Aviv REIT Reports Fourth Quarter 2014 Results

CHICAGO, Feb. 23, 2015 /PRNewswire/ -- Aviv REIT, Inc. (NYSE: AVIV) today reported results for the fourth quarter and year ended December 31, 2014. All per share results are reported on a fully diluted basis.

Highlights

  • On October 31, 2014, Aviv announced that the Boards of Directors of Aviv and Omega Healthcare Investors (NYSE:OHI) unanimously approved a definitive agreement under which Omega will acquire all of the outstanding shares of Aviv in a stock-for-stock merger.
  • $340.1 million of acquisitions
    • $33.1 million acquisition of  three SNFs  at a blended initial cash yield of 9.1%
    • $305.0 million  single transaction acquisition of 23 SNFs, four ALFs, one ILF an office building at a blended initial cash yield of 8.5%
    • $2.0 million acquisition of two land parcels for the new construction of two ALF/ALZ facilities
  • Invested $17.5 million of property reinvestment and new construction
  • AFFO for the quarter ended December 31, 2014 of $31.3 million, or $0.51 per share, a 24% per share increase over Q4 2013
  • AFFO for the year ended December 31, 2014 of $110 MM, or $1.88 per share, an 11.2%  increase over full year 2013
  • Adjusted EBITDA of $46.1 million, a 38% increase over Q4 2013

Q1 2015 Highlights

  • $4.5 million related to one SNF acquisition at an initial cash yield of 9.0%
  • On February 2, 2015, AVIV announced that it has set the date of its special meeting of stockholders to consider and vote on, among other things, a proposal to approve its previously announced merger with Omega. The special meeting will be held on Friday, March 27, 2015, at 10:00 a.m. Eastern time. Aviv stockholders of record as of the close of business on February 12, 2015 will be entitled to receive notice of and to participate at the special meeting. Additional information about the special meeting is included in the preliminary joint proxy statement/prospectus filed by Omega with the Securities and Exchange Commission (the "SEC") on January 5, 2015, as amended on February 17, 2015, and the definitive joint proxy statement/prospectus which is expected to be mailed to stockholders of record after the related registration statement is declared effective by the SEC. Completion of the transaction is subject to satisfaction of customary closing conditions, including the approval of stockholders of both companies. The transaction is currently expected to close early in the second quarter of 2015.

Fourth Quarter 2014 Results

AFFO for the quarter ended December 31, 2014 was $31.3 million, or $0.51 per share, compared to $20.9 million, or $0.41 per share, for the quarter ended December 31, 2013, an increase of 24% per share. The growth in AFFO per share was driven primarily by the Company's strong acquisition activity partially offset by the 9.2 million of additional shares of common stock issued during the second quarter of 2014.

Adjusted EBITDA for the quarter ended December 31, 2014 was $46.1 million, compared to $33.5 million for the quarter ended December 31, 2013, an increase of 38%. Net income for the quarter ended December 31, 2014 was $12.9 million, or $0.21 per share, compared to $11.0 million, or $0.22 per share, for the quarter ended December 31, 2013.

Full Year 2014 Results

AFFO for the year ended December 31, 2014 was $109.6 million, or $1.88 per share, compared to $79.5 million, or $1.69 per share, for the year ended December 31, 2013, an increase of 11% per share. The growth in AFFO per share was driven primarily by the Company's strong acquisition activity.

Adjusted EBITDA for the year ended December 31, 2014 was $166.3 million, compared to $128.8 million for the year ended December 31, 2013, an increase of 29%. Net income for the year ended December 31, 2014 was $44.9 million, or $0.77 per share, compared to $23.1 million, or $0.49 per share, for the year ended December 31, 2013.

Portfolio Update

Acquisitions:

During the fourth quarter, the Company completed three transactions acquiring 34 properties in seven states with three operators for $340.1 million, comprised of the following:

  • One SNF in Kentucky for $4.6 million triple-net leased to existing operator Diversicare at an initial annual cash yield of 10.0%, Diversicare is an operator of 52 facilities in nine states, 13 of which they lease from Aviv
  • Two SNFs in Texas for $28.5 million triple-net leased to existing operator Fundamental at an initial annual cash yield of 9.0%, Fundamental is an operator of 77 facilities in eight states, 19 of which they lease from Aviv
  • 28 properties consisting of 23 SNFs, four assisted livings facilities, one independent living facility and one office building for $305 million triple-net leased to new Aviv operator Laurel Health Care at an initial annual cash yield of 8.5%, Laurel is an operator of 42 facilities in five states
  • Two land parcels in Ohio for the new construction of two separate ALF/Memory Care facilities

For the year ended December 31, 2014, the Company has completed 19 transactions acquiring 69 properties in 15 states with 10 operators for $707 million at a blended initial annual cash yield of 8.9%. The Company also invested $58.1 million through December 31, 2014 for property reinvestment and new construction and acquired five land parcels for $11.9 million for planned new construction projects.

