First Quarter Net Income Attributable to
Common Shareholders of $0.13 Per Share
First Quarter Normalized FFO Attributable to
Common Shareholders of $0.37 Per Share
Senior Housing Properties Trust (Nasdaq: SNH) today announced
its financial results for the quarter ended March 31,
2019.
“In April 2019, we entered into an agreement to restructure our
business arrangements with Five Star Senior Living to seek to
maximize the performance and value of our senior living portfolio,
as well as to help to stabilize our largest senior living
operator,” stated Jennifer Francis, President and Chief Operating
Officer. “When fully implemented, we believe the new structure will
provide us with increased oversight of our senior living
communities, position us for future growth and provide our
shareholders with the opportunity to participate in our and Five
Star's growth. Additionally, we have begun to execute on our
previously announced disposition plan to sell up to $900 million of
assets in connection with the restructuring of our business
arrangements with Five Star, which we expect, when completed, will
enable us to meet our target leverage going forward. Year to date,
we have sold or have under agreement to sell 35 properties for
total expected proceeds of $64 million, and we are moving forward
with the sale process for additional properties.”
Restructuring of Business Arrangements with Five Star Senior
Living Inc.:
As previously announced, in April 2019, SNH entered into a
transaction agreement, or the Transaction Agreement, with Five Star
Senior Living Inc., or Five Star, pursuant to which SNH and Five
Star agreed to modify their existing business arrangements as
outlined below, subject to certain conditions and the receipt of
various approvals.
- Effective January 1, 2020 (or
January 1, 2021 if extended under the Transaction Agreement), or
the Conversion Time, SNH's existing five master leases with Five
Star for SNH’s senior living communities leased to Five Star, as
well as SNH's existing management agreements and pooling agreements
with Five Star for SNH’s senior living communities managed by Five
Star for SNH's account, will be terminated and replaced with new
management agreements between SNH and Five Star for all of these
senior living communities.
- Subject to approval by Five Star’s
stockholders, effective at the Conversion Time, Five Star will
issue to SNH a number of Five Star common shares that, when
considered together with SNH's then owned Five Star common shares,
will result in SNH owning approximately 34% of the then outstanding
Five Star common shares, and SNH will declare a pro rata
distribution to SNH’s shareholders of the right to receive, and
Five Star will issue on a pro rata basis to those SNH shareholders,
a number of Five Star common shares which equals approximately 51%
of the then outstanding Five Star common shares; the noted
percentage ownership amounts are after giving effect to the
issuances of Five Star common shares to SNH and SNH's shareholders
pursuant to the Transaction Agreement.
- At the Conversion Time, as
consideration for the Five Star share issuances noted above, SNH
will provide to Five Star $75.0 million of additional
consideration.
- Commencing February 1, 2019 and through
December 31, 2019, the aggregate amount of monthly minimum rent
payable to SNH by Five Star under the existing master leases is
$11.0 million, subject to adjustment and extension, and no
additional rent is payable to SNH by Five Star for that
period.
- On April 1, 2019, SNH purchased from
Five Star approximately $50.0 million of unencumbered fixed assets
and improvements related to SNH's senior living communities leased
to and operated by Five Star, which amount is subject to adjustment
but will not exceed $60.0 million.
- In connection with the Transaction
Agreement, SNH entered into a short term credit agreement with Five
Star, pursuant to which SNH extended to Five Star a $25.0 million
line of credit, which is secured by six senior living communities
owned by Five Star. This line of credit matures at the
Conversion Time, and there are currently no amounts outstanding
under this line of credit.
Because of the continuing relationships between SNH and Five
Star, the transactions contemplated by the Transaction Agreement
and the terms thereof were evaluated, negotiated and recommended to
SNH’s Board of Trustees and Five Star’s board of directors for
approval by a special committee of SNH’s Board of Trustees and a
special committee of Five Star’s board of directors, respectively,
comprised solely of SNH and Five Star’s Independent Trustees and
directors, respectively, and were separately approved and adopted
by SNH’s Independent Trustees and Five Star’s independent
directors, respectively, and by SNH's Board of Trustees and Five
Star’s board of directors, respectively.
