Summary
Health Care REIT, Inc. (WELL) reported its financial results for the third quarter and the first nine months of 2006. The company experienced significant growth in rental income, driven by new property acquisitions, leading to a substantial increase in net income available to common stockholders compared to the prior year. This growth was partially offset by increased interest and depreciation expenses. Key strategic developments include the announcement of a merger agreement with Windrose Medical Properties Trust, expected to close around year-end 2006, which will expand and diversify WELL's real estate portfolio. The company also secured a new, larger unsecured revolving credit facility, enhancing its financial flexibility. Dividends paid to common stockholders continued to grow, reflecting the company's commitment to returning value to its shareholders.
Key Highlights
- 1Net income available to common stockholders increased significantly to $21.48 million ($0.34 per diluted share) for Q3 2006 and $63.79 million ($1.04 per diluted share) for the first nine months of 2006, up from $19.91 million ($0.37 per diluted share) and $36.11 million ($0.67 per diluted share) in the comparable periods of 2005, respectively.
- 2Total revenues grew by 15% in Q3 2006 and 19% for the nine-month period, primarily driven by a 17% and 22% increase in rental income, respectively, due to property acquisitions.
- 3The company announced a definitive merger agreement with Windrose Medical Properties Trust, expected to close by year-end 2006, creating a combined entity with over 550 properties and approximately $4 billion in gross real estate assets.
- 4Health Care REIT, Inc. secured a new $700 million unsecured revolving credit facility, replacing its previous $500 million facility, extending the maturity to July 2009 and increasing financial flexibility.
- 5The company's property portfolio continues to show strong payment coverages, with weighted average CBMF at 1.95x and CAMF at 1.53x as of June 30, 2006.
- 6Quarterly common stock dividends increased to $0.64 per share, representing the 142nd consecutive dividend payment.
- 7Total assets grew to $3.20 billion as of September 30, 2006, from $2.97 billion at December 31, 2005, with net real estate investments increasing to $3.09 billion.
Frequently Asked Questions
For the third quarter of 2006, net income available to common stockholders was $21.48 million ($0.34/share), compared to $19.91 million ($0.37/share) in Q3 2005. For the nine months ended September 30, 2006, net income available to common stockholders was $63.79 million ($1.04/share), significantly up from $36.11 million ($0.67/share) in the same period of 2005. This increase was primarily driven by higher rental income from acquisitions, partially offset by increased interest and depreciation expenses.
The announced merger with Windrose Medical Properties Trust, expected to close by year-end 2006, is a significant strategic move. It is anticipated to further diversify and expand Health Care REIT's real estate portfolio, creating a combined entity with over 550 properties across 37 states and approximately $4 billion in gross real estate assets. This merger is expected to enhance the company's scale, operational capabilities, and growth opportunities within the senior housing and healthcare real estate sectors.
Health Care REIT recently closed on a new $700 million unsecured revolving credit facility, extending its maturity to July 2009. This enhances financial flexibility and borrowing capacity. As of September 30, 2006, the company had $276 million outstanding under its credit facilities and $15.49 million in cash and cash equivalents, with significant available borrowing capacity. The company maintains a debt-to-book capitalization ratio of 51% and a debt-to-market capitalization ratio of 36%.
The company anticipates making investments in additional facilities, funded through borrowings under its credit lines, internally generated cash, and proceeds from property sales. Permanent financing is expected from debt and equity offerings. Management believes its liquidity and capital sources are sufficient for operations, debt obligations, dividend distributions, and future investments. The company continues to pay consistent cash dividends, increasing its quarterly dividend to $0.64 per share, and aims to increase these payments through portfolio growth and rental income increases.