NHI Reports 9.0% Increase in Fourth Quarter Normalized FFO
NHI Reports 9.0% Increase in Fourth Quarter Normalized FFO
MURFREESBORO, Tenn.--(BUSINESS WIRE)-- National Health Investors, Inc. (NYS: NHI) announced today its normalized Funds From Operations ("FFO"), its normalized Funds Available for Distribution ("FAD") and net income attributable to common stockholders for the three months and year ended December 31, 2012.
2012 Highlights
Made investments and commitments totaling $178.5 million in properties and loans primarily in private-pay senior housing assets
Closed on a new $320 million bank credit facility, expandable to $450 million to fund new healthcare real estate investments
Agreed with our largest customer to a lease extension through 2026
Increased the regular quarterly common dividend 5.8% year-over-year
Declared a $.22 per common share special dividend at year-end
Financial Results
Normalized FFO for the three months ended December 31, 2012, was $23,369,000, or $0.84 per basic and diluted common share, compared with $21,448,000, or $0.77 per basic and diluted common share, for the same period in 2011, an increase of 9.0%. Normalized FAD for the three months ended December 31, 2012, was $22,771,000 or $0.82 per basic and diluted common share, compared with $20,908,000 or $0.75 per basic and diluted common share for the same period in 2011, an increase of 8.9%. Normalized FFO and Normalized FAD for the three months ended December 31, 2012 excludes the effect on income of loan recoveries, investment gains and other adjustments totaling $9,513,000.
FFO, as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), for the three months ended December 31, 2012, was $32,882,000, or $1.18 per basic and diluted common share, compared with $21,038,000, or $0.76 per basic and diluted common share, for the same period in 2011. Net income attributable to common stockholders for the three months ended December 31, 2012, was $41,105,000, or $1.48 per basic and diluted common share, compared with $18,114,000, or $0.65 per basic and diluted common share, for the same period in 2011. During the three months ended December 31, 2012, we recorded a gain of $11,966,000 on the sale of an assisted living facility in New Jersey.
Normalized FFO for the year ended December 31, 2012, was $88,487,000, or $3.18 per basic and diluted common share, compared with $80,176,000, or $2.89 and $2.88 per basic and diluted common share, respectively, for the same period in 2011, an increase of 10.4%. Normalized FFO excludes the effects of investment gains, loan writedowns and recoveries and other adjustments totaling $5,601,000 in 2012, and excluded the effects of investment gains, the change in fair value of an interest rate swap agreement and other adjustments totaling $8,666,000 in 2011. Normalized FAD for the year ended December 31, 2012, was $87,599,000, or $3.15 per basic and diluted common share, compared with $80,419,000, or $2.90 and $2.89 per basic and diluted common share, respectively, for the same period in 2011, an increase of 8.9%. Normalized FAD excludes the effects of investment gains, loan recoveries and other adjustments totaling $6,564,000 in 2012, and excluded the effects of investment gains, the change in fair value of an interest rate swap agreement and other adjustments totaling $8,666,000 in 2011.
FFO, as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), for the year ended December 31, 2012, was $94,088,000, or $3.38 per basic and diluted common share, compared with $88,842,000, or $3.21 and $3.20 per basic and diluted common share, respectively, for the same period in 2011. Net income attributable to common stockholders for the year ended December 31, 2012, was $90,731,000, or $3.26 per basic and diluted common share, respectively, compared with net income of $81,132,000, or $2.93 and $2.92 per basic and diluted common share, for the same period in 2011.
The reconciliation of net income attributable to common stockholders to our FFO, Normalized FFO, FAD and Normalized FAD is included as tables to this press release and is filed on Form 8-K and in our Form 10-K and supplemental data filed with the Securities and Exchange Commission.
2013 Guidance -
The Company currently forecasts Normalized FFO for 2013 from $3.30 to $3.38 per diluted common share. The Company's guidance range for the full year 2013 for Normalized FFO per share, with underlying assumptions and timing of certain transactions, is set forth and reconciled below:
Full-Year | ||||||||||||
Low | High | |||||||||||
Net income per diluted share attributable to common stockholders | $ | 2.76 | $ | 2.81 | ||||||||
Plus: Real estate depreciation | .54 | .57 | ||||||||||
Normalized FFO per diluted common share | $ | 3.30 | $ | 3.38 | ||||||||
The Company's guidance range reflects the existence of volatile economic conditions, but does not assume any material deterioration in tenant credit quality and/or performance of its portfolio. The guidance is based on a number of assumptions, many of which are outside the Company's control and all of which are subject to change. The low end of our guidance range assumes a baseline from the fourth quarter 2012, the timing for terming out debt on our credit facility and assuming 3% growth from our Bickford joint venture. On the top end of that range, we are adding in assumptions for investment activity and a 6% growth from our Bickford joint venture. The Company expects to make new investments in health care real estate during 2013 that meet its underwriting criteria and where the spreads over its cost of capital generates sufficient returns to its shareholders. These new investments are expected to be funded by the Company's liquid investments and by short-term and long-term debt financing. The Company's guidance may change if actual results vary from these assumptions.
