Senior Housing Properties Trust (NYSE: SNH) today announced its
financial results for the quarter and nine months ended September 30,
2014.
SNH President and Chief Operating Officer David Hegarty made the
following statement:
“SNH’s third quarter results continued to show improvement as
normalized FFO per share increased 4.8% year-over-year. Our MOB
portfolio, which now represents our largest property operating segment,
based on NOI contribution, continues to perform well, with a 2.6%
increase in same property cash basis NOI during the quarter, largely
from positive leasing activity. Same property NOI, or rental income,
within our same property triple net leased senior living communities
increased 2.3% during the quarter. Our managed senior living communities
experienced increases in monthly rental rates and occupancy on a same
property basis during the quarter, but same property NOI remained flat
largely because of high operating expenses during the quarter. During
the first nine months of 2014, we have also remained active and focused
on acquiring high quality, private pay healthcare assets with strong
credit quality tenants.”
Results for the quarter ended September 30, 2014:
Normalized funds from operations, or Normalized FFO, for the quarter
ended September 30, 2014 were $89.6 million, or $0.44 per share. This
compares to Normalized FFO for the quarter ended September 30, 2013 of
$78.8 million, or $0.42 per share.
Net income was $37.1 million, or $0.18 per share, for the quarter ended
September 30, 2014, compared to net income of $38.1 million, or $0.20
per share, for the quarter ended September 30, 2013. During the three
months ended September 30, 2014, SNH recognized an impairment of assets
adjustment of $216,000, or less than $0.01 per share, to add back a
portion of previously recorded impairments to the carrying value of one
property (one building) leased to medical providers, medical related
businesses, clinics and biotech laboratory tenants, or MOBs, included in
discontinued operations to its actual net sale price realized during the
third quarter. During the three months ended September 30, 2013, SNH
recognized: (1) a loss on early extinguishment of debt of
$692,000, or less than $0.01 per share, related to the amendment of its
revolving credit facility and the prepayment of one mortgage; and (2) a
gain on sale of properties of $1.1 million, or less than $0.01 per
share, related to the sale of one senior living community previously
classified as held for sale.
The weighted average number of common shares outstanding were 203.8
million and 188.1 million for the quarters ended September 30, 2014 and
2013, respectively.
A reconciliation of net income determined in accordance with U.S.
generally accepted accounting principles, or GAAP, to funds from
operations, or FFO, and Normalized FFO for the quarters ended September
30, 2014 and 2013 appears later in this press release.
Results for the nine months ended September 30, 2014:
Normalized FFO for the nine months ended September 30, 2014 were $256.3
million, or $1.30 per share. This compares to Normalized FFO for the
nine months ended September 30, 2013 of $236.9 million, or $1.27 per
share.
Net income was $113.4 million, or $0.57 per share, for the nine months
ended September 30, 2014, compared to net income of $79.0 million, or
$0.42 per share, for the nine months ended September 30, 2013. During
the nine months ended September 30, 2014, SNH recognized: (1) a gain on
sale of properties of $2.6 million, or $0.01 per share, related to the
sale of three senior living communities previously classified as held
for sale; and (2) impairment of assets charges of $117,000, or less than
$0.01 per share, to adjust the carrying value of one MOB (four
buildings) included in discontinued operations to its aggregate
estimated net sale price, which charge was partially offset by the add
back of a portion of previously recorded impairments to the carrying
value of three MOBs (three buildings) to their net sale prices. During
the nine months ended September 30, 2013, SNH recognized: (1) impairment
of assets charges of $5.7 million, or $0.03 per share, to reduce the
carrying value of four senior living communities and one parcel of land
included in continuing operations to their aggregate estimated net sale
prices; (2) a loss of on early extinguishment of debt of $797,000, or
less than $0.01 per share, related to the amendment of its revolving
credit facility and the prepayment of mortgages encumbering five
properties; (3) a gain on sale of properties of $1.1 million, or less
than $0.01 per share, related to the sale of one senior living community
previously classified as held for sale; and (4) impairment of assets
charges of $27.9 million, or $0.15 per share, to reduce the carrying
value of four MOBs (seven buildings) included in discontinued operations
to their aggregate estimated net sale prices.
The weighted average number of common shares outstanding were 197.3
million and 186.9 million for the nine months ended September 30, 2014
and 2013, respectively.
