SOURCE: Nationwide Health Properties

Nationwide Health Properties

May 05, 2011 07:00 ET

Nationwide Health Properties, Inc. Reports 2011 First Quarter Results

-- Completed $595 Million of Investments to Date in 2011

-- Additional $171 Million of Investments Under Contract

-- Adjusted Diluted FFO and Adjusted Diluted FFO per Share Increased 29% and 20%, Respectively, Over First Quarter 2010

NEWPORT BEACH, CA--(Marketwire - May 5, 2011) - Nationwide Health Properties, Inc. (NYSE: NHP) today announced results of operations for the first quarter ended March 31, 2011. Contemporaneously with this press release, the Company filed its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011 with the Securities and Exchange Commission ("SEC").

"NHP's comparable period first quarter results reflect an excellent start to 2011 with revenue up 21%, adjusted diluted FFO per share up 20% and adjusted diluted FAD per share up 19%. Our credit statistics remain among the best in the REIT sector, and our dividend coverage continues to be outstanding with a diluted FAD payout ratio and FAD coverage at 75% and 1.33x, respectively," commented Douglas M. Pasquale, NHP's Chairman and Chief Executive Officer. "Our regional network of talented investment professionals continues to acquire quality assets across a broad asset class spectrum with both new and existing tenants. This is well evidenced by nearly $600 million of investments already closed in 2011 at a blended 8% initial cash yield and a robust investment pipeline with over $170 million of investments under contract," Mr. Pasquale added.

FIRST QUARTER 2011 RESULTS OF OPERATIONS

The following table presents selected unaudited financial information for the first quarter ended March 31, 2011 as compared to the same period of 2010:

                          Selected Financial Data
                ($ in thousands, except per share amounts)


                                         Three Months Ended March 31,
                                    ---------------------------------------
                                      2011      2010    $ Change  % Change
                                    --------- --------- --------- --------

Revenue                             $ 122,374 $ 100,848 $  21,526     21.3%
Income from Continuing Operations   $  39,574 $  30,320 $   9,254     30.5%
Net Income Attributable to NHP
 Common Stockholders                $  50,551 $  31,429 $  19,122     60.8%
Net Income Attributable to NHP
 Common Stockholders Per Diluted
 Share                              $    0.39 $    0.26 $    0.13     50.0%
Diluted FFO                         $  78,903 $  64,191 $  14,712     22.9%
Adjusted Diluted FFO                $  84,000 $  64,939 $  19,061     29.4%
Diluted FFO Per Share               $    0.61 $    0.54 $    0.07     13.0%
Adjusted Diluted FFO Per Share      $    0.65 $    0.54 $    0.11     20.4%
Diluted FAD                         $  77,199 $  64,267 $  12,932     20.1%
Adjusted Diluted FAD                $  82,296 $  65,015 $  17,281     26.6%
Diluted FAD Per Share               $    0.60 $    0.54 $    0.06     11.1%
Adjusted Diluted FAD Per Share      $    0.64 $    0.54 $    0.10     18.5%

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. We have also included adjusted diluted FFO and adjusted diluted FAD amounts which exclude merger and acquisition costs and the recognition of a net gain on re-measurement of equity interest upon acquisition and a gain on debt extinguishment in 2010.

                   2011 YEAR TO DATE INVESTMENT ACTIVITY

                         Investment Activity 2011
                             ($ in thousands)


                                               Q1       Q2 [A]      YTD
Investment                                   Total      Total      Total
                                           ---------  ---------  ---------
Assisted and Independent Living Facilities
  Investment                               $   7,000  $ 205,000  $ 212,000
  Initial Cash Yield                             8.3%       7.5%       7.5%
                                           ---------  ---------  ---------
Skilled Nursing Facilities
  Investment                               $ 100,000  $ 160,000  $ 260,000
  Initial Cash Yield                             9.4%       9.1%       9.2%
                                           ---------  ---------  ---------
Medical Office Buildings
  Investment                               $   2,000  $  37,000  $  39,000
  Initial Cash Yield                             8.8%       7.1%       7.2%
                                           ---------  ---------  ---------
Continuing Care Retirement Communities
  Investment                                          $  82,000  $  82,000
  Initial Cash Yield                                        7.5%       7.5%
                                           ---------  ---------  ---------
Capital Expenditures
  Investment                               $   2,000             $   2,000
  Initial Cash Yield                             8.2%                  8.2%
                                           ---------  ---------  ---------
Total
  Investment                               $ 111,000  $ 484,000  $ 595,000
  Initial Cash Yield                             9.3%       8.0%       8.2%
                                           ---------  ---------  ---------

