New Senior Investment Group Inc. (“New Senior”, the “Company” or
“we”) (NYSE:SNR) announced today its results for the quarter ended
June 30, 2017.
SECOND QUARTER 2017 FINANCIAL
HIGHLIGHTS
- Declared cash dividend of $0.26 per
common share
- Net income of $3.1 million, or $0.04
per diluted share
- Total net operating income (“NOI”) of
$55.6 million
- Normalized Funds from Operations
(“Normalized FFO”) of $24.4 million, or $0.29 per diluted
share
- AFFO of $22.2 million, or $0.27 per
diluted share
- Normalized Funds Available for
Distribution (“Normalized FAD”) of $20.3 million, or $0.25 per
diluted share
SECOND QUARTER 2017 BUSINESS
HIGHLIGHTS
- Total same store cash NOI decreased
1.7% vs. 2Q’16
- Managed same store cash NOI decreased
6.5% vs. 2Q’16
- Triple net same store cash NOI
increased 4.3% vs. 2Q’16
- Transitioned 4 underperforming
properties to 2 operators
- Sold 2 properties for $33.0 million,
realizing a gain on sale of $18.3 million
SECOND QUARTER 2017
RESULTS
Dollars in thousands, except per share data
For the Quarter Ended
June 30, 2017
For the Quarter Ended
June 30, 2016
Amount
Per BasicShare
Per DilutedShare
Amount
Per BasicShare
Per DilutedShare
GAAP
Net Income (Loss) $3,121 $0.04 $0.04 $(27,358) $(0.33) $(0.33)
Non-GAAP(A)
NOI $55,618 N/A N/A $57,935 N/A N/A FFO 20,717 $0.25 $0.25 26,508
$0.32 $0.32 Normalized FFO 24,416 $0.30 $0.29 27,671 $0.34 $0.33
AFFO 22,190 $0.27 $0.27 25,186 $0.31 $0.30 Normalized FAD(B) 20,286
$0.25 $0.25 23,099 $0.28 $0.28 (A) See end of press release
for reconciliation of non-GAAP measures to net income (loss). (B)
Normalized FAD, which does not reflect debt principal payments and
certain other expenses, does not represent cash available for
distribution to shareholders.
SECOND QUARTER 2017 GAAP
RESULTS
New Senior recorded GAAP net income of $3.1 million, or $0.04
per diluted share, for the second quarter of 2017, compared to a
GAAP net loss of $27.4 million, or $(0.33) per diluted share, for
the second quarter of 2016. The year-over-year increase in the
second quarter net income was primarily driven by a gain on sale of
real estate of $18.3 million and a decrease in expenses of $16.4
million.
SECOND QUARTER 2017 PORTFOLIO
PERFORMANCE
Total NOI decreased 4.0% to $55.6 million compared to $57.9
million for 2Q 2016. Total same store cash NOI decreased 1.7% to
$50.0 million compared to $50.9 million for 2Q 2016.
For the managed portfolio, same store average occupancy
decreased 270 basis points to 86.2% compared to 88.9% for 2Q 2016,
and same store RevPOR increased 2.1% to $3,009 compared to $2,946
for 2Q 2016. Same store cash NOI decreased 6.5% to $26.3 million
compared to $28.1 million for 2Q 2016.
For the triple net portfolio, same store cash NOI increased 4.3%
to $23.7 million compared to $22.8 million for 2Q 2016. Same store
triple net average occupancy decreased 180 basis points to 87.0%
compared to 88.8% for 2Q 2016. EBITDARM coverage as of June 30,
2017 was 1.17x, down from 1.24x as of June 30, 2016. Triple net
average occupancy and EBITDARM coverage are presented one quarter
in arrears on a trailing twelve month basis.
OPERATOR TRANSITIONS
During the second quarter, the Company transitioned the
operators of four underperforming properties (three AL/MC and one
IL) to two operators. Three of the properties were transitioned to
Grace Management, a new operator relationship for the Company, and
the remaining property was transitioned to Watermark, an existing
operator relationship.
ASSET SALES
In June, the Company completed the sale of two properties for
$33.0 million, realizing a gain on sale of $18.3 million. In
connection with the sale, the Company repaid $13.2 million of
debt.
SECOND QUARTER DIVIDEND
On August 1, 2017, the Company’s Board of Directors declared a
cash dividend of $0.26 per share for the quarter ended June 30,
2017. The dividend is payable on September 22, 2017 to shareholders
of record on September 8, 2017.
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 3, 2017 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 2017 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 completion of the
call through 11:59 P.M. Eastern Time on September 6, 2017 by
dialing (855) 859-2056 (from within the U.S.) or (404) 537-3406
(from outside the U.S.); please reference access code
“37039008.”
