-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AT9Kkrvt/w8ENCVquv+3U8CvHyO0d13JQmuUebgO8yNrj1NWVUXZz/anXsGUvVKy apaT9H8GRe/SmiH2IHd9Sg== 0000950152-02-008128.txt : 20021107 0000950152-02-008128.hdr.sgml : 20021107 20021107140213 ACCESSION NUMBER: 0000950152-02-008128 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH CARE REIT INC /DE/ CENTRAL INDEX KEY: 0000766704 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 341096634 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08923 FILM NUMBER: 02812314 BUSINESS ADDRESS: STREET 1: ONE SEAGATE STE 1500 STREET 2: P O BOX 1475 CITY: TOLEDO STATE: OH ZIP: 43604 BUSINESS PHONE: 4192472800 10-Q 1 l96752ae10vq.txt HEALTH CARE REIT =============================================================================== FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002 -------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO -------------- -------------- COMMISSION FILE NUMBER 1-8923 -------------- HEALTH CARE REIT, INC. -------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 34-1096634 -------- ---------- (State or jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE SEAGATE, SUITE 1500, TOLEDO, OHIO 43604 ------------------------------------- --------- (Address of principal executive office) (Zip Code) (Registrant's telephone number, including area code) (419) 247-2800 -------------------------- ----------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ]. No [ ]. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of October 30, 2002. Class: Shares of Common Stock, $1.00 par value Outstanding 39,056,541 shares ================================================================================ INDEX
PAGE ----- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets - September 30, 2002 and December 31, 2001.................. 3 Consolidated Statements of Income - Three and nine months ended September 30, 2002 and 2001................................... 4 Consolidated Statements of Stockholders' Equity - Nine months ended September 30, 2002 and 2001.............................. 5 Consolidated Statements of Cash Flows - Nine months ended September 30, 2002 and 2001....................................... 6 Notes to Unaudited Consolidated Financial Statements.................................... 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................................. 9 Item 3. Quantitative and Qualitative Disclosure About Market Risk............................... 12 Item 4. Controls and Procedures................................................................. 13 PART II. OTHER INFORMATION Item 5. Other Information....................................................................... 13 Item 6. Exhibits and Reports on Form 8-K........................................................ 13 SIGNATURES.............................................................................. 14 CERTIFICATIONS.......................................................................... 15 EXHIBIT INDEX........................................................................... 17
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS -------------------- CONSOLIDATED BALANCE SHEETS HEALTH CARE REIT, INC. AND SUBSIDIARIES
SEPTEMBER 30 DECEMBER 31 2002 2001 (UNAUDITED) (NOTE) ---------------- ----------------- (IN THOUSANDS) ASSETS Real estate investments: Real property owned: Land ............................................................... $ 105,480 $ 89,601 Buildings & improvements............................................ 1,187,408 947,794 Construction in progress............................................ 12,791 0 ---------------- ----------------- 1,305,679 1,037,395 Less accumulated depreciation....................................... (102,286) (80,544) ---------------- ----------------- Total real property owned........................................ 1,203,393 956,851 Loans receivable Real property and other loans.................................... 236,046 240,126 Subdebt investments.............................................. 23,057 23,448 ---------------- ----------------- 259,103 263,574 Less allowance for loan losses...................................... (7,611) (6,861) ---------------- ----------------- Net real estate investments...................................... 1,454,885 1,213,564 Other assets: Equity investments.................................................. 7,215 6,498 Deferred loan expenses.............................................. 9,708 7,190 Cash and cash equivalents........................................... 21,440 9,826 Receivables and other assets........................................ 39,619 32,765 ---------------- ----------------- 77,982 56,279 ---------------- ----------------- TOTAL ASSETS .......................................................... $ 1,532,867 $ 1,269,843 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Borrowings under line of credit obligations......................... $ 72,600 $ 0 Senior unsecured notes.............................................. 515,000 412,250 Secured debt........................................................ 51,937 78,966 Accrued expenses and other liabilities.............................. 13,688 20,757 ---------------- ----------------- TOTAL LIABILITIES...................................................... 653,225 511,973 Stockholders' equity: Preferred stock..................................................... 127,500 150,000 Common stock........................................................ 39,057 32,740 Capital in excess of par value...................................... 764,261 608,942 Cumulative net income............................................... 565,321 512,837 Cumulative dividends................................................ (612,365) (540,946) Accumulated other comprehensive loss................................ (370) (923) Unamortized restricted stock........................................ (3,762) (4,780) ---------------- ----------------- TOTAL STOCKHOLDERS' EQUITY............................................. 879,642 757,870 ---------------- ----------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................. $ 1,532,867 $ 1,269,843 ================ =================
NOTE: The consolidated balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. See notes to unaudited consolidated financial statements 3 CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 2002 2001 2002 2001 -------------------------- ------------------------------- (IN THOUSANDS EXCEPT PER SHARE DATA) REVENUES: Rental income............................... $ 34,407 $ 24,436 $ 94,880 $ 68,266 Interest income ............................ 7,127 7,187 21,022 23,974 Commitment fees and other income............ 839 934 2,144 2,861 Prepayment fees............................. 0 856 0 990 ------------ ----------- ------------- ------------- Total revenue............................ 42,373 33,413 118,046 96,091 EXPENSES: Interest expense............................ 9,990 7,353 29,537 22,562 Loan expense................................ 599 447 1,756 1,212 Provision for depreciation.................. 10,158 6,969 27,916 20,195 Impairment of assets........................ 0 0 550 0 Provision for losses........................ 250 250 750 750 General and administrative expenses......... 2,496 2,070 7,040 5,956 ------------ ----------- ------------- ------------- Total expenses........................... 23,493 17,089 67,549 50,675 ------------ ----------- ------------- ------------- Income from continuing operations before extraordinary item................ 18,880 16,324 50,497 45,416 DISCONTINUED OPERATIONS: Gain on sale of properties.................. 439 101 584 124 Income from discontinued operations, net.... 444 755 1,806 1,964 ------------ ----------- ------------- ------------- Income before extraordinary item............ 19,763 17,180 52,887 47,504 Loss on extinguishment of debt.............. 0 (213) (403) (213) ------------ ---------- ------------- ------------- Net income.................................. 19,763 16,967 52,484 47,291 Preferred stock dividends................... 2,878 3,376 9,596 10,128 ------------ ----------- ------------- ------------- Net income available to common stockholders...................... $ 16,885 $ 13,591 $ 42,888 $ 37,163 ============ =========== ============= ============= Average number of common shares outstanding: Basic.................................... 38,628 32,205 35,695 29,946 Diluted.................................. 39,324 32,762 36,451 30,358 EARNINGS PER SHARE: BASIC: Income from continuing operations and after preferred stock dividends.......... $ 0.42 $ 0.40 $ 1.14 $ 1.18 Discontinued operations..................... 0.02 0.03 0.07 0.07 Extraordinary item.......................... 0.00 (0.01) (0.01) (0.01) ----------- ---------- ------------- ------------- Income available to common stockholders..... $ 0.44 $ 0.42 $ 1.20 $ 1.24 DILUTED: Income from continuing operations and after preferred stock dividends.......... $ 0.41 $ 0.39 $ 1.12 $ 1.16 Discontinued operations..................... 0.02 0.03 0.07 0.07 Extraordinary item.......................... 0.00 (0.01) (0.01) (0.01) ----------- ---------- ------------- ------------- Income available to common stockholders..... $ 0.43 $ 0.41 $ 1.18 $ 1.22 Dividends declared and paid per common share............................. $ 0.585 $ 0.585 $ 1.755 $ 1.755
See notes to unaudited consolidated financial statements 4 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
