Following its announcement of expanding into Canada with a 42-property portfolio, Health Care REIT, Inc. (NYSE:HCN) released its earnings results for the fourth quarter ended Dec. 31, 2011, reporting a net income of $42.3 million. This represents an 8% decrease from 2010’s $46 million and may stem from the REIT’s rigorous recent acquisition activity.
The REIT posted a net income attributable to common stakeholders of $27.3 million, or $0.15 per diluted share, compared to just under $40 million, or $0.29 per diluted share, during the same period last year.
For the twelve months ended Dec. 31, HCN’s net income was $212.7 million, a 65% increase over the previous year. The yearly net income attributable to common stockholders stood at $157.1 million, or $0.90 per diluted share, compared to last year’s $106.9 million and $0.83 per diluted share.
“The continued success of our relationship investment program was demonstrated by an additional $1.2 billion in gross investments for the quarter and $6.0 billion for the year,” said George L. Chapman, Chairman, CEO and President of Health Care REIT. “We believe that our immersion in health care will continue to generate future investment opportunities with leading operators and health systems, positioning the company for sustainable long-term growth as we shape the evolution of health care delivery.”
Total revenues in the quarter more than doubled to $407.4 million in the fourth quarter, compared to $196.4 million. The bulk of that came from rental income, at just under $261 million. For the year, HCN’s revenues were $1.4 billion, more than twice than the previous year’s $657.3 million.
At year’s end, total expenses had also more than doubled to nearly $1.3 billion, compared to $582.7 million in 2010. Property operating expenses tripled to $112.7 million in the fourth quarter compared to the same period the previous year, while for the total year they more than quadrupled.
The fourth quarter normalized funds from operation of $0.91 per share is an increase of 21% from the previous year, with a 2011 normalized FFO of $3.41 per share, up 11% from 2010.
In 2011, HCN completed gross new investments totaling $6 billion, including acquisitions totaling $5.6 billion. $1.2 billion worth of investments took place in the fourth quarter, including acquisitions worth $1.1 billion.
During Q4, the REIT completed $627 million in seniors housing operating acquisitions at a blended yield of 6.2% in high-barrier-to-entry markets along the west coast. These transactions include acquisitions done with partners Merrill Gardens (a $415 million, nine-property portfolio) and Silverado Senior Living ($27 million). HCN also completed a $185 million acquisition with Belmont Village Senior Living, a new operating partner with the company.
The REIT just announced that it’s entering into a RIDEA-structure relationship with Canadian REIT Chartwell Seniors Housing to acquire a 42-property portfolio for $952 million.
Going forward, HCN’s 2012 guidance expects the REIT to report net income attributable to common stockholders in a range of $1.26 to $1.36 per diluted share, and normalized FFO in a range of $3.68 to $3.78 per diluted share, representing an 8-11% increase.
View HCN’s fourth quarter and year-end earnings report here.
Written by Alyssa Gerace