[A] investments closed through earnings release date

In the first quarter of 2011, we invested $111 million at a blended initial cash yield of 9.3%, and we sold two properties for gross sales proceeds of $8.2 million resulting in a total gain of $5.9 million.

Subsequent to quarter end, we invested $484 million at a blended initial cash yield of 8.0%, bringing our year to date total to $595 million at a blended initial cash yield of 8.2%. In addition, NHP has approximately $171 million of investments under contract.

2011 FINANCING TRANSACTIONS

In the first quarter of 2011, we drew a net additional $75 million from our credit facility to fund investments. As of May 5, 2011, the total outstanding balance on our credit facility was $605 million at a weighted average interest rate of 0.95%. We intend to complete soon a one-year $800 million term loan facility from a syndicate of banks, which we anticipate using, together with the proceeds from any asset sales or mortgage or other loan receivable repayments, to provide capital for future investments, to reduce any outstanding balance on our credit facility or to repay other borrowings as they mature. We expect the term loan facility will remain in place following the anticipated merger with Ventas, Inc. (NYSE: VTR) ("Ventas").

MERGER ANNOUNCEMENT WITH VENTAS, INC.

On February 28, 2011, Ventas and NHP announced that the Boards of Directors of both companies unanimously approved a definitive agreement under which Ventas will acquire all of the outstanding shares of NHP in a stock-for-stock transaction valued at $7.4 billion, creating one of the largest publicly traded REITs and the leading healthcare REIT by equity value.

Additional Information about the Proposed Transaction and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction, Ventas has filed with the SEC a registration statement on Form S-4 that includes a preliminary joint proxy statement of NHP and Ventas, and that also constitutes a preliminary prospectus of Ventas. NHP and Ventas also plan to file other documents with the SEC with respect to the proposed transaction. The registration statement has not been declared effective by the SEC, and the definitive joint proxy statement/prospectus is not currently available. INVESTORS ARE URGED TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS AND, IF AND WHEN IT BECOMES AVAILABLE, THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS TO SUCH DOCUMENTS) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors may obtain free copies of the registration statement, the preliminary joint proxy statement/prospectus, the definitive joint proxy statement/prospectus and other relevant documents filed by NHP and Ventas with the SEC (if and when they become available) through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by NHP with the SEC are available free of charge on NHP's website at www.nhp-reit.com, and copies of the documents filed by Ventas with the SEC are also available free of charge on Ventas's website at www.ventasreit.com.

NHP, Ventas and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from NHP's and Ventas's stockholders in respect of the proposed transaction. Information regarding NHP's directors and executive officers can be found in NHP's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on April 26, 2011. Information regarding Ventas's directors and executive officers can be found in Ventas's definitive proxy statement filed with the SEC on March 28, 2011. Additional information regarding the interests of such potential participants is included in the preliminary joint proxy statement/prospectus and will be included in the definitive joint proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed transaction if and when they become available. These documents are available free of charge on the SEC's website and from NHP or Ventas, as applicable, using the sources indicated above.

SUPPLEMENTAL INFORMATION PACKAGE

Our supplemental information package for the quarter ended March 31, 2011 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 May 5, 2011 with the SEC, which also contains a copy of 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 March 31, 2011, the Company's portfolio of properties, including mortgage loans and properties owned by unconsolidated joint ventures, totaled 669 properties among the following segments: 294 senior housing facilities, 217 skilled nursing facilities, 135 medical office buildings, 12 continuing care retirement communities, 7 specialty hospitals, 3 assets in development and 1 asset 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: risks related to the proposed merger with Ventas, Inc.; 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.

