more information contact:

Scott Estes (419) 247-2800

Jay Morgan (419) 247-2800

 

Health Care REIT, Inc. Reports 14% Increase in Second Quarter Normalized FFO to a Record $1.06 Per Diluted Share

Grows Second Quarter Same Store NOI 4.4%, Led by 7.7% Growth in Seniors Housing Operating Portfolio

 Completes $579 Million of Second Quarter Investments

Increases 2014 FFO and FAD Guidance

 

Toledo, Ohio, August 1, 2014…..Health Care REIT, Inc. (NYSE:HCN) today announced operating results for the company’s second quarter ended June 30, 2014.

 

“Our strategy of partnering with the best-in-class seniors housing and post-acute operators as well as strong regional health systems is continuing to generate exceptional results for our shareholders,” said Tom DeRosa, CEO of HCN.  “We are adding value to our high-quality portfolio through innovative programs and partnerships to generate consistent and strong same-store NOI growth, which grew 7.7% in our seniors housing operating portfolio and 4.4% in the total portfolio during the second quarter.  We also maintain an investment pipeline that delivers consistent quarterly volume from our network of operating partners.  The earnings power of our internal and external growth strategy culminated in 14% FFOPS growth and 15% FADPS growth for the quarter.  I am proud to lead this special company positioned to continue delivering high-level performance while fulfilling our mission to improve health care delivery in the U.S., Canada and the U.K.”

 

Earnings Results  The company earned record-high quarterly normalized FFO and FAD per share of $1.06 and $0.94, respectively, representing 14% and 15% increases from the second quarter of 2013.  These earnings results are primarily attributable to strong quarterly operating results as well as $2.7 billion of investments over the last twelve months.

 

Dividends for Second Quarter 2014  As previously announced, the Board of Directors declared a cash dividend for the quarter ended June 30, 2014 of $0.795 per share, as compared to $0.765 per share for the same period in 2013, representing a 4% increase.  On August 20, 2014, the company will pay its 173rd consecutive quarterly cash dividend.  The declaration and payment of quarterly dividends remains subject to review by and approval of the Board of Directors. 

  

Second Quarter Investment Activity   The company completed $579 million of gross investments for the quarter including $455 million in acquisitions, $44 million in development funding, $76 million in loan advances and $4 million in capital improvements. The $455 million of acquisitions have a blended initial yield of 6.5%.  The acquisitions were primarily with existing relationships and are consistent with HCN’s strategic focus on high-quality properties.  They include ten medical office buildings, a post-acute property operated by Genesis, a seniors housing operating property managed by Revera and eight seniors housing triple-net properties operated by existing partners.  The $44 million in development funding is expected to yield 8.3% upon completion and includes seniors housing, post-acute and medical office properties.  The $76 million of loans were made at a blended rate of 7.8%.  In addition to the new investment activity during the quarter, the company placed into service three development properties and one property expansion totaling $65 million with a blended yield of 9.3%.

 

Unsecured Credit Facility Enhancements  As previously announced, the company closed on a new $3.23 billion unsecured credit facility. The expanded, extended and lower-priced facility further enhances the company’s access to efficient capital and financial flexibility. The following is a summary of the key changes (with cost data reflective of HCN’s current credit ratings):

 

 

Prior Capacity

New Capacity

Prior Cost

New Cost

Prior Maturity

New Maturity

Revolver

$2,250,000,000

$2,500,000,000

LIBOR+117.5

LIBOR+105

3/31/17 + 1 yrs

10/31/18 + 1yr

USD term loan

$500,000,000

$500,000,000

LIBOR+135

LIBOR+115

3/31/16 + 2 yrs

10/31/18 + 1yr

CAD term loan(1)

$250,000,000

$250,000,000

CDOR+145

CDOR+115

7/27/15 + 1 yrs

10/31/18 + 1yr

 

(1) Canadian denominated term loan balance was $232.9 million USD at exchange rate as of July 18, 2014. CDOR stands for Canadian Dealer Offered Rate.