During the first quarter of 2015, the Company completed one transaction acquiring one SNF facility for $4.5 million.

Dispositions:

During the fourth quarter, the Company sold one SNF facility  recording a net GAAP loss of $0.6 million

As of December 31, 2014, the Company sold eight properties for $2.4 million recording $2.3 million of impairments and a net GAAP loss of $2.5 million related to such sales.  Five of the eight properties were closed in conjunction with the operators agreeing to continue to pay the Company 90% of the remaining contractual rent owed of approximately $8.1 million under the cross-defaulted existing triple-net lease.

Balance Sheet and Liquidity

As of December 31, 2014, the Company had $10 million of cash and $245 million of availability on its $600 million unsecured credit facility.  As of today, the Company has $440 million outstanding under its credit facility.

Dividends

On November 20, 2014, the Company announced that its Board of Directors declared a dividend for the fourth quarter of $0.36 per share. The dividend was paid in cash on December 19, 2014 to stockholders of record on December 12, 2014.

Full Year 2015 AFFO Guidance

In light of the pending merger with Omega noted above, the Company will not provide 2015 guidance.

Conference Call and Webcast Information

A conference call to review the fourth quarter 2014 earnings and year end results will take place tomorrow, February 24, 2015 at 9:00 a.m. Central time / 10:00 a.m. Eastern time.  The dial-in number for the conference call is (888) 278-8471 (U.S.) or (913) 312-0693 (International). The participant passcode is 6933393. The conference call can also be accessed via webcast at www.avivreit.com under the Investor Relations tab. A replay of the call will be available for approximately two weeks on the Company's website or by calling (888) 203-1112, access code 6933393.  

About Aviv

Aviv REIT, Inc., based in Chicago, is a real estate investment trust that specializes in owning post-acute and long-term care SNFs and other healthcare properties. Aviv is one of the largest owners of SNFs in the United States and has been in the business for over 30 years. As of today, the Company owns 347 properties that are triple-net leased to 37 operators in 30 states.

For more information about the Company, please visit our website at www.avivreit.com or contact:
Craig Bernfield, Chairman & Chief Executive Officer, at 312-855-0930.

Forward-Looking Statements

The information presented herein includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, performance and underlying assumptions and other statements that are not historical facts. Examples of forward-looking statements include all statements regarding our expected future financial position, results of operations, cash flows, liquidity, business strategy, projected growth opportunities and potential acquisitions and plans, objectives of management for future operations and completion of the proposed merger transaction with Omega. You can identify forward-looking statements by their use of forward-looking words, such as "may," "will," "anticipate," "expect," "believe," "estimate," "intend," "plan," "should," "seek" or comparable terms, or the negative use of those words, but the absence of these words does not necessarily mean that a statement is not forward-looking.

These forward-looking statements are made based on our current expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. Important factors, risks and uncertainties that could cause actual results to differ materially from our expectations include those disclosed under Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013, Part II, Item 1A, "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and elsewhere in filings made by us with the Securities and Exchange Commission (the "SEC"). These factors include, among others: uncertainties relating to the operations of our operators, including those relating to reimbursement by government and other third-party payors, compliance with regulatory requirements and occupancy levels; our ability to successfully engage in strategic acquisitions and investments; competition in the acquisition and ownership of healthcare properties; our ability to monitor our portfolio; environmental liabilities associated with our properties; our ability to re-lease or sell any of our properties; the availability and cost of capital;  changes in interest rates; the amount and yield of any additional investments; changes in tax laws and regulations affecting real estate investment trusts (REITs); our ability to maintain our status as a REIT; the ability of Aviv and Omega to close the proposed transaction; risks relating to the integration of Aviv's operations and employees into Omega and the possibility that the anticipated synergies and other benefits of the proposed acquisition will not be realized or will not be realized within the expected timeframe; the outcome of any legal proceedings related to the proposed transaction; and other factors identified in Aviv's and Omega's filings with the SEC.