                    NATIONWIDE HEALTH PROPERTIES, INC.
                      CONSOLIDATED INCOME STATEMENTS
                  (In thousands, except per share data)
                                (Unaudited)


                                              Three Months Ended March 31,
                                              -----------------------------
                                                  2011           2010
                                              -------------- --------------
Revenue:
  Triple-net lease rent                       $       82,271 $       72,200
  Medical office building operating rent              29,515         21,685
                                              -------------- --------------
                                                     111,786         93,885
  Interest and other income                           10,588          6,963
                                              -------------- --------------
                                                     122,374        100,848
Expenses:
  Interest expense                                    22,771         23,590
  Depreciation and amortization                       38,674         31,290
  General and administrative                           7,365          6,980
  Merger and acquisition costs                         5,097          1,443
  Medical office building operating expenses          10,358          8,647
                                              -------------- --------------
                                                      84,265         71,950
                                              -------------- --------------
Operating income                                      38,109         28,898
  Income from unconsolidated joint ventures            1,465          1,347
  Gain on debt extinguishment                              -             75
                                              -------------- --------------
Income from continuing operations                     39,574         30,320
Discontinued operations:
  Gains on sale of facilities, net                    10,607             22
  Income from discontinued operations                    133            897
                                              -------------- --------------
                                                      10,740            919
                                              -------------- --------------
Net income                                            50,314         31,239
  Net loss attributable to noncontrolling
   interests                                             237            190
                                              -------------- --------------
Net income available to NHP common
 stockholders                                 $       50,551 $       31,429
                                              ============== ==============

Basic earnings per share (EPS):
  Income from continuing operations
   attributable to NHP common stockholders    $         0.31 $         0.26
  Discontinued operations attributable to NHP
   common stockholders                                  0.09           0.01
                                              -------------- --------------
  Net income attributable to NHP common
   stockholders                               $         0.40 $         0.27
                                              ============== ==============

Diluted EPS:
  Income from continuing operations
   attributable to NHP common stockholders    $         0.31 $         0.25
  Discontinued operations attributable to NHP
   common stockholders                                  0.08           0.01
                                              -------------- --------------
  Net income attributable to NHP common
   stockholders                               $         0.39 $         0.26
                                              ============== ==============

Weighted average shares outstanding for EPS:
  Basic                                              126,474        117,048
                                              ============== ==============
  Diluted                                            128,980        119,463
                                              ============== ==============





                    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 FFO


                                              Three Months Ended March 31,
                                              ----------------------------
                                                  2011           2010
                                              -------------  -------------

Net income                                    $      50,314  $      31,239
  Net loss attributable to noncontrolling
   interests                                            237            190
  Real estate related depreciation and
   amortization                                      38,248         31,545
  Depreciation in income from unconsolidated
   joint ventures                                     1,182          1,239
  Deferred gain recognition                            (471)             -
  Gains on sale of facilities, net                  (10,607)           (22)
                                              -------------  -------------
Diluted FFO                                          78,903         64,191
  Merger and acquisition costs                        5,097          1,443
  Gain on debt extinguishment                             -            (75)
  Gain on re-measurement of equity interest
   upon acquisition, net                                  -           (620)
                                              -------------  -------------
Adjusted diluted FFO                          $      84,000  $      64,939
                                              =============  =============

Weighted average shares outstanding for
 diluted FFO:
  Diluted weighted average shares outstanding
   (1)                                              129,129        119,600
  Series B preferred stock conversion
   add-back if not already converted                      -            310
                                              -------------  -------------
  Fully diluted weighted average shares
   outstanding                                      129,129        119,910
                                              =============  =============

Diluted FFO per share                         $        0.61  $        0.54
                                              =============  =============
Adjusted diluted FFO per share                $        0.65  $        0.54
                                              =============  =============

Dividends declared per common share           $        0.48  $        0.44
                                              =============  =============

Adjusted diluted FFO payout ratio                        74%            81%
                                              =============  ============= 
Adjusted diluted FFO coverage                          1.35           1.23
                                              =============  =============

(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 March 31,
                                              ----------------------------
                                                  2011           2010
                                              -------------  -------------

