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Aviv REIT Announces First Quarter 2013 Earnings Results

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CHICAGO, May 7, 2013 /PRNewswire/ -- Aviv REIT, Inc. ("Aviv" or the "Company") (NYSE: AVIV) released its earnings for the first quarter ended March 31, 2013. 

Recent Highlights

  • AFFO of $15.6 million, or $0.45 per basic and diluted share; and net loss of $11.4 million, or $0.33 per basic and diluted share
  • Adjusted EBITDA of $31.2 million
  • Completed an initial public offering of common stock raising net proceeds of $282.3 million
  • Closed on a new $400 million revolver with current pricing of LIBOR plus 235 basis points
  • Received a two notch upgrade to BB on the Company's senior unsecured issue-level rating and a one notch upgrade to BB- from S&P on Aviv's corporate credit rating, with a stable outlook
  • Invested $6.7 million for property reinvestment and new construction during the first quarter
  • Invested $5.1 million of acquisitions during the second quarter to date comprised of four properties

"We are excited to begin this next step in the evolution of our business and I am extremely pleased with the success of our IPO," said Craig M. Bernfield, Chairman and Chief Executive Officer of Aviv.  "We appreciate the support we have from our new shareholders and we are committed to transparency, disclosure, communication and performance. Our portfolio continues to perform well, driven by the performance of and relationships with our market-leading operators.  As a result of our access to public debt and equity capital, we believe we are well-positioned to take advantage of the consolidation opportunity that exists in the skilled nursing sector. We are optimistic that we can continue to execute our growth strategy."

Adjusted FFO ("AFFO") for the quarter ended March 31, 2013 was $15.6 million, or $0.45 per diluted share. Adjusted EBITDA for the quarter ended March 31, 2013 was $31.2 million, compared to $25.7 million for the comparable 2012 period. Net (loss) income for the quarter ended March 31, 2013 was $(11.4) million, or $(0.33) per diluted share, compared to $6.0 million, or $0.21 per diluted share, for the comparable 2012 period.

Please refer to the "Reconciliation of Financial Measures" section of this press release for additional information on these financial measures. The Company is also making available certain supplemental information regarding its properties for the first quarter at www.avivreit.com under the Investor Relations tab.

2013 AFFO Guidance

Aviv expects its 2013 AFFO to range between $1.73 and $1.77 per diluted share. The Company's AFFO guidance for 2013 assumes the impact of approximately $220 million of projected investment activity, which includes acquisitions, property reinvestment and new construction activity.  A reconciliation of the AFFO guidance to the Company's projected GAAP earnings is provided on a schedule attached to this press release. The Company's guidance is based on a number of other assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that the Company will achieve these results. The Company may from time to time update its publicly announced guidance, but it is not obligated to do so.

Conference Call

A conference call to discuss the first quarter 2013 earnings will take place today at 11:00 a.m. central time / 12:00 p.m. eastern time.  The dial-in number for the conference call is (877) 941-1466 (U.S.) or (480) 629-9772 (International). The conference call can also be accessed via webcast at www.avivreit.com under the Investor Relations tab. A replay of the call will be available through June 5, 2013 on the Company's website or by calling (800) 406-7325, access code 4615625.  

About Aviv

Aviv REIT, Inc., based in Chicago, is a real estate investment trust that specializes in owning post-acute and long-term care skilled nursing facilities and other healthcare properties. Aviv is one of the largest owners of SNFs in the United States and has been in the business for over 30 years. The Company currently owns 260 properties that are triple-net leased to 36 operators in 29 states.

For more information about the Company, please visit our website at www.avivreit.com

Forward-Looking Statements

This press release may include forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "continue" or similar terminology.  These forward-looking statements are made based on our current expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. These uncertainties include, but are not limited to, uncertainties relating to the operations of our tenants, including those relating to reimbursement by government and other third-party payors, compliance with regulatory requirements and occupancy levels, regulatory, reimbursement and other changes in the healthcare industry, the performance and reputation of our tenants, our ability to successfully engage in strategic acquisitions and investments, the effect of general market, economic and political conditions, the availability and cost of capital, changes in tax laws and regulations affecting REITs and our ability to maintain our status as a REIT.  Important factors that could cause actual results to differ materially from our expectations include those disclosed under "Risk Factors" and elsewhere in filings made by Aviv REIT, Inc. and Aviv Healthcare Properties Limited Partnership with the Securities and Exchange Commission.

