HealthLease Properties Real Estate Investment Trust Continues Double-Digit Growth in Q3 2013

HealthLease Properties Real Estate Investment Trust Continues Double-Digit 
Growth in Q3 2013 
TORONTO, Nov. 7, 2013 /CNW/ - HealthLease Properties Real Estate Investment 
Trust (HLP.UN) ("HealthLease" or "the REIT") today announced its financial 
results for the three months ended September 30, 2013. 
Q3 2013 Highlights 


    --  Acquired 12 senior housing and care facilities in the U.S. and
        Canada for a total purchase price of $147.3 million, and
        provided mezzanine financing in the amount of $5.3 million for
        two others in addition to entering into an agreement to
        purchase the properties upon completion for an aggregate
        purchase price of $53.3 million. The acquisitions were
        partially funded with a $68.8 million equity offering which
        closed on July 23, 2013
    --  Acquired two newly developed properties from Mainstreet
        Property Group - Wellbrooke of Westfield, a 100-bed seniors
        housing facility acquired for of U.S.$20.3 million, and
        Wellbrooke of Avon, a 100-bed facility acquired for U.S.$17.1
        million
    --  FFO increased by 171% to $7.1 million ($0.26/unit) compared to
        $2.6 million ($0.18/unit) in the third quarter of 2012
    --  AFFO increased by 116% to $6.5 million ($0.24/unit) compared to
        $3.0 million ($0.21/unit) in the third quarter of 2012
    --  At quarter end the REIT had a debt to gross book value of
        55.7%, payout ratio of 89.1%, cash balance of $10.5 million and
        undrawn availability of $16.5 million on its secured revolving
        line of credit


--  Subsequent to quarter-end:
  o On October 22, 2013 the REIT announced a bought-deal offering of 
$50 million in convertible debentures with a conversion price of 
$14.00 per unit and interest rate of 5.75%
  o On October 25, 2013, a tenant of the REIT exercised an option in 
its lease agreement and purchased the REIT's property at Valparaiso 
Indiana for U.S.$11.5 million
  o On October 25, 2013, the REIT acquired a 123-bed seniors housing 
facility located in Lexington, Kentucky for a total purchase cost 
of U.S.$14.1 million 
"Q3 2013 was our best quarter to date and once again demonstrates the 
effectiveness of the business model we put in motion at our IPO in June 2012," 
said Zeke Turner, Chairman and CEO. "This business model is built around 
maintaining a triple-net lease structure, a tenant base of leading seniors 
care operators and our partnership with Mainstreet Property Group, our largest 
unitholder, which provides us with exclusive access to a pipeline of high 
quality properties." 
 Summary of Results                                                
                     For the three    For the three months   Change
000's, except per           months
unit data                                 ended Sept. 30, 2012     % 
                    ended Sept. 30, 
                         2013 
Revenue                       $12,283               $4,586       167.8 
Net Profit                    $5,345                $2,934        82.2 
Funds from                    $7,090                $2,613       171.3
Operations 
(FFO) ((1)) 
Adjusted Funds from           $6,532                $3,019       116.4 
Operations (AFFO) (
(2)) 
Weighted Units                                                   
Outstanding
(diluted)                     27,381                14,369          - 


                                                                     

FFO per unit                   $0.26                 $0.18        44.4
(diluted)

AFFO per unit                  $0.24                 $0.21        14.3
(diluted)

Payout Ratio((3))              89.1%                101.1%          -

Footnotes:
(1)Funds from operations, or FFO, is an earnings measure used by most 
publicly traded real estate entities. FFO is not defined under International 
Financial Reporting Standards ("IFRS"). HealthLease calculates FFO in 
accordance with the Real Property Association of Canada ("REALpac") White 
Paper on Funds from Operations issued in 2004 and revised in 2010 for the 
impact of IFRS. FFO is defined as net earnings in accordance with IFRS, 
(i)plus or minus fair value adjustments on investment properties; (ii)plus 
or minus gains or losses from sales of investment properties; (iii)plus or 
minus other fair value adjustments; (iv)plus acquisition costs expensed as a 
result of the purchase of a property being accounted for as a business 
combination; (v)plus distributions on exchangeable units; and (vi)plus 
deferred income tax expense, after adjustments for equity accounted entities 
and joint ventures calculated to reflect FFO on the same basis as consolidated 
properties.

(2)Adjusted funds from operations, or AFFO, is defined by the REIT as a 
measure of operating cash generated from the business. AFFO is calculated as 
FFO subject to certain adjustments, including: (i)amortization of fair value 
mark-to-market adjustments on mortgages, amortization of deferred financing 
costs, and compensation expense related to deferred unit incentive plans, 
(ii)adjusting for any differences resulting from recognizing property rental 
revenues on a straight-line basis, (iii)adding an amount in respect of 
Mainstreet development lease payments owed or paid, and (iv)deducting a 
reserve for normalized maintenance capital expenditures and leasing costs, as 
determined by the REIT. Other adjustments may be made to AFFO as determined 
by our Trustees in their sole discretion.

