TOLEDO, Ohio--(BUSINESS WIRE)--Feb. 2, 2004--Health Care REIT, Inc. (NYSE:HCN) today announced operating results for its fourth quarter and year ended December 31, 2003. We continue to meet our financial and operational expectations.
"Our overall performance for 2003 was exceptional," commented George L. Chapman, chief executive officer of Health Care REIT, Inc. "We expanded our credit facilities and successfully accessed the capital markets on several occasions, enabling us to complete a record $500 million in net investments. Adjusted FFO increased seven percent over 2002, driving down our adjusted FFO payout ratio to 81 percent for the fourth quarter. As a result of these successes, the Board of Directors approved an increase in the common stock dividend to $0.60 per quarter from $0.585 per quarter commencing with the May 2004 dividend."
As previously announced, the Board of Directors declared a dividend for the quarter ended December 31, 2003 of $0.585 per share. The dividend represents the 131st consecutive dividend payment. The dividend will be payable February 20, 2004 to stockholders of record on January 30, 2004.
Summary of Fourth Quarter Results
------------------------------------
(In thousands, except per share data)
----------------------------------------------------------------------
Three Months Ended Three Months Ended
December 31, 2003 December 31, 2002
----------------------------------------------------------------------
Revenues $61,240 $43,380
----------------------------------------------------------------------
Net Income Available to Common
Stockholders $16,935 $12,303
----------------------------------------------------------------------
Funds From Operations $33,206 $25,731
----------------------------------------------------------------------
Funds From Operations - Adjusted $35,998 $27,479
----------------------------------------------------------------------
Net Income Per Diluted Share $0.34 $0.31
----------------------------------------------------------------------
FFO Per Diluted Share $0.66 $0.64
----------------------------------------------------------------------
FFO Per Diluted Share - Adjusted $0.72 $0.69
----------------------------------------------------------------------
Dividend Per Share $0.585 $0.585
----------------------------------------------------------------------
FFO Payout Ratio 88% 91%
----------------------------------------------------------------------
FFO Payout Ratio - Adjusted 81% 85%
----------------------------------------------------------------------
Net income available to common stockholders totaled $16.9 million, or $0.34 per diluted share, for the fourth quarter of 2003, compared with $12.3 million, or $0.31 per diluted share, for the same period in 2002. Funds from operations totaled $33.2 million, or $0.66 per diluted share, for the fourth quarter of 2003, compared with $25.7 million, or $0.64 per diluted share, for the same period in 2002. Adjusted funds from operations, which excludes non-cash impairment charges, totaled $36.0 million, or $0.72 per diluted share, for the fourth quarter of 2003, compared with $27.5 million, or $0.69 per diluted share, for the same period in 2002.
Summary of Year to Date Results
--------------------------------
(In thousands, except per share data)
----------------------------------------------------------------------
Year Ended Year Ended
December 31, 2003 December 31, 2002
----------------------------------------------------------------------
Revenues $201,031 $154,928
----------------------------------------------------------------------
Net Income Available to Common
Stockholders $ 70,732 $ 55,191
----------------------------------------------------------------------
Funds From Operations $119,463 $ 96,573
----------------------------------------------------------------------
Funds From Operations - Adjusted $125,045 $ 98,871
----------------------------------------------------------------------
Net Income Per Diluted Share $1.60 $1.48
----------------------------------------------------------------------
FFO Per Diluted Share $2.70 $2.59
----------------------------------------------------------------------
FFO Per Diluted Share - Adjusted $2.83 $2.65
----------------------------------------------------------------------
Dividend Per Share $2.34 $2.34
----------------------------------------------------------------------
FFO Payout Ratio 87% 90%
----------------------------------------------------------------------
FFO Payout Ratio - Adjusted 83% 88%
----------------------------------------------------------------------
Net income available to common stockholders totaled $70.7 million, or $1.60 per diluted share, for the twelve months ended December 31, 2003, compared with $55.2 million, or $1.48 per diluted share, for the same period in 2002. Funds from operations totaled $119.5 million, or $2.70 per diluted share, for the twelve months ended December 31, 2003, compared with $96.6 million, or $2.59 per diluted share, for the same period in 2002. Adjusted funds from operations, which excludes the non-cash preferred stock redemption and impairment charges, totaled $125.0 million, or $2.83 per diluted share, for the twelve months ended December 31, 2003, compared with $98.9 million, or $2.65 per diluted share, for the same period in 2002.