  

Page 1 of 7 

2Q14 Earnings Release                                                                                                                                                                     August 1, 2014

 

 

 

Outlook for 2014  The company is increasing its 2014 guidance and now expects to generate normalized FFO in a range of $4.05 to $4.15 per diluted share from the previous range of $4.03 to $4.13 per diluted share, now representing a 6%-9% increase from 2013. The company is also increasing its normalized FAD guidance to a range of $3.57 to $3.67 per diluted share from the previous range of $3.55 to $3.65 per diluted share, now representing a 6%-9% increase from 2013. The $0.02 increase in our normalized FFO and FAD per share guidance is primarily driven by the company’s strong second quarter operating results and investment activity partially offset by an increase in dispositions guidance to $450 million from $250 million. Net income attributable to common stockholders guidance has been decreased to a range of $1.02 to $1.12 per diluted share from the previous range of $1.04 to $1.14 per diluted share due to CEO transition costs and transaction costs offset by decreased depreciation and amortization and the items noted above.

 

The company’s guidance does not include any additional 2014 investments beyond what it has announced, nor any transaction costs, capital transactions, impairments, unanticipated additions to the loan loss reserve or other additional one-time items, including any additional cash payments other than normal monthly rental payments.  Please see the exhibits for a reconciliation of the outlook for net income available to common stockholders to normalized FFO and FAD.  The company will provide additional detail regarding its 2014 outlook and assumptions on the second quarter 2014 conference call.

 

Conference Call Information  The company has scheduled a conference call on Friday, August 1, 2014 at 10:00 a.m. Eastern Time to discuss its second quarter 2014 results, industry trends, portfolio performance and outlook for 2014. Telephone access will be available by dialing 888-346-2469 or 706-758-4923 (international).  For those unable to listen to the call live, a taped rebroadcast will be available beginning two hours after completion of the call through August 15, 2014. To access the rebroadcast, dial 855-859-2056 or 404-537-3406 (international).  The conference ID number is 72715970. To participate in the webcast, log on to www.hcreit.com 15 minutes before the call to download the necessary software.  Replays will be available for 90 days.

  

Supplemental Reporting Measures  The company believes that net income attributable to common stockholders (NICS), as defined by U.S. generally accepted accounting principles (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 useful supplemental measures 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 attributable to common stockholders, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate and impairments of depreciable assets, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and noncontrolling interests.   Normalized FFO represents FFO adjusted for certain items detailed in Exhibit 1.  FAD represents FFO excluding net straight-line rental adjustments, amortization related to above/below market leases and amortization of non-cash interest expenses and less cash used to fund capital expenditures, tenant improvements and lease commissions.  Normalized FAD represents FAD excluding prepaid/straight-line rent cash receipts and adjusted for certain items detailed in Exhibit 1.  The company believes that normalized FFO and normalized FAD are useful supplemental measures of operating performance because investors and equity analysts may use these measures to compare the operating performance of the company between periods or as compared to other REITs or other companies on a consistent basis without having to account for differences caused by unanticipated and/or incalculable items.  The company’s supplemental reporting measures and similarly entitled financial measures are widely used by investors and equity analysts in the valuation, comparison and investment recommendations of companies.  The company’s management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions.  Additionally, they are utilized by the Board of Directors to evaluate management.  The supplemental reporting measures 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, the supplemental reporting measures, 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 the exhibits for reconciliations of supplemental reporting measures and the supplemental information package for the quarter ended June 30, 2014, which is available on the company’s website (www.hcreit.com), for information and reconciliations of additional supplemental reporting measures.

Page 2 of 7 

2Q14 Earnings Release                                                                                                                                                                     August 1, 2014

 

 

 

About Health Care REIT, Inc.  HCN, an S&P 500 company with headquarters in Toledo, Ohio, is a real estate investment trust that invests across the full spectrum of seniors housing and health care real estate.  The company also provides an extensive array of property management and development services.  As of June 30, 2014, the company’s broadly diversified portfolio consisted of 1,224 properties in 46 states, the United Kingdom, and Canada.  More information is available on the company’s website at www.hcreit.com.

