Exhibit 99.1

 

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Fourth Quarter 2013 Results

 

Table of Contents
Earnings Release			1-2
Consolidated Statements of Operations and Comprehensive Income			3
Reconciliations of Net Income to EBITDA, Adjusted EBITDA, FFO, Normalized FFO and AFFO			4
Consolidated Balance Sheets			5
Consolidated Statements of Cash Flows			6-7
Portfolio Summary			8-10
Investment Activity			11
Debt Summary and Capitalization			12
Common Share and OP Unit Weighted Average Amounts Outstanding			13
2014 Guidance			14
Definitions and Footnotes			15-16

Note: This earnings release and supplemental information contains certain non-GAAP financial measures that we believe are helpful in understanding our business, as further discussed herein. These financial measures, which include Funds From Operations, Normalized Funds From Operations, AFFO, Funds From Operations per share, Normalized Funds From Operations per share and AFFO per share, should not be considered as an alternative to net income, earnings per share or any other GAAP measurement of performance or as an alternative to cash flows from operating, investing or financing activities. Furthermore, these non-GAAP financial measures are not intended to be a measure of cash flow or liquidity. Information included in this supplemental package is unaudited.

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AVIV REIT REPORTS FOURTH QUARTER 2013 RESULTS

2014 AFFO PER SHARE EXPECTED TO INCREASE 13%

CHICAGO, IL – February 20, 2014 – Aviv REIT, Inc. (NYSE: AVIV) today reported results for the fourth quarter and year ended December 31, 2013. All per share results are reported on a fully diluted basis.

Highlights

 

•

$250 million of 6% Senior Notes due 2021 issued in October 2013

 

•

$159 million of acquisitions closed during the fourth quarter, at an initial cash yield of 9.8%

 

•

$6 million invested for property reinvestment and new construction during the fourth quarter

 

•

$56 million of acquisitions closed during the first quarter to date, at an initial cash yield of 9.4%

 

•

AFFO of $20.9 million, or $0.41 per diluted share

 

•

Adjusted EBITDA of $33.5 million

“We are pleased with our performance for our first year as a public company, completing $239 million of investments and delivering earnings results consistent with our expectations,” said Craig M. Bernfield, Chairman and Chief Executive Officer of Aviv. “With $56 million of acquisitions already completed year-to-date, we look forward to having an active and successful 2014.”

Fourth Quarter 2013 Results

AFFO for the quarter ended December 31, 2013 was $20.9 million, or $0.41 per diluted share, compared to $21.8 million, or $0.43 per diluted share, for the quarter ended September 30, 2013. The primary difference is due to the additional interest expense from the Company’s October 2013 unsecured notes offering, which was used to pre-fund the fourth quarter acquisitions.

Adjusted EBITDA for the quarter ended December 31, 2013 was $33.5 million, compared to $32.4 million for the quarter ended September 30, 2013. Net income for the quarter ended December 31, 2013 was $11.0 million, or $0.22 per diluted share, compared to $10.1 million, or $0.20 per diluted share, for the quarter ended September 30, 2013.

Full Year 2013 Results

AFFO for the year ended December 31, 2013 was $79.5 million, or $1.69 per diluted share. Adjusted EBITDA for the year ended December 31, 2013 was $128.8 million, compared to $110.2 million for the corresponding period in 2012. Net income for the year ended December 31, 2013 was $23.1 million, or $0.49 per diluted share, compared to $8.6 million, or $0.26 per share, for the year ended December 31, 2012.

Balance Sheet and Liquidity

In October 2013, the Company issued $250 million of 6% Senior Notes due 2021. $135 million of the proceeds were used to entirely pay down the Company’s line of credit, with the remaining proceeds available for general corporate purposes, including for acquisitions and other investments. As of December 31, 2013, the Company had $51 million of cash and $380 million available on its $400 million line of credit. As of December 31, 2013, net debt to Adjusted EBITDA was 4.7x.

 

1

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Dividends

On November 26, 2013, the Company’s Board of Directors declared a dividend for the fourth quarter of $0.36 per share. The dividend was paid in cash on January 17, 2014 to stockholders of record on January 3, 2014.

