New Senior Investment Group Inc. (“New Senior” or the “Company”)
(NYSE:SNR) announced today its results for the quarter ended
September 30, 2016.
3Q 2016 FINANCIAL
HIGHLIGHTS
- Declared cash dividend of $0.26 per
common share
- Net loss of $20.2 million, or $0.25 per
basic and diluted share
- Total NOI of $57.1 million, compared to
$53.2 million for 3Q’15
- Normalized Funds from Operations
(“Normalized FFO”) of $25.7 million, or $0.31 per basic and diluted
share, compared to $26.3 million, or $0.30 per basic and diluted
share, for 3Q’15
- AFFO of $22.9 million, or $0.28 per
basic and diluted share, compared to $22.9 million, or $0.27 per
basic share and $0.26 per diluted share, for 3Q’15
- Normalized Funds Available for
Distribution (“Normalized FAD”) of $21.1 million, or $0.26 per
basic and diluted share, compared to $20.9 million, or $0.24 per
basic and diluted share, for 3Q’15
3Q 2016 BUSINESS
HIGHLIGHTS
- Total same store cash net operating
income (“NOI”) decreased 0.2% vs. 3Q’15. Excluding 5
underperforming assets for illustrative purposes, total same store
cash NOI would have been 2.1% higher than 3Q’15
- Managed portfolio average occupancy
increased 120 basis points to 88.1% vs. 3Q’15
- Managed same store average occupancy
increased 80 basis points to 87.0% vs. 3Q’15
- Managed same store NOI decreased 3.2%
vs. 3Q’15. Excluding 5 underperforming assets for illustrative
purposes, managed same store NOI would have been 2.0% higher than
3Q’15
- Triple net same store cash NOI
increased 3.9% vs. 3Q’15
- In October, sold 2 properties for $23
million, representing a cap rate of approximately 6%, 2.4x invested
equity and a gain on sale of $13 million
“New Senior delivered solid earnings results this quarter, with
AFFO per basic share up 4% over the third quarter of 2015,” New
Senior Chief Executive Officer Susan Givens said. “We also made
continued progress on our asset disposition strategy with the
recent sale of 2 properties for $23 million. We continue to pursue
selective, non-core asset sales in an effort to enhance the overall
quality of our portfolio.”
THIRD QUARTER 2016
RESULTS
Dollars in thousands, except per share data
For the Quarter Ended September 30, 2016 Amount
Per Basic Share(B) Per Diluted
Share(B)
GAAP
Net loss ($20,241) ($0.25) ($0.25)
Non-GAAP(A)
NOI $57,103 N/A N/A FFO 25,269 $0.31 $0.31 Normalized FFO 25,741
$0.31 $0.31 AFFO 22,852 $0.28 $0.28 Normalized FAD 21,127 $0.26
$0.26 (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 82.8 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 $20.2 million, or $0.25
per basic and diluted share, for the third quarter of 2016,
compared to a GAAP net loss of $18.0 million, or $0.21 per basic
and diluted share, for the third quarter of 2015. The
year-over-year increase in the third quarter net loss was primarily
driven by an increase in expenses of $15.8 million, partially
offset by an increase in revenues of $13.5 million.
PORTFOLIO PERFORMANCE
Total NOI increased 7% to $57.1 million compared to $53.2
million for 3Q 2015. The increase is primarily due to acquisitions
completed during, and subsequent to, the third quarter of 2015.
Total same store cash NOI decreased 0.2% vs. 3Q 2015. Excluding 5
underperforming assets for illustrative purposes, total same store
cash NOI would have been 2.1% higher than 3Q 2015.
For the managed portfolio, total average occupancy increased 120
basis points to 88.1% compared to 86.9% for 3Q 2015. Total managed
NOI increased 16% to $28.9 million compared to $25.0 million for 3Q
2015. Year over year, managed same store average occupancy
increased 80 basis points to 87.0% compared to 86.2% for 3Q 2015,
and managed same store NOI decreased 3.2% to $18.7 million compared
to $19.3 million for 3Q 2015. Excluding 5 underperforming assets
for illustrative purposes, managed same store NOI would have been
2.0% higher than 3Q 2015.
