Third Quarter Net Loss Attributable to
Common Shareholders of $0.12 Per Share
Third Quarter Normalized FFO Attributable to
Common Shareholders of $0.29 Per Share
Senior Housing Properties Trust (Nasdaq: SNH) today announced
its financial results for the quarter and nine months ended
September 30, 2019.
“During the third quarter, we made further progress in
completing the transformative restructuring of our business
arrangement with our largest tenant, Five Star Senior Living, and
we remain on target to close the transaction on January 1, 2020,”
stated Jennifer Francis, President and Chief Operating Officer of
Senior Housing Properties Trust. “Additionally, in conjunction with
this restructuring, our third quarter results were within our
expectations given our disposition activity and the reduced rent
from Five Star. Furthermore, we are encouraged by both the pricing
and active interest in the assets we are marketing for disposition,
with approximately $564 million of assets sold or under agreement
to sell and an additional $180 million of assets in first and
second round offers stages, and we remain on pace to have
approximately $900 million of assets sold or under agreement to
sell by year end 2019.”
Results for the Quarter Ended September 30, 2019:
Net loss attributable to common shareholders was $29.4 million,
or $0.12 per share, for the quarter ended September 30, 2019
compared to net income attributable to common shareholders of $45.8
million, or $0.19 per share, for the quarter ended September 30,
2018. The net loss attributable to common shareholders for the
quarter ended September 30, 2019 includes:
- a decrease in gains and losses on equity securities, net, of
$35.1 million for the quarter ended September 30, 2019 compared to
the quarter ended September 30, 2018, primarily as a result of
SNH's sale of The RMR Group Inc. (Nasdaq: RMR), or RMR Inc., class
A common stock on July 1, 2019;
- $33.1 million of impairment charges during the quarter ended
September 30, 2019 compared to $4.5 million of impairment charges
during the quarter ended September 30, 2018;
- a decrease in rental income of $25.6 million during the quarter
ended September 30, 2019 compared to the quarter ended September
30, 2018, primarily as a result of the reduction in rent paid to
SNH by Five Star Senior Living Inc. (Nasdaq: FVE), or Five Star,
during the three months ended September 30, 2019 pursuant to the
transaction agreement SNH entered into with Five Star in April
2019, or the Transaction Agreement, as well as dispositions since
July 1, 2018; and
- a decrease in general and administrative expenses during the
quarter ended September 30, 2019 compared to the quarter ended
September 30, 2018, primarily as a result of no business management
incentive fees accrued for the quarter ended September 30, 2019
compared to $18.8 million of business management incentive fees
accrued for the quarter ended September 30, 2018.
Normalized funds from operations attributable to common
shareholders, or Normalized FFO attributable to common
shareholders, were $70.1 million and $100.2 million, or $0.29 and
$0.42 per share, for the quarters ended September 30, 2019 and
2018, respectively.
Reconciliations of net income (loss) 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 September 30, 2019 and 2018
appear later in this press release.
Results for the Nine Months Ended September 30, 2019:
Net loss attributable to common shareholders was $36.5 million,
or $0.15 per share, for the nine months ended September 30, 2019
compared to net income attributable to common shareholders of
$405.4 million, or $1.71 per share, for the nine months ended
September 30, 2018. The net loss attributable to common
shareholders for the nine months ended September 30, 2019
includes:
- $21.9 million of gains on sale of properties, net, during the
nine months ended September 30, 2019 compared to $261.9 million of
gains on sale of properties, net, during the nine months ended
September 30, 2018;
- $41.5 million of losses on equity securities, net, for the nine
months ended September 30, 2019 compared to $85.6 million of gains
on equity securities, net, for the nine months ended September 30,
2018, primarily as a result of SNH's sale of RMR Inc. class A
common stock on July 1, 2019;
- $41.5 million of impairment charges during the nine months
ended September 30, 2019 compared to $5.1 million of impairment
charges during the nine months ended September 30, 2018;
- a decrease in rental income of $62.6 million during the nine
months ended September 30, 2019 compared to the nine months ended
September 30, 2018, primarily as a result of the reduction in rent
paid to SNH by Five Star during the nine months ended September 30,
2019 pursuant to the Transaction Agreement, as well as dispositions
since January 1, 2018;
- $11.2 million of acquisition and certain other transaction
related costs incurred during the nine months ended September 30,
2019 related to the Transaction Agreement; and
- a decrease in general and administrative expenses during the
nine months ended September 30, 2019 compared to the nine months
ended September 30, 2018, primarily as a result of no business
management incentive fees accrued for the nine months ended
September 30, 2019 compared to $50.7 million of business management
incentive fees accrued for the nine months ended September 30,
2018.