Full Year 2014 AFFO Guidance

The Company has established an AFFO guidance range of $1.89 to $1.93 per share for the full year 2014 without regard to any additional acquisitions, dispositions or capital transactions. The assumptions underlying guidance can be found on page 14 of this press release. The $0.22 per share, or 13%, increase between the Company’s full year 2013 AFFO of $1.69 and the expected mid-point of the Company’s guidance range for full year 2014 is primarily due to:

 

•

a positive impact of approximately $0.53 per share from the full-year impact of acquisitions completed in 2013, the impact of acquisitions completed in 2014 to date and annual escalators on the Company’s triple-net leases;

 

•

a negative impact of approximately $0.14 per share from additional interest expense from higher total debt outstanding used to fund the Company’s investment activity; and

 

•

a negative impact of approximately $0.17 per share from the full-year impact of shares issued for the Company’s initial public offering in March 2013.

Conference Call and Webcast Information

A conference call to discuss the fourth quarter 2013 earnings will take place today at 1:00 p.m. central time / 2:00 p.m. eastern time. The dial-in number for the conference call is (877) 941-8609 (U.S.) or (480) 629-9645 (International). The conference call can also be accessed via webcast at www.avivreit.com under the Investor Relations tab. A replay of the call will be available through March 20, 2014 on the Company’s website or by calling (800) 406-7325, access code 4663686.

About Aviv

Aviv REIT, Inc., based in Chicago, is a real estate investment trust that specializes in owning post-acute and long-term care skilled nursing facilities and other healthcare properties. Aviv is one of the largest owners of SNFs in the United States and has been in the business for over 30 years. As of today, the Company owns 286 properties that are triple-net leased to 39 operators in 29 states.

For more information about the Company, please visit our website at www.avivreit.com or contact:

David J. Smith, Managing Director, Investor Relations & Capital Markets at 312-855-0930.

Forward-Looking Statements

This press release may include forward-looking statements. Forward-looking statements can be identified by the use of words such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “continue” or similar terminology. These forward-looking statements are made based on our current expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. These uncertainties include, but are not limited to, uncertainties relating to the operations of our tenants, including those relating to reimbursement by government and other third-party payors, compliance with regulatory requirements and occupancy levels, regulatory, reimbursement and other changes in the healthcare industry, the performance and reputation of our tenants, our ability to successfully engage in strategic acquisitions and investments, the effect of general market, economic and political conditions, the obligations associated with being a public company, our level of indebtedness, the availability and cost of capital, changes in tax laws and regulations affecting REITs and our ability to maintain our status as a REIT. Important factors that could cause actual results to differ materially from our expectations include those disclosed under “Risk Factors” and elsewhere in filings made by Aviv REIT, Inc. and Aviv Healthcare Properties Limited Partnership with the Securities and Exchange Commission.

 

2

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Aviv REIT, Inc.

Consolidated Statements of Operations and Comprehensive Income

(unaudited, in thousands except share and per share data)

 

