- 2008 Investments of $591 Million Yield Growth in Revenue, Recurring Diluted FFO and FAD Per Share
- Balance Sheet Remains Strong With Modest Capital Commitments Through Mid-2011
NEWPORT BEACH, Calif., Feb. 18 /PRNewswire-FirstCall/ -- Nationwide Health Properties, Inc. (NYSE: NHP) today announced results of operations for the fourth quarter and the year ended December 31, 2008. Contemporaneously with this press release, the Company has filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2008 with the Securities and Exchange Commission.
"In 2008, we continued our track record of growth, diversification and balance sheet strength, delivering a strong performance against commonly-used metrics," commented Douglas M. Pasquale, NHP's President and Chief Executive Officer. "Our disciplined approach to acquisitions and balance sheet management has resulted in conservative leverage, an excellent fixed charge coverage and ample liquidity. Given the strength of our balance sheet and modest capital commitments, we believe we have positioned ourselves well to capitalize on strategic opportunities as they arise. Our total shareholder return, diluted FAD dividend payout ratio and coverage remain among the strongest in the entire REIT universe," Mr. Pasquale added.
FOURTH QUARTER 2008 RESULTS OF OPERATIONS
The following table presents selected financial information for the fourth quarter and the year ended December 31, 2008 as compared to the same periods of 2007:
SELECTED FINANCIAL DATA
($in thousands, except per share amounts)
Three Months Ended
December 31,
-----------------------------------
2008 2007 $ Change % Change
-----------------------------------
Revenue $96,470 $83,616 $12,854 15.4%
Income from Continuing
Operations $31,462 $38,509 $(7,047) -18.3%
Net Income $33,416 $53,236 $(19,820) -37.2%
Income Available to Common
Stockholders Per Diluted
Share $0.31 $0.54 $(0.23) -42.6%
Diluted FFO $64,002 $54,989 $9,013 16.4%
Recurring Diluted FFO $59,361 $53,322 $6,039 11.3%
Diluted FFO Per Share $0.60 $0.56 $0.04 7.1%
Recurring Diluted FFO Per
Share $0.56 $0.54 $0.02 3.7%
Diluted FAD $58,554 $53,914 $4,640 8.6%
Recurring Diluted FAD $58,554 $52,247 $6,307 12.1%
Diluted FAD Per Share $0.55 $0.55 $- 0.0%
Recurring Diluted FAD Per
Share $0.55 $0.53 $0.02 3.8%
Year Ended
December 31,
-----------------------------------
2008 2007 $ Change % Change
-----------------------------------
Revenue $370,665 $306,269 $64,396 21.0%
Income from Continuing
Operations $108,140 $132,633 $(24,493) -18.5%
Net Income $268,138 $224,458 $43,680 19.5%
Income Available to Common
Stockholders Per Diluted
Share $2.64 $2.32 $0.32 13.8%
Diluted FFO $236,514 $203,203 $33,311 16.4%
Recurring Diluted FFO $231,873 $199,571 $32,302 16.2%
Diluted FFO Per Share $2.29 $2.12 $0.17 8.0%
Recurring Diluted FFO Per
Share $2.24 $2.08 $0.16 7.7%
Diluted FAD $226,327 $205,019 $21,308 10.4%
Recurring Diluted FAD $226,327 $201,387 $24,940 12.4%
Diluted FAD Per Share $2.19 $2.14 $0.05 2.3%
Recurring Diluted FAD Per
Share $2.19 $2.10 $0.09 4.3%
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 in 2007 and excludes the recognition of a gain on debt extinguishment in 2008.
INCOME FROM CONTINUING OPERATIONS
In 2007, we sold properties to our unconsolidated joint venture with a state pension fund investor. 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 months and year ending December 31, 2007, is substantially greater than the three months and year ending December 31, 2008.
