Health Care REIT FFO Plummets

Health Care REIT Inc. (HCN), a real estate investment trust (REIT) that operates senior housing and health care real estate, has reported dismal third quarter 2009 results with FFO (fund from operations) of 53 cents per share compared to 85 cents in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. 

The year-over-year decrease in FFO was due to the loss on extinguishment of debts and impairment charges totaling 25 cents per share. Excluding one-time charges, FFO for the quarter was 77 cents per share compared to 86 cents in the year-ago period. 

During the quarter, Health Care completed $156.3 million of gross new investments in large senior housing properties and state-of-the-art medical facilities. The company also strengthened its liquidity by raising $434.6 million of net equity proceeds. Year-till-date, Health Care received $177.4 million in proceeds from asset sale and loan-pay-offs, realizing net profit of $26.9 million. 

During the quarter, the company prepaid $58.8 million of secured debt and repurchased $161.4 million of unsecured notes scheduled to mature in 2012. In addition, Health Care received $132.5 million of mortgage loans from Freddie Mac (FRE). At quarter end, Health Care had cash and cash equivalents of $102.4 million. 

Health Care declared a cash dividend of 68 cents per share during the quarter, which marks the 154th consecutive quarterly dividend payment. For full year 2009, the company has revised its normalized FFO guidance to $3.10 − $3.12 per share from its earlier projections of $3.07 − $3.14 per share.

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Read the full analyst report on FRE