8-K: Current report filing
Published on October 29, 2009
PRESS
RELEASE – FOR IMMEDIATE RELEASE
OMEGA
ANNOUNCES THIRD QUARTER 2009 FINANCIAL RESULTS;
ADJUSTED
FFO OF $0.37 PER SHARE FOR THE THIRD QUARTER
HUNT VALLEY, MARYLAND – October 29,
2009 – Omega Healthcare Investors, Inc. (NYSE:OHI) today announced its
results of operations for the quarter ended September 30, 2009. The
Company also reported Funds From Operations (“FFO”) available to common
stockholders for the three months ended September 30, 2009 of $30.0 million or
$0.36 per common share. The $30.0 million of FFO available to common
stockholders for the third quarter of 2009 includes a net loss of $0.1 million
associated with owned and operated assets, $0.5 million of non-cash restricted
stock expense and a $0.1 million non-cash provision for impairment on a real
estate asset. FFO is presented in accordance with the guidelines for
the calculation and reporting of FFO issued by the National Association of Real
Estate Investment Trusts (“NAREIT”). Adjusted FFO was $0.37 per
common share for the three months ended September 30, 2009. FFO and
Adjusted FFO are non-GAAP financial measures. Adjusted FFO excludes
the impact of certain non-cash items and certain items of revenue or expenses,
including: results of operations of owned and operated facilities during the
period, a non-cash provision for impairment and restricted stock
expense. For more information regarding FFO and Adjusted FFO, see the
“Funds From Operations” section below.
GAAP NET
INCOME
For the
three-month period ended September 30, 2009, the Company reported net income of
$21.1 million, net income available to common stockholders of $18.9 million, or
$0.22 per diluted common share on operating revenues of $49.8
million. This compares to net income of $28.1 million, net income
available to common stockholders of $25.6 million, or $0.33 per diluted common
share on operating revenues of $60.0 million for the same period in
2008.
For the
nine-month period ended September 30, 2009, the Company reported net income of
$65.9 million, net income available to common stockholders of $59.1 million, or
$0.71 per diluted common share on operating revenues of $148.1
million. This compares to net income of $62.4 million, net income available
to common stockholders of $55.0 million, or $0.76 per diluted common share on
operating revenues of $144.6 million for the same period in 2008.
The
year-to-date increases in net income and net income available to common
stockholders were primarily due to the impact of: i) $4.0 million of net cash
flow associated with legal settlements; ii) revenue associated with $60 million
of new investments completed since September 2008; iii) a $2.1 million reduction
in interest expense; and iv) a $4.3 million expense for uncollectible accounts
receivable recorded in 2008 and a net change of $1.5 million provision for
impairment charge. This impact was partially offset by: i) increased
depreciation expense associated with the new investments and ii) a $0.5 million
charge relating to the write-off of deferred financing credit facility costs
recorded in the second quarter of 2009.
THIRD QUARTER 2009
RESULTS
Operating
Revenues and Expenses – Operating revenues for the three months ended
September 30, 2009, excluding nursing home revenues of owned and operated assets
and therefore on a non-GAAP basis, were $45.0 million. Operating
expenses for the three months ended September 30, 2009, on a non-GAAP basis
excluding nursing home expenses for owned and operated assets, totaled $13.9
million, comprised of $11.1 million of depreciation and amortization
expense, $2.2 million of general and administrative expenses, $0.5 million of
restricted stock expense and a real estate impairment of $0.1
million. A reconciliation of these amounts to revenues and expenses
reported in accordance with GAAP is provided at the end of this
release.
Other Income and
Expense – Other income and expense for the three months ended September
30, 2009 was a net expense of $9.9 million and was primarily comprised of $9.2
million of interest expense and $0.7 million of amortized deferred financing
costs.
Funds From
Operations – For the three months ended September 30, 2009, reportable
FFO available to common stockholders was $30.0 million, or $0.36 per common
share on 83.9 million weighted-average common shares outstanding, compared
to $23.9 million, or $0.31 per common share on 76.7 million weighted-average
common shares outstanding, for the same period in 2008.
The $30.0
million of FFO for the quarter includes the impact of $0.5 million of non-cash
restricted stock expense, a $0.1 million net loss associated with owned and
operated assets and a real estate impairment of $0.1 million. The
$23.9 million of FFO for the three months ended September 30, 2008, includes the
impact of: (i) a $1.5 million net loss associated with owned and operated
assets; (ii) $0.5 million of non-cash restricted stock expense; (iii) a $0.2
million non-cash provision for real estate impairment; and (iv) $0.1 million
reduction in the Company’s provision for income taxes.