Results for the Quarter Ended March 31, 2019:
Net income attributable to common shareholders was $30.1
million, or $0.13 per diluted share, for the quarter ended
March 31, 2019 compared to $236.0 million, or $0.99 per
diluted share, for the quarter ended March 31, 2018. This
decrease in net income attributable to common shareholders was
primarily the result of: (1) a gain on sale of properties of $181.2
million, or $0.76 per diluted share, during the quarter ended March
31, 2018; (2) a decrease in rental income of $15.5 million, or
$0.07 per diluted share, during the quarter ended March 31, 2019,
as compared to the same period in 2018, as a result of a $12.8
million aggregate reduction in rent paid to SNH by Five Star for
the 2019 period pursuant to the Transaction Agreement, as well as
dispositions since January 1, 2018; (3) impairment charges of
$6.2 million, or $0.03 per diluted share, recognized during the
quarter ended March 31, 2019 to adjust the carrying value of 15
skilled nursing facilities, or SNFs, to their estimated net sales
price; (4) changes in unrealized gains and losses on equity
securities, net, for the quarter ended March 31, 2019 as compared
to the same period in 2018; and (5) acquisition and certain other
transaction related costs of $7.8 million, or $0.03 per diluted
share, incurred during the quarter ended March 31, 2019. This
decrease in net income attributable to common shareholders was
partially offset by: (1) a decrease in general and administrative
expenses as a result of no business management incentive fees
having been accrued during the quarter ended March 31, 2019,
compared to $14.3 million, or $0.06 per diluted share, of business
management incentive fees accrued during the quarter ended March
31, 2018 and (2) acquisitions since January 1, 2018.
Normalized funds from operations attributable to common
shareholders, or Normalized FFO attributable to common
shareholders, were $88.2 million and $107.2 million, or $0.37 and
$0.45 per diluted share, for the quarters ended March 31, 2019
and 2018, respectively.
Reconciliations of net income attributable to common
shareholders determined in accordance with U.S. generally accepted
accounting principles, or GAAP, to funds from operations
attributable to common shareholders, or FFO attributable to common
shareholders, and Normalized FFO attributable to common
shareholders for the quarters ended March 31, 2019 and 2018
appear later in this press release.
Portfolio Operating Results:
For the quarter ended March 31, 2019, consolidated cash
basis net operating income, or Cash Basis NOI, at properties owned
continuously and properties owned and managed continuously by the
same operator since January 1, 2018, or same property,
decreased 8.6% compared to the quarter ended March 31, 2018,
primarily as a result of the reduction in rent paid by Five Star
for February and March 2019.
For the quarter ended March 31, 2019, 47.7% of net
operating income, or NOI, came from 153 buildings leased to medical
providers, medical related businesses, clinics and biotech
laboratory tenants, or MOBs, with 12.5 million leasable square
feet. As of March 31, 2019, 94.0% of MOB square feet was
leased compared to 95.1% as of March 31, 2018. Same property
occupancy was 93.8% as of March 31, 2019 compared to 95.1% as
of March 31, 2018. Same property Cash Basis NOI from MOBs
increased 0.8% for the quarter ended March 31, 2019 compared
to the quarter ended March 31, 2018.
For the quarter ended March 31, 2019, 33.8% of NOI came
from 228 triple net leased senior living communities with 23,853
living units. The weighted average rent coverage for triple net
leased senior living communities decreased to 1.06x for the 12
month period ended December 31, 2018 compared to 1.21x for the 12
month period ended December 31, 2017(1)(2). Same property Cash
Basis NOI from triple net leased senior living communities
decreased 20.4% for the quarter ended March 31, 2019 compared
to the quarter ended March 31, 2018, primarily as a result of
the reduction in rent paid by Five Star for February and March
2019.