ABOUT NEW SENIOR
New Senior is a real estate investment trust with a portfolio of
148 senior housing properties located across 37 states as of June
30, 2017. The Company is the only pure play senior housing REIT and
is one of the largest owners of senior housing properties. 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. 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, 2017 Assets (Unaudited) December
31, 2016 Real estate investments: Land $ 218,356 $ 220,317
Buildings, improvements and other 2,550,053 2,552,862 Accumulated
depreciation (263,756 ) (218,968 ) Net real estate
property 2,504,653 2,554,211 Acquired
lease and other intangible assets 317,773 319,929 Accumulated
amortization (280,234 ) (255,452 ) Net real estate
intangibles 37,539 64,477 Net real
estate investments 2,542,192 2,618,688 Cash and cash
equivalents 60,497 58,048 Straight-line rent receivables 82,891
73,758 Receivables and other assets, net 58,194
71,234
Total Assets $ 2,743,774
$ 2,821,728 Liabilities and
Equity Liabilities Mortgage notes payable, net $
2,095,601 $ 2,130,387 Due to affiliates 12,137 11,623 Accrued
expenses and other liabilities 106,415 100,823
Total Liabilities $ 2,214,153
$ 2,242,833 Commitments and
contingencies
Equity
Preferred stock $0.01 par value,
100,000,000 sharesauthorized and none issued or outstanding as of
both June30, 2017 and December 31, 2016
$ - $ -
Common stock $0.01 par value,
2,000,000,000 sharesauthorized, 82,148,869 and 82,127,247 shares
issued andoutstanding as of June 30, 2017 and December 31,
2016,respectively
821 821 Additional paid-in capital 898,132 897,918 Accumulated
deficit (369,332 ) (319,844 )
Total Equity
$ 529,621 $ 578,895
Total Liabilities and
Equity $ 2,743,774 $
2,821,728
Consolidated Statements of
Operations (unaudited) (dollars in thousands, except share
data) Three Months Ended June 30, Six
Months Ended June 30, 2017 2016 2017
2016 Revenues Resident fees and services $ 86,039 $
90,297 $ 172,765 $ 180,003 Rental revenue 28,247
28,244 56,494 56,483 Total
revenues 114,286 118,541 229,259
236,486
Expenses Property operating
expense 58,668 60,606 118,252 121,231 Depreciation and amortization
35,943 53,866 73,461 101,233 Interest expense 23,505 22,805 46,571
45,593 Acquisition, transaction and integration expense 446 652 794
1,406 Management fees and incentive compensation to affiliate 6,754
4,430 10,578 8,358 General and administrative expense 3,726 3,554
7,737 7,924 Loss on extinguishment of debt 297 - 672 - Other
expense 26 511 161 698
Total expenses $ 129,365 $ 146,424 $ 258,226 $ 286,443 Gain
on sale of real estate 18,347 - 22,546
-
Income (loss) before income
taxes 3,268 (27,883 ) (6,421 ) (49,957 ) Income tax expense
(benefit) 147 (525 ) 353 (751 )
Net income (loss) $ 3,121 $ (27,358 ) $ (6,774 ) $ (49,206 )
Net income (loss) per share of common stock
(A) Basic $ 0.04 $ (0.33 ) $ (0.08 ) $ (0.60 ) Diluted $
0.04 $ (0.33 ) $ (0.08 ) $ (0.60 )
Weighted average
number of shares of common stock outstanding Basic 82,142,562
82,114,218 82,141,661 82,590,408 Diluted (B) 82,778,761
82,114,218 82,141,661 82,590,408
Dividends declared per share of common stock $
0.26 $ 0.26 $ 0.52 $ 0.52 (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) For the reporting periods with a net
loss, 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, 2017 2016 Cash
Flows From Operating Activities Net loss $ (6,774 ) $ (49,206 )
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation of tangible assets and amortization of
intangible assets 73,535 101,304 Amortization of deferred financing
costs 4,774 4,841 Amortization of deferred community fees (597 )
(936 ) Amortization of premium on mortgage notes payable (296 )
(292 ) Non-cash straight line rent (9,133 ) (11,084 ) Gain on sale
of real estate (22,546 ) - Loss on extinguishment of debt 672 -
Equity-based compensation 75 5 Provision for uncollectible
receivables 1,242 1,058 Other non-cash expense 131 557 Changes in:
Receivables and other assets, net (3,287 ) (5,924 ) Due to
affiliates 514 2,160 Accrued expenses and other liabilities
6,175 16,910
Net cash provided by operating
activities $ 44,485 $ 59,393
Cash Flows From Investing Activities Proceeds
from the sale of real estate $ 47,354 $ - Capital expenditures, net
of insurance proceeds (10,309 ) (9,563 ) Reimbursements (escrows)
for capital expenditures, net 3,569 (2,221 ) Deposits refunded for
real estate investments - 584
Net
cash provided by (used in) investing activities $
40,614 $ (11,200 )
Cash Flows From Financing Activities Principal payments of
mortgage notes payable $ (11,657 ) $ (7,854 ) Repayments of
mortgage notes payable (27,968 ) - Payment of exit fee on
extinguishment of debt (311 ) - Payment of common stock dividend
(42,714 ) (42,706 ) Repurchase of common stock -
(30,884 )
Net cash used in financing activities
$ (82,650 ) $ (81,444 )