Normalized FFO attributable to common shareholders were $239.4
million and $312.2 million, or $1.01 and $1.31 per share, for the
nine months ended September 30, 2019 and 2018, respectively.
Reconciliations of net income (loss) attributable to common
shareholders determined in accordance with GAAP to FFO attributable
to common shareholders and Normalized FFO attributable to common
shareholders for the nine months ended September 30, 2019 and 2018
appear later in this press release.
Portfolio Operating Results:
For the quarter ended September 30, 2019, cash basis net
operating income, or Cash Basis NOI, at properties owned, in
service and managed by the same operator continuously since July 1,
2018, or same property, decreased 14.9% compared to the quarter
ended September 30, 2018, primarily as a result of the reduction in
rent paid to SNH by Five Star during the quarter ended September
30, 2019 pursuant to the Transaction Agreement.
For the quarter ended September 30, 2019, 50.3% of net operating
income, or NOI, came from 140 buildings leased to medical
providers, clinics, medical related businesses and biotech
laboratory tenants, or MOBs, with 12.2 million leasable square
feet. Same property MOB occupancy was 94.6% as of September 30,
2019 compared to 95.9% as of September 30, 2018. Same property Cash
Basis NOI from MOBs decreased 0.3% for the quarter ended September
30, 2019 compared to the quarter ended September 30, 2018.
For the quarter ended September 30, 2019, 33.1% of NOI came from
209 triple net leased senior living communities with 22,242 living
units. The weighted average rent coverage for triple net leased
senior living communities increased to 1.51x for the 12 month
period ended June 30, 2019 compared to 1.14x for the 12 month
period ended June 30, 2018(1). Same property Cash Basis NOI from
triple net leased senior living communities decreased 30.4% for the
quarter ended September 30, 2019 compared to the quarter ended
September 30, 2018. The increase in rent coverage for the 12 month
period ended June 30, 2019 and decrease in same property Cash Basis
NOI during the quarter ended September 30, 2019 were primarily a
result of the reduction in rent paid to SNH by Five Star pursuant
to the Transaction Agreement.
For the quarter ended September 30, 2019, 12.9% of NOI came from
77 managed senior living communities with 10,168 living units.
Occupancy at managed senior living communities was 84.7% for the
quarter ended September 30, 2019 compared to 86.7% for the quarter
ended September 30, 2018. Same property occupancy at managed senior
living communities was 85.3% for the quarter ended September 30,
2019 compared to 86.7% for the quarter ended September 30, 2018.
Same property average monthly rates at managed senior living
communities were $4,153 for the quarter ended September 30, 2019
compared to $4,163 for the quarter ended September 30, 2018. Same
property Cash Basis NOI from managed senior living communities
decreased 17.5% for the quarter ended September 30, 2019 compared
to the quarter ended September 30, 2018, primarily due to increased
operating expenses.
SNH's 10 wellness centers were 100% leased as of each of
September 30, 2019 and 2018, and generated Cash Basis NOI of $4.7
million and $4.5 million for the three months ended September 30,
2019 and 2018, respectively.
Reconciliations of net income (loss) determined in accordance
with GAAP to 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 September 30, 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 is provided by tenants
and 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. SNH has not independently
verified this information. Five Star rent coverage for the 12
months ended June 30, 2019 is calculated based on the $132.0
million of annualized rental income payable to SNH by Five Star
pursuant to the Transaction Agreement. The aggregate amount of
monthly minimum rent payable to SNH by Five Star is subject to
adjustment in accordance with the Transaction Agreement.
Disposition Activities:
As previously announced, on July 1, 2019, SNH completed the sale
of its 2,637,408 shares of RMR Inc. class A common stock in an
underwritten public offering at a price to the public of $40.00 per
common share. SNH received $98.9 million in net proceeds from this
sale, after underwriting fees and before other offering expenses,
that it used to repay amounts outstanding under its revolving
credit facility.
