NEWPORT BEACH, Calif., Nov. 6 /PRNewswire-FirstCall/ -- Nationwide Health Properties, Inc. today announced its third quarter and nine months 2007 operating results and investment activity.
"The third quarter was a good one for NHP with revenues up 28% and normalized FFO per share up 8%," commented Douglas M. Pasquale, NHP's President and Chief Executive Officer. "During the quarter we closed $150 million of accretive investments, bringing our total for 2007 to $685 million. With over $300 million of investments expected to close in the fourth quarter, 2007 should make for another $1 billion investment year. We also greatly enhanced our supplemental disclosure package that is distributed on request and is available on our website," Mr. Pasquale added.
2007 THIRD QUARTER RESULTS
The following table presents selected financial results for the third quarter of 2007 as compared to the third quarter of 2006:
SELECTED FINANCIAL RESULTS ($ in thousands, except per share amounts) Three Months Ended September 30, Item 2007 2006 Change Revenues $87,030 $67,781 $19,249 28.4% Income from Continuing Operations $57,752 $17,487 $40,265 230.3% Net Income $57,742 $31,719 $26,023 82.0% Diluted Income from Continuing Operations Available to Common Stockholders Per Share $0.58 $0.17 $0.41 241.2% Diluted Income from Continuing Operations Excluding Gains on Sale Per Share $0.28 $0.17 $0.11 64.7% Diluted Income Available to Common Stockholders Per Share $0.58 $0.34 $0.24 70.6% Diluted FFO $52,926 $42,627 $10,299 24.2% Diluted FFO Per Share $0.55 $0.49 $0.06 12.2% Normalized Diluted FFO $50,961 $42,627 $8,334 19.6% Normalized Diluted FFO Per Share $0.53 $0.49 $0.04 8.2% Nine Months Ended September 30, Revenues $243,735 $180,101 $63,634 35.3% Income from Continuing Operations $105,640 $48,008 $57,632 120.0% Net Income $171,222 $82,821 $88,401 106.7% Diluted Income from Continuing Operations Available to Common Stockholders Per Share $1.04 $0.49 $0.55 112.2% Diluted Income from Continuing Operations Excluding Gains on Sale Per Share $0.71 $0.49 $0.22 44.9% Diluted Income Available to Common Stockholders Per Share $1.77 $0.95 $0.82 86.3% Diluted FFO $148,212 $115,997 $32,215 27.8% Diluted FFO Per Share $1.56 $1.45 $0.11 7.6% Normalized Diluted FFO $146,247 $116,080 $30,167 26.0% Normalized Diluted FFO Per Share $1.54 $1.45 $0.09 6.2% Funds From Operations (FFO)
FFO is a non-GAAP measure that NHP believes is important to an understanding of its operations. A reconciliation between net income, the most directly comparable GAAP financial measure, and FFO is included in the accompanying financial data. We believe FFO is an important supplemental measure of operating performance because it excludes the effects of depreciation and gains (losses) from sales of facilities (both of which are based on historical costs and which may be of limited relevance in evaluating current performance).
The normalized FFO amounts above exclude approximately $2 million of previously reserved rent, interest and late charges (representing the entire amount due from the tenant) recognized when paid during the third quarter of 2007 on a portfolio of four assets, three of which were transferred to a new operator and included in a master lease. These results include gains on the sale of certain assets shown in the accompanying income statement that caused the income from continuing operations and net income results in 2007 to be significantly higher than in 2006. Income from continuing operations does not include the gains on sale or the operations of facilities sold that qualified as discontinued operations for any period presented in the accompanying income statement, however it does include the gains on sale and historical operations of facilities we sold to our unconsolidated joint venture.