We had a total outstanding debt balance of $1.0 billion at December 31, 2003, as compared with $676.3 million at December 31, 2002, and stockholders' equity of $1.1 billion, which represents a debt to total book capitalization ratio of 47 percent. The debt to total market capitalization at December 31, 2003 was 34 percent. Our coverage ratio of EBITDA to interest was 3.50 to 1.00 for the twelve months ended December 31, 2003.
Expansion of Unsecured Line of Credit. During December 2003 and January 2004, we expanded our unsecured revolving line of credit from $225 million to $310 million. The existing bank group, in conjunction with two new participants, First Tennessee Bank National Association and LaSalle Bank National Association, provided the additional capacity.
Dividends for 2004. The Board of Directors approved a new quarterly dividend rate of $0.60 per share per quarter ($2.40 per share annually), commencing with the May 2004 dividend, up from $0.585, the rate during 2003. Our dividend policy is reviewed annually during the Board of Director's January planning session. The declaration and payment of quarterly dividends remains subject to the review and approval of our Board of Directors.
Portfolio Update. Five assisted living facilities stabilized during the quarter and one assisted living facility in fill-up was acquired. We ended the quarter with 13 assisted living facilities remaining in fill-up, representing six percent of revenues. Only two facilities, representing one percent of revenues, have occupancy of less than 50 percent. One facility opened in the third quarter after completion of construction and the other facility was the new acquisition.
As previously announced, Alterra Healthcare Corporation (Alterra) filed for Chapter 11 bankruptcy protection on January 23, 2003. A joint venture between Fortress Investment Group LLC and Emeritus Corporation was the winning bidder at a bankruptcy auction held on July 17, 2003. The bankruptcy court confirmed Alterra's plan of reorganization on November 26, 2003. In connection with confirmation of Alterra's plan, our master lease was assumed and the acquisition of Alterra by the Fortress-Emeritus joint venture was approved. This transaction has closed. Alterra remained current on rental payments throughout the bankruptcy process and continues to remain current today.
Also, as previously announced, Doctors Community Health Care Corporation and its subsidiaries (Doctors) filed for Chapter 11 bankruptcy protection on November 20, 2002. Pursuant to procedures approved by the bankruptcy court, the assets of Doctors were the subject of an auction held on December 10 through December 16, 2003. At the conclusion of that auction, the debtors' independent director declared certain members of Doctors' management the winning bidder. Their bid contemplates a reorganization of Doctors and its subsidiaries with new equity and debt capitalization. The results of this auction are subject to bankruptcy court approval, which the debtors have stated they intend to seek in connection with a hearing on the confirmation of the debtors' proposed plan of reorganization. Doctors anticipates that this hearing will occur in March 2004. Doctors did not make an interest payment for the twelve months ended December 31, 2003. Although we believe we are entitled to all accrued but unrecognized interest, we will not recognize any interest on the loan until confirmation of the bankruptcy plan.
Supplemental Reporting Measures. FFO stands for funds from operations, the generally accepted measure of operating performance for the real estate investment trust industry. EBITDA stands for earnings before interest, taxes, depreciation and amortization. We believe that FFO and EBITDA, along with net income and cash flow provided from operating activities, are important supplemental measures because they provide investors an indication of our ability to service debt, to make dividend payments and to fund other cash needs. We primarily utilize FFO to measure our payout ratio which represents dividends paid per share divided by FFO per diluted share. We primarily utilize EBITDA to measure our interest coverage ratio which represents EBITDA divided by interest expense.
FFO and EBITDA do not represent net income or cash flow provided from operating activities as determined in accordance with generally accepted accounting principles and should not be considered as alternative measures of profitability or liquidity. Additionally, FFO and EBITDA, as defined by us, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Please see Exhibits 14 and 16 for reconciliations of FFO and EBITDA to net income.