  

Forward-Looking Statements and Risk Factors  This document contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When the company uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. In particular, these forward-looking statements include, but are not limited to, those relating to the company’s opportunities to acquire, develop or sell properties; the company’s ability to close its anticipated acquisitions, investments or dispositions on currently anticipated terms, or within currently anticipated timeframes; the expected performance of the company’s operators/tenants and properties; the company’s expected occupancy rates; the company’s ability to declare and to make distributions to shareholders; the company’s investment and financing opportunities and plans; the company’s continued qualification as a real estate investment trust (“REIT”); the company’s ability to access capital markets or other sources of funds; and the company’s ability to meet its earnings guidance. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the company’s actual results to differ materially from the company’s expectations discussed in the forward-looking statements. This may be a result of various factors, including, but not limited to: the status of the economy; the status of capital markets, including availability and cost of capital; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators’/tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care, seniors housing and life science industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; the company’s ability to transition or sell properties with profitable results; the failure to make new investments or acquisitions as and when anticipated; natural disasters and other acts of God affecting the company’s properties; the company’s ability to re-­lease space at similar rates as vacancies occur; the company’s ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant or joint venture partner bankruptcies or insolvencies; the cooperation of joint venture partners; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future investments or acquisitions; environmental laws affecting the company’s properties; changes in rules or practices governing the company’s financial reporting; the movement of U.S. and foreign currency exchange rates; the company’s ability to maintain its qualification as a REIT; key management personnel recruitment and retention; and other risks described in the company’s reports filed from time to time with the Securities and Exchange Commission. Finally, the company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or otherwise, or to update the reasons why actual results could differ from those projected in any forward-looking statements.

Page 3 of 7 

2Q14 Earnings Release                                                                                                                                                                     August 1, 2014

 

 

 

HEALTH CARE REIT, INC.

Financial Exhibits

Consolidated Balance Sheets (unaudited)

 

(in thousands)

 

 

 

 

 

 

June 30,

 

 

 

 

 

 

2014

 

2013

 

Assets

 

 

 

 

 

 

 

Real estate investments:

 

 

 

 

 

 

 

 

 

Land and land improvements

 

$

 1,916,820 

 

$

 1,710,084 

 

 

 

Buildings and improvements

 

 

 21,151,624 

 

 

 18,776,842 

 

 

 

Acquired lease intangibles

 

 

 1,084,703 

 

 

 928,910 

 

 

 

Real property held for sale, net of accumulated depreciation

 

 

 77,436 

 

 

 31,882 

 

 

 

Construction in progress

 

 

 124,073 

 

 

 137,481 

 

 

 

 

 

 

 24,354,656 

 

 

 21,585,199 

 

 

 

Less accumulated depreciation and intangible amortization

 

 

 (2,809,530) 

 

 

 (1,933,439) 

 

 

 

 

Net real property owned

 

 

 21,545,126 

 

 

 19,651,760 

 

 

 

Real estate loans receivable(1)

 

 

 367,186 

 

 

 312,356 

 

 

 

Net real estate investments

 

 

 21,912,312 

 

 

 19,964,116 

 

Other assets:

 

 

 

 

 

 

 

 

 

Investments in unconsolidated entities

 

 

 680,558 

 

 

 768,737 

 

 

 

Goodwill

 

 

 68,321 

 

 

 68,321 

 

 

 

Deferred loan expenses

 

 

 65,479 

 

 

 71,218 

 

 

 

Cash and cash equivalents

 

 

 207,354 

 

 

 512,472 

 

 

 

Restricted cash

 

 

 65,139 

 

 

 212,812 

 

 

 

Receivables and other assets(2)

 

 

 574,727 

 

 

 598,717 

 

 

 

 

 

 

 1,661,578 

 

 

 2,232,277 

 

Total assets

 

$

 23,573,890 

 

$

 22,196,393 

 

 

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Borrowings under unsecured lines of credit arrangements

 

$

 - 

 

$

 - 

 

 

 

Senior unsecured notes

 

 

 7,411,243 

 

 

 6,604,979 

 

 

 

Secured debt

 

 