For the quarter ended March 31, 2019, 15.4% of NOI came
from 76 managed senior living communities with 9,766 living units.
Occupancy at managed senior living communities was 86.3% for the
quarter ended March 31, 2019 compared to 85.8% for the quarter
ended March 31, 2018. Same property occupancy at managed
senior living communities was 86.4% for the quarter ended
March 31, 2019 compared to 85.9% for the quarter ended
March 31, 2018. Same property average monthly rates at managed
senior living communities were $4,329 for the quarter ended
March 31, 2019 compared to $4,308 for the quarter ended
March 31, 2018. Same property Cash Basis NOI from managed
senior living communities decreased 5.7% for the quarter ended
March 31, 2019 compared to the quarter ended March 31,
2018.
SNH's 10 wellness centers were 100% leased as of each of
March 31, 2019 and March 31, 2018, and generated Cash
Basis NOI of $4.8 million and $4.4 million for the three months
ended March 31, 2019 and 2018, respectively.
Reconciliations of net income determined in accordance with GAAP
to consolidated NOI and Cash Basis NOI, and a reconciliation of NOI
to same property NOI and calculation of same property Cash Basis
NOI by operating segment, for the quarters ended March 31,
2019 and 2018, appear later in this press release.
_____________________________________________________________________________________________________________________________
(1) SNH reports rent coverage one quarter in arrears because
operating results from tenants are usually provided to SNH three
months after the end of a fiscal quarter. Operating data from
triple net leased senior living communities are provided by tenants
and SNH has not independently verified this information.
(2) Excludes data for periods prior to SNH's ownership of
certain properties, as well as properties sold or classified as
held for sale during the periods presented.
Disposition Activities:
During the quarter ended March 31, 2019, SNH sold one MOB
located in Florida and another MOB located in Massachusetts, for an
aggregate sales price of approximately $3.0 million, excluding
closing costs.
In May 2019, SNH sold three SNFs located in California for an
aggregate sales price of approximately $21.5 million, excluding
closing costs.
SNH currently has 13 MOBs located in Colorado and Massachusetts
under agreements to sell for an aggregate sales price of
approximately $20.6 million, excluding closing costs.
SNH also has 17 SNFs located in Kansas, Iowa, Nebraska and
Wisconsin under agreements to sell for an aggregate sales price of
approximately $19.0 million, excluding closing costs.
Financing Activities
In May 2019, SNH redeemed at par all of its outstanding 3.25%
senior notes due 2019 for a redemption price equal to the principal
amount of $400.0 million, using cash on hand and borrowings under
its revolving credit facility.
In April 2019, SNH gave notice of its intention to prepay
approximately $42.2 million of secured debt encumbering
four senior living communities with an annual interest rate
of 3.79% and a maturity date in July 2019. SNH expects to
make this prepayment in May 2019.
Conference Call:
At 10:00 a.m. Eastern Time this morning, President and Chief
Operating Officer, Jennifer Francis, and Chief Financial Officer
and Treasurer, Richard Siedel, will host a conference call to
discuss SNH's first quarter 2019 financial results. The conference
call telephone number is (877) 329-4297. Participants calling from
outside the United States and Canada should dial (412) 317-5435. No
pass code is necessary to access the call from either number.
Participants should dial in about 15 minutes prior to the scheduled
start of the call. A replay of the conference call will be
available through 11:59 p.m. on Thursday, May 16, 2019. To access
the replay, dial (412) 317-0088. The replay pass code is
10130007.
A live audio webcast of the conference call will also be
available in a listen-only mode on SNH’s website, www.snhreit.com.
Participants wanting to access the webcast should visit SNH’s
website about five minutes before the call. The archived webcast
will be available for replay on SNH’s website following the call
for about one week. The transcription, recording and
retransmission in any way of SNH’s first quarter conference call
are strictly prohibited without the prior written consent of
SNH.
