NEWPORT BEACH, Calif., Nov. 4 /PRNewswire-FirstCall/ -- Nationwide Health Properties, Inc. today announced results of operations and investment activity for the third quarter and the nine months ended September 30, 2008.
"Our third quarter results continue the positive trends from the first half of 2008. Compared to the third quarter of 2007, revenue is up 18.9%, recurring diluted FFO per share is up 5.7%, and recurring diluted FAD per share is up 1.9%. Our year to date results reflect revenue up 23.0%, recurring diluted FFO per share up 9.1%, and recurring diluted FAD per share up 5.1%," commented Douglas M. Pasquale, NHP's President and Chief Executive Officer. "We continue our disciplined approach to acquisitions and balance sheet management. Our conservative leverage, comfortable fixed charge coverage, excellent liquidity and modest debt maturities through June 2011 position us very well in this challenging and uncertain capital market environment. Our diluted FAD payout ratio and FAD coverage remain among the strongest in our sector at 80% and 1.25, respectively," Mr. Pasquale added.
THIRD QUARTER 2008 RESULTS OF OPERATIONS
The following table presents selected financial information for the third quarter and the nine months ended September 30, 2008 as compared to the same periods of 2007:
SELECTED FINANCIAL DATA ($ in thousands, except per share amounts) Three Months Ended September 30, 2008 2007 $ Change % Change Revenue $95,475 $80,308 $15,167 18.9% Income from Continuing Operations $26,873 $54,162 $(27,289) -50.4% Net Income $29,253 $57,742 $(28,489) -49.3% Income Available to Common Stockholders Per Diluted Share $0.27 $0.58 $(0.31) -53.4% Diluted FFO $58,413 $52,926 $5,487 10.4% Recurring Diluted FFO $58,413 $50,961 $7,452 14.6% Diluted FFO Per Share $0.56 $0.55 $0.01 1.8% Recurring Diluted FFO Per Share $0.56 $0.53 $0.03 5.7% Diluted FAD $57,109 $54,003 $3,106 5.8% Recurring Diluted FAD $57,109 $52,038 $5,071 9.7% Diluted FAD Per Share $0.55 $0.56 $(0.01) -1.8% Recurring Diluted FAD Per Share $0.55 $0.54 $0.01 1.9% Nine Months Ended September 30, 2008 2007 $ Change % Change Revenue $275,691 $224,069 $51,622 23.0% Income from Continuing Operations $77,972 $95,340 $(17,368) -18.2% Net Income $234,722 $171,222 $63,500 37.1% Income Available to Common Stockholders Per Diluted Share $2.34 $1.77 $0.57 32.2% Diluted FFO $172,511 $148,212 $24,299 16.4% Recurring Diluted FFO $172,511 $146,247 $26,264 18.0% Diluted FFO Per Share $1.68 $1.56 $0.12 7.7% Recurring Diluted FFO Per Share $1.68 $1.54 $0.14 9.1% Diluted FAD $167,769 $150,330 $17,439 11.6% Recurring Diluted FAD $167,769 $148,365 $19,404 13.1% Diluted FAD Per Share $1.64 $1.58 $0.06 3.8% Recurring Diluted FAD Per Share $1.64 $1.56 $0.08 5.1% Income from Continuing Operations
In 2007, we sold properties to our unconsolidated joint venture. Under generally accepted accounting principles ("GAAP"), we were required to recognize a gain on this sale and because we have a continuing involvement in these properties through an unconsolidated joint venture, we were required to include this gain on sale in income from continuing operations. As a result, our income from continuing operations for the three and nine months ending September 30, 2007, is substantially greater than the three and nine months ending September 30, 2008.
THIRD QUARTER 2008 INVESTMENT ACTIVITY The following table summarizes our 2008 investment activity: INVESTMENT ACTIVITY 2008 ($ in thousands) Q1 Q2 Q3 Q3 Q3 Investment Total Total Owned Loans Total Senior Housing Number of Facilities 14 1 - Purchase Price $52,000 $20,000 $- Initial Yield 8.1% 8.4% Long-Term Care Number of Facilities 7 5 5 Purchase Price $32,000 $31,200 $31,200 Initial Yield 9.8% 9.6% 9.6% Medical Office Number of Facilities 1 8 14 1 15 Purchase Price $2,000 $198,000 $46,400 $47,500 $93,900 Initial Yield 7.4% 6.2% 7.7% 6.5% 7.1% Total Number of Facilities 15 16 19 1 20 Purchase Price $54,000 $250,000 $77,600 $47,500 $125,100 Initial Yield 8.1% 6.8% 8.5% 6.5% 7.7% Year to Date Investment Total Senior Housing Number of Facilities 15 Purchase Price $72,000 Initial Yield 8.2% Long-Term Care Number of Facilities 12 Purchase Price $63,200 Initial Yield 9.7% Medical Office Number of Facilities 24 Purchase Price $293,900 Initial Yield 6.5% Total Number of Facilities 51 Purchase Price $429,100 Initial Yield 7.2%
Pacific Medical Buildings LLC ("PMB") Update -- In February 2008, we entered into an agreement with PMB and certain of its affiliates to acquire up to 18 multi-tenant medical office buildings, six of which are currently in development, for $747.6 million including the assumption of approximately $282.6 million of mortgage financing. During the nine months ended September 30, 2008, we acquired 8 of such buildings for a total of $197.2 million, including the assumption of $96.6 million of mortgage financing and the issuance of 1,470,754 limited partnership units with a value of $47.3 million. Additionally in September 2008, we made a mortgage loan to an entity affiliated with PMB for $47.5 million due December 31, 2008. The loan is secured by a property that we intend to purchase in the fourth quarter 2008.