When
excluding the above mentioned items in 2009 and 2008, Adjusted FFO was $30.7
million, or $0.37 per common share, for the three months ended September 30,
2009, compared to $26.0 million, or $0.34 per common share, for the same period
in 2008. The Company had 7.2 million additional weighted-average
shares for the three months ended September 30, 2009, compared to the same
period in 2008. The increase in weighted-average common shares was
primarily a result of: i) a 6.0 million share common stock offering on September
19, 2008; ii) approximately 1.3 million common shares issued under the Company’s
Dividend Reinvestment and Common Stock Purchase Plan; and iii) approximately 1.4
million common shares issued under the Company’s Equity Shelf
Program. For further information, see the attached “Funds From
Operations” schedule and notes.
FINANCING
ACTIVITIES
New $200 Million
Revolving Credit Facility – On June 30, 2009, the
Company entered into a new $200 million revolving senior secured credit facility
(the “New Credit Facility”). Banc of America Securities LLC and
Deutsche Bank Trust Company Americas were joint lead arrangers for the New
Credit Facility. Bank of America, N.A. was the administrative agent and UBS
Securities LLC and General Electric Capital Corporation participated in the New
Credit Facility in various agent capacities. The New Credit Facility
will be used for acquisitions and general corporate purposes.
The New
Credit Facility replaces the Company’s previous senior secured credit facility
(the “Prior Credit Facility”). The New Credit Facility matures in
three years, on June 30, 2012, and includes an “accordion feature” that permits
the Company to expand its borrowing capacity to $300 million in certain
circumstances during the first two years thereof, and is currently priced at
LIBOR plus 400 basis points with a 200 basis point LIBOR floor.
For the
nine-month period ended September 30, 2009, the Company recorded a
non-recurring, non-cash charge of approximately $0.5 million relating to the
write-off of deferred financing costs associated with the replacement of the
Prior Credit Facility. At September 30, 2009, the Company had $9.0
million of borrowings outstanding under the New Credit Facility.
Equity Shelf
Program– On June 12, 2009, the
Company entered into separate Equity Distribution Agreements with each of UBS
Securities LLC, Deutsche Bank Securities Inc. and Merrill Lynch, Pierce, Fenner
& Smith Incorporated, each as sales agents and/or principal (the
"Managers"). Under the terms of these agreements, the Company may
sell shares of its common stock, from time to time, through or to the Managers
having an aggregate gross sales price of up to $100,000,000 (the "Equity Shelf
Program"). Sales of the shares, if any, will be made by means of
ordinary brokers’ transactions on the New York Stock Exchange at market prices,
or as otherwise agreed with the applicable Manager. The Company will
pay each Manager, compensation for sales of the shares equal to 2% of the gross
sales price per share of shares sold through such Manager, as sales agent, under
the applicable agreement.
During
the third quarter of 2009, the Company issued 1.4 million shares of its common
stock under the Equity Shelf Program at an average price of $17.17 per share,
resulting in net proceeds of approximately $23.8 million.
DIVIDENDS
Common Dividends
– On October 20, 2009, the Company’s Board of Directors announced a
common stock dividend of $0.30 per share to be paid November 16, 2009 to common
stockholders of record on November 2, 2009. At the date of this
release, the Company had approximately 85.1 million outstanding common
shares.
Series D
Preferred Dividends –
On October 20, 2009, the Company’s Board of Directors declared the
regular quarterly dividends for the Company’s 8.375% Series D Cumulative
Redeemable Preferred Stock (“Series D Preferred Stock”) to stockholders of
record on November 2, 2009. The stockholders of record of the Series
D Preferred Stock on November 2, 2009 will be paid dividends in the amount of
$0.52344 per preferred share on November 16, 2009. The liquidation
preference for the Company’s Series D Preferred Stock is $25.00 per share.
Regular quarterly preferred dividends for the Series D Preferred Stock represent
dividends for the period August 1, 2009 through October 30, 2009.
2009 ADJUSTED FFO GUIDANCE
AFFIRMATION
The
Company affirmed its 2009 Adjusted FFO available to common stockholders guidance
of between $1.47 and $1.50 per diluted share, as previously announced on
February 6, 2009.
The
Company's Adjusted FFO guidance for 2009 excludes the impacts of future
acquisitions, gains and losses from the sale of assets, additional divestitures,
certain revenue and expense items, capital transactions and restricted stock
amortization expense. A reconciliation of the Adjusted FFO guidance to the
Company's projected GAAP earnings is provided on a schedule attached to this
press release. The Company may, from time to time, update its
publicly announced Adjusted FFO guidance, but it is not obligated to do
so.
The
Company's Adjusted FFO guidance is based on a number of assumptions, which are
subject to change and many of which are outside the control of the
Company. If actual results vary from these assumptions, the Company's
expectations may change. Without limiting the generality of the
foregoing, the completion of acquisitions, divestitures, capital and financing
transactions, variations in restricted stock amortization expense, and the
factors identified below may cause actual results to vary materially from our
current expectations. There can be no assurance that the Company will achieve
its projected results.
