Griffin-American Healthcare REIT III Reports Third Quarter 2017 Results
IRVINE, Calif. (Nov. 16, 2017) – Griffin-American Healthcare REIT III, Inc. Inc. today announced operating results for the company’s third quarter ended Sept. 30, 2017.
“In little more than three years, our international portfolio has achieved significant scale and diversity, with hundreds of healthcare real estate investments acquired for more than $2.9 billion1 located throughout the United States and the United Kingdom,” said Jeff Hanson, chairman and chief executive officer. “Most importantly, our portfolio continues to perform very well, with high occupancy in both our RIDEA2 and non-RIDEA segments, enviable average remaining lease term, and low portfolio-level debt.”
Chief financial officer Brian Peay added, “During the third quarter, Griffin-American Healthcare REIT III continued to enjoy impressive operational performance and year-over-year quarterly growth. “Funds from operations attributable to controlling interest grew by 137 percent, while both modified funds from operations attributable to controlling interest and net operating income expanded by approximately 6 percent and 3 percent, respectively. We remain very pleased with our performance and overall portfolio operations.”
Third Quarter 2017 Highlights and Subsequent Events
- Modified funds from operations, as defined by the Investment Program Association, or the IPA, attributable to controlling interest, or MFFO, equaled $25.7 million for the quarter ended Sept. 30, 2017, representing year-over-year growth of approximately 6 percent compared to $24.2 million during the third quarter 2016. Funds from operations, as defined by the National Association of Real Estate Investment Trusts, or NAREIT, attributable to controlling interest, or FFO, equaled $27.7 million during the third quarter 2017, representing year-over-year growth of approximately 137 percent versus third quarter 2016 FFO of $11.7 million. Year-over-year growth in FFO is primarily due to the capitalization of direct acquisition-related costs in connection with the purchase of the company’s properties in 2017 compared to expensing such costs in connection with the purchase of the company’s properties in 2016, in accordance with accounting principles generally accepted in the United States of America, or GAAP. (Please see financial reconciliation tables and notes at the end of this release for more information regarding MFFO and FFO.)
- Net income during the third quarter 2017 was $4.5 million, compared to a net loss of $(56.4) million during the third quarter 2016. Net operating income, or NOI, totaled $55.4 million for the quarter ended Sept. 30, 2017, representing an increase of approximately 3 percent over third quarter 2016 NOI of $54.0 million. (Please see financial reconciliation tables and notes at the end of this release for more information regarding NOI and net income (loss).)
- As of Sept. 30, 2017, the company’s non-RIDEA property portfolio achieved a leased percentage of approximately 95 percent and weighted average remaining lease term of 8.6 years. The company’s portfolio of senior housing — RIDEA facilities and integrated senior health campuses achieved a leased percentage of approximately 85 percent and 86 percent, respectively, for the nine months ended Sept. 30, 2017. Portfolio leverage3 was approximately 37 percent.
- The company declared and paid daily distributions equal to an annualized rate of 6 percent, based upon a $10.00 per share purchase price, to stockholders of record from July 1 to Sept. 30, 2017.
- Subsequent to the close of the third quarter, on Oct. 4, 2017, the company’s board of directors unanimously approved and established a revised estimated per share net asset value, or NAV, of our common stock of $9.27, a $0.26 increase over the per share NAV of $9.01 approved and established by the board of directors on Oct. 5, 2016. Consistent with the IPA’s practice guideline regarding valuations of publicly registered non-listed real estate investment trusts, or REITs, the valuation upon which the per share NAV was based does not include a portfolio premium that may accrue in a typical real estate valuation process conducted for transaction purposes, nor does it reflect an enterprise value. Please refer to the company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on Oct. 5, 2017 for more information.
This release contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, with respect to the performance and projected growth in value of our current portfolio, our occupancy and weighted average lease term and our portfolio leverage. We intend for all forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. 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; uncertainties relating to the strength and financial condition of our current and future real estate investments and their tenants; uncertainties relating to the medical needs and 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; uncertainties relating to the implementation of our real estate investment strategy; and other risk factors as outlined in our company’s 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 undue reliance should not be placed on such statements. We undertake no obligation to update any such statements that may become untrue because of subsequent events.
1Based on aggregate contract purchase price of owned and/or operated real estate and real estate-related investments, including development projects, as of Sept. 30, 2017.
2The operation of healthcare-related facilities utilizing the structure permitted by the REIT Investment Diversification and Empowerment Act of 2007 is commonly referred to as a “RIDEA” structure.
3Total debt divided by total market value of real estate and real estate-related investments. Total market value equals the aggregate purchase price paid for investments or, for investments appraised subsequent to the date of purchase, the aggregate value reported in the most recent independent appraisals of such investments.