Supplemental Data:
A copy of SNH’s First Quarter 2019 Supplemental Operating and
Financial Data is available for download at SNH’s website,
www.snhreit.com. SNH’s website is not incorporated as part of
this press release.
SNH is a real estate investment trust, or REIT, that owns
medical office and life science properties, senior living
communities and wellness centers throughout the United States. SNH
is managed by the operating subsidiary of The RMR Group Inc.
(Nasdaq: RMR), or RMR Inc., an alternative asset management company
that is headquartered in Newton, MA.
Non-GAAP Financial Measures:
SNH presents certain "non-GAAP financial measures" within the
meaning of applicable rules of the Securities and Exchange
Commission, or SEC, including FFO attributable to common
shareholders, Normalized FFO attributable to common shareholders,
NOI and Cash Basis NOI for the three months ended March 31,
2019 and 2018. These measures do not represent cash generated
by operating activities in accordance with GAAP and should not be
considered alternatives to net income or net income attributable to
common shareholders as indicators of SNH's operating performance or
as measures of SNH's liquidity. These measures should be considered
in conjunction with net income and net income attributable to
common shareholders as presented in SNH's condensed consolidated
statements of income. SNH considers these non-GAAP measures to be
appropriate supplemental measures of operating performance for a
REIT, along with net income and net income attributable to common
shareholders. SNH believes these measures provide useful
information to investors because by excluding the effects of
certain historical amounts, such as depreciation and amortization
expense, they may facilitate a comparison of SNH's operating
performance between periods and with other REITs and, in the case
of NOI and Cash Basis NOI, reflecting only those income and expense
items that are generated and incurred at the property level may
help both investors and management to understand the operations at
SNH's properties.
Please see the pages attached hereto for a more detailed
statement of SNH’s operating results and financial condition, and
for an explanation of SNH’s calculation of FFO attributable to
common shareholders, Normalized FFO attributable to common
shareholders, NOI and Cash Basis NOI and a reconciliation of those
amounts to amounts determined in accordance with GAAP.
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(amounts in thousands, except per share
data)
(unaudited)
Three Months Ended March 31, 2019
2018 Revenues: Rental income $ 158,241 $ 173,728 Residents
fees and services 108,045 102,042 Total revenues
266,286 275,770 Expenses: Property operating expenses
117,222 108,098 Depreciation and amortization 72,230 70,339 General
and administrative (1) 9,816 25,118 Acquisition and certain other
transaction related costs 7,814 20 Impairment of assets 6,206
— Total expenses 213,288 203,575 (Loss) gain
on sale of properties (122 ) 181,154 Dividend income 923 659
Unrealized gains and losses on equity securities, net 22,932 27,241
Interest and other income 114 54 Interest expense (including net
amortization of debt premiums, discounts and issuance costs of
$1,652 and $1,411, respectively) (45,611 ) (43,552 ) Loss on early
extinguishment of debt — (130 ) Income from continuing
operations before income tax expense and equity in earnings of an
investee 31,234 237,621 Income tax expense (134 ) (260 ) Equity in
earnings of an investee 404 44 Net income 31,504
237,405 Net income attributable to noncontrolling interest (1,422 )
(1,383 ) Net income attributable to common shareholders $ 30,082
$ 236,022 Weighted average common shares
outstanding (basic) 237,568 237,478 Weighted average
common shares outstanding (diluted) 237,600 237,493
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.13 $ 0.99
(1) General and administrative expenses include estimated
business management incentive fee expense of $14,347 for
the three months ended March 31, 2018.