CONFERENCE
CALL
The
Company will be conducting a conference call on Thursday, October 29, 2009, at
10 a.m. EDT to review the Company’s 2009 third quarter results and current
developments. To listen to the conference call via webcast, log on to www.omegahealthcare.com
and click the “earnings call” icon on the Company’s home
page. Webcast replays of the call will be available on the Company’s
website for two weeks following the call.
* * * * * *
The
Company is a real estate investment trust investing in and providing financing
to the long-term care industry. At September 30, 2009, the Company
owned or held mortgages on 254 skilled nursing facilities and assisted living
facilities with approximately 29,126 licensed beds (27,708 available beds)
located in 28 states and operated by 25 third-party healthcare operating
companies.
FOR
FURTHER INFORMATION, CONTACT
Bob
Stephenson, CFO at (410) 427-1700
________________________
This
announcement includes forward-looking statements, including without limitation
the information under the heading “2009 Adjusted FFO Guidance
Affirmation.” Actual results may differ materially from those
reflected in such forward-looking statements as a result of a variety of
factors, including, among other things: (i) uncertainties relating to the
business operations of the operators of the Company’s properties, including
those relating to reimbursement by third-party payors, regulatory matters and
occupancy levels; (ii) regulatory and other changes in the healthcare sector,
including without limitation, changes in Medicare reimbursement; (iii) changes
in the financial position of the Company’s operators; (iv) the ability of
operators in bankruptcy to reject unexpired lease obligations, modify the terms
of the Company’s mortgages, and impede the ability of the Company to collect
unpaid rent or interest during the pendency of a bankruptcy proceeding and
retain security deposits for the debtor's obligations; (v) the availability and
cost of capital; (vi) the Company’s ability to maintain its credit ratings;
(vii) competition in the financing of healthcare facilities; (viii) the
Company’s ability to maintain its status as a real estate investment trust; (ix)
the Company’s ability to manage, re-lease or sell any owned and
operated facilities; (x) the Company’s ability to sell closed or foreclosed
assets on a timely basis and on terms that allow the Company to realize the
carrying value of these assets; (xi) the effect of economic and market
conditions generally, and particularly in the healthcare finance industry; (xii)
the potential impact of a general economic slowdown on governmental budgets and
healthcare reimbursement expenditures; and (xiii) other factors identified in
the Company’s filings with the Securities and Exchange
Commission. Statements regarding future events and developments and the
Company’s future performance, as well as management's expectations, beliefs,
plans, estimates or projections relating to the future, are forward-looking
statements. The Company undertakes no obligation to update any
forward-looking statements contained in this material.
OMEGA
HEALTHCARE INVESTORS, INC.
CONSOLIDATED
BALANCE SHEETS
(in
thousands)
|
September
30,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
(Unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
Real
estate properties
|
||||||||
|
Land and buildings
|
$ | 1,385,625 | $ | 1,372,012 | ||||
|
Less accumulated
depreciation
|
(284,782 | ) | (251,854 | ) | ||||
|
Real estate properties –
net
|
1,100,843 | 1,120,158 | ||||||
|
Mortgage notes receivable –
net
|
100,531 | 100,821 | ||||||
| 1,201,374 | 1,220,979 | |||||||
|
Other
investments – net
|
29,440 | 29,864 | ||||||
| 1,230,814 | 1,250,843 | |||||||
|
Assets
held for sale – net
|
887 | 150 | ||||||
|
Total investments
|
1,231,701 | 1,250,993 | ||||||
|
Cash
and cash equivalents
|
646 | 209 | ||||||
|
Restricted
cash
|
6,678 | 6,294 | ||||||
|
Accounts
receivable – net
|
81,274 | 75,037 | ||||||
|
Other
assets
|
12,145 | 18,613 | ||||||
|
Operating
assets for owned and operated properties
|
3,949 | 13,321 | ||||||
|
Total assets
|
$ | 1,336,393 | $ | 1,364,467 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Revolving
line of credit
|
$ | 9,000 | $ | 63,500 | ||||
|
Unsecured
borrowings – net
|
484,685 | 484,697 | ||||||
|
Accrued
expenses and other liabilities
|
27,106 | 25,420 | ||||||
|
Operating
liabilities for owned and operated properties