A reconciliation of net income determined in accordance with GAAP to FFO
and Normalized FFO for the nine months ended September 30, 2014 and 2013
appears later in this press release.
Segment Operating Results for the quarter ended September 30, 2014:
For the three months ended September 30, 2014, 42.1% of SNH’s net
operating income, or NOI, came from 98 MOBs with 9.1 million square
feet. As of September 30, 2014, 95.6% of our MOB square feet were
leased, compared to 95.6% as of June 30, 2014 and 95.0% as of September
30, 2013. Same property occupancy for MOBs owned continuously since July
1, 2013 remained unchanged at 94.9% as of September 30, 2014 compared to
September 30, 2013. Same property cash basis NOI increased 2.6% during
the quarter ended September 30, 2014.
For the three months ended September 30, 2014, 41.1% of SNH’s
consolidated NOI came from 218 triple net leased senior living
communities with 24,383 living units. Occupancy at triple net leased
senior living communities was 85.2% during the most recent reported
period, compared to 85.1% during the comparable period last year.(1)
Same property occupancy for triple net leased senior living communities
owned continuously from July 1, 2013 decreased 0.4 percentage points to
85.2% during the most recent reported period, from 85.6% during the
comparable period last year.(1) Same property NOI increased
2.3% during the quarter ended September 30, 2014.
For the three months ended September 30, 2014, 13.4% of SNH’s NOI came
from 44 managed senior living communities with 7,051 living units.
Occupancy at managed senior living communities was 88.2% during the
quarter ended September 30, 2014, compared to 87.6% during the
comparable period last year. Same property occupancy for managed senior
living communities owned continuously since July 1, 2013 increased 0.8
percentage points to 88.1% during the quarter ended September 30, 2014,
from 87.3% during the comparable period last year. Same property NOI
remained unchanged for the quarter ended September 30, 2014 compared to
the quarter ended September 30, 2013.
A reconciliation of NOI and cash basis NOI to net income, determined in
accordance with GAAP, for the quarters and nine months ended September
30, 2014 and 2013 appears later in this press release.
Recent Investment and Sales Activities:
In August 2014, SNH entered into an agreement to acquire 23 MOBs, for
approximately $539.0 million, including the assumption of approximately
$30.0 million of mortgage debt. The MOBs contain approximately 2.2
million square feet and are located in 12 states. The 23 properties will
be purchased in connection with the acquisition by Select Income REIT
(NYSE: SIR) of Cole Corporate Income Trust (“CCIT”) pursuant to an
agreement and plan of merger between SIR, a wholly owned subsidiary of
SIR and CCIT, which provides for the merger of CCIT with and into the
SIR subsidiary, or the Merger. SNH’s acquisition is contingent upon the
completion of the Merger. The Merger is expected to be completed in the
first half of 2015 and SNH’s acquisition of the 23 MOBs is expected to
close substantially concurrently with the closing of the Merger, subject
to the satisfaction of the other conditions of the SNH purchase
transaction. The Merger is subject to various conditions and
contingencies, including approval by the shareholders of SIR and the
stockholders of CCIT; accordingly, SNH may not purchase some or all of
these properties, the SNH purchase may be delayed or the terms of the
SNH purchase may change.
In July 2014, SNH entered into an agreement to acquire one senior living
community with 52 private pay assisted living units located in Jackson,
WI, for approximately $7.0 million, excluding closing costs. In
September 2014, SNH entered into an agreement to acquire one senior
living community with 176 private pay independent and assisted living
units located in Madison, WI, for approximately $40.4 million, excluding
closing costs. SNH intends to acquire these communities using a taxable
REIT subsidiary structure and it expects to enter into long term
management agreements with Five Star Quality Care, Inc., or Five Star,
to manage these communities.
In September 2014, SNH sold one MOB (one building) with 62,000 square
feet located in Rhode Island for $675,000, excluding closing costs and
recorded no gain or loss on the sale.
In October 2014, SNH sold one senior living community with 70 units
located in Virginia for $2.85 million, excluding closing costs. Also in
October 2014, SNH sold two senior living communities with 177 units
located in Arizona for $5.9 million, excluding closing costs. SNH will
record the gain or loss, if any, on these sales during the period ending
December 31, 2014 when all of the costs of the sales are known.
