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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2004

OR

o
TRANSITION REPORT PURSUANT TO SECTION 13 O 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
  
to
  

Commission file number
000-32607
CNL Retirement Properties, Inc.
(Exact name of registrant as specified in its charter)

Maryland
59-3491443
(State of other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)

450 South Orange Avenue Orlando, Florida 32801
(Address of principal executive offices and zip code)

(407) 650-1000
Registrant's telephone number (including area code)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ  No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ No o

The number of shares of common stock outstanding as of November 3, 2004 was 232,032,753.


 
     

CONTENTS


Part I: Financial Information
  
 
Page
Item 1.   Financial Statements:
  
   
1
   
2
   
3
   
4
   
5-20
   
21-35
   
36
   
36
   
   
Part II: Other Information
  
   
Item 1.   Legal Proceedings
37
   
37
   
37
   
38
   
Item 5.   Other Information
38
   
Item 6.   Exhibits
38-48
   
49
   
 


 

 
 
     
Table of Contents
CNL RETIREMENT PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except per share data)
   
September 30,
2004
  
December 31,
2003
  
Assets
          
Investment properties:
              
Accounted for using the operating method, net
 
$
2,227,356
  
$
1,083,392
  
Accounted for using the direct financing method
    
453,640
    
418,347
  
Intangible lease costs, net
    
93,267
    
30,205
  
     
2,774,263
    
1,531,944
  
               
Cash and cash equivalents
    
149,758
    
167,090
  
Restricted cash
    
37,605
    
14,812
  
Accounts and other receivables, net
    
15,176
    
12,223
  
Deferred costs, net
    
11,783
    
7,386
  
Accrued rental income
    
42,946
    
14,644
  
Other assets
    
21,140
    
13,800
  
Goodwill
    
5,791
    
—
  
   
$
3,058,462
  
$
1,761,899
  
               
Liabilities and stockholders’ equity
              
Liabilities:
              
Mortgages payable
  
$
767,579
  
$
275,056
  
Bonds payable
    
93,103
    
90,125
  
Line of credit
    
20,000
    
20,000
  
Construction loans payable
    
67,760
    
7,402
  
Due to related parties
    
2,510
    
3,258
  
Accounts payable and accrued expenses
    
24,973
    
11,657
  
Capital lease obligation
    
2,562
    
—
  
Intangible lease liability, net
    
4,028
    
—
  
Deferred income
    
4,031
    
476
  
Security deposits
    
27,956
    
7,984
  
Total liabilities
    
1,014,502
    
415,958
  
               
Minority interests
    
1,966
    
—
  
               
Commitments and contingencies
              
               
Stockholders’ equity:
              
Preferred stock, without par value
Authorized and unissued 3,000 shares
    
—
    
—
  
Excess shares, $.01 par value per share
Authorized and unissued 103,000 shares
    
—
    
—
  
Common stock, $.01 par value per share
Authorized one billion and 450,000 shares, respectively,
issued 230,045 and 150,253 shares, respectively, outstanding 229,508 and 150,077 shares, respectively
    
2,295
    
1,501
  
Capital in excess of par value
    
2,064,511
    
1,349,719
  
Accumulated distributions in excess of net income
    
(24,812
)
  
(5,279
)
Total stockholders’ equity
   
2,041,994
    
1,345,941
  
   
$
3,058,462
  
$
1,761,899
  
 
See accompanying notes to condensed consolidated financial statements.
 
1
Table of Contents

 
CNL RETIREMENT PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share data)

   
Quarter
  
Nine Months
  
   
Ended September 30,
  
Ended September 30,
  
   
2004
  
2003
  
2004
  
2003
  
Revenues:
                          
Seniors’ Housing:
                          
Rental income from operating leases
  
$
44,602
  
$
15,587
  
$
124,927
  
$
36,973
  
Earned income from direct financing leases
    
14,162
    
8,854
    
40,303
    
19,623
  
FF&E reserve income
    
1,227
    
611
    
3,500
    
1,468
  
Contingent rent
    
30
    
18
    
79
    
45
  
                           
Medical Office Buildings:
                          
Rental income from operating leases
    
9,315
    
—
    
14,065
    
—
  
Tenant expense reimbursements
    
1,495
    
—
    
2,215
    
—
  
                           
Interest and other income
    
1,771
    
516
    
3,251
    
1,111
  
     
72,602
    
25,586
    
188,340
    
59,220
  
                           
Expenses:
                          
Interest and loan cost amortization
    
10,849
    
2,556
    
30,375
    
5,245
  
Seniors’ Housing property expenses
    
459
    
7
    
915
    
26
  
Medical Office Buildings operating expenses
    
3,694
    
—
    
5,469
    
—
  
Asset management fees to related party
    
3,635
    
1,121
    
9,142
    
2,626
  
General and administrative
    
4,086
    
1,350
    
9,458
    
3,531
  
Provision for doubtful accounts
    
1,000
    
—
    
2,250
    
—
  
Impairment of long-lived assets
    
1,883
    
—
    
1,883
    
—
  
Depreciation and amortization
    
17,975
    
4,747
    
42,382
    
10,589
  
     
43,581
    
9,781
    
101,874
    
22,017