|
1,449 | 2,862 | ||||||
|
Total liabilities
|
522,240 | 576,479 | ||||||
|
Stockholders’
equity:
|
||||||||
|
Preferred stock issued and
outstanding – 4,340 shares Series D with an aggregate liquidation
preference of $108,488
|
108,488 | 108,488 | ||||||
|
Common
stock $.10 par value authorized – 200,000 shares: issued and outstanding –
84,904 shares as of September 30, 2009 and 82,382 as of December 31,
2008
|
8,490 | 8,238 | ||||||
|
Common
stock – additional paid-in-capital
|
1,095,578 | 1,054,157 | ||||||
|
Cumulative
net earnings
|
506,149 | 440,277 | ||||||
|
Cumulative
dividends paid
|
(904,552 | ) | (823,172 | ) | ||||
|
Total stockholders’ equity
|
814,153 | 787,988 | ||||||
|
Total liabilities and
stockholders’ equity
|
$ | 1,336,393 | $ | 1,364,467 | ||||
OMEGA
HEALTHCARE INVESTORS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
Unaudited
(in
thousands, except per share amounts)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Revenues
|
||||||||||||||||
|
Rental income
|
$ | 41,226 | $ | 37,265 | $ | 123,626 | $ | 115,052 | ||||||||
|
Mortgage interest income
|
2,915 | 3,007 | 8,686 | 6,536 | ||||||||||||
|
Other investment income –
net
|
694 | 313 | 1,844 | 1,531 | ||||||||||||
|
Miscellaneous
|
160 | 73 | 364 | 2,140 | ||||||||||||
|
Nursing home revenues of owned
and operated assets
|
4,758 | 19,341 | 13,545 | 19,341 | ||||||||||||
|
Total
operating revenues
|
49,753 | 59,999 | 148,065 | 144,600 | ||||||||||||
|
Expenses
|
||||||||||||||||
|
Depreciation and amortization
|
11,093 | 10,076 | 33,014 | 29,185 | ||||||||||||
|
General and administrative
|
2,195 | 2,399 | 7,481 | 7,413 | ||||||||||||
|
Restricted stock expense
|
480 | 526 | 1,439 | 1,577 | ||||||||||||
|
Impairment loss on real estate
properties
|
89 | 170 | 159 | 1,684 | ||||||||||||
|
Provision for uncollectible
accounts receivable
|
- | - | - | 4,268 | ||||||||||||
|
Nursing home expenses of owned and
operated assets
|
4,899 | 20,833 | 15,750 | 20,833 | ||||||||||||
|
Total
operating expenses
|
18,756 | 34,004 | 57,843 | 64,960 | ||||||||||||
|
Income
before other income and expense
|
30,997 | 25,995 | 90,222 | 79,640 | ||||||||||||
|
Other
income (expense):
|
||||||||||||||||
|
Interest and other investment
income
|
2 | 74 | 19 | 197 | ||||||||||||
|
Interest
|
(9,171 | ) | (9,375 | ) | (26,656 | ) | (28,805 | ) | ||||||||
|
Interest – amortization of
deferred financing costs
|
(690 | ) | (500 | ) | (1,690 | ) | (1,500 | ) | ||||||||
|
Interest – refinancing costs
|
- | - | (526 | ) | - | |||||||||||
|
Litigation settlements
|
- | - | 4,527 | 526 | ||||||||||||
|
Total
other expense
|
(9,859 | ) | (9,801 | ) | (24,326 | ) | (29,582 | ) | ||||||||
|
Income
before gain (loss) on assets sold
|
21,138 | 16,194 | 65,896 | 50,058 | ||||||||||||
|
Gain
(loss) on assets sold – net
|
- | 11,806 | (24 | ) | 11,852 | |||||||||||
|
Income
from continuing operations before income taxes
|
21,138 | 28,000 | 65,872 | 61,910 | ||||||||||||
|
Income
taxes
|
- | 72 | - | 72 | ||||||||||||
|
Income
from continuing operations
|
21,138 | 28,072 | 65,872 | 61,982 | ||||||||||||
|
Discontinued
operations
|
- | - | - | 446 | ||||||||||||
|
Net
income
|
21,138 | 28,072 | 65,872 | 62,428 | ||||||||||||
|
Preferred
stock dividends
|
(2,271 | ) | (2,480 | ) | (6,814 | ) | (7,442 | ) | ||||||||
|
Net
income available to common stockholders
|
$ | 18,867 | $ | 25,592 | $ | 59,058 | $ | 54,986 | ||||||||
|
Income
per common share available to common stockholders:
|
||||||||||||||||
|
Basic:
|
||||||||||||||||
|
Income from continuing
operations
|
$ | 0.23 | $ | 0.33 | $ | 0.71 | $ | 0.75 | ||||||||
|
Net income
|
$ | 0.23 | $ | 0.33 | $ | 0.71 | $ | 0.76 | ||||||||
|
Diluted:
|
||||||||||||||||
|
Income from continuing
operations
|
$ | 0.22 | $ | 0.33 | $ | 0.71 | $ | 0.75 | ||||||||
|
Net income
|
$ | 0.22 | $ | 0.33 | $ | 0.71 | $ | 0.76 | ||||||||
|
Dividends
declared and paid per common share
|
$ | 0.30 | $ | 0.30 | $ | 0.90 | $ | 0.89 | ||||||||
|
Weighted-average
shares outstanding, basic
|
83,740 | 76,590 | 82,903 | 72,737 | ||||||||||||
|
Weighted-average
shares outstanding, diluted
|
83,858 | 76,702 | 83,004 | 72,829 | ||||||||||||
|
Components
of other comprehensive income:
|
||||||||||||||||
|
Net
income
|
$ | 21,138 | $ | 28,072 | $ | 65,872 | $ | 62,428 | ||||||||
|
Total
comprehensive income
|
$ | 21,138 | $ | 28,072 | $ | 65,872 | $ | 62,428 | ||||||||
OMEGA
HEALTHCARE INVESTORS, INC.