SNH is also currently marketing for sale four senior living communities
with 305 living units and one MOB (four buildings) with an aggregate of
323,541 square feet. In aggregate, the majority of the combined revenues
generated from the four senior living communities listed for sale comes
from government funded programs, such as Medicare and Medicaid. The
results of operations from the one MOB (four buildings) listed for sale
and the one MOB (one building) sold during the third quarter are
included in discontinued operations in SNH’s financial statements.
Recent Financing Activities:
In October 2014, SNH prepaid at par its $14.7 million loan incurred in
connection with certain revenue bonds that were scheduled to mature in
December 2027. That loan had an interest rate of 5.875%. Also in October
2014, SNH prepaid a mortgage note encumbering one property with a
principal balance of approximately $11.9 million and an interest rate of
6.25% that was scheduled to mature in May 2015.
Conference Call:
On Monday, November 3, 2014, at 1:00 p.m. Eastern Time, David J.
Hegarty, President and Chief Operating Officer, and Richard A. Doyle,
Chief Financial Officer, will host a conference call to discuss the
financial results for the quarter and nine months ended September 30,
2014. The conference call telephone number is (877) 407-4019.
Participants calling from outside the United States and Canada should
dial (201) 689-8337. 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. Eastern Time, Monday, November 10, 2014. To
hear the replay, dial (201) 612-7415. The replay pass code is: 13593422.
A live audio web cast of the conference call will also be available in
listen only mode on the SNH website at www.snhreit.com.
Participants wanting to access the webcast should visit the website
about five minutes before the call. The archived webcast will be
available for replay on the SNH website for about one week after the
call.
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 2014 Supplemental Operating and Financial
Data is available for download from the SNH 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 owned 371
properties (398 buildings) located in 38 states and Washington, D.C. as
of September 30, 2014. SNH is headquartered in Newton, MA.
Please see the pages attached hereto for a more detailed statement of
SNH’s operating results and financial condition.
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(1)
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Most recent reported data is based upon the operating results
provided by our tenants for the 12 months ended June 30, 2014 and
2013 or the most recent prior period for which tenant operating
results are available.
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WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER SNH USES
WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”,
“ESTIMATE” 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 THESE FORWARD LOOKING
STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
-
THIS PRESS RELEASE STATES THAT SNH HAS AGREED TO ACQUIRE 23 MOBS. THE
CLOSING OF THIS TRANSACTION IS SUBJECT TO CONDITIONS AND
CONTINGENCIES, INCLUDING THE CLOSING OF THE MERGER OF SIR AND CCIT
WHICH IS EXPECTED TO OCCUR IN THE FIRST HALF OF 2015. THE MERGER IS
ITSELF SUBJECT TO CONDITIONS AND CONTINGENCIES, INCLUDING APPROVALS BY
THE SHAREHOLDERS OF SIR AND STOCKHOLDERS OF CCIT. SNH CAN PROVIDE NO
ASSURANCE THAT THE CONDITIONS AND CONTINGENCIES TO THE MERGER OR THE
OTHER CONDITIONS AND CONTINGENCIES TO SNH’S ACQUISITION OF THE 23 MOBS
WILL BE SATISFIED. ACCORDINGLY, SNH CAN PROVIDE NO ASSURANCE THAT THE
ACQUISITION OF THE 23 MOBS WILL BE CONSUMMATED, THAT IT WILL NOT BE
DELAYED OR THAT ITS TERMS WILL NOT CHANGE;
-
THIS PRESS RELEASE STATES THAT SNH HAS ENTERED INTO AGREEMENTS TO
ACQUIRE TWO SENIOR LIVING COMMUNITIES. THESE TRANSACTIONS ARE SUBJECT
TO CLOSING CONDITIONS. THESE CONDITIONS MAY NOT BE MET. AS A RESULT,
THESE TRANSACTIONS MAY NOT OCCUR OR MAY BE DELAYED OR THEIR TERMS
MAY CHANGE;
-
THIS PRESS RELEASE STATES THAT SNH HAS FOUR SENIOR LIVING COMMUNITIES
AND ONE MOB CURRENTLY LISTED FOR SALE. SNH MAY NOT BE ABLE TO SELL
THESE PROPERTIES ON TERMS ACCEPTABLE TO IT OR OTHERWISE, AND THE SALES
OF ANY OR ALL OF THESE PROPERTIES MAY NOT OCCUR; AND
-
THIS PRESS RELEASE STATES THAT SNH EXPECTS TO ENTER INTO LONG TERM
MANAGEMENT AGREEMENTS WITH FIVE STAR TO MANAGE TWO SENIOR LIVING
COMMUNITIES SNH HAS AGREED TO ACQUIRE. HOWEVER, THERE CAN BE NO
ASSURANCE THAT SNH WILL ACQUIRE THESE COMMUNITIES OR THAT SNH AND FIVE
STAR WILL ENTER INTO AN ADDITIONAL MANAGEMENT AGREEMENT.
