Third Quarter Highlights: INDIANAPOLIS, Nov. 3
/PRNewswire-FirstCall/ -- Windrose Medical Properties Trust
(NYSE:WRS), a self-managed specialty medical properties REIT,
announced today financial results for the third quarter ended
September 30, 2006. Financial and Operating Results Windrose
reported third quarter 2006 rental revenues of $24.7 million,
compared to $12.0 million for the third quarter 2005, a 106.2%
increase. Third quarter 2006 corporate general and administrative
expenses were $4.0 million, compared to $1.1 million for the same
quarter in 2005. Third quarter 2006 general and administrative
expenses were $1.6 million excluding merger related expenses of
$2.4 million. Third quarter 2006 net loss was $462,000, compared to
net income of $1.5 million for the third quarter 2005. Third
quarter 2006 net loss available for common shareholders after
preferred dividends was $1.5 million, or $0.07 per share based on
20.9 million weighted average common shares outstanding, compared
to net income available to common shareholders of $524,000, or
$0.04 per diluted share based on 14.2 million weighted average
common and dilutive shares outstanding, for the third quarter 2005.
Third quarter 2006 funds from operations (FFO), comprised of net
income plus depreciation and amortization from real estate assets,
was $4.0 million, or $0.19 per share on an increased number of
shares, compared to $3.3 million, or $0.24 per diluted share, for
the third quarter 2005. Third quarter 2006 funds available for
distribution (FAD), which consists of FFO adjusted primarily for
straight-line rent, above/below market rents, and amortization of
deferred financing fees, was $3.7 million, compared to $3.2 million
for the third quarter 2005. Hospital Affiliates Development Corp.
(HADC), Windrose's taxable development subsidiary, generated a
third quarter 2006 pre-tax profit of approximately $20,000, as
compared to a third quarter 2005 pre-tax profit of approximately
$44,000. The third quarter 2006 after-tax profit was approximately
$12,000, compared to a third quarter 2005 after tax profit of
approximately $26,000. In August 2006, Windrose acquired three
specialty hospitals for $26.2 million. With more than 169,000
rentable square feet, the transaction diversified the Company's
portfolio into the long-term acute care and rehabilitation sectors.
In September 2006, the definitive merger agreement was signed
pursuant to which Health Care REIT will acquire Windrose. Pending
completion of the merger, as part of the agreement, Windrose
received from Health Care REIT a line of credit for $125.0 million
primarily to fund acquisitions between the execution of the merger
agreement and completion of the merger. Windrose acquired in
October 2006 a medical office building in Middletown, NY for $18.9
million. This multi-tenant property contributed over 100,000
rentable square feet to the Windrose portfolio. Fred Klipsch,
Chairman and Chief Executive Officer, remarked, "Our third quarter
revenues increased 106% to $24.7 million, driven by our expanded
property portfolio that reached $748 million in gross asset value
at quarter end. We continued to acquire high quality, specialty
properties bringing our total 2006 year-to-date acquisitions to
$74.5 million." Distributions As previously announced, Windrose's
Board of Trustees declared a third quarter 2006 dividend of $0.235
per common share. The dividend is payable on November 21, 2006 to
shareholders of record on November 10, 2006. The Board of Trustees
declared a quarterly dividend of $0.46875 per 7.5% Series A
cumulative convertible preferred share. This dividend is payable on
November 21, 2006 to preferred shareholders of record on November
6, 2006. Conference Call and Webcast Windrose will host a
conference call to discuss third quarter results on Friday,
November 3, 2006 at 11:00 a.m. Eastern Time. The conference call
will be accessible by telephone and through the Internet. Telephone
access is available by dialing (877) 407-0778 for domestic callers,
and (201) 689-8565 for international callers. Those interested in
listening to the conference call should dial into the call
approximately 10 minutes before the start time. A live webcast of
the conference call will be available online at
http://www.windrosempt.com/. After the live webcast, the call will
remain available on Windrose Medical Properties Trust's website,
http://www.windrosempt.com/, through December 3, 2006. In addition,
a telephonic replay of the call will be available through November
17, 2006. The replay dial-in numbers are (877) 660-6853 for
domestic callers and (201) 612-7415 for international. Please use
account number 286 and conference ID number 217486. About Windrose
Windrose is a self-managed real estate investment trust (REIT)
based in Indianapolis, Indiana with offices in Nashville,
Tennessee. Windrose was formed to acquire, selectively develop and
manage specialty medical properties, such as medical office
buildings, ambulatory surgery centers, outpatient treatment
diagnostic facilities, physician group practice clinics, specialty
hospitals and treatment centers. Non-GAAP Financial Measures This
press release contains non-GAAP financial information that is
generally provided by most publicly-traded REITs and that we
believe may be of interest to the investment community.