NEW INVESTMENTS
The following tables summarize our third quarter and year-to-date investment activity:
THIRD QUARTER 2007 CLOSED INVESTMENTS Type Amount Unit Cap Initial CPI DARM (millions) Price Rate Yield Ups Cover (thousands) Senior Housing $36 $94 8.7% 8.6% 2.8% 1.3x Long-Term Care $58 $57 16.7% 8.7% 2.2% 2.4x Medical Office $56 $179/sf 7.1% 7.1% Total $150 2007 CLOSED INVESTMENTS Type Amount Unit Cap Initial CPI DARM (millions) Price Rate Yield Ups Cover (thousands) Senior Housing $236 $95 8.7% 8.3% 2.8% 1.3x CCRC $39 $74 11.1% 8.8% 2.5% 1.6x Long-Term Care $284 $81 11.5% 8.5% 2.2% 1.9x Medical Office $79 $174/sf 7.2% 7.2% Subtotal $638 Loans $47 11.0% Total $685
Included in these numbers are third party investments financed through our unconsolidated joint venture which are broken out in the supplemental information package (which exclude the twelve facilities acquired by the joint venture from us for $143 million during 2007). Approximately 75% of the acquired loans mature in 2007 and 2008.
2007 FINANCING TRANSACTIONS
During the first nine months of 2007, we issued approximately 5.3 million shares through our controlled equity offering program at an average price of $31.44 per share resulting in net proceeds of approximately $164 million.
On October 1, 2007, we redeemed all 900,485 shares of our Series A Cumulative Preferred Step-Up REIT Securities at their $100 per share redemption value for a total of $90,048,500. The final dividend on these shares was paid concurrently.
On October 19, 2007, we issued $300 million of 6.25% senior unsecured notes maturing on February 1, 2013, resulting in net proceeds of approximately $297 million after deducting expected underwriting discounts and other expenses. During the months of August and September, we hedged the treasury rate on $250 million of the offering resulting in a cash payment to us of $1.6 million that will reduce our interest expense over the life of the notes.
2007 GUIDANCE
We are increasing our full-year 2007 guidance range for FFO before impairments, acquisitions and capital transactions and are changing the range from between $2.03 and $2.07 per share to between $2.07 and $2.09 per share, inclusive of the $0.02 per share of non-recurring FFO from the collection of previously reserved rent, interest and late fees noted above. Accordingly, our normalized FFO guidance range will be from between $2.05 to $2.07 per share. A reconciliation between net income per share, FFO per share and normalized FFO per share for the guidance range is included in the accompanying financial data.
Although we expect to continue making accretive acquisitions in 2007 and have over $300 million of investments in the fourth quarter closing queue, this guidance incorporates no results from acquisitions other than those included in the closed investments tables above, nor does it incorporate the impact of any future impairments that might arise. Our guidance does include the effects of the Series A Preferred Stock redemption and the $300 million senior unsecured notes issuance, discussed above, however it excludes any other future capital transactions. This guidance assumes asset sales, mortgage loan receivable prepayments and other expected dispositions during 2007 as described in the supplemental information package available on our website.
CONFERENCE CALL INFORMATION
The Company has scheduled a conference call and webcast on Wednesday, November 7, 2007 at 8:30 a.m. Pacific time in order to present the Company's performance and operating results for the quarter ended September 30, 2007. The conference call is accessible by dialing (877) 356-5705 and referencing conference ID number 20484508 or by logging on to our website at http://www.nhp-reit.com/. The earnings release and any additional financial information that may be discussed on the conference call will also be available at the same location on our website. A digitized replay of the conference call will be available from 10:00 a.m. Pacific time that day until 9:00 p.m. Pacific time on Thursday, November 22, 2007. Callers can access the replay by dialing (800) 642-1687 or (706) 645-9291 and entering conference ID number 20484508. Webcast replays will also be available on our website for at least 12 months following the conference call. The Company's supplemental information package for the third quarter and nine months ended September 30, 2007 will be available on our website, free of charge, at http://www.nhp-reit.com/ by selecting financial information followed by analyst information and will also be included in our 8-K filed November 6, 2007 with the SEC containing this release.
