Second Quarter Net Income Attributable to
Common Shareholders of $0.07 Per Share
Second Quarter Normalized FFO of $0.44 Per
Share
Senior Housing Properties Trust (Nasdaq: SNH) today announced
its financial results for the quarter and six months ended
June 30, 2017.
“In the second quarter, we focused on
investing in our existing portfolio and managing our balance
sheet,” said David Hegarty, President and Chief Operating Officer.
“During the quarter ended June 30, 2017, we remained disciplined
with our deployment of capital by investing approximately $25
million in our managed and triple net leased senior living
communities. Since the quarter ended, we closed on the purchase of
one medical office building for approximately $16.4 million and we
entered a contract to purchase another MOB for approximately $16.7
million. During the quarter, we prepaid approximately $300 million
of high interest debt and subsequent to the end of the quarter, we
amended our $1 billion revolving credit facility, which reduced the
interest rate and extended the maturity to 2022 as well as amended
our $200 million unsecured term loan that matures in 2022 to reduce
the interest rate.”
Results for the Quarter Ended June 30, 2017:
Net income attributable to common shareholders was $16.0
million, or $0.07 per diluted share, for the quarter ended
June 30, 2017, compared to $39.2 million, or $0.17 per diluted
share, for the quarter ended June 30, 2016. This decrease in
net income attributable to common shareholders is primarily the
result of an increase in general and administrative expenses as a
result of $10.8 million of estimated business management incentive
fees due to SNH's outperformance of the SNL U.S. REIT Healthcare
index for the applicable measurement period and a loss on early
extinguishment of debt of $7.4 million recognized for the quarter
ended June 30, 2017. Normalized funds from operations, or
Normalized FFO, were $103.6 million and $111.7 million,
respectively, or $0.44 and $0.47 per diluted share, respectively,
for the quarters ended June 30, 2017 and June 30,
2016.
Cash basis net operating income, or Cash Basis NOI, was $157.3
million for the quarter ended June 30, 2017, compared to
$157.6 million for the quarter ended June 30, 2016, which
represents a decrease of 0.2%. This decrease is primarily the
result of increased property operating expenses at SNH's comparable
properties, partially offset by NOI from acquisitions since April
1, 2016.
Reconciliations of net income attributable to common
shareholders 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 June 30, 2017 and
2016 appear later in this press release. Reconciliations of net
income determined in accordance with GAAP to net operating income,
or NOI, and Cash Basis NOI for the quarters ended June 30,
2017 and 2016 also appear later in this press release. In addition,
calculations and reconciliations of NOI, Cash Basis NOI, same
property NOI and same property Cash Basis NOI by SNH’s operating
segments for the quarters ended June 30, 2017 and 2016 appear
later in this press release.
Results for the Six Months Ended June 30, 2017:
Net income attributable to common shareholders was $48.2
million, or $0.20 per diluted share, for the six months ended
June 30, 2017, compared to $70.5 million, or $0.30 per diluted
share, for the six months ended June 30, 2016. This decrease
in net income attributable to common shareholders is primarily the
result of increases in general and administrative expenses and
interest expense and a loss on early extinguishment of debt
recognized for the six months ended June 30, 2017, partially offset
by income from acquisitions since January 1, 2016 and lower asset
impairment charges. Normalized FFO were $212.0 million and $222.0
million, respectively, or $0.89 and $0.94 per diluted share,
respectively, for the six months ended June 30, 2017 and
June 30, 2016.
Cash Basis NOI was $315.8 million for the six months ended
June 30, 2017, compared to $312.0 million for the six months
ended June 30, 2016, which represents an increase of 1.2%.
This increase is primarily the result of NOI from acquisitions
since January 1, 2016.
Reconciliations of net income attributable to common
shareholders determined in accordance with GAAP to FFO and
Normalized FFO for the six months ended June 30, 2017 and 2016
appear later in this press release. Reconciliations of net income
determined in accordance with GAAP to NOI and Cash Basis NOI for
the six months ended June 30, 2017 and 2016 also appear later
in this press release. In addition, calculations and
reconciliations of NOI, Cash Basis NOI, same property NOI and same
property Cash Basis NOI by SNH’s operating segments for the six
months ended June 30, 2017 and 2016 appear later in this press
release.
