CareTrust REIT Announces First Quarter 2018 Operating Results; Revises Guidance Upward
05/08/18For the quarter,
- Net income of
$14.6 million , an increase of 42%, and net income per diluted weighted-average common share of$0.19 , an increase of 27% over Q1 2017; - Normalized FFO of
$24.1 million , an increase of 25%, and normalized FFO per diluted weighted-average common share of$0.32 , an increase of 10% over Q1 2017; - Normalized FAD of
$24.9 million , an increase of 22%, and normalized FAD per diluted weighted-average common share of$0.33 , an increase of 10% over Q1 2017; - Investments of approximately
$47.4 million (inclusive of transaction costs) at a blended initial cash yield of 9%, acquiring six skilled nursing facilities in two separate transactions; and - A net debt-to-normalized EBITDA ratio of 4.6x and a debt-to-enterprise value of 37%, each as of quarter-end.
Planned Re-Tenantings Completed
Post quarter-end,
Mr. Stapley noted that all of the asset transfers were accomplished at approximately the same rents as the outgoing operators were paying, and that all of the assets are now covered by multi-facility master leases. “Best of all, we are thrilled to have added two new operator relationships with
Financial Results for Quarter Ended
Chief Financial Officer
Liquidity
Discussing CareTrust REIT’s investments and current liquidity, Mr. Wagner reported that the
He also reported that there had been no activity in the quarter on the Company’s at-the-market equity program but, he added, “Our ATM program remains a significant instrument in the Company’s capital-raising repertoire, with up to
2018 Guidance Revised Upward
Mr. Wagner provided
Dividend Increased
During the quarter,
Significant Events During the Quarter and Since
On
On February 27, 2018,
On
On
On
Conference Call
A conference call will be held on Wednesday, May 9, 2018, at
About
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This press release contains, and the related conference call will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical statements of fact and statements regarding the Company’s intent, belief or expectations, including, but not limited to, statements regarding future financial and financing positions, business and acquisition strategies, growth prospects, operating and financial performance, expectations regarding the making of distributions, payment of dividends, compliance with and changes in governmental regulations, and the performance of the Company’s tenants and operators and their respective facilities.
Words such as “anticipate,” “believe,” “could,” expect,” “estimate,” “intend,” “may,” “plan,” “seek,” “should,” “will,” “would,” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements, though not all forward-looking statements contain these identifying words. The Company’s forward-looking statements are based on management’s current expectations and beliefs, and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although the Company believes that the assumptions underlying these forward-looking statements are reasonable, they are not guarantees and the Company can give no assurance that its expectations will be attained. Factors which could have a material adverse effect on the Company’s operations and future prospects or which could cause actual results to differ materially from expectations include, but are not limited to: (i) the ability to achieve some or all of the expected benefits from the completed spin-off from The
Information in this press release or the related conference call is provided as of
As used in this press release or the related conference call, unless the context requires otherwise, references to “CTRE,” "CareTrust," “CareTrust REIT” or the “Company” refer to
Contact:
(949) 542-3130
ir@caretrustreit.com
