Attached files
file | filename |
---|---|
8-K - FORM 8-K - Griffin-American Healthcare REIT II, Inc. | c14037e8vk.htm |
Exhibit 99.1
1551 N. Tustin Avenue, Suite 300 Santa Ana, CA 92705 714.667.8252 main 714.667.6860 fax www.gbe-reits.com/healthcare2 |
Contact:
|
Damon Elder | |
Phone:
|
714.975.2659 | |
Email:
|
damon.elder@grubb-ellis.com |
Grubb & Ellis Healthcare REIT II
Reports Fourth Quarter and Year End 2010 Results
Reports Fourth Quarter and Year End 2010 Results
SANTA ANA, Calif. (March 11, 2011) Grubb & Ellis Healthcare REIT II, Inc. today announced
operating results for the companys fourth quarter and year ended Dec. 31, 2010.
Despite the fact that Grubb & Ellis Healthcare REIT II only began acquiring assets in March 2010,
the companys fourth quarter modified funds from operations of $1.8 million nearly equals our
distributions paid of $1.83 million, said Danny Prosky, president and chief operating officer of
Grubb & Ellis Healthcare REIT II. As weve often said, our focus has been, and will remain,
building and managing the best non-traded REIT in the industry that provides its investors with
distribution sustainability and superior long-term financial performance. Our first full year of
operations has exceeded our expectations, during which we completed 14 acquisitions totaling 25
buildings for an aggregate of more than $193 million and achieved quarterly growth in net operating
income and modified funds from operations as a result of such acquisitions.
2010 Highlights and Recent Accomplishments
| Completed fourth quarter and 2010 acquisitions totaling $55.4 million and $193.4 million, respectively, based on purchase price. |
| Declared and paid quarterly distributions equal to an annualized rate of 6.5 percent to stockholders of record, based upon a $10.00 per share offering price. The companys board of directors intends to continue to declare distributions on a quarterly basis. |
| Companys property portfolio achieved an aggregate average occupancy of 98 percent as of Dec. 31, 2010. |
| Established a secured revolving line of credit with Bank of America, N.A. for $25 million. |
| Fourth quarter modified funds from operations, or MFFO, as defined by the Investment Program Association, or IPA, of approximately $1.8 million nearly equals distributions paid of approximately $1.83 million. (Please see financial reconciliation tables and notes at the end of this release for more information regarding MFFO.) |
| Fourth quarter net operating income, or NOI, totaled approximately $3.7 million. For the year, NOI totaled approximately $6.5 million. (Please see financial reconciliation tables and notes at the end of this release for more information regarding NOI.) |
Fourth Quarter and Recent Acquisition Highlights
Continued to expand assets under management with accretive acquisitions:
| In October, the company acquired Athens Long-Term Acute Care Hospital in Athens, Ga. for approximately $12.3 million. |
| In November, the company completed an $11.4 million acquisition of a medical office building in Sylva, N.C. |
| In December, the company acquired Humble Surgical Hospital near Houston for $13.1 million, a medical office building in Ennis, Texas for $7.1 million and two medical office buildings in Lawton, Oklahoma for a combined total of approximately $11.6 million. |
| Total assets grew from $138 million at the close of the third quarter to more than $193 million at the close of the fourth quarter. |
| Subsequent to the close of the fourth quarter, the company acquired Columbia Long-Term Acute Care Hospital in Columbia, Missouri for approximately $12.4 million. |
Frankly, we are thrilled with our results for 2010, said Prosky. We are raising more equity each
quarter and deploying it efficiently by acquiring assets that are immediately accretive and support
our distribution rate. We are meeting or
exceeding nearly all of our projections for performance and we couldnt be more proud to have
established what is, according to widely accepted industry standards, already among the best
performing non-traded REITs in the country.
Conference Call Information
The company has scheduled a conference call to discuss its fourth quarter and year ended 2010
results on Thursday, March 17, 2011 at 12:30 pm Eastern Time. The conference call may be accessed
by dialing 1.800.942.7925. Callers should reference the Grubb & Ellis Healthcare REIT II call to
the operator when dialing in to the conference.
