HealthLease Properties Real Estate Investment Trust Provides Q&A Update for May 2014

TORONTO, May 30, 2014 /CNW/ - HealthLease Properties Real Estate Investment Trust (HLP.UN) ("HealthLease" or "the REIT") provides answers to questions received since our last Q&A Update on March 31, 2014.

Question 1: What is the current tax treatment for HealthLease distributions?

Answer: The tax characteristics of the distributions of the REIT per trust unit on an annual basis, are as follows:

Per Unit     Foreign Non-
Business Income
    Other Income
(Investment Income)
    Return of Capital   Total
2013                      
Amount     $0.12312     $0.17640     $0.55044   $0.84996
Percent     14.49%     20.75%     64.76%   100.00%
2012                      
Amount     $0.04831     $0.10177     $0.30187   $0.45195
Percent     10.69%     22.52%     66.79%   100.00%
       

Question 2: What is the current run rate on the rental income?

Answer: The current run rate on our rental income is US$54.6 million. This does not include any mezzanine or interest income that we generate.  However, applying a cap rate to the rent would give you a baseline value.

Question 3: An average price per unit for assisted living communities was $164,000 in 2012 and the average price per bed was $60,000 in 2012. The REIT purchased SP III at an average price per unit for $494,000 and average per bed for $135,000 can you please provide further clarity on the reasoning behind the acquisition?

Answer: This is the correct purchase price HealthLease paid. However, the price comparables being used are not the most current as the purchase prices are for industry average facilities.  Generally, most of the facilities are 40 years old or older and rely primarily on Medicaid for payment which is a very low margin business.

By contrast the HealthLease portfolio is a very high quality portfolio. Our strategy is to own the youngest, highest quality portfolio in North America and we believe we have that right now. Across all of our assets, the average age is under 5 years.  We also have a very high quality mix and don't rely as much on Medicaid for reimbursement as many others in the industry. In a recent transaction by another seniors care provider, a high quality and young asset in Colorado was acquired for $268,000 per bed. We feel this is a better comparison to the SP III acquisition.

Question 4: Could you please provide the cap rate or EBITDA margin of acquired properties?

Answer: As it relates to cap rates on acquired properties, it varies by the property. For the assets that Mainstreet has been developing and selling to HLP recently, the appraised values have been around an 8 cap.

Question 5: Could you please provide further information on the criterion HealthLease uses to consider an acquisition?

Answer: HealthLease has a disciplined acquisition team and we consider a number of criteria when acquiring assets which includes location, cost, quality, age and operator.

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, dated May 5, 2014.  The REIT's First Quarter Financial Statements, and MD&A, have been filed on SEDAR. The First Quarter Financial Statements and MD&A can also be viewed in the Investor Information section of the HealthLease's website at www.hlpreit.com.

About HealthLease Properties Real Estate Investment Trust
HealthLease Properties Real Estate Investment Trust (TSX: HLP.UN) owns one of the youngest and highest quality portfolios of seniors housing and care facilities with 51 properties - 12 in two Canadian provinces and 35 in eight U.S. states - for a total of 5,048 beds.  The facilities are leased to experienced tenant operators who have significant operational experience. 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 meets the growing demands 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 Annual Information Form dated March 11, 2014 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.

 

 

SOURCE: HealthLease Properties Real Estate Investment Trust

For further information:

Adlai Chester
Chief Financial Officer
HealthLease Properties REIT
(317) 420-0205

Renée Lam 
Investor Relations
TMX Equicom
(416) 815-0700 ext. 258

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HealthLease Properties Real Estate Investment Trust

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