Recent Accounting Pronouncements. In August, we lowered net income guidance as a result of the Securities and Exchange Commission (SEC) clarification of Emerging Issues Task Force (EITF) Topic D-42. To implement the clarified accounting pronouncement, our 2003 results reflect a reduction in net income available to common stockholders resulting from a non-cash, non-recurring charge of $2.79 million, or $0.06 per diluted share, due to the redemption of our 8.875% Series B Cumulative Redeemable Preferred Stock. The National Association of Real Estate Investment Trusts (NAREIT) has issued its recommendation that preferred stock redemption charges should not be added back to net income in the calculation of FFO. Although we have adopted this recommendation, we have also disclosed FFO adjusted for the preferred stock redemption charge for enhanced clarity.
In October, NAREIT informed its member companies that the SEC is likely to change its position on certain aspects of the NAREIT FFO definition, including impairment charges. Previously, the SEC accepted NAREIT's view that impairment charges are effectively an early recognition of an expected loss on an impending sale of property and thus should be excluded from FFO similar to other gains and losses on sales. However, the SEC's clarified interpretation is that recurring impairments taken on real property may not be added back to net income in the calculation of FFO. Although we have adopted this interpretation, we have also disclosed FFO adjusted for the impairment charges for enhanced clarity. This modification of FFO does not impact our net income.
Outlook for 2004. We are revising our 2004 guidance and expect to report net income available to common stockholders in the range of $1.68 to $1.73 per diluted share, and FFO in the range of $2.99 to $3.04 per diluted share. The adjustment to our previous guidance reflects the anticipated temporary dilution from the excess cash generated by the $250 million senior notes issued in fourth quarter 2003. The guidance assumes no change in our forecast for net investments of $200 million. Additionally, we plan to manage the company to maintain investment grade status with a capital structure consistent with our current profile. Please see Exhibit 15 for a reconciliation of the outlook for net income and FFO.
Conference Call Information. We have scheduled a conference call on February 2, 2004, at 11:00 A.M. EST to discuss our fourth quarter and year end 2003 results, industry trends, portfolio performance and outlook for 2004. To participate on the webcast, log on to www.hcreit.com or www.fulldisclosure.com 15 minutes before the call to download the necessary software. Replays will be available for 90 days through the same Web sites. This earnings release is posted on our Web site under the heading Press Releases.
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 December 31, 2003, we had investments in 328 health care facilities in 33 states with 47 operators and had total assets of approximately $2.2 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 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 enter into agreements with 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 "believe," "expect," "anticipate," 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, but not limited to: 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
HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands)
December 31
------------------------------------
2003 2002
------------------------------------
Assets
Real estate investments:
Real property owned
Land $ 166,408 $ 112,044
Buildings &
improvements 1,712,868 1,288,520
Construction in
progress 14,701 19,833
----------------- -----------------
1,893,977 1,420,397
Less accumulated
depreciation (152,440) (113,579)
----------------- -----------------
Total real property
owned 1,741,537 1,306,818
Loans receivable
Real property loans 213,480 208,016
Subdebt investments 45,254 14,578
----------------- -----------------
258,734 222,594
Less allowance for losses on
loans receivable (7,825) (4,955)
----------------- -----------------
250,909 217,639
----------------- -----------------
Net real estate
investments 1,992,446 1,524,457
Other assets:
Equity investments 3,299 7,494
Deferred loan
expenses 10,331 9,291
Cash and cash
equivalents 124,496 9,550
Receivables and
other assets 52,159 43,318
----------------- -----------------
190,285 69,653
----------------- -----------------
Total assets $2,182,731 $1,594,110
================= =================
Liabilities and
stockholders' equity