THE INFORMATION CONTAINED IN SNH’S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS”
IN ITS PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER
IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM 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 SNH’S 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.
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SENIOR HOUSING PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(unaudited)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2014
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2013
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2014
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2013
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Revenues:
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|
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|
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Rental income
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$
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137,614
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$
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112,319
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$
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377,339
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$
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336,468
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Residents fees and services
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|
79,259
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|
|
|
74,946
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|
|
|
237,740
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|
|
|
224,634
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Total revenues
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216,873
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|
|
187,265
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|
|
|
615,079
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|
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561,102
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|
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Expenses:
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Property operating expenses
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82,706
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74,729
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240,297
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222,893
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Depreciation
|
|
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50,074
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|
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38,473
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|
|
|
135,132
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|
|
|
114,472
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General and administrative
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10,384
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7,798
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28,250
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24,615
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Acquisition related costs
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15
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|
396
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|
2,649
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|
|
|
2,590
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Impairment of assets
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|
—
|
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|
|
—
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|
|
|
—
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|
|
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5,675
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Total expenses
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143,179
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|
|
|
121,396
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|
|
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406,328
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|
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370,245
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|
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|
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Operating income
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73,694
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|
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65,869
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|
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208,751
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190,857
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|
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|
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|
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|
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|
|
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Interest and other income
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|
78
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|
|
|
42
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|
|
336
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|
|
612
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Interest expense
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(36,201)
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(29,405)
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(99,213)
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(88,536)
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Loss on early extinguishment of debt
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—
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(692)
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—
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(797)
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Income from continuing operations before
income tax expense
and equity in earnings of an investee
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37,571
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35,814
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109,874
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102,136
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Income tax expense
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(156)
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(125)
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(502)
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(405)
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Equity in earnings of an investee
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38
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64
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|
59
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|
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219
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Income from continuing operations
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37,453
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35,753
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|
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109,431
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101,950
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Discontinued operations:
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(Loss) income from discontinued operations
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(557)
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1,231
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|
1,484
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|
3,762
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Impairment of assets from discontinued operations
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|
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216
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—
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(117)