During the quarter ended September 30, 2019, SNH sold five
properties from its MOB segment located in Massachusetts for an
aggregate sales price of approximately $9.9 million, excluding
closing costs. In October 2019, SNH sold one property from its MOB
segment located in New Jersey for a sales price of approximately
$47.5 million, excluding closing costs.
During the quarter ended September 30, 2019, SNH sold 15 skilled
nursing facilities, or SNFs, located in Kansas, Iowa and Nebraska
for an aggregate sales price of approximately $8.0 million,
excluding closing costs. In October 2019, SNH sold two SNFs and a
senior living community located in South Dakota for an aggregate
sales price of approximately $10.5 million, excluding closing
costs.
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 third 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, November 14, 2019. To
access the replay, dial (412) 317-0088. The replay pass code is
10134939.
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 third quarter conference call
are strictly prohibited without the prior written consent of
SNH.
Supplemental Data:
A copy of SNH’s Third 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 majority owned operating subsidiary of 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, Cash Basis NOI, same property NOI and same property Cash Basis
NOI, for the three and nine months ended September 30, 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 (loss) or net income (loss) 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 (loss) and net income
(loss) attributable to common shareholders as presented in SNH's
condensed consolidated statements of income (loss). SNH considers
these non-GAAP measures to be appropriate supplemental measures of
operating performance for a REIT, along with net income (loss) and
net income (loss) 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, they may facilitate a comparison of
SNH's operating performance between periods and with other REITs
and, in the case of NOI, Cash Basis NOI, same property NOI and same
property 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, Cash Basis NOI, same property NOI and same
property 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 (LOSS) (amounts
in thousands, except per share data) (unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues:
Rental income
$
148,011
$
173,648
$
459,349
$
521,961
Residents fees and services
107,816
105,321
324,767
309,981
Total revenues
255,827
278,969
784,116
831,942
Expenses:
Property operating expenses
125,083
115,987
362,498
334,141
Depreciation and amortization
73,368
71,661
219,522
214,300
General and administrative (1)
9,604
31,032
28,287
85,228
Acquisition and certain other transaction
related costs
2,492
51
11,209
138
Impairment of assets
33,099
4,525
41,518
5,073
Total expenses
243,646
223,256
663,034
638,880
Gain on sale of properties
4,183
—
21,893
261,916
Dividend income
—
660
1,846
1,978
Gains and losses on equity securities,
net
40
35,137
(41,476
)
85,643
Interest and other income
238
248
590
362
Interest expense (including net
amortization of debt premiums, discounts and issuance costs of
$1,421, $1,626, $4,592 and $4,579, respectively)
(44,817
)
(45,416
)
(136,840
)
(133,781
)
Gain (loss) on early extinguishment of
debt
—
108
(17
)
(22
)
(Loss) income from continuing operations
before income tax benefit (expense) and equity in earnings of an
investee
(28,175
)
46,450
(32,922
)
409,158
Income tax benefit (expense)
146
(79
)
47
(444
)
Equity in earnings of an investee
83
831
617
882
Net (loss) income
(27,946
)
47,202
(32,258
)
409,596
Net income attributable to noncontrolling
interest
(1,444
)
(1,397
)
(4,279
)
(4,181
)
Net (loss) income attributable to common
shareholders
$
(29,390
)
$
45,805
$
(36,537
)
$
405,415
Weighted average common shares outstanding
(basic)
237,608
237,511
237,585
237,492
Weighted average common shares outstanding
(diluted)
237,608
237,562
237,585
237,526
Per common share
amounts (basic and diluted):
Net (loss) income attributable to common
shareholders
$
(0.12
)
$
0.19
$
(0.15
)
$
1.71
(1) General and administrative expenses include estimated
business management incentive fee expense of $18,751 and $50,708
for the three and nine months ended September 30, 2018,
respectively.
