CareTrust REIT Announces Fourth Quarter and Fiscal 2017 Operating Results
02/27/18During the quarter,
- Posted net income of
$0.03 , normalized FFO of$0.31 , an increase of 11% over Q4 2016, and normalized FAD of$0.32 , an increase of 10% over Q4 2016, all per diluted weighted-average common share; - Invested approximately
$153 million (inclusive of transaction costs) at a blended initial cash yield of 9%, acquiring 11 skilled nursing facilities and three assisted living and memory care facilities, and providing one mortgage financing; - Finished the year with a debt-to-normalized EBITDA ratio of 4.6x and a debt-to-enterprise value of 31%, each as of quarter-end; and
- Met its normalized FFO guidance of
$1.16 per diluted weighted-average common share for the year.
Record Year
Financial Results for Quarter and Year Ended
Chief Financial Officer
For the full year 2017, Mr. Wagner reported that
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 Declared
During the quarter,
Pristine Transition and Reserve
Updating recent news regarding changes to its ongoing landlord-tenant relationship with affiliates of
While the lease amendment was expected to afford Pristine an opportunity to focus on a smaller set of better-performing operations and meet its ongoing lease obligations, Pristine has continued to report cash shortfalls that have prevented it from doing so. Although Pristine has paid
Under the Agreement, Pristine will continue to operate the facilities and pay the scheduled base rent until the transitions occur. Mr. Wagner noted that, as a result of the agreement, the Company will recognize Pristine’s rental revenues on a cash basis, and reserve approximately
Upon Pristine’s performance of the terms of the agreement,
Conference Call
A conference call will be held on Wednesday, February 28, 2018, at
About CareTrust REIT™
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 December 31, | Twelve months ended December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Rental income | $ | 32,379 | $ | 25,269 | $ | 117,633 | $ | 93,126 | ||||||||
Tenant reimbursements | 3,001 | 2,031 | 10,254 | 7,846 | ||||||||||||
Independent living facilities | 821 | 793 | 3,228 | 2,970 | ||||||||||||
Interest and other income | 396 | 150 | 1,867 | 737 | ||||||||||||
Total revenues | 36,597 | 28,243 | 132,982 | 104,679 | ||||||||||||
Expenses: | ||||||||||||||||
Depreciation and amortization | 11,003 | 8,532 | 39,159 | 31,965 | ||||||||||||
Interest expense | 6,506 | 5,829 | 24,196 | 22,873 | ||||||||||||
Loss on the extinguishment of debt | — | — | 11,883 | 326 | ||||||||||||
Property taxes | 3,001 | 2,031 | 10,254 | 7,846 | ||||||||||||
Independent living facilities | 730 | 623 | 2,733 | 2,549 | ||||||||||||
Impairment of real estate investment | — | — | 890 | — | ||||||||||||
Acquisition costs | — | 2 | — | 205 | ||||||||||||
Reserve for advances and deferred rent | 10,414 | — | 10,414 | — | ||||||||||||
General and administrative | 2,691 | 2,573 | 11,117 | 9,297 | ||||||||||||
Total expenses | 34,345 | 19,590 | 110,646 | 75,061 | ||||||||||||
Other income: | ||||||||||||||||
Loss on sale of asset | — | (265 | ) | — | (265 | ) | ||||||||||
Gain on disposition of other real estate investment | — | — | 3,538 | — | ||||||||||||
Net income | $ | 2,252 | $ | 8,388 | $ | 25,874 | $ | 29,353 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.03 | $ | 0.14 | $ | 0.35 | $ | 0.52 | ||||||||
Diluted | $ | 0.03 | $ | 0.14 | $ | 0.35 | $ | 0.52 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 75,476 | 60,875 | 72,647 | 56,030 | ||||||||||||
Diluted | 75,476 | 60,875 | 72,647 | 56,030 | ||||||||||||
Dividends declared per common share | $ | 0.185 | $ | 0.17 | $ | 0.74 | $ | 0.68 |
CARETRUST REIT, INC. | |||||||||||||||||