		Three Months Ended December 31,								Year Ended December 31,
		2013				2012				2013				2012
Revenues
Rental income		$	37,307			$	31,526			$	136,513			$	121,210
Interest on secured loans and financing lease			1,128				1,090				4,400				4,633
Interest and other income			26				2				154				1,129
Total revenues			38,461				32,618				141,067				126,972
Expenses
Interest expense incurred			11,186				12,371				40,785				47,440
Amortization of deferred financing costs			943				918				3,459				3,543
Depreciation and amortization			8,826				7,221				33,226				26,892
General and administrative			5,736				4,891				26,886				15,955
Transaction costs			1,208				3,410				3,114				7,259
Loss on impairment of assets			500				4,971				500				11,117
Reserve for uncollectible secured loans and other receivables			12				1,511				68				10,331
Gain on sale of assets, net			(990	)			—				(1,016	)			—
Loss on extinguishment of debt			—				28				10,974				28
Other expenses			—				100				—				400
Total expenses			27,422				35,421				117,996				122,965
Income from continuing operations			11,039				(2,803	)			23,071				4,007
Discontinued operations			—				—				—				4,586
Net income			11,039				(2,803	)			23,071				8,593
Net income allocable to noncontrolling interests			(4,269	)			996				(6,010	)			(3,455	)
Net income allocable to stockholders		$	6,770			$	(1,807	)		$	17,061			$	5,138
Net income		$	11,039			$	(2,803	)		$	23,071			$	8,593
Unrealized loss on derivative instruments			—				—				—				(476	)
Total comprehensive income		$	11,039			$	(2,803	)		$	23,071			$	8,117
Net income allocable to stockholders		$	6,770			$	(1,807	)		$	17,061			$	5,138
Unrealized loss on derivative instruments, net of noncontrolling interest portion of $0, $0, $0 and $192, respectively			—				—				—				(284	)
Total comprehensive income allocable to stockholders		$	6,770			$	(1,807	)		$	17,061			$	4,854
Earnings per common share:
Basic:
Income from continuing operations allocable to stockholders		$	0.22			$	(0.08	)		$	0.51			$	0.12
Discontinued operations, net of noncontrolling interests			—				—				—				0.14
Net income allocable to stockholders		$	0.22			$	(0.08	)		$	0.51			$	0.26
Diluted:
Income from continuing operations allocable to stockholders		$	0.22			$	(0.08	)		$	0.49			$	0.12
Discontinued operations, net of noncontrolling interests			—				—				—				0.14
Net income allocable to stockholders		$	0.22			$	(0.08	)		$	0.49			$	0.26
Weighted average shares used in computing earnings per common share:
Basic			37,534,676				21,653,813				33,700,834				20,006,538
Diluted			50,950,662				21,782,964				44,324,214				20,135,689
Dividends declared per common share		$	0.36			$	0.32			$	1.40			$	1.25

 

3

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Aviv REIT, Inc.

Reconciliations of Net Income to EBITDA and Adjusted EBITDA¹

(unaudited, in thousands)

 

		Three Months Ended December 31,								Year Ended December 31,
		2013				2012				2013				2012
Net income		$	11,039			$	(2,803	)		$	23,071			$	8,593
Interest expense, net			11,186				12,371				40,784				47,436
Amortization of deferred financing costs			943				918				3,459				3,543
Depreciation and amortization			8,826				7,221				33,226				26,892
EBITDA			31,994				17,707				100,540				86,464
Loss on impairment			500				4,971				500				11,117
Gain on sale of assets, net			(990	)			—				(1,016	)			(4,425	)
Transaction costs			1,208				3,410				3,114				7,259
Write-off of straight-line rents			—				985				2,887				1,552
Non-cash stock-based compensation			823				460				11,752				1,689
Loss on extinguishment of debt			—				28				10,974				28
Reserve for uncollectible loan receivables			—				223				11				6,531
Adjusted EBITDA		$	33,535			$	27,784			$	128,762			$	110,215

 

(1)	See definitions and footnotes on pages 15 and 16

Aviv REIT, Inc.

Reconciliations of Net Income to FFO, Normalized FFO and AFFO¹

(unaudited, in thousands except share and per share data)

 

		Three Months Ended December 31,								Year Ended December 31,
		2013				2012				2013				2012
Net income		$	11,039			$	(2,803	)		$	23,071			$	8,593
Adjusted for:
Depreciation and amortization			8,826				7,221				33,226				26,892
Loss on impairment			500				4,971				500				11,117
Gain on sale of assets, net			(990	)			—				(1,016	)			(4,425	)
FFO			19,375				9,389				55,781				42,177
Loss on extinguishment of debt			—				28				10,974				28
Reserve for uncollectible loan receivables			—				223				11				6,531
Severance cost			276				—				276				—
Transaction costs			1,208				3,410				3,114				7,259
Normalized FFO			20,859				13,050				70,156				55,995
Amortization of deferred financing costs			943				918				3,459				3,543
Non-cash stock-based compensation			823				460				11,752				1,689
Straight-line rental income, net			(1,480	)			(1,734	)			(4,478	)			(7,656	)
Rental income from intangible amortization, net			(272	)			(337	)			(1,369	)			(1,486	)
AFFO		$	20,873			$	12,357			$	79,520			$	52,085
Weighted average common shares and units outstanding, basic			49,210								45,573
Weighted average common shares and units outstanding, diluted			50,951								47,104
AFFO per share and unit, basic		$	0.42							$	1.74
AFFO per share and unit, diluted		$	0.41							$	1.69

 

(1)	See definitions and footnotes on pages 15 and 16

 

4

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Aviv REIT, Inc.

