SOURCE: Global Healthcare REIT

Global Healthcare REIT

November 16, 2015 16:01 ET

Global Healthcare REIT Reports Third Quarter 2015 Results

Q3 Rental Revenue up 116% to $1.0 Million vs. Same Year-Ago Quarter

ATLANTA, GA--(Marketwired - Nov 16, 2015) - Global Healthcare REIT, Inc. (OTCQB: GBCS), a company that owns healthcare properties and leases them to senior care facility operators, reported results for the third quarter ended September 30, 2015.

Q3 2015 Highlights

  • Rental revenue increased 116% to $1.0 million versus the same year-ago quarter.
  • Signed three long-term operating leases for its facilities in Georgia, replacing existing leases which are set to expire next year. The new operating leases are expected to increase annual rent revenue by $646,000.
  • Signed a definitive purchase agreement to acquire a 112-bed skilled nursing facility in Ridgeway, South Carolina for $3.0 million. The company expects to complete the transaction by the end of the year and fund the acquisition with a traditional bank loan and other financing alternatives.
  • Appointed Zvi Rhine and Lance J. Baller to board of directors. They have extensive executive management experience in the capital markets, particularly sale-leaseback transactions and mid-market acquisitions.

Q3 2015 Financial Summary
Rental revenue increased 116% to $1.0 million in the third quarter of 2015, as compared to $0.5 million in the same year-ago quarter. The increase in revenue was due to contribution of revenue from five facilities acquired in the year-ago quarter.

Rental revenue in the third quarter of 2015 was derived from 9 out of 11 facilities in the company's portfolio, with the Southern Hills assisted living and independent living facilities currently undergoing renovations.

Total expenses were $1.0 million in the third quarter of 2015, compared to $0.4 million in the same year-ago quarter. The increase in total expenses was primarily due to a bad debt expense of $380,000, and to a lesser extent due to increased depreciation expense due to the addition of properties to the company's portfolio in 2014, and related increased general and administrative expenses.

As the company continues its acquisition campaign for healthcare real estate, it anticipates revenue and cash flow to increase while holding general and administrative costs relatively flat at approximately $205,000 per quarter, excluding costs related to the assisted and independent living facilities in Tulsa, Oklahoma until the renovations are complete and an operator is in place.

Interest expense was $0.7 million in the third quarter of 2015, as compared to $0.2 million in the same year-ago quarter. The increase in interest expense is due to increased debt associated with new acquisitions. 

Net loss to common stockholders was $0.7 million or $(0.03) per basic and diluted share in the third quarter of 2015, as compared to net loss of $0.2 million or $(0.01) per diluted share in the same year-ago period.

Cash and cash equivalents totaled $0.5 million as of September 30, 2015, as compared to $0.5 million as of December 31, 2014.

Funds from operations (FFO) was negative $371,000 or $(0.02) per share in the third quarter of 2015 (see "Use of Non-GAAP Financial Information," below for the definition of FFO, a non-GAAP financial metric, as well as an important discussion about the use of this metric). Given that the company first began to track and report FFO in the first quarter of 2015, there is no comparative year-ago period for FFO.

Management Commentary
"Our strong quarter over quarter growth in rental revenue was driven by the five acquisitions of skilled nursing facilities since the year ago," said Global Healthcare REIT's president and CEO, Christopher Brogdon. "We continue to work towards closing the previously announced acquisition of a skilled nursing facility in South Carolina, which would represent our first facility in the state.

"Regarding our HUD refinancing efforts, we are currently refinancing our Goodwill and Dodge facilities with a long-term rate this is expected to be under 4%. We anticipate closing these loans in Q1 of 2016, and for the lower rate to improve our FFO by generating annual interest savings by $394,000. Our Providence Sparta property is eligible for HUD refinancing once our new tenant is in place on July 1, 2016. We will continue to evaluate HUD refinancing opportunities for other properties where available.