SENIOR HOUSING PROPERTIES TRUST
FUNDS FROM OPERATIONS AND NORMALIZED
FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS
(amounts in thousands, except per share
data)
(unaudited)
Calculation of FFO and Normalized FFO
Attributable to Common Shareholders(1):
Three Months Ended March 31, 2019
2018 Net income attributable to common shareholders $ 30,082
$ 236,022 Depreciation and amortization expense 72,230 70,339 FFO
attributable to noncontrolling interest (5,297 ) (5,300 ) Loss
(gain) on sale of properties 122 (181,154 ) Impairment of assets
6,206 — Unrealized gains and losses on equity securities, net
(22,932 ) (27,241 ) FFO attributable to common shareholders 80,411
92,666 Estimated business management incentive fees (2) —
14,347 Acquisition and certain other transaction related costs
7,814 20 Loss on early extinguishment of debt — 130
Normalized FFO attributable to common shareholders $ 88,225
$ 107,163 Weighted average common shares outstanding
(basic) 237,568 237,478 Weighted average common
shares outstanding (diluted) 237,600 237,493
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.13 $ 0.99
FFO attributable to common shareholders $ 0.34 $ 0.39
Normalized FFO attributable to common shareholders $ 0.37
$ 0.45 Distributions declared $ 0.39 $ 0.39
(1) SNH calculates FFO attributable to common shareholders and
Normalized FFO attributable to common shareholders as shown
above. FFO attributable to common shareholders is calculated
on the basis defined by the National Association of Real Estate
Investment Trusts, which is net income attributable to common
shareholders, calculated in accordance with GAAP, excluding any
gain or loss on sale of properties, loss on impairment of real
estate assets and unrealized gains or losses on equity securities,
net, if any, plus real estate depreciation and amortization and
minus FFO attributable to noncontrolling interest, as well as
certain other adjustments currently not applicable to SNH. In
calculating Normalized FFO attributable to common shareholders, SNH
adjusts for the items shown above and includes business management
incentive fees, if any, only in the fourth quarter versus the
quarter when they are recognized as expense in accordance with GAAP
due to their quarterly volatility not necessarily being indicative
of SNH’s core operating performance and the uncertainty as to
whether any such business management incentive fees will be payable
when all contingencies for determining such fees are known at the
end of the calendar year. FFO attributable to common shareholders
and Normalized FFO attributable to common shareholders are among
the factors considered by SNH’s Board of Trustees when determining
the amount of distributions to its shareholders. Other factors
include, but are not limited to, requirements to maintain SNH’s
qualification for taxation as a REIT, limitations in SNH’s
revolving credit facility and term loan agreements and SNH’s public
debt covenants, the availability to SNH of debt and equity capital,
SNH’s expectation of its future capital requirements and operating
performance, and SNH’s expected needs for and availability of cash
to pay its obligations. Other real estate companies and REITs may
calculate FFO attributable to common shareholders and Normalized
FFO attributable to common shareholders differently than SNH
does.
(2) Incentive fees under SNH’s business management agreement
with The RMR Group LLC are payable after the end of each calendar
year, are calculated based on common share total return, as
defined, and are included in general and administrative expense in
SNH’s condensed consolidated statements of income. In calculating
net income attributable to common shareholders in accordance with
GAAP, SNH recognizes estimated business management incentive fee
expense, if any, in the first, second and third quarters. Although
SNH recognizes this expense, if any, in the first, second and third
quarters for purposes of calculating net income attributable to
common shareholders, SNH does not include these amounts in the
calculation of Normalized FFO attributable to common shareholders
until the fourth quarter, when the amount of the business
management incentive fee expense for the calendar year, if any, is
determined.