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(27,896)
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Income before gain on sale of properties
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|
|
37,112
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|
|
|
36,984
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|
|
|
110,798
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|
|
|
77,816
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Gain on sale of properties
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|
|
—
|
|
|
|
1,141
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|
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|
2,552
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|
|
|
1,141
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Net income
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$
|
37,112
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|
|
$
|
38,125
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|
|
$
|
113,350
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|
|
$
|
78,957
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|
|
|
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|
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|
|
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Weighted average shares outstanding
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203,792
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|
|
|
188,102
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|
|
|
197,317
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|
|
|
186,942
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|
|
|
|
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Income from continuing operations per share
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|
0.18
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|
|
|
0.19
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|
|
|
0.56
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|
|
|
0.55
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Income (loss) from discontinued operations per share
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—
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|
|
|
0.01
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|
|
|
0.01
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|
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|
(0.13)
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Basic and diluted net income per share
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$
|
0.18
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|
|
$
|
0.20
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|
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$
|
0.57
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|
|
$
|
0.42
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|
|
|
|
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SENIOR HOUSING PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS AND NORMALIZED
FUNDS FROM OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
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Calculation of Funds from Operations (FFO) and Normalized FFO
(1):
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Three Months Ended
|
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Nine Months Ended
|
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|
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September 30,
|
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September 30,
|
|
|
|
2014
|
|
2013
|
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2014
|
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2013
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income
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$
|
37,112
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$
|
38,125
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$
|
113,350
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$
|
78,957
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|
Depreciation expense from continuing operations
|
|
|
50,074
|
|
|
38,473
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|
|
135,132
|
|
|
114,472
|
|
Depreciation expense from discontinued operations
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
799
|
|
Gain on sale of properties
|
|
|
—
|
|
|
(1,141)
|
|
|
(2,552)
|
|
|
(1,141)
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|
Impairment of assets
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,675
|
|
Impairment of assets from discontinued operations
|
|
|
(216)
|
|
|
—
|
|
|
117
|
|
|
27,896
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FFO
|
|
|
86,970
|
|
|
75,457
|
|
|
246,047
|
|
|
226,658
|
|
Estimated business management incentive fees(2)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75
|
|
Acquisition related costs from continuing operations
|
|
|
15
|
|
|
396
|
|
|
2,649
|
|
|
2,590
|
|
Loss on early extinguishment of debt
|
|
|
—
|
|
|
692
|
|
|
—
|
|
|
797
|
|
Percentage rent adjustment(3)
|
|
|
2,600
|
|
|
2,300
|
|
|
7,600
|
|
|
6,800
|
|
Normalized FFO
|
|
$
|
89,585
|
|
$
|
78,845
|
|
$
|
256,296
|
|
$
|
236,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
203,792
|
|
|
188,102
|
|
|
197,317
|
|
|
186,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per share
|
|
$
|
0.43
|
|
$
|
0.40
|
|
$
|
1.25
|
|
$
|
1.21
|
|
Normalized FFO per share
|
|
$
|
0.44
|
|
$
|
0.42
|
|
$
|
1.30
|
|
$
|
1.27
|
|
Net income per share
|
|
$
|
0.18
|
|
$
|
0.20
|
|
$
|
0.57
|
|
$
|
0.42
|
|
Distributions declared per share
|
|
$
|
0.39
|
|
$
|
0.39
|
|
$
|
1.17
|
|
$
|
1.17
|
|
|
|
|
|
(1)
|
|
SNH calculates FFO and Normalized FFO as shown above. FFO is
calculated on the basis defined by The National Association of Real
Estate Investment Trusts, or NAREIT, which is net income, calculated
in accordance with GAAP, excluding any gain or loss on sale of
properties and impairment of real estate assets, plus real estate
depreciation and amortization, as well as certain other adjustments
currently not applicable to SNH. SNH’s calculation of Normalized FFO
differs from NAREIT’s definition of FFO because SNH’s includes
estimated percentage rent in the period to which it estimates that
it relates rather than when it is recognized as income in accordance
with GAAP and excludes acquisition related costs, gain or loss on
early extinguishment of debt, gain or loss on lease terminations,
estimated business management incentive fees and loss on impairment
of intangible assets, if any. SNH considers FFO and Normalized FFO
to be appropriate measures of operating performance for a real
estate investment trust, or REIT, along with net income, operating
income and cash flow from operating activities. SNH believes that
FFO and Normalized FFO provide useful information to investors
because by excluding the effects of certain historical amounts, such
as depreciation expense, FFO and Normalized FFO may facilitate a
comparison of its operating performance between periods and with
other REITs. FFO and Normalized FFO are among the factors considered
by SNH’s Board of Trustees when determining the amount of
distributions to shareholders. Other factors include, but are not
limited to, requirements to maintain its status as a REIT,
limitations in its revolving credit facility agreement, term loan
agreement and public debt covenants, the availability of debt and
equity capital, SNH’s expectation of its future capital requirements
and operating performance and SNH’s expected needs and availability
of cash to pay its obligations. FFO and Normalized FFO do not
represent cash generated by operating activities in accordance with
GAAP and should not be considered as alternatives to net income,
operating income or cash flow from operating activities, determined
in accordance with GAAP, or as indicators of SNH’s financial
performance or liquidity, nor are these measures necessarily
indicative of sufficient cash flow to fund all of SNH’s needs. These
measures should be considered in conjunction with net income,
operating income and cash flow from operating activities as
presented in SNH’s Consolidated Statements of Income and
Comprehensive Income and Consolidated Statements of Cash Flows.