 2,850,103 

 

 

 2,875,606 

 

 

 

Capital lease obligations

 

 

 83,850 

 

 

 79,481 

 

 

 

Accrued expenses and other liabilities

 

 

 678,400 

 

 

 539,361 

 

Total liabilities

 

 

 11,023,596 

 

 

 10,099,427 

 

Redeemable noncontrolling interests

 

 

 35,404 

 

 

 32,810 

 

Equity:

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 1,006,250 

 

 

 1,022,917 

 

 

 

Common stock

 

 

 308,355 

 

 

 285,085 

 

 

 

Capital in excess of par value

 

 

 13,524,621 

 

 

 12,263,927 

 

 

 

Treasury stock

 

 

 (32,289) 

 

 

 (21,248) 

 

 

 

Cumulative net income

 

 

 2,484,425 

 

 

 2,264,573 

 

 

 

Cumulative dividends

 

 

 (5,096,110) 

 

 

 (4,127,597) 

 

 

 

Accumulated other comprehensive income

 

 

 (18,642) 

 

 

 (49,174) 

 

 

 

Other equity

 

 

 6,159 

 

 

 5,678 

 

 

 

 

Total Health Care REIT, Inc. stockholders’ equity

 

 

 12,182,769 

 

 

 11,644,161 

 

 

 

Noncontrolling interests

 

 

 332,121 

 

 

 419,995 

 

Total equity

 

 

 12,514,890 

 

 

 12,064,156 

 

Total liabilities and equity

 

$

 23,573,890 

 

$

 22,196,393 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes non-accrual loan balances of $0 and $4,230,000 at June 30, 2014 and 2013, respectively.

(2) Includes net straight-line receivable balances of $231,668,000 and $174,138,000 at June 30, 2014 and 2013, respectively.

  

Page 4 of 7 

2Q14 Earnings Release                                                                                                                                                                     August 1, 2014

 

 

 

 

Consolidated Statements of Income (unaudited)

(in thousands, except per share data)

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

 

2014

 

2013

 

2014

 

2013

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

 347,847 

 

$

 298,873 

 

$

 684,303 

 

$

 591,516 

 

 

Resident fees and service

 

 

 467,639 

 

 

 370,995 

 

 

 923,904 

 

 

 698,319 

 

 

Interest income

 

 

 8,933 

 

 

 7,640 

 

 

 17,527 

 

 

 16,696 

 

 

Other income

 

 

 2,027 

 

 

 1,025 

 

 

 2,520 

 

 

 1,725 

Gross revenues

 

 

 826,446 

 

 

 678,533 

 

 

 1,628,254 

 

 

 1,308,256 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 121,065 

 

 

 109,465 

 

 

 241,898 

 

 

 218,303 

 

 

Property operating expenses

 

 

 343,754 

 

 

 277,958 

 

 

 685,185 

 

 

 530,780 

 

 

Depreciation and amortization

 

 

 214,449 

 

 

 198,062 

 

 

 447,766 

 

 

 382,750 

 

 

General and administrative expenses

 

 

 51,660 

 

 

 23,902 

 

 

 84,524 

 

 

 51,081 

 

 

Transaction costs

 

 

 7,040 

 

 

 28,136 

 

 

 7,993 

 

 

 94,116 

 

 

Loss (gain) on derivatives, net

 

 

 351 

 

 

 (2,716) 

 

 

 351 

 

 

 (407) 

 

 

Loss (gain) on extinguishment of debt, net

 

 

 531 

 

 

 - 

 

 

 383 

 

 

 (308) 

 

Total expenses

 

 

 738,850 

 

 

 634,807 

 

 

 1,468,100 

 

 

 1,276,315 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

and income from unconsolidated entities

 

 

 87,596 

 

 

 43,726 

 

 

 160,154 

 

 

 31,941 

Income tax (expense) benefit

 

 

 (1,569) 

 

 

 (1,215) 

 

 

 (3,830) 

 

 

 (3,978) 

Income (loss) from unconsolidated entities

 

 

 (11,516) 

 

 

 (5,461) 

 

 

