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NHP Reports Third Quarter 2007 Revenue and FFO Growth and Enhanced Disclosure Information

NEWPORT BEACH, Calif., Nov. 6 /PRNewswire-FirstCall/ -- Nationwide Health Properties, Inc. (NYSE: NHP) today announced its third quarter and nine months 2007 operating results and investment activity.

"The third quarter was a good one for NHP with revenues up 28% and normalized FFO per share up 8%," commented Douglas M. Pasquale, NHP's President and Chief Executive Officer. "During the quarter we closed $150 million of accretive investments, bringing our total for 2007 to $685 million. With over $300 million of investments expected to close in the fourth quarter, 2007 should make for another $1 billion investment year. We also greatly enhanced our supplemental disclosure package that is distributed on request and is available on our website," Mr. Pasquale added.


The following table presents selected financial results for the third quarter of 2007 as compared to the third quarter of 2006:


($ in thousands, except per share amounts)

Three Months Ended September 30,

Item 2007 2006 Change

Revenues $87,030 $67,781 $19,249 28.4%

Income from Continuing

Operations $57,752 $17,487 $40,265 230.3%

Net Income $57,742 $31,719 $26,023 82.0%

Diluted Income from

Continuing Operations

Available to Common

Stockholders Per Share $0.58 $0.17 $0.41 241.2%

Diluted Income from

Continuing Operations

Excluding Gains on

Sale Per Share $0.28 $0.17 1,719 $171,222 $82,821

Preferred stock dividends (3,791) (3,791) (11,372) (11,372)

Real estate related depreciation

and amortization 25,799 21,319 72,375 55,869

Depreciation in income from

unconsolidated joint venture 503 --- 1,034 ---

Gains on sale of facilities (29,389) (8,682) (91,234) (17,508)

FFO available to common stockholders 50,864 40,565 142,025 109,810

Series B preferred dividend add-

back 2,062 2,062 6,187 6,187

Diluted FFO 52,926 42,627 148,212 115,997

Impairments --- --- --- 83

Non-recurring settlement of

delinquent tenant obligations (1,965) --- (1,965) ---

Recurring diluted FFO $50,961 $42,627 $146,247 $116,080

Weighted average shares outstanding

for FFO

Diluted weighted average shares

outstanding 96,255 82,003 90,158 75,288

Series B preferred stock add-back --- 4,689 4,704 4,686

Fully diluted weighted average

shares outstanding 96,255 86,692 94,862 79,974

Diluted per share amounts:

FFO $0.55 $0.49 $1.56 $1.45

Recurring FFO $0.53 $0.49 $1.54 $1.45

Dividends declared per common share $0.41 $0.39 $1.23 $1.15

Recurring FFO payout ratio 77% 80% 80% 79%

Recurring FFO Coverage 1.29 1.26 1.25 1.26

Reconciliation of 2007 Net Income Guidance to 2007 Diluted FFO Guidance

Low High

Net income $2.36 $2.38

Less: preferred stock dividends (0.06) (0.06)

Real estate related depreciation

and amortization 1.08 1.08

Less: gains on sale (1.19) (1.19)

Dilution from convertible

preferred stock (0.12) (0.12)

Diluted FFO guidance 2.07 2.09

Non-recurring settlement of

delinquent tenant obligations (0.02) (0.02)

Normalized diluted FFO

guidance $2.05 $2.07

Consolidated Balance Sheets

In thousands

September 30, December 31,

2007 2006


Real estate related investments:

Land $296,011 $267,303

Buildings and improvements 2,822,405 2,581,484

3,118,416 2,848,787

Less accumulated depreciation (416,425) (372,201)

Net real estate 2,701,991 2,476,586

Mortgage loans receivable, net 130,558 106,929

Investment in unconsolidated

joint venture 34,278 ---

Net real estate related investments 2,866,827 2,583,515

Cash and cash equivalents 14,953 14,695

Receivables, net 4,092 7,787

Assets held for sale --- 9,484

Other assets 103,778 89,333

Total assets $2,989,650 $2,704,814

Liabilities and Stockholders' Equity

Credit facility $216,000 $139,000

Senior notes due 2008 - 2038 866,500 887,500

Notes and bonds payable 329,636 355,411

Accounts payable and accrued liabilities 99,620 77,829

Total liabilities 1,511,756 1,459,740

Minority interest 2,201 1,265

Stockholders' equity:

Series A preferred stock 90,049 90,049

Series B convertible preferred stock 106,445 106,450

Common stock 9,209 8,624

Capital in excess of par value 1,481,510 1,298,703

Cumulative net income 1,235,515 1,064,293

Accumulated other comprehensive income 1,183 1,231

Cumulative dividends (1,448,218) (1,325,541)

