UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 12, 2015
CARE CAPITAL PROPERTIES, INC.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
|
001-37356
|
37-1781195
|
(State or other jurisdiction
of incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
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353 N. Clark Street, Suite 2900, Chicago, Illinois
|
60654
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(Address of Principal Executive Offices)
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(Zip Code)
|
Registrant’s Telephone Number, Including Area Code: (312)
881-4700
Not Applicable
Former Name or Former Address, if Changed Since
Last Report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02.
|
Results of Operations and Financial Condition.
|
On November 12, 2015, Care Capital Properties, Inc. (the “Company”)
issued a press release announcing its results of operations for the
quarter ended September 30, 2015. A copy of the press release is
furnished herewith as Exhibit 99.1 and incorporated in this Item 2.02 by
reference.
Item 9.01.
|
Financial Statements and Exhibits.
|
(a)
|
|
Financial Statements of Businesses Acquired.
|
|
|
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Not applicable.
|
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(b)
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Pro Forma Financial Information.
|
|
|
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Not applicable.
|
|
(c)
|
|
Shell Company Transactions.
|
|
|
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Not applicable.
|
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(d)
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Exhibits:
|
Exhibit Number
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Description
|
99.1
|
Press release issued by the Company on November 12, 2015.
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
CARE CAPITAL PROPERTIES, INC.
|
|
|
|
|
|
|
|
Date:
|
November 12, 2015
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By:
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/s/ Kristen M. Benson
|
|
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Kristen M. Benson
|
|
|
|
Executive Vice President, General
|
|
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Counsel and Corporate Secretary
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EXHIBIT INDEX
Exhibit Number
|
Description
|
99.1
|
Press release issued by the Company on November 12, 2015.
|
4
Exhibit 99.1
Care
Capital Properties Reports Third Quarter Results; Normalized FFO of
$0.84 Per Diluted Share
$210
Million of Investments Closed Since Spin-Off from Ventas
CHICAGO--(BUSINESS WIRE)--November 12, 2015--Care Capital Properties,
Inc. (NYSE: CCP) (“CCP”) today announced that reported normalized Funds
From Operations (“FFO”) for the quarter ended September 30, 2015 was $70
million, or $0.84 per diluted common share, as compared to $61 million
for the quarter ended September 30, 2014. Weighted average diluted
shares outstanding for the third quarter of 2015 were 83.6 million.
CCP began operating as an independent, publicly traded company on August
18, 2015, following the completion of its spin-off from Ventas, Inc.
(NYSE: VTR) (“Ventas”). The financial results reported for the third
quarter of 2015 reflect a combination of operating results that have
been “carved-out” of Ventas’s consolidated financial statements for the
period prior to the spin-off and standalone operating results for the
period subsequent to the spin-off.
“CCP is off to a great start. Our quarterly results demonstrate the
reliability of our portfolio, our ability to grow through acquisitions
and our access to attractively priced capital,” CCP Chief Executive
Officer Raymond J. Lewis said. “We were pleased to receive investment
grade ratings from all three of the rating agencies, which confirm the
strength of our balance sheet, and to pay our stockholders a full third
quarter dividend. Our excellent team remains focused on continuing to
produce strong results for all of our stakeholders.”
Net income attributable to CCP for the quarter ended September 30, 2015
was $36 million or $0.43 per diluted common share, as compared to $33
million for the quarter ended September 30, 2014. FFO, as defined by the
National Association of Real Estate Investment Trusts (“NAREIT”), for
the third quarter of 2015 was $67 million, or $0.80 per diluted common
share, versus $61 million for the comparable 2014 period.
The increases in normalized FFO, NAREIT FFO and net income attributable
to CCP over the prior year are primarily attributable to acquisitions
completed in 2015 and contractual rent increases for existing
properties, partially offset by increases in depreciation (for net
income), general and administrative expenses and interest expense due to
the new indebtedness incurred in connection with the spin-off, as well
as the elimination of certain properties that were included in results
for the period prior to the spin-off but were not transferred to CCP.
Normalized Funds Available for Distribution (“FAD”) totaled $63 million,
or $0.75 per diluted common share, for the quarter ended September 30,
2015, an increase of 12 percent from the quarter ended September 30,
2014.
Highlights of the Quarter
-
CCP began operating as an independent company and commenced
“regular-way” trading on the New York Stock Exchange on August 18,
2015. A total of 83.1 million shares of CCP common stock were
distributed to Ventas stockholders in the spin-off.