Consolidated Balance Sheets

(unaudited, in thousands except share data)

 

		December 31,				December 31,
		2013				2012
Assets
Income producing property
Land		$	138,150			$	119,132
Buildings and improvements			1,138,173				968,075
Assets under direct financing leases			11,175				11,049
			1,287,498				1,098,256
Less accumulated depreciation			(147,302	)			(119,371	)
Construction in progress and land held for development			23,292				4,576
Net real estate			1,163,488				983,461
Cash and cash equivalents			50,764				17,876
Straight-line rent receivable, net			40,580				36,102
Tenant receivables, net			1,647				3,484
Deferred finance costs, net			16,643				14,651
Secured loan receivables, net			41,686				32,639
Other assets			15,625				11,316
Total assets		$	1,330,433			$	1,099,529
Liabilities and equity
Secured loan		$	13,654			$	213,679
Unsecured notes payable			652,752				403,180
Line of credit			20,000				88,294
Accrued interest payable			15,284				13,265
Dividends & distributions payable			17,694				13,687
Accounts payable and accrued expenses			10,555				10,943
Tenant security and escrow deposits			21,586				18,278
Other liabilities			10,463				17,700
Total liabilities			761,988				779,026
Equity:
Stockholders’ equity
Common stock (par value $0.01; 37,593,910 and 21,653,813 shares issued and outstanding, respectively)			376				217
Additional paid-in-capital			523,658				375,030
Accumulated deficit			(89,742	)			(46,527	)
Accumulated other comprehensive loss			—				(2,152	)
Total stockholders’ equity			434,292				326,568
Noncontrolling interests—operating partnership			134,153				(6,065	)
Total equity			568,445				320,503
Total liabilities and equity		$	1,330,433			$	1,099,529

 

5

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Aviv REIT, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

		Year Ended December 31,
		2013				2012
Operating activities
Net income		$	23,071			$	8,593
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			33,226				26,935
Amortization of deferred financing costs			3,459				3,543
Accretion of debt premium			(507	)			(414	)
Straight-line rental income, net			(4,478	)			(7,656	)
Rental income from intangible amortization, net			(1,369	)			(1,486	)
Non-cash stock-based compensation			11,752				1,689
Gain on sale of assets, net			(1,016	)			(4,425	)
Non-cash loss on extinguishment of debt			5,161				42
Loss on impairment			500				11,117
Reserve for uncollectible loans and other receivables			68				10,331
Accretion of earn-out provision for previously			—				400
acquired real estate investments
Changes in assets and liabilities:
Tenant receivables			(3,511	)			(4,572	)
Other assets			(5,229	)			(5,873	)
Accounts payable and accrued expenses			3,949				5,021
Tenant security deposits and other liabilities			2,277				1,230
Net cash provided by operating activities			67,353				44,475
Investing activities
Purchase of real estate			(197,388	)			(172,773	)
Proceeds from sales of real estate			15,549				31,933
Capital improvements			(12,003	)			(13,558	)
Development projects			(18,738	)			(28,067	)
Secured loan receivables received from others			4,086				14,632
Secured loan receivables funded to others			(10,407	)			(16,857	)
Net cash used in investing activities			(218,901	)			(184,690	)

 

 

6

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Aviv REIT, Inc.

Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

		Year Ended December 31,
		2013				2012
Financing activities
Borrowings of debt		$	470,000			$	267,761
Repayment of debt			(488,241	)			(174,127	)
Payment of financing costs			(10,448	)			(5,143	)
Capital contributions			575				109,000
Deferred contribution			—				(35,000	)
Initial public offering proceeds			303,600				—
Cost of raising capital			(25,829	)			—
Cash distributions to partners			(16,314	)			(16,484	)
Cash dividends to stockholders			(48,907	)			(28,778	)
Net cash provided by financing activities			184,436				117,229
Net increase (decrease) in cash and cash equivalents			32,888				(22,986	)
Cash and cash equivalents:
Beginning of year			17,876				40,862
End of year		$	50,764			$	17,876
Supplemental cash flow information
Cash paid for interest		$	40,008			$	46,711
Supplemental disclosure of noncash activity
Accrued dividends payable to stockholders		$	13,551			$	9,888
Accrued distributions payable to partners		$	4,143			$	3,799
Write-off of straight-line rent receivable, net		$	2,887			$	1,552
Write-off of in-place lease intangibles, net		$	—			$	19
Write-off of deferred financing costs, net		$	5,161			$	42
Assumed debt		$	—			$	11,460

 

7

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Aviv REIT, Inc.

Portfolio Summary¹

Portfolio Composition

 

Property Type		Property Count				Number of Beds				Square Feet				Investment (GBV)				Annualized Cash Rent				% of Total Rent
Skilled Nursing			236				20,754				7,950			$	1,102,231			$	127,870				85.7	%
Senior Housing			26				1,761				1,024				147,280				15,813				10.6	%
Other Healthcare Properties			20				221				143				65,008				5,488				3.7	%
Total			282				22,736				9,117			$	1,314,519			$	149,171				100.0	%

Portfolio Performance

 

Core Portfolio		EBITDARM Coverage				EBITDAR Coverage				Occupancy				Facility Revenue Mix												EBITDAR Margin
														Private Pay				Medicare				Medicaid
Skilled Nursing			1.9x				1.5x				79.2	%			19.5	%			24.3	%			56.3	%			14.6	%
Senior Housing			1.6x				1.4x				77.0	%			81.4	%			4.9	%			13.8	%			29.8	%
Other Healthcare Properties			9.8x				8.7x				86.0	%			100.0	%			0.0	%			0.0	%			30.4	%
Total			2.0x				1.6x				79.2	%			24.7	%			22.7	%			52.7	%			15.7	%

State Diversification

 

State		Properties				Investment (GBV)				Annualized Rent
										Rent				%
Texas			62			$	218,913			$	26,032				17.5	%
Ohio			27				191,381				20,868				14.0	%
California			36				167,033				19,162				12.8	%
Connecticut			6				92,725				9,428				6.3	%
Pennsylvania			10				79,599				8,265				5.5	%
Missouri			15				76,164				7,229				4.8	%
Arkansas			11				54,722				5,818				3.9	%
Illinois			11				38,864				5,359				3.6	%
New Mexico			9				29,586				5,075				3.4	%
Washington			10				57,785				4,621				3.1	%
Other 19 States			85				307,748				37,314				25.0	%
			282			$	1,314,519			$	149,171				100.0	%

Operator Diversification

 

Operator (Location)		Properties								Investment (GBV)				Annualized Rent								States
		Aviv				Total								Rent				%
Daybreak (Denton, TX)			52				69			$	170,256			$	20,909				14.0	%			2
Saber (Bedford Heights, OH)			30				72				185,761				20,130				13.5	%			6
EmpRes (Vancouver, WA)			17				45				111,862				12,480				8.4	%			6
Preferred Care (Plano, TX)			17				111				69,007				10,537				7.1	%			12
Maplewood (Westport, CT)			7				7				102,940				10,228				6.9	%			2
Sun Mar (Brea, CA)			13				25				71,075				8,980				6.0	%			1
Fundamental (Sparks, MD)			12				104				78,438				7,314				4.9	%			9
Diversicare (Brentwood, TN)			6				47				54,952				5,637				3.8	%			9
Deseret (Bountiful, UT)			18				29				39,077				4,936				3.3	%			5
Genesis (Kennett Square, PA)			10				412				16,253				4,400				2.9	%			28
Other 28 Operators			100				402				414,898				43,621				29.2	%
			282				1,323			$	1,314,519			$	149,171				100.0	%

 

(1)

Dollars and square feet in thousands. Data as of December 31, 2013. Coverage, occupancy, margin and revenue mix information is provided on a trailing twelve month basis through September 30, 2013. Annualized cash rent for leases in place as of December 31, 2013 and includes income from a deferred financing lease.