There may be additional risks of which we are presently unaware or that we currently deem immaterial. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date as of which such statements are made. Forward-looking statements are not guarantees of future performance. Except as required by law, we do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date as of which such statements are made or to update you on the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained herein.

Additional Information about the Proposed Transaction and Where to Find It

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any proxy, vote or approval. In connection with the proposed transaction, Omega filed with the SEC a registration statement on Form S-4 containing a preliminary joint proxy statement/prospectus. The information in the preliminary joint proxy statement/prospectus is not complete and may be changed.   The definitive joint proxy statement/prospectus will be mailed to stockholders of Omega and Aviv after the registration statement is declared effective by the SEC.  INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors may obtain free copies of the registration statement, the joint proxy statement/prospectus and other relevant documents filed by Omega and Aviv with the SEC (if and when they become available) through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by Omega with the SEC will also be available free of charge on Omega's website at www.omegahealthcare.com and copies of the documents filed by Aviv with the SEC are available free of charge on Aviv's website at www.avivreit.com.

Omega, Aviv and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Omega's and Aviv's shareholders in respect of the proposed transaction. Information regarding Omega's directors and executive officers can be found in Omega's definitive proxy statement filed with the SEC on April 29, 2014. Information regarding Aviv's directors and executive officers can be found in Aviv's definitive proxy statement filed with the SEC on April 15, 2014. Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and other relevant documents filed with the SEC in connection with the proposed transaction if and when they become available. These documents are available free of charge on the SEC's website and from Omega and Aviv, as applicable, using the sources indicated above.

 

 

Aviv REIT, Inc.

Consolidated Statements of Operations

(unaudited, in thousands except share and per share data)










Three Months Ended December 31, 


Year ended December 31,


2014


2013


2014


2013

Revenues








Rental income

$     50,005


$     37,307


$   177,947


$   136,513

Interest on loans and financing lease

1,220


1,128


4,483


4,400

Interest and other income 

380


26


1,612


154

Total revenues 

51,605


38,461


184,042


141,067









Expenses








Interest expense incurred

13,191


11,186


49,680


40,785

Amortization of deferred financing costs

998


943


3,942


3,459

Depreciation and amortization

12,553


8,826


44,023


33,226

General and administrative

7,079


5,737


24,039


26,886

Transaction costs

4,788


1,208


8,601


3,114

Loss on impairment 


500


2,341


500

Reserve for uncollectible loans and other receivables

14


12


3,523


68

Loss (gain) on sale of assets, net

60


(990)


2,518


(1,016)

Loss on extinguishment of debt



501


10,974

Total expenses

38,683


27,422


139,168


117,996

Net income

12,922


11,039


44,874


23,071

Net income allocable to noncontrolling interests - operating partnership

(2,398)


(4,269)


(9,082)


(6,010)

Net income allocable to common stockholders

$     10,524


$       6,770


$     35,792


$     17,061









Earnings per common share:








Basic:








Net income allocable to common stockholders

$         0.22


$         0.22


$         0.80


$         0.51

Diluted:








Net income allocable to common stockholders

$         0.21


$         0.22


$         0.77


$         0.49









Weighted average common shares outstanding:








Basic

47,755,148


37,534,676


44,629,901


33,700,834

Diluted

61,373,736


50,950,662


58,166,924


44,324,214









Dividends declared per common share

$         0.36


$         0.36


$         1.44


$         1.40

 

 


Aviv REIT, Inc.


Reconciliations of Net Income to EBITDA and Adjusted EBITDA1


(unaudited, in thousands)












Three Months Ended December 31,


Year Ended December 31,



2014


2013


2014


2013


Net income

$  12,922


$  11,039


$    44,874


$    23,071


Interest expense, net 

13,191


11,186


49,680


40,784


Amortization of deferred financing costs

998


943


3,942


3,459


Depreciation and amortization

12,553


8,826


44,023


33,226


EBITDA

39,664


31,994


142,519


100,540











Loss on impairment

-


500


2,341


500


Loss (gain) on sale of assets, net

60


(990)


2,518


(1,016)


Transaction costs

4,788


1,208


8,601


3,114


Write-off of straight-line rents

170


-


1,549


2,887


Non-cash stock-based compensation 

1,258


823


4,861


11,752


Loss on extinguishment of debt

-


-


501


10,974


Reserve for uncollectible loan receivables

195


-


3,406


11


Adjusted EBITDA

$ 46,135


$ 33,535


$ 166,296


$ 128,762











(1) See definitions and footnotes on pages 17 and 18











Aviv REIT, Inc.


