Health Care REIT, Inc. Reports First Quarter 2009 Results

TOLEDO, Ohio--(BUSINESS WIRE)--Health Care REIT, Inc. (NYSE:HCN) today announced operating results for the company’s first quarter ended March 31, 2009.

“We are off to a solid start this year as our portfolio performance and financial results were in line with our expectations”

“We are off to a solid start this year as our portfolio performance and financial results were in line with our expectations,” commented George L. Chapman, chairman, chief executive officer and president of Health Care REIT, Inc. “Thus far in 2009, we have raised over $400 million in capital through a combination of equity, secured debt and selective asset sales. This capital, combined with proceeds from asset sales and additional secured debt, should provide adequate liquidity to meet all of our debt maturities and unfunded development through mid-2012.”

Recent Highlights.

• Achieved 1Q09 normalized FFO of $0.81 per share, up 3%
• Achieved 1Q09 normalized FAD of $0.76 per share, up 1%
• Completed 1Q09 net new investments totaling $129.5 million
• Generated $63.0 million in net proceeds on property sales, recognizing $17.0 million of gains in 1Q09
• Raised $210.9 million in net proceeds from S&P 500 inclusion offering in February
• Raised $133.0 million Freddie Mac mortgage loan in April
• Retired $21.7 million of future unsecured senior note and convertible debt maturities for $19.8 million

Key Performance Indicators.

	1Q09	1Q08	Change
Net income attributable to common
stockholders (NICS) per diluted share	$0.56	$0.34	65%
Normalized FFO per diluted share	$0.81	$0.79	3%
Normalized FAD per diluted share	$0.76	$0.75	1%
Dividends per common share	$0.68	$0.66	3%
Normalized FFO Payout Ratio	84%	84%
Normalized FAD Payout Ratio	89%	88%

1Q09 Earnings. The following table summarizes certain items impacting NICS, FFO and FAD:

	NICS			FFO			FAD
	1Q09	1Q08	Change	1Q09	1Q08	Change	1Q09	1Q08	Change
Per diluted share	$0.56	$0.34	65%	$0.79	$0.79	0%	$0.81	$0.79	3%
Includes impact of:
Gains on sales of real property ^(1)	$0.16	$0.00
Other items, net ^(2)	($0.02)	$0.00		($0.02)	$0.00		($0.02)	$0.00
Prepaid/straight-line rent cash receipts ^(3)							$0.07	$0.03
Per diluted share - normalized (a)				$0.81	$0.79	3%	$0.76	$0.75	1%

(a)	Amounts may not sum due to rounding
	(1) $17,036,000 and $26,000 of gains in 1Q09 and 1Q08, respectively.
	(2) See reconciliations for other items.
	(3) $7,889,000 and $2,975,000 of receipts in 1Q09 and 1Q08, respectively.

Dividends for First Quarter 2009. As previously announced, the Board of Directors declared a cash dividend for the quarter ended March 31, 2009 of $0.68 per share, as compared to $0.68 per share for the same period in 2008. The cash dividend will be paid on May 20, 2009 and will be the company’s 152^nd consecutive quarterly dividend payment.

Outlook for 2009. The company is revising its 2009 normalized FFO and FAD guidance primarily due to the additional secured debt capital transactions now included in the forecast. In addition to the $133 million, 10-year, 6.10% Freddie Mac mortgage loan completed in April, the company expects to raise an additional $200 to $300 million of secured debt at approximately 6.0% to 6.5% during the second half of 2009.

Normalized FFO has been revised to a range of $3.10 to $3.20 per diluted share from $3.20 to $3.30 per diluted share. Normalized FAD has been revised to a range of $2.96 to $3.06 per diluted share from $3.08 to $3.18 per diluted share. FFO guidance should be compared to the $3.33 per diluted share actual 2008 results as restated for the convertible debt accounting change.

Net income attributable to common stockholders has been increased to a range of $1.70 to $1.80 per diluted share from $1.59 to $1.69 per diluted share. The increase in net income guidance is primarily due to the $17.0 million of gains on sales of real estate, lower projected depreciation expense and $1.7 million of debt extinguishment gains partially offset by the incremental secured debt assumptions.

The company’s guidance excludes any impairments, unanticipated additions to the loan loss reserve or other additional one-time items, including any additional cash payments other than normal monthly rental payments. Please see the exhibits for a reconciliation of the outlook for net income available to common stockholders to normalized FFO and FAD.