Portfolio Operating Results:
For the quarter ended June 30, 2017, 41.5% of SNH’s NOI
came from 236 triple net leased senior living communities with
26,220 living units. Occupancy at triple net leased senior living
communities and same property triple net leased senior living
communities decreased to 84.6% for the most recently available 12
month period, compared to 85.4% for the comparable period last
year(1). Same property Cash Basis NOI and same property NOI from
triple net leased senior living communities increased by $1.1
million and $0.7 million, respectively, for the quarter ended
June 30, 2017 compared to the quarter ended June 30,
2016.
For the quarter ended June 30, 2017, 41.4% of SNH’s NOI
came from 120 properties leased to medical providers, medical
related businesses, clinics and biotech laboratory tenants, or
MOBs, with 11.6 million leasable square feet. As of June 30,
2017, 96.5% of SNH’s MOB square feet were leased compared to 95.9%
as of June 30, 2016. Same property occupancy at SNH’s MOBs was
unchanged at 96.3% as of each of June 30, 2017 and
June 30, 2016. SNH's MOB same property Cash Basis NOI and
same property NOI decreased by $0.1 million and $1.2 million,
respectively, for the quarter ended June 30, 2017 compared to
the quarter ended June 30, 2016.
For the quarter ended June 30, 2017, 14.3% of SNH's NOI
came from 68 managed senior living communities with 8,806 living
units. Occupancy at managed senior living communities was 85.7% for
the quarter ended June 30, 2017, compared to 87.1% for the
quarter ended June 30, 2016. Same property occupancy at
managed senior living communities owned and managed by the same
operator continuously since April 1, 2016 was 86.0% for the quarter
ended June 30, 2017, compared to 86.9% for the quarter ended
June 30, 2016. Same property average monthly rates increased
by 1.3% to $4,328 for the quarter ended June 30, 2017 compared
to the quarter ended June 30, 2016. Same property Cash Basis
NOI and same property NOI from managed senior living communities
each decreased by $2.0 million for the quarter ended June 30,
2017 compared to the quarter ended June 30, 2016.
For the quarter ended June 30, 2017, consolidated same
property Cash Basis NOI decreased to $151.7 million compared to
$152.7 million for the quarter ended June 30, 2016, and
consolidated same property NOI decreased to $156.4 million compared
to $158.8 million for the quarter ended June 30, 2016.
Financing Activities:
In August 2017, SNH amended the agreement governing its $1.0
billion revolving credit facility. As a result of the amendment,
the interest rate payable on borrowings under the facility was
reduced from LIBOR plus a premium of 130 basis points per annum (as
of June 30, 2017) to LIBOR plus a premium of 120 basis points per
annum, and the facility fee was reduced from 30 basis points per
annum (as of June 30, 2017) to 25 basis points per annum on the
total amount of lending commitments under the facility. The
interest rate premium and facility fee are each subject to
adjustment based upon changes to SNH’s credit ratings. Also as a
result of the amendment, the stated maturity date of the facility
was extended from January 15, 2018 to January 15, 2022, and subject
to the payment of an extension fee and meeting other conditions,
SNH has the right to extend the maturity date of the facility for
an additional year. The amended facility also includes a feature
pursuant to which, in certain circumstances, maximum borrowings
under the facility may be increased to up to $2.0 billion.
Also in August 2017, SNH amended the agreement governing its
$200.0 million unsecured term loan. As a result of the amendment,
the interest rate payable on borrowings under the term loan was
reduced from LIBOR plus a premium of 180 basis points per annum (as
of June 30, 2017) to LIBOR plus a premium of 135 basis points per
annum.