 (17,073) 

 

 

 (3,198) 

Income (loss) from continuing operations

 

 

 74,511 

 

 

 37,050 

 

 

 139,251 

 

 

 24,765 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (loss) on sales of discontinued properties, net

 

 

 6,411 

 

 

 (29,997) 

 

 

 6,411 

 

 

 52,495 

 

 

Income (loss) from discontinued operations, net

 

 

 264 

 

 

 128 

 

 

 724 

 

 

 1,720 

 

 

 

 

 

 

 6,675 

 

 

 (29,869) 

 

 

 7,135 

 

 

 54,215 

Gain (loss) on real estate dispositions, net

 

 

 6,668 

 

 

 - 

 

 

 6,668 

 

 

 - 

Net income (loss)

 

 

 87,854 

 

 

 7,181 

 

 

 153,054 

 

 

 78,980 

Less:

Preferred dividends

 

 

 16,352 

 

 

 16,602 

 

 

 32,705 

 

 

 33,203 

 

 

 

Net income (loss) attributable to noncontrolling interests

 

 

 (327) 

 

 

 (913) 

 

 

 (1,502) 

 

 

 (774) 

Net income (loss) attributable to common stockholders

 

$

 71,829 

 

$

 (8,508) 

 

$

 121,851 

 

 

 46,551 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 296,256 

 

 

 273,091 

 

 

 293,046 

 

 

 266,602 

 

 

Diluted

 

 

 297,995 

 

 

 276,481 

 

 

 294,590 

 

 

 266,602 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common stockholders per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

 0.24 

 

$

 (0.03) 

 

$

 0.42 

 

$

 0.17 

 

 

Diluted

 

$

 0.24 

 

$

 (0.03) 

 

$

 0.41 

 

$

 0.17 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common dividends per share

 

$

 0.795 

 

$

 0.765 

 

$

 1.59 

 

$

 1.53 

  

Page 5 of 7 

2Q14 Earnings Release                                                                                                                                                                     August 1, 2014

 

 

 

 

 

Normalizing Items

 

 

 

 

 

 

 

 

 

 

Exhibit 1

 

 

(in thousands, except per share data)

Three Months Ended

 

Six Months Ended

 

 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

 

 

2014

 

2013

 

2014

 

2013

 

 

Transaction costs

$

 7,040(1)

 

$

 28,136 

 

$

 7,993 

 

$

 94,116 

 

 

Loss (gain) on derivatives, net

 

 351(2)

 

 

 (2,716) 

 

 

 351 

 

 

 (407) 

 

 

Loss (gain) on extinguishment of debt, net

 

 531(3)

 

 

 - 

 

 

 383 

 

 

 (308) 

 

 

CEO transition costs

 

 19,688(4)

 

 

 - 

 

 

 19,688 

 

 

 - 

 

 

Normalizing items attributable to noncontrolling interests and unconsolidated entities, net

 

 4,502(5)

 

 

 (11) 

 

 

 4,607 

 

 

 (11) 

 

 

Total

$

 32,112 

 

$

 25,409 

 

$

 33,022 

 

$

 93,390 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average diluted common shares outstanding

 

 297,995 

 

 

 276,481 

 

 

 294,590 

 

 

 269,580 

 

 

Net amount per diluted share

$

 0.11 

 

$

 0.09 

 

$

 0.11 

 

$

 0.35 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

(1) Primarily costs incurred with seniors housing transactions.

 

 

 

 

 

(2) Related to settlement of currency hedges on foreign investments.

 

 

 

 

 

(3) Primarily related to seniors housing secured debt extinguishments.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4) Costs associated with CEO retirement and transition, including compensation and professional services.

 

 

 

 

 

(5) Primarily related to costs incurred with unconsolidated seniors housing transactions.