FINANCIAL TABLES AND NOTES FOLLOW
GRUBB & ELLIS HEALTHCARE REIT II, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2010 and 2009
As of December 31, 2010 and 2009
December 31, | ||||||||
2010 | 2009 | |||||||
ASSETS |
||||||||
Real estate investments: |
||||||||
Operating properties, net |
$ | 163,335,000 | $ | | ||||
Cash and cash equivalents |
6,018,000 | 13,773,000 | ||||||
Accounts and other receivables, net |
241,000 | | ||||||
Restricted cash |
2,816,000 | | ||||||
Real estate and escrow deposits |
649,000 | | ||||||
Identified intangible assets, net |
28,568,000 | | ||||||
Other assets, net |
2,369,000 | 36,000 | ||||||
Total assets |
$ | 203,996,000 | $ | 13,809,000 | ||||
LIABILITIES AND EQUITY |
||||||||
Liabilities: |
||||||||
Mortgage loans payable, net |
$ | 58,331,000 | $ | | ||||
Line of credit |
11,800,000 | | ||||||
Accounts payable and accrued liabilities |
3,356,000 | 178,000 | ||||||
Accounts payable due to affiliates |
840,000 | 347,000 | ||||||
Derivative financial instruments |
453,000 | | ||||||
Identified intangible liabilities, net |
502,000 | | ||||||
Security deposits, prepaid rent and other liabilities |
3,352,000 | | ||||||
Total liabilities |
78,634,000 | 525,000 | ||||||
Commitments and contingencies |
||||||||
Equity: |
||||||||
Stockholders equity: |
||||||||
Preferred stock, $0.01 par value;
200,000,000 shares authorized;
none issued and outstanding |
| | ||||||
Common stock, $0.01 par value;
1,000,000,000 shares authorized;
15,452,668 and 1,532,268 shares issued
and outstanding
as of December 31, 2010 and
2009, respectively |
154,000 | 15,000 | ||||||
Additional paid-in capital |
137,657,000 | 13,549,000 | ||||||
Accumulated deficit |
(12,571,000 | ) | (281,000 | ) | ||||
Total stockholders equity |
125,240,000 | 13,283,000 | ||||||
Noncontrolling interests |
122,000 | 1,000 | ||||||
Total equity |
125,362,000 | 13,284,000 | ||||||
Total liabilities and equity |
$ | 203,996,000 | $ | 13,809,000 | ||||
GRUBB & ELLIS HEALTHCARE REIT II, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2010 and for the Period from
January 7, 2009 (Date of Inception) through December 31, 2009
For the Year Ended December 31, 2010 and for the Period from
January 7, 2009 (Date of Inception) through December 31, 2009
Period from | ||||||||
January 7, 2009 | ||||||||
(Date of Inception) | ||||||||
Year Ended | through | |||||||
December 31, 2010 | December 31, 2009 | |||||||
Revenue: |
||||||||
Rental income |
$ | 8,682,000 | $ | | ||||
Expenses: |
||||||||
Rental expenses |
2,201,000 | | ||||||
General and administrative |
1,670,000 | 268,000 | ||||||
Acquisition related expenses |
7,099,000 | 18,000 | ||||||
Depreciation and amortization |
3,591,000 | | ||||||
Total expenses |
14,561,000 | 286,000 | ||||||
Loss from operations |
(5,879,000 | ) | (286,000 | ) | ||||
Other income (expense): |
||||||||
Interest expense (including amortization of deferred
financing costs and debt discount): |
||||||||
Interest expense |
(1,416,000 | ) | | |||||
Loss in fair value of derivative financial
instruments |
(143,000 | ) | | |||||
Interest income |
15,000 | 4,000 | ||||||
Net loss |
(7,423,000 | ) | (282,000 | ) | ||||
Less: Net (income) loss attributable to
noncontrolling interests |
(1,000 | ) | 1,000 | |||||
Net loss attributable to controlling interest |
$ | (7,424,000 | ) | $ | (281,000 | ) | ||
Net loss per common share attributable to controlling
interest basic and diluted |
$ | (0.99 | ) | $ | (1.51 | ) | ||
Weighted average number of common shares
outstanding basic and diluted |
7,471,184 | 186,330 | ||||||
GRUBB & ELLIS HEALTHCARE REIT II, INC.