Conference Call Information. The company has scheduled a conference call on Tuesday, May 5, 2009 at 10:00 a.m. Eastern Time to discuss its first quarter 2009 results, industry trends, portfolio performance and outlook for 2009. Telephone access will be available by dialing 888-346-2469 or 706-758-4923 (international). For those unable to listen to the call live, a taped rebroadcast will be available beginning two hours after completion of the call through May 19, 2009. To access the rebroadcast, dial 800-642-1687 or 706-645-9291 (international). The conference ID number is 92034109. To participate in the webcast, log on to www.hcreit.com or www.earnings.com 15 minutes before the call to download the necessary software. Replays will be available for 90 days through the same websites. This earnings release is posted on the company’s website under the heading News & Events.

Supplemental Reporting Measures. The company believes that net income attributable to common stockholders (NICS), as defined by U.S. generally accepted accounting principles (U.S. GAAP), is the most appropriate earnings measurement. However, the company considers funds from operations (FFO) and funds available for distribution (FAD) to be useful supplemental measures of its operating performance. Historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time as evidenced by the provision for depreciation. However, since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient. In response, the National Association of Real Estate Investment Trusts (NAREIT) created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation from net income. FFO, as defined by NAREIT, means net income, computed in accordance with U.S. GAAP, excluding gains (or losses) from sales of real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Normalized FFO represents FFO adjusted for unusual and non-recurring items. FAD represents FFO excluding net straight-line rental adjustments, amortization related to above/below market leases and amortization of non-cash interest expenses and less cash used to fund capital expenditures, tenant improvements and lease commissions at medical office buildings. Normalized FAD represents FAD excluding prepaid/straight-line rent cash receipts and adjusted for unusual and non-recurring items.

The company’s supplemental reporting measures and similarly entitled financial measures are widely used by investors and equity analysts in the valuation, comparison and investment recommendations of companies. The company’s management uses these financial measures to facilitate internal and external comparisons to historical operating results and in making operating decisions. Additionally, they are utilized by the Board of Directors to evaluate management. The supplemental reporting measures do not represent net income or cash flow provided from operating activities as determined in accordance with U.S. GAAP and should not be considered as alternative measures of profitability or liquidity. Finally, the supplemental reporting measures, as defined by the company, may not be comparable to similarly entitled items reported by other real estate investment trusts or other companies. Please see the exhibits for reconciliations of the supplemental reporting measures.

About Health Care REIT. Health Care REIT, Inc., an S&P 500 company with headquarters in Toledo, Ohio, is a real estate investment trust that invests across the full spectrum of senior housing and health care real estate. The company also provides an extensive array of property management and development services. As of March 31, 2009, the company’s broadly diversified portfolio consisted of 632 properties in 39 states. More information is available on the Internet at www.hcreit.com.

This document may contain “forward-looking” statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern and are based upon, among other things, the possible expansion of the company’s portfolio; the sale of properties; the performance of its operators/tenants and properties; its occupancy rates; its ability to acquire, develop and/or manage properties; its ability to enter into agreements with viable new tenants for vacant space or for properties that the company takes back from financially troubled tenants, if any; its ability to make distributions to stockholders; its policies and plans regarding investments, financings and other matters; its tax status as a real estate investment trust; its ability to appropriately balance the use of debt and equity; its ability to access capital markets or other sources of funds; its critical accounting policies; and its ability to meet its earnings guidance. When the company uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The company’s expected results may not be achieved, and actual results may differ materially from expectations. This may be a result of various factors, including, but not limited to: the status of the economy; the status of capital markets, including availability and cost of capital; issues facing the health care industry, including compliance with, and changes to, regulations and payment policies, responding to government investigations and punitive settlements and operators’/tenants’ difficulty in cost-effectively obtaining and maintaining adequate liability and other insurance; changes in financing terms; competition within the health care and senior housing industries; negative developments in the operating results or financial condition of operators/tenants, including, but not limited to, their ability to pay rent and repay loans; the company’s ability to transition or sell facilities with profitable results; the failure to make new investments as and when anticipated; acts of God affecting the company’s properties; the company’s ability to re-lease space at similar rates as vacancies occur; the company’s ability to timely reinvest sale proceeds at similar rates to assets sold; operator/tenant bankruptcies or insolvencies; government regulations affecting Medicare and Medicaid reimbursement rates and operational requirements; liability or contract claims by or against operators/tenants; unanticipated difficulties and/or expenditures relating to future acquisitions; environmental laws affecting the company’s properties; changes in rules or practices governing the company’s financial reporting; and legal and operational matters, including real estate investment trust qualification and key management personnel recruitment and retention. Finally, the company assumes no obligation to update or revise any forward-looking statements or to update the reasons why actual results could differ from those projected in any forward-looking statements.

