New Senior Investment Group Inc. (“New Senior” or the “Company”)
(NYSE:SNR) announced today its results for the quarter ended June
30, 2016.
2Q 2016 FINANCIAL
HIGHLIGHTS
- Declared cash dividend of $0.26 per
common share
- Net loss of $27.4 million, or $0.33 per
basic and diluted share
- Total NOI of $57.9 million compared to
$57.3 million for 1Q’16
- Normalized Funds from Operations
(“Normalized FFO”) of $27.7 million, or $0.34 per basic share and
$0.33 per diluted share, compared to $26.5 million, or $0.32 per
basic and diluted share, for 1Q’16
- AFFO of $25.2 million, or $0.31 per
basic share and $0.30 per diluted share, compared to $23.9 million,
or $0.29 per basic and diluted share, for 1Q’16
- Normalized Funds Available for
Distribution (“Normalized FAD”) of $23.1 million, or $0.28 per
basic and diluted share, compared to $21.8 million, or $0.26 per
basic and diluted share, for 1Q’16
2Q 2016 BUSINESS
HIGHLIGHTS
- Total managed portfolio average
occupancy increased 210 basis points to 88.3% vs. 2Q’15, and was
flat vs. 1Q’16
- Same store average occupancy for the
managed portfolio increased 120 basis points vs. 2Q’15, and was
flat vs. 1Q’16
- Same store net operating income (“NOI”)
increased 2.1% for the managed portfolio vs. 1Q’16
- Occupancy for the triple net portfolio
increased 60 basis points vs. 2Q’15
“Our portfolio produced stable results this quarter, delivering
same store NOI growth for our managed portfolio of 2.1% and flat
occupancy over the first quarter of 2016,” New Senior Chief
Executive Officer Susan Givens said. “In addition, we achieved
growth in AFFO per basic share of 7% versus the first quarter of
2016. We continue to pursue selective asset sales and expect to
complete sales in the fourth quarter of 2016.”
SECOND QUARTER 2016
RESULTS
Dollars in thousands, except per share data
For
the Quarter Ended June 30, 2016 Amount
Per BasicShare(B)
Per
DilutedShare(B)
GAAP
Net loss ($27,358 ) ($0.33 ) ($0.33 )
Non-GAAP(A)
NOI $ 57,935 N/A N/A FFO 26,508 $ 0.32 $ 0.32 Normalized FFO 27,671
$ 0.34 $ 0.33 AFFO 25,186 $ 0.31 $ 0.30 Normalized FAD 23,099 $
0.28 $ 0.28 (A) See end of press release for reconciliation of
non-GAAP measures to net loss. (B) Non-GAAP measures per basic
share are based on 82.1 million shares outstanding, and non-GAAP
measures per diluted share are based on 82.7 million shares,
representing the number of shares outstanding plus the number of
shares issuable upon the exercise of options. GAAP net loss per
basic share and per diluted share is based, in each case, on 82.1
million shares outstanding, because the inclusion of options in the
calculation of GAAP net loss per diluted share would be
anti-dilutive.
GAAP RESULTS
New Senior recorded a GAAP net loss of $27.4 million, or $0.33
per share, for the second quarter of 2016, compared to a GAAP net
loss of $21.2 million, or $0.32 per share, for the second quarter
of 2015. The year over year increase in the second quarter net loss
was primarily driven by an increase in expenses of $33.5 million,
partially offset by an increase in revenues of $27.3 million.
PORTFOLIO PERFORMANCE
Total NOI increased 20% to $57.9 million compared to $48.4
million for 2Q 2015. Since the end of 2Q 2015, the Company has
grown its portfolio from 124 to 154 properties.
For the managed portfolio, total average occupancy increased 210
basis points to 88.3% compared to 86.2% for 2Q 2015. Total NOI for
2Q 2016 increased 44% to $29.7 million compared to $20.6 million
for 2Q 2015. Quarter over quarter, same store average occupancy was
flat at 88.3%, and same store NOI increased 2.1% to $29.7 million
compared to $29.1 million for 1Q 2016. Year over year, same store
average occupancy increased 120 basis points to 87.3% compared to
86.1% for 2Q 2015, and same store NOI decreased 3.7% to $19.6
million compared to $20.3 million for 2Q 2015.