(3)Payout ratio is a measure of the distributions (inclusive of 
distributions paid on Exchangeable Units) compared to the AFFO.

Review of Q3 2013 Operating and Financial Results (rounded to nearest '000 
except per unit data)

Revenue. Revenue is rental income from single tenant operators who are under 
long-term triple-net leases and interest income from loans. Revenue during 
the quarter was $12,283. The increase over the previous year is due to the 
addition of 27 properties that generated additional revenue of $7,697.

Net Operating Income. Net operating income, which is revenue less property 
expenses, was $11,770. Net operating income was 96.0% of revenue for the 
quarter ended September 30, 2013. The high margin is attributable to minimal 
operating expenses as a result of the triple-net structure of HealthLease's 
leases.

Net Profit. Net profit, which is revenue less all expenses (including non-cash 
fair market value changes in investment properties and Exchangeable Units), 
was $5,345 for the three months ended September 30, 2013.

Distributions. Distributions on weighted average outstanding units, 
including distributions on Exchangeable Units, totaled $5,818, or $0.21 per 
unit. This translates into a payout ratio of 89.1% for the quarter. If the 
payout ratio was calculated on actual distributions the result would be a 
payout ratio of 84%.

Financial Position (rounded to nearest '000)

Cash. At September 30, 2013, the REIT had cash-on-hand amounting to $10,526 
and restricted cash of $3,874.

Operating Line of Credit. At September 30, 2013, the REIT had a secured 
revolving line of credit of $120,000, secured by 17 properties in the U.S.; 
$16,470 was available on the operating line at the end of the quarter. 

Debt to Gross Book Value. Debt to gross book value is calculated by dividing 
total indebtedness, net of loan costs, by the total assets of the REIT. At 
June 30, 2013, the debt to gross book value was 55.7%.

Interest Coverage Ratio. Interest coverage ratio, a measure of credit risk, 
is calculated by dividing net operating income by net interest expense. For 
the three months ended September 30, 2013, interest coverage ratio was 3.22 
times, while the weighted average cost of debt was 4.27%.

Equity and Exchangeable Units. At September 30, 2013, the REIT had 29,337 
units outstanding, including Exchangeable Units. At the closing price of 
$10.17 per unit on September 30, 2013, the REIT had a market capitalization of 
$298,364.

Acquisition of Senior Care Properties

On July 1, 2013, the REIT indirectly acquired a senior housing and care 
property located in Westfield, Indiana for a total purchase price of U.S.$20.3 
million. The facility was externally developed by Mainstreet Asset 
Management, Inc. As part of the acquisition, Exchangeable Units were issued to 
Mainstreet Property Group, a related party, at a price of $10.69 per unit. 
The remainder of the purchase price was funded through a combination of 
assumption of debt, drawing on the line of credit, and current cash.

On July 26, 2013, the REIT acquired a portfolio of six senior housing and care 
facilities located in Ohio, North Carolina and Virginia (SP II Portfolio) for 
a total purchase price of U.S.$77.6 million. The acquisition was funded 
through a $68.8 million equity offering of 6,587,500 units at $10.45 per unit, 
in addition to drawing on the REIT's line of credit and cash on hand.

On July 31, 2013 the REIT acquired a portfolio of six senior housing and care 
facilities located in Alberta (Continuum Portfolio) for U.S.$69.7 million. In 
acquiring the Continuum Portfolio, the REIT issued Canadian Partnership Units 
in a newly formed Canadian partnership, HealthLease Canada, LP (the "Canadian 
Partnership"). The Canadian Partnership was formed for the purpose of 
holding the newly acquired Canadian senior housing and care properties. In 
addition, the REIT made a mezzanine loan, to the seller, on two properties 
currently under development. The REIT has committed to buying the two 
properties for $53.2 million upon completion. The acquisition was funded 
through a combination of assumption of debt, Exchangeable Units and cash on 
hand.

On September 3, 2013, the REIT indirectly acquired a senior housing and care 
property located in Avon, Indiana for a total purchase price of U.S.$17.1 
million. The facility was externally developed by Mainstreet Asset 
Management, Inc. As part of the acquisition, Exchangeable Units were issued to 
Mainstreet Property Group, a related party, at a price of $9.82 per unit. 
The remainder of the purchase price was funded through a combination of 
assumption of debt, drawing on the line of credit, and current cash.