HEALTH CARE REIT, INC.
Financial Supplement
CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands)
				March 31,
				2009			2008
Assets
Real estate investments:
	Real property owned:
		Land and land improvements		$	504,145		$	454,474
		Buildings and improvements			4,652,920			4,329,405
		Acquired lease intangibles			133,457			134,388
		Real property held for sale, net of accumulated depreciation			35,520			2,150
		Construction in progress			763,982			369,582
					6,090,024			5,289,999
		Less accumulated depreciation and intangible amortization			(627,898	)		(517,487	)
			Net real property owned		5,462,126			4,772,512
	Real estate loans receivable:
		Loans receivable			480,719			388,250
		Less allowance for losses on loans receivable			(7,640	)		(7,406	)
			Net real estate loans receivable		473,079			380,844
		Net real estate investments			5,935,205			5,153,356
Other assets:
		Equity investments			836			1,168
		Deferred loan expenses			25,097			28,817
		Cash and cash equivalents			19,180			32,282
		Restricted cash			16,358			15,789
		Receivables and other assets			146,405			156,044
					207,876			234,100
Total assets				$	6,143,081		$	5,387,456
Liabilities and equity
Liabilities:
		Borrowings under unsecured lines of credit arrangements		$	335,000		$	432,500
		Senior unsecured notes			1,810,537			1,828,004
		Secured debt			444,336			478,228
		Accrued expenses and other liabilities			102,601			110,715
Total liabilities					2,692,474			2,849,447
Equity:
		Preferred stock			288,728			327,897
		Common stock			110,945			88,992
		Capital in excess of par value			3,428,472			2,534,322
		Treasury stock			(7,577	)		(3,986	)
		Cumulative net income			1,421,043			1,106,497
		Cumulative dividends			(1,805,329	)		(1,510,296	)
		Accumulated other comprehensive income			(1,348	)		(18,474	)
		Other equity			5,187			3,360
			Total Health Care REIT, Inc. stockholders’ equity		3,440,121			2,528,312
		Noncontrolling interests			10,486			9,697
Total equity					3,450,607			2,538,009
Total liabilities and equity				$	6,143,081		$	5,387,456

CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In thousands, except per share data)
		Three Months Ended
		March 31,
		2009			2008
Revenues:
	Rental income	$	132,891		$	115,825
	Interest income		9,953			9,092
	Other income		1,484			1,716
Gross revenues			144,328			126,633
Expenses:
	Interest expense		27,695			35,102
	Property operating expenses		11,419			10,712
	Depreciation and amortization		40,811			36,346
	General and administrative expenses		17,361			12,328
	Gain on extinguishment of debt		(1,678	)		(1,326	)
	Provision for loan losses		140			0
Total expenses			95,748			93,162
Income from continuing operations before income taxes			48,580			33,471
Income tax expense			(50	)		(1,279	)
Income from continuing operations			48,530			32,192
Discontinued operations:
	Gain on sales of properties		17,036			26
	Income from discontinued operations, net		1,079			3,240
			18,115			3,266
Net income			66,645			35,458
Less:     Preferred dividends			5,524			6,147
Net income attributable to noncontrolling interests			2			62
Net income attributable to common stockholders		$	61,119		$	29,249
Average number of common shares outstanding:
	Basic		108,214			86,100
	Diluted		108,624			86,610
Net income attributable to common stockholders per share:
	Basic	$	0.56		$	0.34
	Diluted		0.56			0.34
Common dividends per share		$	0.68		$	0.66

Funds From Operations Reconciliation
(Amounts in 000's except per share data)
		Three Months Ended
		March 31,
		2009			2008
Net income attributable to common stockholders		$	61,119		$	29,249
Depreciation and amortization (1)			41,326			39,574
Gain on sales of properties			(17,036	)		(26	)
Noncontrolling interests			(87	)		(87	)
Funds from operations			85,322			68,710
Non-recurring G&A expenses			3,909			0
Gain on extinguishment of debt			(1,678	)		(1,326	)
Provision for loan losses			140			0
Non-recurring income tax expense			0			1,325
Funds from operations - normalized		$	87,693		$	68,709
Average common shares outstanding:
	Basic		108,214			86,100
	Diluted		108,624			86,610
Per share data:
Net income attributable to common stockholders
	Basic	$	0.56		$	0.34
	Diluted		0.56			0.34
Funds from operations
	Basic	$	0.79		$	0.80
	Diluted		0.79			0.79
Funds from operations - normalized
	Basic	$	0.81		$	0.80
	Diluted		0.81			0.79
FFO Payout Ratio
Dividends per common share		$	0.68		$	0.66
FFO per diluted share		$	0.79		$	0.79
	FFO payout ratio		86%			84%
FFO Payout Ratio - Normalized
Dividends per share		$	0.68		$	0.66
FFO per diluted share - normalized		$	0.81		$	0.79
	FFO payout ratio - normalized		84%			84%

Notes:

(1)

Depreciation and amortization includes depreciation and amortization from discontinued operations.