Liabilities:
Borrowings under unsecured
lines of credit obligations $ 0 $ 109,500
Senior unsecured
notes 865,000 515,000
Secured debt 148,184 51,831
Accrued expenses and other
liabilities 19,868 20,547
----------------- -----------------
Total liabilities 1,033,052 696,878
Stockholders' equity:
Preferred stock 120,761 127,500
Common stock 50,298 40,086
Capital in excess of
par value 1,069,887 790,838
Treasury stock (523) 0
Cumulative net
income 660,446 580,496
Cumulative dividends (749,166) (638,085)
Accumulated other
comprehensive
income 1 (170)
Other equity (2,025) (3,433)
----------------- -----------------
Total stockholders'
equity 1,149,679 897,232
----------------- -----------------
Total liabilities and
stockholders' equity $2,182,731 $1,594,110
================= =================
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data)
Three Months Ended Year Ended
December 31 December 31
2003 2002 2003 2002
------------------ ------------------
Revenues:
Rental income $ 54,748 $ 37,219 $176,504 $125,601
Interest income 4,841 5,503 20,768 26,525
Transaction fees and other
income 1,651 658 3,759 2,802
Prepayment fees 0 0 0 0
--------- -------- -------- --------
Gross revenues 61,240 43,380 201,031 154,928
Expenses:
Interest expense 17,063 11,206 54,144 39,432
Provision for depreciation 16,094 11,063 51,078 36,384
General and administrative 3,032 2,624 11,483 9,665
Loan expense 889 618 2,921 2,373
Impairment of assets 2,792 1,748 2,792 2,298
Loss on extinguishment of
debt 0 0 0 403
Provision for loan losses 2,120 250 2,870 1,000
--------- -------- -------- --------
Total expenses 41,990 27,509 125,288 91,555
--------- -------- -------- --------
Income from continuing
operations 19,250 15,871 75,743 63,373
Discontinued operations:
Gain (loss) on sales of
properties (173) (1,616) 4,139 (1,032)
Income (loss) from
discontinued
operations, net 2 920 2,858 5,318
--------- -------- -------- --------
(171) (696) 6,997 4,286
--------- -------- -------- --------
Net income 19,079 15,175 82,740 67,659
Preferred dividends 2,144 2,872 9,218 12,468
Preferred stock redemption
charge 0 0 2,790 0
--------- -------- -------- --------
Net income available to
common stockholders $ 16,935 $ 12,303 $ 70,732 $ 55,191
========= ======== ======== ========
Average number of common shares
outstanding:
Basic 49,440 39,403 43,572 36,702
Diluted 50,119 39,896 44,201 37,301
Net income available to
common stockholders per
share:
Basic $ 0.34 $ 0.31 $ 1.62 $ 1.50
Diluted 0.34 0.31 1.60 1.48
Funds from operations $ 33,206 $ 25,731 $119,463 $ 96,573
Funds from operations -
adjusted 35,998 27,479 125,045 98,871
Funds from operations per
share:
Basic $ 0.67 $ 0.65 $ 2.74 $ 2.63
Diluted 0.66 0.64 2.70 2.59
Funds from operations per
share - adjusted:
Basic $ 0.73 $ 0.70 $ 2.87 $ 2.69
Diluted 0.72 0.69 2.83 2.65
Dividends per share $ 0.585 $ 0.585 $ 2.34 $ 2.34
HEALTH CARE REIT, INC.
Financial Supplement - December 31, 2003
Portfolio Composition ($000's) Exhibit 1
------------------------------
# #
Balance Sheet Data Properties Beds/Units Balance % Balance
------------ ------------ ----------- -----------
Real Property 304 26,904 $1,741,537 87%
Loans Receivable 24 2,749 213,480 11%
Subdebt
Investments 0 0 45,254 2%
------------ ------------ ----------- -----------
Total
Investments 328 29,653 $2,000,271 100%
# # Investment %
Investment Data Properties Beds/Units (1) Investment
------------ ------------ ----------- -----------
Assisted Living
Facilities 219 14,193 $1,196,450 60%
Skilled Nursing
Facilities 101 14,256 648,354 32%
Specialty Care
Facilities 8 1,204 158,662 8%
------------ ------------ ----------- -----------
Real Estate
Investments 328 29,653 $2,003,466 100%
Notes: (1) Real Estate Investments include gross real estate
investments and credit enhancements which amounted to $2,000,271,000
and $3,195,000, respectively.
Revenue Composition ($000's) Exhibit 2
----------------------------
Three Months Ended Year Ended
December 31, 2003 December 31, 2003
--------------------- ----------------------
Revenue by
Investment Type (1)
Real Property $ 56,293 92% $185,581 90%
Loans Receivable 4,023 7% 19,240 9%
Subdebt Investments 933 1% 2,093 1%
------------------- --------------------
Total $ 61,249 100% $206,914 100%
Revenue by
Facility Type (1)
Assisted Living
Facilities $ 37,826 62% $118,180 57%
Skilled Nursing
Facilities 19,857 32% 76,515 37%
Specialty Care
Facilities 3,566 6% 12,220 6%
------------------- --------------------
Total $ 61,249 100% $206,914 100%
Notes: (1) Revenues include gross revenues and revenues from
discontinued operations.