Nine months ended September 30, 2002 ------------------------------------------------------------------------------------------------ Capital In Unamortized Accum. Other Preferred Common Excess of Restricted Cumulative Cumulative Comprehensive in thousands Stock Stock Par Value Stock Earnings Dividends Income/(Loss) Total ------------------------------------------------------------------------------------------------ Balance at beginning of period $150,000 $32,740 $608,942 $(4,780) $512,837 $(540,946) $ (923) $757,870 Comprehensive income: Net income 52,484 52,484 Unrealized losses on securities (44) (44) Foreign currency translation adjustment 597 597 -------- Comprehensive income 53,037 -------- Proceeds from issuance from dividend reinvestment and stock incentive plans, net of forfeitures 1,083 22,818 (189) 23,712 Proceeds from issuance of common shares 4,356 110,879 115,235 Conversion of preferred stock (22,500) 878 21,622 0 Restricted stock amortization 1,207 1,207 Cash dividends paid (71,419) (71,419) -------- ------- ------- ------- -------- --------- -------- --------- Balance at end of period $127,500 $39,057 $764,261 $(3,762) $565,321 $(612,365) $ (370) $879,642 ======== ======= ======== ======== ======== ========== ======== ========
Nine months ended September 30, 2001 ------------------------------------------------------------------------------------------------ Capital In Unamortized Accum. Other Preferred Common Excess of Restricted Cumulative Cumulative Comprehensive in thousands Stock Stock Par Value Stock Earnings Dividends Income/(Loss) Total ------------------------------------------------------------------------------------------------ Balance at beginning of period $150,000 $28,806 $528,138 $(4,205) $452,288 $(455,676) $ (744) $698,607 Comprehensive income: Net income 47,291 47,291 Unrealized losses on (89) (89) securities Foreign currency translation adjustment (40) (40) -------- Comprehensive income 47,162 -------- Proceeds from issuance from dividend reinvestment and stock incentive plans, net of forfeitures 234 4,827 (83) 4,978 Proceeds from issuance of common shares 3,450 70,740 74,190 Restricted stock amortization 874 874 Cash dividends paid (62,825) (62,825) -------- ------- -------- ------- ------- --------- ------- -------- Balance at end of period $150,000 $32,490 $603,705 $(3,414) $499,579 $(518,501) $ (873) $762,986 ======== ======= ======== ======= ======== ========= ======== ========
See notes to unaudited consolidated financial statements 5 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) HEALTH CARE REIT, INC. AND SUBSIDIARIES
NINE MONTHS ENDED SEPTEMBER 30 2002 2001 ------------------------------- (IN THOUSANDS) OPERATING ACTIVITIES Net income.................................................................. $ 52,484 $ 47,291 Adjustments to reconcile net income to net cash provided from operating activities: Provision for depreciation............................................... 28,662 21,201 Provision for losses..................................................... 750 750 Provision for asset impairment........................................... 550 0 Amortization............................................................. 2,961 2,124 Loan and commitment fees earned in excess of cash received............... (1,530) (1,329) Rental income in excess of cash received................................. (5,346) (6,187) Interest and other income less than (in excess of) cash received......... 220 (249) Gain on sales of properties.............................................. (584) (124) Decrease in accrued expenses and other liabilities....................... (5,536) (967) Increase in receivables and other assets................................. (1,460) (1,548) ------------- -------------- NET CASH PROVIDED FROM OPERATING ACTIVITIES........................... 71,171 60,962 INVESTING ACTIVITIES Investment in real properties............................................... (291,439) (79,529) Investment in loans receivable.............................................. (61,433) (19,424) Other investments, net...................................................... (228) (685) Principal collected on loans................................................ 35,203 70,391 Proceeds from sale of properties............................................ 49,519 22,142 Other...................................................................... . (485) (203) ------------- ----------- NET CASH USED IN INVESTING ACTIVITIES................................. (268,863) (7,308) FINANCING ACTIVITIES Net increase (decrease) under unsecured lines of credit..................... 72,600 (119,900) Net decrease under secured lines of credit.................................. (29,000) 0 Principal payments on long-term obligations................................. (47,527) (78,801) Issuance of long-term obligations........................................... 150,000 175,000 Net proceeds from the issuance of Common Stock.............................. 138,947 79,168 Increase in deferred loan expense........................................... (4,295) (5,576) Cash distributions to stockholders.......................................... (71,419) (62,825) ------------- -------------- NET CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES.................... 209,306 (12,934) ------------- -------------- Increase in cash and cash equivalents.......................................... 11,614 40,720 Cash and cash equivalents at beginning of period............................... 9,826 2,844 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD............................... $ 21,440 $ 43,564 ============= ============= Supplemental Cash Flow Information -- Interest Paid............................ $ 35,935 $ 25,096 ============= ============= See notes to unaudited consolidated financial statements
6 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS HEALTH CARE REIT, INC. AND SUBSIDIARIES NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered for a fair presentation have been included. Operating results for the nine months ended September 30, 2002, are not necessarily an indication of the results that may be expected for the year ending December 31, 2002. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2001. NOTE B - REAL ESTATE INVESTMENTS During the nine months ended September 30, 2002, the Company invested $291,439,000 in real property, made loan advances of $35,660,000 and funded $1,830,000 of equity related investments. During the nine months ended September 30, 2002, the Company sold properties with carrying values of $48,935,000 and received prepayments on loans totaling $36,083,000. NOTE C - EQUITY INVESTMENTS Management determines the appropriate classification of an equity investment at the time of acquisition and reevaluates such designation as of each balance sheet date. At September 30, 2002, equity investments include the common stock of a corporation, valued at historical cost, and ownership representing a 31% interest in Atlantic Healthcare Finance L.P., a property investment group that specializes in the financing, through sale and leaseback transactions, of nursing homes located in the United Kingdom and continental Europe. The ownership interest in Atlantic Healthcare Finance L.P. is accounted for under the equity method. NOTE D - DISCONTINUED OPERATIONS In August 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which is effective for fiscal years beginning after December 15, 2001. The Company adopted the standard effective January 1, 2002. During the nine months ended September 30, 2002, the Company sold seven assisted living facilities and one parcel of land at a gain of $584,000. The properties generated $3,372,000 of rental revenue and had expenses associated with the properties of $1,566,000, generating income from discontinued operations of $1,806,000 for the nine months ended September 30, 2002. For the nine months ended September 30, 2001, the properties generated $3,962,000 of rental revenue and had expenses associated with the properties of $1,998,000, generating income from discontinued operations of $1,964,000 for that period. NOTE E - IMPAIRMENT OF ASSETS Management reviews its real estate portfolio on a quarterly basis to determine if there are any indicators of impairment. If indicators of impairment exist, management determines, using moderate assumptions and the information available at that time, if the projected undiscounted cash flows exceed the net book value of the property. If the projected undiscounted cash flows do not exceed the net book value, the property is written down to fair market value. During the nine months ended September 30, 2002, it was determined that the projected cash flows from a parcel of land did not exceed its net book value and a charge of $550,000 was recorded to reduce the property to its fair market value. The fair market value of the property was determined by an offer to purchase by a third party. 7 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) HEALTH CARE REIT, INC. AND SUBSIDIARIES NOTE F - CONTINGENT LIABILITIES As disclosed in the financial statements for the year ended December 31, 2001, the Company was contingently liable for certain obligations amounting to $11,425,000. NOTE G - DISTRIBUTIONS PAID TO COMMON STOCKHOLDERS On February 20, 2002, the Company paid a dividend of $0.585 per share to stockholders of record on January 31, 2002. This dividend related to the period from October 1, 2001 through December 31, 2001. On May 20, 2002, the Company paid a dividend of $0.585 per share to stockholders of record on April 30, 2002. This dividend related to the period from January 1, 2002 through March 31, 2002. On August 20, 2002, the Company paid a dividend of $0.585 per share to stockholders of record on July 31, 2002. This dividend related to the period from April 1, 2002 through June 30, 2002. NOTE H - EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 -------------------------- ------------------------- 2002 2001 2002 2001 ---- ---- ---- ---- Numerator for basic and diluted earnings per share-income available to common shareholders..... $ 16,885 $ 13,591 $ 42,888 $ 37,163 ============ ========== ========== ========== Denominator for basic earnings per share - weighted average shares........................... 38,628 32,205 35,695 29,946 Effect of dilutive securities: Employee stock options............................ 441 327 501 182 Nonvested restricted shares....................... 255 230 255 230 ------------ ---------- ---------- ---------- Dilutive potential common shares..................... 696 557 756 412 ------------ ---------- ---------- ---------- Denominator for diluted earnings per share - adjusted weighted average shares................... 39,324 32,762 36,451 30,358 ============ ========== ========== ========== Basic earnings per share............................. $ 0.44 $ 0.42 $ 1.20 $ 1.24 Diluted earnings per share........................... $ 0.43 $ 0.41 $ 1.18 $ 1.22
