FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 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 (State or other jurisdiction of incorporation or organization) |
59-3491443 (I.R.S. Employment Identification No.) |
450 South Orange Avenue, Orlando, Florida 32801
(Address of principal executive offices, including 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 day. Yes X No____.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No ____.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
The number of shares of common stock outstanding as of August 3, 2004, was 223,067,363.
CONTENTS
Part I: Financial Information
| Page | |
|
Item 1. Financial Statements: |
|
|
Condensed Consolidated Balance Sheets |
1 |
|
Condensed Consolidated Statements of Income |
2 |
|
Condensed Consolidated Statments of Stockholders' Equity |
3 |
|
Condensed Consolidated Statements of Cash Flows |
4 |
|
Notes to Condensed Consolidated Financial Statements |
5-18 |
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
19-32 |
|
Item 3. Quantitative and Qualitative Disclosures About Market Risk |
33 |
|
Item 4. Controls and Procedures |
33 |
| Part II: Other Information | |
|
Item 1. Legal Proceedings |
34 |
|
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
34 |
|
Item 3. Defaults Upon Senior Securities |
34 |
|
Item 4. Submission of Matters to a Vote of Security Holders |
35 |
|
Item 5. Other Information |
35 |
|
Item 6. Exhibits and Reports on Form 8-K |
35-45 |
| Signatures | 46 |
| Exhibits |
CNL RETIREMENT
PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS
(UNAUDITED)
(in thousands, except
per share data)
| June 30, 2004 |
December 31, 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||
Investment properties: | ||||||||
| Accounted for using the operating method, net | $ | 1,963,569 | $ | 1,083,392 | ||||
| Accounted for using the direct financing method | 422,930 | 418,347 | ||||||
| Intangible lease costs, net | 67,778 | 30,205 | ||||||
| 2,454,277 | 1,531,944 | |||||||
| Cash and cash equivalents | 346,253 | 167,090 | ||||||
| Restricted cash | 48,109 | 14,812 | ||||||
| Accounts and other receivables, net | 17,381 | 12,223 | ||||||
| Deferred costs, net | 12,516 | 7,386 | ||||||
| Accrued rental income | 32,304 | 14,644 | ||||||
| Other assets | 32,146 | 13,800 | ||||||
| $ | 2,942,986 | $ | 1,761,899 | |||||
| Liabilities and stockholders' equity | ||||||||
Liabilities: | ||||||||
| Mortgages payable | $ | 762,113 | $ | 275,056 | ||||
| Bonds payable | 93,301 | 90,125 | ||||||
| Line of credit | 20,000 | 20,000 | ||||||
| Construction loans payable | 46,532 | 7,402 | ||||||
| Due to related parties | 1,446 | 3,258 | ||||||
| Accounts payable and accrued expenses | 14,112 | 11,657 | ||||||
| Intangible lease liability, net | 2,039 | — | ||||||
| Deferred income | 2,467 | 476 | ||||||
| Security deposits | 24,355 | 7,984 | ||||||
| Total liabilities | 966,365 | 415,958 | ||||||
| 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 450,000 shares, | ||||||||
| issued 221,242 and 150,253 shares, respectively, | ||||||||
| outstanding 220,913 and 150,077 shares, respectively | 2,209 | 1,501 | ||||||
| Capital in excess of par value | 1,988,384 | 1,349,719 | ||||||
| Accumulated distributions in excess of net income | (13,972 | ) | (5,279 | ) | ||||
| Total stockholders' equity | 1,976,621 | 1,345,941 | ||||||
| $ | 2,942,986 | $ | 1,761,899 | |||||
See accompanying notes to condensed consolidated financial statements.
CNL RETIREMENT
PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except
per share data)
| Quarter Ended June 30, |
Six Months Ended June 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 |
2003 |
2004 |
2003 | |||||||||||
| Revenues: | ||||||||||||||
| Seniors' Housing: | ||||||||||||||
| Rental income from operating leases | $ | 43,633 | $ | 14,292 | $ | 80,325 | $ | 21,387 | ||||||
| Earned income from direct financing leases | 13,499 | 6,108 | 26,141 | 10,768 | ||||||||||
| Contingent rent | — | 18 | 49 | 27 | ||||||||||
| FF&E reserve income | 826 | 530 | 2,273 | 857 | ||||||||||
Medical Office Buildings: | ||||||||||||||
| Rental income from operating leases | 4,750 | — | 4,750 | — | ||||||||||
| Tenant expense reimbursements | 720 | — | 720 | — | ||||||||||
Interest and other income | 878 | 182 | 1,480 | 595 | ||||||||||
| 64,306 | 21,130 | 115,738 | 33,634 | |||||||||||
| Expenses: | ||||||||||||||
| Interest and loan cost amortization | 11,557 | 1,932 | 19,526 | 2,687 | ||||||||||
| Seniors' Housing property expenses | 135 | 7 | 456 | 19 | ||||||||||
| Medical Office Buildings operating expenses | 1,775 | — | 1,775 | — | ||||||||||
| Asset management fees to related party | 3,243 | 951 | 5,507 | 1,505 | ||||||||||
| General and administrative | 3,092 | 1,533 | 5,372 | 2,181 | ||||||||||
| Provision for doubtful accounts | — | — | 1,250 | — | ||||||||||
| Depreciation and amortization | 14,845 | 3,800 | 24,407 | 5,844 | ||||||||||
| 34,647 | 8,223 | 58,293 | 12,236 | |||||||||||
| Income before equity in earnings of unconsolidated | ||||||||||||||
| subsidiary | 29,659 | 12,907 | 57,445 | 21,398 | ||||||||||
Equity in earnings of unconsolidated subsidiary | 32 | 6 | 47 | 19 | ||||||||||
| Net income | $ | 29,691 | $ | 12,913 | $ | 57,492 | $ | 21,417 | ||||||
| Net income per share of common stock | ||||||||||||||
| (basic and diluted) | $ | 0.14 | $ | 0.18 | $ | 0.28 | $ | 0.35 | ||||||
| Weighted average number of shares of | ||||||||||||||
| common stock outstanding (basic and diluted) | 214,948 | 71,770 | 206,547 | 61,777 | ||||||||||
See accompanying notes to condensed consolidated financial statements.