CARETRUST REIT, INC. | |||||||
CONSOLIDATED INCOME STATEMENTS | |||||||
(in thousands, except per share data) | |||||||
(unaudited) | |||||||
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Revenues: | |||||||
Rental income | $ | 33,816 | $ | 27,339 | |||
Tenant reimbursements | 2,968 | 2,321 | |||||
Independent living facilities | 799 | 793 | |||||
Interest and other income | 518 | 155 | |||||
Total revenues | 38,101 | 30,608 | |||||
Expenses: | |||||||
Depreciation and amortization | 11,577 | 9,076 | |||||
Interest expense | 7,092 | 5,879 | |||||
Property taxes | 2,968 | 2,321 | |||||
Independent living facilities | 716 | 661 | |||||
General and administrative | 3,192 | 2,390 | |||||
Total expenses | 25,545 | 20,327 | |||||
Other income: | |||||||
Gain on sale of real estate | 2,051 | — | |||||
Net income | $ | 14,607 | $ | 10,281 | |||
Earnings per common share: | |||||||
Basic | $ | 0.19 | $ | 0.15 | |||
Diluted | $ | 0.19 | $ | 0.15 | |||
Weighted average shares outstanding: | |||||||
Basic | 75,504 | 66,951 | |||||
Diluted | 75,504 | 66,951 | |||||
Dividends declared per common share | $ | 0.205 | $ | 0.185 | |||
CARETRUST REIT, INC. | ||||||||
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES | ||||||||
(in thousands, except per share data) | ||||||||
(unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Net income | $ | 14,607 | $ | 10,281 | ||||
Depreciation and amortization | 11,577 | 9,076 | ||||||
Interest expense | 7,092 | 5,879 | ||||||
Amortization of stock-based compensation | 904 | 536 | ||||||
EBITDA | 34,180 | 25,772 | ||||||
Gain on sale of real estate | (2,051 | ) | — | |||||
Normalized EBITDA | $ | 32,129 | $ | 25,772 | ||||
Net income | $ | 14,607 | $ | 10,281 | ||||
Real estate related depreciation and amortization | 11,549 | 9,050 | ||||||
Gain on sale of real estate | (2,051 | ) | — | |||||
Funds from Operations (FFO) | 24,105 | 19,331 | ||||||
Normalized FFO | $ | 24,105 | $ | 19,331 | ||||
CARETRUST REIT, INC. | ||||||||
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (continued) | ||||||||
(in thousands, except per share data) | ||||||||
(unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Net income | $ | 14,607 | $ | 10,281 | ||||
Real estate related depreciation and amortization | 11,549 | 9,050 | ||||||
Amortization of deferred financing fees | 484 | 561 | ||||||
Amortization of stock-based compensation | 904 | 536 | ||||||
Straight-line rental income | (591 | ) | (72 | ) | ||||
Gain on sale of real estate | (2,051 | ) | — | |||||
Funds Available for Distribution (FAD) | 24,902 | 20,356 | ||||||
Normalized FAD | $ | 24,902 | $ | 20,356 | ||||
FFO per share | $ | 0.32 | $ | 0.29 | ||||
Normalized FFO per share | $ | 0.32 | $ | 0.29 | ||||
FAD per share | $ | 0.33 | $ | 0.30 | ||||
Normalized FAD per share | $ | 0.33 | $ | 0.30 | ||||
Diluted weighted-average shares outstanding [1] | 75,657 | 67,133 | ||||||
[1] For the periods presented, the diluted weighted-average shares have been calculated using the treasury stock method. | ||||||||
CARETRUST REIT, INC. | |||||||||||||||
CONSOLIDATED INCOME STATEMENTS - 5 QUARTER TREND | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
(unaudited) | |||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||
March 31, 2017 |
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
March 31, 2018 |
|||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 27,339 | $ | 28,511 | $ | 29,404 | $ | 32,379 | $ | 33,816 | |||||
Tenant reimbursements | 2,321 | 2,389 | 2,543 | 3,001 | 2,968 | ||||||||||
Independent living facilities | 793 | 789 | 825 | 821 | 799 | ||||||||||
Interest and other income | 155 | 1,140 | 176 | 396 | 518 | ||||||||||
Total revenues | 30,608 | 32,829 | 32,948 | 36,597 | 38,101 | ||||||||||
Expenses: | |||||||||||||||