The diluted earnings per share calculation excludes the dilutive effect of 10,000 and 1,350,000 shares for the periods ended September 30, 2002 and September 30, 2001, respectively, because the exercise price was greater than the average market price. The Series C Cumulative Convertible Preferred Stock was not included in this calculation as the effect of the conversion was anti-dilutive. NOTE I - COMPREHENSIVE INCOME Comprehensive income for the three months ended September 30, 2002 and 2001, totaled $19,952,000 and $17,251,000, respectively. NOTE J - NEW ACCOUNTING POLICY In April 2002, FASB issued SFAS 145, Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical Corrections. Statement 145 will require gains and losses on extinguishments of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under Statement 4. Extraordinary 8 treatment will be required for certain extinguishments as provided in APB Opinion No. 30. Statement 145 will be effective for fiscal years beginning after December 15, 2002 and the Company will reclassify prior periods upon adoption. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- LIQUIDITY AND CAPITAL RESOURCES At September 30, 2002, the Company's net real estate investments totaled $1,454,885,000 which included 154 assisted living facilities, 75 skilled nursing facilities and eight specialty care facilities. Depending upon the availability and cost of external capital, the Company anticipates making additional investments in health care related facilities. New investments are funded from temporary borrowings under the Company's line of credit arrangements, internally generated cash and the proceeds derived from asset sales. Permanent financing for future investments, which replaces funds drawn under the line of credit arrangements, is expected to be provided through a combination of private and public offerings of debt and equity securities and the assumption of secured debt. The Company believes its liquidity and various sources of available capital are sufficient to fund operations, meet debt service and dividend requirements and finance future investments. In February 2002, the Company issued 906,125 shares of Common Stock, $1 par value, at a price of $27.59 per share, which generated net proceeds of $23,657,000. In May 2002, the Company issued 3,450,000 shares of Common Stock, $1 par value, at a price of $28.00 per share, which generated net proceeds of $91,578,000. During the nine months ended September 30, 2002, the holder of the Company's Series C Convertible Preferred Stock converted 900,000 shares into 878,000 shares of Common Stock. In September 2002, the Company sold $150,000,000 of 8.0% unsecured senior notes, maturing in September 2012. As of September 30, 2002, the Company had a total outstanding debt balance of $639,537,000 and stockholders' equity of $879,642,000 which represents a debt to equity ratio of 0.73 to 1.00, and a debt to total capitalization ratio of 0.42 to 1.00. In August 2002, the Company announced the amendment and extension of its primary unsecured revolving line of credit. The line of credit was expanded to $175,000,000, matures in August 2005 with the ability to extend for one year at the Company's discretion if the Company is in compliance with all covenants, and bears interest at the lender's prime rate or LIBOR plus 1.3%. In addition, at September 30, 2002, the Company had an unsecured revolving line of credit in the amount of $25,000,000 bearing interest at the lender's prime rate or LIBOR plus 2.0% which expires June 30, 2003. Also, at September 30, 2002, the Company had secured line of credit arrangements totaling $64,000,000 bearing interest at LIBOR plus 2.0% with a floor of 7.0% which mature in February 2004. At September 30, 2002, the Company had $72,600,000 in borrowings under the unsecured line of credit arrangements and $4,000,000 outstanding on the secured line of credit arrangements. As of September 30, 2002, the Company had an effective shelf registration on file with the Securities and Exchange Commission under which the Company may issue up to $410,574,000 of securities including debt securities, common and preferred stock and warrants. Depending upon market conditions, the Company anticipates issuing securities under such shelf registrations to invest in additional health care facilities and to repay borrowings under the Company's line of credit arrangements. RESULTS OF OPERATIONS Revenues were comprised of the following:
THREE MONTHS ENDED CHANGE YEAR TO DATE THROUGH CHANGE ------------------------------ --------------------- ----------------------------- -------------------- SEPT. 30, 2002 SEPT. 30, 2001 $ % SEPT. 30, 2002 SEPT. 30, 2001 $ % -------------- -------------- -------------------- -------------- --------------- -------- ------ (000's) Rental income....... $ 34,407 $ 24,436 $ 9,971 41% $ 94,880 $ 68,266 $ 26,614 39% Interest income..... 7,127 7,187 (60) -1% 21,022 23,974 (2,952) -12% Commitment fees and other income..... 839 934 (95) -10% 2,144 2,861 (717) -25% Prepayment fees..... 0 856 (856) -100% 0 990 (990) -100% ------------ ------------ --------- --------- ------------ ------------- --------- -------- Total............... $ 42,373 $ 33,413 $ 8,960 27% $ 118,046 $ 96,091 $ 21,955 23% ============ ============ ========= ========= ============ ============= ========= ========
9 For the three and nine months ended September 30, 2002, the Company generated increased rental income as a result of the acquisition of properties for which the Company receives rent. This was partially offset by a reduction in interest income due to the repayment of mortgage loans. Commitment fees and other income decreased primarily as a result of the completion of construction projects. Expenses were comprised of the following:
THREE MONTHS ENDED CHANGE YEAR TO DATE THROUGH CHANGE ------------------------------ --------------------- ------------------------------ ------------------ SEPT. 30, 2002 SEPT. 30, 2001 $ % SEPT. 30, 2002 SEPT. 30, 2001 $ % -------------- -------------- ---------- --------- -------------- --------------- -------- --------- (000's) Interest expense.... $ 9,990 $ 7,353 $ 2,637 36% $ 29,537 $ 22,562 $ 6,975 31% Loan expense........ 599 447 152 34% 1,756 1,212 544 45% Provision for depreciation..... 10,158 6,969 3,189 46% 27,916 20,195 7,721 38% Provision for losses 250 250 0 0% 750 750 0 0% Impairment of assets 0 0 0 0% 550 0 550 100% General and admin. expenses.. 2,496 2,070 426 21% 7,040 5,956 1,084 18% ------------ ----------- -------- --------- ----------- ----------- -------- -------- Total............... $ 23,493 $ 17,089 $ 6,404 37% $ 67,549 $ 50,675 $ 16,874 33% ============ =========== ======== ========= ============ =========== ======== ========
The increase in interest expense for both the three month and year-to-date periods was primarily due to higher average borrowings during the 2002 periods, including the issuance of $175 million senior notes in August 2001 and $150 million in September 2002. The proceeds from these additional borrowings was used to invest in additional health care properties. This was offset by lower interest rates on the Company's unsecured revolving lines of credit. In addition, there was a reduction in the amount of capitalized interest offsetting interest expense. The Company capitalizes certain interest costs associated with funds used to finance the construction of properties owned directly by the Company. The amount capitalized is based upon the borrowings outstanding during the construction period using the rate of interest which approximates the Company's cost of financing. Capitalized interest for the three-month and year-to-date periods totaled $0 and $0, respectively as compared with $200,000 and $739,000 for the same periods in 2001. The provision for depreciation increased over the comparable periods in 2001 primarily as a result of additional investments in properties owned directly by the Company. General and administrative expenses as a percentage of revenues (including revenues from discontinued operations) for the three-month and year-to-date periods were 5.89% and 5.96% as compared with 6.20% and 6.20% for the same periods in 2001. Other Items:
