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8-K - FORM 8-K - CareTrust REIT, Inc.d207180d8k.htm

Exhibit 99.1

 

LOGO

CareTrust REIT, Inc. Announces Fourth Quarter and Full Year 2015 Operating Results

Conference Call and Webcast Scheduled for Friday, February 12, 2016 at 8:00 am PT

San Clemente, CA – (Globe Newswire – February 11, 2016) – CareTrust REIT, Inc. (NASDAQ:CTRE) today reported operating results for the fourth quarter and full year 2015, as well as other recent events.

Highlights included:

 

    Net income was $0.10 for the fourth quarter, and $0.26 for the year, per diluted share;

 

    Normalized FFO was $0.25 for the quarter and $0.94 for the year, per diluted share;

 

    Normalized FAD was $0.27 for the quarter and $1.04 for the year, per diluted share;

 

    During the year and since, CareTrust announced investments of approximately $271 million, at a blended going-in cash yield of over 9.5%, in 30 skilled nursing and senior housing facilities across Colorado, Washington, Florida, Georgia, Ohio, Iowa and Texas, initiating six new net-lease tenant relationships in the process; and

 

    During the year and since, CareTrust eliminated all of its secured indebtedness by (i) replacing its secured revolving credit facility with a new, four-year $400 million unsecured revolving credit facility that includes an accordion feature which allows CareTrust to increase the line’s borrowing availability to $650 million, (ii) entering into a new $100 million, seven-year, non-amortizing unsecured term loan, and (iii) paying off and terminating its previously non-prepayable $95 million secured mortgage loan under the legacy 2006 credit agreement with General Electric Capital Corporation.

Approximately $271 Million in New Investments Completed

Commenting on the investment activity during the year and since, Greg Stapley, CareTrust’s Chairman and Chief Executive Officer, remarked, “Our new investments in 2015 and since demonstrate our ability to consistently add small-to-medium sized acquisitions to our portfolio, to opportunistically pursue larger investments, to create new tenant relationships with quality operators, and to grow those new tenant relationships with add-on acquisitions.” He noted that CareTrust now has ten tenant relationships, that revenue from its Ensign leases has been reduced to approximately 64% of total revenues exclusive of tenant reimbursements on a run-rate basis, and that the entire lease portfolio remains operationally healthy with solid and growing lease coverage.

 

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Financial Results & Financing Activities

Discussing financial results for the year, Chief Financial Officer Bill Wagner reported that the Company generated normalized FFO of $35.3 million or $0.94 per diluted common share, and normalized FAD of $39.0 million or $1.04 per diluted common share.

Mr. Wagner also discussed the Company’s expanded revolver capacity and recent debt refinancing activity. “We have finally replaced the last of our secured debt with lower-cost unsecured debt, and in the process expanded our borrowing capacity and further staggered our debt maturities,” he said. He noted that, taking into account existing extension rights, CareTrust now has no debt maturing before 2020, and that the Company’s current debt-to-EBITDA ratio stands at approximately 5.7x, down from approximately 7.0x at the Company’s spinoff just 20 months ago.

Commenting on the Company’s liquidity, he added, “For 2016, we are positioned to fund our near-term growth plans and to improve our credit profile with the rating agencies.” He noted that at present only about $85 million is drawn on the Company’s $400 million unsecured revolver, leaving ample room for additional investments in the near term.

2016 Guidance Revised Upward

Mr. Wagner updated the Company’s previously-issued 2016 earnings guidance, projecting normalized FFO per diluted share of approximately $1.05 to $1.07, and normalized FAD per diluted share of approximately $1.15 to $1.17. The guidance assumes no new acquisitions beyond those made to date, no new debt incurrence or equity issuances, and no rent bumps on the Company’s long-term leases.

Dividends Declared

During the year, the Company declared dividends totaling $0.64 per common share. “Our annual dividend represents a payout ratio of approximately 62% based on the $1.04 normalized FAD for 2015,” said Mr. Wagner. “At this level,” he added, “our dividend remains among the best-protected of all our industry peers and gives us additional growth capital, all while providing a solid return to our shareholders.”