2008 FINANCING TRANSACTIONS
During the third quarter of 2008, we issued 1,329,000 shares of our common stock through our controlled equity offering program at an average price of $35.32 per share resulting in net proceeds of approximately $46.4 million. For the nine months ended September 30, 2008, we have issued 2.6 million shares of our common stock through our controlled equity offering program at an average price of $34.97 per share resulting in net proceeds of approximately $89.1 million.
STOCK REPURCHASE PROGRAM
NHP also announced today that its Board of Directors has approved the expenditure of up to $100 million to repurchase shares of the company's common stock. The stock repurchase authorization does not have an expiration date and the pace of repurchase activity will depend on factors such as current stock price, cash requirements for acquisitions, repayment of debt, and other factors. NHP may repurchase shares from time to time on the open market or in privately negotiated transactions as permitted by securities laws and other legal requirements. The stock repurchase program does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice. "The Board's approval of the share repurchase program reflects its confidence in the continued growth of NHP's business and an ongoing commitment to increase shareholder value," said Abdo Khoury, Chief Financial and Portfolio Officer. "We have maintained a strong balance sheet and feel confident that this program adds flexibility to our strategic options surrounding the deployment of our capital."
2008 GUIDANCE
We are increasing by $0.02 per share the low end of our full-year 2008 diluted FFO guidance from $2.19 per share to $2.21 per share and are increasing by $0.01 the high end of the range from $2.23 per share to $2.24 per share. We are also increasing by $0.02 per share the low end of our full-year 2008 diluted FAD guidance from $2.11 per share to $2.13 per share and are increasing by $0.01 the high end of the range from $2.15 per share to $2.16 per share. Annualizing our year to date diluted FAD per share would result in an amount greater than the high end of our range, however, such analysis does not reflect the timing of capital expenditures and tenant improvements for medical office buildings ("MOBs"). Certain factors could effect our diluted FFO per share and diluted FAD per share such as the slower than expected reinvestment of proceeds from the sale of the Emeritus assets and the issuance of 1,329,000 shares of common stock during the third quarter. Our guidance includes the additional acquisitions of MOBs from PMB as well as expected mortgage loan receivable prepayments and dispositions during 2008 as described in our supplemental information package available on our website. However, while we expect to continue to make accretive acquisitions during 2008, our diluted FFO per share and diluted FAD per share guidance ranges do not assume any additional acquisitions or investments, impairments or capital transactions.
CONFERENCE CALL INFORMATION
We have scheduled a conference call and webcast on Wednesday, November 5, 2008 at 8:30 a.m. Pacific time in order to present our performance and operating results for the quarter and nine months ended September 30, 2008. The conference call is accessible by dialing 877-356-5705 and referencing conference ID number 68594782 or by logging on to our website at http://www.nhp-reit.com/. The international dial-in number is 973-200-3389. 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 10:30 a.m. Pacific time (1:30 p.m. Eastern time) that day until 9:00 p.m. Pacific time (Midnight Eastern time) on Friday, December 5, 2008. Callers can access the replay by dialing 800-642-1687 or 706-645-9291 and entering conference ID number 68594782. Webcast replays will also be available on our website for at least 12 months following the conference call. Our supplemental information package for the quarter ended September 30, 2008 is available on our website, free of charge, at http://www.nhp-reit.com/ by selecting "Investor Relations" followed by "Financial Information" and will be included in our Current Report on Form 8-K filed November 4, 2008 with the SEC also containing this release.
ABOUT NATIONWIDE HEALTH PROPERTIES, INC.
Nationwide Health Properties, Inc. is a real estate investment trust that invests in senior housing facilities, long-term care facilities and medical office buildings. We have investments in 580 facilities in 43 states. For more information on Nationwide Health Properties, Inc., visit our website at http://www.nhp-reit.com/.
