CareTrust REIT Announces Third Quarter 2019 Operating Results
11/07/19For the quarter,
- Net loss of
$10.1 million and net loss per diluted weighted-average common share of$0.11 ; - Normalized FFO of
$33.6 million and normalized FFO per diluted weighted-average common share of$0.35 ; - Normalized FAD of
$34.5 million and normalized FAD per diluted weighted-average common share of$0.36 ; and - A net debt-to-normalized EBITDA ratio of 3.4x, and a net debt-to-enterprise value of 20%, each as of quarter-end.
Spring Cleaning
Speaking of the Company’s progress during the quarter,
Mr. Stapley characterized the exercise as a necessary part of a “regular and robust asset management process” in which every landlord should engage periodically. “We are committed to detecting and tackling small problems while they are still small, and believe this rigorous approach enhances accountability and promotes long term success both for us and our operating partners,” he said.
Financial Results for Quarter Ended
Chief Financial Officer
Mr. Wagner reported that the quarter’s GAAP financial results were impacted by the several restructuring efforts simultaneously undertaken by the Company in the quarter. “The changes we made resulted in total impairments of
Liquidity
Discussing the Company’s balance sheet, Mr. Wagner reported that, as of quarter end, CareTrust’s net debt-to-normalized EBITDA ratio was approximately 3.4x and its net debt-to-enterprise value was approximately 20%. “Our current debt levels continue to be well under management’s stated target leverage range of 4.0x to 5.0x net debt-to-normalized EBITDA, allowing us substantial optionality with respect to how we choose to fund significant growth going forward,” he said.
2019 Guidance Update & 2020 Guidance Preview
The Company updated its guidance for 2019, with Mr. Wagner projecting on a per-diluted weighted-average common share basis net income of approximately
Mr. Wagner also noted that the recent adjustments in CareTrust’s portfolio had provided early visibility into the Company’s estimated earnings for 2020. “We are projecting normalized FFO per share of
Portfolio Growth and Other Changes in the Quarter and Since
During the third quarter, CareTrust acquired a 96-operating bed assisted living facility in
On
On
On
During the quarter, CareTrust concluded that six skilled nursing facilities located in
Dividend Declared
During the quarter, CareTrust declared a quarterly dividend of
Conference Call
A conference call will be held on Friday, November 8, 2019, at
About CareTrustTM
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 and willingness of Company tenants to meet and/or perform their obligations under the triple-net leases the Company has entered into with them, including, without limitation, their respective obligations to indemnify, defend and hold the Company harmless from and against various claims, litigation and liabilities; (ii) the ability and willingness of the Company’s tenants to comply with laws, rules and regulations in the operation of the properties the Company leases to them; (iii) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration and the ability to reposition Company properties on the same or better terms in the event of nonrenewal or in the event the Company replaces an existing tenant, as well as any obligations, including indemnification obligations, that the Company may incur in connection with the replacement of an existing tenant; (iv) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities and the ability to acquire and lease the respective properties to such tenants on favorable terms; (v) the ability to generate sufficient cash flows to service the Company’s outstanding indebtedness; (vi) access to debt and equity capital markets; (vii) fluctuating interest rates; (viii) the ability to retain key management personnel; (ix) the ability to maintain the Company’s status as a real estate investment trust (“REIT”); (x) changes in the U.S. tax laws and other state, federal or local laws, whether or not specific to REITs; (xi) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xii) any additional factors identified in the Company’s filings with 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. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Rental income | $ | 31,577 | $ | 35,332 | $ | 114,047 | $ | 103,856 | ||||||||
