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Mon, February 28, 2011 Nationwide Health Properties, Inc. Reports 2010 Fourth Quarter and Full Year Results
NEWPORT BEACH, CA--(Marketwire - February 28, 2011) - Nationwide Health Properties, Inc. (
"Our comparable period fourth quarter results concluded a very strong year for NHP with fourth quarter revenues up 20%, adjusted diluted FFO per share up 13% and adjusted diluted FAD per share up 9%. As a result, NHP's Board of Directors increased our quarterly dividend by $0.01 to $0.48 per share, or $1.92 per share on an annualized basis. This represents a 9% increase in our annualized dividend from the year ago quarter. Our credit statistics and dividend coverage continue to be outstanding with a diluted FAD payout ratio and FAD coverage at 81% and 1.23x, respectively," commented Douglas M. Pasquale, NHP's Chairman and Chief Executive Officer. "We also concluded an excellent year of investments capped by fourth quarter investments of $248 million at a 9.1% blended yield and annual investments totaling $924 million at an 8.7% blended yield. Further, 2011 is off to an impressive start with $102 million of investments already closed, and another $141 million set to close by quarter end," Mr. Pasquale added.
FOURTH QUARTER 2010 RESULTS OF OPERATIONS
The following table presents selected unaudited financial information for the fourth quarter and the year ended December 31, 2010 as compared to the same periods of 2009:
Selected Financial Data ($ in thousands, except per share amounts) Three Months Ended December 31, ------------------------------------------- 2010 2009 $ Change % Change ---------- ---------- --------- --------- Revenue $ 116,657 $ 97,045 $ 19,612 20.2% Income from Continuing Operations $ 38,050 $ 29,043 $ 9,007 31.0% Net Income Attributable to NHP Common Stockholders $ 35,313 $ 30,895 $ 4,418 14.3% Net Income Attributable to NHP Common Stockholders Per Diluted Share $ 0.27 $ 0.27 $ - 0.0% Diluted FFO $ 60,373 $ 61,821 $ (1,448) -2.3% Adjusted Diluted FFO $ 77,392 $ 62,651 $ 14,741 23.5% Diluted FFO Per Share $ 0.47 $ 0.53 $ (0.06) -11.3% Adjusted Diluted FFO Per Share $ 0.60 $ 0.53 $ 0.07 13.2% Diluted FAD $ 57,889 $ 61,481 $ (3,592) -5.8% Adjusted Diluted FAD $ 74,908 $ 62,311 $ 12,597 20.2% Diluted FAD Per Share $ 0.45 $ 0.52 $ (0.07) -13.5% Adjusted Diluted FAD Per Share $ 0.58 $ 0.53 $ 0.05 9.4% Year Ended December 31, ------------------------------------------- 2010 2009 $ Change % Change ---------- ---------- --------- --------- Revenue $ 439,251 $ 383,853 $ 55,398 14.4% Income from Continuing Operations $ 137,224 $ 121,800 $ 15,424 12.7% Net Income Attributable to NHP Common Stockholders $ 143,766 $ 143,040 $ 726 0.5% Net Income Attributable to NHP Common Stockholders Per Diluted Share $ 1.15 $ 1.31 $ (0.16) -12.2% Diluted FFO $ 266,856 $ 253,357 $ 13,499 5.3% Adjusted Diluted FFO $ 286,285 $ 249,291 $ 36,994 14.8% Diluted FFO Per Share $ 2.14 $ 2.27 $ (0.13) -5.7% Adjusted Diluted FFO Per Share $ 2.30 $ 2.23 $ 0.07 3.1% Diluted FAD $ 261,152 $ 251,956 $ 9,196 3.6% Adjusted Diluted FAD $ 280,581 $ 247,890 $ 32,691 13.2% Diluted FAD Per Share $ 2.10 $ 2.25 $ (0.15) -6.7% Adjusted Diluted FAD Per Share $ 2.25 $ 2.22 $ 0.03 1.4%
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 adjusted diluted FFO and adjusted diluted FAD amounts which exclude acquisition costs, impairments and the recognition of a net gain on re-measurement of equity interest upon acquisition in 2010 and gains on debt extinguishments in 2010 and 2009.