During the quarter ended June 30, 2017, SNH prepaid
approximately $297.2 million of secured debt encumbering 19
properties with a weighted average annual interest rate of 6.7%,
plus an aggregate premium of approximately $5.4 million and accrued
interest. SNH funded these prepayments with cash on hand and
borrowings under its revolving credit facility.
Investment Activities:
In July 2017, SNH acquired one MOB (one building) located in
Maryland with approximately 59,000 square feet for approximately
$16.4 million, excluding closing costs.
Also in July 2017, SNH entered an agreement to acquire one MOB
(one building) located in Minnesota with approximately 150,000
square feet for approximately $16.7 million, excluding costs. This
acquisition is expected to close later in 2017.
During the quarter ended June 30, 2017, SNH invested
approximately $14.8 million in improvements at its owned senior
living communities that has generated or will generate additional
rent under the terms of its existing senior living communities’
leases. SNH regularly makes additional investments at its owned
MOBs and its owned and managed senior living communities that it
expects may increase its operating revenue from those
properties.
Conference Call:
On Thursday, August 3, 2017, at 10:00 a.m. Eastern
Time, President and Chief Operating Officer, David Hegarty, and
Chief Financial Officer and Treasurer, Richard Siedel, will host a
conference call to discuss SNH's second quarter 2017 financial
results. The conference call telephone number is (877) 329-4297.
Participants calling from outside the United States and Canada
should dial (412) 317-5435. No pass code is necessary to access the
call from either number. Participants should dial in about 15
minutes prior to the scheduled start of the call. A replay of the
conference call will be available through 11:59 p.m. Eastern Time
on Thursday, August 10, 2017. To hear the replay, dial (412)
317-0088. The replay pass code is 10110430.
A live audio webcast of the conference call will also be
available in a listen only mode on the company’s website, which is
located at www.snhreit.com. Participants wanting to access the
webcast should visit the company’s website about five minutes
before the call. The archived webcast will be available for replay
on the company’s website following the call for about one week.
The transcription, recording and retransmission in any way of
SNH’s second quarter conference call are strictly prohibited
without the prior written consent of SNH.
Supplemental Data:
A copy of SNH’s Second Quarter 2017 Supplemental Operating and
Financial Data is available for download at SNH’s website,
www.snhreit.com. SNH’s website is not incorporated as part of this
press release.
SNH is a real estate investment trust, or REIT, which owns
senior living communities, medical office buildings and wellness
centers throughout the United States. SNH is managed by the
operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an
alternative asset management company that is headquartered in
Newton, MA.
Please see the pages attached hereto for a more detailed
statement of SNH’s operating results and financial condition, and
for an explanation of SNH’s calculation of FFO and Normalized FFO,
and NOI and Cash Basis NOI and reconciliations of net income
attributable to common shareholders and net income, respectively,
determined in accordance with GAAP to these amounts.
_________________________________________________________________________________________________________________________________(1) Occupancy
ratios for triple net leased senior living communities are based
upon operating results provided by SNH’s tenants, and this
information is usually provided to SNH three months after the end
of a fiscal quarter. As a result, occupancy ratios presented for
triple net leased senior living communities are for the 12 months
ended March 31, 2017 and 2016. SNH has not independently verified
tenant operating data.