Investor Conference Call and Webcast
NHI will host a conference call on Friday, February 15, 2013, at 1 p.m. ET, to discuss fourth quarter results. The number to call for this interactive teleconference is (212) 231-2902 with the confirmation number, 21645930. The live broadcast of NHI's quarterly conference call will be available online at www.nhireit.com. The online replay will follow shortly after the call and continue for approximately 90 days.
National Health Investors, Inc. is a healthcare real estate investment trust that specializes in the financing of healthcare real estate by purchase and leaseback transactions, RIDEA transactions, and mortgage loans. NHI's investments involve skilled nursing facilities, assisted living facilities, independent living facilities, medical office buildings, and hospitals. The common stock of the company trades on the New York Stock Exchange with the symbol NHI. Additional information about NHI, including its most recent press releases, may be obtained on NHI's web site at www.nhireit.com.
Statements in this press release that are not historical facts are forward-looking statements. NHI cautions investors that any forward-looking statements may involve risks and uncertainties and are not guarantees of future performance. All forward-looking statements represent NHI's judgment as of the date of this release.Investors are urged to carefully review and consider the various disclosures made by NHI in its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Annual Report on Form 10-K for the most recently ended fiscal year. Copies of these filings are available at no cost on the SEC's web site atwww.sec.govor on NHI's web site atwww.nhireit.com.
Reconciliation of Funds From Operations and Normalized Funds From Operations(1)(2) | ||||||||||||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||
Net income attributable to common stockholders | $ | 41,105 | $ | 18,114 | $ | 90,731 | $ | 81,132 | ||||||||||||
Elimination of certain non-cash items in net income: | ||||||||||||||||||||
Real estate depreciation in continuing operations | 3,712 | 2,823 | 14,989 | 10,615 | ||||||||||||||||
Real estate depreciation related to noncontrolling interest | (68 | ) | — | (68 | ) | — | ||||||||||||||
Real estate depreciation in discontinued operations | 99 | 101 | 402 | 443 | ||||||||||||||||
Net gain on sales of real estate | (11,966 | ) | — | (11,966 | ) | (3,348 | ) | |||||||||||||
Funds from operations | $ | 32,882 | $ | 21,038 | $ | 94,088 | $ | 88,842 | ||||||||||||
Investment and other gains | (4,730 | ) | — | (4,760 | ) | (9,899 | ) | |||||||||||||
Loan write-downs (recoveries), net | (4,495 | ) | — | (2,195 | ) | (99 | ) | |||||||||||||
Non-cash write-off of straight-line rent receivable | — | — | 963 | — | ||||||||||||||||
Write-offs and expenses due to early lease termination | — | — | 297 | — | ||||||||||||||||
Change in fair value of interest rate swap agreement | — | 275 | — | 1,197 | ||||||||||||||||
Legal settlements | — | — | 365 | — | ||||||||||||||||
Other items | (288 | ) | 135 | (271 | ) | 135 | ||||||||||||||
Normalized FFO | $ | 23,369 | $ | 21,448 | $ | 88,487 | $ | 80,176 | ||||||||||||
BASIC | ||||||||||||||||||||
Weighted average common shares outstanding | 27,848,002 | 27,741,961 | 27,811,813 | 27,719,096 | ||||||||||||||||
FFO per common share | $ | 1.18 | $ | .76 | $ | 3.38 | $ | 3.21 | ||||||||||||
Normalized FFO per common share | $ | .84 | $ | .77 | $ | 3.18 | $ | 2.89 | ||||||||||||
DILUTED | ||||||||||||||||||||
Weighted average common shares outstanding | 27,868,245 | 27,784,915 | 27,838,720 | 27,792,592 | ||||||||||||||||
FFO per common share | $ | 1.18 | $ | .76 | $ | 3.38 | $ | 3.20 | ||||||||||||
Normalized FFO per common share | $ | .84 | $ | .77 | $ | 3.18 | $ | 2.88 | ||||||||||||
(1)Management believes that funds from operations (FFO) is an important supplemental measure of operating performance for a real estate investment trust. 