FOURTH QUARTER 2008 INVESTMENT ACTIVITY
The following table summarizes our 2008 investment activity:
INVESTMENT ACTIVITY 2008
($in thousands)
Q1 Q2 Q3 Q4 Year to Date
Investment Total Total Total Owned (1) Total
------------------------------------------------------------------------
Senior Housing
Number of
Facilities 14 1 - 3 18
Purchase Price
(2) $52,000 $20,000 $- $26,000 $98,000
Initial Yield 8.1% 8.3% 8.4% 8.2%
------------------------------------------------------------------------
Long-Term Care
Number of
Facilities - 7 5 1 13
Purchase Price
(2) $- $32,000 $32,000 $22,000 $86,000
Initial Yield 9.4% 9.7% 9.7% 9.6%
------------------------------------------------------------------------
Medical Office
Number of
Facilities 1 8 15 2 26
Purchase Price
(3) $2,000 $198,000 $110,000 $49,000 $359,000
Initial Yield 7.4% 6.0% 7.2% 6.0% 6.3%
------------------------------------------------------------------------
Investments in
Existing
Portfolio
Investment $6,000 $9,000 $13,000 $20,000 $48,000
Initial Yield 8.7% 8.0% 8.3% 7.8% 8.1%
------------------------------------------------------------------------
Total
Number of
Facilities 15 16 20 6 57
Purchase Price $60,000 $259,000 $155,000 $117,000 $591,000
Initial Yield 8.1% 6.6% 7.8% 7.5% 7.3%
------------------------------------------------------------------------
(1) There were no loans placed in the fourth quarter.
(2) The Q4 total includes the exercise for $8.0 million (Senior Housing)
and $13.0 million (Long-Term Care) of purchase options by one of our
JVs in which we hold a 25% interest.
(3) The Q3 total has been adjusted to reflect $19.0 million invested in
two MOBs by a JV in which we hold a 44.95% interest.
Pacific Medical Buildings LLC ("PMB") Update - During 2008, we directly or indirectly acquired or otherwise invested in 12 PMB medical office buildings previously owned by affiliates of PMB. The gross investment was $266.2 million, including the assumption of $132.4 million of mortgage financing and the issuance of 1,829,562 limited operating partnership units with a value of $58.4 million. Additionally, in September 2008, we made a $47.5 million mortgage loan, which is secured by a medical office building, to a PMB affiliate which has the right to extend the loan until August 2009.
2008 FINANCING TRANSACTIONS
During the fourth quarter of 2008, we issued 2.4 million shares of our common stock through our controlled equity offering program at an average price of $29.29 per share, resulting in net proceeds of approximately $69.0 million. For the year ended December 31, 2008, we issued 5.0 million shares of our common stock through our controlled equity offering program at an average price of $32.24 per share resulting in net proceeds of approximately $158.1 million.
During the fourth quarter of 2008, we converted 314,716 shares of series B cumulative convertible preferred stock into 1.4 million shares of common stock.
During the fourth quarter of 2008, we retired $49.7 million of medium term notes with a weighted average interest rate of 7.15% for $44.6 million, resulting in a $4.6 million gain on extinguishment of debt net of related deferred financing costs.
2009 GUIDANCE
Our diluted FFO guidance per share range is from $2.20 to $2.25 and our diluted FAD guidance per share range is from $2.18 to $2.23. Our guidance excludes any acquisitions, investments, impairments or capital transactions occurring in 2009. Current guidance also assumes no material changes to the Hearthstone lease nor the recognition of any supplemental rent previously or prospectively deferred. Beginning in 2009, certain costs associated with acquisitions which were previously capitalized are now required to be expensed. While our guidance does not assume any acquisitions, we will incur certain costs that will be expensed for any acquisitions we may make and those costs could be material.
CONFERENCE CALL INFORMATION
We have scheduled a conference call and webcast on Thursday, February 19, 2009 at 8:30 a.m. Pacific time (11:30 a.m. Eastern time) in order to present our performance and operating results for the quarter and year ended December 31, 2008. The conference call is accessible by dialing 877-356-5705 and referencing conference ID number 83294465 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 Thursday, March 19, 2009. Callers can access the replay by dialing 800-642-1687 or 706-645-9291 and entering conference ID number 83294465. 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 December 31, 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 February 18, 2009 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 that invests in senior housing facilities, long-term care facilities and medical office buildings. We have investments in 582 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.
