Health Care REIT 3Q Profit Down 58% On Charges, Revenue Grows

Chief Executive George L. Chapman said the company has strengthened its balance sheet this year, raising $1 billion in equity and debt and generating more than $150 million in proceeds from asset sales. He added that the moves placed the company in an "excellent capital position" while reducing future interest expenses.

The company, which has investments including assisted living and skilled nursing facilities, has been less affected by the economic downturn than retail and industrial REITs. Health Care is taking a closer look at acquisitions and, in September, the company sharply boosted its share offering, with plans to use the proceeds to retire mortgages payable and to invest in properties.

Health Care posted earnings of $24.7 million, or 17 cents a share, down from $ 59.3 million, or 55 cents a share. The company reported a property-sale loss of $806,000, compared with a gain of $12.6 million a year earlier. Normalized funds from operations, a key profitability metric for REITs, slid to 77 cents from 86 cents.

Gross revenue grew 4.1% to $145.1 million.

Analysts polled by Thomson Reuters had expected FFO of 77 cents and revenue of $143 million.

Shares fell 5 cents to $43.68 in after-hours trading.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com

(Updates throughout with details on funds from operations and outlook.)

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Health Care REIT Inc.'s (HCN) third-quarter funds from operations fell about 26% as the company issued new equity and reduced its leverage, yet still met Wall Street's expectations.

The Toledo, Ohio, company, whose investments include assisted living and skilled nursing facilities, also narrowed its 2009 adjusted FFO view.

Chief Executive George L. Chapman said the company has strengthened its balance sheet this year, raising $1 billion in equity and debt and generating more than $150 million in proceeds from asset sales. He added that the moves placed the company in an "excellent capital position" while reducing future interest expenses.

Health care REITs have generally been more recession-resilient than REITs in the multi-family and office space because of the growing number of senior citizens and limited new supply of senior housing properties.

Health Care is taking a closer look at acquisitions and, in September, the company sharply boosted its share offering, with plans to use the proceeds to retire mortgages payable and to invest in properties.

Health Care REIT said third-quarter funds from operations fell to $60.9 million, or 53 cents a share, from $82.6 million, or 85 cents a share, a year earlier.

Adjusted FFO was 77 cents a share for the quarter.

Analysts, on average, expected FFO, a key industry figure of performance, of 77 cents a share, according to Thomson Reuters.

Still, rent growth and occupancy has been challenged in senior housing as the weakened economy has made it more difficult for some seniors to sell their homes and move into REIT-owned facilities.

Health Care posted earnings of $24.7 million, or 17 cents a share, down from $ 59.3 million, or 55 cents a share. The company reported a property-sale loss of $806,000, compared with a gain of $12.6 million a year earlier.

Gross revenue grew 4.1% to $145.1 million.

Looking ahead, Health Care REIT narrowed its 2009 adjusted FFO view to partly reflect its new net investment expectations. The company now expects adjusted FFO of $3.10 to $3.12 a share from a previous view of $3.07 to $3.14 a share.

The company also cut its 2009 net investment forecast to $300 million from a prior view of $300 million to $400 million.

Shares fell 5 cents to $43.68 in after-hours trading.

-By Veronica Dagher and John Kell, Dow Jones Newswires; 212-416-2261; john.kell@dowjones.com

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