Net increase (decrease) in cash and cash equivalents 2,449 (33,251
) Cash and cash equivalents, beginning of period 58,048
116,881
Cash and cash equivalents, end of
period $ 60,497 $ 83,630
Supplemental Disclosure of Cash Flow
Information Cash paid during the period for interest expense $
42,134 $ 41,122 Cash paid during the period for income taxes 271
262
Supplemental Disclosure of Non-Cash Investing and
Financing Activities Issuance of common stock 214 -
Reconciliation of NOI to Net Income
(dollars in thousands) For the Quarter Ended June
30, 2017 Total revenues $ 114,286 Property operating expense
(58,668 )
NOI 55,618 Depreciation and
amortization (35,943 ) Interest expense (23,505 ) Acquisition,
transaction and integration expense (446 ) Management fees and
incentive compensation to affiliate (6,754 ) General and
administrative expense (3,726 ) Loss on extinguishment of debt (297
) Other expense (26 ) Gain on sale of real estate 18,347 Income tax
expense (147 )
Net Income $ 3,121
Reconciliation of Net Income
to FFO, Normalized FFO, AFFO and Normalized FAD (dollars and
shares in thousands, except per share data) For the
Quarter Ended June 30, 2017 Net Income $
3,121 Adjustments: Gain on sale of real estate (18,347)
Depreciation and amortization 35,943
FFO $ 20,717 FFO per diluted share
$ 0.25 Acquisition, transaction
and integration expense 446 Loss on extinguishment of debt 297
Incentive compensation on sale of real estate(1) 2,930 Other
expense(2) 26
Normalized FFO
$ 24,416 Normalized FFO per diluted share
$ 0.29 Straight-line rent
(4,552) Amortization of deferred financing costs 2,309 Amortization
of deferred community fees and other(3)
17
AFFO $ 22,190 AFFO per diluted share
$ 0.27 Routine capital
expenditures (1,904)
Normalized
FAD $ 20,286 Normalized FAD per diluted
share $ 0.25 Weighted
average diluted shares outstanding 82,779 (1) Represents
incentive compensation directly related to the gain on sale of real
estate, which may represent a portion of total incentive
compensation earned by the manager in a given quarter, as reported
in “Management fees and incentive compensation to affiliate” in the
Consolidated Statements of Operations. The calculation of gain on
sale for purposes of the incentive compensation calculation differs
significantly from gain on sale calculated in accordance with GAAP.
(2) Primarily includes changes in the fair value of financial
instruments. (3) 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.
Reconciliation of Year-over-Year Cash NOI (unaudited)
(dollars in thousands) 2Q 2016 2Q 2017
Same Store NNN
Properties
Non-Same Store
NNN Properties
Same Store
Managed Properties
Non-Same Store
Managed Properties
Total
Same Store NNN
Properties
Non-Same Store
NNN Properties
Same Store
Managed Properties
Non-Same Store
Managed Properties
Total Cash NOI $22,753 - $28,136 $2,294
$53,183 $23,736 - $26,302 $1,198 $51,236 Straight-line rent 5,531 -
- - 5,531 4,552 - - - 4,552 Amortization of deferred community fees
and other(1) (40) - (693)
(46) (779) (41) - (251)
122 (170)
Segment / Total NOI
$28,244 - $27,443
$2,248 $57,935 $28,247
- $26,051
$1,320 $55,618 Depreciation and amortization
(53,866) (35,943) Interest expense (22,805) (23,505)
Acquisition, transaction & integration
expense
(652) (446)
Management fees and incentive
compensationto affiliate
(4,430) (6,754) General and administrative expense (3,554) (3,726)
Loss on extinguishment of debt — (297) Other expense (511) (26)
Gain on sale of real estate — 18,347 Income tax benefit (expense)
525 (147)
Net income (loss) $(27,358) $3,121
(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 income (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, the capital structure of such companies or
other factors.
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 and travel cost reimbursements. The sum of
the NOI for each segment is total NOI, which the Company uses to
evaluate the aggregate performance of its segments. 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. We believe 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 our 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. Properties acquired,
sold, transitioned to other operators or classified as held for
sale during the comparable periods are excluded from the same store
amounts.
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. FFO does not account for debt principal payments and is
not intended as a measure of a REIT’s ability to satisfy such
payments or any other cash requirements.
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. Normalized FAD, which does not reflect debt
principal payments and certain other expenses, does not represent
cash available for distribution to shareholders.
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New Senior Investment Group Inc.David Smith, 212-515-7783
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