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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net (loss) income attributable to common
shareholders
$
(29,390
)
$
45,805
$
(36,537
)
$
405,415
Depreciation and amortization
73,368
71,661
219,522
214,300
FFO attributable to noncontrolling
interest
(5,277
)
(5,300
)
(15,871
)
(15,900
)
Gain on sale of properties
(4,183
)
—
(21,893
)
(261,916
)
Impairment of assets
33,099
4,525
41,518
5,073
Gains and losses on equity securities,
net
(40
)
(35,137
)
41,476
(85,643
)
FFO attributable to common
shareholders
67,577
81,554
228,215
261,329
Estimated business management incentive
fees (2)
—
18,751
—
50,708
Acquisition and certain other transaction
related costs
2,492
51
11,209
138
(Gain) loss on early extinguishment of
debt
—
(108
)
17
22
Normalized FFO attributable to common
shareholders
$
70,069
$
100,248
$
239,441
$
312,197
Weighted average common shares outstanding
(basic)
237,608
237,511
237,585
237,492
Weighted average common shares outstanding
(diluted)
237,608
237,562
237,585
237,526
Per common share
data (basic and diluted):
Net (loss) income attributable to common
shareholders
$
(0.12
)
$
0.19
$
(0.15
)
$
1.71
FFO attributable to common
shareholders
$
0.28
$
0.34
$
0.96
$
1.10
Normalized FFO attributable to common
shareholders
$
0.29
$
0.42
$
1.01
$
1.31
Distributions declared
$
0.15
$
0.39
$
0.69
$
1.17
(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 (loss) 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 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, compared to returns for the SNL U.S. REIT Healthcare Index
over the applicable measurement period and are included in general
and administrative expense in SNH’s condensed consolidated
statements of income (loss). In calculating net income (loss)
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 (loss) 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 September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Calculation of NOI and Cash Basis
NOI(1):
Revenues:
Rental income
$
148,011
$
173,648
$
459,349
$
521,961
Residents fees and services
107,816
105,321
324,767
309,981
Total revenues
255,827
278,969
784,116
831,942
Property operating expenses
(125,083
)
(115,987
)
(362,498
)
(334,141
)
NOI
130,744
162,982
421,618
497,801
Non-cash straight line rent
adjustments
(1,186
)
(2,484
)
(3,550
)
(8,507
)
Lease value amortization
(1,842
)
(1,493
)
(4,922
)
(4,290
)
Non-cash amortization included in property
operating expenses(2)
(199
)
(199
)
(597
)
(597
)
Cash Basis NOI
$
127,517
$
158,806
$
412,549
$
484,407
Reconciliation of Net Income (Loss) to
NOI and Cash Basis NOI:
Net (loss) income
$
(27,946
)
$
47,202
$
(32,258
)
$
409,596
Equity in earnings of an investee
(83
)
(831
)
(617
)
(882
)
Income tax (benefit) expense
(146
)
79
(47
)
444
(Gain) loss on early extinguishment of
debt
—
(108
)
17
22
Interest expense
44,817
45,416
136,840
133,781
Interest and other income
(238
)
(248
)
(590
)
(362
)
Gains and losses on equity securities,
net
(40
)
(35,137
)
41,476
(85,643
)
Dividend income
—
(660
)
(1,846
)
(1,978
)
Gain on sale of properties
(4,183
)
—
(21,893
)
(261,916
)
Impairment of assets
33,099
4,525
41,518
5,073
Acquisition and certain other transaction
related costs
2,492
51
11,209
138
General and administrative
9,604
31,032
28,287
85,228
Depreciation and amortization
73,368
71,661
219,522
214,300
NOI
130,744
162,982
421,618
497,801
Non-cash amortization included in property
operating expenses(2)
(199
)
(199
)
(597
)
(597
)
Lease value amortization
(1,842
)
(1,493
)
(4,922
)
(4,290
)
Non-cash straight line rent
adjustments
(1,186
)
(2,484
)
(3,550
)
(8,507
)
Cash Basis NOI
$
127,517
$
158,806
$
412,549
$
484,407
(1) The calculations of NOI, Cash Basis NOI, same property NOI
and same property Cash Basis NOI exclude certain components of net
income (loss) 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