Conference Call

An earnings webcast will be held on Friday, February 12, 2016, at 8:00 a.m. Pacific Time, during which CareTrust’s management will discuss the Company’s fourth quarter and full year 2015 results, recent developments and other matters affecting the Company’s business and prospects. To listen to the webcast, or to view any financial or other statistical information required by SEC Regulation G, please visit the Investors section of the CareTrust website at http://investor.caretrustreit.com/. The webcast will be recorded, and will be available for replay via the website for one year following the event.

About CareTrustTM

CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust that is engaged in the ownership, acquisition and leasing of seniors housing and healthcare-related properties. With 129 net-leased healthcare properties and three operated seniors housing properties in 15 states, CareTrust is pursuing opportunities nationwide to acquire additional properties that

 

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will be leased to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses. More information about CareTrust is available at www.caretrustreit.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains, and the related conference call and webcast will include, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding future financing plans, business and acquisition strategies, growth prospects and operating and financial performance.

Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These 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 Management believes that the assumptions underlying the forward-looking statements are reasonable, they are not guarantees and the Company can give no assurance that their 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; (ii) the ability and willingness of Ensign to meet and/or perform its obligations under the contractual arrangements that it entered into with the Company in connection with the spin-off, including the Ensign Master Leases, and any of its obligations to indemnify, defend and hold the Company harmless from and against various claims, litigation and liabilities; (iii) the ability and willingness of the Company’s tenants to (a) comply with laws, rules and regulations in the operation of the properties the Company leases to them, and (b) renew their leases with the Company upon expiration, or in the alternative, (c) the Company’s ability to reposition and re-let the Company’s properties on the same or better terms in the event of nonrenewal or replacement of an existing tenant and any obligations, including indemnification obligations, that the Company may incur in replacing an existing tenant; (iv) the availability of, and the ability to identify and acquire, suitable acquisition opportunities and lease the same to reliable tenants on accretive 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 and properly incentivize key management personnel; (ix) the ability to qualify or 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 included in this report and any included in the section entitled “Risk Factors” in Item 1A of Part I of the Company’s most recently filed Form 10-K.

Forward-looking statements speak only as of the date made, whether in this press release or the related conference call and webcast. Except in the normal course of the Company’s public disclosure obligations, the Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any statement is based.

 

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Contact Information

CareTrust REIT, Inc. (949) 542-3130, ir@caretrustreit.com

SOURCE: CareTrust REIT, Inc.

 

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CARETRUST REIT, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     December 31,
2015
    December 31,
2014
 

Assets

    

Real estate investments, net

   $ 645,614      $ 436,215   

Other real estate investments

     8,477        7,532   

Cash and cash equivalents

     11,467        25,320   

Accounts receivable

     2,342        2,291   

Prepaid expenses and other assets

     2,083        809   

Deferred financing costs, net

     3,183        2,973   
  

 

 

   

 

 

 

Total assets

   $ 673,166      $ 475,140   
  

 

 

   

 

 

 

Liabilities and Equity

    

Senior unsecured notes payable, net

   $ 254,229      $ 253,165   

Mortgage notes payable, net

     94,676        97,608   

Unsecured revolving credit facility

     45,000        —     

Accounts payable and accrued liabilities

     9,269        6,959   

Dividends payable

     7,704        3,946   
  

 

 

   

 

 

 

Total liabilities

     410,878        361,678   
  

 

 

   

 

 

 

Equity:

    

Common stock

     477        313   

Additional paid-in capital

     410,217        246,041   

Cumulative distributions in excess of earnings

     (148,406     (132,892
  

 

 

   

 

 

 

Total equity

     262,288        113,462   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 673,166      $ 475,140   
  

 

 

   

 

 

 

 

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CARETRUST REIT, INC.