Reconciliations of Net Income to FFO, Normalized FFO and AFFO1


(unaudited, in thousands except per share data)












Three Months Ended December 31,


Year Ended December 31,



2014


2013


2014


2013


Net income

$  12,922


$  11,039


$    44,874


$    23,071


Depreciation and amortization

12,553


8,826


44,023


33,226


Loss on impairment

-


500


2,341


500


Loss (gain) on sale of assets, net

60


(990)


2,518


(1,016)


FFO

25,535


19,375


93,756


55,781











Loss on extinguishment of debt

-


-


501


10,974


Reserve for uncollectible loan receivables

195


-


3,406


11


Severance cost

-


276


-


276


Transaction costs

4,788


1,208


8,601


3,114


Normalized FFO

30,518


20,859


106,264


70,156











Amortization of deferred financing costs

998


943


3,942


3,459


Non-cash stock-based compensation

1,258


823


4,861


11,752


Straight-line rental income, net

(1,368)


(1,480)


(4,788)


(4,478)


Rental income from intangible amortization, net

(127)


(272)


(666)


(1,369)


AFFO

$ 31,279


$ 20,873


$ 109,613


$   79,520











Weighted average common shares and units outstanding, basic

58,637


49,210


55,958


45,573


Weighted average common shares and units outstanding, diluted

61,374


50,951


58,167


47,104











AFFO per share and unit, basic

$0.53


$0.42


$1.96


$1.74


AFFO per share and unit, diluted

$0.51


$0.41


$1.88


$1.69











(1) See definitions and footnotes on pages 17 and 18

 

 

Aviv REIT, Inc.

Consolidated Balance Sheets

(unaudited, in thousands except share data)






December 31,


December 31,


2014


2013

Assets




Income producing property




Land 

$    190,300


$    138,150

Buildings and improvements 

1,845,992


1,138,173

Assets under direct financing leases 

11,291


11,175


2,047,583


1,287,498

Less accumulated depreciation

(188,286)


(147,302)

Construction in progress and land held for development

23,150


23,292

Net real estate 

1,882,447


1,163,488

Cash and cash equivalents 

10,036


50,764

Straight-line rent receivable, net

45,368


40,580

Tenant receivables, net

4,095


1,647

Deferred finance costs, net 

19,024


16,643

Loan receivables, net

42,697


41,686

Other assets 

16,763


15,625

Total assets

$ 2,020,430


$ 1,330,433





Liabilities and equity




Secured loans

$    193,418


$      13,654

Unsecured notes payable

652,292


652,752

Line of credit

355,000


20,000

Accrued interest payable

15,126


15,284

Dividends and distributions payable

-


17,694

Accounts payable and accrued expenses 

18,582


10,555

Tenant security and escrow deposits 

26,259


21,586

Other liabilities

9,805


10,463

Total liabilities 

1,270,482


761,988

Equity:




Stockholders' equity




Common stock (par value $0.01; 48,425,224 and 37,593,910 shares issued and outstanding, as of December 31, 2014 and December 31, 2013, respectively) 

 

484


 

376

Additional paid-in-capital

737,262


523,658

Accumulated deficit

(119,039)


(89,742)

Total stockholders' equity

618,707


434,292

Noncontrolling interests - operating partnership

131,241


134,153

Total equity

749,948


568,445

Total liabilities and equity

$ 2,020,430


$ 1,330,433

 

 



Aviv REIT, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)





Year Ended December 31


2014

2013

Operating activities



Net income

$  44,874

$  23,071

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation and amortization

44,023

33,226

Amortization of deferred financing costs

3,942

3,459

Accretion of debt premium

(539)

(507)

Straight-line rental income, net

(4,788)

(4,478)

Rental income from intangible amortization, net 

(666)

(1,369)

Non-cash stock-based compensation 

4,861

11,752

Loss (gain) on sale of assets, net

2,518

(1,016)

Non-cash loss on extinguishment of debt

494

5,161

Loss on impairment

2,341

500

Reserve for uncollectible secured loan and other receivables

3,523

68

Changes in assets and liabilities:



        Tenant receivables

(2,577)

(3,511)

        Other assets 

(1,356)

(5,229)

        Accounts payable and accrued expenses

2,880

3,949

        Tenant security deposits and other liabilities 

5,079

2,277

Net cash provided by operating activities 

104,609

67,353




Investing activities



Purchase of real estate

(706,737)

(197,388)

Proceeds from sales of real estate , net

2,277

15,549

Capital improvements

(14,997)

(12,003)

Development projects

(43,083)

(18,738)

Loan receivables received from others

19,642

4,086

Loan receivables funded to others

(24,376)

(10,407)

Net cash used in investing activities 

(767,274)

(218,901)


 

 

Aviv REIT, Inc.