September 30, 2019
For the Three Months Ended
September 30, 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
$
100,010
$
43,326
$
107,816
$
4,675
$
255,827
$
104,492
$
64,538
$
105,321
$
4,618
$
278,969
Property operating expenses
(34,184
)
—
(90,899
)
—
(125,083
)
(32,652
)
—
(83,335
)
—
(115,987
)
NOI
$
65,826
$
43,326
$
16,917
$
4,675
$
130,744
$
71,840
$
64,538
$
21,986
$
4,618
$
162,982
NOI change
(8.4
)%
(32.9
)%
(23.1
)%
1.2
%
(19.8
)%
NOI
$
65,826
$
43,326
$
16,917
$
4,675
$
130,744
$
71,840
$
64,538
$
21,986
$
4,618
$
162,982
Less:
Non-cash straight line rent
adjustments
1,043
255
—
(112
)
1,186
1,912
548
—
24
2,484
Lease value amortization
1,787
—
—
55
1,842
1,438
—
—
55
1,493
Non-cash amortization included in property
operating expenses (3)
199
—
—
—
199
199
—
—
—
199
Cash Basis NOI
$
62,797
$
43,071
$
16,917
$
4,732
$
127,517
$
68,291
$
63,990
$
21,986
$
4,539
$
158,806
Cash Basis NOI change
(8.0
)%
(32.7
)%
(23.1
)%
4.3
%
(19.7
)%
Reconciliation of NOI to Same Property
NOI:
NOI
$
65,826
$
43,326
$
16,917
$
4,675
$
130,744
$
71,840
$
64,538
$
21,986
$
4,618
$
162,982
Less:
NOI not included in same property
1,185
963
(1,443
)
—
705
5,696
3,709
(265
)
—
9,140
Same property NOI (4)
$
64,641
$
42,363
$
18,360
$
4,675
$
130,039
$
66,144
$
60,829
$
22,251
$
4,618
$
153,842
Same property NOI change
(2.3
)%
(30.4
)%
(17.5
)%
1.2
%
(15.5
)%
Reconciliation of Same Property NOI to
Same Property Cash Basis NOI:
Same property NOI (4)
$
64,641
$
42,363
$
18,360
$
4,675
$
130,039
$
66,144
$
60,829
$
22,251
$
4,618
$
153,842
Less:
Non-cash straight line rent
adjustments
1,029
258
—
(112
)
1,175
2,466
368
—
24
2,858
Lease value amortization
1,798
—
—
55
1,853
1,654
—
—
55
1,709
Non-cash amortization included in property
operating expenses (3)
188
—
—
—
188
183
—
—
—
183
Same property cash basis NOI (4)
$
61,626
$
42,105
$
18,360
$
4,732
$
126,823
$
61,841
$
60,461
$
22,251
$
4,539
$
149,092
Same property cash basis NOI change
(0.3
)%
(30.4
)%
(17.5
)%
4.3
%
(14.9
)%
(1) See page 7 for the calculation of NOI and a reconciliation
of net income (loss) determined in accordance with GAAP to that
amount. See footnote 1 on page 7 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, in service and managed by the
same operator continuously since July 1, 2018, including SNH's MOB
(two buildings) owned in a joint venture arrangement in which SNH
owns a 55% equity interest; excludes properties classified as held
for sale or in redevelopment, if any.
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 Nine Months Ended
September 30, 2019
For the Nine Months Ended
September 30, 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
$
307,616
$
137,683
$
324,767
$
14,050
$
784,116
$
309,497
$
198,626
$
309,981
$
13,838
$
831,942
Property operating expenses
(98,886
)
—
(263,612
)
—
(362,498
)
(94,773
)
—
(239,368
)
—
(334,141
)
NOI
$
208,730
$
137,683
$
61,155
$
14,050
$
421,618
$
214,724
$
198,626
$
70,613
$
13,838
$
497,801
NOI change
(2.8
)%
(30.7
)%
(13.4
)%
1.5
%
(15.3
)%
NOI
$
208,730
$
137,683
$
61,155
$
14,050
$
421,618
$
214,724
$
198,626
$
70,613
$
13,838
$
497,801
Less:
Non-cash straight line rent
adjustments
3,151
736
—
(337
)
3,550
6,486
1,722
—
299
8,507
Lease value amortization
4,756
—
—
166
4,922
4,124
—
—
166
4,290
Non-cash amortization included in property
operating expenses (3)
597
—
—
—
597
597
—
—
—
597
Cash Basis NOI
$
200,226
$
136,947
$
61,155
$
14,221
$
412,549
$
203,517
$
196,904
$
70,613
$
13,373
$
484,407
Cash Basis NOI change
(1.6
)%
(30.4
)%
(13.4
)%
6.3
%
(14.8
)%
Reconciliation of NOI to Same Property
NOI:
NOI
$
208,730
$
137,683
$
61,155
$
14,050
$
421,618
$
214,724
$
198,626
$
70,613
$
13,838
$
497,801
Less:
NOI not included in same property
19,106
3,877
(998
)
—
21,985
24,220
16,408
2,150
—
42,778
Same property NOI (4)
$
189,624
$
133,806
$
62,153
$
14,050
$
399,633
$
190,504
$
182,218
$
68,463
$
13,838
$
455,023