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”, "WILL", “MAY” AND NEGATIVES OR
DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, SNH IS MAKING FORWARD
LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON
SNH’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING
STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN
OR IMPLIED BY SNH’S FORWARD LOOKING STATEMENTS AS A RESULT OF
VARIOUS FACTORS. FOR EXAMPLE:
- THIS PRESS RELEASE DISCUSSES CERTAIN
AMENDMENTS TO SNH’S REVOLVING CREDIT FACILITY AND $200 MILLION TERM
LOAN: CONTINUED AVAILABILITY OF BORROWINGS UNDER SNH’S REVOLVING
CREDIT FACILITY IS SUBJECT TO SNH’S SATISFYING CERTAIN FINANCIAL
COVENANTS AND OTHER CREDIT FACILITY CONDITIONS THAT IT MAY BE
UNABLE TO SATISFY; ACTUAL COSTS UNDER SNH’S REVOLVING CREDIT
FACILITY WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES
AND EXPENSES ASSOCIATED WITH THE FACILITY; INCREASING THE MAXIMUM
BORROWING AVAILABILITY UNDER SNH’S REVOLVING CREDIT FACILITY IS
SUBJECT TO SNH’S OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS,
WHICH MAY NOT OCCUR; SNH’S RIGHT TO EXTEND THE MATURITY DATE
OF ITS REVOLVING CREDIT FACILITY IS SUBJECT TO ITS PAYMENT OF A FEE
AND MEETING OTHER CONDITIONS AND SUCH CONDITIONS MAY NOT BE MET;
AND FUTURE CHANGES IN SNH’S CREDIT RATINGS MAY CAUSE THE INTEREST
AND FEES SNH PAYS ON ITS REVOLVING CREDIT FACILITY AND $200 MILLION
TERM LOAN TO INCREASE.
- THIS PRESS RELEASE INCLUDES A STATEMENT
THAT SNH EXPECTS THE ADDITIONAL INVESTMENTS IT REGULARLY MAKES AT
ITS MOBS AND MANAGED SENIOR LIVING COMMUNITIES MAY INCREASE
OPERATING REVENUE FROM THOSE PROPERTIES. HOWEVER, THERE CAN BE NO
ASSURANCE THAT OPERATING REVENUE FROM THOSE PROPERTIES WILL
INCREASE OR REMAIN AT CURRENT LEVELS OR THAT FUTURE INVESTMENTS IN
SNH’S PROPERTIES WILL INCREASE OPERATING REVENUE FROM THOSE
PROPERTIES. IN FACT, SNH’S REVENUES MAY DECLINE.
- SNH HAS ENTERED AN AGREEMENT TO ACQUIRE
AN MOB FOR APPROXIMATELY $16.7 MILLION, EXCLUDING CLOSING COSTS.
THIS TRANSACTION IS SUBJECT TO CONDITIONS. THESE CONDITIONS MAY NOT
BE MET AND THIS TRANSACTION MAY NOT OCCUR, MAY BE DELAYED OR THE
TERMS MAY CHANGE.
THE INFORMATION CONTAINED IN SNH’S FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK
FACTORS” IN SNH’S PERIODIC REPORTS, OR INCORPORATED
THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE
SNH’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR
IMPLIED BY SNH’S FORWARD LOOKING STATEMENTS. SNH’S FILINGS WITH THE
SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING
STATEMENTS.
EXCEPT AS REQUIRED BY LAW, SNH DOES NOT INTEND TO UPDATE OR
CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(amounts in thousands, except per share
data)
(unaudited)
Three Months Ended Six Months Ended June
30, June 30, 2017
2016 2017 2016 Revenues:
Rental income $ 166,647 $ 163,997 $ 333,090 $ 325,419 Residents
fees and services 98,366 97,370 196,484
194,323 Total revenues 265,013 261,367 529,574 519,742
Expenses: Property operating expenses 102,795 97,474 203,851
195,422 Depreciation and amortization 69,669 71,372 142,844 142,594
General and administrative 22,922 11,965 38,005 22,828 Acquisition
and certain other transaction related costs — 180 292 619
Impairment of assets 5,082 4,961 5,082 12,351
Total expenses 200,468 185,952 390,074
373,814 Operating income 64,545 75,415 139,500
145,928 Dividend income 659 789 1,319 789 Interest and other
income 76 177 195 242 Interest expense (40,800 ) (41,118 ) (84,289
) (80,399 ) Loss on early extinguishment of debt (7,353 ) —
(7,353 ) (6 ) Income from continuing operations before income tax
expense and equity in earnings of an investee 17,127 35,263 49,372
66,554 Income tax expense (99 ) (108 ) (191 ) (202 ) Equity in
earnings of an investee 374 17 502 94
Income before gain on sale of properties 17,402 35,172 49,683
66,446 Gain on sale of properties — 4,061 —
4,061 Net income 17,402 39,233 49,683 70,507 Net income
attributable to noncontrolling interest (1,360 ) — (1,486 )
— Net income attributable to common shareholders $ 16,042