Net income                                    $      50,314  $      31,239
  Net loss attributable to noncontrolling
   interests                                            237            190
  Real estate related depreciation and
   amortization                                      38,248         31,545
  Deferred gain recognition                            (471)             -
  Gains on sale of facilities, net                  (10,607)           (22)
  Straight-lined rent                                (2,300)        (1,687)
  Amortization of intangible assets and
   liabilities                                          132            (59)
  Non-cash stock-based compensation expense           1,776          1,594
  Deferred financing cost amortization                  635            845
  Lease commissions and tenant and capital
   improvements                                      (1,981)          (637)
  Unconsolidated joint ventures:
    Real estate related depreciation and
     amortization                                     1,182          1,239
    Straight-lined rent                                   9             (1)
    Deferred finance cost amortization                   25             21
                                              -------------  -------------
Diluted FAD                                          77,199         64,267
  Merger and acquisition costs                        5,097          1,443
  Gain on extinguishment of debt                          -            (75)
  Gain on re-measurement of equity interest
   upon acquisition, net                                  -           (620)
                                              -------------  -------------
Adjusted diluted FAD                          $      82,296  $      65,015
                                              =============  =============

Weighted average shares outstanding for
 diluted FAD:
  Diluted weighted average shares outstanding
   (1)                                              129,129        119,600
  Series B preferred stock add-back if not
   already converted                                      -            310
                                              -------------  -------------
  Fully diluted weighted average shares
   outstanding                                      129,129        119,910
                                              =============  =============

Diluted FAD per share                         $        0.60  $        0.54
                                              =============  =============
Adjusted diluted FAD per share                $        0.64  $        0.54
                                              =============  =============

Dividends declared per common share           $        0.48  $        0.44
                                              =============  =============

Adjusted diluted FAD payout ratio                        75%            81%
                                              =============  =============
Adjusted diluted FAD coverage                          1.33           1.23
                                              =============  =============

(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)



                                                  March 31,   December 31,
                                                    2011          2010
                                                ------------  ------------
                                                (unaudited)
Assets
  Investments in real estate:
    Land                                        $    342,161  $    339,534
    Buildings and improvements                     3,796,893     3,679,745
    Development in progress                           21,866        17,827
                                                ------------  ------------
                                                   4,160,920     4,037,106
    Less accumulated depreciation                   (701,717)     (670,601)
                                                ------------  ------------
                                                   3,459,203     3,366,505
    Mortgage loans receivable, net                   262,675       289,187
    Investments in unconsolidated joint
     ventures                                         41,875        42,582
                                                ------------  ------------
      Net real estate related investments          3,763,753     3,698,274
  Cash and cash equivalents                           51,207        59,591
  Receivables, net                                     9,432         8,336
  Assets held for sale                                 4,946         5,150
  Intangible assets                                  155,383       163,238
  Other assets                                       169,124       158,035
                                                ------------  ------------
      Total assets                              $  4,153,845  $  4,092,624
                                                ============  ============

Liabilities and Equity
  Unsecured senior credit facility              $    245,000  $    175,000
  Senior notes                                       991,633       991,633
  Notes and bonds payable                            365,164       362,624
  Accounts payable and accrued liabilities           147,036       151,069
                                                ------------  ------------
    Total liabilities                              1,748,833     1,680,326

  Redeemable OP unitholder interests                  92,575        79,188

Equity:
  NHP stockholders' equity:
    Common stock                                      12,662        12,625
    Capital in excess of par value                 2,505,565     2,516,397
    Cumulative net income                          1,899,596     1,849,045
    Accumulated other comprehensive income             9,840         8,614
    Cumulative dividends                          (2,148,141)   (2,086,854)
                                                ------------  ------------
    Total NHP stockholders' equity                 2,279,522     2,299,827
  Noncontrolling interests                            32,915        33,283
                                                ------------  ------------
    Total equity                                   2,312,437     2,333,110
                                                ------------  ------------
      Total liabilities and equity              $  4,153,845  $  4,092,624
                                                ============  ============

Contact Information

  • Contact:
    Abdo H. Khoury
    Chief Financial and Portfolio Officer
    Nationwide Health Properties, Inc.
    (949) 718-4400