THREE MONTHS ENDED CHANGE YEAR TO DATE THROUGH CHANGE ----------------------------- -------------------- ------------------------------ ----------------- SEPT. 30, 2002 SEPT. 30, 2001 $ % SEPT. 30, 2002 SEPT. 30, 2001 $ % -------------- -------------- -------------------- -------------- ---------------- -------- ------- (000's) Discontinued Operations......... $ 444 $ 755 $ (311) -41% $ 1,806 $ 1,964 $ (158) -8% Loss on extinguishment of debt.............. 0 (213) 213 -100% (403) (213) (190) 89% Gain on sales of Properties......... 439 101 338 335% 584 124 460 371% Preferred dividends.. (2,878) (3,376) 498 -15% (9,596) (10,128) 532 -5% ------------ ------------- -------- -------- ------------- ------------- ------- ------- Total................ $ (1,995) $ (2,733) $ 738 -27% $ (7,609) $ (8,253) $ 644 -8% ============ ============= ========= ======== ============= ============= ======= =======
During the three and nine months ended September 30, 2002, the Company sold properties with carrying values of $47,069,000 and $48,935,000 for gains of $439,000 and $584,000, respectively. In addition, these properties generated $444,000 and $1,806,000 of income after deducting depreciation and interest expense from rental income for the three and nine months ended September 30, 2002, respectively. In April 2002 the Company purchased $35,000,000 of unsecured senior notes that were due in 2003. The Company recorded a charge of $403,000 in connection with this early extinquishment. 10 As a result of the various factors mentioned above, net income available to common shareholders for the three-month and year-to-date periods was $16,885,000, or $0.43 per diluted share, and $42,888,000 or $1.18 per diluted share, respectively, as compared with $13,591,000, or $0.41 per diluted share, and $37,163,000 or $1.22 per diluted share for the comparable periods in 2001. CRITICAL ACCOUNTING POLICIES The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which require the Company to make estimates and assumptions (see Note 1 to the consolidated financial statements). The Company believes that of its significant accounting policies, the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements. IMPAIRMENT OF LONG-LIVED ASSETS The net book value of long-lived assets is reviewed quarterly on a property by property basis to determine if there are indicators of impairment. These indicators may include anticipated operating losses at the property level, the tenant's inability to make rent payments, and changes in the market that may permanently reduce the value of the property. If indicators of impairment exist, then the undiscounted future cash flows from the most likely use of the property are compared to the current net book value. If the undiscounted cash flows are less than the net book value, an impairment loss would be recognized to the extent that the net book value exceeds the current fair market value. This analysis requires the Company to determine if indicators of impairment exist and to estimate the most likely stream of cash flows to be generated from the property during the period the property is expected to be held. If the projections or assumptions change in the future, the Company may be required to record an impairment charge and reduce the net book value of the property owned. ALLOWANCE FOR LOAN LOSSES Management reviews the adequacy of the allowance for loan losses on a quarterly basis. The Company makes mortgage loans and sometimes provides working capital and subdebt loans to operators of health care facilities in its portfolio. When reviewing the ultimate collectibility of these loans, management uses moderate assumptions of operating performance to determine the operator's ability to repay the obligation. As facts and circumstances change, management takes these into account to determine if the allowance for loan losses is adequate. STATEMENT REGARDING FORWARD LOOKING DISCLOSURE This report on Form 10-Q of the Company may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern the possible expansion of our portfolio; the performance of our operators and properties; our ability to obtain new viable tenants for properties which we take back from financially troubled tenants, if any; our ability to make distributions; our policies and plans regarding investments, financings and other matters; our tax status as a real estate investment trust; our ability to appropriately balance the use of debt and equity; and our ability to access capital markets or other sources of funds. When we use words such as "believes", "expects", "anticipates", or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Our expected results may not be achieved, and actual results may differ materially from our expectations. This may be a result of various factors, including: the status of the economy; the status of capital markets, including prevailing interest rates; compliance with and changes to regulations and payment policies within the health care industry; changes in financing terms; competition within the health care and senior housing industries; and changes in federal, state and local legislation. Finally, we assume no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements. 11 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK --------------------------------------------------------- The Company is exposed to various market risks, including the potential loss arising from adverse changes in interest rates. The Company seeks to mitigate the effects of fluctuations in interest rates by matching the term of new investments with new long-term fixed rate borrowings to the extent possible. The following section is presented to provide a discussion of the risks associated with potential fluctuations in interest rates. The Company historically borrows on its revolving lines of credit to make acquisitions or to finance the construction of health care facilities. Then, as market conditions dictate, the Company will issue equity or long-term fixed rate debt to repay the borrowings under the revolving lines of credit. A change in interest rates will not affect future earnings or cash flow on our fixed rate debt. Interest rate changes, however, will affect the fair value of such debt. A 1% increase in interest rates would result in a decrease in fair value of the Company's Senior Unsecured Notes by approximately $15 million at September 30, 2002. Changes in the interest rate environment upon maturity of this fixed rate debt could have an affect on the future cash flows and earnings of the Company, depending on whether the debt is replaced with other fixed rate debt, with variable rate debt, with equity or by the sale of assets. A change in interest rates will not affect the fair value of the Company's variable rate debt, including its unsecured and secured revolving credit arrangements. At September 30, 2002, a 1% increase in interest rates related to this variable rate debt and assuming no changes in outstanding balances, would result in increased annual interest expense of $726,000. The Company is subject to risks associated with debt financing, including the risk that existing indebtedness may not be refinanced or that the terms of such refinancing may not be as favorable as the terms of current indebtedness. The majority of the Company's borrowings were completed pursuant to indentures or contractual agreements that limit the amount of indebtedness the Company may incur. Accordingly, in the event that the Company is unable to raise additional equity or borrow money because of these limitations, the Company's ability to acquire additional properties may be limited. From time to time, the Company's variable interest rate debt may exceed its variable interest rate assets, presenting an exposure to rising interest rates. The Company may or may not elect to use financial derivative instruments to hedge variable interest rate exposure. Such decisions are principally based on the Company's policy to match its variable rate investments with comparable borrowings, but is also based on the general trend in interest rates at the applicable dates and the Company's perception of future volatility of interest rates. ITEM 4. CONTROLS AND PROCEDURES ----------------------- Within 90 days of filing this quarterly report, an evaluation was performed under the supervision and with the participation of our management, including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2002, and the evaluation date. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of our evaluation. 12 PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION ----------------- On August 26, 2002, the Company issued a press release announcing the closing of a $175 million unsecured credit facility. On September 6, 2002, the Company issued a press release announcing the issuance of $150 million in senior unsecured notes. On October 1, 2002, the Company issued a press release announcing the release date of October 15, 2002 for earnings and third quarter conference call. On October 8, 2002, the Company issued a press release announcing investments of $105 million for third quarter. On October 15, 2002, the Company issued a press release announcing earnings results for third quarter and declaration of regular dividend. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -------------------------------- (a) Exhibits 99.1 Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer. 99.2 Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer. 99.3 Press release dated August 26, 2002. 99.4 Press release dated September 6, 2002. 99.5 Press release dated October 1, 2002. 99.6 Press release dated October 8, 2002. 99.7 Press release dated October 15, 2002. (b) Reports on Form 8-K
Date of Report Item Description -------------- ---- ----------- August, 30, 2002 5 Effective August 23, 2002, the Company and its subsidiaries entered into an Amended and Restated Loan Agreement for a $175 million unsecured credit facility. September 9, 2002 5 Documentation regarding an issuance of $150 million in senior unsecured notes of the Company.