$ 39,233 $ 48,197 $ 70,507
Weighted average common shares outstanding (basic) 237,399 237,325
237,395 237,320 Weighted average common shares outstanding
(diluted) 237,445 237,363 237,433 237,349
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.07 $ 0.17
$ 0.20 $ 0.30
SENIOR HOUSING PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF FFO AND
NORMALIZED FFO
(amounts in thousands, except per share
data)
(unaudited)
Calculation of FFO and Normalized
FFO (1):
Three Months EndedJune 30, Six Months
EndedJune 30, 2017
2016 2017 2016 Net income
attributable to common shareholders $ 16,042 $ 39,233 $ 48,197 $
70,507 Depreciation and amortization expense 69,669 71,372 142,844
142,594 Noncontrolling interest's share of net FFO adjustments
(5,305 ) — (5,761 ) — Gain on sale of properties — (4,061 ) —
(4,061 ) Impairment of assets 5,082 4,961 5,082
12,351 FFO 85,488 111,505 190,362 221,391
Estimated business management incentive fees (2) 10,760 — 14,026 —
Acquisition and certain other transaction related costs — 180 292
619 Loss on early extinguishment of debt 7,353 —
7,353 6 Normalized FFO $ 103,601 $ 111,685
$ 212,033 $ 222,016 Weighted average
common shares outstanding (basic) 237,399 237,325 237,395 237,320
Weighted average common shares outstanding (diluted) 237,445
237,363 237,433 237,349
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.07 $ 0.17
$ 0.20 $ 0.30 FFO $ 0.36 $ 0.47
$ 0.80 $ 0.93 Normalized FFO $ 0.44 $ 0.47
$ 0.89 $ 0.94 Distributions declared $ 0.39
$ 0.39 $ 0.78 $ 0.78
(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
attributable to common shareholders, 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 and the difference between net income attributable to
common shareholders and FFO attributable to noncontrolling
interest, 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 includes business management
incentive fees, if any, only in the fourth quarter versus the
quarter when they are recognized as expense in accordance with GAAP
due to their quarterly volatility not necessarily being indicative
of SNH’s core operating performance and the uncertainty as to
whether any such business management incentive fees will be payable
when all contingencies for determining such fees are known at the
end of the calendar year, and SNH excludes acquisition and certain
other transaction related costs expensed under GAAP such as legal
and professional fees associated with SNH's acquisition and
disposition activities, gains and losses on early extinguishment of
debt, if any, and Normalized FFO from noncontrolling interest, net
of FFO, if any. SNH considers FFO and Normalized FFO to be
appropriate supplemental measures of operating performance for a
REIT, along with net income, net income attributable to common
shareholders and operating income. SNH believes that FFO and
Normalized FFO provide useful information to investors, because by
excluding the effects of certain historical amounts, such as
depreciation and amortization expense, FFO and Normalized FFO may
facilitate a comparison of SNH's 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 its shareholders. Other factors include,
but are not limited to, requirements to maintain SNH’s
qualification for taxation as a REIT, limitations in SNH’s
revolving credit facility and term loan agreements and SNH’s public
debt covenants, the availability to SNH of debt and equity capital,
SNH’s expectation of its future capital requirements and operating
performance and SNH’s expected needs 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, net income
attributable to common shareholders or operating income as an
indicator of SNH’s operating performance or as a measure of SNH’s
liquidity. These measures should be considered in conjunction with
net income, net income attributable to common shareholders and
operating income as presented in SNH’s Condensed Consolidated
Statements of Income. Other REITs and real estate companies may
calculate FFO and Normalized FFO differently than SNH does.