Other REITs and real estate companies may calculate FFO and
Normalized FFO differently than SNH does.
|
|
|
|
|
|
(2)
|
|
Amounts represent estimated incentive fees under SNH’s business
management agreement payable in common shares after the end of each
calendar year calculated: (i) prior to 2014 based upon increases in
annual Normalized FFO per share and (ii) beginning in 2014 based on
common share total return. In calculating net income in accordance
with GAAP, SNH recognizes an estimated business management incentive
fee expense, if any, each quarter. Although SNH recognizes this
expense, if any, each quarter for purposes of calculating net
income, SNH does not include these amounts in the calculation of
Normalized FFO until the fourth quarter, which is when the actual
expense amount for the year is determined. Adjustments were made to
prior period amounts to conform to the current period Normalized FFO
calculation.
|
|
|
|
|
|
(3)
|
|
In calculating net income in accordance with GAAP, SNH recognizes
percentage rental income received for the first, second and third
quarters in the fourth quarter, which is when all contingencies are
met and the income is earned. Although SNH defers recognition of
this revenue until the fourth quarter for purposes of calculating
net income, it includes these estimated amounts in its calculation
of Normalized FFO for each quarter of the year. The fourth quarter
Normalized FFO calculation excludes the amounts included during the
first three quarters.
|
|
|
|
|
|
|
|
|
SENIOR HOUSING PROPERTIES TRUST
CALCULATION AND RECONCILIATION OF NET OPERATING INCOME (NOI)
AND CASH BASIS NOI
(amounts in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
9/30/2014
|
|
|
9/30/2013
|
|
|
9/30/2014
|
|
|
9/30/2013
|
|
Calculation of NOI (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$ 137,614
|
|
|
$ 112,319
|
|
|
$ 377,339
|
|
|
$ 336,468
|
|
Residents fees and services
|
|
79,259
|
|
|
74,946
|
|
|
237,740
|
|
|
224,634
|
|
Total revenues
|
|
216,873
|
|
|
187,265
|
|
|
615,079
|
|
|
561,102
|
|
Property operating expenses
|
|
82,706
|
|
|
74,729
|
|
|
240,297
|
|
|
222,893
|
|
Property net operating income (NOI):
|
|
134,167
|
|
|
112,536
|
|
|
374,782
|
|
|
338,209
|
|
Non cash straight line rent adjustments
|
|
(2,876)
|
|
|
(1,567)
|
|
|
(6,806)
|
|
|
(5,413)
|
|
Lease value amortization
|
|
(1,264)
|
|
|
858
|
|
|
(1,111)
|
|
|
2,692
|
|
Lease termination fees
|
|
-
|
|
|
(4)
|
|
|
-
|
|
|
(7)
|
|
Cash Basis NOI
|
|
$ 130,027
|
|
|
$ 111,823
|
|
|
$ 366,865
|
|
|
$ 335,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Cash Basis NOI to Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis NOI
|
|
130,027
|
|
|
111,823
|
|
$
|
366,865
|
|
$
|
335,481
|
|
Non cash straight line rent adjustments
|
|
2,876
|
|
|
1,567
|
|
|
6,806
|
|
|
5,413
|
|
Lease value amortization
|
|
1,264
|
|
|
(858)
|
|
|
1,111
|
|
|
(2,692)
|
|
Lease termination fees
|
|
-
|
|
|
4
|
|
|
-
|
|
|
7
|
|
Property NOI
|
|
134,167
|
|
|
112,536
|
|
|
374,782
|
|
|
338,209
|
|
Depreciation expense
|
|
(50,074)
|
|
|
(38,473)
|
|
|
(135,132)
|
|
|
(114,472)
|
|
General and administrative expense
|
|
(10,384)
|
|
|
(7,798)
|
|
|
(28,250)
|
|
|
(24,615)
|
|
Acquisition related costs
|
|
(15)
|
|
|
(396)
|
|
|
(2,649)
|
|
|
(2,590)
|
|
Impairment of assets
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,675)
|
|
Operating income
|
|
73,694
|
|
|
65,869
|
|
|
208,751
|
|
|
190,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
78
|
|
|
42
|
|
|
336
|
|
|
612
|
|
Interest expense
|
|
(36,201)
|
|
|
(29,405)
|
|
|
(99,213)
|
|
|
(88,536)
|
|
Loss on early extinguishment of debt
|
|
-
|
|
|
(692)
|
|
|
-
|
|
|
(797)
|
|
Loss on lease terminations
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Income before income tax expense and
|
|
|
|
|
|
|
|
|
|
|
|
|
equity in earnings of an investee
|
|
37,571
|
|
|
35,814
|
|
|
109,874
|
|
|
102,136
|
|
Income tax expense
|
|
(156)
|
|
|
(125)
|
|
|
(502)
|
|
|
(405)
|
|
Equity in earnings of an investee
|
|
38
|
|
|
64
|
|
|
59
|
|
|
219
|
|