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES | |||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Months Ended December 31, | Twelve months ended December 31, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Net income | $ | 2,252 | $ | 8,388 | $ | 25,874 | $ | 29,353 | |||||||||
Depreciation and amortization | 11,003 | 8,532 | 39,159 | 31,965 | |||||||||||||
Interest expense | 6,506 | 5,829 | 24,196 | 22,873 | |||||||||||||
Amortization of stock-based compensation | 624 | 339 | 2,416 | 1,546 | |||||||||||||
EBITDA | 20,385 | 23,088 | 91,645 | 85,737 | |||||||||||||
Acquisition costs | — | 2 | — | 205 | |||||||||||||
Loss on sale of real estate | — | 265 | — | 265 | |||||||||||||
Loss on the extinguishment of debt | — | — | 11,883 | 326 | |||||||||||||
Deferred preferred return | — | — | (544 | ) | — | ||||||||||||
Impairment of real estate investment | — | — | 890 | — | |||||||||||||
Reserve for advances and deferred rent | 10,414 | 10,414 | — | ||||||||||||||
Gain on disposition of other real estate investment | — | — | (3,538 | ) | — | ||||||||||||
Normalized EBITDA | $ | 30,799 | $ | 23,355 | $ | 110,750 | $ | 86,533 | |||||||||
Net income | $ | 2,252 | $ | 8,388 | $ | 25,874 | $ | 29,353 | |||||||||
Real estate related depreciation and amortization | 10,973 | 8,505 | 39,049 | 31,865 | |||||||||||||
Loss on sale of real estate | — | 265 | — | 265 | |||||||||||||
Impairment of real estate investment | — | — | 890 | — | |||||||||||||
Gain on disposition of other real estate investment | — | — | (3,538 | ) | — | ||||||||||||
Funds from Operations (FFO) | 13,225 | 17,158 | 62,275 | 61,483 | |||||||||||||
Reserve for advances and deferred rent | 10,414 | — | 10,414 | — | |||||||||||||
Acquisition costs | — | 2 | — | 205 | |||||||||||||
Deferred preferred return | — | — | (544 | ) | — | ||||||||||||
Effect of the senior unsecured notes payable redemption | — | — | 12,475 | — | |||||||||||||
Write-off of deferred financing fees | — | — | — | 326 | |||||||||||||
Normalized FFO | $ | 23,639 | $ | 17,160 | $ | 84,620 | $ | 62,014 |
CARETRUST REIT, INC. | |||||||||||||||||
RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES (continued) | |||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Months Ended December 31, | Twelve months ended December 31, | ||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Net income | $ | 2,252 | $ | 8,388 | $ | 25,874 | $ | 29,353 | |||||||||
Real estate related depreciation and amortization | 10,973 | 8,505 | 39,049 | 31,865 | |||||||||||||
Amortization of deferred financing fees | 485 | 561 | 2,059 | 2,239 | |||||||||||||
Amortization of stock-based compensation | 624 | 339 | 2,416 | 1,546 | |||||||||||||
Straight-line rental income | (227 | ) | (72 | ) | (344 | ) | (150 | ) | |||||||||
Loss on sale of real estate | — | 265 | — | 265 | |||||||||||||
Impairment of real estate investment | — | — | 890 | — | |||||||||||||
Gain on disposition of other real estate investment | — | — | (3,538 | ) | — | ||||||||||||
Funds Available for Distribution (FAD) | 14,107 | 17,986 | 66,406 | 65,118 | |||||||||||||
Reserve for advances and deferred rent | 10,414 | — | 10,414 | — | |||||||||||||
Acquisition costs | — | 2 | — | 205 | |||||||||||||
Deferred preferred return | — | — | (544 | ) | — | ||||||||||||
Effect of the senior unsecured notes payable redemption | — | — | 12,475 | — | |||||||||||||
Write-off of deferred financing fees | — | — | — | 326 | |||||||||||||
Normalized FAD | $ | 24,521 | $ | 17,988 | $ | 88,751 | $ | 65,649 | |||||||||
FFO per share | $ | 0.17 | $ | 0.28 | $ | 0.85 | $ | 1.09 | |||||||||
Normalized FFO per share | $ | 0.31 | $ | 0.28 | $ | 1.16 | $ | 1.10 | |||||||||
FAD per share | $ | 0.19 | $ | 0.29 | $ | 0.91 | $ | 1.16 | |||||||||
Normalized FAD per share | $ | 0.32 | $ | 0.29 | $ | 1.22 | $ | 1.17 | |||||||||