"Subsequent to the quarter, we announced signing three long-term operating leases for our Green Pointe, Providence and Warrenton facilities in Georgia, replacing existing leases which are set to expire on June 30, 2016. These long-term leases to an experienced professional operator contain terms more reflective of the value of the properties and their cash flow generation capacity.

"Our business model and property ownership structure is designed to drive increased operating cash flow as incremental properties are acquired. As we continue our acquisition campaign, we anticipate revenue and cash flow to increase as we maintain corporate overhead relatively flat."

Summary of Property Portfolio

ALF = Assisted Living Facility SNF = Skilled Nursing Facility ILF= Independent Living Facility

                         
Property Name   Property Count   Facility Type   Beds/Units   Gross Annual Rent   Location   Date Acquired
Middle Georgia   1   SNF   100 beds   $570,000   Eastman, GA   3-15-2013
Warrenton   1   SNF   110 beds   $334,448   Warrenton, GA   12-31-2013
        SNF   106 beds   $420,000        
Southern Hills   1   ILF   96 units   Under renovations   Tulsa, OK   2-7-2014
        ALF   32 beds   $240,000        
Goodwill   1   SNF   172 beds   $734,400   Macon, GA   5-19-2014
Edwards Redeemer   1   SNF   106 beds   $540,000   Oklahoma City, OK   9-16-2014
Golden Years Manor   1   SNF   141 beds   $768,000   Lonoke, AK   9-16-2014
Sparta   1   SNF   71 beds   $237,372   Sparta, GA   9-16-2014
Greene Point   1   SNF   71 beds   $254,220   Union Point, GA   9-16-2014
Meadowview   1   SNF   80 beds   $410,340   Seville, OH   9-30-2014
Total   9   11   1,085   $4.5 Million        
                         

About Global Healthcare REIT

Global Healthcare REIT acquires real estate properties primarily engaged in the healthcare industry, including skilled nursing homes, medical offices, hospitals and emergency care facilities. The company does not operate its own healthcare facilities, but leases its properties under long term operating leases. It currently owns interest in 11 facilities primarily across the Southeastern U.S. For further information, visit www.gbcsreit.com.

Forward-looking Statements

This press release may contain projection and other forward-looking statements. Any such statement reflects the Company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur and actual results could differ materially from those presented. There can be no assurance that the Company will be able to declare and pay cash dividends to common stockholders in the future, or the frequency or amount of such dividends, if any. A discussion of important factors that could cause actual results to differ from those presented is included in the Company's periodic reports filed with the Securities and Exchange Commission (at http://www.sec.gov).

Note Regarding Non-GAAP Financial Measures
Beginning with the reporting of results for the first quarter of 2015, the company began to report the measures of funds from operations (FFO) and FFO per share.

Funds from Operations (FFO), as defined by the National Association of Real Estate Investment Trusts (NAREIT), and FFO per share are important non-GAAP supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP.

FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from real estate dispositions, real estate depreciation and amortization and impairment charges, and adjustments for unconsolidated partnerships and joint ventures. The Company computes FFO in accordance with NAREIT's definition.

   
GLOBAL HEALTHCARE REIT, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED)  
   
