Global Healthcare REIT Reports Third Quarter 2015 Results
Q3 Rental Revenue up 116% to $1.0 Million vs. Same Year-Ago Quarter
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E-mailATLANTA, GA -- (Marketwired) -- 11/16/15 -- Global Healthcare REIT, Inc. (OTCQB: GBCS), a company that owns healthcare properties and leases them to senior care facility operators, reported results for the third quarter ended September 30, 2015.
Q3 2015 Highlights
- Rental revenue increased 116% to $1.0 million versus the same year-ago quarter.
- Signed three long-term operating leases for its facilities in Georgia, replacing existing leases which are set to expire next year. The new operating leases are expected to increase annual rent revenue by $646,000.
- Signed a definitive purchase agreement to acquire a 112-bed skilled nursing facility in Ridgeway, South Carolina for $3.0 million. The company expects to complete the transaction by the end of the year and fund the acquisition with a traditional bank loan and other financing alternatives.
- Appointed Zvi Rhine and Lance J. Baller to board of directors. They have extensive executive management experience in the capital markets, particularly sale-leaseback transactions and mid-market acquisitions.
Q3 2015 Financial Summary Rental revenue increased 116% to $1.0 million in the third quarter of 2015, as compared to $0.5 million in the same year-ago quarter. The increase in revenue was due to contribution of revenue from five facilities acquired in the year-ago quarter.
Rental revenue in the third quarter of 2015 was derived from 9 out of 11 facilities in the company's portfolio, with the Southern Hills assisted living and independent living facilities currently undergoing renovations.
Total expenses were $1.0 million in the third quarter of 2015, compared to $0.4 million in the same year-ago quarter. The increase in total expenses was primarily due to a bad debt expense of $380,000, and to a lesser extent due to increased depreciation expense due to the addition of properties to the company's portfolio in 2014, and related increased general and administrative expenses.
As the company continues its acquisition campaign for healthcare real estate, it anticipates revenue and cash flow to increase while holding general and administrative costs relatively flat at approximately $205,000 per quarter, excluding costs related to the assisted and independent living facilities in Tulsa, Oklahoma until the renovations are complete and an operator is in place.
Interest expense was $0.7 million in the third quarter of 2015, as compared to $0.2 million in the same year-ago quarter. The increase in interest expense is due to increased debt associated with new acquisitions.
Net loss to common stockholders was $0.7 million or $(0.03) per basic and diluted share in the third quarter of 2015, as compared to net loss of $0.2 million or $(0.01) per diluted share in the same year-ago period.
Cash and cash equivalents totaled $0.5 million as of September 30, 2015, as compared to $0.5 million as of December 31, 2014.
Funds from operations (FFO) was negative $371,000 or $(0.02) per share in the third quarter of 2015 (see "Use of Non-GAAP Financial Information," below for the definition of FFO, a non-GAAP financial metric, as well as an important discussion about the use of this metric). Given that the company first began to track and report FFO in the first quarter of 2015, there is no comparative year-ago period for FFO.
Management Commentary "Our strong quarter over quarter growth in rental revenue was driven by the five acquisitions of skilled nursing facilities since the year ago," said Global Healthcare REIT's president and CEO, Christopher Brogdon. "We continue to work towards closing the previously announced acquisition of a skilled nursing facility in South Carolina, which would represent our first facility in the state.
"Regarding our HUD refinancing efforts, we are currently refinancing our Goodwill and Dodge facilities with a long-term rate this is expected to be under 4%. We anticipate closing these loans in Q1 of 2016, and for the lower rate to improve our FFO by generating annual interest savings by $394,000. Our Providence Sparta property is eligible for HUD refinancing once our new tenant is in place on July 1, 2016. We will continue to evaluate HUD refinancing opportunities for other properties where available.
"Subsequent to the quarter, we announced signing three long-term operating leases for our Green Pointe, Providence and Warrenton facilities in Georgia, replacing existing leases which are set to expire on June 30, 2016. These long-term leases to an experienced professional operator contain terms more reflective of the value of the properties and their cash flow generation capacity.
