Core Group - AHE - of American Health Properties, Inc. Reports Second Quarter Results; FFO Increases to $.64 per Share.DENVER--(BUSINESS WIRE)--July 20, 1998-- $72 Million of New Investments; Leases Representing 29% of Revenues Renewed; Inter-Group Loans to Psychiatric psy·chi·at·ric adj. Of or relating to psychiatry. psychiatric adjective Pertaining to psychiatry, mental disorders Group Repaid in Full; $21.5 Million of Common Equity to be Issued in July The Board of Directors of American Health American Health Inc. is a company that manufactures health supplements. It is located in Holbrook, New York. One of its products is labeled the "Chewable Original Papaya Enzyme" with the attached registered trademark, "The 'After Meal Supplement'". Properties, Inc. declared a second quarter dividend of $.545 per share on the Company's Core Group Common Stock (NYSE NYSE See: New York Stock Exchange :AHE) payable August 18, 1998 to shareholders of record August 7, 1998. In addition, the Board of Directors declared a dividend of $.5375 per share for the regular quarterly period ending August 31, 1998 on its 8.60% Series B Cumulative Redeemable Redeemable Eligible for redemption under the terms of an indenture. Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. Depositary DEPOSITARY, contracts. He with whom a deposit is confided or made. 2. It is, the essence of the contract of deposits that it should be gratuitous on the part 'of the depositary. 9 M. R. 470. Shares (NYSE:AHE PrB), payable August 31, 1998 to shareholders of record August 17, 1998. -- Core Group FFO FFO See: Funds from operations available to common shareholders for the second quarter of 1998 was $15,496,000 ($.64 per share) compared to $14,802,000 ($.63 per share) for the second quarter of 1997. -- The Core Group had another productive quarter of acquisitions, completing a $58.75 million investment in ten seasoned skilled nursing facilities skilled nursing facility n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. and a $13 million investment in one well-positioned medical office and outpatient surgery Outpatient Surgery, also referred to as ambulatory surgery or same-day surgery, is surgery that does not require an overnight hospital stay. The term “outpatient” arises from the fact that surgery patients may go home do not need an overnight hospital facility. -- During the second quarter, the Company also renewed leases for four of its acute care hospitals, operated by Tenet Healthcare Tenet Healthcare Corporation (THC) is an operating company that owns and operates 57 hospitals in the United States [1]. It is based in Dallas, Texas. Its stock ticker symbol on the New York Stock Exchange is NYSE: THC. Corporation (NYSE:THC THC tetrahydrocannabinol. THC n. Tetrahydrocannabinol; a compound that is obtained from cannabis or is made synthetically; it is the primary intoxicant in marijuana and hashish. ), under the same lease terms and provisions as were previously in place. The four leases generated approximately $25.2 million of revenue for the Company's Core Group in 1997, representing approximately 29% of total Core Group operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. . -- After the end of the second quarter in early July, the Core Group received $11.2 million from the Psychiatric Group as payment in full of the entire outstanding balance of inter-Group loans owed to the Core Group by the Psychiatric Group. The payoff of inter- inter- word element [L.], between. inter- pref. 1. Between; among: interdental. 2. In the midst of; within: interoceptor. Group loans owed by the Psychiatric Group was made by using a portion of the $35 million received by the Psychiatric Group from the payoff of its two Four Winds mortgage loans. The Psychiatric Group announced on July 2, 1998 that it would distribute a substantial portion of the remaining proceeds from the payoff of the two mortgage loans to holders of Psychiatric Group Depositary Shares (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AHEPZ) in the form of a special dividend payable in shares of the Company's Core Group Common Stock. In order to effectuate ef·fec·tu·ate tr.v. ef·fec·tu·at·ed, ef·fec·tu·at·ing, ef·fec·tu·ates To bring about; effect. [Medieval Latin effectu the stock dividend, the Core Group will issue and sell approximately 830,000 new shares of Core Group Common Stock to the Psychiatric Group in July at a price of $25.9407 per share, resulting in total proceeds to the Core Group of approximately $21.5 million. The Core Group will use the proceeds from the payoff of the inter-Group loans and the sale of the additional shares to pay down borrowings under the Company's bank credit facility. Had the inter-Group loans been paid off and the proceeds used to pay down the Company's bank credit facility prior to April 1, 1998, the Core Group's second quarter earnings would have been lower by approximately $163,000 ($.007 per common share). As a result of the payoff of the Psychiatric Group's Four Winds mortgage loans, the remaining Psychiatric Group investments represent approximately 1.7% of the consolidated investments of the Company. Accordingly, the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of the Company's consolidated general and administrative expenses, which are primarily based on the relative revenues of the two Groups, will be increased to the Core Group by approximately $80,000 per quarter (less than $.005 per common share). Joseph P. Sullivan, Chairman, President and Chief Executive Officer of the Company, stated, "The positive second quarter activity reflects a continuation of the Core Group's strong investment momentum. We continue to have excellent financial flexibility with debt to market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. of