FORWARD LOOKING STATEMENTS
Certain information contained in this 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. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. Risks and uncertainties associated with our business 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 tenants for a significant percentage of our revenue; 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; risks associated with acquisitions, including our ability to identify and complete favorable transactions, delays or failures in obtaining third party consents or approvals, the failure to achieve perceived benefits, unexpected costs or liabilities and potential litigation; the ability of our tenants to repay straight-line rent or loans in future periods; the ability of our tenants to obtain and maintain adequate liability and other insurance; our ability to attract new tenants 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 senior 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 other factors discussed from time to time in our news releases, public statements and/or filings with the Securities and Exchange Commission, especially the "Risk Factors" sections of our Annual and Quarterly Reports on Forms 10-K and 10-Q. Forward-looking information is provided by us pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of these factors. We disclaim any intent or obligation to update these forward-looking statements.
NON-GAAP FINANCIAL MEASURES
Diluted Funds From Operations ("FFO") and Diluted Funds Available for Distribution ("FAD") are non-GAAP measures that we believe are important to understanding our operations. We believe diluted FFO is an important supplemental measure of operating performance because it excludes the effects of depreciation and amortization 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). We believe diluted FAD is an important supplemental measure of operating performance because, like diluted FFO, it excludes the effects of depreciation and amortization 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). It also excludes straight-lined rent and other non-cash items that have become more significant for us and our competitors over the last several years. We believe that net income is the most directly comparable GAAP measure to diluted FFO and diluted FAD. Reconciliations between net income and diluted FFO and net income and diluted FAD are included in the accompanying financial data. For guidance, we have also included in the accompanying financial data reconciliations between net income per share and diluted FFO and diluted FAD per share. We have also included recurring diluted FFO and recurring diluted FAD amounts which exclude the recognition of revenue related to cash received from a tenant related to previously reserved rental revenue, interest income and late charges.
Contact: Abdo H. Khoury Chief Financial and Portfolio Officer (949) 718-4400 ***Financial Tables to Follow*** NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Revenue: Triple net lease rent $72,673 $70,188 $214,203 $199,111 Medical office building operating rent 16,188 3,560 43,058 9,133 88,861 73,748 257,261 208,244 Interest and other income 6,614 6,560 18,430 15,825 95,475 80,308 275,691 224,069 Expenses: Interest and amortization of deferred financing costs 25,308 24,297 75,554 72,205 Depreciation and amortization 30,416 23,851 86,776 65,277 General and administrative 6,634 6,080 19,538 17,493 Medical office building operating expenses 7,220 1,891 18,782 5,084 69,578 56,119 200,650 160,059 Income before minority interests, unconsolidated joint ventures and discontinued operations 25,897 24,189 75,041 64,010 Minority interests 52 76 107 139 Income from unconsolidated joint ventures 924 547 2,824 1,242 Gain on sale of facilities to unconsolidated joint venture - 29,350 - 29,949 Income from continuing operations 26,873 54,162 77,972 95,340 Discontinued operations Gain on sale of facilities, net 2,351 39 153,444 61,285 Income from discontinued operations 29 3,541 3,306 14,597 2,380 3,580 156,750 75,882 Net income 29,253 57,742 234,722 171,222 Preferred stock dividends (2,061) (3,791) (6,185) (11,372) Income available to common stockholders $27,192 $53,951 $228,537 $159,850 Basic earnings per share (EPS): Income from continuing operations excluding gains $0.26 $0.23 $0.75 $0.61 Gains in income from continuing operations - 0.32 - 0.33 Income from continuing operations 0.26 0.55 0.75 0.94 Discontinued operations 0.02 0.04 1.63 0.84 Income available to common stockholders $0.28 $0.59 $2.38 $1.78 Diluted EPS: Income from continuing operations excluding gains $0.25 $0.24 $0.74 $0.60 Gain in income from continuing operations - 0.30 - 0.33 Income from continuing operations 0.25 0.54 0.74 0.93 Discontinued operations 0.02 0.04 1.60 0.84 Income available to common stockholders $0.27 $0.58 $2.34 $1.77 Weighted average shares outstanding for EPS: Basic 96,975 91,089 96,203 89,690 Diluted 99,032 96,255 97,648 90,158 NATIONWIDE HEALTH