-
In connection with the spin-off, CCP entered into an unsecured credit
facility comprised of a $600 million revolver, a $600 million two-year
term loan and an $800 million five-year term loan. Approximately $1.3
billion in proceeds from borrowings under the term loans was
distributed to Ventas in connection with the spin-off. CCP intends to
replace the floating rate bank term loans with long-term fixed rate
debt over time.
-
In connection with the spin-off, CCP entered into a transition
services agreement with Ventas under which Ventas will provide CCP
with certain accounting, tax and IT support until August 31, 2016 in
exchange for a fixed fee of $2.5 million, payable quarterly. CCP will
be obligated to pay this amount whether or not it requires any
transition services from Ventas.
-
On September 1, 2015, CCP completed the acquisition of eight
properties for approximately $190 million and simultaneously entered
into a long-term triple-net lease with an existing tenant to operate
the acquired portfolio. CCP also made a $20 million fully amortizing
loan to the tenant for a total transaction value of $210 million. The
initial cash lease yield is 8.25 percent.
-
Moody’s Investor Services (“Moody’s”) assigned an issuer rating of
“Baa3” to CCP’s operating partnership, Care Capital Properties, L.P.
(“Care Capital LP”), Fitch Ratings assigned a rating of “BBB-” to both
CCP and Care Capital LP, and Standard & Poor’s Rating Services
assigned a corporate rating of “BB+” to CCP, but indicated that it
would expect senior unsecured bonds issued by Care Capital LP to be
rated “BBB-.” All three ratings were assigned with a stable outlook.
-
As of September 30, 2015, CCP had $138 million outstanding and $462
million of available borrowing capacity under its revolving credit
facility. CCP’s net debt to Adjusted Pro Forma EBITDA was 4.8x as of
the end of the third quarter.
-
On September 30, 2015, CCP paid a cash dividend of $0.57 per share to
stockholders of record as of September 14, 2015, representing a payout
ratio of 68 percent based on normalized FFO for the third quarter.
Future Results
CCP intends to hold its first regular quarterly earnings call in
connection with the release of its results for the fourth quarter and
year ending December 31, 2015. Earnings guidance for 2016 is expected to
be issued at that time.
Care Capital Properties, Inc. is a healthcare real estate investment
trust with a diversified portfolio of triple-net leased properties
focused on the post-acute sector. Its skilled management team is fully
invested in delivering excellent returns by forging strong relationships
with shareholders, operators and employees. More information about Care
Capital Properties, Inc. can be found at: www.carecapitalproperties.com.
This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements regarding CCP’s or its tenants’ or borrowers’ expected future
financial condition, results of operations, cash flows, funds from
operations, dividends and dividend plans, financing opportunities and
plans, capital markets transactions, business strategy, budgets,
projected costs, operating metrics, capital expenditures, competitive
positions, acquisitions, investment opportunities, dispositions, growth
opportunities, expected lease income, continued qualification as a real
estate investment trust (“REIT”), plans and objectives of management for
future operations and statements that include words such as
“anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,”
“may,” “could,” “should,” “will”
and other similar expressions are forward-looking statements. These
forward-looking statements are inherently uncertain, and actual results
may differ from CCP’s expectations. CCP does not undertake a duty to
update these forward-looking statements, which speak only as of the date
on which they are made.