SENIOR HOUSING PROPERTIES TRUST
CALCULATION AND RECONCILIATION OF NET
OPERATING INCOME (NOI) AND CASH BASIS NOI
(amounts in thousands)
(unaudited)
Three Months Ended March 31, 2019
2018
Calculation of
NOI and Cash Basis NOI(1):
Revenues: Rental income $ 158,241 $ 173,728 Residents fees and
services 108,045 102,042 Total revenues 266,286
275,770 Property operating expenses (117,222 ) (108,098 ) Property
net operating income (NOI): 149,064 167,672 Non-cash straight line
rent adjustments (1,934 ) (2,993 ) Lease value amortization (1,525
) (1,381 ) Non-cash amortization included in property operating
expenses(2) (199 ) (199 ) Cash Basis NOI $ 145,406 $ 163,099
Reconciliation of
Net Income to NOI:
Net income $ 31,504 $ 237,405 Equity in earnings of an
investee (404 ) (44 ) Income tax expense 134 260 Loss on early
extinguishment of debt — 130 Interest expense 45,611 43,552
Interest and other income (114 ) (54 ) Unrealized gains and losses
on equity securities, net (22,932 ) (27,241 ) Dividend income (923
) (659 ) Loss (gain) on sale of properties 122 (181,154 )
Impairment of assets 6,206 — Acquisition and certain other
transaction related costs 7,814 20 General and administrative
expense 9,816 25,118 Depreciation and amortization expense 72,230
70,339 Total NOI 149,064 167,672 Non-cash
amortization included in property operating expenses(2) (199 ) (199
) Lease value amortization (1,525 ) (1,381 ) Non-cash straight line
rent adjustments (1,934 ) (2,993 ) Cash Basis NOI $ 145,406
$ 163,099
(1) The calculations of NOI, Cash Basis NOI, same property NOI
and same property Cash Basis NOI exclude certain components of net
income in order to provide results that are more closely related to
SNH’s property level results of operations. SNH calculates NOI and
Cash Basis NOI as shown above. SNH defines NOI as income from
its real estate less its property operating expenses. NOI excludes
amortization of capitalized tenant improvement costs and leasing
commissions that SNH records as depreciation and
amortization. SNH defines Cash Basis NOI as NOI excluding
non-cash straight line rent adjustments, lease value amortization,
lease termination fee amortization, if any, and non-cash
amortization included in property operating expenses. SNH
calculates same property NOI and same property Cash Basis NOI in
the same manner that it calculates the corresponding NOI and Cash
Basis NOI amounts, except that it only includes same properties in
calculating same property NOI and same property Cash Basis NOI. SNH
uses NOI, Cash Basis NOI, same property NOI and same property Cash
Basis NOI to evaluate individual and company wide property level
performance. Other real estate companies and REITs may calculate
NOI, Cash Basis NOI, same property NOI and same property Cash Basis
NOI differently than SNH does.
(2) SNH recorded a liability for the amount by which the
estimated fair value for accounting purposes exceeded the price SNH
paid for its investment in RMR Inc. common stock in June 2015.
A portion of this liability is being amortized on a straight line
basis through December 31, 2035 as a reduction to property
management fees expense, which is included in property operating
expenses.
SENIOR HOUSING PROPERTIES TRUST
Calculation and Reconciliation of NOI,
Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI
by Segment (1)
(dollars in thousands)
(unaudited)
For the Three Months Ended March 31, 2019