"Our business model and property ownership structure is designed to drive increased operating cash flow as incremental properties are acquired. As we continue our acquisition campaign, we anticipate revenue and cash flow to increase as we maintain corporate overhead relatively flat."
Summary of Property Portfolio
ALF = Assisted Living Facility SNF = Skilled Nursing Facility ILF= Independent Living Facility
----------------------------------------------------------------------------
Property Property Facility Gross Date
Name Count Type Beds/Units Annual Rent Location Acquired
----------------------------------------------------------------------------
Middle Eastman,
Georgia 1 SNF 100 beds $570,000 GA 3-15-2013
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Warrenton,
Warrenton 1 SNF 110 beds $334,448 GA 12-31-2013
----------------------------------------------------------------------------
SNF 106 beds $420,000
----------------------------------
Southern Under
Hills 1 ILF 96 units renovations Tulsa, OK 2-7-2014
----------------------------------
ALF 32 beds $240,000
----------------------------------------------------------------------------
Goodwill 1 SNF 172 beds $734,400 Macon, GA 5-19-2014
----------------------------------------------------------------------------
Edwards Oklahoma
Redeemer 1 SNF 106 beds $540,000 City, OK 9-16-2014
----------------------------------------------------------------------------
Golden
Years
Manor 1 SNF 141 beds $768,000 Lonoke, AK 9-16-2014
----------------------------------------------------------------------------
Sparta 1 SNF 71 beds $237,372 Sparta, GA 9-16-2014
----------------------------------------------------------------------------
Greene Union
Point 1 SNF 71 beds $254,220 Point, GA 9-16-2014
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Seville,
Meadowview 1 SNF 80 beds $410,340 OH 9-30-2014
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$4.5
Total 9 11 1,085 Million
-------------------------------------------------------
About Global Healthcare REIT
Global Healthcare REIT acquires real estate properties primarily engaged in the healthcare industry, including skilled nursing homes, medical offices, hospitals and emergency care facilities. The company does not operate its own healthcare facilities, but leases its properties under long term operating leases. It currently owns interest in 11 facilities primarily across the Southeastern U.S. For further information, visit www.gbcsreit.com.
Forward-looking Statements
This press release may contain projection and other forward-looking statements. Any such statement reflects the Company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur and actual results could differ materially from those presented. There can be no assurance that the Company will be able to declare and pay cash dividends to common stockholders in the future, or the frequency or amount of such dividends, if any. A discussion of important factors that could cause actual results to differ from those presented is included in the Company's periodic reports filed with the Securities and Exchange Commission (at http://www.sec.gov).
Note Regarding Non-GAAP Financial Measures Beginning with the reporting of results for the first quarter of 2015, the company began to report the measures of funds from operations (FFO) and FFO per share.
Funds from Operations (FFO), as defined by the National Association of Real Estate Investment Trusts (NAREIT), and FFO per share are important non-GAAP supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that uses historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP.
FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from real estate dispositions, real estate depreciation and amortization and impairment charges, and adjustments for unconsolidated partnerships and joint ventures. The Company computes FFO in accordance with NAREIT's definition.