CCP’s actual future results and trends may differ materially from
expectations depending on a variety of factors discussed in its filings
with the Securities and Exchange Commission. These factors
include without limitation: (a) the ability and willingness of CCP’s
tenants, borrowers and other third parties to satisfy their obligations
under their respective contractual arrangements with CCP, including, in
some cases, their obligations to indemnify, defend and hold harmless CCP
from and against various claims, litigation and liabilities; (b) the
ability of CCP’s tenants and borrowers to maintain the financial
strength and liquidity necessary to satisfy their respective obligations
and liabilities to third parties, including without limitation
obligations under their existing credit facilities and other
indebtedness; (c) CCP’s success in implementing its business strategy
and its ability to identify, underwrite, finance, consummate and
integrate diversifying acquisitions and investments; (d) macroeconomic
conditions such as a disruption of or lack of access to the capital
markets, changes in the debt rating on U.S. government securities,
default or delay in payment by the United States of its obligations, and
changes in the federal or state budgets resulting in the reduction or
nonpayment of Medicare or Medicaid reimbursement rates; (e) the nature
and extent of future competition, including new construction in the
markets in which CCP’s properties are located; (f) the extent of future
or pending healthcare reform and regulation, including cost containment
measures and changes in reimbursement policies, procedures and rates;
(g) increases in CCP’s borrowing costs as a result of changes in
interest rates and other factors; (h) the ability of CCP’s tenants to
comply with laws, rules and regulations in the operation of CCP’s
properties, to deliver high-quality services, to attract and retain
qualified personnel and to attract residents and patients; (i) changes
in general economic conditions or economic conditions in the markets in
which CCP may, from time to time, compete, and the effect of those
changes on CCP’s revenues, earnings and capital sources; (j) CCP’s
ability to pay down, refinance, restructure or extend its indebtedness
as it becomes due; (k) CCP’s ability and willingness to maintain its
qualification as a REIT in light of economic, market, legal, tax and
other considerations; (l) final determination of CCP’s taxable net
income for the year ending December 31, 2015; (m) the ability and
willingness of CCP’s tenants to renew their leases upon expiration,
CCP’s ability to reposition its properties on the same or better terms
in the event of nonrenewal or in the event CCP exercises its right to
replace an existing tenant, and obligations, including indemnification
obligations, CCP may incur in connection with the replacement of an
existing tenant; (n) year-over-year changes in the Consumer Price Index
and the effect of those changes on the rent escalators contained in
CCP’s leases and on CCP’s earnings; (o) CCP’s ability and the ability of
its tenants and borrowers to obtain and maintain adequate property,
liability and other insurance from reputable, financially stable
providers; (p) the impact of increased operating costs and uninsured
professional liability claims on CCP’s or its tenants’ or borrowers’
liquidity, financial condition and results of operations, and the
ability of CCP and its tenants and borrowers to accurately estimate the
magnitude of those claims; (q) consolidation in the healthcare industry
resulting in a change of control of, or a competitor’s investment in,
one or more of CCP’s tenants or borrowers or significant changes in the
senior management of CCP’s tenants or borrowers; (r) the impact of