Totals may not add due to rounding.

 

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Aviv REIT, Inc.

Portfolio Summary

State Occupancy¹

 

State		Aviv Occupancy				State Average				Variance
Texas			74.6	%			71.9	%			2.7	%
Ohio			83.0	%			84.3	%			(1.3	%)
California			90.9	%			85.0	%			5.9	%
Connecticut			98.8	%			NA				NA
Pennsylvania			85.0	%			90.4	%			(5.4	%)
Missouri			72.6	%			71.7	%			0.9	%
Arkansas			70.8	%			72.4	%			(1.6	%)
Illinois			72.8	%			77.7	%			(4.9	%)
New Mexico			81.1	%			83.7	%			(2.6	%)
Washington			85.9	%			79.9	%			6.0	%

Lease Maturity Schedule ²

 

Year		Number of Properties				% of Total Rent
2014			1				0.2	%
2015			8				2.2	%
2016			6				2.2	%
2017			16				3.8	%
2018			28				11.8	%
Thereafter			222				79.8	%
Total			281				100.0	%

 

(1)	Occupancy information as of September 30, 2013. State occupancy represents nursing facility occupancies per American Health Care Association. Aviv only has assisted living properties in Connecticut.

(2)	Lease expiration schedule as of December 31, 2013 and excludes one property without a lease in place at December 31, 2013.

 

9

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Aviv REIT, Inc.

Portfolio Summary

Information for the trailing twelve month period ended September 30, 2013

EBITDARM Coverage Distribution

 

EBITDAR Coverage Distribution

 

 

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Aviv REIT, Inc.

Investment Activity as of December 31, 2013

(in thousands)

2013 Property Reinvestment and New Construction

 

Period		Property Reinvestment				New Construction				Total
Fourth quarter		$	2,094			$	4,358			$	6,452
Third quarter			1,993				3,882				5,875
Second quarter			3,011				8,674				11,685
First quarter			4,905				1,824				6,729
										$	30,741

New Construction Projects

 

Operator—Location		Property Type				Beds				Opening Date				Acquisition Costs				Spend Through 12/31/2013				Remaining Costs to be Spent				Total Expected Cost				Expected Yield
Daybreak—Eagle Lake, TX			SNF				80				Q1 2014			$	101			$	4,223			$	1,476			$	5,800				11.0	%
Saber—Chatham, PA			SNF				120				Q2 2014				2,200				9,666				334				12,200				11.0	%
Maplewood—Bethel, CT			ALF				80				Q1 2015				2,400				5,264				11,236				18,900				9.5	%
Total														$	4,701			$	19,153			$	13,046			$	36,900

2013 Acquisitions

 

Period		Property Type		Location		Beds				Amount				Initial Cash Yield
Fourth quarter		SNF, ALF, LTAC, Hospital		8 states			2,646			$	159,312				9.8	%
Third quarter		SNF		2 states			203				12,450				10.7	%
Second quarter		SNF, MOB, TBI		6 states			437				25,626				10.4	%
First quarter		N/A		N/A			0				0				0.0	%
Total							3,286			$	197,388				10.0	%

 

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Aviv REIT, Inc.

Debt Summary and Capitalization as of December 31, 2013

Debt Maturities

 

Year		Senior Unsecured Notes				Revolving Credit Facility				Mortgage Debt				Total Debt
2014		$	—			$	—			$	157			$	157
2015			—				—				165				165
2016			—				20,000				174				20,174
2017			—				—				183				183
2018			—				—				192				192
Thereafter			650,000				—				10,367				660,367
Subtotal		$	650,000			$	20,000			$	11,238			$	681,238
(Discounts) and premiums, net			2,752				—				2,416				5,168
Total debt		$	652,752			$	20,000			$	13,654			$	686,406
Weighted average interest rate															6.9	%
Weighted average maturity in years															6.5

Fixed and Floating Rate Debt

 