FOURTH QUARTER 2010 INVESTMENT ACTIVITY
Investment Activity 2010 ($ in thousands) Q1 Q2 Q3 Q4 2010 Investment Total Total Total Total Total --------- --------- --------- --------- --------- Assisted and Independent Living Facilities Investment $ 6,000 $ 46,000 $ 59,000 $ 111,000 Initial Yield 8.8% 8.2% 8.1% 8.2% --------- --------- --------- --------- --------- Skilled Nursing Facilities Investment $ 130,000 $ 47,000 $ 92,000 $ 269,000 Initial Yield 9.1% 9.6% 10.3% 9.6% --------- --------- --------- --------- --------- Continuing Care Retirement Communities Investment $ 16,000 $ 16,000 Initial Yield 9.1% 9.1% --------- --------- --------- --------- --------- Medical Office Buildings Investment $ 380,000 $ 46,000 $ 77,000 $ 503,000 Initial Yield 8.2% 9.3% 8.5% 8.4% --------- --------- --------- --------- --------- Total Investment $ 380,000 $ 182,000 $ 93,000 $ 244,000 $ 899,000 Initial Yield 8.2% 9.1% 8.9% 9.1% 8.7% --------- --------- --------- --------- ---------
In the fourth quarter of 2010, we invested approximately $4.0 million in revenue producing capital expenditures at a blended yield of 9.0% for a total of $19.0 million at a blended yield of 8.5% for the year. Additionally during the year, we funded two unsecured loans totaling $5.5 million at a blended rate of 9.3%. We also entered into a joint venture with PMB to develop a medical office building in Mission Hills, CA, our first development pursuant to the Amended and Restated Pipeline Property Agreement. We funded $1.6 million in the fourth quarter and $17.8 million year to date for two development projects with combined budgets of $59.6 million.
In the fourth quarter of 2010, we sold seven properties for gross sales proceeds of $28.3 million resulting in a total gain of $10.5 million. For the year, we sold 12 properties for gross sales proceeds of $44.3 million resulting in a total gain of $16.9 million. Also during the fourth quarter, we concluded that our investment in one of our medical office properties was impaired, and we plan to dispose of this investment in 2011. As a result, we recorded a non-cash impairment charge totaling $15.0 million in discontinued operations relating to this investment.
FOURTH QUARTER 2010 FINANCING TRANSACTIONS
At-The-Market Equity Offering Program 2010 (in thousands, except price per share) Q1 Q2 Q3 Q4 2010 Total Total Total Total Total ---------- ---------- ---------- ---------- ---------- Number of Shares 1,269 3,789 2,793 1,290 9,141 Average Price per Share $ 35.58 $ 35.69 $ 37.90 $ 40.59 $ 37.04 Net Proceeds $ 44,673 $ 133,820 $ 104,750 $ 51,820 $ 335,063 ---------- ---------- ---------- ---------- ----------
In the fourth quarter, we prepaid $105.9 million of mortgage debt. We also assumed $15.8 million of mortgage debt in conjunction with our acquisitions of two medical office buildings. The assumed mortgage debt has a blended interest rate of 5.8% and matures in 2014. In order to fund investments during the fourth quarter, we drew $175 million on our $700 million credit facility, and subsequent to year end, we have drawn an additional $50 million to bring the total currently outstanding under our credit facility to $225 million.
HEARTHSTONE LEASE MODIFICATIONS
In February 2011, our tenant, Hearthstone Senior Services, L.P. ("Hearthstone"), notified us that it would be unable to pay the rent then due under its leases with us, and asked us to amend certain terms of the leases to make rents achievable. In order to substantially increase the ability of Hearthstone to meet its future obligations, we agreed to certain modifications of the terms of our leases with Hearthstone that include, among other things, a reduction in the aggregate rent payable by $7.4 million for the lease year ending February 2012, and by $6.4 million for subsequent lease years. After giving effect to these reductions, the aggregate rent payable by Hearthstone is $31.7 million for the first lease year, $33.7 million for the second lease year and increases by 3% each year thereafter. In connection with the lease modifications, we also obtained the right to terminate any and all of our leases with Hearthstone at any time without cause.
CONFERENCE CALL INFORMATION
The conference call previously scheduled for February 28, 2011 at 11:00 a.m. Pacific Time to discuss our fourth quarter and year end results has been cancelled. There will be a conference call today at 5:30 a.m. Pacific Time (8:30 am Eastern Time) to discuss the previously announced merger transaction between Nationwide Health Properties and Ventas. The conference call is being webcast by Thomson Reuters and can be accessed at the Ventas website at [ www.ventasreit.com ] and at NHP's website at [ www.nhp-reit.com ] or by dialing (866) 610-1072 and providing the conference ID "48183257". A replay of the webcast will be available on Ventas' and NHP's websites or by calling (800) 642-1687, referencing conference ID "48183257", at approximately 11:30 a.m. Eastern Time today. The webcast will be archived for 30 days.
