Griffin-American Healthcare REIT III Reports Fourth Quarter and Year-End 2017 Results
IRVINE, Calif. ((March 19, 2018) – Griffin-American Healthcare REIT III, Inc. Inc. today announced operating results for the company’s fourth quarter and year ended Dec. 31, 2017.
“Griffin-American Healthcare REIT III acquired its first real estate asset in June 2014 and in just three-and-a-half years, we have built an international portfolio of premium healthcare real estate valued at approximately $3 billion,1” said Jeff Hanson, chairman and chief executive officer. “We are very pleased with the progress we have made on behalf of our fellow stockholders in such a short period of time, and remain optimistic about our company’s long-term prospects.”
Chief financial officer Brian Peay added, “It was a very successful year in 2017 for Griffin-American Healthcare REIT III, during which we continued to experience significant growth across key financial metrics, including net operating income, net income, funds from operations and modified funds from operations. We couldn’t be more pleased with our performance and progress.”
2017 Highlights and Subsequent Events
- Modified funds from operations, as defined by the Investment Program Association, or IPA, attributable to controlling interest, or MFFO, equaled approximately $102.3 million for the year ended Dec. 31, 2017, representing growth of 6.0 percent compared to MFFO of approximately $96.5 million for the year ended Dec. 31, 2016. MFFO during the fourth quarter 2017 equaled approximately $29.2 million, representing 20.7 percent growth compared to MFFO of approximately $24.2 million during the same period in 2016. Funds from operations, as defined by the National Association of Real Estate Investment Trusts, or NAREIT, attributable to controlling interest, or FFO, equaled approximately $113.5 million for the year ended Dec. 31, 2017, representing growth of approximately 80.3 percent as compared to approximately $62.9 million for the year ended Dec. 31, 2016. FFO equaled approximately $35.3 million during the fourth quarter 2017 compared to fourth quarter 2016 FFO of approximately $15.3 million, an approximately 131.1 percent increase. Yearover-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 for the year ended Dec. 31, 2017 was approximately $5.4 million, as compared to net loss of $(203.9) million for the year ended Dec. 31, 2016. Net income during the fourth quarter 2017 equaled approximately $6.9 million, compared with net loss during the fourth quarter 2016 of approximately $(48.6) million. (Please see financial reconciliation tables and notes at the end of this release for more information regarding net income (loss).)
- Net operating income, or NOI, totaled approximately $214.8 million for the year ended Dec. 31, 2017, representing an increase of approximately 10.1 percent compared to NOI of approximately $195.0 million for the year ended Dec. 31, 2016. NOI during the fourth quarter 2017 equaled approximately $58.1 million, an increase of approximately 24.7 percent compared to fourth quarter 2016 NOI of approximately $46.6 million (Please see financial reconciliation tables and notes at the end of this release for more information regarding NOI.)
- The company completed fourth quarter and year-to-date 2017 property acquisitions totaling approximately $28.7 million and $124.8 million, respectively, based on aggregate contract purchase price. As of Dec. 31, 2017, the company had completed the acquisition of a diversified portfolio of medical office buildings, hospitals, senior housing facilities, skilled nursing facilities, integrated senior health campuses and real estaterelated investments for an aggregate contract purchase price of approximately $3.0 billion.
- As of Dec. 31, 2017, the company’s non-RIDEA2 property portfolio achieved a leased percentage of 94.3 percent and weighted average remaining lease term of 8.4 years. The company’s portfolio of senior housing — RIDEA facilities and integrated senior health campuses achieved a leased percentage of 85.0 percent and 85.3 percent, respectively, for the 12 months ended Dec. 31, 2017. Portfolio leverage3 was 38.0 percent.
- The company declared and paid daily distributions equal to an annualized distribution of $0.60 per share to stockholders of record from Jan. 1 to Dec. 31, 2017.
- On Oct. 4, 2017, the company’s board of directors, at the recommendation of its independent directors, unanimously approved and established an updated 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 REITs, the valuation upon which the 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.
1 Based on aggregate contract purchase price of owned and/or operated real estate and real estate-related investments, including development projects, as of Dec. 31, 2017.
2 The 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.
3 Total 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.