Operator Concentration ($000's) Exhibit 3
-------------------------------
Concentration by Investment # Properties Investment %Investment
------------ ---------- ----------
Emeritus Corporation 30 $ 232,018 12%
Southern Assisted Living,
Inc. 46 211,633 11%
Commonwealth Communities
L.L.C. 14 200,127 10%
Home Quality Management,
Inc. 25 143,113 7%
Life Care Centers of
America, Inc. 17 120,810 6%
Remaining Operators (42) 196 1,095,765 54%
------------ ---------- ----------
Total 328 $2,003,466 100%
Concentration by Revenue # Properties Revenue(1) % Revenue
------------ ----------- ----------
Commonwealth Communities
L.L.C. 14 $ 26,592 13%
Home Quality Management,
Inc. 25 14,886 7%
Life Care Centers of
America, Inc. 17 14,525 7%
Merrill Gardens L.L.C. 12 14,397 7%
Alterra Healthcare
Corporation 45 14,293 7%
Remaining Operators (42) 215 122,221 59%
------------ ----------- ----------
Total 328 $ 206,914 100%
Notes: (1) Year ended December 31, 2003.
Geographic Concentration ($000's) Exhibit 4
---------------------------------
Concentration by Region # Properties Investment %Investment
------------ ---------- ----------
South 200 $1,002,502 50%
Northeast 45 407,858 20%
West 44 307,556 15%
Midwest 39 285,550 15%
------------ ---------- ----------
Total 328 $2,003,466 100%
Concentration by State # Properties Investment %Investment
------------ ---------- ----------
Massachusetts 24 $ 269,428 13%
North Carolina 43 205,162 10%
Florida 32 178,937 9%
Ohio 14 129,293 6%
Texas 29 118,341 6%
Remaining States (28) 186 1,102,305 56%
------------ ---------- ----------
Total 328 $2,003,466 100%
Revenue by State # Properties Revenue(1) % Revenue
------------ ---------- ----------
Massachusetts 24 $ 32,587 16%
Florida 32 20,849 10%
Texas 29 15,807 8%
North Carolina 43 12,790 6%
Ohio 14 12,374 6%
Remaining States (28) 186 112,507 54%
------------ ---------- ----------
Total 328 $ 206,914 100%
Notes: (1) Year ended December 31, 2003.
Committed Investment Balances Exhibit 5
----------------------------------------
($000's except Investment per Bed/Unit)
Committed Investment
# # Balance per
Properties Beds/Units (1) Bed/Unit
--------------------------------------------
Assisted Living
Facilities 219 14,193 $1,211,952 $85,391
Skilled Nursing
Facilities 101 14,256 648,353 45,479
Specialty Care
Facilities 8 1,204 158,662 131,779
--------------------------------------------
Total 328 29,653 $2,018,967 -na-
Notes: (1) Committed Balance includes gross real estate investments,
credit enhancements and unfunded construction commitments for which
initial funding had commenced.
Lease Up Statistics on Assisted
Living Facilities ($000's) Exhibit 6
------------------------------
Average Months %
Occupancy # Properties in Operation Revenue(1) Revenue
-----------------------------------------------
0% - 50% 2 2 $ 1,130 1%
50% - 70% 3 34 6,462 3%
70% + 8 33 5,649 2%
-----------------------------------------------
13 -na- $13,241 6%
Notes: (1) Interest and rental income for the year ended December 31,
2003.
Selected Facility Data Exhibit 7
----------------------
Coverage Data
-----------------
% Payor Mix Before After
------------------- Mgt. Mgt.
Census Private Medicare Fees Fees
-----------------------------------------------
Assisted Living
Facilities 85% 96% 0% 1.31x 1.10x
Skilled Nursing
Facilities 86% 17% 15% 1.75x 1.34x
Specialty Care
Facilities 67% 25% 32% 1.92x 1.48x
-----------------
Weighted Averages 1.53x 1.23x
Notes: Data as of September 30, 2003.