(2) Incentive fees under SNH’s business management agreement are
payable after the end of each calendar year, are calculated based
on common share total return, as defined, and are included in
general and administrative expense in SNH’s Condensed Consolidated
Statements of Income. In calculating net income attributable to
common shareholders in accordance with GAAP, SNH recognizes
estimated business management incentive fee expense, if any, in the
first, second and third quarters. Although SNH recognizes this
expense, if any, in the first, second and third quarters for
purposes of calculating net income attributable to common
shareholders, SNH does not include these amounts in the calculation
of Normalized FFO until the fourth quarter, when the amount of the
business management incentive fee expense for the calendar year, if
any, is determined.
SENIOR HOUSING PROPERTIES TRUST
CALCULATION AND RECONCILIATION OF NET
OPERATING INCOME (NOI) AND CASH BASIS NOI
(amounts in thousands)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2017 2016 2017
2016
Calculation of
NOI and Cash Basis NOI(1):
Revenues: Rental income $ 166,647 $ 163,997 $ 333,090 $ 325,419
Residents fees and services 98,366 97,370 196,484
194,323 Total revenues 265,013 261,367 529,574
519,742 Property operating expenses (102,795 ) (97,474 ) (203,851 )
(195,422 ) Property net operating income (NOI): 162,218 163,893
325,723 324,320 Non-cash straight line rent adjustments (3,435 )
(4,745 ) (6,865 ) (9,306 ) Lease value amortization (1,320 ) (1,303
) (2,610 ) (2,558 ) Lease termination fee amortization — — — (42 )
Non-cash amortization included in property operating expenses(2)
(199 ) (199 ) (399 ) (398 ) Cash Basis NOI $ 157,264 $
157,646 $ 315,849 $ 312,016
Reconciliation of
Net Income to Cash Basis NOI:
Net income $ 17,402 $ 39,233 $ 49,683 $ 70,507 Gain on sale of
properties — (4,061 ) — (4,061 ) Income before gain
on sale of properties 17,402 35,172 49,683 66,446 Equity in
earnings of an investee (374 ) (17 ) (502 ) (94 ) Income tax
expense 99 108 191 202 Loss on early extinguishment of debt 7,353 —
7,353 6 Interest expense 40,800 41,118 84,289 80,399 Interest and
other income (76 ) (177 ) (195 ) (242 ) Dividend income (659 ) (789
) (1,319 ) (789 ) Operating income 64,545 75,415 139,500 145,928
Impairment of assets 5,082 4,961 5,082 12,351 Acquisition
and certain other transaction related costs — 180 292 619 General
and administrative expense 22,922 11,965 38,005 22,828 Depreciation
and amortization expense 69,669 71,372 142,844
142,594 Property NOI 162,218 163,893 325,723 324,320
Non-cash amortization included in property operating expenses(2)
(199 ) (199 ) (399 ) (398 ) Lease termination fee amortization — —
— (42 ) Lease value amortization (1,320 ) (1,303 ) (2,610 ) (2,558
) Non-cash straight line rent adjustments (3,435 ) (4,745 ) (6,865
) (9,306 ) Cash Basis NOI $ 157,264 $ 157,646 $
315,849 $ 312,016
(1) The calculations of NOI and Cash Basis NOI exclude certain
components of net income in order to provide results that are more
closely related to SNH’s property level results of operations. SNH
calculates NOI and Cash Basis NOI as shown above. SNH defines NOI
as income from its real estate less its property operating
expenses. NOI excludes amortization of capitalized tenant
improvement costs and leasing commissions because SNH records those
amounts as depreciation and amortization. SNH defines Cash Basis
NOI as NOI excluding non-cash straight line rent adjustments, lease
value amortization, lease termination fee amortization, if any, and
non-cash amortization included in property operating expenses. SNH
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 SNH’s 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 generated and incurred
at the property level and may facilitate comparisons of its
operating performance between periods and with other REITs. 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, net income attributable to common
shareholders or operating income as an indicator of SNH’s operating
performance or as a measure of SNH’s liquidity. These measures
should be considered in conjunction with net income, net income
attributable to common shareholders and operating income as
presented in SNH’s Condensed Consolidated Statements of Income.