litigation or any financial, accounting, legal or regulatory issues that
may affect CCP or its tenants or borrowers; and (s) changes in
accounting principles, or their application or interpretation, and CCP’s
ability to make estimates and the assumptions underlying the estimates,
which could have an effect on CCP’s earnings. Many of these factors are
beyond the control of CCP and its management.
COMBINED CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
|
2015
|
|
2015
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Real estate investments:
|
|
|
|
|
|
|
|
|
Land and improvements
|
|
$
|
288,199
|
|
|
$
|
282,034
|
|
|
$
|
287,336
|
|
|
$
|
249,504
|
|
Buildings and improvements
|
|
3,010,206
|
|
|
2,848,646
|
|
|
2,926,094
|
|
|
2,446,688
|
|
Construction in progress
|
|
19,457
|
|
|
16,713
|
|
|
15,711
|
|
|
10,433
|
|
Acquired lease intangibles
|
|
102,130
|
|
|
96,929
|
|
|
106,574
|
|
|
87,194
|
|
|
|
3,419,992
|
|
|
3,244,322
|
|
|
3,335,715
|
|
|
2,793,819
|
|
Accumulated depreciation and amortization
|
|
(685,727
|
)
|
|
(659,534
|
)
|
|
(633,175
|
)
|
|
(602,578
|
)
|
Net real estate property
|
|
2,734,265
|
|
|
2,584,788
|
|
|
2,702,540
|
|
|
2,191,241
|
|
Net investment in direct financing lease
|
|
21,960
|
|
|
21,844
|
|
|
21,730
|
|
|
21,626
|
|
Secured loans receivable, net
|
|
5,253
|
|
|
5,252
|
|
|
5,250
|
|
|
5,249
|
|
Net real estate investments
|
|
2,761,478
|
|
|
2,611,884
|
|
|
2,729,520
|
|
|
2,218,116
|
|
Cash
|
|
10,444
|
|
|
1,497
|
|
|
1,376
|
|
|
2,424
|
|
Goodwill
|
|
146,017
|
|
|
135,736
|
|
|
162,705
|
|
|
88,959
|
|
Other assets
|
|
53,332
|
|
|
24,376
|
|
|
22,423
|
|
|
22,251
|
|
Total assets
|
|
$
|
2,971,271
|
|
|
$
|
2,773,493
|
|
|
$
|
2,916,024
|
|
|
$
|
2,331,750
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Term loans and other debt
|
|
$
|
1,518,437
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Tenant deposits
|
|
67,334
|
|
|
59,897
|
|
|
52,958
|
|
|
57,362
|
|
Lease intangible liabilities, net
|
|
135,354
|
|
|
140,942
|
|
|
147,328
|
|
|
145,640
|
|
Accounts payable and other liabilities
|
|
13,493
|
|
|
6,812
|
|
|
4,729
|
|
|
5,669
|
|
Deferred income taxes
|
|
2,341
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total liabilities
|
|
1,736,959
|
|
|
207,651
|
|
|
205,015
|
|
|
208,671
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value; 10,000 shares authorized,
unissued at September 30, 2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Common stock, $0.01 par value; 300,000 shares authorized, 83,801
shares issued at September 30, 2015
|
|
838
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Additional paid-in capital
|
|
1,263,848
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Dividends in excess of net income
|
|
(35,084
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net parent investment
|
|
—
|
|
|
2,561,082
|
|
|
2,706,205
|
|
|
2,118,216
|
|
Total CCP equity
|
|
1,229,602
|
|
|
2,561,082
|
|
|
2,706,205
|
|
|
2,118,216
|
|
Noncontrolling interests
|
|
4,710
|
|
|
4,760
|
|
|
4,804
|
|
|
4,863
|
|
Total equity
|
|
1,234,312
|
|
|
2,565,842
|
|
|
2,711,009
|
|
|
2,123,079
|
|
Total liabilities and equity
|
|
$
|
2,971,271
|
|
|
$
|
2,773,493
|
|
|
$
|
2,916,024
|
|
|
$
|
2,331,750
|
|
|
COMBINED CONSOLIDATED STATEMENTS OF INCOME
|
(Unaudited)
|
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
|
Rental income, net
|
|
$
|
80,595
|
|
|
$
|
72,421
|
|
|
$
|
237,100
|
|
|
$
|
221,849
|
|
Income from investments in direct financing leases and loans
|
|
955
|
|
|
856
|
|
|
2,680
|
|
|
2,542
|
|
Real estate services fee income
|
|
763
|
|
|
—
|
|
|
763
|
|
|
—
|
|
Interest and other income
|
|
4
|
|
|
1
|
|
|
67
|
|
|
2
|
|
Total revenues
|
|
82,317
|
|
|
73,278
|
|
|
240,610
|
|
|
224,393