For the triple net portfolio, total portfolio average occupancy
increased 60 basis points to 88.8% compared to 88.2% for 2Q 2015.
Triple net average occupancy is presented one quarter in arrears on
a trailing twelve month basis.
SECOND QUARTER DIVIDEND
On August 3, 2016, the Company’s Board of Directors declared a
cash dividend of $0.26 per share for the quarter ended June 30,
2016. The dividend is payable on September 22, 2016 to shareholders
of record on September 8, 2016.
SHARE REPURCHASE
ACTIVITY
The Company did not complete any share repurchases during the
second quarter of 2016, and the remaining capacity under the
Company’s share repurchase program is $89.7 million.
ADDITIONAL INFORMATION
For additional information that management believes to be useful
for investors, please refer to the presentation posted in the
Investor Relations section of the Company’s website,
www.newseniorinv.com.
EARNINGS CONFERENCE CALL
Management will host a conference call on August 4, 2016 at 9:00
A.M. Eastern Time. The conference call may be accessed by dialing
(877) 694-6694 (from within the U.S.) or (970) 315-0985 (from
outside of the U.S.) ten minutes prior to the scheduled start of
the call; please reference “New Senior Second Quarter 2016 Earnings
Call.” A simultaneous webcast of the conference call will be
available to the public on a listen-only basis at
www.newseniorinv.com. Please allow extra time prior to the call to
visit the website and download any necessary software required to
listen to the internet broadcast.
A telephonic replay of the conference call will also be
available approximately two hours following the call’s completion
through 11:59 P.M. Eastern Time on September 5, 2016 by dialing
(855) 859-2056 (from within the U.S.) or (404) 537-3406 (from
outside the U.S.); please reference access code “47502185.”
ABOUT NEW SENIOR
New Senior is a real estate investment trust focused on
investing in senior housing properties across the United States.
The Company is the only pure play senior housing REIT and is one of
the largest owners of senior housing properties. Currently, New
Senior owns 154 properties located across 37 states. New Senior is
managed by an affiliate of Fortress Investment Group LLC, a global
investment management firm. More information about New Senior can
be found at www.newseniorinv.com.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain items in this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, such as statements
regarding our asset sale strategy and our expectation that we will
complete asset sales in the fourth quarter of 2016. These
statements are not historical facts. They represent management’s
current expectations regarding future events and are subject to a
number of trends and uncertainties, many of which are beyond our
control, that could cause actual results to differ materially from
those described in the forward-looking statements. Accordingly, you
should not place undue reliance on any forward-looking statements
contained herein. For a discussion of some of the risks and
important factors that could affect such forward-looking
statements, see the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in the Company’s annual and quarterly
reports filed with the Securities and Exchange Commission, which
are available on the Company’s website (www.newseniorinv.com). New
risks and uncertainties emerge from time to time, and it is not
possible for New Senior to predict or assess the impact of every
factor that may cause its actual results to differ from those
contained in any forward-looking statements. Forward-looking
statements contained herein speak only as of the date of this press
release, and New Senior expressly disclaims any obligation to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in New Senior's
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
Consolidated Balance Sheets
(dollars in thousands, except share data) June 30,
2016 Assets (Unaudited) December 31, 2015
Real estate investments: Land $ 226,180 $ 222,795 Buildings,
improvements and other 2,558,659 2,568,133 Accumulated depreciation
(174,158 ) (129,788 ) Net real estate property