An investor presentation discussing the transaction will be available on Ventas' website at [ www.ventasreit.com ] and on NHP's website at [ www.nhp-reit.com ].
Our supplemental information package for the quarter ended December 31, 2010 is available on our website, free of charge, at [ http://www.nhp-reit.com ] by selecting "Investor Relations" followed by "Financial Information" and is included in our Current Report on Form 8-K filed February 28, 2011 with the SEC also containing this release. Shareholders may receive, free of charge, a complete set of our audited financial statements upon request.
ABOUT NATIONWIDE HEALTH PROPERTIES, INC.
Nationwide Health Properties, Inc. is a real estate investment trust (REIT) that invests primarily in healthcare real estate in the United States. As of December 31, 2010, the Company's portfolio of properties, including mortgage loans and properties owned by unconsolidated joint ventures, totaled 667 properties among the following segments: 298 senior housing facilities, 212 skilled nursing facilities, 134 medical office buildings, 12 continuing care retirement communities, 7 specialty hospitals, 2 assets in development and 2 assets held for sale. 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 or other significant operators in the healthcare industry; non-payment or late payment of rent, interest or loan principal amounts by our tenants; the ability of our tenants to pay contractual rent and/or interest escalations in future periods; the ability of our tenants to obtain and maintain adequate liability and other insurance and potential underinsured or uninsured losses; occupancy levels at certain facilities; our reliance on one tenant for a significant percentage of our revenues; risks associated with real estate ownership, including the illiquid nature of real estate and the real estate market, maintenance and repair costs, potential liability under environmental laws, leases that are not renewed or are renewed at lower rates, our ability to attract new tenants for certain facilities, purchase option exercises that reduce revenue and our ability to sell certain facilities for their book value; the amount and yield of any additional investments and 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; risks associated with development, including our ability to obtain financing, delays or failures in obtaining necessary permits and authorizations, the failure to achieve original project estimates and our limited history in conducting ground-up development projects; access to the capital markets and the cost and availability of capital; changes in the ratings of our debt securities; our level of indebtedness; the effect of economic and market conditions and changes in interest rates; maintaining compliance with our debt covenants and restrictions imposed by such covenants; the possibility that we could be required to repurchase some of our senior notes; increased competition in our business sector; adverse trends in the healthcare industry; tenant regulatory and licensing requirements and the effect of healthcare reform legislation or government regulations, including changes in the reimbursement levels under the Medicare and Medicaid programs; our ability to retain key personnel; changes in or inadvertent violations of tax laws and regulations and other factors that can affect 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.
***Financial Tables to Follow***
NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED INCOME STATEMENTS (In thousands, except per share data) Three Months Ended Year Ended December 31, December 31, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- --------- (Unaudited) Revenue: Triple-net lease rent $ 80,555 $ 72,411 $ 307,567 $ 287,379 Medical office building operating rent 26,610 17,944 102,287 70,054 --------- --------- --------- --------- 107,165 90,355 409,854 357,433 Interest and other income 9,492 6,690 29,397 26,420 --------- --------- --------- --------- 116,657 97,045 439,251 383,853 Expenses: Interest expense 23,937 23,091 95,761 93,630 Depreciation and amortization 34,290 30,862 134,540 121,032 General and administrative 8,574 6,916 30,836 27,320 Acquisition costs 2,013 830 5,118 830 Medical office building operating expenses 11,216 7,704 41,325 28,906 --------- --------- --------- --------- 80,030 69,403 307,580 271,718 --------- --------- --------- --------- Operating income 36,627 27,642 131,671 112,135 Income from unconsolidated joint ventures 1,423 1,401 5,478 5,101 Gain on debt extinguishment - - 75 4,564 --------- --------- --------- --------- Income from continuing operations 38,050 29,043 137,224 121,800 Discontinued operations: Gains on sale of facilities, net 10,461 2,756 16,948 23,908 Impairment of asset (15,006) - (15,006) - Income from discontinued operations 1,060 575 2,957 3,350 --------- --------- --------- --------- (3,485) 3,331 4,899 27,258 --------- --------- --------- --------- Net income 34,565 32,374 142,123 149,058 Net loss (income) attributable to noncontrolling interests 748 (484) 1,643 (668) --------- --------- --------- --------- Net income attributable to NHP 35,313 31,890 143,766 148,390 Preferred stock dividends - (995) - (5,350) --------- --------- --------- --------- Income available to NHP common stockholders $ 35,313 $ 30,895 $ 143,766 $ 143,040 ========= ========= ========= ========= Basic earnings per share (EPS): Income from continuing operations attributable to NHP common stockholders $ 0.31 $ 0.24 $ 1.13 $ 1.08 Discontinued operations attributable to NHP common stockholders (0.03) 0.03 0.04 0.26 --------- --------- --------- --------- Net income attributable to NHP common stockholders $ 0.28 $ 0.27 $ 1.17 $ 1.34 ========= ========= ========= ========= Diluted EPS: Income from continuing operations attributable to NHP common stockholders $ 0.30 $ 0.24 $ 1.11 $ 1.06 Discontinued operations attributable to NHP common stockholders (0.03) 0.03 0.04 0.25 --------- --------- --------- --------- Net income attributable to NHP common stockholders $ 0.27 $ 0.27 $ 1.15 $ 1.31 ========= ========= ========= ========= Weighted average shares outstanding for EPS: Basic 125,975 112,575 121,687 106,329 ========= ========= ========= ========= Diluted 128,673 115,009 124,339 108,547 ========= ========= ========= ========= RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share data) (Unaudited) Reconciliation of Net Income to Adjusted Diluted FFO Three Months Ended Year Ended December 31, December 31, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- --------- Net income $ 34,565 $ 32,374 $ 142,123 $ 149,058 Preferred stock dividends - (995) - (5,350) Net loss (income) attributable to noncontrolling interests 748 (484) 1,643 (668) Real estate related depreciation and amortization 34,337 31,415 135,245 123,666 Depreciation in income from unconsolidated joint ventures 1,184 1,272 4,793 5,209 Gains on sale of facilities, net (10,461) (2,756) (16,948) (23,908) --------- --------- --------- --------- FFO available to NHP common stockholders 60,373 60,826 266,856 248,007 Series B preferred dividend add-back - 995 - 5,350 --------- --------- --------- --------- Diluted FFO 60,373 61,821 266,856 253,357 Acquisition costs 2,013 830 5,118 830 Impairment of asset 15,006 - 15,006 - Gain on extinguishment of debt - - (75) (4,896) Gain on re-measurement of equity interest upon acquisition, net - - (620) - --------- --------- --------- --------- Adjusted diluted FFO $ 77,392 $ 62,651 $ 286,285 $ 249,291 ========= ========= ========= ========= Weighted average shares outstanding for diluted FFO: Diluted weighted average shares outstanding (1) 128,769 115,116 124,438 108,621 Series B preferred stock conversion add-back if not already converted - 2,517 76 3,154 --------- --------- --------- --------- Fully diluted weighted average shares outstanding 128,769 117,633 124,514 111,775 ========= ========= ========= ========= Diluted FFO per share $ 0.47 $ 0.53 $ 2.14 $ 2.27 ========= ========= ========= ========= Adjusted diluted FFO per share $ 0.60 $ 0.53 $ 2.30 $ 2.23 ========= ========= ========= ========= Dividends declared per common share $ 0.47 $ 0.44 $ 1.82 $ 1.76 ========= ========= ========= ========= Adjusted diluted FFO payout ratio 78% 83% 79% 79% ========= ========= ========= ========= Adjusted diluted FFO coverage 1.28 1.20 1.26 1.27 ========= ========= ========= ========= (1) Diluted weighted average shares outstanding includes the effect of all participating and non-participating share-based payment awards which for us consists of stock options and other share-based payment awards if the effect is dilutive. The dilutive effect of all share-based payment awards is calculated using the treasury stock method. Additionally, our redeemable OP units are included as if converted to common stock on a one-for-one basis. NATIONWIDE HEALTH PROPERTIES, INC. RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (In thousands, except per share data) (Unaudited) Reconciliation of Net Income to Adjusted Diluted FAD Three Months Ended Year Ended December 31, December 31, -------------------- -------------------- 2010 2009 