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

     Three Months Ended December 31,      Year Ended December 31,  
     2015      2014      2015      2014  
     (unaudited)                

Revenues:

           

Rental income

   $ 20,110       $ 14,139       $ 65,979       $ 51,367   

Tenant reimbursements

     1,631         1,230         5,497         4,956   

Independent living facilities

     642         663         2,510         2,519   

Interest and other income

     249         45         965         55   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     22,632         16,077         74,951         58,897   
  

 

 

    

 

 

    

 

 

    

 

 

 

Expenses:

           

Depreciation and amortization

     7,040         5,369         24,133         23,000   

Interest expense

     6,145         5,900         25,256         21,622   

Loss on extinguishment of debt

     —           —           —           4,067   

Property taxes

     1,631         1,230         5,497         4,956   

Acquisition costs

     —           47         —           47   

Independent living facilities

     598         559         2,376         2,243   

General and administrative

     2,215         2,342         7,655         11,105   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     17,629         15,447         64,917         67,040   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income (loss)

   $ 5,003       $ 630       $ 10,034       $ (8,143
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings (loss) per common share:

           

Basic

   $ 0.10       $ 0.03       $ 0.26       $ (0.36
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

   $ 0.10       $ 0.03       $ 0.26       $ (0.36
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding:

           

Basic

     47,660         24,419         37,380         22,788   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     47,660         24,586         37,380         22,788   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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CARETRUST REIT, INC.

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Year Ended December 31,  
     2015     2014  

Cash flows from operating activities:

    

Net income (loss)

   $ 10,034      $ (8,143

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     24,133        23,000   

Amortization of deferred financing costs and debt discount

     2,200        1,603   

Write-off of deferred financing costs

     1,208        —     

Amortization of stock-based compensation

     1,522        154   

Non cash interest income

     (945     (32

Loss on extinguishment of debt

     —          1,998   

Loss on settlement of interest rate swap

     —          1,661   

Change in operating assets and liabilities:

    

Accounts receivable

     (2,326     4   

Accounts receivable due from related party

     2,275        (2,275

Prepaid expenses and other assets

     (86     445   

Interest rate swap

     —          (1,661

Accounts payable and accrued liabilities

     2,239        5,152   
  

 

 

   

 

 

 

Net cash provided by operating activities

     40,254        21,906   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Acquisition of real estate

     (232,466     (25,742

Improvements to real estate

     (187     (579

Purchases of equipment, furniture and fixtures

     (276     (19,275

Preferred equity investment

     —          (7,500

Escrow deposits for acquisition of real estate

     (1,750     (500

Net proceeds from the sale of vacant land

     30        —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (234,649     (53,596
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from the issuance of common stock, net

     162,963        —     

Proceeds from the issuance of senior unsecured notes payable

     —          260,000   

Borrowings under unsecured credit facility

     45,000        —     

Borrowings under senior secured revolving credit facility

     35,000        10,000   

Proceeds from the issuance of mortgage notes payable

     —          50,676   

Repayments of borrowings under senior secured revolving credit facility

     (35,000     (88,701

Payments on the mortgage notes payable

     (3,183     (68,155

Payments on the senior secured term loan

     —          (65,624

Payments of deferred financing costs

     (2,303     (13,436

Net-settle adjustment on restricted stock

     (145     —     

Dividends paid on common stock

     (21,790     (33,001

Net contribution from Ensign

     —          4,356   
  

 

 

   

 

 

 

Net cash provided by financing activities

     180,542        56,115   
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (13,853     24,425   

Cash and cash equivalents, beginning of period

     25,320        895   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 11,467      $ 25,320   
  

 

 

   

 

 

 

 

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CARETRUST REIT, INC.