Same property NOI change
(0.5
)%
(26.6
)%
(9.2
)%
1.5
%
(12.2
)%
Reconciliation of Same Property NOI to
Same Property Cash Basis NOI:
Same property NOI (4)
$
189,624
$
133,806
$
62,153
$
14,050
$
399,633
$
190,504
$
182,218
$
68,463
$
13,838
$
455,023
Less:
Non-cash straight line rent
adjustments
3,772
745
—
(337
)
4,180
7,621
1,143
—
299
9,063
Lease value amortization
5,352
—
—
166
5,518
4,926
—
—
166
5,092
Non-cash amortization included in property
operating expenses (3)
554
—
—
—
554
547
—
—
—
547
Same property cash basis NOI (4)
$
179,946
$
133,061
$
62,153
$
14,221
$
389,381
$
177,410
$
181,075
$
68,463
$
13,373
$
440,321
Same property cash basis NOI change
1.4
%
(26.5
)%
(9.2
)%
6.3
%
(11.6
)%
(1) See page 7 for the calculation of NOI and a reconciliation
of net income (loss) determined in accordance with GAAP to that
amount. See footnote 1 on page 7 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, in service and managed by the
same operator continuously since January 1, 2018, including SNH's
MOB (two buildings) owned in a joint venture arrangement in which
SNH owns a 55% equity interest; excludes properties classified as
held for sale or in redevelopment, if any.
SENIOR HOUSING PROPERTIES
TRUST CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands)
(unaudited)
September 30, 2019
December 31, 2018
ASSETS
Real estate properties
$
7,844,812
$
7,876,300
Accumulated depreciation
(1,655,141
)
(1,534,392
)
Total real estate properties, net
6,189,671
6,341,908
Assets of properties held for sale
104,446
1,928
Cash and cash equivalents
49,462
54,976
Restricted cash
13,987
15,095
Acquired real estate leases and other
intangible assets, net
359,909
419,244
Other assets, net
199,515
327,275
Total assets
$
6,916,990
$
7,160,426
LIABILITIES AND EQUITY
Unsecured revolving credit facility
$
589,000
$
139,000
Unsecured term loans, net
548,906
548,286
Senior unsecured notes, net
1,819,802
2,216,945
Secured debt and capital leases, net
698,695
744,186
Accrued interest
30,308
26,182
Assumed real estate lease obligations,
net
79,134
86,304
Other liabilities
182,923
219,653
Total liabilities
3,948,768
3,980,556
Total equity
2,968,222
3,179,870
Total liabilities and equity
$
6,916,990
$
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 that SNH has made further progress in
completing and remains on target to close the transformative
restructuring of its business arrangement with Five Star on January
1, 2020 may imply that the restructuring transaction will be
completed effective January 1, 2020. SNH's restructuring
transaction with Five Star is subject to conditions, including,
among others, the receipt of certain regulatory approvals. SNH
cannot be sure that any or all of such conditions will be
satisfied. Accordingly, this restructuring transaction may not be
completed effective January 1, 2020 or at all, and the terms of
such transaction may change.
- Ms. Francis’s statements that SNH has approximately $564
million of assets sold or under agreement to sell, that SNH has
received offers for $180 million of additional assets and that SNH
remains on pace to have approximately $900 million of assets sold
or under agreement to sell by year end 2019 may imply that SNH will
sell the properties under agreement or for which it has received
offers by year end 2019 and receive proceeds from those sales equal
to or greater than the expected amounts. However, SNH may not
complete the sales of any or all of the properties it currently
plans to sell. Also, SNH may sell some or all of these properties
at amounts that are less than currently expected and/or less than
the carrying values of such properties and SNH may incur losses on
any such sales as a result.
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/20191107005281/en/
Michael Kodesch, Director, Investor Relations (617) 796-8234
www.snhreit.com
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