Consolidated Statements of Cash Flows (continued)

(unaudited, in thousands)



Year Ended December 31


2014

2013

Financing activities



Borrowings of debt 

$668,000

$470,000

Repayment of debt 

(153,157)

(488,241)

Payment of financing costs

(6,980)

(10,448)

Capital contributions

60

575

Proceeds from issuance of common stock

221,720

303,600

Cost of raising capital

(10,558)

(25,829)

Shares issued for settlement of vested stock and exercised stock options, net

1,707

Cash distributions to partners

(20,215)

(16,314)

Cash dividends to stockholders

(78,640)

(48,907)

Net cash provided by financing activities 

621,937

184,436

Net (decrease) increase in cash and cash equivalents

(40,728)

32,888

Cash and cash equivalents:



Beginning of year

50,764

17,876

End of year

$  10,036

$  50,764







Supplemental cash flow information



Cash paid for interest

$  50,972

$  40,008




Supplemental disclosure of noncash activity



Accrued dividends payable to stockholders

$           –

$  13,551

Accrued distributions payable to partners

$           –

$    4,143

Write-off of straight-line rent receivable, net

$    1,549

$    2,887

Write-off of deferred financing costs, net

$       501

$    5,161

 

 

















Aviv REIT, Inc.

Portfolio Summary1

















































Portfolio Composition


























Annualized








Property


Number of 


Square


Investment


Cash


% of




Property Type


Count


Beds


Feet


(GBV)


Rent


Total Rent




















Skilled Nursing


285


26,879


10,225


$ 1,661,828


$ 181,184


82.8%




Senior Housing


37


2,555


1,677


291,877


29,971


13.7%




Other Healthcare Properties


24


212


255


93,878


7,588


3.5%




















Total


346


29,646


12,157


$ 2,047,583


$ 218,743


100.0%




































Portfolio Performance


















EBITDARM


EBITDAR




Facility Revenue Mix


EBITDAR


Core Portfolio


Coverage


Coverage


Occupancy


Private Pay


Medicare


Medicaid


Margin


















Skilled Nursing


1.74x


1.35x


77.4%


21.3%


25.1%


53.6%


13.6%


Senior Housing


1.22x


1.04x


77.0%


85.8%


4.2%


10.0%


23.2%


Other Healthcare Properties


6.37x


5.70x


85.3%


89.4%


10.6%


0.0%


34.0%


















Total


1.77x


1.39x


77.4%


26.0%


23.8%


50.2%


14.6%


































State Diversification




















Investment


Annualized Rent








State


Properties


(GBV)


$


%
























Texas                                   

68


$   316,453


$    36,832


16.8%








Ohio


38


300,867


30,621


14.0%








California


39


182,752


21,046


9.6%








Connecticut


6


109,474


11,149


5.1%








Michigan


12


124,117


10,619


4.9%








Washington


15


122,335


10,566


4.8%








Massachusetts


10


88,205


9,901


4.5%








Pennsylvania


10


79,746


9,433


4.3%








Missouri


18


93,073


9,307


4.3%








Kentucky


11


64,658


7,005


3.2%








Other States


119


565,903


62,264


28.5%










346


$ 2,047,583


$  218,743


100.0%








































Operator Diversification


















Properties


Investment


Annualized Rent






Operator (Location)


Aviv


Total


(GBV)


$


%


States




















Laurel Health Care Company


29


42


$  304,493


$     26,376


12.1%


5




Daybreak (Denton, TX)


50


69


165,122


21,949


10.0%


2




Saber (Bedford Heights, OH)


30


79


186,043


21,538


9.8%


6




EmpRes (Vancouver, WA)


23


49


196,267


20,348


9.3%


6




Maplewood (Westport, CT)


14


14


203,024


18,768


8.6%


3




Fundamental (Sparks, MD)


19


75


177,289


16,902


7.7%


8




Preferred Care (Plano, TX)


17


111


68,982


10,761


4.9%


12




Diversicare (Brentwood, TN)


13


52


95,139


9,554


4.4%


9




Sun Mar (Brea, CA)


13


25


71,144


9,167


4.2%


2




Providence (National City, CA)

10


13


48,350


5,258


2.4%


5




Other 28 Operators


128


402


531,731


58,122


26.6%








346


931


$2,047,583


$   218,743


100.0%






































(1)  Dollars and square feet in thousands. Data as of December 31, 2014.  Coverage, occupancy, margin and revenue mix information is provided on a trailing twelve month basis through September 30, 2014. Annualized cash rent for leases in place as of December 31, 2014 and includes income from a deferred financing lease.