Reconciliation of all non-GAAP financial measures to GAAP financial
measures are included in the schedule accompanying this press
release and on Windrose's web site at http://www.windrosempt.com/
under the heading "Financial Reports" on the "Investor Center"
section of Windrose's web site. Windrose believes that FFO is
helpful in understanding Windrose's operating performance in that
FFO excludes depreciation and amortization expense on real estate
assets. Windrose believes that GAAP historical cost depreciation of
real estate assets is generally not correlated with changes in the
value of those assets, whose value does not diminish predictably
over time, as historical cost depreciation implies. FFO should not
be considered as an alternative to cash flows from operating,
investing and financing activities as a measure of liquidity. The
White Paper on FFO approved by the Board of Governors of the
National Association of Real Estate Investment Trusts ("NAREIT") in
April 2002 defines FFO as net income (loss) (computed in accordance
with GAAP), excluding gains (or losses) from sales of properties,
plus real estate related depreciation and amortization and
comparable adjustments for Windrose's portion of these items
related to unconsolidated entities and joint ventures. A
reconciliation of Windrose's third quarter 2006 and 2005 FFO to net
income, the most directly comparable GAAP measure, is included in a
schedule accompanying this press release. Windrose's management
considers funds available for distribution ("FAD") to be a useful
liquidity measure because FAD provides investors with an additional
basis to evaluate the ability of Windrose to incur and service debt
and to fund capital expenditures and distributions to shareholders
and unit holders. Windrose derives FAD by adjusting FFO for certain
non-cash items such as the straight line rent adjustment,
above/below market lease rents, amortization of loan fees, and
depreciation of property, plant and equipment. A reconciliation of
Windrose's third quarter 2006 and 2005 FAD to net income, the most
directly comparable GAAP measure, is included in a schedule
accompanying this press release. Safe Harbor Some of the statements
in this news release, including those related to this earnings
report, constitute forward-looking statements. Such statements
include, in particular, statements about our beliefs, expectations,
plans and strategies that are not based on historical facts. You
should not rely on our forward-looking statements because the
matters they describe are subject to known and unknown risks,
uncertainties, assumptions and changes in circumstances, many of
which are beyond our control, which may cause our actual results to
differ significantly from those expressed in any forward- looking
statement. The factors that could cause actual results to differ
materially from current expectations include the completion of the
merger with Health Care REIT, adverse changes in healthcare laws,
changes in economic and general business conditions, competition
for specialty medical properties, our ability to finance our
operations, regulatory conditions and other factors described from
time to time in filings we make with the Securities and Exchange
Commission including our Annual Report on Form 10-K for the year
ended December 31, 2005. The forward-looking statements contained
herein represent our judgment as of the date hereof, and we caution
readers not to place undue reliance on such statements. We do not
undertake to publicly update or revise any forward-looking
statement whether as a result of new information, future events or
otherwise. Windrose Medical Properties Trust Condensed Consolidated
Financial Information (Dollars in Thousands, except per share
amounts) Three months Three months ended ended 9/30/2006 9/30/2005
RENTAL OPERATIONS Revenues Rent $24,717 $11,985 Operating expenses
Rental expenses 5,859 2,651 Property taxes 2,469 1,122 Depreciation
and amortization 5,618 2,820 Total operating expenses $13,946
$6,593 Operating income from rental operations $10,771 $5,392
SERVICE OPERATIONS (HADC) Revenues Development and project
management fees $512 $523 Expenses Cost of sales and project costs
449 321 General and administrative expenses 43 158 Gain from
service operations $20 $44 GENERAL AND ADMINISTRATIVE EXPENSES
Corporate operations 3,982 1,057 Abandoned Deals Expense 24 - Total
General and Administrative Expenses $4,006 $1,057 Operating income
$6,785 $4,379 OTHER INCOME (EXPENSE) Interest income (expense)
(7,076) (2,783) Other income (expense) (71) (42) Total other income
(expense) $(7,147) $(2,825) Income tax benefit (expense) (8) (17)
Net income (loss) before minority interest $(370) $1,537 Minority
interest in income of common unit holders and other subsidiaries
(92) (21) Net income (loss) $(462) $1,516 Dividends on preferred
shares 991 992 Net Income (Loss) available for common shareholders
$(1,453) $524 Weighted average shares of common stock outstanding -
Basic 20,948 13,771 - Diluted* 20,948 14,175 * Same as the basic
due to the anti-dilutive effect of the net loss Net income (loss)
per common share - Basic and diluted $(0.07) $0.04 Windrose Medical
Properties Trust Condensed Consolidated Financial Information
(Dollars in Thousands, except per share amounts) Three months Three
months ended ended 9/30/2006 9/30/2005 Funds from operations(1)
(FFO): Net income (loss) available for common shareholders $(1,453)
$524 Add back (deduct): Amortization and depreciation expense 5,618
2,820 Minority interest share of depreciation and amortization
(135) (74) Funds from operations (FFO) $4,030 $3,270 Weighted
average shares of common stock outstanding - Basic 20,948 13,771 -
Diluted 20,948 14,175 FFO per common share - Basic and diluted
$0.19 $0.24 Windrose Medical Properties Trust Condensed