Aviv REIT, Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)


March 31,


December 31, 


2013


2012

Assets




Real estate investments




Land 

$    119,220,274


$    119,224,819

Buildings and improvements 

968,954,252


968,074,506

Construction in progress

7,997,164


4,483,684

Assets under direct financing leases 

11,083,558


11,049,120


1,107,255,248


1,102,832,129

Less accumulated depreciation

(126,228,358)


(119,371,113)

Net real estate investments

981,026,890


983,461,016

Cash and cash equivalents 

47,248,305


17,876,319

Straight-line rent receivable, net

38,834,802


36,101,861

Tenant receivables, net

5,440,110


3,483,534

Deferred finance costs, net 

13,852,637


14,651,265

Secured loan receivables, net

31,781,253


32,638,780

Other assets 

10,470,980


11,315,865

Total assets

$ 1,128,654,977


$ 1,099,528,640





Liabilities and equity




Senior notes payable and other debt

$    499,461,877


$    705,153,415

Accounts payable and accrued expenses 

14,117,355


24,207,814

Tenant security and escrow deposits 

17,754,510


18,278,172

Other liabilities

11,052,638


31,386,742

Total liabilities 

542,386,380


779,026,143

Equity:




Stockholders' equity




Common stock (par value $0.01; 37,271,273 and 21,653,813 




shares issued and outstanding, respectively) 

372,713


216,538

Additional paid-in-capital

517,235,643


375,029,917

Accumulated deficit

(73,803,028)


(46,526,886)

Accumulated other comprehensive loss


(2,151,670)

Total stockholders' equity

443,805,328


326,567,899

Noncontrolling interests

142,463,269


(6,065,402)

Total equity

586,268,597


320,502,497

Total liabilities and equity

$ 1,128,654,977


$ 1,099,528,640





 

Aviv REIT, Inc. and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

(unaudited)


Three Months Ended March 31,


2013


2012

Revenues




Rental income

$      33,639,699


$      27,915,264

Interest on secured loans and financing lease

1,058,639


1,346,122

Interest and other income 

2,011


6,419

Total revenues 

34,700,349


29,267,805





Expenses




Interest expense

13,345,417


11,954,053

Depreciation and amortization

7,998,143


5,997,591

General and administrative

13,890,034


3,854,634

Transaction costs

182,654


678,444

Loss on impairment of assets


699,201

Reserve for uncollectible secured loans and other receivables

14,207


137,235

Gain on sale of assets, net

(264,001)


Loss on extinguishment of debt

10,974,196


Other expenses


100,088

Total expenses

46,140,650


23,421,246

(Loss) income from continuing operations

(11,440,301)


5,846,559

Discontinued operations


169,725

Net (loss) income

(11,440,301)


6,016,284

Net loss (income) allocable to noncontrolling interests

3,963,425


(2,456,487)

Net (loss) income allocable to stockholders

$      (7,476,876)


$        3,559,797

Net (loss) income

$    (11,440,301)


$        6,016,284

Unrealized loss on derivative instruments

-


(208,328)

Total comprehensive (loss) income 

$    (11,440,301)


$        5,807,956

Net (loss) income allocable to stockholders

$      (7,476,876)


$        3,559,797

Unrealized loss on derivative instruments, 




net of noncontrolling interest portion of $0 and ($85,062), respectively

-


(123,266)

Total comprehensive (loss) income allocable to stockholders

$      (7,476,876)


$        3,436,531





Earnings per common share:




Basic:




(Loss) income from continuing operations allocable to stockholders

$               (0.33)


$                 0.20

Discontinued operations, net of noncontrolling interests

-


0.01

Net (loss) income allocable to stockholders

$               (0.33)


$                 0.21

Diluted:




(Loss) income from continuing operations allocable to stockholders

$               (0.33)


$                 0.20

Discontinued operations, net of noncontrolling interests

-


0.01

Net (loss) income allocable to stockholders

$               (0.33)


$                 0.21





Weighted average shares used in computing earnings per common share:




Basic

22,521,450


17,332,290

Diluted

23,184,696


17,475,291





    

Aviv REIT, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)



Three Months Ended March 31, 



2013


2012

Operating activities





Net (loss) income


$    (11,440,301)