DEBT SUMMARY

(dollars in thousands)

(unaudited)

 

                   December 31, 2015  

Debt

  

Collateral

  

Interest Rate/
Spread

 

Maturity
Date

  

Principal

   

Deferred
Loan Costs

   

Net Carrying
Value

 

Fixed Rate Debt

              

Senior unsecured notes payable

   Unsecured    5.875%   2021    $ 260,000      $ (5,771   $ 254,229   

GECC mortgage notes payable (1)

   10 properties    7.252%   2017      46,165        (168     45,997   
          

 

 

   

 

 

   

 

 

 
             306,165        (5,939     300,226   
          

 

 

   

 

 

   

 

 

 

Floating Rate Debt

              

GECC mortgage notes payable (1)

   10 properties    L + 3.35%   2017      48,857        (178     48,679   

Unsecured revolving credit facility (2)

   Unsecured    L + 1.75%-2.40%   2019      45,000        —   (3)      45,000   
          

 

 

   

 

 

   

 

 

 
             93,857        (178     93,679   
          

 

 

   

 

 

   

 

 

 

Total Debt

           $ 400,022      $ (6,117   $ 393,905   
          

 

 

   

 

 

   

 

 

 

Debt Statistics

              

% Fixed Rate Debt

             76.5    

% Floating Rate Debt

             23.5    
          

 

 

     

Total

             100.0    
          

 

 

     

Weighted Average Interest Rates:

              

Fixed

             6.1    

Floating

             3.2    

Blended

             5.4    

 

(1) The GECC mortgage notes payable was paid off on February 1, 2016, in conjunction with an amendment to our Credit Facility which included, among other things, increased commitments to $400.0 million under our Revolving Facility and a $100.0 million Term Loan.
(2) Funds can also be borrowed at the Base Rate (as defined) plus 0.75% to 1.4%.
(3) Deferred financing fees are not shown net for the unsecured revolving credit facility and are included in assets on the balance sheet.

 

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CARETRUST REIT, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

 

     Quarter
Ended
March 31, 2015
     Quarter
Ended
June 30, 2015
     Quarter
Ended
September 30, 2015
     Quarter
Ended
December 31, 2015
     Year
Ended
December 31, 2015
 

Revenues:

              

Rental income

   $ 14,842       $ 15,249       $ 15,778       $ 20,110       $ 65,979   

Tenant reimbursements

     1,258         1,288         1,320         1,631         5,497   

Independent living facilities

     635         607         626         642         2,510   

Interest and other income

     223         232         261         249         965   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     16,958         17,376         17,985         22,632         74,951   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Expenses:

              

Depreciation and amortization

     5,599         5,679         5,815         7,040         24,133   

Interest expense

     5,901         5,989         7,221         6,145         25,256   

Property taxes

     1,258         1,288         1,320         1,631         5,497   

Independent living facilities

     602         566         610         598         2,376   

General and administrative

     1,560         1,588         2,292         2,215         7,655   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     14,920         15,110         17,258         17,629         64,917   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 2,038       $ 2,266       $ 727       $ 5,003       $ 10,034   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

   $ 0.06       $ 0.07       $ 0.02       $ 0.10       $ 0.26   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average shares outstanding

     31,257         31,278         39,125         47,660         37,380   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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CARETRUST REIT, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

 

     One Month
Ended
June 30, 2014
     Quarter
Ended
September 30, 2014
     Quarter
Ended
December 31, 2014
     Seven
Months Ended
December 31, 2014
 

Revenues:

           

Rental income

   $ 4,667       $ 14,000       $ 14,139       $ 32,806   

Tenant reimbursements

     396         1,228         1,230         2,854   

Independent living facilities

     211         646         663         1,520   

Interest and other income

     —           10         45         55   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     5,274         15,884         16,077         37,235   
  

 

 

    

 

 

    

 

 

    

 

 

 

Expenses:

           

Depreciation and amortization

     1,794         5,362         5,369         12,525   

Interest expense

     1,967         5,943         5,900         13,810   

Property taxes

     396         1,228         1,230         2,854   

Acquisition costs

     —           —           47         47   

Independent living facilities

     161         586         559         1,306   

General and administrative

     500         798         2,342         3,640   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     4,818         13,917         15,447         34,182   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 456       $ 1,967       $ 630       $ 3,053   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

   $ 0.02       $ 0.09       $ 0.03       $ 0.13   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average shares outstanding

     22,436         22,436         24,586         23,357   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

 