2010 2009 --------- --------- --------- --------- Net income $ 34,565 $ 32,374 $ 142,123 $ 149,058 Preferred stock dividends - (995) - (5,350) Net loss (income) attributable to noncontrolling interests 748 (484) 1,643 (668) Real estate related depreciation and amortization 34,337 31,415 135,245 123,666 Gains on sale of facilities, net (10,461) (2,756) (16,948) (23,908) Straight-lined rent (3,586) (1,509) (11,970) (6,275) Amortization of intangible assets and liabilities 134 (157) 341 (564) Non-cash stock-based compensation expense 1,765 1,780 6,939 7,007 Deferred financing cost amortization 1,044 765 3,808 3,101 Lease commissions and tenant and capital improvements (1,875) (1,257) (4,931) (4,733) Unconsolidated joint ventures: Real estate related depreciation and amortization 1,184 1,272 4,793 5,209 Straight-lined rent 9 17 16 (26) Amortization of intangible assets and liabilities - - - 5 Deferred finance cost amortization 25 21 93 84 --------- --------- --------- --------- FAD available to NHP common stockholders 57,889 60,486 261,152 246,606 Series B preferred dividends - 995 - 5,350 --------- --------- --------- --------- Diluted FAD 57,889 61,481 261,152 251,956 Acquisition costs 2,013 830 5,118 830 Impairment of asset 15,006 - 15,006 - Gain on extinguishment of debt - - (75) (4,896) Gain on re-measurement of equity interest upon acquisition, net - - (620) - --------- --------- --------- --------- Adjusted diluted FAD $ 74,908 $ 62,311 $ 280,581 $ 247,890 ========= ========= ========= ========= Weighted average shares outstanding for diluted FAD: Diluted weighted average shares outstanding (1) 128,769 115,116 124,438 108,621 Series B preferred stock add-back if not already converted - 2,517 76 3,154 --------- --------- --------- --------- Fully diluted weighted average shares outstanding 128,769 117,633 124,514 111,775 ========= ========= ========= ========= Diluted FAD per share $ 0.45 $ 0.52 $ 2.10 $ 2.25 ========= ========= ========= ========= Adjusted diluted FAD per share $ 0.58 $ 0.53 $ 2.25 $ 2.22 ========= ========= ========= ========= Dividends declared per common share $ 0.47 $ 0.44 $ 1.82 $ 1.76 ========= ========= ========= ========= Adjusted diluted FAD payout ratio 81% 83% 81% 79% ========= ========= ========= ========= Adjusted diluted FAD coverage 1.23 1.20 1.24 1.26 ========= ========= ========= ========= (1) Diluted weighted average shares outstanding includes the effect of all participating and non-participating share-based payment awards which for us consists of stock options and other share-based payment awards if the effect is dilutive. The dilutive effect of all share-based payment awards is calculated using the treasury stock method. Additionally, our redeemable OP units are included as if converted to common stock on a one-for-one basis. NATIONWIDE HEALTH PROPERTIES, INC. CONSOLIDATED BALANCE SHEETS (In thousands) December 31, December 31, 2010 2009 ----------- ----------- Assets Investments in real estate: Land $ 339,534 $ 318,457 Buildings and improvements 3,679,745 3,088,183 Development in progress 17,827 - ----------- ----------- 4,037,106 3,406,640 Less accumulated depreciation (670,601) (585,294) ----------- ----------- 3,366,505 2,821,346 Mortgage loans receivable, net 289,187 110,613 Mortgage loan receivable from related party - 47,500 Investments in unconsolidated joint ventures 42,582 51,924 ----------- ----------- Net real estate related investments 3,698,274 3,031,383 Cash and cash equivalents 59,591 382,278 Receivables, net 8,336 6,605 Assets held for sale 5,150 - Intangible assets 163,238 93,657 Other assets 158,035 133,152 ----------- ----------- Total assets $ 4,092,624 $ 3,647,075 =========== =========== Liabilities and Equity Unsecured senior credit facility $ 175,000 $ - Senior notes 991,633 991,633 Notes and bonds payable 362,624 431,456 Accounts payable and accrued liabilities 151,069 132,915 ----------- ----------- Total liabilities 1,680,326 1,556,004 Redeemable OP unitholder interests 79,188 57,335 Equity: NHP stockholders' equity: Series B convertible preferred stock - 51,364 Common stock 12,625 11,432 Capital in excess of par value 2,516,397 2,128,843 Cumulative net income 1,849,045 1,705,279 Accumulated other comprehensive income (loss) 8,614 (823) Cumulative dividends (2,086,854) (1,862,996) ----------- ----------- Total NHP stockholders' equity 2,299,827 2,033,099 Noncontrolling interests 33,283 637 ----------- ----------- Total equity 2,333,110 2,033,736 ----------- ----------- Total liabilities and equity $ 4,092,624 $ 3,647,075 =========== ===========