13 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HEALTH CARE REIT, INC. Date: NOVEMBER 7, 2002 By: /s/ GEORGE L. CHAPMAN ----------------------------- ---------------------------------- George L. Chapman, Chairman and Chief Executive Officer Date: NOVEMBER 7 , 2002 By: /s/ RAYMOND W. BRAUN ----------------------------- --------------------------------- Raymond W. Braun, President and Chief Financial Officer Date: NOVEMBER 7, 2002 By: /s/ MICHAEL A. CRABTREE ----------------------------- ---------------------------------- Michael A. Crabtree, Chief Accounting Officer 14 CERTIFICATE OF CHIEF EXECUTIVE OFFICER I, GEORGE L. CHAPMAN, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Health Care REIT, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: NOVEMBER 7, 2002 -------------------------- /s/ GEORGE L. CHAPMAN ---------------------------- George L. Chapman, Chief Executive Officer 15 CERTIFICATE OF CHIEF FINANCIAL OFFICER I, RAYMOND W. BRAUN, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Health Care REIT, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: NOVEMBER 7, 2002 ------------------------- /s/ RAYMOND W. BRAUN ---------------------------- Raymond W. Braun, Chief Financial Officer 16 EXHIBIT INDEX The following documents are included in this Form 10-Q as Exhibits: DESIGNATION NUMBER UNDER ITEM 601 OF REGULATION S-K EXHIBIT DESCRIPTION -------------- -------------------- 99.1 Certification pursuant to 18 U.S.C. Section 1350 by Chief Executive Officer. 99.2 Certification pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer. 99.3 Press release dated August 26, 2002. 99.4 Press release dated September 6, 2002. 99.5 Press release dated October 1, 2002. 99.6 Press release dated October 8, 2002 99.7 Press release dated October 15, 2002. 17 EX-99.1 3 l96752aexv99w1.txt EXHIBIT 99.1 CERTIFICATION OF CEO EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 I, George L. Chapman, the Chief Executive Officer of Health Care REIT, Inc. (the "Company"), certify that (i) the Quarterly Report on Form 10-Q for the Company for the quarter ended September 30, 2002 (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ GEORGE L. CHAPMAN ----------------------------- George L. Chapman Chief Executive Officer Dated: November 7, 2002 18 EX-99.2 4 l96752aexv99w2.txt EXHIBIT 99.2 CERTIFICATION OF CFO EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 I, Raymond W. Braun, the Chief Financial Officer of Health Care REIT, Inc. (the "Company"), certify that (i) the Quarterly Report on Form 10-Q for the Company for the quarter ended September 30, 2002 (the "Report"), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ RAYMOND W. BRAUN ----------------------------- Raymond W. Braun Chief Financial Officer Dated: November 7, 2002 19 EX-99.3 5 l96752aexv99w3.txt EXHIBIT 99.3 PRESS RELEASE DATED AUGUST 26, 2002 EXHIBIT 99.3 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E August 26, 2002 For more information contact: Ray Braun - (419) 247-2800 Mike Crabtree - (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES CLOSING OF $175 MILLION UNSECURED CREDIT FACILITY Toledo, Ohio, August 26, 2002........HEALTH CARE REIT, INC. (NYSE/HCN) announced today that it has closed a $175 million unsecured revolving credit facility, replacing the company's existing $150 million facility which was scheduled to mature March, 2003. The credit facility was arranged by Deutsche Bank Securities as Lead Arranger and Syndication Agent and KeyBank as Lead Arranger and Administrative Agent. UBS Warburg is the Documentation Agent. Other participants include Bank of America, Bank One, National City Bank, and Comerica Bank. Highlights of the new unsecured credit facility include: - Providing the company with the flexibility and capacity to continue its growth strategy - Reducing the line cost by approximately 25 bps - Extending the agreement for three years to August, 2005 with the ability to extend for a fourth year at the company's option "These achievements are significant for Health Care REIT. We are appreciative of the support and commitment provided by the bank group," stated George L. Chapman, chairman and chief executive officer. "The new credit line positions the company to continue its growth strategy and advance the capital plan that is focused on improving our credit ratings in addition to reducing our cost of capital." The company's debt is currently rated Ba1 by Moody's and BBB- by Standard & Poor's and Fitch. On August 8, 2002, Moody's revised its outlook for the company to positive. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care facilities, primarily skilled nursing facilities and assisted living facilities. At June 30, 2002, the company had investments in 229 health care facilities in 34 states and had total assets of approximately $1.5 billion. For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code - HCN. More information is available on the Internet at http://www.hcreit.com. 20 This document and supporting schedules may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern the possible expansion of our portfolio; the performance of our operators and properties; our ability to obtain new viable tenants for properties which we take back from financially troubled tenants, if any; our ability to make distributions; our policies and plans regarding investments, financings and other matters; our tax status as a real estate investment trust; our ability to appropriately balance the use of debt and equity; and our ability to access capital markets or other sources of funds. When we use words such as "believes", "expects", "anticipates", or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Our expected results may not be achieved, and actual results may differ materially from our expectations. This may be a result of various factors, including: the status of the economy; the status of capital markets, including prevailing interest rates; compliance with and changes to regulations and payment policies within the health care industry; changes in financing terms; competition within the health care and senior housing industries; and changes in federal, state and local legislation. Finally, we assume no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements. 21 EX-99.4 6 l96752aexv99w4.txt EXHIBIT 99.4 PRESS RELEASE DATED SEPT 6, 2002 EXHIBIT 99.4 [HEALTH CARE REIT LOGO F O R I M M E D I A T E R E L E A S E SEPTEMBER 6, 2002 FOR MORE INFORMATION CONTACT: RAY BRAUN - (419) 247-2800 MIKE CRABTREE - (419) 247-2800 HEALTH CARE REIT, INC. ISSUES $150 MILLION IN SENIOR UNSECURED NOTES Toledo, Ohio, September 6, 2002........HEALTH CARE REIT, INC. (NYSE:HCN) today announced that it has priced a public offering of $150 million of senior unsecured notes due September 2012 at an effective yield of 8.07 percent. The company intends to use the net proceeds from the sale to invest in additional health care properties. Pending such use, the proceeds will be used primarily to repay borrowings under unsecured revolving lines of credit. Deutsche Bank Securities Inc. and UBS Warburg acted as joint-lead managers. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care facilities, primarily skilled nursing and assisted living facilities. At June 30, 2002, the company had investments in 229 health care facilities in 34 states and had total assets of approximately $1.5 billion. For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code - HCN. More information is available on the Internet at http://www.hcreit.com. This document may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern the possible expansion of our portfolio; the performance of our operators and properties; our ability to obtain new viable tenants for properties which we take back from financially troubled tenants, if any; our ability to make distributions; our policies and plans regarding investments, financings and other matters; our tax status as a real estate investment trust; our ability to appropriately balance the use of debt and equity; and our ability to access capital markets or other sources of funds. When we use words such as "believes", "expects", "anticipates", or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Our expected results may not be achieved, and actual results may differ materially from our expectations. This may be a result of various factors, including: the status of the economy; the status of capital markets, including prevailing interest rates; compliance with and changes to regulations and payment policies within the health care industry; changes in financing terms; competition within the health care and senior housing industries; and changes in federal, state and local legislation. Finally, we assume no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements. ##### 22 EX-99.5 7 l96752aexv99w5.txt EXHIBIT 99.5 PRESS RELEASE DATED OCT 1, 2002 EXHIBIT 99.5 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E October 1, 2002 For more information contact: Ray Braun (419) 247-2800 Mike Crabtree (419) 247-2800 HEALTH CARE REIT, INC. TO RELEASE EARNINGS AND HOLD THIRD-QUARTER CONFERENCE CALL SET FOR OCTOBER 15, 2002 Toledo, Ohio, October 1, 2002.....HEALTH CARE REIT, INC. (NYSE/HCN) announced today that it will release its 2002 third quarter earnings on Tuesday, October 15, 2002. At 3:00 p.m. Eastern Time on Tuesday, October 15, 2002, the company will hold a conference call to discuss its results and performance for the third quarter. The conference call will be accessible by telephone and through the Internet. Telephone access will be available by dialing 800-218-9073 or 303-262-2171. Callers to this number will be able to listen to the company's business update. For those unable to listen to the call live, a taped rebroadcast will be available beginning two hours after completion of the live call on October 15, 2002. To access the rebroadcast, dial 800-405-2236 or 303-590-3000. The conference ID number is 500362. To participate via the webcast, log on to WWW.HCREIT.COM or WWW.CCBN.COM 15 minutes before the call to download the necessary software. Replay will be available for 90 days through the same websites. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care facilities, primarily skilled nursing and assisted living facilities. At June 30, 2002, the company had investments in 229 health care facilities in 34 states and total assets of approximately $1.5 billion. For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code - HCN. More information is available on the Internet at http://www.hcreit.com. This document may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern the possible expansion of our portfolio; the performance of our operators and properties; our ability to obtain new viable tenants for properties which we take back from financially troubled tenants, if any; our ability to make distributions; our policies and plans regarding investments, financings and other matters; our tax status as a real estate investment trust; our ability to appropriately balance the use of debt and equity; and our ability to access capital markets or other sources of funds. When we use words such as "believes," "expects," "anticipates," or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Our expected results may not be achieved, and actual results may differ materially from our expectations. This may be a result of various factors, including: the status of the economy; the status of capital markets, including prevailing interest rates; compliance with and changes to regulations and payment policies within the health care industry; changes in financing terms; competition within the health care and senior housing industries; and changes in federal, state and local legislation. Finally, we assume no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements. ##### 23 EX-99.6 8 l96752aexv99w6.txt EXHIBIT 99.6 PRESS RELEASE DATED OCT 8, 2002 EXHIBIT 99.6 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E October 8, 2002 For more information contact: Ray Braun (419) 247-2800 Mike Crabtree (419) 247-2800 HEALTH CARE REIT, INC. ANNOUNCES INVESTMENTS OF $105 MILLION FOR THIRD QUARTER Toledo, Ohio, October 8, 2002.....HEALTH CARE REIT, INC. (NYSE/HCN) announced today that it had completed $105 million of investments during the third quarter of 2002. The investment activity during the quarter was approximately 82% real property investments and 18% loans. Facility-based investments include 21% assisted living facilities, 71% skilled nursing facilities and 8% specialty care facilities. Aggregate funding was provided to 15 operators in 13 states. Included in the investments for the quarter was $12.8 million for three construction projects. These projects have total estimated construction costs of $56.4 million, with the remainder anticipated to be funded over the next 12 to 18 months. Also during the quarter, the company had $51.7 million of asset sales and loan payoffs relating to seven assisted living facilities and one parcel of land. Through September 30, 2002, the company has completed investments of $330 million, offset by $85 million of asset sales and loan payoffs, generating $245 million in net new investments. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care facilities, primarily skilled nursing and assisted living facilities. At June 30, 2002, the company had investments in 229 health care facilities in 34 states and total assets of approximately $1.5 billion. For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code - HCN. More information is available on the Internet at http://www.hcreit.com. This document may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern the possible expansion of our portfolio; the performance of our operators and properties; our ability to obtain new viable tenants for properties which we take back from financially troubled tenants, if any; our ability to make distributions; our policies and plans regarding investments, financings and other matters; our tax status as a real estate investment trust; our ability to appropriately balance the use of debt and equity; and our ability to access capital markets or other sources of funds. When we use words such as "believes," "expects," "anticipates," or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Our expected results may not be achieved, and actual results may differ materially from our expectations. This may be a result of various factors, including: the status of the economy; the status of capital markets, including prevailing interest rates; compliance with and changes to regulations and payment policies within the health care industry; changes in financing terms; competition within the health care and senior housing industries; and changes in federal, state and local legislation. Finally, we assume no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements. ##### 24 EX-99.7 9 l96752aexv99w7.txt EXHIBIT 99.7 PRESS RELEASE DATED OCT 15, 2002 EXHIBIT 99.7 [HEALTH CARE REIT LOGO] F O R I M M E D I A T E R E L E A S E OCTOBER 15, 2002 FOR MORE INFORMATION CONTACT: RAY BRAUN - (419) 247-2800 MIKE CRABTREE - (419) 247-2800 HEALTH CARE REIT, INC. REPORTS 11% FFO GROWTH IN THIRD QUARTER RESULTS; DECLARES REGULAR DIVIDEND Toledo, Ohio, October 15, 2002........HEALTH CARE REIT, INC. (NYSE/HCN) today announced operating results for its third quarter of 2002. The company continues to meet its financial and operational expectations. "Once again we are pleased to report the progress we have made during the quarter towards achieving several of our stated goals," commented George L. Chapman, chief executive officer. "As previously stated, reducing the payout ratio to the mid 80 percent level has been one of our priorities, and we attained this goal due to the 11% increase in FFO over the third quarter of 2001. We also made gross investments of $105 million, completed our revolving line of credit renewal and issued $150 million of senior notes. In addition, we increased our master lease portfolio to 85 percent and obtained a positive outlook from Moody's. Our new investments included three new operators. Given the considerable acquisition opportunities that are presently available in the market, we are raising our 2003 guidance to $2.82 to $2.87. We expect gross investments of $250 to $300 million over the next two quarters with net investments of $150 to $200 million." The Board of Directors declared a dividend for the quarter ended September 30, 2002, of $0.585 per share. The dividend represents the 126th consecutive dividend payment. The dividend will be payable November 20, 2002, to stockholders of record on October 31, 2002. SUMMARY OF THIRD QUARTER RESULTS - -------------------------------- (In thousands, except per share numbers) - -------------------------------------------------------------------------------- THREE MONTHS ENDED THREE MONTHS ENDED SEPTEMBER 30, 2002 SEPTEMBER 30, 2001 - -------------------------------------------------------------------------------- Revenues $42,373 $33,413 - -------------------------------------------------------------------------------- Net Income Available to Common Stockholders $16,885 $13,591 - -------------------------------------------------------------------------------- Funds From Operations (FFO) $26,664 $20,090 - -------------------------------------------------------------------------------- Net Income Per Diluted Share $0.43 $0.41 - -------------------------------------------------------------------------------- FFO Per Diluted Share $0.68 $0.61 - -------------------------------------------------------------------------------- Dividend Per Share $0.585 $0.585 - -------------------------------------------------------------------------------- FFO Payout Ratio 86% 96% - -------------------------------------------------------------------------------- 25 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - -------------------------------------------------------------------------------- Funds from operations (FFO), the generally accepted measure of operating performance for the real estate investment trust industry, totaled $26.7 million, or $0.68 per diluted share, for the third quarter of 2002, compared with $20.1 million, or $0.61 per diluted share, for the same period in 2001. SUMMARY OF YEAR TO DATE RESULTS - ------------------------------- (In thousands, except per share numbers) - -------------------------------------------------------------------------------- NINE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, 2002 SEPTEMBER 30, 2001 - -------------------------------------------------------------------------------- Revenues $118,046 $96,091 - -------------------------------------------------------------------------------- Net Income Available to Common Stockholders $42,888 $37,163 - -------------------------------------------------------------------------------- Funds From Operations (FFO) $71,795 $57,285 - -------------------------------------------------------------------------------- Net Income Per Diluted Share $1.18 $1.22 - -------------------------------------------------------------------------------- FFO Per Diluted Share $1.97 $1.89 - -------------------------------------------------------------------------------- Dividend Per Share $1.755 $1.755 - -------------------------------------------------------------------------------- FFO Payout Ratio 89% 93% - -------------------------------------------------------------------------------- FFO totaled $71.8 million, or $1.97 per diluted share for the nine months ended September 30, 2002, compared with $57.3 million, or $1.89 per diluted share, for the same period in 2001. The company had a total outstanding debt balance of $639.5 million at September 30, 2002, as compared with $416.1 million in third quarter 2001, and stockholders' equity of $879.6 million, which represents a debt to total capitalization ratio of 42 percent. The