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Interest
|
|
4,090
|
|
|
—
|
|
|
4,075
|
|
|
—
|
|
Depreciation and amortization
|
|
31,502
|
|
|
27,880
|
|
|
97,336
|
|
|
77,492
|
|
General, administrative and professional fees
|
|
9,216
|
|
|
5,712
|
|
|
21,499
|
|
|
18,314
|
|
Merger-related expenses and deal costs
|
|
991
|
|
|
561
|
|
|
4,746
|
|
|
964
|
|
Other
|
|
158
|
|
|
5,815
|
|
|
1,278
|
|
|
7,251
|
|
Total expenses
|
|
45,957
|
|
|
39,968
|
|
|
128,934
|
|
|
104,021
|
|
Income before income taxes, real estate dispositions and
noncontrolling interests
|
|
36,360
|
|
|
33,310
|
|
|
111,676
|
|
|
120,372
|
|
Income tax expense
|
|
(1,024
|
)
|
|
—
|
|
|
(1,024
|
)
|
|
—
|
|
Gain (loss) on real estate dispositions
|
|
856
|
|
|
(61
|
)
|
|
856
|
|
|
(61
|
)
|
Net income
|
|
36,192
|
|
|
33,249
|
|
|
111,508
|
|
|
120,311
|
|
Net income attributable to noncontrolling interests
|
|
26
|
|
|
47
|
|
|
138
|
|
|
137
|
|
Net income attributable to CCP
|
|
$
|
36,166
|
|
|
$
|
33,202
|
|
|
$
|
111,370
|
|
|
$
|
120,174
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
|
|
Net income attributable to CCP
|
|
$
|
0.43
|
|
|
$
|
0.40
|
|
|
$
|
1.33
|
|
|
$
|
1.44
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Net income attributable to CCP
|
|
$
|
0.43
|
|
|
$
|
0.40
|
|
|
$
|
1.33
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing earnings per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
83,488
|
|
|
83,488
|
|
|
83,488
|
|
|
83,488
|
|
Diluted
|
|
83,558
|
|
|
83,488
|
|
|
83,558
|
|
|
83,488
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
$
|
0.57
|
|
|
$
|
—
|
|
$
|
0.57
|
|
|
$
|
—
|
|
|
COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
36,192
|
|
|
$
|
33,249
|
|
|
$
|
111,508
|
|
|
$
|
120,311
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
30,360
|
|
|
|
26,079
|
|
|
|
94,170
|
|
|
|
73,653
|
|
Amortization of above and below market lease intangibles, net
|
|
|
(2,164
|
)
|
|
|
(2,407
|
)
|
|
|
(6,835
|
)
|
|
|
(8,770
|
)
|
Amortization of deferred financing fees
|
|
|
646
|
|
|
|
—
|
|
|
|
646
|
|
|
|
—
|
|
Accretion of direct financing lease
|
|
|
(345
|
)
|
|
|
(308
|
)
|
|
|
(996
|
)
|
|
|
(890
|
)
|
Amortization of leasing costs and other intangibles
|
|
|
1,142
|
|
|
|
1,800
|
|
|
|
3,166
|
|
|
|
3,838
|
|
Stock-based compensation
|
|
|
1,760
|
|
|
|
—
|
|
|
|
1,760
|
|
|
|
—
|
|
Straight-lining of rental income, net
|
|
|
(46
|
)
|
|
|
(130
|
)
|
|
|
(125
|
)
|
|
|
(242
|
)
|
Gain on real estate disposition
|
|
|
(856
|
)
|
|
|
—
|
|
|
|
(856
|
)
|
|
|
—
|
|
Income tax benefit
|
|
|
(42
|
)
|
|
|
—
|
|
|
|
(42
|
)
|
|
|
—
|
|
Other
|
|
|
(35
|
)
|
|
|
171
|
|
|
|
(102
|
)
|
|
|
118
|
|
Changes in operating assets and liabilities, net of effects of the
September acquisition
|
|
|
|
|
|
|
|
|
Increase in other assets
|
|
|
(1,378
|
)
|
|
|
(1,149
|
)
|
|
|
(3,789
|
)
|
|
|
(2,570
|
)
|
Increase in tenant deposits
|
|
|
4,066
|
|
|
|
5,135
|
|
|
|
6,601
|
|
|
|
2,712
|
|
Decrease in accounts payable and other liabilities
|
|
|
3,185
|
|
|
|
(4,604
|
)
|
|
|
935
|
|
|
|
(5,087
|
)
|
Net cash provided by operating activities
|
|
|
72,485
|
|
|
|
57,836
|
|
|
|
206,041
|
|
|
|
183,073
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Net investment in real estate property
|
|
|
(186,250
|
)
|
|
|
(2,388
|
)
|
|
|
(454,832
|
)
|
|
|
(12,598
|
)
|
Investment in loans receivable
|
|
|
(20,091
|
)
|
|
|
(236
|
)
|
|
|
(20,091
|
)
|
|
|
(800
|
)
|
Proceeds from real estate disposals
|
|
|
1,500
|
|
|
|
975
|
|
|
|
1,510
|
|
|
|
975
|
|
Proceeds from loans receivable
|
|
|
354
|
|
|
|
313
|
|
|
|
1,040
|
|
|
|
917
|
|
Development project expenditures
|
|
|
(6,142
|
)
|
|
|
(2,134
|
)
|
|
|
(12,629
|
)
|
|
|
(6,657
|
)
|
Capital expenditures
|
|
|
(5,218
|
)
|
|
|
(1,740
|
)
|
|
|
(13,504
|