For the Three Months Ended March 31, 2018
Calculation of
NOI and Cash Basis NOI:
MOBs Triple Net Leased Senior Living
Communities Managed Senior Living Communities
Non-Segment (2) Total
MOBs Triple Net Leased Senior Living
Communities Managed Senior Living Communities
Non-Segment (2) Total Rental
income / residents fees and services $ 103,221 $ 50,320 $ 108,045 $
4,700 $ 266,286 $ 101,151 $ 67,975 $ 102,042 $ 4,602 $ 275,770
Property operating expenses (32,177 ) — (85,045 ) —
(117,222 ) (30,938 ) — (77,160 ) — (108,098 )
Property net operating income (NOI) $ 71,044 $ 50,320
$ 23,000 $ 4,700 $ 149,064 $ 70,213 $
67,975 $ 24,882 $ 4,602 $ 167,672 NOI
change 1.2 % (26.0 )% (7.6 )% 2.1 % (11.1 )% Property NOI $
71,044 $ 50,320 $ 23,000 $ 4,700 $ 149,064 $ 70,213 $ 67,975 $
24,882 $ 4,602 $ 167,672 Less: Non-cash straight line rent
adjustments 1,806 240 — (112 ) 1,934 2,236 619 — 138 2,993 Lease
value amortization 1,470 — — 55 1,525 1,326 — — 55 1,381 Non-cash
amortization included in property operating expenses (3) 199
— — — 199 199 — —
— 199 Cash Basis NOI $ 67,569 $ 50,080
$ 23,000 $ 4,757 $ 145,406 $ 66,452 $
67,356 $ 24,882 $ 4,409 $ 163,099 Cash
Basis NOI change 1.7 % (25.6 )% (7.6 )% 7.9 % (10.8 )%
Reconciliation of
NOI to Same Property NOI:
Property NOI $ 71,044 $ 50,320 $ 23,000 $ 4,700 $ 149,064 $ 70,213
$ 67,975 $ 24,882 $ 4,602 $ 167,672 Less: NOI not included in same
property 3,560 735 (165 ) — 4,130 2,992
5,453 328 — 8,773 Same property
NOI (4) $ 67,484 $ 49,585 $ 23,165 $ 4,700
$ 144,934 $ 67,221 $ 62,522 $ 24,554
$ 4,602 $ 158,899 Same property NOI change 0.4
% (20.7 )% (5.7 )% 2.1 % (8.8 )%
Reconciliation of
Same Property NOI to Same Property Cash Basis NOI:
Same property NOI (4) $ 67,484 $ 49,585 $ 23,165 $ 4,700 $ 144,934
$ 67,221 $ 62,522 $ 24,554 $ 4,602 $ 158,899 Less: Non-cash
straight line rent adjustments 1,851 240 — (112 ) 1,979 2,252 493 —
138 2,883 Lease value amortization 1,531 — — 55 1,586 1,370 — — 55
1,425 Non-cash amortization included in property operating expenses
(3) 195 — — — 195 195 —
— — 195 Same property cash basis NOI
(4) $ 63,907 $ 49,345 $ 23,165 $ 4,757
$ 141,174 $ 63,404 $ 62,029 $ 24,554 $
4,409 $ 154,396 Same property cash basis NOI change
0.8 % (20.4 )% (5.7 )% 7.9 % (8.6 )%
(1) See page 8 for the calculation of NOI and a reconciliation
of net income determined in accordance with GAAP to that amount.
See footnote 1 on page 8 of this press release for a definition of
NOI, Cash Basis NOI, same property NOI and same property Cash Basis
NOI, and page 4 for a description of why management believes they
are appropriate supplemental measures and a description of how
management uses these measures.
(2) Includes the operating results of certain properties that
offer wellness, fitness and spa services to members.
(3) SNH recorded a liability for the amount by which the
estimated fair value for accounting purposes exceeded the price SNH
paid for its investment in RMR Inc. common stock in June 2015.
A portion of this liability is being amortized on a straight line
basis through December 31, 2035 as a reduction to property
management fees expense, which is included in property operating
expenses.
(4) Consists of properties owned continuously and properties
owned and managed continuously by the same operator since
January 1, 2018 and includes SNH's MOB (two buildings) that is
owned in a joint venture arrangement and excludes properties
classified as held for sale, if any.