company's coverage ratio of EBITDA to interest was 3.76 to 1.00 for the twelve months ended September 30, 2002. PORTFOLIO UPDATE. The portfolio results met the company's expectations. The seasoning of the assisted living portfolio is on target. The company ended the quarter with 16 assisted living facilities remaining in fill-up, representing 9 percent of revenues. Four assisted living facilities, representing 4 percent of revenues, have occupancy less than 50 percent. OUTLOOK FOR 2002 & 2003. Based upon the investment activity through the third quarter, the company expects to report FFO in the range of $2.65 to $2.67 per share for the full year 2002 and $2.82 to $2.87 for the year 2003. CONFERENCE CALL INFORMATION. Health Care REIT, Inc. has scheduled a conference call on October 15, 2002, at 3:00 PM EST to discuss its third quarter 2002 performance, industry trends, portfolio performance, and its outlook for the remainder of 2002. To participate on the webcast, log on to www.hcreit.com or www.ccbn.com 15 minutes before the call to download the necessary software. Replays will be available for 90 days through the same websites. Health Care REIT, Inc., with headquarters in Toledo, Ohio, is a real estate investment trust that invests in health care facilities, primarily skilled nursing facilities and assisted living facilities. At September 30, 2002, the company had investments in 237 health care facilities in 33 states and had total assets of approximately $1.5 billion. For more information on Health Care REIT, Inc., via facsimile at no cost, dial 1-800-PRO-INFO and enter the company code - HCN. More information is available on the Internet at http://www.hcreit.com. This document and supporting schedules may contain "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern the possible expansion of our portfolio; the performance of our operators and properties; our ability to obtain new viable tenants for properties which we take back from financially troubled tenants, if any; our ability to make distributions; our policies and plans regarding investments, financings and other matters; our tax status as a real estate investment trust; our ability to appropriately balance the use of debt and equity; and our ability to access capital markets or other sources of funds. When we use words such as "believes", "expects", "anticipates", or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Our expected results may not be 26 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - -------------------------------------------------------------------------------- achieved, and actual results may differ materially from our expectations. This may be a result of various factors, including: the status of the economy; the status of capital markets, including prevailing interest rates; compliance with and changes to regulations and payment policies within the health care industry; changes in financing terms; competition within the health care and senior housing industries; and changes in federal, state and local legislation. Finally, we assume no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements. FINANCIAL SCHEDULES FOLLOW ##### 27 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - -------------------------------------------------------------------------------- HEALTH CARE REIT, INC. FINANCIAL SUPPLEMENT CONSOLIDATED BALANCE SHEETS (UNAUDITED) (AMOUNTS IN THOUSANDS) SEPTEMBER 30 --------------------------- 2002 2001 --------------------------- ASSETS Real estate investments: Real property owned Land $ 105,480 $ 79,861 Buildings & improvements 1,187,408 836,867 Construction in progress 12,791 8,995 ----------- ----------- 1,305,679 925,723 Less accumulated depreciation (102,286) (71,564) ----------- ----------- Total real property owned 1,203,393 854,159 Loans receivable Real property loans 236,046 234,886 Subdebt investments 23,057 23,426 ----------- ----------- 259,103 258,312 Less allowance for losses on loans receivable (7,611) (6,611) ----------- ----------- 251,492 251,701 ----------- ----------- Net real estate investments 1,454,885 1,105,860 Other assets: Equity investments 7,215 6,585 Deferred loan expenses 9,708 7,266 Cash and cash equivalents 21,440 43,564 Receivables and other assets 36,255 32,012 ----------- ----------- 74,618 89,427 ----------- ----------- TOTAL ASSETS $ 1,529,503 $ 1,195,287 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Borrowings under line of credit obligations $ 72,600 $ 0 Senior unsecured notes 515,000 412,250 Secured debt 51,937 3,801 Accrued expenses and other liabilities 10,324 16,250 ----------- ----------- Total liabilities 649,861 432,301 Stockholders' equity: Preferred stock 127,500 150,000 Common stock 39,057 32,490 Capital in excess of par value 764,261 603,705 Cumulative net income 565,321 499,579 Cumulative dividends (612,365) (518,501) Accumulated other comprehensive income (370) (873) Unamortized restricted stock (3,762) (3,414) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 879,642 762,986 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,529,503 $ 1,195,287 =========== =========== 28 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - -------------------------------------------------------------------------------- HEALTH CARE REIT, INC. FINANCIAL SUPPLEMENT CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------ -------------------- 2002 2001 2002 2001 ------------------ -------------------- Revenues: Operating lease rents $34,407 $ 24,436 $ 94,880 $ 68,266 Interest income 7,127 7,187 21,022 23,974 Commitment fees and other income 839 934 2,144 2,861 Prepayment fees 0 856 0 990 ------- -------- --------- -------- Gross revenues 42,373 33,413 118,046 96,091 Expenses: Interest expense 9,990 7,353 29,537 22,562 Provision for depreciation 10,158 6,969 27,916 20,195 General and administrative 2,496 2,070 7,040 5,956 Loan expense 599 447 1,756 1,212 Impairment of assets 0 0 550 0 Provision for losses 250 250 750 750 ------- -------- --------- -------- Total expenses 23,493 17,089 67,549 50,675 ------- -------- --------- -------- Income from continuing operations and before extraordinary item 18,880 16,324 50,497 45,416 Discontinued operations: Gain on sale of properties 439 101 584 124 Income from discontinued operations, net 444 755 1,806 1,964 ------- -------- --------- -------- 883 856 2,390 2,088 ------- -------- --------- -------- Income before extraordinary item 19,763 17,180 52,887 47,504 Loss on extinguishment of debt 0 (213) (403) (213) ------- -------- --------- -------- Net income 19,763 16,967 52,484 47,291 Preferred dividends 2,878 3,376 9,596 10,128 ------- -------- --------- -------- Net income available to common stockholders $16,885 $ 13,591 $ 42,888 $ 37,163 ======= ======== ========= ======== Average number of common shares outstanding: Basic 38,628 32,205 35,695 29,946 Diluted 39,324 32,763 36,451 30,358 Net income per share: Basic $ 0.44 $ 0.42 $ 1.20 $ 1.24 Diluted 0.43 0.41 1.18 1.22 Funds from operations: $26,664 $ 20,090 $ 71,795 $ 57,285 Funds from operations per share: Basic $ 0.69 $ 0.62 $ 2.01 $ 1.91 Diluted 0.68 0.61 1.97 1.89 Dividends per share $ 0.585 $ 0.585 $ 1.755 $ 1.755 29 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - -------------------------------------------------------------------------------- HEALTH CARE REIT, INC. FINANCIAL SUPPLEMENT - SEPTEMBER 30, 2002
- ----------------------------------------------------------------------------------------------------------------------- PORTFOLIO COMPOSITION ($000'S) EXHIBIT 1 ------------------------------ BALANCE SHEET DATA # Properties # Beds/Units Balance % Balance ------------------------------------------------------------------------------ Real Property 207 18,146 $ 1,203,393 82% Loans Receivable 30 3,778 236,046 16% Subdebt Investments 0 0 23,057 2% ------------------------------------------------------------------------------ Total Investments 237 21,924 $ 1,462,496 100% INVESTMENT DATA # Properties # Beds/Units Investment (1) % Investment ------------------------------------------------------------------------------ Assisted Living Facilities 154 10,396 $ 845,797 57% Skilled Nursing Facilities 75 10,202 523,668 36% Specialty Care Facilities 8 1,326 103,891 7% ------------------------------------------------------------------------------ Real Estate Investments 237 21,924 $ 1,473,356 100% INVESTMENT BY OWNER TYPE # Properties # Beds/Units Investment (1) % Investment ------------------------------------------------------------------------------ Publicly Traded 58 3,106 $ 207,548 14% Key Private 84 9,113 654,569 44% Privately Held 95 9,705 611,239 42% ------------------------------------------------------------------------------ Real Estate Investments 237 21,924 $ 1,473,356 100% NOTES: (1) REAL ESTATE INVESTMENTS INCLUDE GROSS REAL ESTATE INVESTMENTS AND CREDIT ENHANCEMENTS WHICH AMOUNTED TO $1,462,496,000 AND $10,860,000, RESPECTIVELY. - -----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- REVENUE COMPOSITION ($000'S) EXHIBIT 2 - ---------------------------- Three Months Ended Nine Months Ended September 30, 2002 September 30, 2002 ------------------------------------- ------------------------------------- REVENUE BY INVESTMENT TYPE (1) Real Property $ 36,332 83% $ 100,003 82% Loans Receivable & Other 6,681 15% 20,493 17% Subdebt Investments 761 2% 1,506 1% ------------------------------------- ------------------------------------- Total $ 43,774 100% $ 122,002 100% REVENUE BY FACILITY TYPE (1) Assisted Living Facilities $ 27,557 63% $ 77,256 63% Skilled Nursing Facilities 14,257 33% 40,158 33% Specialty Care Facilities 1,960 4% 4,588 4% ------------------------------------- ------------------------------------- Total $ 43,774 100% $ 122,002 100% REVENUE BY OWNER TYPE (1) Publicly Traded $ 7,863 18% $ 24,600 20% Key Private 20,259 46% 56,029 46% Privately Held 15,652 36% 41,373 34% ------------------------------------- ------------------------------------- Total $ 43,774 100% $ 122,002 100% NOTES: (1) REVENUES INCLUDE GROSS REVENUES, GAIN ON SALES, AND REVENUES FROM DISCONTINUED OPERATIONS. - -----------------------------------------------------------------------------------------------------------------------