Tenant reimbursements | — | 2,990 | — | 8,974 | ||||||||||||
Independent living facilities | 929 | 871 | 2,676 | 2,515 | ||||||||||||
Interest and other income | 808 | 317 | 2,450 | 1,235 | ||||||||||||
Total revenues | 33,314 | 39,510 | 119,173 | 116,580 | ||||||||||||
Expenses: | ||||||||||||||||
Depreciation and amortization | 13,420 | 11,351 | 38,759 | 34,227 | ||||||||||||
Interest expense | 7,064 | 6,805 | 21,209 | 21,182 | ||||||||||||
Property taxes | 1,025 | 2,990 | 2,307 | 8,974 | ||||||||||||
Independent living facilities | 806 | 766 | 2,232 | 2,226 | ||||||||||||
Impairment of real estate investments | 16,692 | — | 16,692 | — | ||||||||||||
Provision for loan losses | 1,076 | — | 1,076 | — | ||||||||||||
General and administrative | 3,502 | 3,088 | 11,418 | 9,638 | ||||||||||||
Total expenses | 43,585 | 25,000 | 93,693 | 76,247 | ||||||||||||
Other income: | ||||||||||||||||
Gain on sale of real estate | 217 | — | 217 | 2,051 | ||||||||||||
Net (loss) income | $ | (10,054 | ) | $ | 14,510 | $ | 25,697 | $ | 42,384 | |||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | (0.11 | ) | $ | 0.18 | $ | 0.28 | $ | 0.54 | |||||||
Diluted | $ | (0.11 | ) | $ | 0.18 | $ | 0.28 | $ | 0.54 | |||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 95,103 | 81,490 | 92,409 | 77,811 | ||||||||||||
Diluted | 95,103 | 81,490 | 92,409 | 77,811 | ||||||||||||
Dividends declared per common share | $ | 0.225 | $ | 0.205 | $ | 0.675 | $ | 0.615 |
CARETRUST REIT, INC. | ||||||||||||||||
RECONCILIATIONS OF NET (LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(in thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net (loss) income | $ | (10,054 | ) | $ | 14,510 | $ | 25,697 | $ | 42,384 | |||||||
Depreciation and amortization | 13,420 | 11,351 | 38,759 | 34,227 | ||||||||||||
Interest expense | 7,064 | 6,805 | 21,209 | 21,182 | ||||||||||||
Amortization of stock-based compensation | 981 | 988 | 3,122 | 2,816 | ||||||||||||
EBITDA | 11,411 | 33,654 | 88,787 | 100,609 | ||||||||||||
Impairment of real estate investments | 16,692 | — | 16,692 | — | ||||||||||||
Provision for loan losses | 1,076 | — | 1,076 | — | ||||||||||||
Provision for doubtful accounts | 12,471 | — | 12,471 | — | ||||||||||||
Property operating expenses | 218 | — | 218 | — | ||||||||||||
Gain on sale of real estate | (217 | ) | — | (217 | ) | (2,051 | ) | |||||||||
Normalized EBITDA | $ | 41,651 | $ | 33,654 | $ | 119,027 | $ | 98,558 | ||||||||
Net (loss) income | $ | (10,054 | ) | $ | 14,510 | $ | 25,697 | $ | 42,384 | |||||||
Real estate related depreciation and amortization | 13,404 | 11,330 | 38,709 | 34,144 | ||||||||||||
Impairment of real estate investments | 16,692 | — | 16,692 | — | ||||||||||||
Gain on sale of real estate | (217 | ) | — | (217 | ) | (2,051 | ) | |||||||||
Funds from Operations (FFO) | 19,825 | 25,840 | 80,881 | 74,477 | ||||||||||||
Provision for loan losses | 1,076 | — | 1,076 | — | ||||||||||||
Provision for doubtful accounts | 12,471 | — | 12,471 | — | ||||||||||||
Property operating expenses | 218 | — | 218 | — | ||||||||||||
Normalized FFO | $ | 33,590 | $ | 25,840 | $ | 94,646 | $ | 74,477 |
CARETRUST REIT, INC. | ||||||||||||||||