$        6,016,284

Adjustments to reconcile net (loss)  income to net cash (used in) provided by




operating activities:





Depreciation and amortization


7,998,143


6,031,681

Amortization of deferred financing costs


901,245


775,336

Accretion of debt premium


(122,054)


(70,081)

Straight-line rental income, net


(2,732,941)


(1,680,092)

Rental income from intangible amortization, net 


(365,852)


(368,754)

Non-cash stock-based compensation 


10,355,670


244,196

Gain on sale of assets, net


(264,001)


Non-cash loss on extinguishment of debt


5,160,614


13,264

Loss on impairment of assets



699,201

Reserve for uncollectible loans and other receivables


14,207


100,352

Accretion of earn-out provision for previously
acquired real estate investments



100,088

Changes in assets and liabilities:





Tenant receivables


(1,970,784)


(2,822,991)

Other assets 


409,311


(1,305,381)

Accounts payable and accrued expenses


(8,594,788)


(4,770,254)

Tenant security deposits and other liabilities 


291,444


(1,846,351)

Net cash (used in) provided by operating activities 


(360,087)


1,116,498






Investing activities





Purchase of real estate investments



(23,775,000)

Proceeds from sales of real estate investments


1,753,871


Capital improvements


(4,905,238)


(1,134,828)

Development projects


(1,823,970)


(8,216,003)

Secured loan receivables received from others


1,247,718


949,047

Secured loan receivables funded to others


(2,330,880)


(2,692,622)

Net cash used in investing activities 


(6,058,499)


(34,869,406)






Aviv REIT, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (continued)

(unaudited)



Three Months Ended March 31, 



2013


2012

Financing activities





Borrowings of debt 


$  100,000,000


$    134,049,000

Repayment of debt 


(305,569,484)


(115,287,565)

Payment of financing costs


(5,122,128)


(4,603,430)

Payment for swap termination


(3,606,000)


Capital contributions


361,149


75,000,000

Deferred contribution



(35,000,000)

Initial public offering proceeds


303,600,000


Cost of raising capital


(25,248,699)


Cash distributions to partners


(7,400,136)


(4,575,684)

Cash dividends to stockholders


(21,224,130)


(6,372,353)

Net cash provided by financing activities 


35,790,572


43,209,968

Net increase in cash and cash equivalents


29,371,986


9,457,060

Cash and cash equivalents:





  Beginning of period


17,876,319


40,862,023

  End of period


$      47,248,305


$      50,319,083






Supplemental cash flow information





Cash paid for interest


$      22,042,811


$      16,490,483






Supplemental disclosure of noncash activity





Accrued dividends payable to stockholders


$           757,795


$        7,221,693

Accrued distributions payable to partners


$           238,768


$        3,975,101

Write-off of straight-line rent receivable, net


$                      –


$             58,268

Write-off of deferred financing costs, net


$        5,160,614


$             13,264

Accrued capital improvement loan receivables


$        1,940,689


$                      –

Reconciliation of Financial Measures

We use financial measures in this release that are derived on the basis of methodologies other than in accordance with GAAP. We derive these measures as follows:

  • The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (computed in accordance with GAAP), excluding gains and losses from sales of property (net) and impairments of depreciated real estate, plus real estate depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Applying the NAREIT definition to our financial statements results in FFO representing net income before depreciation and amortization, impairments of assets and gain (loss) on sale of assets.
  • Normalized FFO represents FFO before loss on extinguishment of debt, reserves for uncollectible loan receivables, transaction costs and change in fair value of derivatives.
  • AFFO represents Normalized FFO before amortization of deferred financing costs, non-cash stock-based compensation, straight-line rent and rental income from intangible amortization.
  • EBITDA represents net income before interest expense (net) and depreciation and amortization.
  • Adjusted EBITDA represents EBITDA before impairment of assets, gain (loss) on sale of assets, transaction costs, write-off of straight-line rents, non-cash stock-based compensation, loss on extinguishment of debt, reserves for uncollectible loan receivables and change in fair value of derivatives.