)
|
|
|
(3,416
|
)
|
Net cash used in investing activities
|
|
|
(215,847
|
)
|
|
|
(5,210
|
)
|
|
|
(498,506
|
)
|
|
|
(21,579
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Net change in borrowings under credit facility
|
|
|
1,538,000
|
|
|
|
—
|
|
|
|
1,538,000
|
|
|
|
—
|
|
Payment of deferred financing costs
|
|
|
(20,209
|
)
|
|
|
—
|
|
|
|
(20,209
|
)
|
|
|
—
|
|
Distributions to noncontrolling interests
|
|
|
(51
|
)
|
|
|
(80
|
)
|
|
|
(266
|
)
|
|
|
(288
|
)
|
Net contribution from (distribution to) parent prior to separation
|
|
|
(44,677
|
)
|
|
|
(52,014
|
)
|
|
|
103,714
|
|
|
|
(160,677
|
)
|
Distribution to parent
|
|
|
(1,273,000
|
)
|
|
|
—
|
|
|
|
(1,273,000
|
)
|
|
|
—
|
|
Cash distribution to common stockholders
|
|
|
(47,754
|
)
|
|
|
—
|
|
|
|
(47,754
|
)
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
|
152,309
|
|
|
|
(52,094
|
)
|
|
|
300,485
|
|
|
|
(160,965
|
)
|
Net increase in cash
|
|
|
8,947
|
|
|
|
532
|
|
|
|
8,020
|
|
|
|
529
|
|
Cash at beginning of period
|
|
|
1,497
|
|
|
|
2,164
|
|
|
|
2,424
|
|
|
|
2,167
|
|
Cash at end of period
|
|
$
|
10,444
|
|
|
$
|
2,696
|
|
|
$
|
10,444
|
|
|
$
|
2,696
|
|
|
|
|
NON-GAAP FINANCIAL MEASURES RECONCILIATION
|
Funds From Operations (FFO), Normalized FFO and Normalized
Funds Available for Distribution (FAD)1
|
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
For the Three Months Ended
|
|
|
September 30,
|
|
|
2015
|
|
2014
|
Net income attributable to CCP
|
|
$
|
36,166
|
|
|
$
|
33,202
|
|
Net income attributable to CCP per share
|
|
$
|
0.43
|
|
|
$
|
0.40
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Real estate depreciation and amortization
|
|
31,367
|
|
|
27,775
|
|
Real estate depreciation related to noncontrolling interests
|
|
(68
|
)
|
|
(107
|
)
|
(Gain) loss on real estate dispositions
|
|
(856
|
)
|
|
61
|
|
Subtotal: FFO add-backs
|
|
30,443
|
|
|
27,729
|
|
Subtotal: FFO add-backs per share
|
|
$
|
0.36
|
|
|
$
|
0.33
|
|
FFO (NAREIT) attributable to CCP
|
|
$
|
66,609
|
|
|
$
|
60,931
|
|
FFO (NAREIT) attributable to CCP per share
|
|
$
|
0.80
|
|
|
$
|
0.73
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Income tax expense
|
|
1,024
|
|
|
—
|
|
Stock-based compensation expense associated with spin-related
conversion of awards
|
|
542
|
|
|
—
|
|
Transition services fee expense
|
|
293
|
|
|
—
|
|
Merger-related expenses and deal costs
|
|
991
|
|
|
561
|
|
Initial debt rating agency costs
|
|
477
|
|
|
—
|
|
Amortization of other intangibles
|
|
89
|
|
|
—
|
|
Subtotal: normalized FFO add-backs
|
|
3,416
|
|
|
561
|
|
Subtotal: normalized FFO add-backs per share
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
Normalized FFO attributable to CCP
|
|
$
|
70,025
|
|
|
$
|
61,492
|
|
Normalized FFO attributable to CCP per share
|
|
$
|
0.84
|
|
|
$
|
0.74
|
|
|
|
|
|
|
Non-cash items included in normalized FFO:
|
|
|
|
|
Amortization of above and below market and lease intangibles, net
|
|
(2,164
|
)
|
|
(2,679
|
)
|
Accretion of direct financing lease
|
|
(345
|
)
|
|
(297
|
)
|
Other amortization
|
|
(35
|
)
|
|
(26
|
)
|
Straight-lining of rental income, net
|
|
(46
|
)
|
|
(56
|
)
|
Other adjustments:
|
|
|
|
|
|
|
Capital expenditures
|
|
(5,368
|
)
|
|
(2,055
|
)
|
Stock-based compensation
|
|
1,799
|
|
|
—
|
|
Merger-related expenses and deal costs
|
|
(991
|
)
|
|
(561
|
)
|
Normalized FAD attributable to CCP
|
|
$
|
62,875
|
|
|
$
|
55,818
|
|
Normalized FAD attributable to CCP per share
|
|
$
|
0.75
|
|
|
$
|
0.67
|
|
Weighted average diluted shares
|
|
83,558
|
|
|
83,488
|
|
|
|
|
|
|
1 Totals and per share amounts may not add due to
rounding.
|
|
Historical cost accounting for real estate assets implicitly assumes
that the value of real estate assets diminishes predictably over time.