FUNDS
FROM OPERATIONS
Unaudited
(In
thousands, except per share amounts)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Net
income available to common stockholders
|
$ | 18,867 | $ | 25,592 | $ | 59,058 | $ | 54,986 | ||||||||
|
(Deduct gain) add back loss
from real estate dispositions(1)
|
— | (11,806 | ) | 24 | (12,283 | ) | ||||||||||
|
Sub-total
|
18,867 | 13,786 | 59,082 | 42,703 | ||||||||||||
|
Elimination of non-cash items
included in net income:
|
||||||||||||||||
|
Depreciation and
amortization(1)
|
11,093 | 10,076 | 33,014 | 29,185 | ||||||||||||
|
Funds
from operations available to common stockholders
|
$ | 29,960 | $ | 23,862 | $ | 92,096 | $ | 71,888 | ||||||||
|
Weighted-average
common shares outstanding, basic
|
83,740 | 76,590 | 82,903 | 72,737 | ||||||||||||
|
Effect of restricted stock
awards
|
107 | 100 | 89 | 80 | ||||||||||||
|
Assumed exercise of stock
options
|
11 | 12 | 11 | 12 | ||||||||||||
|
Deferred stock
|
— | — | 1 | — | ||||||||||||
|
Weighted-average
common shares outstanding, diluted
|
83,858 | 76,702 | 83,004 | 72,829 | ||||||||||||
|
Fund
from operations per share available to common stockholders
|
$ | 0.36 | $ | 0.31 | $ | 1.11 | $ | 0.99 | ||||||||
|
Adjusted
funds from operations:
|
||||||||||||||||
|
Funds from operations available
to common stockholders
|
$ | 29,960 | $ | 23,862 | $ | 92,096 | $ | 71,888 | ||||||||
|
Deduct litigation
settlements
|
— | — | (4,527 | ) | (526 | ) | ||||||||||
|
Deduct one-time cash
revenue
|
— | — | — | (702 | ) | |||||||||||
|
Deduct FIN 46R adjustment
|
— | — | — | (90 | ) | |||||||||||
|
Deduct collection of prior
operator’s past due rental obligation
|
— | — | — | (650 | ) | |||||||||||
|
Deduct provision for income
taxes
|
— | (72 | ) | — | (72 | ) | ||||||||||
|
Deduct nursing home
revenues
|
(4,758 | ) | (19,341 | ) | (13,545 | ) | (19,341 | ) | ||||||||
|
Add back non-cash provision for
uncollectible accounts receivable
|
— | — | — | 4,268 | ||||||||||||
|
Add back non-cash provision for
impairments on real estate properties(1)
|
89 | 170 | 159 | 1,684 | ||||||||||||
|
Add back nursing home
expenses
|
4,899 | 20,833 | 15,750 | 20,833 | ||||||||||||
|
Add back one-time interest
refinancing expense
|
— | — | 526 | — | ||||||||||||
|
Add back non-cash restricted
stock expense
|
480 | 526 | 1,439 | 1,577 | ||||||||||||
|
Adjusted
funds from operations available to common stockholders
|
$ | 30,670 | $ | 25,978 | $ | 91,898 | $ | 78,869 | ||||||||
(1)
Includes
amounts in discontinued operations
This
press release includes Funds From Operations, or FFO, which is a non-GAAP
financial measure. For purposes of the Securities and Exchange
Commission’s Regulation G, a non-GAAP financial measure is a numerical measure
of a company’s historical or future financial performance, financial position or
cash flows that excludes amounts, or is subject to adjustments that have the
effect of excluding amounts, that are included in the most directly comparable
financial measure calculated and presented in accordance with GAAP in the
statement of operations, balance sheet or statement of cash flows (or equivalent
statements) of the company, or includes amounts, or is subject to adjustments
that have the effect of including amounts, that are excluded from the most
directly comparable financial measure so calculated and presented. As
used in this press release, GAAP refers to generally accepted accounting
principles in the United States of America. Pursuant to the
requirements of Regulation G, the Company has provided reconciliations of the
non-GAAP financial measures to the most directly comparable GAAP financial
measures.