Diluted weighted average shares outstanding [1] | 75,692 | 61,028 | 72,853 | 56,186 | |||||||||||||
[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 | |||||||||||
December 31, 2016 | March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | |||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 25,269 | $ | 27,339 | $ | 28,511 | $ | 29,404 | $ | 32,379 | |||||
Tenant reimbursements | 2,031 | 2,321 | 2,389 | 2,543 | 3,001 | ||||||||||
Independent living facilities | 793 | 793 | 789 | 825 | 821 | ||||||||||
Interest and other income | 150 | 155 | 1,140 | 176 | 396 | ||||||||||
Total revenues | 28,243 | 30,608 | 32,829 | 32,948 | 36,597 | ||||||||||
Expenses: | |||||||||||||||
Depreciation and amortization | 8,532 | 9,076 | 9,335 | 9,745 | 11,003 | ||||||||||
Interest expense | 5,829 | 5,879 | 6,219 | 5,592 | 6,506 | ||||||||||
Loss on the extinguishment of debt | — | — | 11,883 | — | — | ||||||||||
Property taxes | 2,031 | 2,321 | 2,389 | 2,543 | 3,001 | ||||||||||
Independent living facilities | 623 | 661 | 644 | 698 | 730 | ||||||||||
Impairment of real estate investment | — | — | 890 | — | — | ||||||||||
Acquisition costs | 2 | — | — | — | — | ||||||||||
Reserve for advances and deferred rent | — | — | — | — | 10,414 | ||||||||||
General and administrative | 2,573 | 2,390 | 2,977 | 3,059 | 2,691 | ||||||||||
Total expenses | 19,590 | 20,327 | 34,337 | 21,637 | 34,345 | ||||||||||
Other income (expense): | |||||||||||||||
Loss on sale of real estate | (265 | ) | — | — | — | — | |||||||||
Gain on disposition of other real estate investment | — | — | 3,538 | — | — | ||||||||||
Net income | $ | 8,388 | $ | 10,281 | $ | 2,030 | $ | 11,311 | $ | 2,252 | |||||
Diluted earnings per share | $ | 0.14 | $ | 0.15 | $ | 0.03 | $ | 0.15 | $ | 0.03 | |||||
Diluted weighted average shares outstanding | 60,875 | 66,951 | 72,564 | 75,471 | 75,476 |
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 | |||||||||||
December 31, 2016 | March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | |||||||||||
Net income | $ | 8,388 | $ | 10,281 | $ | 2,030 | $ | 11,311 | $ | 2,252 | |||||
Depreciation and amortization | 8,532 | 9,076 | 9,335 | 9,745 | 11,003 | ||||||||||
Interest expense | 5,829 | 5,879 | 6,219 | 5,592 | 6,506 | ||||||||||
Amortization of stock-based compensation | 339 | 536 | 600 | 656 | 624 | ||||||||||
EBITDA | 23,088 | 25,772 | 18,184 | 27,304 | 20,385 | ||||||||||
Acquisition costs | 2 | — | — | — | — | ||||||||||
Loss on sale of real estate | 265 | — | — | — | — | ||||||||||
Loss on the extinguishment of debt | — | — | 11,883 | — | — | ||||||||||
Deferred preferred return | — | — | (544 | ) | — | — | |||||||||
Impairment of real estate investment | — | — | 890 | — | — | ||||||||||
Reserve for advances and deferred rent | — | — | — | — | 10,414 | ||||||||||
Gain on disposition of other real estate investment | — | — | (3,538 | ) | — | — | |||||||||
Normalized EBITDA | $ | 23,355 | $ | 25,772 | $ | 26,875 | $ | 27,304 | $ | 30,799 | |||||
Net income | $ | 8,388 | $ | 10,281 | $ | 2,030 | $ | 11,311 | $ | 2,252 | |||||
Real estate related depreciation and amortization | 8,505 | 9,050 | 9,309 | 9,717 | 10,973 | ||||||||||
Loss on sale of real estate | 265 | — | — | — | — | ||||||||||
Impairment of real estate investment | — | — | 890 | — | — | ||||||||||
Gain on disposition of other real estate investment | — | — | (3,538 | ) | — | — | |||||||||
Funds from Operations (FFO) | 17,158 | 19,331 | 8,691 | 21,028 | 13,225 | ||||||||||
Reserve for advances and deferred rent | — | — | — | — | 10,414 | ||||||||||
Acquisition costs | 2 | — | — | — | — | ||||||||||
Deferred preferred return | — | — | (544 | ) | — | — | |||||||||
Effect of the senior unsecured notes payable redemption | — | — | 12,475 | — | — | ||||||||||