Total stockholders' equity 1,475,693 1,243,809

Total liabilities and

stockholders' equity $2,989,650 $2,704,814

CONTACT: Abdo H. Khoury

Chief Financial and Portfolio Officer

(949) 718-4400

$0.11 64.7%

Diluted Income

Available to Common

Stockholders Per Share $0.58 $0.34 $0.24 70.6%

Diluted FFO $52,926 $42,627 $10,299 24.2%

Diluted FFO Per Share $0.55 $0.49 $0.06 12.2%

Normalized Diluted FFO $50,961 $42,627 $8,334 19.6%

Normalized Diluted FFO

Per Share $0.53 $0.49 $0.04 8.2%

Nine Months Ended September 30,

Revenues $243,735 $180,101 $63,634 35.3%

Income from Continuing

Operations $105,640 $48,008 $57,632 120.0%

Net Income $171,222 $82,821 $88,401 106.7%

Diluted Income from

Continuing Operations

Available to Common

Stockholders Per Share $1.04 $0.49 $0.55 112.2%

Diluted Income from

Continuing Operations

Excluding Gains on

Sale Per Share $0.71 $0.49 $0.22 44.9%

Diluted Income Available

to Common Stockholders

Per Share $1.77 $0.95 $0.82 86.3%

Diluted FFO $148,212 $115,997 $32,215 27.8%

Diluted FFO Per Share $1.56 $1.45 $0.11 7.6%

Normalized Diluted FFO $146,247 $116,080 $30,167 26.0%

Normalized Diluted

FFO Per Share $1.54 $1.45 $0.09 6.2%

Funds From Operations (FFO)

FFO is a non-GAAP measure that NHP believes is important to an understanding of its operations. A reconciliation between net income, the most directly comparable GAAP financial measure, and FFO is included in the accompanying financial data. We believe FFO is an important supplemental measure of operating performance because it excludes the effects of depreciation 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).

The normalized FFO amounts above exclude approximately $2 million of previously reserved rent, interest and late charges (representing the entire amount due from the tenant) recognized when paid during the third quarter of 2007 on a portfolio of four assets, three of which were transferred to a new operator and included in a master lease. These results include gains on the sale of certain assets shown in the accompanying income statement that caused the income from continuing operations and net income results in 2007 to be significantly higher than in 2006. Income from continuing operations does not include the gains on sale or the operations of facilities sold that qualified as discontinued operations for any period presented in the accompanying income statement, however it does include the gains on sale and historical operations of facilities we sold to our unconsolidated joint venture.


The following tables summarize our third quarter and year-to-date investment activity:


Type Amount Unit Cap Initial CPI DARM

(millions) Price Rate Yield Ups Cover


Senior Housing $36 $94 8.7% 8.6% 2.8% 1.3x

Long-Term Care $58 $57 16.7% 8.7% 2.2% 2.4x

Medical Office $56 $179/sf 7.1% 7.1%

Total $150


Type Amount Unit Cap Initial CPI DARM

(millions) Price Rate Yield Ups Cover


Senior Housing $236 $95 8.7% 8.3% 2.8% 1.3x

CCRC $39 $74 11.1% 8.8% 2.5% 1.6x

Long-Term Care $284 $81 11.5% 8.5% 2.2% 1.9x

Medical Office $79 $174/sf 7.2% 7.2%

Subtotal $638

Loans $47 11.0%

Total $685

Included in these numbers are third party investments financed through our unconsolidated joint venture which are broken out in the supplemental information package (which exclude the twelve facilities acquired by the joint venture from us for $143 million during 2007). Approximately 75% of the acquired loans mature in 2007 and 2008.


During the first nine months of 2007, we issued approximately 5.3 million shares through our controlled equity offering program at an average price of $31.44 per share resulting in net proceeds of approximately $164 million.

On October 1, 2007, we redeemed all 900,485 shares of our Series A Cumulative Preferred Step-Up REIT Securities at their $100 per share redemption value for a total of $90,048,500. The final dividend on these shares was paid concurrently.

On October 19, 2007, we issued $300 million of 6.25% senior unsecured notes maturing on February 1, 2013, resulting in net proceeds of approximately $297 million after deducting expected underwriting discounts and other expenses. During the months of August and September, we hedged the treasury rate on $250 million of the offering resulting in a cash payment to us of $1.6 million that will reduce our interest expense over the life of the notes.


We are increasing our full-year 2007 guidance range for FFO before impairments, acquisitions and capital transactions and are changing the range from between $2.03 and $2.07 per share to between $2.07 and $2.09 per share, inclusive of the $0.02 per share of non-recurring FFO from the collection of previously reserved rent, interest and late fees noted above. Accordingly, our normalized FFO guidance range will be from between $2.05 to $2.07 per share. A reconciliation between net income per share, FFO per share and normalized FFO per share for the guidance range is included in the accompanying financial data.