The
Company calculates and reports FFO in accordance with the definition and
interpretive guidelines issued by the National Association of Real Estate
Investment Trusts ("NAREIT"), and consequently, FFO is defined as net income
available to common stockholders, adjusted for the effects of asset dispositions
and certain non-cash items, primarily depreciation and
amortization. The Company believes that FFO is an important
supplemental measure of its operating performance. Because the
historical cost accounting convention used for real estate assets requires
depreciation (except on land), such accounting presentation implies that the
value of real estate assets diminishes predictably over time, while real estate
values instead have historically risen or fallen with market
conditions. The term FFO was designed by the real estate industry to
address this issue. FFO herein is not necessarily comparable to FFO
of other real estate investment trusts, or REITs, that do not use the same
definition or implementation guidelines or interpret the standards differently
from the Company.
In
February 2004, NAREIT informed its member companies that it was adopting the
position of the SEC with respect to asset impairment charges and would no longer
recommend that impairment write-downs be excluded from FFO. In the
tables included in this press release, the Company has applied this
interpretation and has not excluded asset impairment charges in calculating its
FFO. As a result, its FFO may not be comparable to similar measures
reported in previous disclosures. According to NAREIT, there is
inconsistency among NAREIT member companies as to the adoption of this
interpretation of FFO. Therefore, a comparison of the Company’s FFO
results to another company's FFO results may not be meaningful.
The
Company uses FFO as one of several criteria to measure the operating performance
of its business. The Company further believes that by excluding the
effect of depreciation, amortization and gains or losses from sales of real
estate, all of which are based on historical costs and which may be of limited
relevance in evaluating current performance, FFO can facilitate comparisons of
operating performance between periods and between other REITs. The Company offers this
measure to assist the users of its financial statements in analyzing its
performance; however, this is not a measure of financial performance under GAAP
and should not be considered a measure of liquidity, an alternative to net
income or an indicator of any other performance measure determined in accordance
with GAAP. Investors and potential investors in the Company’s
securities should not rely on this measure as a substitute for any GAAP measure,
including net income.
Adjusted
FFO is calculated as FFO available to common stockholders less non-cash
stock-based compensation and one-time revenue and expense items. The
Company believes that Adjusted FFO provides an enhanced measure of the operating
performance of the Company’s core portfolio as a REIT. The Company's
computation of Adjusted FFO is not comparable to the NAREIT definition of FFO or
to similar measures reported by other REITs, but the Company believes it is an
appropriate measure for this Company.
The
following table presents a reconciliation of our guidance regarding 2009 FFO and
Adjusted FFO to net income available to common stockholders:
|
2009
Projected
|
||||||||||||
|
Per
diluted share:
|
||||||||||||
|
Net
income available to common stockholders
|
$ | 0.95 | − | $ | 0.98 | |||||||
|
Adjustments:
|
||||||||||||
|
Depreciation and
amortization
|
0.52 | − | 0.52 | |||||||||
|
Funds
from operations available to common stockholders
|
$ | 1.47 | − | $ | 1.50 | |||||||
|
Adjustments:
|
||||||||||||
|
Legal settlement income
|
(0.05 | ) | − | (0.05 | ) | |||||||
|
Nursing home revenue and expense
- net
|
0.02 | − | 0.02 | |||||||||
|
Interest expense -
refinancing
|
0.01 | − | 0.01 | |||||||||
|
Impairment on real estate
assets
|
0.00 | − | 0.00 | |||||||||
|
Restricted stock expense
|
0.02 | − | 0.02 | |||||||||
|
Adjusted
funds from operations available to common stockholders
|
$ | 1.47 | − | $ | 1.50 | |||||||
The
table below reconciles reported revenues and expenses to revenues and expenses
excluding nursing home revenues and expenses of owned and operated
assets:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(in
thousands)
|
||||||||||||||||
|
Total
operating revenues
|
$ | 49,753 | $ | 59,999 | $ | 148,065 | $ | 144,600 | ||||||||
|
Nursing
home revenues of owned and operated assets
|
4,758 | 19,341 | 13,545 | 19,341 | ||||||||||||
|
Revenues
excluding nursing home revenues of owned and operated
assets
|
$ | 44,995 | $ | 40,658 | $ | 134,520 | $ | 125,259 | ||||||||
|
Total
operating expenses
|
$ | 18,756 | $ | 34,004 | $ | 57,843 | $ | 64,960 | ||||||||
|
Nursing
home expenses of owned and operated assets
|
4,899 | 20,833 | 15,750 | 20,833 | ||||||||||||
|
Expenses
excluding nursing home expenses of owned and operated
assets
|
$ | 13,857 | $ | 13,171 | $ | 42,093 | $ | 44,127 | ||||||||
This
press release includes references to revenues and expenses excluding nursing
home and operated assets, which are non-GAAP financial measures. The
Company believes that presentation of the Company's revenues and expenses,
excluding nursing home owned and operated assets, provides a useful measure of
the operating performance of the Company's core portfolio as a real estate
investment trust in view of the disposition of all but two of the Company's
owned and operated assets and short term holding of owned and operated assets.
