Health Care Q3 Normalized FFO Down 26%; Narrows FY09 FFO Outlook

11/4/2009 9:29 PM ET

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(RTTNews) - Equity real estate investment trust Health Care REIT, Inc. (HCN: News ) reported Wednesday a year-over-year drop in normalized fund from operations or FFO for the third quarter, hurt by a loss on extinguishment of debt, despite revenue growth. Normalized FFO per share for the quarter declined 10% and came in line with analysts' expectations. Normalized funds available for distribution or FAD declined 12% from last year. The company also narrowed its forecast range for normalized FFO per share and normalized FAD per share, while lowering its earnings per share guidance.

Third Quarter Results

The Toledo, Ohio-based company, which invests in healthcare properties, reported normalized FFO of $60.93 million or $0.77 per share for the third quarter, down from $82.57 million or $0.86 per share in the prior-year quarter. On average, eleven analysts polled by Thomson Reuters estimated FFO of $0.77 per share for the third quarter. Analysts' estimates typically exclude special items.

Normalized FAD for the quarter was $83.32 million or $0.72 per share, compared to $78.96 million or $0.82 per share in the year-ago quarter. Net income attributable to common shareholders for the quarter plunged to $19.13 million or $0.17 per share from $53.59 million or $0.55 per share in the similar period last year.

Gross revenues for the quarter increased to $145.10 million from $139.35 million in the same quarter last year. Four Wall Street analysts had a consensus revenue estimate of $143.07 million for the quarter.

Segment-wise, rental income for the third quarter increased to $133.48 million from $126.38 million in the year-ago quarter. Interest income totaled $10.53 million, marginally down from $10.91 million in the prior-year quarter. Other income almost halved to $1.09 million from $2.06 million last year.

Peer Performance

Among Health Care's peers, Long Beach, California-based real estate investment trust HCP, Inc. (HCP: News ), reported Tuesday a decline in funds from operation for the third quarter, hurt by the negative impact of impairments, litigation liabilities and income from the sales of marketable debt securities. The company slipped to a loss in the third quarter on lower revenues and the special items that affected quarterly FFO.

Another peer, Newport Beach, California-based Nationwide Health Properties, Inc. (NHP: News ) is scheduled to report financial results for the third quarter on November 9, 2009. Analysts expect the company to report earnings of $0.56 per share for the quarter, on revenues of $94.41 million.