Although we expect to continue making accretive acquisitions in 2007 and have over $300 million of investments in the fourth quarter closing queue, this guidance incorporates no results from acquisitions other than those included in the closed investments tables above, nor does it incorporate the impact of any future impairments that might arise. Our guidance does include the effects of the Series A Preferred Stock redemption and the $300 million senior unsecured notes issuance, discussed above, however it excludes any other future capital transactions. This guidance assumes asset sales, mortgage loan receivable prepayments and other expected dispositions during 2007 as described in the supplemental information package available on our website.


The Company has scheduled a conference call and webcast on Wednesday, November 7, 2007 at 8:30 a.m. Pacific time in order to present the Company's performance and operating results for the quarter ended September 30, 2007. The conference call is accessible by dialing (877) 356-5705 and referencing conference ID number 20484508 or by logging on to our website at 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 10:00 a.m. Pacific time that day until 9:00 p.m. Pacific time on Thursday, November 22, 2007. Callers can access the replay by dialing (800) 642-1687 or (706) 645-9291 and entering conference ID number 20484508. Webcast replays will also be available on our website for at least 12 months following the conference call. The Company's supplemental information package for the third quarter and nine months ended September 30, 2007 will be available on our website, free of charge, at by selecting financial information followed by analyst information and will also be included in our 8-K filed November 6, 2007 with the SEC containing this release.

Nationwide Health Properties, Inc. is a real estate investment trust that invests in senior housing facilities, long-term care facilities and medical office buildings. The Company has investments in 547 facilities in 43 states. For more information on Nationwide Health Properties, Inc., visit our website at

Certain information contained in this news 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. All forward-looking statements included in this news release are based on information available to us on the date hereof. These statements speak only as of the date hereof, and we assume no obligation to update such forward-looking statements for any reason or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties 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 operators for a significant percentage of our revenues; 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; our ability to meet acquisition goals; the ability of our operators to repay deferred rent or loans in future periods; the ability of our operators to obtain and maintain adequate liability and other insurance; our ability to attract new operators 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 medium-term 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 the risk factors described in our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q filed with the SEC.

Consolidated Statements of Operations

In thousands, except per share data

Three Months Ended Nine Months Ended

September 30, September 30,

2007 2006 2007 2006


Triple net lease rent $76,904 $61,242 $218,757 $163,333

Medical office building operating

rent 3,560 2,479 9,133 6,902

80,464 63,721 227,890 170,235

Interest and other income 6,566 4,060 15,845 9,866

87,030 67,781 243,735 180,101


Interest and amortization of

deferred financing costs 25,387 24,890 75,484 65,492

Depreciation and amortization 25,880 19,886 71,337 51,174

General and administrative 6,087 4,165 17,501 11,819

Medical office building operating

expenses 1,897 1,513 5,103 3,895

59,251 50,454 169,425 132,380

Income before minority interest and

unconsolidated joint venture 27,779 17,327 74,310 47,721

Minority interest in net loss of

consolidated joint ventures 76 160 139 287

Income from unconsolidated joint

venture 547 --- 1,242 ---

Gain on sale of facilities to

joint venture 29,350 --- 29,949 ---

Income from continuing operations 57,752 17,487 105,640 48,008

Discontinued operations

Gain on sale of facilities, net 39 8,682 61,285 17,508

Income (loss) from discontinued

operations (49) 5,550 4,297 17,305

(10) 14,232 65,582 34,813

Net income 57,742 31,719 171,222 82,821

Preferred stock dividends (3,791) (3,791) (11,372) (11,372)

Income available to common

stockholders $53,951 $27,928 $159,850 $71,449

Basic earnings per share (EPS):

Income from continuing operations

excluding gains $0.27 $0.17 $0.72 $0.49

Gains in income from continuing

operations 0.32 --- 0.33 ---

Income from continuing operations 0.59 0.17 1.05 0.49

Discontinued operations --- 0.17 0.73 0.46

Income available to common

stockholders $0.59 $0.34 $1.78 $0.95

Diluted EPS:

Income from continuing operations

excluding gains $0.28 $0.17 $0.71 $0.49

Gains in income from continuing

operations 0.30 --- 0.33 ---

Income from continuing operations 0.58 0.17 1.04 0.49

Discontinued operations --- 0.17 0.73 0.46

Income $0.58 $0.34 $1.77 $0.95

Weighted average shares outstanding

for EPS:

Basic 91,089 81,679 89,690 74,959

Diluted 96,255 82,003 90,158 75,288

Series B Convertible Preferred

Dividends in Diluted EPS $2,062 $--- $--- $---

Reconciliation of Net Income to Funds From Operations (FFO)

In thousands, except per share data

Three Months Ended Nine Months Ended

September 30, September 30,

2007 2006 2007 2006

Net income to FFO

Net income $57,742 $3

SOURCE Nationwide Health Properties, Inc.
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