Totals may not add due to rounding.














 

 












Aviv REIT, Inc.

Portfolio Summary























State Occupancy1













Aviv


State







State


Occupancy


Average


Variance
















Texas                                   


71.5%


70.8%


0.7%





Ohio


75.5%


84.3%


(8.8%)





California


91.5%


85.5%


6.0%





Connecticut


70.9%


87.7%


N/A





Michigan


94.8%


85.0%


9.8%





Washington


84.6%


80.4%


4.2%





Massachusetts


79.5%


87.0%


(7.5%)





Pennsylvania


86.1%


90.4%


(4.3%)





Missouri


70.9%


72.3%


(1.4%)





Kentucky


84.0%


87.8%


(3.8%)



























Lease Maturity Schedule2













Number of


% of







Year


Properties


Total Rent


















2015


4


1.0%







2016


3


1.2%







2017


11


2.8%







2018


29


8.3%







2019


4


1.1%







Thereafter


291


85.6%







Total


342


100.0%











(1)  Occupancy information as of September 30, 2014. State occupancy represents nursing facility occupancies per American Health Care Association.




      Aviv only has assisted living properties in Connecticut.

(2) Excludes five development properties with rent start dates in the future and one office building with two leases.

 

Aviv REIT, Inc.

Portfolio Summary as of December 31, 2014

 

Information for the trailing twelve month period ended September 30, 2014


Aviv REIT, Inc.

 

 

















Aviv REIT, Inc.

Investment Activity as of December 31, 2014


(in thousands)

































2014 Property Reinvestment and New Construction






























Property


New












Period


Reinvestment


Construction


Total


























Fourth quarter


$  4,704


$ 12,767


$ 17,471










Third quarter


5,027


19,597


24,624










Second quarter


3,422


5,023


8,445










First quarter


1,844


5,696


7,540
















$ 58,080










































New Construction Projects






















Expected


Construction in


Remaining


Total






Property




Opening


Progress at


Costs to


Expected


Expected


Operator - Location


Type


Beds


Date


12/31/2014


be Spent


Cost


Yield


















Care Meridian - numerous locations


-


-


-


807


2,929


3,736


9.5%


Property reinvestment - numerous locations

-


-


-


3,759


8,425


12,184


-


Land held for development


-


-


-


18,584



18,584


-


















Total








$          23,150


$   11,354


$   34,504




































2014 Acquisitions




























Initial




Period


Property Type


Location


Beds


Amount


Cash Yield




















Fourth quarter


SNF, ALF, ILF


7 states


3,211


338,100


8.5%




Third quarter


SNF, ALF


2 states


1,420


$ 181,800


8.7%




Second quarter


SNF


4 states


1,110


82,650


9.8%




First quarter


SNF, ALF, ILF


4 states


1,497


104,420


10.0%




Total








7,238


$ 706,970

(1)

8.9%





(1)  Excludes $16.4 million paid for five land parcels and entitlements for the construction of two ALFs and a 50-unit expansion to an existing ALF.

 

 












Aviv REIT, Inc.

Debt Summary and Capitalization as of December 31, 2014












Debt Maturities













Senior Unsecured




Mortgage




Total

Year


Notes


Line of Credit


Debt (1)


GE Debt


Debt












2015


$             -


$           -


$          165


$           -


$         165

2016


-


-


174


-


174

2017


-


-


183


2,021


2,204

2018


-


355,000


192


2,335


357,527

2019


400,000


-


202


175,644


575,846

Thereafter


250,000


-


10,165


-


260,165

Subtotal


650,000


355,000


11,081


180,000


1,196,081

(Discounts) and premiums, net


2,292


-


2,337


-


4,629

Total debt


$   652,292


$ 355,000


$     13,418


$ 180,000


$ 1,200,710












Weighted average interest rate










5.1%












Weighted average maturity in years










4.8























Fixed and Floating Rate Debt
























Amount


% of Total







Fixed rate debt











Senior unsecured notes


$   652,292


54.3%







Mortgage debt


13,418


1.1%







Total fixed rate debt


665,710


55.4%


















Floating rate debt











Revolver


355,000


29.6%







    GE debt


180,000


15.0%







Total floating rate debt


535,000


44.6%


















    Total debt


$1,200,710


100.0%





























Covenants for Senior Unsecured Notes (2)




