RECONCILIATIONS OF NET (LOSS) INCOME TO NON-GAAP FINANCIAL MEASURES (continued) | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net (loss) income | $ | (10,054 | ) | $ | 14,510 | $ | 25,697 | $ | 42,384 | |||||||
Real estate related depreciation and amortization | 13,404 | 11,330 | 38,709 | 34,144 | ||||||||||||
Amortization of deferred financing fees | 488 | 484 | 1,516 | 1,452 | ||||||||||||
Amortization of stock-based compensation | 981 | 988 | 3,122 | 2,816 | ||||||||||||
Straight-line rental income | (546 | ) | (698 | ) | (1,483 | ) | (1,631 | ) | ||||||||
Impairment of real estate investments | 16,692 | — | 16,692 | — | ||||||||||||
Gain on sale of real estate | (217 | ) | — | (217 | ) | (2,051 | ) | |||||||||
Funds Available for Distribution (FAD) | 20,748 | 26,614 | 84,036 | 77,114 | ||||||||||||
Provision for loan losses | 1,076 | — | 1,076 | — | ||||||||||||
Provision for doubtful accounts | 12,471 | — | 12,471 | — | ||||||||||||
Property operating expenses | 218 | — | 218 | — | ||||||||||||
Normalized FAD | $ | 34,513 | $ | 26,614 | $ | 97,801 | $ | 77,114 | ||||||||
FFO per share | $ | 0.21 | $ | 0.32 | $ | 0.87 | $ | 0.96 | ||||||||
Normalized FFO per share | $ | 0.35 | $ | 0.32 | $ | 1.02 | $ | 0.96 | ||||||||
FAD per share | $ | 0.22 | $ | 0.33 | $ | 0.91 | $ | 0.99 | ||||||||
Normalized FAD per share | $ | 0.36 | $ | 0.33 | $ | 1.06 | $ | 0.99 | ||||||||
Diluted weighted average shares outstanding [1] | 95,313 | 81,687 | 92,650 | 77,985 | ||||||||||||
[1] For the periods presented, the diluted weighted average shares have been calculated using the treasury stock method. |
CARETRUST REIT, INC. | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS - 5 QUARTER TREND | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||
September 30, 2018 | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | |||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 35,332 | $ | 36,217 | $ | 38,347 | $ | 44,123 | $ | 31,577 | |||||
Tenant reimbursements | 2,990 | 2,950 | — | — | — | ||||||||||
Independent living facilities | 871 | 864 | 860 | 887 | 929 | ||||||||||
Interest and other income | 317 | 330 | 451 | 1,191 | 808 | ||||||||||
Total revenues | 39,510 | 40,361 | 39,658 | 46,201 | 33,314 | ||||||||||
Expenses: | |||||||||||||||
Depreciation and amortization | 11,351 | 11,539 | 11,902 | 13,437 | 13,420 | ||||||||||
Interest expense | 6,805 | 6,678 | 6,860 | 7,285 | 7,064 | ||||||||||
Property taxes | 2,990 | 2,950 | 826 | 456 | 1,025 | ||||||||||
Independent living facilities | 766 | 738 | 707 | 719 | 806 | ||||||||||
Impairment of real estate investments | — | — | — | — | 16,692 | ||||||||||
Provision for loan losses | — | — | — | — | 1,076 | ||||||||||
General and administrative | 3,088 | 2,917 | 3,310 | 4,606 | 3,502 | ||||||||||
Total expenses | 25,000 | 24,822 | 23,605 | 26,503 | 43,585 | ||||||||||
Other income: | |||||||||||||||
Gain on sale of real estate | — | — | — | — | 217 | ||||||||||
Net income (loss) | $ | 14,510 | $ | 15,539 | $ | 16,053 | $ | 19,698 | $ | (10,054 | ) | ||||
Diluted earnings per share | $ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.21 | $ | (0.11 | ) | ||||
Diluted weighted average shares outstanding | 81,490 | 84,084 | 88,010 | 94,036 | 95,103 |
CARETRUST REIT, INC. | |||||||||||||||
RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP FINANCIAL MEASURES - 5 QUARTER TREND | |||||||||||||||
(in thousands) | |||||||||||||||
(Unaudited) | |||||||||||||||
Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||
September 30, 2018 | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | |||||||||||
Net income (loss) | $ | 14,510 | $ | 15,539 | $ | 16,053 | $ | 19,698 | $ | (10,054 | ) | ||||
Depreciation and amortization | 11,351 | 11,539 | 11,902 | 13,437 | 13,420 | ||||||||||
Interest expense | 6,805 | 6,678 | 6,860 | 7,285 | 7,064 | ||||||||||