 

  

 

Funds Available for Distribution Reconciliation

 

 

 

 

 

 

 

 

 

 

Exhibit 2

 

 

(in thousands, except per share data)

Three Months Ended

 

Six Months Ended

 

 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

 

 

2014

 

2013

 

2014

 

2013

 

 

Net income (loss) attributable to common stockholders

$

 71,829 

 

$

 (8,508) 

 

$

 121,851 

 

$

 46,551 

 

 

Depreciation and amortization(1)

 

 214,449 

 

 

 200,477 

 

 

 447,766 

 

 

 387,599 

 

 

Losses/impairments (gains) on properties, net

 

 (13,079) 

 

 

 29,997 

 

 

 (13,079) 

 

 

 (52,495) 

 

 

Noncontrolling interests(2)

 

 (8,361) 

 

 

 (6,831) 

 

 

 (17,885) 

 

 

 (11,911) 

 

 

Unconsolidated entities(3)

 

 18,881 

 

 

 11,348 

 

 

 33,304 

 

 

 25,269 

 

 

Gross straight-line rental income

 

 (22,958) 

 

 

 (13,683) 

 

 

 (39,550) 

 

 

 (28,329) 

 

 

Prepaid/straight-line rent receipts

 

 2,656 

 

 

 184 

 

 

 3,117 

 

 

 4,441 

 

 

Amortization related to above (below) market leases, net

 

 280 

 

 

 40 

 

 

 365 

 

 

 195 

 

 

Non-cash interest expense

 

 1,649 

 

 

 1,237 

 

 

 1,980 

 

 

 4,731 

 

 

Cap-ex, tenant improvements, lease commissions

 

 (13,796) 

 

 

 (12,174) 

 

 

 (26,188) 

 

 

 (24,059) 

 

 

Funds available for distribution

 

 251,550 

 

 

 202,087 

 

 

 511,681 

 

 

 351,992 

 

 

Normalizing items, net(4)

 

 32,112 

 

 

 25,409 

 

 

 33,022 

 

 

 93,390 

 

 

Prepaid/straight-line rent receipts

 

 (2,656) 

 

 

 (184) 

 

 

 (3,117) 

 

 

 (4,441) 

 

 

Funds available for distribution - normalized

$

 281,006 

 

$

 227,312 

 

$

 541,586 

 

$

 440,941 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average diluted common shares outstanding

 

 297,995 

 

 

 276,481 

 

 

 294,590 

 

 

 269,580 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common stockholders

$

 0.24 

 

$

 (0.03) 

 

$

 0.41 

 

$

 0.17 

 

 

 

Funds available for distribution

$

 0.84 

 

$

 0.73 

 

$

 1.74 

 

$

 1.31 

 

 

 

Funds available for distribution - normalized

$

 0.94 

 

$

 0.82 

 

$

 1.84 

 

$

 1.64 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FAD Payout Ratio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share

$

 0.795 

 

$

 0.765 

 

$

 1.59 

 

$

 1.53 

 

 

 

FAD per diluted share - normalized

$

 0.94 

 

$

 0.82 

 

$

 1.84 

 

$

 1.64 

 

 

 

 

Normalized FAD payout ratio

 

85%

 

 

93%

 

 

86%

 

 

93%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

(1) Depreciation and amortization includes depreciation and amortization from discontinued operations.

 

 

 

 

 

(2) Represents noncontrolling interests' share of net FAD adjustments.

 

 

 

 

 

(3) Represents HCN's share of net FAD adjustments from unconsolidated entities.

 

 

 

 

 

(4) See Exhibit 1.

 

  

Page 6 of 7 

2Q14 Earnings Release                                                                                                                                                                     August 1, 2014

 

 

 

 

 

Funds From Operations Reconciliation

 

 

 

 

 

 

 

 

 

 

Exhibit 3

 

 

(in thousands, except per share data)

Three Months Ended

 

Six Months Ended

 

 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

 

 

2014

 

2013

 

2014

 

2013

 

 

Net income (loss) attributable to common stockholders

$

 71,829 

 

$

 (8,508) 

 

$

 121,851 

 

$

 46,551 

 

 

Depreciation and amortization(1)

 

 214,449 

 

 

 200,477 

 

 

 447,766 

 

 

 387,599 

 

 

Losses/impairments (gains) on properties, net

 

 (13,079) 

 

 

 29,997 

 

 