GLOBAL HEALTHCARE REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- --------------------------
2015 2014 2015 2014
----------- ------------ ------------ ------------
Revenue
Rental Revenue $ 978,648 $ 453,600 $ 3,264,321 $ 998,632
----------- ------------ ------------ ------------
Expenses
General and
Administrative 276,478 188,196 1,036,946 580,794
Acquisition Costs 1,950 68,725 1,950 249,180
Bad Debt 380,000 - 380,000 -
Loss on Sale of
Property and
Equipment - - - 381,395
Depreciation 338,355 177,146 949,080 345,650
----------- ------------ ------------ ------------
Total Expenses 996,783 434,067 2,367,976 1,557,019
----------- ------------ ------------ ------------
Income (Loss) from
Operations (18,135) 19,533 896,345 (558,387)
----------- ------------ ------------ ------------
Other (Income)
Expense
Bargain Purchase
Gain - - - (3,000,000)
Interest Income (19,660) (52,250) (82,824) (103,580)
Interest Expense 735,843 199,998 2,074,854 567,774
----------- ------------ ------------ ------------
Total Other
(Income) Expense 716,183 147,748 1,992,030 (2,535,806)
----------- ------------ ------------ ------------
Equity in Income
(Loss) from
Unconsolidated
Partnership - (22,076) 53,688 (37,501)
----------- ------------ ------------ ------------
Net Income (Loss) (734,318) (150,291) (1,041,997) 1,939,918
Net (Income) Loss
Attributable to
Noncontrolling
Interests 11,963 (11,848) (27,174) (21,965)
----------- ------------ ------------ ------------
Net Income (Loss)
Attributable to
Global Healthcare
REIT, Inc. (722,355) (162,139) (1,069,171) 1,917,953
Series D Preferred
Dividends (7,561) (12,061) (22,438) (35,342)
----------- ------------ ------------ ------------
Net Income (Loss)
Attributable to
Common Stockholders $ (729,916) $ (174,200) $ (1,091,609) $ 1,882,611
=========== ============ ============ ============
Per Share Data:
Net Income (Loss) per
Share Attributable
to Common
Stockholders -
Basic $ (0.03) $ (0.01) $ (0.05) $ 0.10
=========== ============ ============ ============
Diluted $ (0.03) $ (0.01) $ (0.05) $ 0.09
=========== ============ ============ ============
Weighted Average
Common Shares
Outstanding:
Basic 22,259,569 19,960,494 22,021,499 18,950,343
=========== ============ ============ ============
Diluted 22,259,569 19,960,494 22,021,499 21,835,748
=========== ============ ============ ============
GLOBAL HEALTHCARE REIT, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
2015 2014
ASSETS
Property and Equipment, Net $ 39,638,926 $ 40,259,357
Cash and Cash Equivalents 456,464 533,597
Advances to Related Parties, Net of Allowance 53,211 353,211
Restricted Cash 544,783 904,157
Note Receivable 350,000 -
Notes Receivable - Related Parties, Net of
Discount 682,472 1,186,822
Prepaid Expenses, Deferred Loan Costs, and
Other 1,367,076 1,490,634
Goodwill 1,750,454 1,750,454
------------- ------------
Total Assets $ 44,843,386 $ 46,478,232
============= ============
LIABILITIES AND EQUITY
Liabilities
Debt, Net $ 36,394,727 $ 36,810,874
Accounts Payable and Accrued Liabilities 382,819 268,942
Dividends Payable 7,561 -
Lease Security Deposits 249,543 176,667
------------- ------------
Total Liabilities 37,034,650 37,256,483
------------- ------------
Equity
Stockholders' Equity
Preferred Stock:
Series A - No Dividends, $2.00 Stated
Value, Non-Voting; 2,000,000 Shares
Authorized, 200,500 Shares Issued and
Outstanding 401,000 401,000
Series D - 8% Cumulative, Convertible,
$1.00 Stated Value, Non-Voting;
1,000,000 Shares Authorized, 375,000
Shares Issued and Outstanding
375,000 375,000
Common Stock - $0.05 Par Value; 50,000,000
Shares Authorized, 22,238,837 and
21,640,051 Shares Issued and Outstanding
at September 30, 2015 and December 31,
2014, Respectively 1,111,942 1,082,003
Additional Paid-In Capital 8,656,941 8,540,520
Retained Earnings (Accumulated Deficit) (1,319,816) 212,573
------------- ------------
Total Global Healthcare REIT, Inc.
Stockholders' Equity 9,225,067 10,611,096
Noncontrolling Interests (1,416,331) (1,389,347)
------------- ------------
Total Equity 7,808,736 9,221,749
------------- ------------
Total Liabilities and Equity $ 44,843,386 $ 46,478,232
============= ============
Investor Relations Contact: Ron Both Senior Managing Director Liolios Tel 949-574-3860 Email Contact
Source: Global Healthcare REIT
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