Covenant


Requirement


Q4 2014


Q4 2013
















Total debt / total assets


No greater than 60%

54%


46%





Secured debt / total assets


No greater than 40%

9%


2%





Interest coverage


No less than 2.00x

3.30x


3.16x





Unencumbered assets / unsecured debt


No less than 150%

181%


185%



























Total Market Capitalization













Shares/units


12/31/2014









Outstanding


Closing Price


Value
















Common stock and OP units


58,729


$34.48


$ 2,024,976





Total debt






1,200,710





Total market capitalization






$ 3,225,686



























Dollars and shares/units in thousands











(1)  Mortgage debt was paid in full in January 2015.










(2)  Covenants are calculated in accordance with the indenture governing the senior unsecured notes.





 

 

Aviv REIT, Inc.

Common Share and OP Unit

Weighted Average Amounts Outstanding
























YTD


YTD







Q4 2014


Q4 2013


Q4 2014


Q4 2013

Weighted Average Amounts Outstanding for EPS Purposes:





















Common shares - basic




47,755,148


37,534,676


44,629,901


33,700,834

Effect of dilutive securities:











OP units





10,881,474


11,675,517


11,328,049


9,091,974

Stock options





2,581,412


1,696,726


2,136,040


1,518,813

Restricted stock units




155,702


43,714


72,934


12,568

Total common shares - diluted




61,373,736


50,950,633


58,166,924


44,324,189



























Weighted Average Amounts Outstanding for FFO,








Normalized FFO and AFFO Purposes:























Common shares - basic




47,755,148


37,534,676


44,629,901


33,700,834

OP units






10,881,474


11,675,517


11,328,049


11,872,154

Total common shares and OP units



58,636,622


49,210,193


55,957,950


45,572,988

Effect of dilutive securities:











Stock options





2,581,412


1,696,726


2,136,040


1,518,813

Restricted stock units




155,702


43,714


72,934


12,568

Total common shares and units - diluted



61,373,736


50,950,633


58,166,924


47,104,369



























Period Ending Amounts Outstanding:










Common shares (includes restricted stock)



48,456,724


37,641,160





OP units






10,272,374


11,616,283





Total common shares and units




58,729,098


49,257,443





 

Aviv REIT, Inc.
Definitions and Footnotes

EBITDARM Coverage:  Represents EBITDARM, which the Company defines as earnings before interest, taxes, depreciation, amortization, rent expense and management fees allocated by the operator to one of its affiliates, of our operators for the applicable period, divided by the rent paid to the Company by its operators during each period.

EBITDAR Coverage:  Represents EBITDAR, which the Company defines as earnings before interest, taxes, depreciation, amortization and rent expense, of its operators for the applicable period, divided by the rent paid to Aviv by its operators during such period. Assumes a management fee of 4%.

EBITDAR Margin:  Represents the operator's EBITDAR for the applicable period divided by the operator's total revenue for the applicable period.

Enterprise Value:  Represents equity market capitalization plus net debt. Equity market capitalization is calculated as the number of shares of common stock and units multiplied by the closing price of the Company's common stock on the last day of the period presented.  Net debt represents total debt less cash and cash equivalents. 

Portfolio Occupancy:  Represents the average daily number of beds at the Company's properties that are occupied during the applicable period divided by the total number of beds at the Company's properties that are available for use during the applicable period.

Property Type:  ALF = assisted living facility; LTACH = long-term acute care hospital; MOB = medical office building; TBI = traumatic brain injury facility; SNF = skilled nursing facility

State Average Occupancy:  Represents the Nursing Facility State Occupancy Rate as reported by American Health Care Association (AHCA). AHCA occupancy data is calculated by dividing the sum of all facility patients in the state occupying certified beds by the sum of all the certified beds in the state reported at the time of the survey corresponding to the period presented. Aviv occupancy represents the state occupancy for the entire portfolio.

Yield:  Represents annualized contractual or projected income to be received in cash divided by investment amount. 