Depreciation and amortization | 9,076 | 9,335 | 9,745 | 11,003 | 11,577 | ||||||||||
Interest expense | 5,879 | 6,219 | 5,592 | 6,506 | 7,092 | ||||||||||
Loss on the extinguishment of debt | — | 11,883 | — | — | — | ||||||||||
Property taxes | 2,321 | 2,389 | 2,543 | 3,001 | 2,968 | ||||||||||
Independent living facilities | 661 | 644 | 698 | 730 | 716 | ||||||||||
Impairment of real estate investment | — | 890 | — | — | — | ||||||||||
Reserve for advances and deferred rent | — | — | — | 10,414 | — | ||||||||||
General and administrative | 2,390 | 2,977 | 3,059 | 2,691 | 3,192 | ||||||||||
Total expenses | 20,327 | 34,337 | 21,637 | 34,345 | 25,545 | ||||||||||
Other income: | |||||||||||||||
Gain on disposition of other real estate investment | — | 3,538 | — | — | — | ||||||||||
Gain on sale of real estate | — | — | — | — | 2,051 | ||||||||||
Net income | $ | 10,281 | $ | 2,030 | $ | 11,311 | $ | 2,252 | $ | 14,607 | |||||
Diluted earnings per share | $ | 0.15 | $ | 0.03 | $ | 0.15 | $ | 0.03 | $ | 0.19 | |||||
Diluted weighted average shares outstanding | 66,951 | 72,564 | 75,471 | 75,476 | 75,504 | ||||||||||
CARETRUST REIT, INC. | |||||||||||||||
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
(unaudited) | |||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||
March 31, 2017 |
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
March 31, 2018 |
|||||||||||
Net income | $ | 10,281 | $ | 2,030 | $ | 11,311 | $ | 2,252 | $ | 14,607 | |||||
Depreciation and amortization | 9,076 | 9,335 | 9,745 | 11,003 | 11,577 | ||||||||||
Interest expense | 5,879 | 6,219 | 5,592 | 6,506 | 7,092 | ||||||||||
Amortization of stock-based compensation | 536 | 600 | 656 | 624 | 904 | ||||||||||
EBITDA | 25,772 | 18,184 | 27,304 | 20,385 | 34,180 | ||||||||||
Impairment of real estate investment | — | 890 | — | — | — | ||||||||||
Gain on sale of real estate | — | — | — | — | (2,051 | ) | |||||||||
Loss on the extinguishment of debt | — | 11,883 | — | — | — | ||||||||||
Deferred preferred return | — | (544 | ) | — | — | — | |||||||||
Reserve for advances and deferred rent | — | — | — | 10,414 | — | ||||||||||
Gain on disposition of other real estate investment | — | (3,538 | ) | — | — | — | |||||||||
Normalized EBITDA | $ | 25,772 | $ | 26,875 | $ | 27,304 | $ | 30,799 | $ | 32,129 | |||||
Net income | $ | 10,281 | $ | 2,030 | $ | 11,311 | $ | 2,252 | $ | 14,607 | |||||
Real estate related depreciation and amortization | 9,050 | 9,309 | 9,717 | 10,973 | 11,549 | ||||||||||
Impairment of real estate investment | — | 890 | — | — | — | ||||||||||
Gain on disposition of other real estate investment | — | (3,538 | ) | — | — | — | |||||||||
Gain on sale of real estate | — | — | — | — | (2,051 | ) | |||||||||
Funds from Operations (FFO) | 19,331 | 8,691 | 21,028 | 13,225 | 24,105 | ||||||||||
Reserve for advances and deferred rent | — | — | — | 10,414 | — | ||||||||||
Deferred preferred return | — | (544 | ) | — | — | — | |||||||||
Effect of the senior unsecured notes payable redemption | — | 12,475 | — | — | — | ||||||||||
Normalized FFO | $ | 19,331 | $ | 20,622 | $ | 21,028 | $ | 23,639 | $ | 24,105 | |||||
CARETRUST REIT, INC. | |||||||||||||||
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND (continued) | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
(unaudited) | |||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||
March 31, 2017 |
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
March 31, 2018 |
|||||||||||
Net income | $ | 10,281 | $ | 2,030 | $ | 11,311 | $ | 2,252 | $ | 14,607 | |||||
Real estate related depreciation and amortization | 9,050 | 9,309 | 9,717 | 10,973 | 11,549 | ||||||||||
Amortization of deferred financing fees | 561 | 529 | 484 | 485 | 484 | ||||||||||
Amortization of stock-based compensation | 536 | 600 | 656 | 624 | 904 | ||||||||||