NET OPERATING INCOME RECONCILIATION
For the Quarter Ended December 31, 2010, For the Year Ended December 31, 2010 and
For the Period from January 7, 2009 (Date of Inception) through December 31, 2009
For the Quarter Ended December 31, 2010, For the Year Ended December 31, 2010 and
For the Period from January 7, 2009 (Date of Inception) through December 31, 2009
Net operating income is a financial measure that does not conform to accounting principles
generally accepted in the United States of America, or GAAP, or a non-GAAP measure. It is
defined as net income, computed in accordance with GAAP, generated from properties before
general and administrative expenses, acquisition related expenses, depreciation and
amortization, interest expense and interest income. The company believes that net operating
income is useful for investors as it provides an accurate measure of the operating performance
of its operating assets because net operating income excludes certain items that are not
associated with the management of the properties. Additionally, the company believes that net
operating income is a widely accepted measure of comparative operating performance in the real
estate community. However, the companys use of the term net operating income may not be
comparable to that of other real estate companies as they may have different methodologies for
computing this amount.
The following is a reconciliation of net loss, which is the most directly comparable GAAP
financial measure, to net operating income for the quarter ended December 31, 2010, for the year
ended December 31, 2010 and for the period from January 7, 2009 (Date of Inception) through
December 31, 2009:
Period from | ||||||||||||
January 7, 2009 | ||||||||||||
Quarter Ended | (Date of Inception) | |||||||||||
December 31, 2010 | Year Ended | through | ||||||||||
(unaudited) | December 31, 2010 | December 31, 2009 | ||||||||||
Net loss |
$ | (1,631,000 | ) | $ | (7,423,000 | ) | $ | (282,000 | ) | |||
Add: |
||||||||||||
General and administrative |
622,000 | 1,670,000 | 268,000 | |||||||||
Acquisition related expenses |
1,920,000 | 7,099,000 | 18,000 | |||||||||
Depreciation and amortization |
1,869,000 | 3,591,000 | | |||||||||
Interest expense |
933,000 | 1,559,000 | | |||||||||
Less: |
||||||||||||
Interest income |
(1,000 | ) | (15,000 | ) | (4,000 | ) | ||||||
Net operating income |
$ | 3,712,000 | $ | 6,481,000 | $ | | ||||||
GRUBB & ELLIS HEALTHCARE REIT II, INC.
FFO AND MFFO RECONCILIATION
For the Quarter Ended December 31, 2010, For the Year Ended December 31, 2010 and For the Period from
January 7, 2009 (Date of Inception) through December 31, 2009
For the Quarter Ended December 31, 2010, For the Year Ended December 31, 2010 and For the Period from
January 7, 2009 (Date of Inception) through December 31, 2009
Due to certain unique operating characteristics of real estate companies, the National Association
of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a measure
known as funds from operations, or FFO, which the company believes to be an appropriate
supplemental measure to reflect the operating performance of a real estate investment trust, or
REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO
is not equivalent to our net income or loss as determined under GAAP.
The company defines FFO, a non-GAAP measure, consistent with the standards established by the White
Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004, or the
White Paper. The White Paper defines FFO as net income or loss computed in accordance with GAAP,
excluding gains or losses from sales of property but including asset impairment writedowns, plus
depreciation and amortization, and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect
FFO. The companys FFO calculation complies with NAREITs policy described above.
The historical accounting convention used for real estate assets requires straight-line
depreciation of buildings and improvements, which implies that the value of real estate assets
diminishes predictably over time. Since real estate values historically rise and fall with market
conditions, presentations of operating results for a REIT, using historical accounting for
depreciation, the company believes, may be less informative. As a result, the company believes that
the use of FFO, which excludes the impact of real estate related depreciation and amortization,
provides a more complete understanding of the companys performance to investors and to management,
and when compared year over year, reflects the impact on the companys operations from trends in
occupancy rates, rental rates, operating costs, general and administrative expenses, and interest
costs, which is not immediately apparent from net income.