2,610,681 2,661,140 Acquired lease and other
intangible assets 321,440 308,917 Accumulated amortization
(223,598 ) (166,714 ) Net real estate intangibles
97,842 142,203 Net real estate investments
2,708,523 2,803,343 Cash and cash equivalents 83,630 116,881
Straight-line rent receivables 63,000 51,916 Receivables and other
assets, net 52,921 45,319
Total
Assets $ 2,908,074 $
3,017,459 Liabilities and Equity
Liabilities Mortgage notes payable, net $ 2,148,013 $
2,151,317 Due to affiliates 11,804 9,644 Accrued expenses and other
liabilities 103,723 89,173
Total
Liabilities $ 2,263,540 $ 2,250,134
Commitments and contingencies
Equity
Preferred Stock $0.01 par value,
100,000,000 sharesauthorized and none outstanding as of both June
30, 2016and December 31, 2015
$ - $ -
Common stock $0.01 par value,
2,000,000,000 sharesauthorized, 82,114,218 and 85,447,551 shares
issued andoutstanding as of June 30, 2016 and December 31,
2015,respectively
821 854 Additional paid-in capital 897,808 928,654 Accumulated
deficit (254,095 ) (162,183 )
Total Equity $
644,534 $ 767,325
Total Liabilities
and Equity $ 2,908,074 $
3,017,459 Consolidated Statements of
Operations (unaudited) (dollars in thousands, except share
data)
Three Months Ended June 30, Six Months Ended June 30,
2016 2015 2016
2015 Revenues Resident fees and services $
90,297 $ 63,470 $ 180,003 $ 110,658 Rental revenue 28,244
27,730 56,483 54,402
Total revenues 118,541 91,200
236,486 165,060
Expenses
Property operating expense 60,606 42,824 121,231 77,095
Depreciation and amortization 53,866 39,574 101,233 69,731 Interest
expense 22,805 16,984 45,593 32,295 Acquisition, transaction, and
integration expense 652 5,199 1,406 9,117 Management fees and
incentive compensation to affiliate 4,430 3,071 8,358 6,122 General
and administrative expense 3,554 4,129 7,924 7,539 Loss on
extinguishment of debt - - - 5,091 Other expense 511
480 698 480 Total
expenses $ 146,424 $ 112,261 $ 286,443 $
207,470
Loss Before Income Taxes (27,883 )
(21,061 ) (49,957 ) (42,410 ) Income tax (benefit) expense
(525 ) 129 (751 ) 34
Net
Loss $ (27,358 ) $ (21,190 ) $ (49,206 ) $ (42,444 )
Loss Per Share of Common Stock Basic and diluted(A) $ (0.33
) $ (0.32 ) $ (0.60 ) $ (0.64 )
Weighted Average Number of Shares of
Common StockOutstanding
Basic and diluted(B) 82,114,218 66,857,483
82,590,408 66,637,670
Dividends Declared Per Share of Common Stock $ 0.26 $
0.49 $ 0.52 $ 0.49
(A) Basic earnings per share (“EPS”) is calculated by dividing
net income by the weighted average number of shares of common stock
outstanding. Diluted EPS is computed by dividing net income by the
weighted average number of shares of common stock outstanding plus
the additional dilutive effect, if any, of common stock equivalents
during each period.
(B) All outstanding options were excluded from the diluted share
calculation as their effect would have been anti-dilutive.
Consolidated Statements of Cash Flows (unaudited)
(dollars in thousands) Six
Months Ended June 30, 2016 2015
Cash Flows From Operating Activities Net loss $ (49,206 ) $
(42,444 ) Adjustments to reconcile net loss to net cash provided by
operating activities: Depreciation of tangible assets and
amortization of intangible assets 101,304 69,804 Amortization of
deferred financing costs 4,841 4,473 Amortization of deferred
community fees (936 ) (1,112 ) Amortization of premium on mortgage
notes payable (292 ) 305 Non-cash straight line rent (11,084 )
(12,540 ) Loss on extinguishment of debt - 5,091 Equity-based
compensation 5 17 Provision for bad debt 1,058 824 Other non-cash
expense 557 480 Changes in: Receivables and other assets, net
(5,924 ) (4,432 ) Due to affiliates 2,160 2,559 Accrued expenses
and other liabilities
16,910
9,932 Net cash provided by operating
activities $
59,393
$ 32,957
Cash Flows From Investing
Activities Cash paid for acquisitions, net of deposits $ - $
(584,932 ) Capital expenditures
(9,563
) (4,978 ) Funds reserved for future capital expenditures (2,221 )
(292 ) Deposits refunded (paid) for real estate investments
584 (10,855 ) Net cash used in investing activities $
(11,200
) $ (601,057 )
Cash Flows From Financing Activities