PROPERTIES, INC. RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share data) Reconciliation of Net Income to Diluted FFO and Recurring Diluted FFO Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Net income $29,253 $57,742 $234,722 $171,222 Preferred stock dividends (2,061) (3,791) (6,185) (11,372) Real estate related depreciation and amortization 30,290 25,799 87,766 72,375 Depreciation in income from unconsolidated joint ventures 1,221 503 3,467 1,034 Gains on sale of facilities (2,351) (29,389) (153,444) (91,234) FFO available to common stockholders 56,352 50,864 166,326 142,025 Series B preferred dividends 2,061 2,062 6,185 6,187 Diluted FFO 58,413 52,926 172,511 148,212 Non-recurring settlement of delinquent tenant obligations - (1,965) - (1,965) Recurring diluted FFO $58,413 $50,961 $172,511 $146,247 Weighted average shares outstanding for diluted FFO: Diluted weighted average shares outstanding 99,032 91,544 97,648 90,158 Series B preferred stock conversion 4,744 4,711 4,736 4,704 Fully diluted weighted average shares outstanding 103,776 96,255 102,384 94,862 Diluted FFO per share $0.56 $0.55 $1.68 $1.56 Recurring diluted FFO per share $0.56 $0.53 $1.68 $1.54 Dividends declared per common share $0.44 $0.41 $1.32 $1.23 Recurring diluted FFO payout ratio 79% 77% 79% 80% Recurring diluted FFO coverage 1.27 1.29 1.27 1.25 NATIONWIDE HEALTH PROPERTIES, INC. RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share data) Reconciliation of Net Income to Diluted FAD and Recurring Diluted FAD Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 Net income $29,253 $57,742 $234,722 $171,222 Preferred stock dividends (2,061) (3,791) (6,185) (11,372) Real estate related depreciation and amortization 30,290 25,799 87,766 72,375 Gains on sale of facilities (2,351) (29,389) (153,444) (91,234) Straight-lined rent (2,280) (226) (7,877) (1,924) Amortization of above and below market lease intangibles (137) (69) (411) (22) Non-cash stock-based compensation expense 1,500 1,248 4,271 3,486 Deferred finance cost amortization 741 683 2,265 2,066 Lease commissions and tenant and capital improvements (1,105) (565) (2,999) (1,498) Unconsolidated joint ventures: Real estate related depreciation and amortization 1,221 503 3,467 1,034 Straight-lined rent (44) - (54) - Deferred finance cost amortization 21 6 63 10 FAD available to common stockholders 55,048 51,941 161,584 144,143 Series B preferred dividends 2,061 2,062 6,185 6,187 Diluted FAD 57,109 54,003 167,769 150,330 Non-recurring settlement of delinquent tenant obligations - (1,965) - (1,965) Recurring diluted FAD $57,109 $52,038 $167,769 $148,365 Weighted average shares outstanding for diluted FAD: Weighted average shares outstanding 99,032 91,544 97,648 90,158 Series B preferred stock conversion 4,744 4,711 4,736 4,704 Fully diluted weighted average shares outstanding 103,776 96,255 102,384 94,862 Diluted FAD per share $0.55 $0.56 $1.64 $1.58 Recurring FAD dilutedper share $0.55 $0.54 $1.64 $1.56 Dividends declared per common share $0.44 $0.41 $1.32 $1.23 Recurring diluted FAD payout ratio 80% 76% 80% 79% Recurring diluted FAD coverage 1.25 1.32 1.24 1.27
Reconciliation of 2008 Net Income Guidance to 2008 Diluted FFO and Diluted FAD
Guidance on a Per Share Basis Low High Net income $2.55 $2.58 Real estate related depreciation and amortization 1.24 1.24 Less: gains on sale (1.56) (1.56) Dilution from convertible preferred stock (0.02) (0.02) Diluted FFO guidance 2.21 2.24 Straight-lined rent (0.11) (0.11) Non-cash stock-based compensation expense 0.05 0.05 Deferred finance cost amortization 0.03 0.03 Lease commissions and tenant and capital improvements (0.05) (0.05) Diluted FAD guidance $2.13 $2.16 NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2008 2007 Assets Real estate related investments: Land $313,530 $301,100 Buildings and improvements 3,001,616 2,896,876 3,315,146 3,197,976 Less accumulated depreciation (463,156) (410,865) Net real estate 2,851,990 2,787,111 Mortgage loans receivable, net 116,005 121,694 Mortgage loan receivable from related party 47,500 - Investment in unconsolidated joint ventures 54,445 52,637 Net real estate related investments 3,069,940 2,961,442 Cash and cash equivalents 114,385 19,407 Receivables, net 5,203 3,808 Other assets 244,848 159,696 Total assets $3,434,376 $3,144,353 Liabilities and Stockholders' Equity Unsecured senior credit facility $- $41,000 Senior notes due 2008 - 2038 1,139,473 1,166,500 Notes and bonds payable 412,812 340,150 Accounts payable and accrued liabilities 134,141 107,844 Total liabilities 1,686,426 1,655,494 Minority interest 50,555 6,166 Stockholders' equity: Series B convertible preferred stock 106,390 106,445 Common stock 9,825 9,481 Capital in excess of par value 1,678,965 1,565,249 Cumulative net income 1,523,473 1,288,751 Accumulated other comprehensive income 2,197 2,561 Cumulative dividends (1,623,455) (1,489,794) Total stockholders' equity 1,697,395 1,482,693 Total liabilities and stockholders' equity $3,434,376 $3,144,353