The table below reconciles reported revenues and expenses to revenues and
expenses excluding nursing home revenues and expenses of owned and operated
assets.
The
following tables present selected portfolio information, including operator and
geographic concentrations, and revenue maturities for the period ending
September 30, 2009:
|
Portfolio
Composition ($000's)
|
||||||||||||||||||||
|
Balance
Sheet Data
|
#
of Properties
|
#
of Licensed Beds
|
Investment
|
%
Investment
|
||||||||||||||||
|
Real
Property(1)(3)
|
239 | 27,141 | $ | 1,404,825 | 93 | % | ||||||||||||||
|
Loans
Receivable(2)
|
15 | 1,985 | 100,531 | 7 | % | |||||||||||||||
|
Total
Investments
|
254 | 29,126 | $ | 1,505,356 | 100 | % | ||||||||||||||
|
Investment
Data
|
#
of Properties
|
#
of Licensed Beds
|
Investment
|
%
Investment
|
Investment
per Bed
|
|||||||||||||||
|
Skilled
Nursing Facilities (1) (2)
(3)
|
243 | 28,499 | $ | 1,445,665 | 96 | % | $ | 51 | ||||||||||||
|
Assisted
Living Facilities
|
7 | 393 | 29,854 | 2 | % | 76 | ||||||||||||||
|
Rehab
Hospitals
|
4 | 234 | 29,837 | 2 | % | 128 | ||||||||||||||
| 254 | 29,126 | $ | 1,505,356 | 100 | % | $ | 52 | |||||||||||||
|
(1)
Includes $19.2 million for lease inducement.
(2)
Includes $1.0 million of unamortized principal.
(3)
Excludes two facilities classified as held for sale.
|
||||||||||||||||||||
|
Revenue
Composition ($000's)
|
||||||||||||||||
|
Revenue by Investment Type
(1)
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
|
September
30, 2009
|
September
30, 2009
|
|||||||||||||||
|
Rental
Property
|
$ | 41,226 | 92 | % | $ | 123,626 | 92 | % | ||||||||
|
Mortgage
Notes
|
2,915 | 7 | % | 8,686 | 7 | % | ||||||||||
|
Other
Investment Income
|
694 | 1 | % | 1,844 | 1 | % | ||||||||||
| $ | 44,835 | 100 | % | $ | 134,156 | 100 | % | |||||||||
|
Revenue by Facility Type
(1)
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
|
September
30, 2009
|
September
30, 2009
|
|||||||||||||||
|
Skilled
Nursing Facilities
|
$ | 43,239 | 96 | % | $ | 129,600 | 97 | % | ||||||||
|
Assisted
Living Facilities
|
597 | 1 | % | 1,796 | 1 | % | ||||||||||
|
Specialty
Hospitals
|
305 | 1 | % | 916 | 1 | % | ||||||||||
|
Other
|
694 | 2 | % | 1,844 | 1 | % | ||||||||||
| $ | 44,835 | 100 | % | $ | 134,156 | 100 | % | |||||||||
|
(1)
Excludes revenue from owned and operated assets.
|
||||||||||||||||
|
Operator
Concentration ($000's)
|
||||||||||||
|
Concentration
by Investment
|
#
of Properties
|
Investment
|
%
Investment
|
|||||||||
|
CommuniCare
Health Services
|
36 | $ | 317,822 | 21 | % | |||||||
|
Sun
Healthcare Group, Inc.
|
40 | 215,160 | 14 | % | ||||||||
|
Advocat
Inc.
|
40 | 151,775 | 10 | % | ||||||||
|
Guardian
LTC Management (1)
|
23 | 145,171 | 10 | % | ||||||||
|
Signature
Holdings, LLC
|
18 | 142,460 | 10 | % | ||||||||
|
Formation
Capital
|
14 | 120,699 | 8 | % | ||||||||
|
Nexion
Health, Inc.
|
19 | 80,113 | 5 | % | ||||||||
|
Essex
Healthcare Corp.
|
13 | 79,564 | 5 | % | ||||||||
|
Alpha
Healthcare Properties, LLC
|
8 | 55,834 | 4 | % | ||||||||
|
Mark
Ide Limited Liability Company
|
10 | 36,264 | 2 | % | ||||||||
|
Remaining
Operators (2)
(3)
|
33 | 160,494 | 11 | % | ||||||||
| 254 | $ | 1,505,356 | 100 | % | ||||||||
|
(1) Investment
amount includes a $19.2 million lease inducement.
(2) Includes
$1.0 million of unamortized principal.