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 Year Ended
December 31, December 31,
------------- --------------
2008 2007 2008 2007
------------- --------------
Revenue:
Triple net lease rent $72,691 $70,651 $285,398 $268,346
Medical office building
operating rent 17,229 6,928 60,287 16,061
------ ----- ------ ------
89,920 77,579 345,685 284,407
Interest and other income 6,550 6,037 24,980 21,862
----- ----- ------ ------
96,470 83,616 370,665 306,269
Expenses:
Interest and
amortization of
deferred financing
costs 25,492 25,435 101,045 97,639
Depreciation and
amortization 30,898 26,110 117,473 91,187
General and
administrative 6,513 6,937 26,051 24,429
Medical office building
operating expenses 7,849 3,512 26,631 8,596
----- ----- ------ -----
70,752 61,994 271,200 221,851
------ ------ ------- -------
Income before
minority interests,
unconsolidated
joint ventures and
discontinued operations 25,718 21,622 99,465 84,418
Minority interests 24 73 131 212
Income from
unconsolidated joint
ventures 1,079 717 3,903 1,958
Gain on
extinguishment of
debt, net 4,641 - 4,641 -
Gain on sale of facilities
to unconsolidated joint
venture - 16,097 - 46,045
------ ------ ----- ------
Income from
continuing
operations 31,462 38,509 108,140 132,633
Discontinued
operations
Gain on sale of
facilities, net 1,552 10,783 154,995 72,069
Income from
discontinued
operations 402 3,944 5,003 19,756
--- ----- ----- ------
1,954 14,727 159,998 91,825
----- ------ ------- ------
Net income 33,416 53,236 268,138 224,458
Preferred stock dividends (1,452) (2,062) (7,637) (13,434)
------ ------ ------ -------
Income available
to common
stockholders $31,964 $51,174 $260,501 $211,024
======= ======= ======== ========
Basic earnings per
share (EPS):
Income from
continuing
operations
excluding gains $0.25 $0.22 $0.98 $0.81
Gains in income from
continuing operations 0.05 0.17 0.05 0.51
---- ---- ---- ----
Income from
continuing
operations 0.30 0.39 1.03 1.32
Discontinued operations 0.02 0.16 1.65 1.01
---- ---- ---- ----
Income available to
common stockholders $0.32 $0.55 $2.68 $2.33
===== ===== ===== =====
Diluted EPS:
Income from
continuing
operations
excluding gains $0.25 $0.22 $0.97 $0.80
Gain in income from
continuing operations 0.04 0.17 0.05 0.51
---- ---- ---- ----
Income from
continuing
operations 0.29 0.39 1.02 1.31
Discontinued operations 0.02 0.15 1.62 1.01
---- ---- ---- ----
Income available to
common stockholders $0.31 $0.54 $2.64 $2.32
===== ===== ===== =====
Weighted average
shares outstanding
for EPS:
Basic 100,353 93,399 97,246 90,625
======= ====== ====== ======
Diluted 102,455 93,990 98,855 91,129
======= ====== ====== ======
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 Year Ended
December 31, December 31,
------------- --------------
2008 2007 2008 2007
---- ---- ---- ----
Net income $33,416 $53,236 $268,138 $224,458
Preferred stock
dividends (1,452) (2,062) (7,637) (13,434)
Real estate
related
depreciation and
amortization 30,837 27,965 118,603 100,340
Depreciation in
income from
unconsolidated
joint ventures 1,301 668 4,768 1,703
Gains on sale of
facilities, net (1,552) (26,880) (154,995) (118,114)
------ ------- -------- --------
FFO available to
common stockholders 62,550 52,927 228,877 194,953
Series B
preferred
dividends 1,452 2,062 7,637 8,250
----- ----- ----- -----
Diluted FFO 64,002 54,989 236,514 203,203
Gain on
extinguishment of
debt, net (4,641) - (4,641) -
Non-recurring
settlement of
tenant
obligations - (1,667) - (3,632)
------- ------ ------- ------
Recurring diluted
FFO $59,361 $53,322 $231,873 $199,571
======= ======= ======== ========
Weighted average
shares outstanding
for diluted FFO:
Diluted weighted
average shares
outstanding 102,455 93,990 98,855 91,129
Series B
preferred stock
conversion 3,896 4,717 4,526 4,707
----- ----- ----- -----
Fully diluted
weighted average
shares
outstanding 106,351 98,707 103,381 95,836
======= ====== ======= ======
Diluted FFO per
share $0.60 $0.56 $2.29 $2.12
===== ===== ===== =====
Recurring diluted
FFO per share $0.56 $0.54 $2.24 $2.08
===== ===== ===== =====
Dividends declared
per common share $0.44 $0.41 $1.76 $1.64
===== ===== ===== =====
Recurring diluted
FFO payout ratio 79% 76% 79% 79%
== == == ==
Recurring diluted
FFO coverage 1.27 1.32 1.27 1.27