On October 23, 2013, the REIT indirectly acquired, through the Partnership, a 
senior housing and care facility in Lexington, Kentucky for a purchase price 
of U.S.$14.1 million. The REIT purchased the asset, which was unencumbered 
by previous debt with net cash of $11.3 million and gross debt of $2.9 
million. The debt was sourced by the Partnership's operating line.

HealthLease Owned Properties  

Location         Number of    SNF/LTC Beds   AL/ALZ/ILF   Total Beds
                                                Beds     
                 Facilities

Alberta                11           515           740        1,255

British                1             57           159          216
Columbia

Illinois               1             75            -            75

Indiana                9            748           174          922

Kentucky               1             54            69          123

Michigan*              2            271                        271

North Carolina         11            80           713          793

Ohio                   1             80                         80

Pennsylvania           2            185            -           185

Virginia               5            415            -           415

Total                  44          2,480        1,855        4,335

*The REIT has non-amortizing mortgages on its two properties in Michigan and 
can buy them at maturity of the loans for the balance outstanding plus US$1.00.

Conference Call

HealthLease will host a conference call tomorrow, November 8, 2013, at 9:00 am 
ET to discuss its third quarter financial results. To access the conference 
call, please dial 647-427-7450 or 1-888-231-8191. Please connect 
approximately 10 minutes prior to the beginning of the call to ensure 
participation. The conference call will be archived for replay by telephone 
until Friday, November 15, 2013 at midnight. To access the archived 
conference call, dial 1-855-859-2056 and enter the reservation number 91124533.

With the goal of communicating fairly by providing equal access to all 
stakeholders, management will answer questions in written form instead of 
entertaining live questions during the call. All interested 
parties—including securities analysts, current and potential unitholders, 
and others—are encouraged to submit questions in writing to info@hlpreit.com 
by 11:30 am ET on November 8. The REIT will then issue and file on SEDAR a 
press release before the end of the same day that lists the questions received 
and the REIT's answers. Related questions will be combined and provided a 
single answer.

Supplemental Financial Information

This news release is not in any way a substitute for reading HealthLease's 
financial statements, including notes to the financial statements, and 
Management's Discussion and Analysis. The REIT's Fiscal Third Quarter 
Financial Statements have been filed on SEDAR and can also be viewed in the 
Investor Information section of HealthLease's website at www.hlpreit.com.

About HealthLease Properties Real Estate Investment Trust

HealthLease Properties Real Estate Investment Trust (TSX: HLP.UN) owns a 
portfolio of seniors housing and care facilities located in the United States 
and Canada. The facilities are leased to experienced tenant operators who 
have significant operational experience in the U.S. and Canada. The leases are 
structured as long-term and triple-net, features that provide stability and 
dependability to the REIT's cash flow and distributions. The REIT's 
best-in-class portfolio of properties meets the needs of modern seniors by 
emphasizing features such as hotel-like design, private rooms and baths, and 
hospitality-inspired amenities. For more information, visit www.hlpreit.com.

Forward-Looking Information
This news release contains forward-looking statements which reflect the REIT's 
current expectations regarding future events. The forward-looking statements 
involve risks and uncertainties, including those set forth in the REIT's AIF 
dated March 6, 2013 under the section "Risk Factors", a copy of which can be 
obtained at www.sedar.com. Actual results could differ materially from those 
projected herein. The REIT disclaims any obligation to update these 
forward-looking statements.

Non-IFRS Measures
The REIT reports its financial results in accordance with IFRS. Included in 
this news release are certain non-IFRS financial measures as supplemental 
indicators used by management to track the REIT's performance. These non-IFRS 
measures are Net operating income (NOI), Funds from operations (FFO), Adjusted 
funds from operations (AFFO), payout ratio, weighted average cost of capital 
and debt to gross book value (Debt to GBV). See the sections entitled 
"Summary of the Key Performance Indicators for the Three and Nine Months ended 
September 30, 2013" in Management's Discussion & Analysis of Results of 
Operations and Financial Condition for the quarter ended September 30, 2013 
for the definitions of these non-IFRS measures.

The REIT believes that these non-IFRS financial measures provide useful 
information to both management and investors in measuring the financial 
performance and financial condition of the REIT. These measures do not have a 
standardized meaning prescribed by IFRS and, therefore, may not be comparable 
to similar measures presented by other real estate investment trusts or 
enterprises, nor should they be construed as an alternative to other financial 
measures determined in accordance with IFRS.



SOURCE  HealthLease Properties Real Estate Investment Trust 
Scott White Executive Vice President - Finance HealthLease Properties REIT 
(317) 420-0205  Renée Lam Investor Relations TMX Equicom (416) 815-0700 ext. 
258    
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CO: HealthLease Properties Real Estate Investment Trust
ST: Ontario
NI: FIN REL ERN CONF  
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