However, since real estate values have historically risen or fallen with
market conditions, many industry investors deem presentations of
operating results for real estate companies that use historical cost
accounting to be insufficient by themselves. For that reason, CCP
considers FFO, normalized FFO and normalized FAD to be appropriate
measures of operating performance of an equity REIT. In particular, CCP
believes that normalized FFO is useful because it allows investors,
analysts and CCP management to compare CCP’s operating performance to
the operating performance of other real estate companies and between
periods on a consistent basis without having to account for differences
caused by unanticipated items and other events such as transactions.
CCP uses the NAREIT definition of FFO. NAREIT defines FFO as net income
(computed in accordance with GAAP) excluding gains (or losses) from
sales of real estate property and impairment write-downs of depreciable
real estate, plus real estate depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for joint ventures will be calculated to reflect FFO on the
same basis. CCP defines normalized FFO as FFO excluding income taxes,
stock-based compensation expense associated with the spin-related
conversion of awards, transition services fee expense, merger-related
expenses and deal costs, initial debt rating agency costs, and
amortization of other intangibles (which may be recurring in nature).
Normalized FAD represents normalized FFO excluding amortization of above
and below market lease intangibles, accretion of direct financing lease,
other amortization, straight-line rental adjustments, non-revenue
enhancing capital expenditures and stock-based compensation, but
including merger-related expenses and deal costs.
FFO, normalized FFO and normalized FAD presented herein may not be
comparable to similar measures presented by other real estate companies
due to the fact that not all real estate companies use the same
definitions. FFO, normalized FFO and normalized FAD should not be
considered as alternatives to net income (determined in accordance with
GAAP) as indicators of CCP’s financial performance or as alternatives to
cash flow from operating activities (determined in accordance with GAAP)
as measures of CCP’s liquidity, nor are they necessarily indicative of
sufficient cash flow to fund all of CCP’s needs. CCP believes that, in
order to facilitate a clear understanding of CCP’s consolidated
historical operating results, FFO, normalized FFO and normalized FAD
should be examined in conjunction with net income attributable to CCP as
presented elsewhere herein.
|
NON-GAAP FINANCIAL MEASURES RECONCILIATION
|
Net Debt to Adjusted Pro Forma EBITDA
|
|
The following information considers the pro forma effect on net
income of CCP’s investments that were completed during the three
months ended September 30, 2015, as if the transactions had been
consummated as of the beginning of the period. The following table
illustrates net debt to pro forma earnings before interest, taxes,
depreciation and amortization, excluding stock-based compensation,
merger-related expenses and deal costs, gain on real estate
disposition, transition services fee expense and initial debt
rating agency costs (“Adjusted Pro Forma EBITDA”) (dollars in
thousands):
|
Net income
|
|
$
|
36,192
|
|
|
Pro forma adjustments for acquisitions and investments
|
|
2,783
|
|
|
Pro forma net income
|
|
38,975
|
|
|
Add back:
|
|
|
|
Interest
|
|
4,090
|
|
|
Income tax expense
|
|
1,024
|
|
|
Depreciation and amortization
|
|
31,502
|
|
|
Stock-based compensation
|
|
2,341
|
|
|
Merger-related expenses and deal costs
|
|
991
|
|
|
Gain on real estate disposition
|
|
(856
|
)
|
|
Transition services fee expense
|
|
293
|
|
|
Initial debt rating agency costs
|
|
477
|
|
|
Adjusted Pro Forma EBITDA
|
|
$
|
78,837
|
|
|
Adjusted Pro Forma EBITDA annualized
|
|
315,348
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2015:
|
|
|
|
Debt
|
|
$
|
1,518,437
|
|
|
Unamortized debt issuance costs
|
|
19,563
|
|
|
Cash
|
|
(10,444
|
)
|
|
Net debt (adjusted for unamortized debt issuance costs)
|
|
$
|
1,527,556
|
|
|
|
|
|
|
Net debt to Adjusted Pro Forma EBITDA
|
|
4.8
|
|
x
|
CONTACT:
Care Capital Properties, Inc.
Lori B. Wittman
Executive
Vice President and Chief Financial Officer
lwittman@carecapitalproperties.com
312.881.4702
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