		Amount				% of Total
Fixed rate debt
Senior unsecured notes		$	650,000				95.4	%
Mortgage debt			11,238				1.6	%
Total fixed rate debt		$	661,238				97.1	%
Floating rate debt
Revolver		$	20,000				2.9	%
Total debt		$	681,238				100.0	%

Covenants for Senior Unsecured Notes ¹

 

Covenant		Requirement		Q4 2013
Total debt / total assets		No greater than 60%			46	%
Secured debt / total assets		No greater than 40%			2	%
Interest coverage		No less than 2.00x			3.16x
Unencumbered assets / unsecured debt		No less than 150%			185	%

Total Market Capitalization

 

		Shares/units Outstanding				Price				Value
Common stock and OP units			49,257			$	23.70			$	1,167,401
Total debt											686,406
Total market capitalization										$	1,853,807

Dollars and shares/units in thousands

 

(1)	Covenants are calculated in accordance with the indenture governing the senior unsecured notes.

 

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Aviv REIT, Inc.

Common Share and OP Unit

Weighted Average Amounts Outstanding

 

		Q4 2013				2013
Weighted Average Amounts Outstanding for EPS Purposes:
Common shares—basic			37,534,676				33,700,834
Effect of dilutive securities:
OP units			11,675,517				9,091,974
Stock options			1,696,755				1,518,838
Restricted stock units			43,714				12,568
Total common shares—diluted			50,950,662				44,324,214
Weighted Average Amounts Outstanding for FFO,
Normalized FFO and AFFO Purposes:
Common shares—basic			37,534,676				33,700,834
OP units			11,675,517				11,872,154
Total common shares and OP units			49,210,193				45,572,988
Effect of dilutive securities:
Stock options			1,696,755				1,518,838
Restricted stock units			43,714				12,568
Total common shares and units—diluted			50,950,662				47,104,394
Period Ending Amounts Outstanding:
Common shares (includes restricted stock)			37,641,160
OP units			11,616,283
Total common shares and units			49,257,443

 

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Aviv REIT, Inc.

2014 Guidance

The following table illustrates the Company’s AFFO per share guidance for the year ending December 31, 2014.

 

		Expected 2014 per share
Per diluted common share:
Net income		$1.08 -$ 1.12
Depreciation and amortization		0.72
FFO		$1.80 -$ 1.84
Transaction costs		0.02
Normalized FFO		$1.82 -$ 1.86
Amortization of deferred financing costs		0.07
Non-cash stock-based compensation		0.10
Straight-line rental income, net		(0.09)
Rental income from intangible amortization, net		(0.01)
AFFO		$1.89 -$ 1.93
Weighted average common shares and units - diluted		51.1 million

The Company’s AFFO guidance for 2014 excludes any additional acquisitions, dispositions and capital transactions.

 

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Aviv REIT, Inc.

Definitions and Footnotes for Pages 4, 8, 9, 10 and 14

EBITDARM Coverage: Represents EBITDARM, which the Company defines as earnings before interest, taxes, depreciation, amortization, rent expense and management fees allocated by the operator to one of its affiliates, of our operators for the applicable period, divided by the rent paid to the Company by its operators during each period.

EBITDAR Coverage: Represents EBITDAR, which the Company defines as earnings before interest, taxes, depreciation, amortization and rent expense, of its operators for the applicable period, divided by the rent paid to Aviv by its operators during such period. Assumes a management fee of 4%.

EBITDAR Margin: Represents the operator’s EBITDAR for the applicable period divided by the operator’s total revenue for the applicable period.

Enterprise Value: Represents equity market capitalization plus net debt. Equity market capitalization is calculated as the number of shares of common stock and units multiplied by the closing price of the Company’s common stock on the last day of the period presented. Net debt represents total debt less cash and cash equivalents.

Portfolio Occupancy: Represents the average daily number of beds at the Company’s properties that are occupied during the applicable period divided by the total number of beds at the Company’s properties that are available for use during the period.

Property Type: ALF = assisted living facility; LTACH = long-term acute care hospital; MOB = medical office building; TBI = traumatic brain injury facility; SNF = skilled nursing facility

State Average Occupancy: Represents the Nursing Facility State Occupancy Rate as reported by American Health Care Association (AHCA). AHCA occupancy data is calculated by dividing the sum of all facility patients in the state occupying certified beds by the sum of all the certified beds in the state reported at the time of the survey corresponding to the period presented. Aviv occupancy represents the state occupancy for the entire portfolio.