Our management uses FFO, Normalized FFO, AFFO, EBITDA and Adjusted EBITDA as important supplemental measures of our operating performance and liquidity. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. The term FFO was designed by the real estate industry to address this issue and as an indicator of our ability to incur and service debt. Because FFO, Normalized FFO and AFFO exclude depreciation and amortization unique to real estate, impairment, gains and losses from property dispositions and extraordinary items and because EBITDA and Adjusted EBITDA exclude certain non-cash charges and adjustments and amounts spent on interest and taxes, they provide our management with performance measures that, when compared year over year or with other real estate investment trusts, or REITs, reflect the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and, with respect to FFO, Normalized FFO and AFFO, interest costs, in each case providing perspective not immediately apparent from net income. In addition, we believe that FFO, Normalized FFO, AFFO, EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs.

We offer these measures to assist the users of our financial statements in assessing our financial performance and liquidity under GAAP, but these measures are non-GAAP measures and should not be considered measures of liquidity, alternatives to net income or indicators of any other performance measure determined in accordance with GAAP, nor are they indicative of funds available to fund our cash needs, including our ability to make payments on our indebtedness. In addition, our calculations of these measures are not necessarily comparable to similar measures as calculated by other companies that do not use the same definition or implementation guidelines or interpret the standards differently from us. Investors should not rely on these measures as a substitute for any GAAP measure, including net income or revenues.








Three Months Ended March 31,

EBITDA


2013


2012

Net income (loss)


$ (11,440,301)


$ 6,016,284

Adjusted for:





Interest expense, net


13,345,204


11,950,966

Depreciation and amortization


7,998,143


5,997,573

EBITDA


$ 9,903,046


$23,964,823






Adjusted EBITDA





EBITDA


$ 9,903,046


$ 23,964,823

Adjusted for:





Loss on impairment of assets


-


699,201

Gain on sale of assets, net


(264,001)


-

Transaction costs


182,654


678,444

Write-off of straight-line rents


-


58,268

Non-cash stock-based compensation


10,355,670


244,196

Loss on extinguishment of debt


10,974,196


-

Reserve for uncollectible loan receivables


-


100,352

Adjusted EBITDA


$31,151,565


$25,745,284






FFO





Net income (loss)


$ (11,440,301)


$ 6,016,284

Adjusted for:





Depreciation and amortization


7,998,143


5,997,573

Loss on impairment of assets


-


699,201

Gain on sale of assets, net


(264,001)


-

FFO


$ (3,706,159)


$12,713,058






Normalized FFO





FFO


$ (3,706,159)


$ 12,713,058

Adjusted for:





Loss on extinguishment of debt


10,974,196


-

Reserve for uncollectible loan receivables


-


100,352

Transaction costs


182,654


678,444

Normalized FFO


$ 7,450,691


$13,491,854






AFFO





Normalized FFO


$ 7,450,691


$ 13,491,854

Adjusted For:





Amortization of deferred financing costs


901,245


773,336

Non-cash stock-based compensation


10,355,670


244,196

Straight-line rental income, net


(2,732,941)


(1,680,092)

Rental income from intangible amortization, net


(365,852)


(368,754)

AFFO


$15,608,813


$12,460,540






Weighted average common shares and units outstanding, basic1


34,459,870



Weighted average common shares and units outstanding, diluted2


34,977,654








AFFO per share and unit, basic


$0.45



AFFO per share and unit, diluted


$0.45













1)

Includes 22,521,450 common shares and 11,938,420 units.

2)

Includes dilution from 5,870,258 options outstanding with a weighted average exercise price of $17.47. Using the average stock price of $19.16 for the first quarter results in dilution of 517,784 shares.

 

The following table illustrates the Company's AFFO guidance for the year ending December 31, 2013:




2013 Projected AFFO

Per diluted common share:




Net income


$0.57

-

$0.61

Adjustments:






Depreciation and amortization

0.71

-

0.71


Gain on sale of assets, net

(0.01)

-

(0.01)

FFO


$1.28

-

$1.32







Adjustments:






Loss on extinguishment of debt

0.23

-

0.23


Transaction costs

0.08

-

0.08

Normalized FFO

$1.59

-

$1.63







Adjustments:






Amortization of deferred financing costs

0.06

-

0.06


Non-cash stock-based compensation

0.26

-

0.26


Straight-line rent

(0.15)

-

(0.15)


Rental income from intangible amortization

(0.03)

-

(0.03)

AFFO


$1.73

-

$1.77

      

 

 

SOURCE Aviv REIT, Inc.



RELATED LINKS
http://www.avivreit.com

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