Amortization of stock-based compensation | 988 | 1,032 | 994 | 1,147 | 981 | ||||||||||
EBITDA | 33,654 | 34,788 | 35,809 | 41,567 | 11,411 | ||||||||||
Impairment of real estate investments | — | — | — | — | 16,692 | ||||||||||
Provision for loan losses | — | — | — | — | 1,076 | ||||||||||
Provision for doubtful accounts | — | — | — | — | 12,471 | ||||||||||
Property operating expenses | — | — | — | — | 218 | ||||||||||
Gain on sale of real estate | — | — | — | — | (217 | ) | |||||||||
Normalized EBITDA | $ | 33,654 | $ | 34,788 | $ | 35,809 | $ | 41,567 | $ | 41,651 | |||||
Net income (loss) | $ | 14,510 | $ | 15,539 | $ | 16,053 | $ | 19,698 | $ | (10,054 | ) | ||||
Real estate related depreciation and amortization | 11,330 | 11,520 | 11,884 | 13,421 | 13,404 | ||||||||||
Impairment of real estate investments | — | — | — | — | 16,692 | ||||||||||
Gain on sale of real estate | — | — | — | — | (217 | ) | |||||||||
Funds from Operations (FFO) | 25,840 | 27,059 | 27,937 | 33,119 | 19,825 | ||||||||||
Provision for loan losses | — | — | — | — | 1,076 | ||||||||||
Provision for doubtful accounts | — | — | — | — | 12,471 | ||||||||||
Property operating expenses | — | — | — | — | 218 | ||||||||||
Normalized FFO | $ | 25,840 | $ | 27,059 | $ | 27,937 | $ | 33,119 | $ | 33,590 |
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 | |||||||||||
September 30, 2018 | December 31, 2018 | March 31, 2019 | June 30, 2019 | September 30, 2019 | |||||||||||
Net income (loss) | $ | 14,510 | $ | 15,539 | $ | 16,053 | $ | 19,698 | $ | (10,054 | ) | ||||
Real estate related depreciation and amortization | 11,330 | 11,520 | 11,884 | 13,421 | 13,404 | ||||||||||
Amortization of deferred financing fees | 484 | 486 | 541 | 487 | 488 | ||||||||||
Amortization of stock-based compensation | 988 | 1,032 | 994 | 1,147 | 981 | ||||||||||
Straight-line rental income | (698 | ) | (702 | ) | (463 | ) | (474 | ) | (546 | ) | |||||
Impairment of real estate investments | — | — | — | — | 16,692 | ||||||||||
Gain on sale of real estate | — | — | — | — | (217 | ) | |||||||||
Funds Available for Distribution (FAD) | 26,614 | 27,875 | 29,009 | 34,279 | 20,748 | ||||||||||
Provision for loan losses | — | — | — | — | 1,076 | ||||||||||
Provision for doubtful accounts | — | — | — | — | 12,471 | ||||||||||
Property operating expenses | — | — | — | — | 218 | ||||||||||
Normalized FAD | $ | 26,614 | $ | 27,875 | $ | 29,009 | $ | 34,279 | $ | 34,513 | |||||
FFO per share | $ | 0.32 | $ | 0.32 | $ | 0.32 | $ | 0.35 | $ | 0.21 | |||||
Normalized FFO per share | $ | 0.32 | $ | 0.32 | $ | 0.32 | $ | 0.35 | $ | 0.35 | |||||
FAD per share | $ | 0.33 | $ | 0.33 | $ | 0.33 | $ | 0.36 | $ | 0.22 | |||||
Normalized FAD per share | $ | 0.33 | $ | 0.33 | $ | 0.33 | $ | 0.36 | $ | 0.36 | |||||
Diluted weighted average shares outstanding [1] | 81,687 | 84,324 | 88,266 | 94,292 | 95,313 | ||||||||||
[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) | ||||||||||
September 30, 2019 | December 31, 2018 | |||||||||
Assets: | ||||||||||
Real estate investments, net | $ | 1,404,024 | $ | 1,216,237 | ||||||
Other real estate investments, net | 44,808 | 18,045 | ||||||||
Assets held for sale, net | 34,590 | — | ||||||||
Cash and cash equivalents | 5,749 | 36,792 | ||||||||
Accounts and other receivables, net | 2,125 | 11,387 | ||||||||
Prepaid expenses and other assets | 30,202 | 8,668 | ||||||||
Deferred financing costs, net | 3,268 | 633 | ||||||||
Total assets | $ | 1,524,766 | $ | 1,291,762 | ||||||
Liabilities and Equity: | ||||||||||
Senior unsecured notes payable, net | $ | 295,721 | $ | 295,153 | ||||||
Senior unsecured term loan, net | 198,661 | 99,612 | ||||||||
Unsecured revolving credit facility | 65,000 | 95,000 | ||||||||
Accounts payable and accrued liabilities | 16,251 | 15,967 | ||||||||
Dividends payable | 21,647 | 17,783 | ||||||||