Funds Available For Distribution Reconciliation
(Amounts in 000's except per share data)
		Three Months Ended
		March 31,
		2009			2008
Net income attributable to common stockholders		$	61,119		$	29,249
Depreciation and amortization (1)			41,326			39,574
Gain on sales of properties			(17,036	)		(26	)
Noncontrolling interests			(16	)		(8	)
Gross straight-line rental income			(5,030	)		(5,336	)
Prepaid/straight-line rent receipts			7,889			2,975
Amortization related to above/(below) market leases, net			(356	)		(263	)
Non-cash interest expense			2,772			2,790
Cap-ex, tenant improvements, lease commissions			(2,425	)		(765	)
Funds available for distribution			88,243			68,190
Non-recurring G&A expenses			3,909			0
Gain on extinguishment of debt			(1,678	)		(1,326	)
Provision for loan losses			140			0
Non-recurring income tax expense			0			1,325
Prepaid/straight-line rent receipts			(7,889	)		(2,975	)
Funds available for distribution - normalized		$	82,725		$	65,214
Average common shares outstanding:
	Basic		108,214			86,100
	Diluted		108,624			86,610
Per share data:
Net income attributable to common stockholders
	Basic	$	0.56		$	0.34
	Diluted		0.56			0.34
Funds available for distribution
	Basic	$	0.82		$	0.79
	Diluted		0.81			0.79
Funds available for distribution - normalized
	Basic	$	0.76		$	0.76
	Diluted		0.76			0.75
FAD Payout Ratio
Dividends per common share		$	0.68		$	0.66
FAD per diluted share		$	0.81		$	0.79
	FAD payout ratio		84%			84%
FAD Payout Ratio - Normalized
Dividends per common share		$	0.68		$	0.66
FAD per diluted share - normalized		$	0.76		$	0.75
	FAD payout ratio - normalized		89%			88%

Notes:

(1)

Depreciation and amortization includes depreciation and amortization from discontinued operations.

Outlook Reconciliations
(Amounts in 000's except per share data)
	Prior Outlook						Current Outlook
	Year Ended						Year Ended
	December 31, 2009						December 31, 2009
	Low			High			Low			High
FFO Reconciliation:
Net income attributable to common stockholders	$	175,691		$	186,741		$	188,765		$	199,865
Loss (gain) on sales of properties		0			0			(17,036	)		(17,036	)
Depreciation and amortization (1)		174,000			174,000			170,000			170,000
Funds from operations		349,691			360,741			341,729			352,829
Loss (gain) on extinguishment of debt		0			0			(1,678	)		(1,678	)
Provision for loan losses		0			0			140			140
Non-recurring G&A expenses (2)		3,909			3,909			3,909			3,909
Funds from operations - normalized	$	353,600		$	364,650		$	344,100		$	355,200
Per share data (diluted):
Net income attributable to common stockholders	$	1.59		$	1.69		$	1.70		$	1.80
Funds from operations		3.16			3.26			3.08			3.18
Funds from operations - normalized		3.20			3.30			3.10			3.20
FAD Reconciliation:
Net income attributable to common stockholders	$	175,691		$	186,741		$	188,765		$	199,865
Loss (gain) on sales of properties		0			0			(17,036	)		(17,036	)
Depreciation and amortization (1)		174,000			174,000			170,000			170,000
Gross straight-line rental income		(13,800	)		(13,800	)		(16,000	)		(16,000	)
Prepaid/straight-line rent receipts		0			0			7,889			7,889
Amortization related to above/(below) market leases, net
		(1,300	)		(1,300	)		(1,300	)		(1,300	)
Non-cash interest expense		11,500			11,500			11,500			11,500
Cap-ex, tenant improvements, lease commissions		(10,000	)		(10,000	)		(10,000	)		(10,000	)
Funds available for distribution		336,091			347,141			333,818			344,918
Loss (gain) on extinguishment of debt		0			0			(1,678	)		(1,678	)
Provision for loan losses		0			0			140			140
Non-recurring G&A expenses (2)		3,909			3,909			3,909			3,909
Prepaid/straight-line rent receipts		0			0			(7,889	)		(7,889	)
Funds available for distribution - normalized	$	340,000		$	351,050		$	328,300		$	339,400
Per share data (diluted):
Net income attributable to common stockholders	$	1.59		$	1.69		$	1.70		$	1.80
Funds available for distribution		3.04			3.14			3.01			3.11
Funds available for distribution - normalized		3.08			3.18			2.96			3.06

Notes:	(1)	Depreciation and amortization includes depreciation and amortization from discontinued operations.
	(2)	Expenses recognized in connection with the departure of Raymond Braun.