However, changes in the accounting and reporting rules under GAAP (for acquisition fees and
expenses from a capitalization/depreciation model to an expensed-as-incurred model) that have been
put into effect since the establishment of NAREITs definition of FFO have prompted an increase in
the non-cash and non-operating items included in FFO. In addition, the company views fair value
adjustments of derivatives, and impairment charges and gains and losses from dispositions of assets
as items which are typically adjusted for when assessing operating performance. Lastly, publicly
registered, non-listed REITs typically have a significant amount of acquisition activity and are
substantially more dynamic during their initial years of investment and operation and therefore
require additional adjustments to FFO in evaluating performance. Due to these and other unique
features of publicly registered, non-listed REITs, the IPA, an industry trade group, has
standardized
a measure known as MFFO, which the company believes to be another appropriate supplemental measure
to reflect the operating performance of a REIT. The use of MFFO is recommended by the IPA as a
supplemental performance measure for publicly registered, non-listed REITs. MFFO is a metric used
by management to evaluate sustainable performance and dividend policy. MFFO is not equivalent to
the companys net income or loss as determined under GAAP.
The company defines MFFO, a non-GAAP measure, consistent with the IPAs Guideline 2010-01,
Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from
Operations, or the Practice Guideline, issued by the IPA in November 2010. The Practice Guideline
defines MFFO as FFO further adjusted for the following items included in the determination of GAAP
net income: acquisition fees and expenses; amounts relating to deferred rent receivables and
amortization of above and below market leases and liabilities; accretion of discounts and
amortization of premiums on debt investments; nonrecurring impairments of real estate-related
investments; mark-to-market adjustments included in net income; nonrecurring gains or losses
included in net income from the extinguishment or sale of debt, hedges, foreign exchange,
derivatives or securities holdings where trading of such holdings is not a fundamental attribute of
the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation
to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and
joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The companys
MFFO calculation
complies with the IPAs Practice Guideline described above. In calculating MFFO, the company
excludes acquisition related expenses, amortization of above and below market leases, fair value
adjustments of derivative financial instruments, deferred rent receivables and the adjustments of
such items related to noncontrolling interests. The other adjustments included in the IPAs
Practice Guideline are not applicable to the company for the quarter ended December 31, 2010, for
the year ended December 31, 2010 and for the period from January 7, 2009 (Date of Inception)
through December 31, 2009.
Presentation of this information is intended to assist in comparing the operating performance of
different REITs, although it should be noted that not all REITs calculate FFO and MFFO the same
way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not
necessarily indicative of cash flow available to fund cash needs and should not be considered as an
alternative to net income (loss) as an indication of the companys performance, as an indication of
its liquidity, or indicative of funds available to fund its cash needs including its ability to
make distributions to its stockholders. FFO and MFFO should be reviewed in conjunction with other
measurements as an indication of our performance.
The following is a reconciliation of net loss, which is the most directly comparable GAAP financial
measure, to FFO and MFFO for the quarter ended December 31, 2010, for the year ended December 31,
2010 and for the period from January 7, 2009 (Date of Inception) through December 31, 2009.