Yield: Represents annualized contractual or projected income to be received in cash divided by investment amount.

Portfolio metrics and other statistics are not derived from Aviv’s financial statements but are operating statistics that the Company derives from reports that it receives from its operators pursuant to Aviv’s triple-net leases. As a result, the Company’s portfolio metrics typically lag its own financial statements by approximately one quarter. In order to determine Aviv’s portfolio metrics for the period presented, the metrics are stated only with respect to properties owned by the Company and operated by the same operator for the portion of the period Aviv owned the properties and excludes assets held for sale, closed properties, properties under construction and, with certain exceptions for shorter periods, properties within 24 months of completion of construction. Accordingly, EBITDARM coverage, EBITDAR coverage, EBITDAR margin, portfolio occupancy and quality mix for the twelve months ended September 30, 2013 included 240 core properties of the 263 properties in the Company’s portfolio as of September 30, 2013.

When Aviv refers to the “total rent” of its portfolio, the Company is referring to the total monthly rent due under all of its triple-net leases as of the date specified, calculated based on the first full month following the specified date. Aviv calculates “annualized rent” for properties during a period by utilizing the amount of rent under contract as of the last day of the period and assume that amount of rent was received in respect of such property throughout the entire period.

Non-GAAP Financial Measures

We use financial measures in this release that are derived on the basis of methodologies other than in accordance with GAAP. We derive these measures as follows:

 

•

The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (computed in accordance with GAAP), excluding gains and losses from sales of property (net) and impairments of depreciated real estate, plus real estate depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Applying the NAREIT definition to our financial statements results in FFO representing net income before depreciation and amortization, impairment of assets, and gain (loss) on sale of assets.

 

•

Normalized FFO represents FFO before loss on extinguishment of debt, reserves for uncollectible loan receivables, transaction costs, severance costs and change in fair value of derivatives.

 

•

AFFO represents Normalized FFO before amortization of deferred financing costs, non-cash stock-based compensation, straight-line rental income (net) and rental income from intangible amortization (net).

 

•

EBITDA represents net income before interest expense (net), amortization of deferred financing costs and depreciation and amortization.

 

•

Adjusted EBITDA represents EBITDA before impairment of assets, gain (loss) on sale of assets, transaction costs, write-off of straight-line rents, non-cash stock-based compensation, loss on extinguishment of debt, reserves for uncollectible loan receivables and change in fair value of derivatives.

 

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Aviv REIT, Inc.

Definitions and Footnotes for Pages 4, 8, 9, 10 and 14

 

Our management uses FFO, Normalized FFO, AFFO, EBITDA and Adjusted EBITDA as important supplemental measures of our operating performance and liquidity. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. The term FFO was designed by the real estate industry to address this issue and as an indicator of our ability to incur and service debt. Because FFO, Normalized FFO and AFFO exclude depreciation and amortization unique to real estate, impairment, gains and losses from property dispositions and extraordinary items and because EBITDA and Adjusted EBITDA exclude certain non-cash charges and adjustments and amounts spent on interest and taxes, they provide our management with performance measures that, when compared year over year or with other real estate investment trusts, or REITs, reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and, with respect to FFO, Normalized FFO and AFFO, interest costs, in each case providing perspective not immediately apparent from net income. In addition, we believe that FFO, Normalized FFO, AFFO, EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs.

We offer these measures to assist the users of our financial statements in assessing our financial performance and liquidity under GAAP, but these measures are non-GAAP measures and should not be considered measures of liquidity, alternatives to net income or indicators of any other performance measure determined in accordance with GAAP, nor are they indicative of funds available to fund our cash needs, including our ability to make payments on our indebtedness. In addition, our calculations of these measures are not necessarily comparable to similar measures as calculated by other companies that do not use the same definition or implementation guidelines or interpret the standards differently from us. Investors should not rely on these measures as a substitute for any GAAP measure, including net income, cash flows provided by operating activities or revenues.

 

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