CNL RETIREMENT
PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
Six Months Ended June
30, 2004 and Year Ended December 31, 2003
(UNAUDITED)
(in thousands, except per
share data)
| Common stock |
Capital in | Accumulated distributions |
|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of shares |
Par Value |
excess of par value |
in excess of net income |
Total | |||||||||||||
| Balance at December 31, 2002 | 44,211 | $ | 442 | $ | 393,308 | $ | (3,955 | ) | $ | 389,795 | |||||||
Subscriptions received for common | |||||||||||||||||
| stock through public offerings and | |||||||||||||||||
| distribution reinvestment plan | 105,998 | 1,060 | 1,058,921 | — | 1,059,981 | ||||||||||||
| Retirement of common stock | (132 | ) | (1 | ) | (1,211 | ) | — | (1,212 | ) | ||||||||
| Stock issuance costs | — | — | (101,299 | ) | — | (101,299 | ) | ||||||||||
| Net income | — | — | — | 58,460 | 58,460 | ||||||||||||
| Distributions declared and paid | |||||||||||||||||
| ($0.7067 per share) | — | — | — | (59,784 | ) | (59,784 | ) | ||||||||||
| Balance at December 31, 2003 | 150,077 | 1,501 | 1,349,719 | (5,279 | ) | 1,345,941 | |||||||||||
Subscriptions received for common | |||||||||||||||||
| stock through public offerings and | |||||||||||||||||
| distribution reinvestment plan | 70,986 | 709 | 709,151 | — | 709,860 | ||||||||||||
| Retirement of common stock | (150 | ) | (1 | ) | (1,408 | ) | — | (1,409 | ) | ||||||||
| Stock issuance costs | — | — | (69,078 | ) | — | (69,078 | ) | ||||||||||
| Net income | — | — | — | 57,492 | 57,492 | ||||||||||||
| Distributions declared and paid | |||||||||||||||||
| ($0.3552 per share) | — | — | — | (66,185 | ) | (66,185 | ) | ||||||||||
| Balance at June 30, 2004 | 220,913 | $ | 2,209 | $ | 1,988,384 | $ | (13,972 | ) | $ | 1,976,621 | |||||||
See accompanying notes to condensed consolidated financial statements.
CNL RETIREMENT
PROPERTIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2004 |
2003 | |||||||
| Increase (decrease) in cash and cash equivalents: | ||||||||
| Net cash provided by operating activities | $ | 61,964 | $ | 17,944 | ||||
| Investing activities: | ||||||||
| Investment in land, buildings and equipment | (496,160 | ) | (212,378 | ) | ||||
| Investment in direct financing leases | (300 | ) | (40,225 | ) | ||||
| Investment in intangible lease costs | (38,198 | ) | (16,718 | ) | ||||
| Payment of acquisition costs | (61,232 | ) | (25,324 | ) | ||||
| Proceeds from note receivable | — | 2,000 | ||||||
| Distributions received from unconsolidated subsidiary | 50 | 53 | ||||||
| Increase in restricted cash | (19,678 | ) | (518 | ) | ||||
| Net cash used in investing activities | (615,518 | ) | (293,110 | ) | ||||
| Financing activities: | ||||||||
| Proceeds from borrowings on mortgages payable | 155,045 | 26,000 | ||||||
| Principal payments on mortgages payable | (26,794 | ) | (493 | ) | ||||
| Proceeds from construction loans payable | 39,130 | — | ||||||
| Proceeds from borrowings on line of credit | — | 71,370 | ||||||
| Repayments on line of credit | — | (51,370 | ) | |||||
| Proceeds from issuance of life care bonds | 6,273 | — | ||||||
| Retirement of life care bonds | (3,097 | ) | — | |||||
| Payment of loan costs | (9,981 | ) | (2,506 | ) | ||||
| Subscriptions received from stockholders | 709,860 | 396,524 | ||||||
| Payment of stock issuance costs | (70,617 | ) | (36,312 | ) | ||||
| Distributions to stockholders | (66,185 | ) | (20,720 | ) | ||||
| Retirement of common stock | (917 | ) | (400 | ) | ||||
| Net cash provided by financing activities | 732,717 | 382,093 | ||||||
| Net increase in cash and cash equivalents | 179,163 | 106,927 | ||||||
Cash and cash equivalents at beginning of period | 167,090 | 40,800 | ||||||
| </ | ||||||||