For the triple net portfolio, same store cash NOI increased 3.9%
compared to 3Q 2015. Total triple net average occupancy decreased
40 basis points to 88.4% compared to 88.8% for 3Q 2015. Same store
triple net average occupancy was flat at 88.4% for 3Q 2016 compared
to 3Q 2015. Triple net average occupancy is presented one quarter
in arrears on a trailing twelve month basis.
ASSET SALES
In October, the Company completed the sale of two assisted
living / memory care properties for $23.0 million, representing a
cap rate of approximately 6%, 2.4x invested equity and a gain on
sale of $13 million. In connection with the sale, the Company
repaid $13.7 million of debt associated with these properties.
THIRD QUARTER DIVIDEND
On October 31, 2016, the Company’s Board of Directors declared a
cash dividend of $0.26 per share for the quarter ended September
30, 2016. The dividend is payable on December 22, 2016 to
shareholders of record on December 8, 2016.
SHARE REPURCHASE
ACTIVITY
The Company did not complete any share repurchases during the
third 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 November 2, 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 Third 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 three hours following the call’s completion
through 11:59 P.M. Eastern Time on December 2, 2016 by dialing
(855) 859-2056 (from within the U.S.) or (404) 537-3406 (from
outside the U.S.); please reference access code “53071588.”
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 152 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. 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.
CAUTIONARY NOTE REGARDING ILLUSTRATIVE
INFORMATION
Illustrative information does not represent the Company’s
historical performance or management’s projections for any future
reporting period. The illustrative information presented herein
differs materially from actual results.
Consolidated Balance Sheets (dollars in thousands,
except share data)
Assets
September 30, 2016
(Unaudited)
December 31, 2015
Real estate investments: Land $ 222,138 $ 222,795 Buildings,
improvements and other 2,557,895 2,568,133 Accumulated depreciation
(197,510) (129,788) Net real estate property
2,582,523 2,661,140 Acquired lease and other
intangible assets 321,634 308,917 Accumulated amortization
(242,671) (166,714) Net real estate intangibles
78,963 142,203 Net real estate investments
2,661,486 2,803,343 Cash and cash equivalents 73,395 116,881
Straight-line rent receivables 68,379 51,916 Receivables and other
assets, net 63,697 45,319
Total Assets
$ 2,866,957 $ 3,017,459
Liabilities and Equity Liabilities Mortgage notes
payable, net $ 2,146,292 $ 2,151,317 Due to affiliates 10,786 9,644
Accrued expenses and other liabilities 106,800 89,173
Total Liabilities $ 2,263,878 $
2,250,134 Commitments and contingencies
Equity
Preferred Stock $0.01 par value,
100,000,000 sharesauthorized and none outstanding as of both
September 30,2016 and December 31, 2015
$ - $ -
Common stock $0.01 par value,
2,000,000,000 sharesauthorized, 82,127,247 and 85,447,551 shares
issued andoutstanding as of September 30, 2016 and December 31,
2015,respectively
821 854 Additional paid-in capital 897,947 928,654 Accumulated
deficit (295,689) (162,183)
Total Equity
$ 603,079 $ 767,325
Total Liabilities and Equity $ 2,866,957
$ 3,017,459 Consolidated
Statements of Operations (unaudited) (dollars in thousands,
except share data) Three Months Ended
September 30, Nine Months Ended September 30,
2016 2015 2016
2015 Revenues Resident fees and services $ 90,217 $
76,726 $ 270,220 $ 187,384 Rental revenue 28,240
28,259 84,723 82,661 Total revenues 118,457
104,985 354,943 270,045
Expenses
Property operating expense 61,354 51,760 182,585 128,855
Depreciation and amortization 45,510 40,812 146,743 110,543
Interest expense 23,065 20,051 68,658 52,346 Acquisition,
transaction, and integration expense 364 2,373 1,770 11,490
Management fees and incentive compensation to affiliate 3,839 4,085
12,197 10,207 General and administrative expense 3,676 3,152 11,600
10,691 Loss on extinguishment of debt - - - 5,091 Other expense