Portfolio metrics and other statistics are not derived from Aviv's financial statements but are operating statistics that the Company derives from reports that it receives from its operators pursuant to Aviv's triple-net leases. As a result, the Company's portfolio metrics typically lag its own financial statements by approximately one quarter. In order to determine Aviv's portfolio metrics for the period presented, the metrics are stated only with respect to properties owned by the Company and operated by the same operator for the portion of the period Aviv owned the properties and exclude assets held for sale, closed properties, properties under construction and, with certain exceptions for shorter periods, properties within 24 months of completion of construction. Accordingly, EBITDARM coverage, EBITDAR coverage, EBITDAR margin, portfolio occupancy and quality mix for the twelve months ended September 30, 2014 included 289 core properties of the 313 properties in the Company's portfolio as of September 30, 2014.

When Aviv refers to the "total rent" of its portfolio, the Company is referring to the total monthly rent due under all of its triple-net leases as of the date specified, calculated based on the first full month following the specified date.  Aviv calculates "annualized rent" for properties during a period by utilizing the amount of rent under contract as of the last day of the period and assume that amount of rent was received in respect of such property throughout the entire period.

Non-GAAP Financial Measures
In addition to the results of operations presented in this release, we use financial measures in this release that are derived on the basis of methodologies other than in accordance with United States generally accepted accounting principles (GAAP). We derive these non-GAAP measures as follows:

  • FFO is defined by the National Association of Real Estate Investment Trusts, or NAREIT, as net income (computed in accordance with GAAP), excluding gains and losses from sales of property (net) and impairments of depreciated real estate, plus real estate depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Applying the NAREIT definition to our financial statements results in FFO representing net income before depreciation and amortization, loss on impairment, and loss (gain) on sale of assets (net).
  • Normalized FFO represents FFO before loss on extinguishment of debt, reserve for uncollectible loan receivables, transaction costs and severance costs.
  • AFFO represents Normalized FFO before amortization of deferred financing costs, non-cash stock-based compensation, straight-line rental income (net) and rental income from intangible amortization (net).
  • EBITDA represents net income before interest expense (net), amortization of deferred financing costs and depreciation and amortization.
  • Adjusted EBITDA represents EBITDA before loss on impairment, loss (gain) on sale of assets (net), transaction costs, write-off of straight-line rents, non-cash stock-based compensation, loss on extinguishment of debt and reserve for uncollectible loan receivables.

 

Aviv REIT, Inc.
Definitions and Footnotes

Our management uses FFO, Normalized FFO, AFFO, EBITDA and Adjusted EBITDA as important supplemental measures of our operating performance and liquidity. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. The term FFO was designed by the real estate industry to address this issue and as an indicator of our ability to incur and service debt. Because FFO, Normalized FFO and AFFO exclude depreciation and amortization unique to real estate, impairment, gains and losses from property dispositions and extraordinary items and because EBITDA and Adjusted EBITDA exclude certain non-cash charges and adjustments and amounts spent on interest and taxes, they provide our management with performance measures that, when compared year over year or with other REITs, reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and, with respect to FFO, Normalized FFO and AFFO, interest costs, in each case providing perspective not immediately apparent from net income. In addition, we believe that FFO, Normalized FFO, AFFO, EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs.  

We offer these measures to assist the users of our financial statements in assessing our financial performance and liquidity under GAAP, but these measures are non-GAAP measures and should not be considered measures of liquidity, alternatives to net income or indicators of any other performance measure determined in accordance with GAAP, nor are they indicative of funds available to fund our cash needs, including our ability to make payments on our indebtedness. In addition, our calculations of these measures are not necessarily comparable to similar measures as calculated by other companies that do not use the same definition or implementation guidelines or interpret the standards differently from us. Investors should not rely on these measures as a substitute for any GAAP measure, including net income, cash flows provided by operating activities or revenues.

Note: This earnings release and the related supplemental information contain certain non-GAAP financial measures that we believe are helpful in understanding our business, as further discussed herein. These financial measures, which include Funds From Operations, Normalized Funds From Operations, AFFO, EBITDA and Adjusted EBITDA, should not be considered as an alternative to net income, earnings per share or any other GAAP measurement of performance or as an alternative to cash flows from operating, investing or financing activities. Furthermore, these non-GAAP financial measures are not intended to be a measure of cash flow or liquidity. Information included in this supplemental package is unaudited. For a reconciliation of each such non-GAAP financial measure to the most directly comparable GAAP financial measure, please see Reconciliations tables. 

Photo - http://photos.prnewswire.com/prnh/20150223/177187

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/aviv-reit-reports-fourth-quarter-2014-results-300039976.html

SOURCE Aviv REIT, Inc.

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