Proceeds from mortgage notes payable $ - $ 757,572 Principal
payments of mortgage notes payable (7,854 ) (7,911 ) Repayments of
mortgage notes payable - (289,484 ) Payment of exit fee on
extinguishment of debt - (1,499 ) Payment of deferred financing
costs - (8,798 ) Payment of common stock dividend (42,706 ) (30,552
) Purchase of interest rate caps - (1,037 ) Repurchase of common
stock (30,884 ) - Proceeds from issuance of common stock - 276,569
Costs related to issuance of common stock -
(10,056 ) Net cash (used in) provided by financing activities $
(81,444 ) $ 684,804
Net (Decrease) Increase in Cash and
Cash Equivalents (33,251 ) 116,704
Cash and Cash
Equivalents, Beginning of Period 116,881
226,377
Cash and Cash Equivalents, End of Period $
83,630 $ 343,081
Supplemental Disclosure of
Cash Flow Information Cash paid during the period for interest
expense $ 41,122 $ 26,734 Cash paid during the period for income
taxes 262 190
Supplemental Disclosure of Non-Cash
Investing and Financing Activities Common stock dividend
declared but not paid $ - $ 17,268
Reconciliation
of NOI to Net Loss (dollars in thousands)
For the Quarter Ended June 30, 2016 Total revenues $
118,541 Property operating expense (60,606 )
NOI
57,935 Depreciation and amortization (53,866 )
Interest expense (22,805 ) Acquisition, transaction and integration
expense (652 ) Management fees and incentive compensation to
affiliate (4,430 ) General and administrative expense (3,554 )
Other expense (511 ) Income tax benefit 525
Net
Loss $ (27,358 )
Reconciliation of Net Loss to FFO, Normalized FFO, AFFO and
Normalized FAD (dollars and shares in thousands, except per
share data) For the Quarter Ended June
30, 2016 Net loss $ (27,358 )
Adjustments: Depreciation and amortization
53,866
FFO $ 26,508 FFO per diluted
share $ 0.32 Acquisition,
transaction and integration expense 652 Other expense
511
Normalized FFO $ 27,671
Normalized FFO per diluted share $
0.33 Straight-line rent (5,531 ) Amortization of
deferred financing costs 2,413 Amortization of deferred community
fees and other(1) 633
AFFO
$ 25,186 AFFO per diluted share
$ 0.30
Routine capital expenditures
(2,087
)
Normalized FAD $ 23,099 Normalized FAD
per diluted share $ 0.28
Weighted average basic shares outstanding 82,114 Weighted
average diluted shares outstanding(2) 82,666
(1) Includes amortization of above / below market lease
intangibles, amortization of premium on mortgage notes payable and
amortization of deferred community fees and other, which includes
the net change in deferred community fees and other rent discounts
or incentives.
(2) Includes dilutive effect of options.
Reconciliation of Year-over-Year Same Store NOI (unaudited)
(dollars in thousands)
2Q 2015 2Q 2016
NNNProperties
Same
StoreManagedProperties
Non-SameStoreManagedProperties
Total
NNNProperties
Same
StoreManagedProperties
Non-SameStoreManagedProperties
Total NOI $ 27,730
$ 20,315 $ 331
$ 48,376 $ 28,244
$ 19,573 $ 10,118
$ 57,935 Depreciation and amortization (39,574
) (53,866 ) Interest expense (16,984 ) (22,805 )
Acquisition, transaction andintegration
expense
(5,199 ) (652 )
Management fees and incentivecompensation
to affiliate
(3,071 ) (4,430 ) General and administrative expense (4,129 )
(3,554 ) Other expense (480 ) (511 ) Income tax benefit (expense)
(129 ) 525
Net Loss
($21,190 ) ($27,358 )
Reconciliation of Quarter-over-Quarter Same Store NOI
(unaudited) (dollars in thousands) 1Q 2016
2Q 2016
NNNProperties
Same
StoreManagedProperties
Non-SameStoreManagedProperties
Total
NNNProperties
Same
StoreManagedProperties
Non-SameStoreManagedProperties
Total NOI $ 28,239
$ 29,081 -
$ 57,320 $ 28,244
$ 29,691 - $
57,935 Depreciation and amortization (47,367 )
(53,866 ) Interest expense (22,788 ) (22,805 )
Acquisition, transaction andintegration
expense
(754 ) (652 )
Management fees and incentivecompensation
to affiliate
(3,928 ) (4,430 ) General and administrative expense (4,370 )
(3,554 ) Other expense (187 ) (511 ) Income tax benefit 226
525
Net Loss ($21,848
) ($27,358 )
NON-GAAP FINANCIAL
MEASURES
The tables above set forth reconciliations of non-GAAP measures
to net loss, which is the most directly comparable GAAP financial
measure.