Normalized FFO | $ | 17,160 | $ | 19,331 | $ | 20,622 | $ | 21,028 | $ | 23,639 |
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 | |||||||||||
December 31, 2016 | March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | |||||||||||
Net income | $ | 8,388 | $ | 10,281 | $ | 2,030 | $ | 11,311 | $ | 2,252 | |||||
Real estate related depreciation and amortization | 8,505 | 9,050 | 9,309 | 9,717 | 10,973 | ||||||||||
Amortization of deferred financing fees | 561 | 561 | 529 | 484 | 485 | ||||||||||
Amortization of stock-based compensation | 339 | 536 | 600 | 656 | 624 | ||||||||||
Straight-line rental income | (72 | ) | (72 | ) | (43 | ) | (2 | ) | (227 | ) | |||||
Loss on sale of real estate | 265 | — | — | — | — | ||||||||||
Impairment of real estate investment | — | — | 890 | — | — | ||||||||||
Gain on disposition of other real estate investment | — | — | (3,538 | ) | — | — | |||||||||
Funds Available for Distribution (FAD) | 17,986 | 20,356 | 9,777 | 22,166 | 14,107 | ||||||||||
Reserve for advances and deferred rent | — | — | — | — | 10,414 | ||||||||||
Acquisition costs | 2 | — | — | — | — | ||||||||||
Deferred preferred return | — | — | (544 | ) | — | — | |||||||||
Effect of the senior unsecured notes payable redemption | — | — | 12,475 | — | — | ||||||||||
Normalized FAD | $ | 17,988 | $ | 20,356 | $ | 21,708 | $ | 22,166 | $ | 24,521 | |||||
FFO per share | $ | 0.28 | $ | 0.29 | $ | 0.12 | $ | 0.28 | $ | 0.17 | |||||
Normalized FFO per share | $ | 0.28 | $ | 0.29 | $ | 0.28 | $ | 0.28 | $ | 0.31 | |||||
FAD per share | $ | 0.29 | $ | 0.30 | $ | 0.13 | $ | 0.29 | $ | 0.19 | |||||
Normalized FAD per share | $ | 0.29 | $ | 0.30 | $ | 0.30 | $ | 0.29 | $ | 0.32 | |||||
Diluted weighted average shares outstanding [1] | 61,028 | 67,133 | 72,803 | 75,659 | 75,692 | ||||||||||
[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) | ||||||||||
(audited) | ||||||||||
December 31, 2017 | December 31, 2016 | |||||||||
Assets: | ||||||||||
Real estate investments, net | $ | 1,152,261 | $ | 893,918 | ||||||
Other real estate investments | 17,949 | 13,872 | ||||||||
Cash and cash equivalents | 6,909 | 7,500 | ||||||||
Accounts and other receivables, net | 5,254 | 5,896 | ||||||||
Prepaid expenses and other assets | 895 | 1,369 | ||||||||
Deferred financing costs, net | 1,718 | 2,803 | ||||||||
Total assets | $ | 1,184,986 | $ | 925,358 | ||||||
Liabilities and Equity | ||||||||||
Senior unsecured notes payable, net | $ | 294,395 | $ | 255,294 | ||||||
Senior unsecured term loan, net | 99,517 | 99,422 | ||||||||
Unsecured revolving credit facility | 165,000 | 95,000 | ||||||||
Accounts payable and accrued liabilities | 17,413 | 12,137 | ||||||||
Dividends payable | 14,044 | 11,075 | ||||||||
Total liabilities | 590,369 | 472,928 | ||||||||
Equity: | ||||||||||
Common stock | 755 | 648 | ||||||||
Additional paid-in capital | 783,237 | 611,475 | ||||||||
Cumulative distributions in excess of earnings | (189,375 | ) | (159,693 | ) | ||||||
Total equity | 594,617 | 452,430 | ||||||||
Total liabilities and equity | $ | 1,184,986 | $ | 925,358 |
CARETRUST REIT, INC. | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in thousands) | |||||||
(audited) | |||||||
Twelve Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 25,874 | $ | 29,353 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization (including a below-market ground lease) | 39,176 | 31,980 | |||||
Amortization of deferred financing costs | 2,100 | 2,239 | |||||
Loss on the extinguishment of debt | 11,883 | 326 | |||||
Amortization of stock-based compensation | 2,416 | 1,546 | |||||
Straight-line rental income | (344 | ) | (150 | ) | |||
Noncash interest income | (686 | ) | (737 | ) | |||
Interest income distribution from other real estate investment | 1,500 | — | |||||
Reserve for advances and deferred rent | 10,414 | — | |||||