Credit Support ($000's) Exhibit 8
-----------------------
Balance % Investment
------------------------
Cross Defaulted $1,862,270 93% of gross real estate investments
Cross
Collateralized 168,519 79% of real property loans receivable
Master Leases 1,398,615 80% of real property owned
Current
Capitalization % Leverage &
($000's) Balance Balance Performance Ratios
-------------- -------------------- ---------------------------
Borrowings Under
Bank Lines $ 0 0% Debt/Total Book Cap 47%
Long-Term Debt Debt/Total Market Cap 34%
Obligations 1,013,184 47% Interest
Stockholders' Coverage 3.20x 4th Qtr.
Equity 1,149,679 53% 3.50x YTD
------------------ FFO Payout
Total Book Ratio 88% 4th Qtr.
Capitalization $2,162,863 100% 87% YTD
FFO Payout
Ratio 81% 4th Qtr.
- Adjusted 83% YTD
Revenue Maturities ($000's) Exhibit 9
---------------------------
Operating Lease Expirations & Loan Maturities
Current Lease and
Current Lease Interest Interest
Year Revenue (1) Revenue (1) Revenue % of Total
----------------------------------------------------------------------
2004 $ 1,894 $ 1,950 $ 3,844 2%
2005 330 2,219 2,549 1%
2006 0 5,409 5,409 2%
2007 0 6,769 6,769 3%
2008 0 1,514 1,514 1%
Thereafter 209,749 6,904 216,653 91%
---------------------------------------------------------
Total $211,973 $ 24,765 $236,738 100%
Notes: (1) Revenue impact by year, annualized.
Debt Maturities and Principal Payments ($000's) Exhibit 10
-----------------------------------------------
Lines of
Year Credit (1) Senior Notes Secured Debt Total (1)
----------------------------------------------------------------------
2004 $ 30,000 $ 40,000 $ 65,828 $ 135,828
2005 0 0 2,522 2,522
2006 310,000 50,000 2,703 362,703
2007 0 175,000 14,709 189,709
2008 0 100,000 9,879 109,879
2009 0 0 12,938 12,938
2010 0 0 8,948 8,948
Thereafter 0 500,000 90,657 590,657
----------------------------------------------------------
Total $340,000 $865,000 $208,184 $1,413,184
Notes: (1) Reflected at 100% capacity.
Investment Activity ($000's) Exhibit 11
----------------------------
Three Months Ended Year Ended
December 31, 2003 December 31, 2003
-------------------- -----------------
Funding by Investment Type
Real Property $ 43,351 84% $520,396 90%
Loans Receivable 7,576 15% 27,711 5%
Subdebt Investments 690 1% 27,410 5%
-------------------- -----------------
Total $ 51,617 100% $575,517 100%
Funding by Facility Type
Assisted Living Facilities $ 15,798 31% $400,348 70%
Skilled Nursing Facilities 23,908 46% 138,757 24%
Specialty Care Facilities 11,911 23% 36,412 6%
-------------------- -----------------
Total $ 51,617 100% $575,517 100%
Disposition Activity ($000's) Exhibit 12
-----------------------------
Three Months Ended Year Ended
December 31, 2003 December 31, 2003
-------------------- -------------------
Dispositions by
Investment Type
Real Property $ 468 100% $45,217 60%
Loans Receivable 30,631 40%
------- ----- ------- -----
Total $ 468 100% $75,848 100%
Dispositions by Facility
Type
Assisted Living Facilities $ 468 100% $66,578 88%
Skilled Nursing Facilities 9,270 12%
------- ----- ------- -----
Total $ 468 100% $75,848 100%
Discontinued Operations ($000's) Exhibit 13
--------------------------------------------------
Three Months Ended Year Ended
December 31 December 31
----------------------- ----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Revenues
Rental income $ 9 $ 2,083 $ 5,883 $11,953
Expenses
Interest expense 3 414 1,233 2,669
Provision for
depreciation 4 749 1,792 3,966
---------- ---------- ---------- ----------
Income (loss) from
discontinued
