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Health Care REIT, Inc. Reports Third Quarter Results

Stocks in this article: HCN

Health Care REIT, Inc. (NYSE:HCN) today announced operating results for the company’s third quarter ended September 30, 2012.

“Our business model continued to hit on all cylinders during the third quarter,” commented George L. Chapman, Chairman and CEO of Health Care REIT, Inc. “Our relationship program has produced $1.0 billion of investments in the quarter and $2.9 billion year-to-date. Our high-quality, diverse portfolio generated another quarter of strong 3.6% same-store NOI growth. We sit in an excellent liquidity position having successfully raised $2.4 billion of equity during the quarter and our operations team continues to effectively manage our growth. The completion of the Sunrise Senior Living acquisition coupled with disposition of noncore properties will further strengthen and diversify the quality of our portfolio. We believe the attributes of our business model position us to continue to deliver consistent and resilient cash flow growth, predictable deal flow, and attractive risk adjusted returns to our shareholders.”

Recent Highlights

  • Announced 125 property acquisition with Sunrise Senior Living
  • Completed approximately $1.0 billion of gross new investments in 3Q12, including $243.5 million with Sunrise
  • Increased 3Q12 same-store cash NOI by 3.6%, including 7.0% growth in our seniors housing operating portfolio
  • Reported 3Q12 normalized FFO of $0.91 per share and normalized FAD of $0.82 per share
  • Completed $133 million in dispositions, generating $13 million in gains for 3Q12
  • Reduced debt to undepreciated book capitalization to 38% at end of 3Q12 from 45% at end of 2Q12
  • Funded $250 million Canadian denominated unsecured term loan (approximately $249 million USD) in July
  • Completed redemptions/conversions of $168 million 4.75% convertible senior unsecured notes due 2027 in August
  • Extinguished $77 million of 8% senior unsecured notes upon maturity in September
  • Issued 43.7 million shares of common stock during 3Q12, generating approximately $2.4 billion of proceeds
  • Increased quarterly cash dividend to $0.765 per share, or $3.06 annually beginning with the February 2013 dividend, up 3.4% versus $2.96 per share to be paid in 2012

Dividends for Third Quarter 2012  As previously announced, the Board of Directors declared a cash dividend for the quarter ended September 30, 2012 of $0.74 per share, as compared to $0.715 per share for the same period in 2011, representing a 3.5% increase. The cash dividend will be paid on November 20, 2012 and will be the company’s 166 th consecutive quarterly dividend payment. The declaration and payment of quarterly dividends remains subject to review by and approval of the Board of Directors.

Dividends for 2013  The Board of Directors approved a quarterly cash dividend rate of $0.765 per share ($3.06 per share annually), which represents a 3.4% increase, commencing with the February 2013 dividend payment. The company’s dividend policy was reviewed during the Board’s October meeting. The declaration and payment of quarterly dividends remains subject to review by and approval of the Board of Directors.

Third Quarter Investment Highlights  As previously announced, during the quarter the company completed the acquisition of five Sunrise Senior Living properties located in the United Kingdom for $243.5 million at a blended NOI yield of 7.2%. The five properties were purchased from a partnership between Sunrise and an institutional investor and are included in the previously announced 125 property Sunrise acquisition. The communities are 100% private pay, include 437 units and are located in attractive metropolitan markets. Consistent with our seniors housing operating portfolio, we expect annual NOI growth of approximately 4% to 5%. Sunrise will continue to manage the communities under an incentive-based management contract.

During the quarter the company completed $611 million in seniors housing triple-net lease investments at a blended yield of 7.1%. The investments include acquisitions totaling $586 million at a blended yield of 7.0%, consisting of 19 facilities operated by Senior Lifestyle for $459 million and five facilities with other operators for $127 million. In addition, two development projects totaling $25 million at a blended yield of 8.5% were completed during the quarter.

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