Period from | ||||||||||||
January 7, 2009 | ||||||||||||
Quarter Ended | (Date of Inception) | |||||||||||
December 31, 2010 | Year Ended | through | ||||||||||
(unaudited) | December 31, 2010 | December 31, 2009 | ||||||||||
Net loss |
$ | (1,631,000 | ) | $ | (7,423,000 | ) | $ | (282,000 | ) | |||
Add: |
||||||||||||
Depreciation and amortization
consolidated properties |
1,869,000 | 3,591,000 | | |||||||||
Less: |
||||||||||||
Net (income) loss attributable to
noncontrolling interests |
| (1,000 | ) | 1,000 | ||||||||
Depreciation and amortization related to
noncontrolling interests |
(2,000 | ) | (4,000 | ) | | |||||||
FFO |
$ | 236,000 | $ | (3,837,000 | ) | $ | (281,000 | ) | ||||
Add: |
||||||||||||
Acquisition related expenses |
$ | 1,920,000 | $ | 7,099,000 | $ | 18,000 | ||||||
Amortization of above and below market leases |
30,000 | 79,000 | | |||||||||
Loss in fair value of derivative financial instruments |
(51,000 | ) | 143,000 | | ||||||||
Deferred rent receivables related to noncontrolling interests |
1,000 | 1,000 | | |||||||||
Less: |
||||||||||||
Deferred rent receivables |
(335,000 | ) | (576,000 | ) | | |||||||
MFFO |
$ | 1,801,000 | $ | 2,909,000 | $ | (263,000 | ) | |||||
Weighted average common shares
outstanding basic and diluted |
12,765,174 | 7,471,184 | 186,330 | |||||||||
FFO per common share basic and diluted |
$ | 0.02 | $ | (0.51 | ) | $ | (1.51 | ) | ||||
MFFO per common share basic and diluted |
$ | 0.14 | $ | 0.39 | $ | (1.41 | ) | |||||
About Grubb & Ellis Healthcare REIT II
Grubb & Ellis Healthcare REIT II, Inc. intends to qualify as a real estate investment trust that
seeks to preserve, protect and return investors capital contributions, pay regular cash
distributions, and realize growth in the value of its investments upon the ultimate sale of such
investments. Grubb & Ellis Healthcare REIT II is seeking to raise up to approximately $3 billion in
equity and to acquire a diversified portfolio of real estate assets, focusing primarily on medical
office buildings and other healthcare-related facilities.
Grubb & Ellis Healthcare REIT II is sponsored by Grubb & Ellis Company (NYSE: GBE). Grubb & Ellis
is one of the largest and most respected commercial real estate services and investment companies
in the world. Grubb & Ellis Companys 5,200 professionals in more than 100 company-owned and
affiliate offices draw from a unique platform of real estate services, practice groups and
investment products to deliver comprehensive, integrated solutions to real estate owners, tenants
and investors. The firms transaction, management, consulting and investment services are supported
by highly regarded proprietary market research and extensive local expertise. Through its
investment subsidiaries, the company is a leading sponsor of real estate investment programs that
provide individuals and institutions the opportunity
to invest in a broad range of real estate investment vehicles, including publicly registered
non-traded REITs, mutual funds, separate accounts and other real estate investment funds. For more
information, visit www.grubb-ellis.com.
* * *
This release contains certain forward-looking statements (under Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) with
respect to the success of our company, our ability to provide our investors distribution
sustainability and superior long-term financial performance, whether we will be able to maintain
our current distribution rate, whether we can continue to improve our net operating income and
modified funds of operations, whether we can maintain the financial results experienced in the year
ended December 31, 2010, and whether we can continue to raise sufficient equity in our initial
public offering and deploy it efficiently by acquiring assets. Because such statements include
risks, uncertainties and contingencies, actual results may differ materially from those expressed
or implied by such forward-looking statements. These risks, uncertainties and contingencies
include, but are not limited to, the following: our strength and financial condition and
uncertainties relating to the financial strength of our current and future real estate investments;
uncertainties relating to our ability to continue to maintain the current coverage of our investor
distributions; uncertainties relating to the local economies where our real estate investments are
located; uncertainties relating to changes in general economic and real estate conditions;
uncertainties regarding changes in the healthcare industry; uncertainties relating to the
implementation of recent healthcare legislation; the uncertainties relating to the implementation
of our real estate investment strategy; and other risk factors as outlined in the companys
prospectus, as amended from time to time, and as detailed from time to time in our periodic
reports, as filed with the U.S. Securities and Exchange Commission. Forward-looking statements in
this document speak only as of the date on which such statements were made, and we undertake no
obligation to update any such statements that may become untrue because of subsequent events.
THIS IS NEITHER AN OFFER TO SELL NOR AN OFFER TO BUY ANY SECURITIES DESCRIBED HEREIN. OFFERINGS
ARE MADE ONLY BY MEANS OF A PROSPECTUS OR OFFERING MEMORANDUM.
###