30 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- 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 ------------------------------------------------------------------------------------------------------------------ 2002 $ 0 $ 905 $ 905 1% 2003 3,670 0 3,670 2% 2004 410 2,974 3,384 2% 2005 0 5,077 5,077 3% 2006 5,044 5,336 10,380 6% Thereafter 124,688 13,687 138,375 86% -------------------------------------------------------------------------------------------- Total $ 133,812 $ 27,979 $ 161,791 100% NOTES: (1) REVENUE IMPACT BY YEAR, ANNUALIZED. - -------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- COMMITTED INVESTMENT BALANCES EXHIBIT 4 ------------------------------ ($000'S EXCEPT INVESTMENT PER BED/UNIT) Committed Investment # Properties # Beds/Units Balance (1) per Bed/Unit ------------------------------------------------------------------------------- Assisted Living Facilities 154 10,396 $ 868,113 $ 83,505 Skilled Nursing Facilities 75 10,202 522,223 51,188 Specialty Care Facilities 8 1,326 125,966 94,997 ------------------------------------------------------------------------------- Total 237 21,924 $ 1,516,302 -na- NOTES: (1) COMMITTED BALANCE INCLUDES GROSS 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 ---------------------------------------------------------------------- Commonwealth Communities 10 $ 145,930 10% Merrill Gardens 20 145,409 10% Home Quality Management 19 114,932 8% Alterra Healthcare 45 107,081 7% Life Care Centers of America, Inc. 16 101,289 7% Remaining Operators 127 858,715 58% ---------------------------------------------------------------------- Total 237 $ 1,473,356 100% CONCENTRATION BY REVENUE # Properties Revenue (1) % Revenue ---------------------------------------------------------------------- Merrill Gardens 20 $ 13,073 11% Alterra Healthcare 45 10,995 9% Commonwealth Communities 10 10,679 9% Home Quality Management 19 10,176 8% Life Care Centers of America, Inc. 16 7,212 6% Remaining Operators 127 69,867 57% ---------------------------------------------------------------------- Total 237 $ 122,002 100% NOTES: (1) NINE MONTHS ENDED SEPTEMBER 30, 2002. - -------------------------------------------------------------------------------------------------------------------------
31 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- SELECTED FACILITY DATA EXHIBIT 6 ---------------------- Coverage Data % Payor Mix -------------------------------- --------------------------------- Before After Census Private Medicare Mgt. Fees Mgt. Fees -------------------------------------------------------------------------------- Assisted Living Facilities 86% 100% 0% 1.32x 1.12x Skilled Nursing Facilities 84% 21% 15% 1.77x 1.33x Specialty Care Facilities 65% 15% 31% 2.57x 1.97x -------------------------------- Weighted Averages 1.58x 1.28x - -------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- CREDIT SUPPORT ($000'S) EXHIBIT 7 ----------------------- Balance % Investment ------------------------------------------------------------- Cross Defaulted $ 1,408,301 96% of gross real estate investments Cross Collateralized 192,121 81% of loans receivable Master Leases 1,024,811 85% of real property owned CURRENT CAPITALIZATION ($000'S) LEVERAGE & PERFORMANCE RATIOS ------------------------------- ----------------------------------------- Balance % Balance ---------------------------------- Borrowings Under Bank Lines $ 72,600 5% Debt/Total Book Cap 42% Long-Term Debt Obligations 566,937 37% Debt/Total Mkt. Cap 35% Stockholders' Equity 879,642 58% Interest Coverage 3.94x 3rd Qtr. -------------------------------- 3.76x L12M Total Book Capitalization $ 1,519,179 100% FFO Payout Ratio 86% 3rd Qtr. 90% L12M - -------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- DEBT MATURITIES AND PRINCIPAL PAYMENTS ($000'S) EXHIBIT 8 ----------------------------------------------- Year Lines of Credit (1) Senior Notes Secured Debt (1) Total ----------------------------------------------------------------------------------------------------------------- 2002 $ 0 $ 0 $ 271 $ 271 2003 25,000 0 400 25,400 2004 0 40,000 64,474 104,474 2005 175,000 0 862 175,862 2006 0 50,000 398 50,398 2007 0 175,000 430 175,430 2008 0 100,000 464 100,464 Thereafter 0 150,000 44,638 194,638 ------------------------------------------------------------------------------------------ Total $ 200,000 $ 515,000 $ 111,937 $ 826,937 NOTES: (1) LINES OF CREDIT REFLECT 100% CAPACITY. - -------------------------------------------------------------------------------------------------------------------------
32 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- INVESTMENT ACTIVITY ($000'S) EXHIBIT 9 ---------------------------- Three Months Ended Nine Months Ended September 30, 2002 September 30, 2002 ---------------------------------- ---------------------------------- FUNDING BY INVESTMENT TYPE Real Property $ 85,811 82% $ 292,742 89% Mortgage & Other Loans 18,286 17% 35,660 10% Subdebt Investments 718 1% 1,830 1% ---------------------------------- ---------------------------------- Total $ 104,815 100% $ 330,232 100% REAL ESTATE INVESTMENTS Assisted Living Facilities $ 22,490 21% $ 157,539 48% Skilled Nursing Facilities 74,353 71% 156,120 47% Specialty Care Facilities 7,972 8% 16,573 5% ---------------------------------- ---------------------------------- Total $ 104,815 100% $ 330,232 100% - -------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------- GEOGRAPHIC CONCENTRATION ($000'S) EXHIBIT 10 --------------------------------- CONCENTRATION BY REGION # Properties Investment % Investment ----------------------- ---------------------- ---------------------- South 129 $ 640,925 43% Northeast 38 351,852 24% West 33 247,647 17% Midwest 37 232,932 16% ----------------------- ---------------------- ---------------------- Total 237 $ 1,473,356 100% CONCENTRATION BY STATE # Properties Investment % Investment ----------------------- ---------------------- ---------------------- Massachusetts 17 $ 187,920 13% Florida 31 153,272 10% Texas 32 120,971 8% Ohio 13 103,520 7% California 10 85,186 6% Remaining States 134 822,487 56% ----------------------- ---------------------- ---------------------- Total 237 $ 1,473,356 100% REVENUE BY STATE (1) # Properties Revenue (1) % Revenue ----------------------- ---------------------- ---------------------- Florida 31 $ 14,489 12% Massachusetts 17 14,594 12% Texas 32 9,920 8% Ohio 13 9,365 8% North Carolina 9 7,050 5% Remaining States 135 66,584 55% ----------------------- ---------------------- ---------------------- Total 237 $ 122,002 100% NOTES: (1) NINE MONTHS ENDED SEPTEMBER 30, 2002. - ------------------------------------------------------------------------------------------------------------------------
33 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------ FUNDS FROM OPERATIONS COMPUTATION ($000'S) EXHIBIT 11 -------------------------------------------- Three Months Ended Nine Months Ended September 30, 2002 September 30, 2002 ------------------------- ------------------------- Net Income Available to Common Stockholders $ 16,885 $ 42,888 Add: Depreciation Expense 10,158 27,916 Depreciation Expense-Discontinued Ops 60 622 Loss on Extinguishment 0 403 Loss on Sale of Assets 0 0 Asset Impairment 0 550 Deduct: Gain on Sale of Assets 439 584 Prepayment Fees 0 0 ------------------------- ------------------------- Funds From Operations (FFO) $ 26,664 $ 71,795 Average Common Shares Outstanding: Basic 38,628 35,695 Diluted 39,324 36,451 FFO Per Common Share: Basic $ 0.69 $ 2.01 Diluted 0.68 1.97 - -----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- DISPOSITION ACTIVITY EXHIBIT 12 -------------------- Three Months Ended Nine Months Ended September 30, 2002 September 30, 2002 ---------------------------------- ---------------------------------- DISPOSITIONS BY INVESTMENT TYPE Real Property $ 47,069 91% $ 48,423 57% Mortgage & Other Loans 4,627 9% 36,083 43% -------------- -------- --------------- ------- Total $ 51,696 100% $ 84,506 100% REAL ESTATE INVESTMENTS Assisted Living Facilities $ 51,696 100% $ 84,506 100% Skilled Nursing Facilities 0 0% 0 0% Specialty Care Facilities 0 0% 0 0% -------------- -------- --------------- ------- Total $ 51,696 100% $ 84,506 100% - -----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- LEASE UP STATISTICS ON ASSISTED LIVING FACILITIES EXHIBIT 13 ------------------------------------------------- OCCUPANCY Facilities Months in Operation Revenue (1) % of Revenue ---------------------------------------------------------------------------------- 00% - 50% 4 17 $ 4,399 4% 50% - 70% 4 21 2,812 2% 70% + 8 32 3,226 3% ---------------------------------------------------------------------------------- 16 -na- $ 10,437 9% NOTES: (1) INTEREST AND RENTAL INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002. - -----------------------------------------------------------------------------------------------------------------------
34 3Q02 EARNINGS RELEASE OCTOBER 15, 2002 - --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------- DISCONTINUED OPERATIONS COMPUTATION ($000'S) EXHIBIT 14 ---------------------------------------------- Three Months Ended Nine Months Ended September 30, 2002 September 30, 2002 ------------------------- ------------------------- REVENUES: Operating lease rents $ 962 $ 3,372 EXPENSES: Interest expense 458 944 Provision for depreciation 60 622 ------------------------- ------------------------- Income from discontinued operations, net $ 444 $ 1,806 - -----------------------------------------------------------------------------------------------------------------------
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