Straight-line rental income | (72 | ) | (43 | ) | (2 | ) | (227 | ) | (591 | ) | |||||
Impairment of real estate investment | — | 890 | — | — | — | ||||||||||
Gain on disposition of other real estate investment | — | (3,538 | ) | — | — | — | |||||||||
Gain on sale of real estate | — | — | — | — | (2,051 | ) | |||||||||
Funds Available for Distribution (FAD) | 20,356 | 9,777 | 22,166 | 14,107 | 24,902 | ||||||||||
Reserve for advances and deferred rent | — | — | — | 10,414 | — | ||||||||||
Deferred preferred return | — | (544 | ) | — | — | — | |||||||||
Effect of the senior unsecured notes payable redemption | — | 12,475 | — | — | — | ||||||||||
Normalized FAD | $ | 20,356 | $ | 21,708 | $ | 22,166 | $ | 24,521 | $ | 24,902 | |||||
FFO per share | $ | 0.29 | $ | 0.12 | $ | 0.28 | $ | 0.17 | $ | 0.32 | |||||
Normalized FFO per share | $ | 0.29 | $ | 0.28 | $ | 0.28 | $ | 0.31 | $ | 0.32 | |||||
FAD per share | $ | 0.30 | $ | 0.13 | $ | 0.29 | $ | 0.19 | $ | 0.33 | |||||
Normalized FAD per share | $ | 0.30 | $ | 0.30 | $ | 0.29 | $ | 0.32 | $ | 0.33 | |||||
Diluted weighted-average shares outstanding [1] | 67,133 | 72,803 | 75,659 | 75,692 | 75,657 | ||||||||||
[1] For the periods presented, the diluted weighted-average shares have been calculated using the treasury stock method. | |||||||||||||||
CARETRUST REIT, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
Assets: | ||||||||
Real estate investments, net | $ | 1,177,140 | $ | 1,152,261 | ||||
Other real estate investments, net | 18,031 | 17,949 | ||||||
Cash and cash equivalents | 14,195 | 6,909 | ||||||
Accounts and other receivables, net | 5,999 | 5,254 | ||||||
Prepaid expenses and other assets | 1,919 | 895 | ||||||
Deferred financing costs, net | 1,447 | 1,718 | ||||||
Total assets | $ | 1,218,731 | $ | 1,184,986 | ||||
Liabilities and Equity: | ||||||||
Senior unsecured notes payable, net | $ | 294,584 | $ | 294,395 | ||||
Senior unsecured term loan, net | 99,540 | 99,517 | ||||||
Unsecured revolving credit facility | 200,000 | 165,000 | ||||||
Accounts payable and accrued liabilities | 15,111 | 17,413 | ||||||
Dividends payable | 15,608 | 14,044 | ||||||
Total liabilities | 624,843 | 590,369 | ||||||
Equity: | ||||||||
Common stock | 755 | 755 | ||||||
Additional paid-in capital | 783,509 | 783,237 | ||||||
Cumulative distributions in excess of earnings | (190,376 | ) | (189,375 | ) | ||||
Total equity | 593,888 | 594,617 | ||||||
Total liabilities and equity | $ | 1,218,731 | $ | 1,184,986 | ||||
CARETRUST REIT, INC. | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in thousands) | |||||||
(unaudited) | |||||||
For the Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 14,607 | $ | 10,281 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization (including a below-market ground lease) | 11,582 | 9,080 | |||||
Amortization of deferred financing costs | 484 | 561 | |||||
Amortization of stock-based compensation | 904 | 536 | |||||
Straight-line rental income | (591 | ) | (72 | ) | |||
Noncash interest income | (106 | ) | (155 | ) | |||
Gain on sale of real estate | (2,051 | ) | — | ||||
Change in operating assets and liabilities: | |||||||
Accounts and other receivables, net | (155 | ) | (1,964 | ) | |||
Prepaid expenses and other assets | (36 | ) | 13 | ||||
Accounts payable and accrued liabilities | (2,579 | ) | 1,886 | ||||
Net cash provided by operating activities | 22,059 | 20,166 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of real estate | (47,103 | ) | (54,568 | ) | |||
Improvements to real estate | (11 | ) | (89 | ) | |||
Purchases of equipment, furniture and fixtures | (27 | ) | (117 | ) | |||
Principal payments received on mortgage loan receivable | 23 | — | |||||
Escrow deposits for acquisition of real estate | (1,000 | ) | (700 | ) | |||