==== ==== ==== ====
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 Year Ended
December 31, December 31,
------------- --------------
2008 2007 2008 2007
---- ---- ---- ----
Net income $33,416 $53,236 $268,138 $224,458
Preferred stock dividends (1,452) (2,062) (7,637) (13,434)
Real estate related depreciation
and amortization 30,837 27,965 118,603 100,340
Gains on sale of facilities, net (1,552) (26,880) (154,995) (118,114)
Gain on extinguishment of debt,
net (4,641) - (4,641) -
Straight-lined rent (2,388) (1,735) (10,263) (2,886)
Amortization of intangible assets
and liabilities (148) (74) (559) (96)
Non-cash stock-based compensation
expense 1,528 1,247 5,800 4,733
Deferred finance cost amortization 908 737 3,173 2,803
Lease commissions and tenant and
capital improvements (716) (1,260) (3,715) (2,758)
Unconsolidated joint ventures:
Real estate related
depreciation and amortization 1,301 668 4,768 1,703
Straight-lined rent (12) - (66) -
Deferred finance cost
amortization 21 10 84 20
-- -- -- --
FAD available to common
stockholders 57,102 51,852 218,690 196,769
Series B preferred dividends 1,452 2,062 7,637 8,250
----- ----- ----- -----
Diluted FAD 58,554 53,914 226,327 205,019
Non-recurring settlement of
delinquent tenant obligations - (1,667) - (3,632)
- ------ - ------
Recurring diluted FAD $58,554 $52,247 $226,327 $201,387
======= ======= ======== ========
Weighted average shares
outstanding for diluted FAD:
Weighted average shares
outstanding 102,455 93,990 98,855 91,129
Series B preferred stock
conversion 3,896 4,717 4,526 4,707
----- ----- ----- -----
Fully diluted weighted average
shares outstanding 106,351 98,707 103,381 95,836
======= ====== ======= ======
Diluted FAD per share $0.55 $0.55 $2.19 $2.14
===== ===== ===== =====
Recurring FAD diluted per share $0.55 $0.53 $2.19 $2.10
===== ===== ===== =====
Dividends declared per common
share $0.44 $0.41 $1.76 $1.64
===== ===== ===== =====
Recurring diluted FAD payout
ratio 80% 77% 80% 78%
== == == ==
Recurring diluted FAD coverage 1.25 1.29 1.24 1.28
==== ==== ==== ====
Reconciliation of 2009 Net Income Guidance to 2009 Diluted FFO and
Diluted FAD Guidance on a Per Share Basis
Low High
--- ----
Net income $1.07 $1.12
Real estate related
depreciation and
amortization 1.14 1.14
Dilution from
convertible preferred
stock (0.01) (0.01)
----- -----
Diluted FFO guidance 2.20 2.25
---- ----
Straight-lined rent (0.06) (0.06)
Amortization of
intangible assets and
liabilities (0.01) (0.01)
Non-cash stock- based
compensation expense 0.07 0.07
Deferred finance cost
amortization 0.03 0.03
Lease commissions and
tenant and capital
improvements (0.05) (0.05)
----- -----
Diluted FAD
guidance $2.18 $2.23
===== =====
NATIONWIDE HEALTH PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2008 2007
---- ----
Assets
Real estate related investments:
Land $320,394 $301,100
Buildings and improvements 3,079,819 2,896,876
--------- ---------
3,400,213 3,197,976
Less accumulated depreciation (490,112) (410,865)
-------- --------
Net real estate 2,910,101 2,787,111
Mortgage loans receivable, net 112,399 121,694
Mortgage loan receivable from related
party 47,500 -
Investment in unconsolidated joint
ventures 54,299 52,637
------ ------
Net real estate related investments 3,124,299 2,961,442
Cash and cash equivalents 82,250 19,407
Receivables, net 6,066 3,808
Assets held for sale 4,542 -
Intangible assets 109,434 58,481
Other assets 131,534 101,215
------- -------
Total assets $3,458,125 $3,144,353
========== ==========
Liabilities and Stockholders' Equity
Unsecured senior credit facility $- $41,000
Senior notes due 2009 - 2038 1,056,233 1,166,500
Notes and bonds payable 435,199 340,150
Accounts payable and accrued
liabilities 144,566 107,844
------- -------
Total liabilities 1,635,998 1,655,494
Minority interests 61,460 6,166
Stockholders' equity:
Series B convertible preferred stock 74,918 106,445
Common stock 10,228 9,481
Capital in excess of par value 1,786,193 1,565,249
Cumulative net income 1,556,889 1,288,751
Accumulated other comprehensive income 1,846 2,561
Cumulative dividends (1,669,407) (1,489,794)
---------- ----------
Total stockholders' equity 1,760,667 1,482,693
--------- ---------
Total liabilities and stockholders'
equity $3,458,125 $3,144,353
========== ==========
