Aviv REIT reports net income of $12 million for third quarter 2014

Aviv REIT, Inc. (NYSE: AVIV) today reported results for the third quarter ended September 30, 2014. All per share results are reported on a fully diluted basis.

Q3 Highlights

• $194.1 million of acquisitions
  • $99.8 million of SNF acquisitions at a blended initial cash yield of 9.2%
  • $82.0 million of ALF acquisitions at a blended initial cash yield of 8.0%
  • $12.3 million acquisition for land and entitlements for future identified new construction ALFs
• Invested $24.6 million for property reinvestment and new construction
• AFFO of $28.8 million, or $0.47 per share, a 9% increase over Q3 2013
• Adjusted EBITDA of $43.0 million, a 33% increase over Q3 2013
• Sold five properties for $0.8 million recording a net GAAP loss of $2.5 million

Q4 Quarter-to-date Highlights

• $33.1 million of acquisitions
  • $4.6 million acquisition of one SNF at an initial cash yield of 10.0%
  • $28.5 million related acquisitions of two SNFs at an initial cash yield of 9.0%

Craig M. Bernfield, Aviv's Chairman and Chief Executive Officer, said, "We are pleased with our third quarter performance. We have produced a significant volume of attractive investments, completing over $440 million year-to-date, already the most we have ever closed in a calendar year, significantly exceeding the $239 million of investments we completed in 2013. These investments include approximately $400 million of acquisitions and approximately $40 million of reinvestment and new construction projects, which are key to our commitment to owning high quality properties across our portfolio. We continue to acquire high-quality SNFs and ALFs with knowledgeable and experienced operators at attractive valuations, cash yields and coverages, all consistent with our track record. We are working on a number of identified acquisitions and other investments that we expect to close prior to year-end or in early 2015. We believe that we are in a great position to continue to grow given our operator relationships, market presence, liquidity, access to capital and cost of capital."

Third Quarter 2014 Results

AFFO for the quarter ended September 30, 2014 was $28.8 million, or $0.47 per share, compared to $21.8 million, or $0.43 per share, for the quarter ended September 30, 2013, an increase of 9% per share. The growth in AFFO per share was driven primarily by the Company's strong acquisition activity offset by the additional shares of common stock issued during the second quarter of 2014.

Adjusted EBITDA for the quarter ended September 30, 2014 was $43.0 million, compared to $32.4 million for the quarter ended September 30, 2013, an increase of 33%. Net income for the quarter ended September 30, 2014 was $12.0 million, or $0.20 per share, compared to $10.1 million, or $0.20 per share, for the quarter ended September 30, 2013.

Nine Months 2014 Results

AFFO for the nine months ended September 30, 2014 was $78.3 million, or $1.37 per share, compared to $58.6 million, or $1.28 per share, for the nine months ended September 30, 2013, an increase of 7%. The growth in AFFO per share was driven primarily by the Company's strong acquisition activity.

Adjusted EBITDA for the nine months ended September 30, 2014 was $120.2 million, compared to $95.2 million for the nine months ended September 30, 2013, an increase of 26%. Net income for the nine months ended September 30, 2014 was $32.0 million, or $0.56 per share, compared to $12.0 million, or $0.26 per share, for the nine months ended September 30, 2013.

Portfolio Update

Acquisitions:

During the third quarter, the Company completed four transactions acquiring 12 properties and two land parcels in 4 states with 3 operators for $194.1 million, comprised of the following:

• Three SNFs in Missouri for $16.2 million triple-net leased to existing operator Diversicare at an initial cash yield of 10.0%.
• Two ALFs and one SNF in Massachusetts for $82.0 million triple-net leased to existing operator Maplewood Senior Living, an operator of 12 facilities in three states, at an initial cash yield of 8.0%.
• Two land parcels and entitlements for $12.3 million for future identified new construction ALFs.
• Four post-acute and long-term care SNFs in Washington, an ALF in Washington and a campus in Idaho, which includes a SNF and an ALF, for a total price of $83.6 million. The SNF and ALF properties are triple-net leased to existing Aviv operator EmpRes at a blended initial cash yield of 9.0%.

During the fourth quarter, the Company completed two transactions acquiring three properties for $33.1 million.

Year-to-date, the Company has completed 18 transactions acquiring 41 properties in 10 states with 9 operators for $403 million at a blended initial cash yield of 9.3%. The Company has also invested $40.6 million through September 30, 2014 for property reinvestment and new construction.

Dispositions:

During the third quarter, the Company sold five properties for $763,000 recording a net GAAP loss of $2.5 million or $0.04 per share. These five properties were previously closed in conjunction with each local existing operator agreeing to continue to pay the remaining contractual rent owed of approximately $6.9 million under the cross-defaulted existing triple-net lease. The Company also recorded an impairment charge of $1.5 million in the third quarter on a property held for sale and expected to sell in the fourth quarter.

Year-to-date, the Company sold seven properties for $1.4 million recording $0.9 million of impairments and a net GAAP loss of $2.5 million related to such sales. Five of the seven properties were previously closed in conjunction with each local existing operator agreeing to continue to pay the remaining contractual rent owed of approximately $6.9 million under the cross-defaulted existing triple-net lease.

Balance Sheet and Liquidity

As of September 30, 2014, the Company had $16 million of cash, $425 million of availability on its $600 million unsecured credit facility and a net debt to Adjusted EBITDA ratio of 4.8. As of today, the Company has $220 million outstanding under its credit facility.

Dividends

On July 29, 2014, the Company announced that its Board of Directors declared a dividend for the third quarter of $0.36 per share. The dividend was paid in cash on October 10, 2014 to stockholders of record on September 26, 2014.

Full Year 2014 AFFO Guidance

The Company is reaffirming its AFFO guidance range of $1.89 to $1.93 per share for the full year 2014.