    Quarter
Ended
March 31, 2015
    Quarter
Ended
June 30, 2015
    Quarter
Ended
September 30, 2015
    Quarter
Ended
December 31, 2015
    Year
Ended
December 31, 2015
 

Net income

  $ 2,038      $ 2,266      $ 727      $ 5,003      $ 10,034   

Depreciation and amortization

    5,599        5,679        5,815        7,040        24,133   

Interest expense

    5,901        5,989        7,221        6,145        25,256   

Amortization of stock-based compensation

    366        294        435        427        1,522   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

    13,904        14,228        14,198        18,615        60,945   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 13,904      $ 14,228      $ 14,198      $ 18,615      $ 60,945   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 2,038      $ 2,266      $ 727      $ 5,003      $ 10,034   

Real estate related depreciation and amortization

    5,593        5,668        5,796        7,018        24,075   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Funds from Operations (FFO)

    7,631        7,934        6,523        12,021        34,109   

Write-off of deferred financing fees

    —          —          1,208        —          1,208   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Normalized FFO

  $ 7,631      $ 7,934      $ 7,731      $ 12,021      $ 35,317   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 2,038      $ 2,266      $ 727      $ 5,003      $ 10,034   

Real estate related depreciation and amortization

    5,593        5,668        5,796        7,018        24,075   

Amortization of deferred financing costs

    547        555        547        551        2,200   

Amortization of stock-based compensation

    366        294        435        427        1,522   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Funds Available for Distribution (FAD)

    8,544        8,783        7,505        12,999        37,831   

Write-off of deferred financing fees

    —          —          1,208        —          1,208   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Normalized FAD

  $ 8,544      $ 8,783      $ 8,713      $ 12,999      $ 39,039   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

FFO per share

  $ 0.24      $ 0.25      $ 0.17      $ 0.25      $ 0.91   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Normalized FFO per share

  $ 0.24      $ 0.25      $ 0.20      $ 0.25      $ 0.94   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

FAD per share

  $ 0.27      $ 0.28      $ 0.19      $ 0.27      $ 1.01   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Normalized FAD per share

  $ 0.27      $ 0.28      $ 0.22      $ 0.27      $ 1.04   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average shares outstanding (1)

    31,446        31,462        39,271        47,802        37,545   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) For all quarters presented, the diluted weighted average shares includes unvested restricted stock awards as the effect is more dilutive.

 

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CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES

(in thousands, except per share data)

(unaudited)

 

     One Month      Quarter      Quarter      Seven  
     Ended      Ended      Ended      Months Ended  
     June 30, 2014      September 30, 2014      December 31, 2014      December 31, 2014  

Net income

   $ 456       $ 1,967       $ 630       $ 3,053   

Depreciation and amortization

     1,794         5,362         5,369         12,525   

Interest expense

     1,967         5,943         5,900         13,810   

Amortization of stock-based compensation

     —           —           154         154   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

     4,217         13,272         12,053         29,542   

Acquisition costs

     —           —           47         47   

Costs associated with the Spin-Off

     254         30         168         452   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 4,471       $ 13,302       $ 12,268       $ 30,041   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 456       $ 1,967       $ 630       $ 3,053   

Real estate related depreciation and amortization

     1,794         5,362         5,365         12,521   
  

 

 

    

 

 

    

 

 

    

 

 

 

Funds from Operations (FFO)

     2,250         7,329         5,995         15,574   

Acquisition costs

     —           —           47         47   

Costs associated with the Spin-Off

     254         30         168         452   
  

 

 

    

 

 

    

 

 

    

 

 

 

Normalized FFO

   $ 2,504       $ 7,359       $ 6,210       $ 16,073   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 456       $ 1,967       $ 630       $ 3,053   

Real estate related depreciation and amortization

     1,794         5,362         5,365         12,521   

Amortization of deferred financing costs

     175         533         553         1,261   

Amortization of stock-based compensation

     —           —           154         154   
  

 

 

    

 

 

    

 

 

    

 

 

 

Funds Available for Distribution (FAD)