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2015     2014     2015     2014  
Revenue                                
  Rental Revenue   $ 978,648     $ 453,600     $ 3,264,321     $ 998,632  
Expenses                                
  General and Administrative     276,478       188,196       1,036,946       580,794  
  Acquisition Costs     1,950       68,725       1,950       249,180  
  Bad Debt     380,000       -       380,000       -  
  Loss on Sale of Property and Equipment     -       -       -       381,395  
  Depreciation     338,355       177,146       949,080       345,650  
    Total Expenses     996,783       434,067       2,367,976       1,557,019  
Income (Loss) from Operations     (18,135 )     19,533       896,345       (558,387 )
Other (Income) Expense                                
  Bargain Purchase Gain     -       -       -       (3,000,000 )
  Interest Income     (19,660 )     (52,250 )     (82,824 )     (103,580 )
  Interest Expense     735,843       199,998       2,074,854       567,774  
    Total Other (Income) Expense     716,183       147,748       1,992,030       (2,535,806 )
Equity in Income (Loss) from Unconsolidated Partnership     -       (22,076 )     53,688       (37,501 )
Net Income (Loss)     (734,318 )     (150,291 )     (1,041,997 )     1,939,918  
  Net (Income) Loss Attributable to Noncontrolling Interests     11,963       (11,848 )     (27,174 )     (21,965 )
Net Income (Loss) Attributable to Global Healthcare REIT, Inc.     (722,355 )     (162,139 )     (1,069,171 )     1,917,953  
  Series D Preferred Dividends     (7,561 )     (12,061 )     (22,438 )     (35,342 )
Net Income (Loss) Attributable to Common Stockholders   $ (729,916 )   $ (174,200 )   $ (1,091,609 )   $ 1,882,611  
Per Share Data:                                
Net Income (Loss) per Share Attributable to Common Stockholders -                                
  Basic   $ (0.03 )   $ (0.01 )   $ (0.05 )   $ 0.10  
  Diluted   $ (0.03 )   $ (0.01 )   $ (0.05 )   $ 0.09  
Weighted Average Common Shares Outstanding:                                
  Basic     22,259,569       19,960,494       22,021,499       18,950,343  
  Diluted     22,259,569       19,960,494       22,021,499       21,835,748  
                                 
                                 
   
GLOBAL HEALTHCARE REIT, INC.  
CONSOLIDATED BALANCE SHEETS  
(UNAUDITED)  
   
    September 30, 2015     December 31, 2014  
   
ASSETS        
                 
Property and Equipment, Net   $ 39,638,926     $ 40,259,357  
Cash and Cash Equivalents     456,464       533,597  
Advances to Related Parties, Net of Allowance     53,211       353,211  
Restricted Cash     544,783       904,157  
Note Receivable     350,000       -  
Notes Receivable - Related Parties, Net of Discount     682,472       1,186,822  
Prepaid Expenses, Deferred Loan Costs, and Other     1,367,076       1,490,634  
Goodwill     1,750,454       1,750,454  
                 
Total Assets   $ 44,843,386     $ 46,478,232  
                 
LIABILITIES AND EQUITY        
Liabilities                
  Debt, Net   $ 36,394,727     $ 36,810,874  
  Accounts Payable and Accrued Liabilities     382,819       268,942  
  Dividends Payable     7,561       -  
  Lease Security Deposits     249,543       176,667  
                 
Total Liabilities     37,034,650       37,256,483  
                 
Equity                
  Stockholders' Equity                
    Preferred Stock:                
      Series A - No Dividends, $2.00 Stated Value, Non-Voting; 2,000,000 Shares Authorized, 200,500 Shares Issued and Outstanding     401,000       401,000  
                       
      Series D - 8% Cumulative, Convertible, $1.00 Stated Value, Non-Voting; 1,000,000 Shares Authorized, 375,000 Shares Issued and Outstanding                
  375,000       375,000  
                     
    Common Stock - $0.05 Par Value; 50,000,000 Shares Authorized, 22,238,837 and 21,640,051 Shares Issued and Outstanding at September 30, 2015 and December 31, 2014, Respectively     1,111,942       1,082,003  
    Additional Paid-In Capital     8,656,941       8,540,520  
    Retained Earnings (Accumulated Deficit)     (1,319,816 )     212,573  
    Total Global Healthcare REIT, Inc. Stockholders' Equity     9,225,067       10,611,096  
                     
    Noncontrolling Interests     (1,416,331 )     (1,389,347 )
                 
Total Equity     7,808,736       9,221,749  
                 
Total Liabilities and Equity   $ 44,843,386     $ 46,478,232  
                 

Contact Information

  • Investor Relations Contact:
    Ron Both
    Senior Managing Director
    Liolios
    Tel 949-574-3860
    Email Contact