only 28% and more than $200 million unused under our bank line. We anticipate being active for the remainder of 1998." Summary Background Information The Core Group Common Stock (NYSE:AHE) represents the Company's approximately $820 million of core investments in acute care hospitals, rehabilitation hospitals Hospital devoted to the rehabilitation of patients with various neurologic, musculoskeletal, orthopedic and other medical conditions following stabilization of their acute medical issues. , long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. acute care hospitals, assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. facilities, skilled nursing facilities, Alzheimer's care facilities and medical office/clinic facilities (the "Core Group"). The Psychiatric Group Depositary Shares (NASDAQ:AHEPZ) represent the Company's approximately $14 million of investments in three psychiatric hospitals psychiatric hospital n. A hospital for the care and treatment of patients affected with acute or chronic mental illness. Also called mental hospital. (the "Psychiatric Group"). The Company has directly assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. or, if not directly assigned, allocated its assets, liabilities and stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. , and its revenues, expenses and cash flow items, between the Core Group and Psychiatric Group. General and administrative expenses of the Company that cannot be directly attributed to either Group are allocated to the Core Group and the Psychiatric Group primarily on the basis of their respective contributions to the Company's consolidated revenues. American Health Properties, Inc. is a real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) specializing in quality health care facilities. The Company currently has in excess of $830 million of investments in health care facilities located in 22 states. Cautionary Statement Regarding Future Results and Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release includes statements that are not purely historical and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the Company's expectations, beliefs, intentions or strategies regarding the future. All statements other than historical fact contained in this press release, including without limitation statements regarding rent or interest to be received from the Company's operators and tenants, plans with respect to individual facilities, expectations with respect to the specific terms and renewals of leases of the Company's facilities, the Company's anticipated dividend payout ratios Dividend Payout Ratio The percentage of earnings paid to shareholders in dividends. Calculated as: , the Company's liquidity position, projected expenses associated with maintaining individual properties, the Company's ability to realize the recorded amounts of its investments and the potential effect of new or existing regulations on the operations conducted at the Company's facilities, are forward-looking statements. All forward-looking statements included in this press release are based on information available to the Company on the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and the Company assumes no obligation to update such forward-looking statements. Although the Company believes that the assumptions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct or that the Company will take any actions that may presently be planned. Certain factors that could cause actual results to differ materially from those expected include, among others: the financial success of the operations conducted at the Company's facilities and the financial strength of the operators and tenants of such facilities, the continuing ability of operators and tenants to meet their obligations to the Company under existing or restructured agreements, changes in operators or ownership of operators, the viability of alternative uses for the Company's properties when necessary, changes in government policy relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the health care industry including reductions in reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. levels under the Medicare and Medicaid Medicare and Medicaid U.S. government programs in effect since 1966. Medicare covers most people 65 or older and those with long-term disabilities. Part A, a hospital insurance plan, also pays for home health visits and hospice care. programs, operators' and tenants' continued eligibility to participate in the Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. or Medicaid programs, reductions in reimbursement by other third-party payors, the impact of managed care pricing pressures, the requirement to provide care on a fixed-price basis, lower occupancy levels at the Company's facilities, a downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in market lease rates for medical office space, higher than expected costs associated with the maintenance and operation of the Company's medical office/clinic facilities, higher than expected turnover at the Company's medical office/clinic facilities, demand for the services provided at the Company's facilities, the strength and financial resources of the Company's competitors, the availability and cost of capital, the Company's ability to make additional real estate investments at attractive yields and changes in tax laws and regulations affecting real estate investment trusts. Readers are encouraged to review the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 1997 for a fuller discussion of such factors. Note: All income and FFO per share amounts in this narrative are on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis.
AMERICAN HEALTH PROPERTIES, INC.