     2,425         7,862         6,702         16,989   

Acquisition costs

     —           —           47         47   

Costs associated with the Spin-Off

     254         30         168         452   
  

 

 

    

 

 

    

 

 

    

 

 

 

Normalized FAD

   $ 2,679       $ 7,892       $ 6,917       $ 17,488   
  

 

 

    

 

 

    

 

 

    

 

 

 

FFO per share

   $ 0.10       $ 0.33       $ 0.24       $ 0.67   
  

 

 

    

 

 

    

 

 

    

 

 

 

Normalized FFO per share

   $ 0.11       $ 0.33       $ 0.25       $ 0.69   
  

 

 

    

 

 

    

 

 

    

 

 

 

FAD per share

   $ 0.11       $ 0.35       $ 0.27       $ 0.73   
  

 

 

    

 

 

    

 

 

    

 

 

 

Normalized FAD per share

   $ 0.12       $ 0.35       $ 0.28       $ 0.75   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average shares outstanding (1)

     22,436         22,436         24,586         23,357   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) For all quarters presented, the diluted weighted average shares includes unvested restricted stock awards as the effect is more dilutive.

 

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CARETRUST REIT, INC.

RECONCILIATIONS OF NET INCOME TO NON-GAAP FINANCIAL MEASURES

(shares in thousands)

(unaudited)

2016 Guidance

 

     Low      High  

Net income

   $ 0.44       $ 0.46   

Real estate related depreciation and amortization

     0.60         0.60   
  

 

 

    

 

 

 

Funds from Operations (FFO)

     1.04         1.06   

Write-off of deferred financing fees

     0.01         0.01   
  

 

 

    

 

 

 

Normalized FFO

   $ 1.05       $ 1.07   
  

 

 

    

 

 

 

Net income

   $ 0.44       $ 0.46   

Real estate related depreciation and amortization

     0.60         0.60   

Amortization of deferred financing costs

     0.05         0.05   

Amortization of deferred stock compensation

     0.05         0.05   
  

 

 

    

 

 

 

Funds Available for Distribution (FAD)

     1.14         1.16   

Write-off of deferred financing fees

     0.01         0.01   
  

 

 

    

 

 

 

Normalized FAD

   $ 1.15       $ 1.17   
  

 

 

    

 

 

 

Weighted average shares outstanding:

     

Diluted

     48,147         48,147   
  

 

 

    

 

 

 

 

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Discussion of Non-GAAP Financial Measures

EBITDA represents net income before interest expense, amortization of deferred financing costs and stock-based compensation, and depreciation and amortization. Adjusted 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 costs associated with the spin-off, impairments, and gains or losses on the sale of real estate. EBITDA and Adjusted 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 Adjusted 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 Adjusted EBITDA may not be comparable to EBITDA and Adjusted EBITDA reported by other REITs.

Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), and Funds Available for Distribution (“FAD”) are important non-GAAP supplemental measures of operating performance for a REIT. 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. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP.

FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from real estate dispositions, real estate depreciation and amortization and impairment charges, and adjustments for unconsolidated partnerships and joint ventures. The Company computes FFO in accordance with NAREIT’s definition.

 

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FAD is defined as FFO excluding non-cash expenses, such as stock-based compensation expense, amortization of deferred financing costs and the effects of straight-line rent. FAD is useful in analyzing the portion of cash flow that is available for distribution to shareholders. Investors, analysts and the Company utilize FAD as an indicator of common dividend potential. The FAD payout ratio, which represents annual distributions to common shareholders expressed as a percentage of FAD, facilitates the comparison of dividend coverage among REITs.

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 costs associated with the spin-off, and other non-recurring expenses and 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 the use of EBITDA, Adjusted 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 Adjusted EBITDA useful in understanding the Company’s operating results independent of its capital structure and indebtedness, 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 expenses such as stock-based compensation expense and amortization of deferred financing costs, FFO, normalized FFO, FAD and normalized FAD can help investors compare the Company’s operating performance between periods and to other REITs.

 

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