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. Since real estate values instead have historically risen and fallen with market conditions, presentations of operating results for a real estate investment trust that uses historical cost accounting for depreciation could be less informative, and should be supplemented with a measure such as FFO. The term FFO was designed by the real estate investment trust industry to address this issue. Our measure may not be comparable to similarly titled measures used by other REITs. Consequently, our funds from operations may not provide a meaningful measure of our performance as compared to that of other REITs. Since other REITs may not use our definition of FFO, caution should be exercised when comparing our Company's FFO to that of other REITs. FFO does not represent cash generated from operating activities in accordance with GAAP (funds from operations does not include changes in operating assets and liabilities) and therefore should not be considered an alternative to net earnings as an indication of operating performance, or to net cash flow from operating activities as determined by GAAP in the United States, as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. | ||||||||||||||||||||
(2)Normalized FFO excludes from FFO certain items which, due to their infrequent or unpredictable nature, may create some difficulty in comparing FFO for the current period to similar prior periods, and may include, but are not limited to, impairment of assets, gains and losses attributable to the acquisition and disposition of assets and liabilities, recoveries of previous write-downs, and changes in the fair value of interest rate swap agreements. | ||||||||||||||||||||
Reconciliation of Funds Available for Distribution and Normalized Funds Available for Distribution(1)(2) | ||||||||||||||||||||
(in thousands, except share and per share amounts) | ||||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||||||
Net income attributable to common stockholders | $ | 41,105 | $ | 18,114 | $ | 90,731 | $ | 81,132 | ||||||||||||
Elimination of certain non-cash items in net income: | ||||||||||||||||||||
Depreciation in continuing operations | 4,229 | 3,124 | 16,579 | 11,549 | ||||||||||||||||
Depreciation related to noncontrolling interest | (87 | ) | — | (87 | ) | — | ||||||||||||||
Depreciation in discontinued operations | 99 | 101 | 402 | 443 | ||||||||||||||||
Net gain on sales of real estate | (11,966 | ) | — | (11,966 | ) | (3,348 | ) | |||||||||||||
Straight-line lease revenue, net | (1,340 | ) | (1,016 | ) | (3,664 | ) | (3,778 | ) | ||||||||||||
Non-cash stock based compensation | 244 | 175 | 2,168 | 3,087 | ||||||||||||||||
Funds available for distribution | $ | 32,284 | $ | 20,498 | $ | 94,163 | $ | 89,085 | ||||||||||||
Investment and other gains | (4,730 | ) | — | (4,760 | ) | (9,899 | ) | |||||||||||||
Loan write-downs (recoveries), net | (4,495 | ) | — | (2,195 | ) | (99 | ) | |||||||||||||
Write-offs and expenses due to early lease termination | — | — | 297 | — | ||||||||||||||||
Change in fair value of interest rate swap agreement | — | 275 | — | 1,197 | ||||||||||||||||
Legal settlements | — | — | 365 | — | ||||||||||||||||
Other items | (288 | ) | 135 | (271 | ) | 135 | ||||||||||||||
Normalized FAD | $ | 22,771 | $ | 20,908 | $ | 87,599 | $ | 80,419 | ||||||||||||
BASIC | ||||||||||||||||||||
Weighted average common shares outstanding | 27,848,002 | 27,741,961 | 27,811,813 | 27,719,096 | ||||||||||||||||
FAD per common share | $ | 1.16 | $ | .74 | $ | 3.39 | $ | 3.21 | ||||||||||||
Normalized FAD per common share | $ | .82 | $ | .75 | $ | 3.15 | $ | 2.90 | ||||||||||||
DILUTED | ||||||||||||||||||||
Weighted average common shares outstanding | 27,868,245 | 27,784,915 | 27,838,720 | 27,792,592 | ||||||||||||||||
FAD per common share | $ | 1.16 | $ | .74 | $ | 3.38 | $ | 3.21 | ||||||||||||
Normalized FAD per common share | $ | .82 | $ | .75 | $ | 3.15 | $ | 2.89 | ||||||||||||
(1)Management believes that FAD and normalized FAD are important supplemental measures of a REIT's net earnings available to common stockholders. Since other REITs may not use our definition of FAD; caution should be exercised when comparing our Company's FAD to that of other REITs. FAD in and of itself does not represent cash generated from operating activities in accordance with GAAP (FAD does not include changes in operating assets and liabilities) and therefore should not be considered an alternative to net earnings as an indication of operating performance, or to net cash flow from operating activities as determined by GAAP as a measure of liquidity, and is not necessarily indicative of cash available to fund cash needs. | ||||||||||||||||||||
(2)Normalized FAD excludes from FAD certain items which, due to their infrequent or unpredictable nature, may create some difficulty in comparing FAD for the current period to similar prior periods, and may include, but are n | ||||||||||||||||||||