Consolidated Financial Information (Dollars in Thousands) Three
months Three months ended ended 9/30/2006 9/30/2005 Funds available
for distribution(2) (FAD): Funds from operations (FFO) $4,030
$3,270 Add back (deduct): Straight-line rent adjustment (969) (468)
Rental income associated with above/below market leases 332 143
Amortization of deferred financing fees 193 193 Depreciation of
property, plant and equipment 53 41 Minority interest share of FAD
adjustments 36 15 Funds available for distribution (FAD) $3,675
$3,194 Cash Spent on Tenant Improvements, Capital Expenditures and
Leasing Commissions Capital improvement expenditures $25 $65 Tenant
improvements and leasing commissions 406 91 Total $431 $156
Reconciliation of Net Income to Cash Flows Provided by Operating
Activities Three months Three months ended ended 9/30/2006
9/30/2005 Net income (loss) $(462) $1,516 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization 5,618 2,820 Rental income associated
with above/below market leases 332 143 Deferred income taxes 8 17
Stock compensation expense 156 28 Amortization of deferred
financing fees 193 193 Amortization of fair value of debt
adjustment (107) (214) Minority interest in earnings 92 21 Increase
(decrease) in cash due to changes in: Construction receivables and
payables, net (221) (61) Straight line rent receivable (969) (472)
Revenue earned in excess of billings 77 - Billings in excess of
revenues earned 54 (107) Receivables from tenants (1,586) 94 Other
accrued revenues and expenses 3,817 465 Cash flows provided by
operating activities $7,002 $4,443 Reconciliation of Cash Flows
Provided by Operating Activities to Funds Available for
Distribution (FAD) Three months Three months ended ended 9/30/2006
9/30/2005 Cash flows provided by operating activities 7,002 $4,443
Add (Deduct): Non-income Operating Cash Flows: Billings in excess
of revenues earned (54) - Revenue earned in excess of billings (77)
107 Deferred income taxes (8) (17) Receivables from tenants 1,586
(94) Amortization of fair value of debt 107 214 Depreciation of
PP&E and amortization of other assets 53 45 Other accrued
revenues and expenses (3,817) (465) Construction payables, net 221
61 Stock compensation expense (156) (28) Minority interest in
earnings (92) (21) Minority interest share of depreciation and
amortization and FAD Adjustments (99) (59) Preferred dividends
(991) (992) Funds available for distribution (FAD) $3,675 $3,194
Windrose Medical Properties Trust Condensed Consolidated Balance
Sheets (Dollars in Thousands) 9/30/2006 9/30/2005 Cash and cash
equivalents $11,910 $10,690 Net real estate assets 707,738 419,484
Other assets 53,400 16,359 Total assets $773,048 $446,533 Debt
$417,036 $228,185 Liability to subsidiary trust issuing preferred
securities 51,000 - Payables and other liabilities 22,981 17,613
Minority interest 5,799 5,592 Shareholders' equity 276,232 195,143
Total liabilities and shareholders' equity $773,048 $446,533 (1)
The Company believes that funds from operations ("FFO") is helpful
in understanding the Company's operating performance in that FFO
excludes depreciation and amortization expense on real estate
assets. The Company believes that GAAP historical cost depreciation
of real estate assets is generally not correlated with changes in
the value of those assets, whose value does not diminish
predictably over time, as historical cost depreciation implies. FFO
should not be considered as an alternative to cash flows from
operating, investing and financing activities as a measure of
liquidity. The White Paper on FFO approved by the Board of
Governors of the National Association of Real Estate Investment
Trusts ("NAREIT") in April 2002 defines FFO as net income (loss)
(computed in accordance with GAAP), excluding gains from sales of
properties, plus real estate related depreciation and amortization
and comparable adjustments for the Company's portion of these items
related to unconsolidated entities and joint ventures. (2) The
Company's management considers funds available for distribution
("FAD") to be a useful liquidity measure because FAD provides
investors with an additional basis to evaluate the ability of the
Company to incur and service debt and to fund capital expenditures
and distributions to shareholders and unit holders. The Company
derives FAD by adjusting FFO for certain non-cash items such as the
straight line rent adjustment, above/below market lease rents,
amortization of loan fees, and depreciation of non-real estate
property, plant and equipment. The Company's calculations of FFO
and FAD may not be comparable to FFO and FAD reported by other real
estate investment trusts ("REITs") due to the fact that not all
REITs use the same definitions. FFO and FAD should not be
considered as alternatives to net income as indicators of the
Company's operating performance or alternatives to cash flows as
measures of liquidity. FFO and FAD do not measure whether cash flow
is sufficient to fund all of the Company's cash needs, including
principal amortization, capital expenditures, and distributions to
shareholders and unit holders. Additionally, FFO and FAD do not
represent cash flows from operating, investing or financing
activities as defined by GAAP. Reclassifications: Certain prior
quarter balances have been reclassified to conform to the current
presentation. Contact: Windrose Medical Properties Trust Fred
Farrar President and COO (317) 860-8213 Investors/Media: The Ruth
Group Stephanie Carrington/Jason Rando (646) 536-7017/7025
DATASOURCE: Windrose Medical Properties Trust CONTACT: Fred Farrar,
President and COO, Windrose Medical Properties Trust,
+1-317-860-8213; Investors/Media - Stephanie Carrington,
+1-646-536-7017, , or Jason Rando, +1-646-536-7025, , both of The
Ruth Group Web site: http://www.windrosempt.com/
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