108 1,089 806 1,569 Total expenses $
137,916 $ 123,322 $ 424,359 $ 330,792
Loss Before Income
Taxes (19,459) (18,337) (69,416) (60,747) Income tax expense
(benefit) 782 (378) 31 (344)
Net
Loss $ (20,241) $ (17,959) $ (69,447) $ (60,403)
Loss
Per Share of Common Stock Basic and diluted(A) $ (0.25) $
(0.21) $ (0.84) $ (0.82)
Weighted Average Number of Shares of
Common Stock Outstanding
Basic and diluted(B) 82,126,397 86,533,384
82,434,609 73,342,453
Dividends Declared Per Share
of Common Stock $ 0.26 $ - $ 0.78 $ 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)
Nine Months Ended September 30, 2016
2015 Cash Flows From Operating Activities Net loss $
(69,447) $ (60,403) Adjustments to reconcile net loss to net cash
provided by operating activities: Depreciation of tangible assets
and amortization of intangible assets 146,852 110,651 Amortization
of deferred financing costs 7,216 6,777 Amortization of deferred
community fees (1,384) (1,886) Amortization of premium on mortgage
notes payable (447) 228 Non-cash straight line rent (16,463)
(18,885) Loss on extinguishment of debt - 5,091 Equity-based
compensation 144 17 Provision for bad debt 1,552 1,449 Other
non-cash expense 665 837 Changes in: Receivables and other assets,
net (8,647) (13,148) Due to affiliates 1,142 4,547 Accrued expenses
and other liabilities 18,503 18,641 Net cash provided
by operating activities $ 79,686 $ 53,916
Cash Flows From
Investing Activities Cash paid for acquisitions, net of
deposits $ - $ (1,212,169) Capital expenditures (15,753) (7,788)
Funds reserved for future capital expenditures (1,266) (2,003)
Deposits refunded (paid) for real estate investments 584
(11,355) Net cash used in investing activities $ (16,435) $
(1,233,315)
Cash Flows From Financing Activities
Proceeds from mortgage notes payable $ - $ 1,222,252 Principal
payments of mortgage notes payable (11,794) (11,683) Repayments of
mortgage notes payable - (304,484) Payment of exit fee on
extinguishment of debt - (1,499) Payment of deferred financing
costs - (12,294) Payment of common stock dividend (64,059) (47,820)
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 $ (106,737) $
1,109,948
Net Decrease in Cash and Cash Equivalents (43,486)
(69,451)
Cash and Cash Equivalents, Beginning of Period
116,881 226,377
Cash and Cash Equivalents, End of
Period $ 73,395 $ 156,926
Supplemental Disclosure of
Cash Flow Information Cash paid during the period for interest
expense $ 61,932 $ 42,886 Cash paid during the period for income
taxes 266 190
Supplemental Disclosure of Non-Cash
Investing and Financing Activities Issuance of common stock $
139 $ - Option exercise - 62 Other liabilities assumed with
acquisitions - 651
Reconciliation of NOI to Net
Loss (dollars in thousands) For the Quarter Ended
September 30, 2016 Total revenues $ 118,457 Property
operating expense (61,354)
NOI 57,103
Depreciation and amortization (45,510) Interest expense (23,065)
Acquisition, transaction and integration expense (364) Management
fees and incentive compensation to affiliate (3,839) General and
administrative expense (3,676) Other expense (108) Income tax
expense (782)
Net Loss $ (20,241)
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
September 30, 2016 Net loss $ (20,241)
Adjustments: Depreciation and amortization
45,510
FFO $ 25,269 FFO per
diluted share $ 0.31 Acquisition,
transaction and integration expense 364 Other
expense 108
Normalized FFO
$ 25,741 Normalized FFO per diluted
share $ 0.31 Straight-line rent
(5,379) Amortization of deferred financing
costs 2,375 Amortization of deferred community
fees and other(1) 115
AFFO
$ 22,852 AFFO per diluted share
$ 0.28 Routine capital expenditures
(1,725)
Normalized FAD $
21,127 Normalized FAD per diluted share
$ 0.26 Weighted average basic shares
outstanding 82,126 Weighted average diluted shares outstanding(2)
82,761
(1) Includes amortization of above / below
market lease intangibles, amortization ofpremium on mortgage notes
payable and amortization of deferred community feesand other, which
includes the net change in deferred community fees and other
rentdiscounts or incentives.