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE
SHEETS
(amounts in thousands)
(unaudited)
March 31, 2019 December 31, 2018
ASSETS
Real estate properties $ 7,859,676 $ 7,876,300 Accumulated
depreciation (1,560,690 ) (1,534,392 ) Total real estate
properties, net 6,298,986 6,341,908 Cash and cash
equivalents 39,875 54,976 Restricted cash 14,877 15,095 Acquired
real estate leases and other intangible assets, net 401,209 419,244
Other assets, net 390,953 329,203 Total assets $
7,145,900 $ 7,160,426
LIABILITIES AND
EQUITY
Unsecured revolving credit facility $ 225,000 $ 139,000 Unsecured
term loans, net 548,493 548,286 Senior unsecured notes, net
2,217,989 2,216,945 Secured debt and capital leases, net 742,883
744,186 Accrued interest 35,241 26,182 Assumed real estate lease
obligations, net 83,919 86,304 Other liabilities 178,937
219,653 Total liabilities 4,032,462 3,980,556 Total
equity 3,113,438 3,179,870 Total liabilities and
equity $ 7,145,900 $ 7,160,426
Warning Concerning Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995 and other securities laws. Whenever SNH uses words such
as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”,
"will", “may” and negatives or derivatives of these or similar
expressions, SNH is making forward-looking statements. These
forward-looking statements are based upon SNH’s present intent,
beliefs or expectations, but forward-looking statements are not
guaranteed to occur and may not occur. Actual results
may differ materially from those contained in or implied by
SNH’s forward-looking statements. Forward-looking statements
involve known and unknown risks, uncertainties and other factors,
some of which are beyond SNH’s control. For example,
- Ms. Francis's statements in this press
release that SNH entered into the Transaction Agreement to maximize
the performance and value of SNH's senior living portfolio and to
stabilize its largest senior living operator, and that the new
structure will provide SNH with increased oversight of its senior
living communities, position SNH for future growth and provide its
shareholders the opportunity to participate in that growth, are
contingent upon the consummation of the transactions contemplated
by the Transaction Agreement. These transactions may not occur and
the benefits of these transactions may not materialize and/or Five
Star’s financial condition may further deteriorate despite these
agreements. SNH may also not be able to maximize the performance
and value of its senior living portfolio, and the new structure may
not result in growth for SNH or its shareholders or Five Star.
- This press release states that SNH
entered into the Transaction Agreement to modify its existing
business arrangements with Five Star and that certain of the
transactions contemplated by the Transaction Agreement are expected
to be effective January 1, 2020. These transactions are subject to
conditions, including, among others, the receipt of approval
by Five Star’s stockholders and certain regulatory approvals. SNH
cannot be sure that any or all of such conditions will be
satisfied. Accordingly, these transactions may not become
effective as of January 1, 2020 or at all, or the terms of such
transactions may change.
- This press release states that the
transactions contemplated by the Transaction Agreement and the
terms thereof were evaluated, negotiated and recommended to SNH’s
Board of Trustees and Five Star’s board of directors for approval
by a special committee of SNH’s Board of Trustees and a special
committee of Five Star’s board of directors, respectively,
comprised solely of SNH’s Independent Trustees and Five Star’s
independent directors, respectively, and were separately approved
and adopted by SNH’s Independent Trustees and Five Star’s
independent directors, respectively, and by SNH’s Board of Trustees
and Five Star’s board of directors, respectively. Despite this
process, SNH could be subject to claims challenging the Transaction
Agreement or the restructuring transactions or SNH’s entry into the
Transaction Agreement and related agreements because of the
multiple relationships among SNH, Five Star and related persons and
entities or other reasons, and defending even meritless claims
could be expensive and distracting to management.
- Ms. Francis’s statement that SNH is
moving forward with the sale process for additional properties may
imply that SNH will be successful in selling properties in the
future and/or reducing its leverage to stated targets. However, SNH
may not be able to successfully sell properties in the future.
Also, SNH may sell properties at prices that are less than their
carrying values and SNH may incur future losses.
- SNH has agreed to sell 13 MOBs and 17
SNFs for an aggregate sales price of approximately $39.6 million,
excluding closing costs. These sales are subject to conditions.
These conditions may not be met and these sales may not occur, may
be delayed or their terms may change.
The information contained in SNH’s filings with the
SEC, including under “Risk Factors” in SNH’s periodic reports,
or incorporated therein, identifies important factors that
could cause SNH’s actual results to differ materially from those
stated in or implied by SNH’s forward-looking statements. SNH’s
filings with the SEC are available on the SEC’s website at
www.sec.gov. You should not place undue reliance upon
forward-looking statements. Except as required by law, SNH
does not intend to update or change any forward-looking statements
as a result of new information, future events or otherwise.
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the Nasdaq.No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190509005320/en/
Brad Shepherd, Senior Director, Investor Relations(617)
796-8234www.snhreit.com
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