Net proceeds from the sale of real estate | 13,004 | — | |||||
Net cash used in investing activities | (35,114 | ) | (55,474 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from the issuance of common stock, net | (10 | ) | 108,166 | ||||
Borrowings under unsecured revolving credit facility | 60,000 | 45,000 | |||||
Payments on unsecured revolving credit facility | (25,000 | ) | (113,000 | ) | |||
Net-settle adjustment on restricted stock | (605 | ) | — | ||||
Dividends paid on common stock | (14,044 | ) | (11,075 | ) | |||
Net cash provided by financing activities | 20,341 | 29,091 | |||||
Net increase (decrease) in cash and cash equivalents | 7,286 | (6,217 | ) | ||||
Cash and cash equivalents, beginning of period | 6,909 | 7,500 | |||||
Cash and cash equivalents, end of period | $ | 14,195 | $ | 1,283 | |||
CARETRUST REIT, INC. | |||||||||||||||||||
DEBT SUMMARY | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
March 31, 2018 | |||||||||||||||||||
Interest | Maturity | % of | Deferred | Net Carrying | |||||||||||||||
Debt | Rate | Date | Principal | Principal | Loan Costs | Value | |||||||||||||
Fixed Rate Debt | |||||||||||||||||||
Senior unsecured notes payable | 5.250 | % | 2025 | $ | 300,000 | 50.0 | % | $ | (5,416 | ) | $ | 294,584 | |||||||
Floating Rate Debt | |||||||||||||||||||
Senior unsecured term loan | 3.837 | % | [1] | 2023 | 100,000 | 16.7 | % | (460 | ) | 99,540 | |||||||||
Unsecured revolving credit facility | 3.624 | % | [2] | 2020 | [3] | 200,000 | 33.3 | % | — | [4] | 200,000 | ||||||||
3.695 | % | 300,000 | 50.0 | % | (460 | ) | 299,540 | ||||||||||||
Total Debt | 4.473 | % | $ | 600,000 | 100.0 | % | $ | (5,876 | ) | $ | 594,124 | ||||||||
[1] Funds can be borrowed at applicable LIBOR plus 1.95% to 2.60% or at the Base Rate (as defined) plus 0.95% to 1.6%. | |||||||||||||||||||
[2] Funds can be borrowed at applicable LIBOR plus 1.75% to 2.40% or the Base Rate (as defined) plus 0.75% to 1.4%. | |||||||||||||||||||
[3] Maturity date assumes exercise of two 6-month extension options. | |||||||||||||||||||
[4] Deferred financing fees are not shown net for the unsecured revolving credit facility and are included in assets on the balance sheet. | |||||||||||||||||||
CARETRUST REIT, INC. | |||||||
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES | |||||||
(shares in thousands) | |||||||
(unaudited) | |||||||
2018 Guidance | |||||||
Low | High | ||||||
Net income | $ | 0.70 | $ | 0.72 | |||
Real estate related depreciation and amortization | 0.59 | 0.59 | |||||
Gain on sale of real estate | (0.03 | ) | (0.03 | ) | |||
Funds from Operations (FFO) | 1.26 | 1.28 | |||||
Normalized FFO | $ | 1.26 | $ | 1.28 | |||
Net income | $ | 0.70 | $ | 0.72 | |||
Real estate related depreciation and amortization | 0.59 | 0.59 | |||||
Amortization of deferred financing fees | 0.03 | 0.03 | |||||
Amortization of stock-based compensation | 0.05 | 0.05 | |||||
Straight-line rental income | (0.02 | ) | (0.02 | ) | |||
Gain on sale of real estate | (0.03 | ) | (0.03 | ) | |||
Funds Available for Distribution (FAD) | 1.32 | 1.34 | |||||
Normalized FAD | $ | 1.32 | $ | 1.34 | |||
Weighted average shares outstanding: | |||||||
Diluted | 75,916 | 75,916 |
Non-GAAP Financial Measures
EBITDA represents net income before interest expense (including amortization of deferred financing costs), amortization of stock-based compensation, and depreciation and amortization. Normalized EBITDA represents EBITDA as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of core operating performance, such as real estate impairment charges, expensed acquisition costs, certain deferred preferred return, losses on the extinguishment of debt, reserve for advances and deferred rent and gains or losses from dispositions of real estate or other real estate. EBITDA and Normalized EBITDA do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. EBITDA and Normalized EBITDA do not purport to be indicative of cash available to fund future cash requirements, including the Company’s ability to fund capital expenditures or make payments on its indebtedness. Further, the Company’s computation of EBITDA and Normalized EBITDA may not be comparable to EBITDA and Normalized EBITDA reported by other REITs.