(3) Excludes
two facilities classified as held for sale.
|
||||||||||||
|
Concentration
by State
|
#
of Properties
|
Investment
|
%
Investment
|
|||||||||
|
Ohio
|
47 | $ | 333,972 | 22 | % | |||||||
|
Florida
(2)
|
25 | 173,107 | 11 | % | ||||||||
|
Pennsylvania
|
23 | 150,225 | 10 | % | ||||||||
|
Texas
|
20 | 85,644 | 6 | % | ||||||||
|
West
Virginia (1)
|
10 | 74,867 | 5 | % | ||||||||
|
Maryland
|
7 | 69,928 | 5 | % | ||||||||
|
Louisiana
|
14 | 55,343 | 4 | % | ||||||||
|
Colorado
|
8 | 54,322 | 3 | % | ||||||||
|
Alabama
|
10 | 45,195 | 3 | % | ||||||||
|
Arkansas
|
11 | 44,791 | 3 | % | ||||||||
|
Rhode
Island
|
4 | 39,741 | 3 | % | ||||||||
|
Massachusetts
|
6 | 39,576 | 3 | % | ||||||||
|
Kentucky
|
10 | 37,253 | 2 | % | ||||||||
|
California
|
11 | 34,756 | 2 | % | ||||||||
|
Connecticut
|
4 | 31,573 | 2 | % | ||||||||
|
Remaining
States (3)
|
44 | 235,063 | 16 | % | ||||||||
| 254 | $ | 1,505,356 | 100 | % | ||||||||
|
(1) Investment
amount includes a $19.2 million lease inducement.
(2) Includes
$1.0 million of unamortized principal.
(3) Excludes
two facilities classified as held for sale.
|
||||||||||||
|
Revenue
Maturities ($000's)
|
|||||||||||||||||
|
Operating
Lease Expirations & Loan Maturities
|
Year
|
Current
Lease Revenue (1)
|
Current
Interest Revenue (1)
|
Lease
and Interest Revenue
|
%
|
||||||||||||
|
2009
|
- | - | - | 0 | % | ||||||||||||
|
2010
|
496 | 1,431 | 1,927 | 1 | % | ||||||||||||
|
2011
|
4,598 | 68 | 4,666 | 3 | % | ||||||||||||
|
2012
|
3,175 | - | 3,175 | 2 | % | ||||||||||||
|
2013
|
24,717 | - | 24,717 | 14 | % | ||||||||||||
|
Thereafter
|
126,003 | 9,887 | 135,890 | 80 | % | ||||||||||||
| $ | 158,989 | $ | 11,386 | $ | 170,375 | 100 | % | ||||||||||
|
(1)
Based on 2009 contractual rents and interest (assumes no annual
escalators).
|
|||||||||||||||||
|
Selected
Facility Data
|
|||||||||||||||||
|
TTM
ending 6/30/09
|
Coverage
Data
|
||||||||||||||||
|
%
Revenue Mix
|
Before
|
After
|
|||||||||||||||
|
Census
(1)
|
Private
|
Medicare
|
Mgmt.
Fees
|
Mgmt.
Fees
|
|||||||||||||
|
Total
Portfolio
|
85.5%
|
9.2 | % | 25.4 | % | 2.1 | x | 1.6 | x | ||||||||
|
(1)
|
Based
on available beds.
|
The
following table presents a debt maturity schedule for the period ending
September 30, 2009:
|
Debt
Maturities ($000's)
|
Secured
Debt
|
||||||||||||
|
Year
|
Lines
of Credit (1)
|
Senior
Notes
|
Total
|
||||||||||
|
2009
|
$ | - | $ | - | $ | - | |||||||
|
2010
|
- | - | - | ||||||||||
|
2011
|
- | - | - | ||||||||||
|
2012
|
200,000 | - | 200,000 | ||||||||||
|
2013
|
- | - | - | ||||||||||
|
Thereafter
|
- | 485,000 | 485,000 | ||||||||||
| $ | 200,000 | $ | 485,000 | $ | 685,000 | ||||||||
|
(1) Reflected
at 100% borrowing capacity.
|
|||||||||||||
The
following table presents investment activity for the three- and nine- month
periods ending September 30, 2009:
|
Investment
Activity ($000's)
|
||||||||||||||||
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30, 2009
|
September
30, 2009
|
|||||||||||||||
|
$
Amount
|
%
|
$
Amount
|
%
|
|||||||||||||
|
Funding
by Investment Type:
|
||||||||||||||||
|
Real
Property
|
$ | - | 0 | % | $ | - | 0 | % | ||||||||
|
Mortgages
|
- | 0 | % | - | 0 | % | ||||||||||
|
Other
|
5,966 | 100 | % | 12,641 | 100 | % | ||||||||||
|
Total
|
$ | 5,966 | 100 | % | $ | 12,641 | 100 | % | ||||||||