Total liabilities | 597,280 | 523,515 | ||||||||
Equity: | ||||||||||
Common stock | 951 | 859 | ||||||||
Additional paid-in capital | 1,162,047 | 965,578 | ||||||||
Cumulative distributions in excess of earnings | (235,512 | ) | (198,190 | ) | ||||||
Total equity | 927,486 | 768,247 | ||||||||
Total liabilities and equity | $ | 1,524,766 | $ | 1,291,762 |
CARETRUST REIT, INC. | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in thousands) | |||||||
(Unaudited) | |||||||
For the Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 25,697 | $ | 42,384 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization (including below-market ground leases) | 38,789 | 34,240 | |||||
Amortization of deferred financing costs | 1,516 | 1,453 | |||||
Amortization of stock-based compensation | 3,122 | 2,816 | |||||
Straight-line rental income | (1,483 | ) | (1,631 | ) | |||
Adjustment for collectibility of rental income | 12,078 | — | |||||
Noncash interest income | (31 | ) | (228 | ) | |||
Gain on sale of real estate | (217 | ) | (2,051 | ) | |||
Interest income distribution from other real estate investment | 463 | — | |||||
Impairment of real estate investments | 16,692 | — | |||||
Provision for loan losses | 1,076 | — | |||||
Change in operating assets and liabilities: | |||||||
Accounts and other receivables, net | (6,043 | ) | (5,499 | ) | |||
Prepaid expenses and other assets | (348 | ) | (159 | ) | |||
Accounts payable and accrued liabilities | 3,847 | 1,065 | |||||
Net cash provided by operating activities | 95,158 | 72,390 | |||||
Cash flows from investing activities: | |||||||
Acquisitions of real estate, net of deposits applied | (298,557 | ) | (75,621 | ) | |||
Improvements to real estate | (1,230 | ) | (5,401 | ) | |||
Purchases of equipment, furniture and fixtures | (2,926 | ) | (1,262 | ) | |||
Investment in real estate mortgage and other loans receivable | (14,699 | ) | (2,598 | ) | |||
Principal payments received on real estate mortgage and other loans receivable | 11,959 | 893 | |||||
Repayment of other real estate investment | 2,204 | — | |||||
Escrow deposits for acquisitions of real estate | (22,920 | ) | (1,000 | ) | |||
Net proceeds from sales of real estate | 218 | 13,004 | |||||
Net cash used in investing activities | (325,951 | ) | (71,985 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from the issuance of common stock, net | 195,963 | 130,546 | |||||
Proceeds from the issuance of senior unsecured term loan | 200,000 | — | |||||
Borrowings under unsecured revolving credit facility | 235,000 | 60,000 | |||||
Payments on unsecured revolving credit facility | (265,000 | ) | (135,000 | ) | |||
Payments on senior unsecured term loan | (100,000 | ) | — | ||||
Payments of deferred financing costs | (4,534 | ) | — | ||||
Net-settle adjustment on restricted stock | (2,524 | ) | (1,288 | ) | |||
Dividends paid on common stock | (59,155 | ) | (45,827 | ) | |||
Net cash provided by financing activities | 199,750 | 8,431 | |||||
Net (decrease) increase in cash and cash equivalents | (31,043 | ) | 8,836 | ||||
Cash and cash equivalents, beginning of period | 36,792 | 6,909 | |||||
Cash and cash equivalents, end of period | $ | 5,749 | $ | 15,745 |
CARETRUST REIT, INC. | |||||||||||||||||||
DEBT SUMMARY | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
September 30, 2019 | |||||||||||||||||||
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 | 53.1 | % | $ | (4,279 | ) | $ | 295,721 | |||||||
Floating Rate Debt | |||||||||||||||||||
Senior unsecured term loan | 3.542 | % | [1] | 2026 | 200,000 | 35.4 | % | (1,339 | ) | 198,661 | |||||||||
Unsecured revolving credit facility | 3.144 | % | [2] | 2024 | [3] | 65,000 | 11.5 | % | — | [4] | 65,000 | ||||||||
3.444 | % | 265,000 | 46.9 | % | (1,339 | ) | 263,661 | ||||||||||||