operations, net $ 2 $ 920 $ 2,858 $ 5,318
Funds From Operations Reconciliation Exhibit 14
------------------------------------
(Amounts in 000's except per share data)
Three Months Ended Year Ended
December 31 December 31
----------------- ------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net income available to
common stockholders $ 16,935 $ 12,303 $ 70,732 $ 55,191
Provision for depreciation (1) 16,098 11,812 52,870 40,350
Loss (gain) on sales of
properties 173 1,616 (4,139) 1,032
-------- -------- -------- --------
Funds from operations 33,206 25,731 119,463 96,573
Impairment of assets 2,792 1,748 2,792 2,298
Preferred stock redemption
charge 0 0 2,790 0
-------- -------- -------- --------
Funds from operations -
adjusted $ 35,998 $ 27,479 $125,045 $ 98,871
Average common shares
outstanding:
Basic 49,440 39,403 43,572 36,702
Diluted 50,119 39,896 44,201 37,301
Per share data:
Net income available to
common stockholders
Basic $ 0.34 $ 0.31 $ 1.62 $ 1.50
Diluted 0.34 0.31 1.60 1.48
Funds from operations
Basic $ 0.67 $ 0.65 $ 2.74 $ 2.63
Diluted 0.66 0.64 2.70 2.59
Funds from operations -
adjusted
Basic $ 0.73 $ 0.70 $ 2.87 $ 2.69
Diluted 0.72 0.69 2.83 2.65
FFO Payout Ratio
Dividends per share $ 0.585 $ 0.585 $ 2.34 $ 2.34
FFO per diluted share $ 0.66 $ 0.64 $ 2.70 $ 2.59
-------- -------- -------- --------
FFO payout ratio 88% 91% 87% 90%
FFO Payout Ratio - Adjusted
Dividends per share $ 0.585 $ 0.585 $ 2.34 $ 2.34
FFO per diluted share -
adjusted $ 0.72 $ 0.69 $ 2.83 $ 2.65
-------- -------- -------- --------
FFO payout ratio -
adjusted 81% 85% 83% 88%
Notes: (1) Provision for depreciation includes provision for
depreciation from discontinued operations.
FFO Outlook Reconciliation Exhibit 15
--------------------------
(Amounts in 000's except per share data)
Year Ended
December 31, 2004
---------------------
Low High
-------- --------
Net income available to common
stockholders $ 86,700 $ 89,300
Provision for depreciation (1) 68,000 68,000
-------- --------
Funds from operations $154,700 $157,300
Average common shares
outstanding (diluted) 51,750 51,750
Per share data (diluted):
Net income available to common
stockholders $ 1.68 $ 1.73
Funds from operations 2.99 3.04
Notes: (1) Provision for depreciation includes provision for
depreciation from discontinued operations.
EBITDA Reconciliation ($000's) Exhibit 16
------------------------------
Three Months Ended Year Ended
December 31 December 31
2003 2002 2003 2002
-------- -------- -------- --------
Net income $ 19,079 $ 15,175 $ 82,740 $ 67,659
Provision for depreciation (1) 16,098 11,812 52,870 40,350
Interest expense (1) 17,066 11,620 55,377 42,101
Capitalized interest 407 170 1,535 170
Amortization (2) 1,102 967 3,957 3,928
Provision for loan losses 2,120 250 2,870 1,000
-------- -------- -------- --------
EBITDA $ 55,872 $ 39,994 $199,349 $155,208
Interest Coverage Ratio
Interest expense (1) $ 17,066 $ 11,620 $ 55,377 $ 42,101
Capitalized interest 407 170 1,535 170
-------- -------- -------- --------
Total interest 17,473 11,790 56,912 42,271
EBITDA 55,872 39,994 199,349 155,208
-------- -------- -------- --------
Interest coverage 3.20x 3.39x 3.50x 3.67x
ratio
Notes: (1) Provision for depreciation and interest expense include
provision for depreciation and interest expense from discontinued
operations.
(2) Amortization includes amortization of deferred loan expenses,
restricted stock and stock options.
CONTACT: Health Care REIT, Inc.
Ray Braun, 419-247-2800
Mike Crabtree, 419-247-2800
Scott Estes, 419-247-2800
SOURCE: Health Care REIT, Inc.