Income from continuing operations
|
|
37,453
|
|
|
35,753
|
|
|
109,431
|
|
|
101,950
|
|
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
(557)
|
|
|
1,231
|
|
|
1,484
|
|
|
3,762
|
|
Impairment of assets from discontinued operations
|
|
216
|
|
|
-
|
|
|
(117)
|
|
|
(27,896)
|
|
Income before gain on sale of properties
|
|
37,112
|
|
|
36,984
|
|
|
110,798
|
|
|
77,816
|
|
Gain on sale of properties
|
|
-
|
|
|
1,141
|
|
|
2,552
|
|
|
1,141
|
|
Net income
|
|
$ 37,112
|
|
|
$ 38,125
|
|
|
$ 113,350
|
|
|
$ 78,957
|
|
(1)
|
|
SNH calculates NOI and Cash Basis NOI as shown above excluding
properties classified as discontinued operations. 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. SNH defines Cash Basis NOI as NOI less non
cash straight line rent adjustments, lease value amortization and
lease termination fees, if any. SNH considers NOI and Cash Basis NOI
to be appropriate supplemental measures to net income because they
may help both investors and management to understand the operations
of our properties. SNH uses NOI and Cash Basis NOI internally to
evaluate individual and company wide property level performance, and
it believes that NOI and Cash Basis NOI provide useful information
to investors regarding its results of operations because these
measures reflect only those income and expense items that are
incurred at the property level and may facilitate comparisons of its
operating performance between periods and with other REITs. The
calculation of NOI and Cash Basis NOI excludes certain components of
net income in order to provide results that are more closely related
to its properties' results of operations. NOI and Cash Basis NOI do
not represent cash generated by operating activities in accordance
with GAAP and should not be considered as an alternative to net
income, operating income or cash flow from operating activities
determined in accordance with GAAP, or as indicators of SNH’s
financial performance or liquidity, nor are these measures
necessarily indicative of sufficient cash flow to fund all of SNH’s
needs. These measures should be considered in conjunction with net
income, operating income and cash flow from operating activities as
presented in SNH’s Consolidated Statements of Income and
Comprehensive Income and Consolidated Statements of Cash Flows.
Other REITs and real estate companies may calculate NOI and Cash
Basis NOI differently than SNH does.
|
|
|
|
|
|
|
|
|
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
|
|
Balance Sheet:
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Real estate properties
|
|
$
|
6,184,068
|
|
|
$
|
5,263,625
|
|
Less accumulated depreciation
|
|
|
(946,566)
|
|
|
|
(840,760)
|
|
|
|
|
5,237,502
|
|
|
|
4,422,865
|
|
Cash and cash equivalents
|
|
|
80,750
|
|
|
|
39,233
|
|
Restricted cash
|
|
|
10,986
|
|
|
|
12,514
|
|
Deferred financing fees, net
|
|
|
32,021
|
|
|
|
27,975
|
|
Acquired real estate leases and other intangible assets, net
|
|
|
482,564
|
|
|
|
103,494
|
|
Other assets
|
|
|
145,299
|
|
|
|
158,585
|
|
Total assets
|
|
$
|
5,989,122
|
|
|
$
|
4,764,666
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Unsecured revolving credit facility
|
|
$
|
—
|
|
|
$
|
100,000
|
|
Unsecured term loan
|
|
|
350,000
|
|
|
|
—
|
|
Senior unsecured notes, net of discount
|
|
|
1,743,272
|
|
|
|
1,093,337
|
|
Secured debt and capital leases
|
|
|
669,011
|
|
|
|
699,427
|
|
Accrued interest
|
|
|
32,555
|
|
|
|
15,839
|
|
Assumed real estate lease obligations, net
|
|
|
125,493
|
|
|
|
12,528
|
|
Other liabilities
|
|
|
84,576
|
|
|
|
66,546
|
|
Total liabilities
|
|
|
3,004,907
|
|
|
|
1,987,677
|
|
|
|
|
|
|
|
|
|
|
Total shareholders’ equity
|
|
|
2,984,215
|
|
|
|
2,776,989
|
|
Total liabilities and shareholders’ equity
|
|
$
|
5,989,122
|
|
|
$
|
4,764,666
|
|
A Maryland Real Estate Investment Trust with transferable shares of
beneficial interest listed on the New York Stock Exchange.
|
|
No shareholder, Trustee or officer is personally liable for any act
or obligation of the Trust.
|
Copyright Business Wire 2014