Nationwide Health Properties, Inc. is a real estate investment trust that invests in senior housing facilities, long-term care facilities and medical office buildings. The Company has investments in 547 facilities in 43 states. For more information on Nationwide Health Properties, Inc., visit our website at http://www.nhp-reit.com/.
Certain information contained in this news release includes forward-looking statements. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are not statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as "may," "will," "anticipates," "expects," "believes," "intends," "should" or comparable terms or the negative thereof. All forward-looking statements included in this news release are based on information available to us on the date hereof. These statements speak only as of the date hereof, and we assume no obligation to update such forward-looking statements for any reason or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include (without limitation) the following: deterioration in the operating results or financial condition, including bankruptcies, of our tenants; non-payment or late payment of rent by our tenants; our reliance on two operators for a significant percentage of our revenues; occupancy levels at certain facilities; our level of indebtedness; changes in the ratings of our debt securities; access to the capital markets and the cost of capital; government regulations, including changes in the reimbursement levels under the Medicare and Medicaid programs; the general distress of the healthcare industry; increasing competition in our business sector; the effect of economic and market conditions and changes in interest rates; the amount and yield of any additional investments; our ability to meet acquisition goals; the ability of our operators to repay deferred rent or loans in future periods; the ability of our operators to obtain and maintain adequate liability and other insurance; our ability to attract new operators for certain facilities; our ability to sell certain facilities for their book value; our ability to retain key personnel; potential liability under environmental laws; the possibility that we could be required to repurchase some of our medium-term notes; the rights and influence of holders of our outstanding preferred stock; changes in or inadvertent violations of tax laws and regulations and other factors that can affect real estate investment trusts and our status as a real estate investment trust; and the risk factors described in our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q filed with the SEC.
Consolidated Statements of Operations In thousands, except per share data Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Revenues: Triple net lease rent $76,904 $61,242 $218,757 $163,333 Medical office building operating rent 3,560 2,479 9,133 6,902 80,464 63,721 227,890 170,235 Interest and other income 6,566 4,060 15,845 9,866 87,030 67,781 243,735 180,101 Expenses: Interest and amortization of deferred financing costs 25,387 24,890 75,484 65,492 Depreciation and amortization 25,880 19,886 71,337 51,174 General and administrative 6,087 4,165 17,501 11,819 Medical office building operating expenses 1,897 1,513 5,103 3,895 59,251 50,454 169,425 132,380 Income before minority interest and unconsolidated joint venture 27,779 17,327 74,310 47,721 Minority interest in net loss of consolidated joint ventures 76 160 139 287 Income from unconsolidated joint venture 547 --- 1,242 --- Gain on sale of facilities to joint venture 29,350 --- 29,949 --- Income from continuing operations 57,752 17,487 105,640 48,008 Discontinued operations Gain on sale of facilities, net 39 8,682 61,285 17,508 Income (loss) from discontinued operations (49) 5,550 4,297 17,305 (10) 14,232 65,582 34,813 Net income 57,742 31,719 171,222 82,821 Preferred stock dividends (3,791) (3,791) (11,372) (11,372) Income available to common stockholders $53,951 $27,928 $159,850 $71,449 Basic earnings per share (EPS): Income from continuing operations excluding gains $0.27 $0.17 $0.72 $0.49 Gains in income from continuing operations 0.32 --- 0.33 --- Income from continuing operations 0.59 0.17 1.05 0.49 Discontinued operations --- 0.17 0.73 0.46 Income available to common stockholders $0.59 $0.34 $1.78 $0.95 Diluted EPS: Income from continuing operations excluding gains $0.28 $0.17 $0.71 $0.49 Gains in income from continuing operations 0.30 --- 0.33 --- Income from continuing operations 0.58 0.17 1.04 0.49 Discontinued operations --- 0.17 0.73 0.46 Income $0.58 $0.34 $1.77 $0.95 Weighted average shares outstanding for EPS: Basic 91,089 81,679 89,690 74,959 Diluted 96,255 82,003 90,158 75,288 Series B Convertible Preferred Dividends in Diluted EPS $2,062 $--- $--- $--- Reconciliation of Net Income to Funds From Operations (FFO) In thousands, except per share data Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Net income to FFO Net income $57,742 $31,719 $171,222 $82,821 Preferred stock dividends (3,791) (3,791) (11,372) (11,372) Real estate related depreciation and amortization 25,799 21,319 72,375 55,869 Depreciation in income from unconsolidated joint venture 503 --- 1,034 --- Gains on sale of facilities (29,389) (8,682) (91,234) (17,508) FFO available to common stockholders 50,864 40,565 142,025 109,810 Series B preferred dividend add- back 2,062 2,062 6,187 6,187 Diluted FFO 52,926 42,627 148,212 115,997 Impairments --- --- --- 83 Non-recurring settlement of delinquent tenant obligations (1,965) --- (1,965) --- Recurring diluted FFO $50,961 $42,627 $146,247 $116,080 Weighted average shares outstanding for FFO Diluted weighted average shares outstanding 96,255 82,003 90,158 75,288 Series B preferred stock add-back --- 4,689 4,704 4,686 Fully diluted weighted average shares outstanding 96,255 86,692 94,862 79,974 Diluted per share amounts: FFO $0.55 $0.49 $1.56 $1.45 Recurring FFO $0.53 $0.49 $1.54 $1.45 Dividends declared per common share $0.41 $0.39 $1.23 $1.15 Recurring FFO payout ratio 77% 80% 80% 79% Recurring FFO Coverage 1.29 1.26 1.25 1.26 Reconciliation of 2007 Net Income Guidance to 2007 Diluted FFO Guidance Low High Net income $2.36 $2.38 Less: preferred stock dividends (0.06) (0.06) Real estate related depreciation and amortization 1.08 1.08 Less: gains on sale (1.19) (1.19) Dilution from convertible preferred stock (0.12) (0.12) Diluted FFO guidance 2.07 2.09 Non-recurring settlement of delinquent tenant obligations (0.02) (0.02) Normalized diluted FFO guidance $2.05 $2.07 Consolidated Balance Sheets In thousands September 30, December 31, 2007 2006 Assets Real estate related investments: Land $296,011 $267,303 Buildings and improvements 2,822,405 2,581,484 3,118,416 2,848,787 Less accumulated depreciation (416,425) (372,201) Net real estate 2,701,991 2,476,586 Mortgage loans receivable, net 130,558 106,929 Investment in unconsolidated joint venture 34,278 --- Net real estate related investments 2,866,827 2,583,515 Cash and cash equivalents 14,953 14,695 Receivables, net 4,092 7,787 Assets held for sale --- 9,484 Other assets 103,778 89,333 Total assets $2,989,650 $2,704,814 Liabilities and Stockholders' Equity Credit facility $216,000 $139,000 Senior notes due 2008 - 2038 866,500 887,500 Notes and bonds payable 329,636 355,411 Accounts payable and accrued liabilities 99,620 77,829 Total liabilities 1,511,756 1,459,740 Minority interest 2,201 1,265 Stockholders' equity: Series A preferred stock 90,049 90,049 Series B convertible preferred stock 106,445 106,450 Common stock 9,209 8,624 Capital in excess of par value 1,481,510 1,298,703 Cumulative net income 1,235,515 1,064,293 Accumulated other comprehensive income 1,183 1,231 Cumulative dividends (1,448,218) (1,325,541) Total stockholders' equity 1,475,693 1,243,809 Total liabilities and stockholders' equity $2,989,650 $2,704,814 CONTACT: Abdo H. Khoury Chief Financial and Portfolio Officer (949) 718-4400