(2) Includes dilutive effect of options.
Reconciliation of Year-over-Year Same Store NOI (unaudited)
(dollars in thousands)
3Q 2015 3Q 2016
NNN Properties
Same Store Managed
Properties
Non-Same Store
Managed Properties
Total
NNN Properties
Same Store Managed
Properties
Non-Same Store
Managed Properties
Total
NOI $28,259 $19,307
$5,659 $53,225 $28,240
$18,691 $10,172 $57,103
Depreciation and amortization (40,812) (45,510) Interest expense
(20,051) (23,065) Acquisition, transaction and integration expense
(2,373) (364) Management fees and incentive compensation to
affiliate (4,085) (3,839) General and administrative expense
(3,152) (3,676) Other expense (1,089) (108) Income tax benefit
(expense) 378 (782)
Net Loss ($17,959)
($20,241) Reconciliation of
Quarter-over-Quarter Same Store NOI (unaudited) (dollars in
thousands)
2Q 2016
3Q 2016
NNN Properties
Same Store Managed
Properties
Non-Same Store
Managed Properties
Total
NNN Properties
Same Store Managed
Properties
Non-Same Store
Managed Properties
Total
NOI $28,244 $29,242
$449
$57,935 $28,240 $28,507
$356
$57,103 Depreciation and amortization (53,866)
(45,510) Interest expense (22,805) (23,065) Acquisition,
transaction and integration expense (652) (364) Management fees and
incentive compensation to affiliate (4,430) (3,839) General and
administrative expense (3,554) (3,676) Other expense (511) (108)
Income tax benefit (expense) 525 (782)
Net Loss
($27,358) ($20,241)
Reconciliation of Year-over-Year Cash NOI (unaudited)
(dollars in thousands) 3Q 2015
3Q 2016
Same Store
NNN Properties
Non-Same
Store NNN Properties
Same Store
Managed Properties
Non-Same
Store Managed
Properties
Total
Same
StoreNNN
Properties
Non-Same
Store NNN Properties
Same Store
Managed Properties
Non-Same Store
Managed Properties
Total
Cash NOI $21,953 - $19,672 $5,999 $47,624 $22,808 - $18,729 $10,457
$51,994 Straight-line rent 6,346 - - - 6,346 5,379 - - - 5,379
Amortization of deferred community fees and other(1) (40) - (365)
(340) (745) 53 - (38) (285) (270)
Segment / Total
NOI $28,259 - $19,307 $5,659
$53,225
$28,240 - $18,691 $10,172
$57,103 Depreciation and amortization (40,812)
(45,510) Interest expense (20,051) (23,065) Acquisition,
transaction & integration expense (2,373) (364) Management fees
and incentive compensation to affiliate (4,085) (3,839) General and
administrative expense (3,152) (3,676) Other expense (1,089) (108)
Income tax benefit (expense) 378 (782)
Net
loss ($17,959) ($20,241) (1) Includes
amortization of above / below market lease intangibles and
amortization of deferred community fees and other, which includes
the net change in deferred community fees and other rent discounts
or incentives.
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 and Cash 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. Cash receipts may differ due to
straight-line recognition of certain rental income and the
application of other GAAP policies. The Company defines cash NOI as
NOI excluding the effects of straight-line rent, amortization of
above / below market lease intangibles and amortization of deferred
community fees and other, which includes the net change in deferred
community fees and other rent discounts or incentives. Management
believes that NOI and cash NOI serve as useful supplemental
measures to net income because they allow 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 and same store cash NOI include
only properties owned for the entirety of comparable periods and
exclude assets classified as held for sale.
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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version on businesswire.com: http://www.businesswire.com/news/home/20161102005738/en/
New Senior Investment Group Inc.David Smith, 212-479-3140
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