Aviv REIT Reports Fourth Quarter 2013 Results

2014 AFFO PER SHARE EXPECTED TO INCREASE 13%

PR Newswire

CHICAGO, Feb. 20, 2014 /PRNewswire/ -- Aviv REIT, Inc. (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.   

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.

 

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

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 notes on Definitions and Footnotes


















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 notes on Definitions and Footnotes









 

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





 

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
acquired real estate investments



400

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)

 

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






 

Aviv REIT, Inc.

Portfolio Summary1


Portfolio Composition

























Annualized







Property


Number of 


Square


Investment


Cash


% of



Property Type


Count


Beds


Feet


(GBV)


Rent


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

















EBITDARM


EBITDAR




Facility Revenue Mix


EBITDAR

Core Portfolio


Coverage


Coverage


Occupancy


Private Pay


Medicare


Medicaid


Margin
















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



















Investment


Annualized Rent







State


Properties


(GBV)


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

















Properties


Investment


Annualized Rent





Operator (Location)


Aviv


Total


(GBV)


Rent


%


States


















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.

 

Aviv REIT, Inc.

Portfolio Summary


State Occupancy1









Aviv


State



State


Occupancy


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 Schedule2









Number of


% of



Year


Properties


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.

Aviv REIT, Inc.
Portfolio Summary

(Photo: http://photos.prnewswire.com/prnh/20140220/CG67813)

 

Aviv REIT, Inc.

Investment Activity as of December 31, 2013

(in thousands)


2013 Property Reinvestment and New Construction






























Property


New













Period


Reinvestment


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





























Remaining


Total





Property




Opening


Acquisition


Spend Through


Costs to


Expected


Expected

Operator - Location


Type


Beds


Date


Costs


12/31/2013


be Spent


Cost


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





























Initial





Period


Property Type


Location


Beds


Amount


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%





 

Aviv REIT, Inc.

Debt Summary and Capitalization as of December 31, 2013


Debt Maturities











Senior Unsecured


Revolving


Mortgage


Total

Year


Notes


Credit Facility


Debt


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 Notes1
















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.

 

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



 

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.

Aviv REIT, Inc.
Definitions and Footnotes

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.

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.

Information included in this supplemental package is unaudited.

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