A non-GAAP financial measure is a measure of historical or
future financial performance, financial position or cash flows that
excludes or includes amounts that are not excluded from or included
in the most comparable GAAP measure. We consider certain non-GAAP
financial measures to be useful supplemental measures of our
operating performance. GAAP accounting for real estate assets
assumes that the value of real estate assets diminishes predictably
over time, even though real estate values historically have risen
or fallen with market conditions. As a result, many industry
investors look to non-GAAP financial measures for supplemental
information about real estate companies.
You should not consider non-GAAP measures as alternatives to
GAAP net income, which is an indicator of our financial
performance, or as alternatives to GAAP cash flow from operating
activities, which is a liquidity measure, nor are non-GAAP measures
necessarily indicative of our ability to satisfy our funding
requirements. In order to facilitate a clear understanding of our
consolidated historical operating results, you should examine our
non-GAAP measures in conjunction with GAAP net income as presented
in our Consolidated Financial Statements and other financial data
included elsewhere in this report. Moreover, the comparability of
non-GAAP financial measures across companies may be limited as a
result of differences in the manner in which real estate companies
calculate such measures.
Below is a description of the non-GAAP financial measures
presented herein.
NOI
The Company evaluates the performance of each of its two
business segments based on NOI. The Company defines NOI as total
revenues less property-level operating expenses, which include
property management fees, payroll expense and travel cost
reimbursements to affiliates. The sum of the NOI for each segment
is total NOI, which the Company uses to evaluate the aggregate
performance of its segments. Management believes that NOI serves as
a useful supplement to net income because it allows investors,
analysts and management to measure unlevered property-level
operating results and to compare the Company’s operating results
between periods and to the operating results of other real estate
companies on a consistent basis. Same store NOI includes only
properties owned for the entirety of comparable periods.
FFO and Other Non-GAAP Measures
We use Funds From Operations ("FFO") and Normalized FFO as
supplemental measures of our operating performance. We use the
National Association of Real Estate Investment Trusts ("NAREIT")
definition of FFO. NAREIT defines FFO as GAAP net income excluding
gains (losses) from sales of depreciable real estate assets and
impairment charges of depreciable real estate, plus real estate
depreciation and amortization, and after adjustments for
unconsolidated entities and joint ventures to reflect FFO on the
same basis.
Normalized FFO, as defined below, measures the financial
performance of our portfolio of assets excluding items that,
although incidental to, are not reflective of the day-to-day
operating performance of our portfolio of assets. We believe that
Normalized FFO is useful because it facilitates the evaluation of
our portfolio’s operating performance (i) between periods on a
consistent basis and (ii) to the operating performance of other
real estate companies. However, comparability may be limited
because our calculation of Normalized FFO may differ significantly
from that of other companies, or because of features of our
business that are not present in other companies.
We define Normalized FFO as FFO excluding the following income
and expense items, as applicable: (a) acquisition, transaction and
integration related costs and expenses; (b) the write off of
unamortized discounts, premiums, deferred financing costs, or
additional costs, make whole payments and penalties or premiums
incurred as the result of early repayment of debt (collectively
“Gain (Loss) on extinguishment of debt”); (c) incentive
compensation recognized as a result of sales of property and (d)
other items that we believe are not indicative of operating
performance, generally reported as “Other (income) expense” in the
Consolidated Statements of Operations.
Management also uses AFFO and Normalized FAD as supplemental
measures of the Company’s operating performance.
We define AFFO as Normalized FFO excluding the impact of the
following: (a) straight-line rents; (b) amortization of above /
below market lease intangibles; (c) amortization of deferred
financing costs; (d) amortization of premium on mortgage notes
payable and (e) amortization of deferred community fees and other,
which includes the net change in deferred community fees and other
rent discounts or incentives. We believe AFFO is useful because it
facilitates the evaluation of (i) the current economic return on
our portfolio of assets between periods on a consistent basis and
(ii) our portfolio versus those of other real estate companies that
report AFFO. However, comparability may be limited because our
calculation of AFFO may differ significantly from that of other
companies, or because of features of our business that are not
present in other companies.
We define Normalized FAD as AFFO less routine capital
expenditures, which we view as a cost associated with the current
economic return.
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New Senior Investment Group Inc.David Smith, 212-479-3140
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