Impairment of real estate investment | 890 | — | |||||
Loss on sale of real estate | — | 265 | |||||
Change in operating assets and liabilities: | |||||||
Accounts and other receivables, net | (9,428 | ) | (3,404 | ) | |||
Prepaid expenses and other assets | (273 | ) | 84 | ||||
Accounts payable and accrued liabilities | 5,278 | 2,929 | |||||
Net cash provided by operating activities | 88,800 | 64,431 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of real estate | (296,517 | ) | (281,228 | ) | |||
Improvements to real estate | (748 | ) | (762 | ) | |||
Purchases of equipment, furniture and fixtures | (403 | ) | (151 | ) | |||
Investment in real estate mortgage loan receivable | (12,416 | ) | — | ||||
Preferred equity investments | — | (4,656 | ) | ||||
Sale of other real estate investment | 7,500 | — | |||||
Principal payments received on mortgage loan receivable | 25 | — | |||||
Escrow deposits for acquisition of real estate | — | (700 | ) | ||||
Net proceeds from the sale of real estate | — | 2,855 | |||||
Net cash used in investing activities | (302,559 | ) | (284,642 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from the issuance of common stock, net | 170,323 | 200,402 | |||||
Proceeds from the issuance of senior unsecured notes payable | 300,000 | — | |||||
Proceeds from the issuance of senior unsecured term loan | — | 100,000 | |||||
Borrowings under unsecured revolving credit facility | 238,000 | 255,000 | |||||
Payments on senior unsecured notes payable | (267,639 | ) | — | ||||
Payments on unsecured revolving credit facility | (168,000 | ) | (205,000 | ) | |||
Payments on the mortgage notes payable | — | (95,022 | ) | ||||
Payments of deferred financing costs | (6,063 | ) | (1,352 | ) | |||
Net-settle adjustment on restricted stock | (866 | ) | (515 | ) | |||
Dividends paid on common stock | (52,587 | ) | (37,269 | ) | |||
Net cash provided by financing activities | 213,168 | 216,244 | |||||
Net decrease in cash and cash equivalents | (591 | ) | (3,967 | ) | |||
Cash and cash equivalents, beginning of period | 7,500 | 11,467 | |||||
Cash and cash equivalents, end of period | $ | 6,909 | $ | 7,500 |
CARETRUST REIT, INC. | |||||||||||||||||||
DEBT SUMMARY | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
December 31, 2017 | |||||||||||||||||||
Interest | Maturity | % of | Deferred | Net Carrying | |||||||||||||||
Debt | Rate | Date | Principal | Principal | Loan Costs | Value | |||||||||||||
Fixed Rate Debt | |||||||||||||||||||
Senior unsecured notes payable | 5.25 | % | 2025 | $ | 300,000 | 53.1 | % | $ | (5,605 | ) | $ | 294,395 | |||||||
Floating Rate Debt | |||||||||||||||||||
Senior unsecured term loan | 3.519 | % | [1] | 2023 | 100,000 | 17.7 | % | (483 | ) | 99,517 | |||||||||
Unsecured revolving credit facility | 3.319 | % | [2] | 2020 | [3] | 165,000 | 29.2 | % | — | [4] | 165,000 | ||||||||
3.394 | % | 265,000 | 46.9 | % | (483 | ) | 264,517 | ||||||||||||
Total Debt | 4.379 | % | $ | 565,000 | 100 | % | $ | (6,088 | ) | $ | 558,912 | ||||||||
[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 | $ | 0.67 | $ | 0.69 | ||||||||||||||||
Real estate related depreciation and amortization | 0.58 | 0.58 | ||||||||||||||||||
Funds from Operations (FFO) | 1.25 | 1.27 | ||||||||||||||||||
Normalized FFO | $ | 1.25 | $ | 1.27 | ||||||||||||||||
Net income | $ | 0.67 | $ | 0.69 | ||||||||||||||||
Real estate related depreciation and amortization | 0.58 | 0.58 | ||||||||||||||||||
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 | ) | ||||||||||||||||
Funds Available for Distribution (FAD) | 1.31 | 1.33 | ||||||||||||||||||
Normalized FAD | $ | 1.31 | $ | 1.33 | ||||||||||||||||
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, 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.