Total Debt | 4.403 | % | $ | 565,000 | 100.0 | % | $ | (5,618 | ) | $ | 559,382 | ||||||||
[1] Funds can be borrowed at applicable LIBOR plus 1.50% to 2.20% or at the Base Rate (as defined) plus 0.50% to 1.20%. | |||||||||||||||||||
[2] Funds can be borrowed at applicable LIBOR plus 1.10% to 1.55% or the Base Rate (as defined) plus 0.10% to 0.55%. | |||||||||||||||||||
[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) | ||||||||||||||||||||||||||
Guidance | ||||||||||||||||||||||||||
Q1-Q3 2019 | Q4 2019 Guidance | Full Year 2019 Guidance | Full Year 2020 Guidance | |||||||||||||||||||||||
Actual | Low | High | Low | High | Low | High | ||||||||||||||||||||
Net income | $ | 0.28 | $ | 0.18 | $ | 0.19 | $ | 0.46 | $ | 0.47 | $ | 0.80 | $ | 0.82 | ||||||||||||
Real estate related depreciation and amortization | 0.42 | 0.14 | 0.14 | 0.56 | 0.56 | 0.56 | 0.56 | |||||||||||||||||||
Impairment of real estate investment | 0.18 | — | — | 0.18 | 0.18 | — | — | |||||||||||||||||||
Gain on sale of real estate | (0.00 | ) | — | — | (0.00 | ) | (0.00 | ) | — | — | ||||||||||||||||
Funds from Operations (FFO) | 0.87 | 0.32 | 0.33 | 1.20 | 1.21 | 1.36 | 1.38 | |||||||||||||||||||
Provision for doubtful accounts and straight-line rent | 0.13 | 0.01 | 0.01 | 0.15 | 0.15 | — | — | |||||||||||||||||||
Provision for loan losses | 0.01 | — | — | 0.01 | 0.01 | — | — | |||||||||||||||||||
Property operating expenses | 0.00 | — | — | 0.00 | 0.00 | — | — | |||||||||||||||||||
Normalized FFO | $ | 1.02 | $ | 0.34 | $ | 0.35 | $ | 1.36 | $ | 1.37 | $ | 1.36 | $ | 1.38 | ||||||||||||
Net income | $ | 0.28 | $ | 0.18 | $ | 0.19 | $ | 0.46 | $ | 0.47 | $ | 0.80 | $ | 0.82 | ||||||||||||
Real estate related depreciation and amortization | 0.42 | 0.14 | 0.14 | 0.56 | 0.56 | 0.56 | 0.56 | |||||||||||||||||||
Amortization of deferred financing fees | 0.02 | — | — | 0.02 | 0.02 | 0.02 | 0.02 | |||||||||||||||||||
Amortization of stock-based compensation | 0.03 | 0.01 | 0.01 | 0.04 | 0.04 | 0.03 | 0.03 | |||||||||||||||||||
Straight-line rental income | (0.02 | ) | 0.00 | 0.00 | (0.02 | ) | (0.02 | ) | (0.01 | ) | (0.01 | ) | ||||||||||||||
Impairment of real estate investment | 0.18 | — | — | 0.18 | 0.18 | — | — | |||||||||||||||||||
Gain on sale of real estate | (0.00 | ) | — | — | (0.00 | ) | (0.00 | ) | — | — | ||||||||||||||||
Funds Available for Distribution (FAD) | 0.91 | 0.33 | 0.34 | 1.24 | 1.25 | 1.40 | 1.42 | |||||||||||||||||||
Provision for doubtful accounts and straight-line rent | 0.13 | 0.01 | 0.01 | 0.15 | 0.15 | — | — | |||||||||||||||||||
Provision for loan losses | 0.01 | — | — | 0.01 | 0.01 | — | — | |||||||||||||||||||
Property operating expenses | 0.00 | — | — | 0.00 | 0.00 | — | — | |||||||||||||||||||
Normalized FAD | $ | 1.06 | $ | 0.34 | $ | 0.35 | $ | 1.40 | $ | 1.41 | $ | 1.40 | $ | 1.42 | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||||
Diluted | 92,650 | 95,557 | 95,557 | 93,357 | 93,357 | 95,557 | 95,557 |
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, provision for loan losses, provision for doubtful accounts, property operating expenses 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 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 noncash income and expenses, such as amortization of stock-based compensation, amortization of deferred financing fees 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 provision for loan losses, provision for doubtful accounts, and property operating expenses. 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 other charges that are not indicative of its ongoing results, 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 noncash income and expenses such as amortization of stock-based compensation, amortization of deferred financing fees, 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.