Funds from Operations (“FFO”), as defined by the
FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from dispositions of real estate or other real estate investments, real estate depreciation and amortization and real estate impairment charges, and adjustments for unconsolidated partnerships and joint ventures. The Company computes FFO in accordance with NAREIT’s definition.
FAD is defined as FFO excluding non-cash income and expenses, such as amortization of stock-based compensation, amortization of deferred financing costs and the effects of straight-line rent. The Company considers FAD to be a useful supplemental measure to evaluate the Company’s operating results excluding these income and expense items to help investors, analysts and other interested parties compare the operating performance of the Company between periods or as compared to other companies on a more consistent basis.
In addition, the Company reports normalized FFO and normalized FAD, which adjust FFO and FAD for certain revenue and expense items that the Company does not believe are indicative of its ongoing operating results, such as written-off deferred financing fees, expensed acquisition costs, certain preferred returns, the effect of the senior unsecured notes payable redemption and other unanticipated charges. By excluding these items, investors, analysts and our management can compare normalized FFO and normalized FAD between periods more consistently.
While FFO, normalized FFO, FAD and normalized FAD are relevant and widely-used measures of operating performance among REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating the Company’s liquidity or operating performance. FFO, normalized FFO, FAD and normalized FAD do not purport to be indicative of cash available to fund future cash requirements.
Further, the Company’s computation of FFO, normalized FFO, FAD and normalized FAD may not be comparable to FFO, normalized FFO, FAD and normalized FAD reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define FAD differently than the Company does.
The Company believes that net income, as defined by GAAP, is the most appropriate earnings measure. The Company also believes that the use of EBITDA, Normalized EBITDA, FFO, normalized FFO, FAD and normalized FAD, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and makes comparisons of operating results among such companies more meaningful. The Company considers EBITDA and Normalized EBITDA useful in understanding the Company’s operating results independent of its capital structure, indebtedness and non-recurring charges, thereby allowing for a more meaningful comparison of operating performance between periods and against other REITs. The Company considers FFO, normalized FFO, FAD and normalized FAD to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses from real estate dispositions, impairment charges and real estate depreciation and amortization, and, for FAD and normalized FAD, by excluding non-cash income and expenses such as amortization of stock-based compensation, amortization of deferred financing costs, and the effects of straight-line rent, FFO, normalized FFO, FAD and normalized FAD can help investors compare the Company’s operating performance between periods and to other REITs.
Source: CareTrust REIT, Inc.