 (13,079) 

 

 

 (52,495) 

 

 

Noncontrolling interests(2)

 

 (9,741) 

 

 

 (7,821) 

 

 

 (20,259) 

 

 

 (13,614) 

 

 

Unconsolidated entities(3)

 

 20,787 

 

 

 16,521 

 

 

 36,770 

 

 

 33,504 

 

 

Funds from operations

 

 284,245 

 

 

 230,666 

 

 

 573,049 

 

 

 401,545 

 

 

Normalizing items, net(4)

 

 32,112 

 

 

 25,409 

 

 

 33,022 

 

 

 93,390 

 

 

Funds from operations - normalized

$

 316,357 

 

$

 256,075 

 

$

 606,071 

 

$

 494,935 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average diluted common shares outstanding

 

 297,995 

 

 

 276,481 

 

 

 294,590 

 

 

 269,580 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common stockholders

$

 0.24 

 

$

 (0.03) 

 

$

 0.41 

 

$

 0.17 

 

 

 

Funds from operations

$

 0.95 

 

$

 0.83 

 

$

 1.95 

 

$

 1.49 

 

 

 

Funds from operations - normalized

$

 1.06 

 

$

 0.93 

 

$

 2.06 

 

$

 1.84 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO Payout Ratio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends per common share

$

 0.795 

 

$

 0.765 

 

$

 1.59 

 

$

 1.53 

 

 

 

FFO per diluted share - normalized

$

 1.06 

 

$

 0.93 

 

$

 2.06 

 

$

 1.84 

 

 

 

 

Normalized FFO payout ratio

 

75%

 

 

82%

 

 

77%

 

 

83%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

(1) Depreciation and amortization includes depreciation and amortization from discontinued operations.

 

 

 

 

 

(2) Represents noncontrolling interests' share of net FFO adjustments.

 

 

 

 

 

(3) Represents HCN's share of net FFO adjustments from unconsolidated entities.

 

 

 

 

 

(4) See Exhibit 1.

 

  

 

Outlook Reconciliations: Year Ended December 31, 2014

 

 

 

 

 

 

 

Exhibit 4

 

 

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prior Outlook

 

Current Outlook

 

 

 

 

 

 

Low

 

High

 

Low

 

High

 

 

FFO Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

$

 1.04 

 

$

 1.14 

 

$

 1.02 

 

$

 1.12 

 

 

Depreciation and amortization(1)

 

 2.99 

 

 

 2.99 

 

 

 2.92 

 

 

 2.92 

 

 

Funds from operations

 

 4.03 

 

 

 4.13 

 

 

 3.94 

 

 

 4.04 

 

 

Normalizing items, net(2)

 

 - 

 

 

 - 

 

 

 0.11 

 

 

 0.11 

 

 

Funds from operations - normalized

$

 4.03 

 

$

 4.13 

 

$

 4.05 

 

$

 4.15 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FAD Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

$

 1.04 

 

$

 1.14 

 

$

 1.02 

 

$

 1.12 

 

 

Depreciation and amortization(1)

 

 2.99 

 

 

 2.99 

 

 

 2.92 

 

 

 2.92 

 

 

Net straight-line rent and above/below amortization(1)

 

 (0.26) 

 

 

 (0.26) 

 

 

 (0.26) 

 

 

 (0.26) 

 

 

Cap-ex, tenant improvements, lease commissions(1)

 

 (0.22) 

 

 

 (0.22) 

 

 

 (0.22) 

 

 

 (0.22) 

 

 

Funds available for distribution

 

 3.55 

 

 

 3.65 

 

 

 3.46 

 

 

 3.56 

 

 

Normalizing items, net(2)

 

 - 

 

 

 - 

 

 

 0.11 

 

 

 0.11 

 

 

Funds available for distribution - normalized

$

 3.55 

 

$

 3.65 

 

$

 3.57 

 

$

 3.67 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes:

(1) Amounts presented net of noncontrolling interests' share and HCN's share of unconsolidated entities.

 

 

 

 

 

(2) See Exhibit 1.

 

 

Page 7 of 7