FINANCIAL HIGHLIGHTS - SECOND QUARTER
(In thousands except per share amounts)
(Unaudited)
Consolidated Core Group Psychiatric Group
Three Months Ended June 30,
1998 1997 1998 1997 1998 1997
Revenues
Rental income $22,484 $17,817 $22,129 $17,475 $ 355 $ 342
Mortgage interest
income 1,655 1,531 117 15 1,538 1,516
Additional rental
and interest
income 3,400 3,147 3,130 2,980 270 167
Other property
income 384 34 384 34 - -
Other interest
income 220 242 141 157 79 85
Interest on loans to
Psychiatric Group - - 347 394 - -
28,143 22,771 26,248 21,055 2,242 2,110
Expenses
Depreciation and
amortization 5,159 3,889 4,971 3,701 188 188
Property operating 1,352 77 1,277 52 75 25
Interest expense 5,308 4,478 5,308 4,478 - -
Interest on loans from
Core Group - - - - 347 394
General and
administrative 2,322 1,948 1,936 1,648 386 300
Impairment loss on
notes receivable 2,730 - - - 2,730 -
16,871 10,392 13,492 9,879 3,726 907
Minority Interest 47 47 47 47 - -
Net Income $11,225 $12,332 $12,709 $11,129 $(1,484) $1,203
Funds From
Operations $19,080 $16,193 $17,646 $14,802 $ 1,434 $1,391
Basic Per Share Amounts(1)
Net Income $ 0.44(2) $0.47 $ (0.71) $ 0.58
Funds From Operation $ 0.64(2) $0.63 $ 0.69 $ 0.67
Weighted Average Common
Shares 24,055 23,459 2,084 2,084
Diluted Per Share Amounts(1)
Net Income $0.43(2) $0.47 $ (0.71)(3)$0.57
Funds From Operation $0.64(2) $0.63 $ 0.68 $0.66
Weighted Average Common Shares and
Dilutive Potential Common Shares 24,314 23,643 2,103 2,098
Dividends Declared Per Share 0.545 0.525 0.64 0.63
As of June 30,
Balance Sheet
Information 1998 1997 1998 1997 1998 1997
Total Assets $776,725 $582,758 $740,026 $544,528 $47,902 $51,545
Total Debt $322,117 $234,723 $322,117 $234,723 $11,203 $13,315
Total Shareholders'
Equity $421,322 $319,832 $387,490 $282,944 $33,832 $36,888
(1) Per share amounts for 1997 have been restated as required by
Statement of Financial Accounting Standards No. 128, "Earnings
per Share".
(2) Per share amount is based on amount attributable to Core Group
common shareholders which represents amount after deduction of
preferred dividends of $2,150 for the three months ended June 30,
1998.
(3) Per share amount is based on Weighted Average Shares used for
Basic Per Share Amounts.
AMERICAN HEALTH PROPERTIES, INC.
FINANCIAL HIGHLIGHTS - YEAR TO DATE
(In thousands except per share amounts)
(Unaudited)
Consolidated Core Group Psychiatric Group
Six Months Ended June 30,
1998 1997 1998 1997 1998 1997
Revenues
Rental income $43,842 $35,627 $43,132 $34,704 $710 $923
Mortgage interest
income 3,308 3,048 230 15 3,078 3,033
Additional rental and
interest income 6,820 6,123 6,256 5,752 564 371
Other property
income 719 34 719 34 - -
Other interest
income 461 1,272 302 1,088 159 184
Interest on loans to
Psychiatric Group - - 712 784 - -
55,150 46,104 51,351 42,377 4,511 4,511
Expenses
Depreciation and
amortization 10,033 7,717 9,657 7,343 376 374
Property
operating 2,567 88 2,267 63 300 25
Interest
expense 10,250 10,585 10,250 10,585 - -
Interest on loans
from Core Group - - - - 712 784
General and
administrative 4,428 3,828 3,790 3,233 638 595
Impairment loss on real
estate and notes
receivable 2,730 11,000 - - 2,730 11,000
30,008 33,218 25,964 21,224 4,756 12,778
Minority Interest 94 94 94 94 - -
Income (Loss) Before
Extraordinary
Item 25,048 12,792 25,293 21,059 (245) (8,267)
Extraordinary
Loss On Debt
Prepayment - (11,427) - (11,427) - -
Net Income
(Loss) $25,048 $1,365 $25,293 $9,632 $(245) $(8,267)
Funds From
Operations $37,752 $31,452 $34,891 $28,345 $2,861 $3,107
Basic Per Share Amounts (1)
Income (Loss) Before
Extraordinary Item $0.88(2) $0.90 $(0.12) $(3.97)
Extraordinary Loss
On Debt Prepayment $ - $(0.49) $ - $ -
Net Income (Loss) $0.88(2) $ 0.41 $(0.12) $(3.97)
Funds From Operation $1.28(2) $ 1.21 $ 1.37 $ 1.49
Weighted Average Shares 23,887 23,459 2,084 2,084
Diluted Per Share Amounts (1)
Income (Loss) Before
Extraordinary Item $ 0.87(2) $ 0.89 $(0.12)(3)$(3.97)(3)
Extraordinary Loss On
Debt Prepayment $ - $(0.48)$ - $ -
Net Income (Loss) $ 0.87(2) $ 0.41 $(0.12)(3)$(3.97)(3)
Funds From Operations $ 1.27(2) $ 1.20 $ 1.36 $ 1.48
Weighted Average Shares and
Dilutive Potential Shares 24,154 23,646 2,102 2,097
Dividends Declared Per Share $ 1.09 $ 1.05 $ 1.28 $ 1.38
(1) Per share amounts for 1997 have been restated as required by
Statement of Financial Accounting Standards No. 128, "Earnings
per Share".
(2) Per share amount is based on amount attributable to Core Group
common shareholders which represents amount after deduction of
preferred dividends of $4,300 for the six months ended June 30,
1998.
(3) Per share amount is based on Weighted Average Shares used for
Basic Per Share Amo
CONTACT: American Health Properties, Inc.
Joseph P. Sullivan / Michael J. McGee, 303/796-9793
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