Other REITs and real estate companies may calculate NOI and Cash
Basis NOI differently than SNH does.
(2) SNH recorded a liability for the amount by which the
estimated fair value for accounting purposes exceeded the price SNH
paid for its investment in RMR common stock in June 2015. A
portion of this liability is being amortized on a straight line
basis through December 31, 2035 as a reduction to property
management fees, which are included in property operating
expenses.
SENIOR HOUSING PROPERTIES TRUST
Calculation and Reconciliation of NOI,
Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI
by Segment (1)
(dollars in thousands)
(unaudited)
For the Three Months Ended June 30, 2017 For the
Three Months Ended June 30, 2016 Calculation of NOI and Cash
Basis NOI: Triple Net
Leased Senior
Living
Communities
Managed
Senior Living
Communities
MOBs
Non-Segment (2)
Total Triple Net
Leased Senior
Living
Communities
Managed
Senior Living
Communities
MOBs
Non-Segment (2)
Total Rental income / residents fees
and services $ 67,426 $ 98,366 $ 94,651 $ 4,570 $ 265,013 $ 66,441
$ 97,370 $ 92,978 $ 4,578 $ 261,367 Property operating expenses —
(75,149 ) (27,646 ) — (102,795 ) (423 ) (71,642 )
(25,409 ) — (97,474 ) Property net operating income (NOI) $
67,426 $ 23,217 $ 67,005 $ 4,570 $
162,218 $ 66,018 $ 25,728 $ 67,569 $
4,578 $ 163,893 NOI change 2.1 % (9.8 )% (0.8 )% (0.2
)% (1.0 )% Property NOI $ 67,426 $ 23,217 $ 67,005 $ 4,570 $
162,218 $ 66,018 $ 25,728 $ 67,569 $ 4,578 $ 163,893 Less:
Non-cash straight line rent
adjustments
778 — 2,520 137 3,435 1,148 — 3,460 137 4,745 Lease value
amortization — — 1,265 55 1,320 — — 1,248 55 1,303 Non-cash
amortization included in property operating expenses (3) — —
199 — 199 — — 199
— 199 Cash Basis NOI $ 66,648 $ 23,217
$ 63,021 $ 4,378 $ 157,264 $ 64,870 $
25,728 $ 62,662 $ 4,386 $ 157,646 Cash
Basis NOI change 2.7 % (9.8 )% 0.6 % (0.2 )% (0.2 )%
Reconciliation of NOI to Same Property NOI: Property NOI $
67,426 $ 23,217 $ 67,005 $ 4,570 $ 162,218 $ 66,018 $ 25,728 $
67,569 $ 4,578 $ 163,893 Less: NOI not included in same property
2,456 987 2,419 — 5,862 1,778 1,528 1,827 — 5,133
Same
property NOI (4) $ 64,970 $ 22,230 $ 64,586 $
4,570 $ 156,356 $ 64,240 $ 24,200 $
65,742 $ 4,578 $ 158,760 Same property NOI
change 1.1 % (8.1 )% (1.8 )% (0.2 )% (1.5 )%
Reconciliation of Same Property NOI to Same Property Cash Basis
NOI: Same property NOI (4) $ 64,970 $ 22,230 $ 64,586 $ 4,570 $
156,356 $ 64,240 $ 24,200 $ 65,742 $ 4,578 $ 158,760 Less: Non-cash
straight line rent adjustments 778 — 2,215 137 3,130 1,119 — 3,344
137 4,600 Lease value amortization — — 1,268 55 1,323 — — 1,166 55
1,221 Non-cash amortization included in property operating expenses
(3) — — 199 — 199 — —
197 — 197 Same property cash basis NOI
(4) $ 64,192 $ 22,230 $ 60,904 $ 4,378
$ 151,704 $ 63,121 $ 24,200 $ 61,035 $
4,386 $ 152,742 Same property cash basis NOI change
1.7 % (8.1 )% (0.2 )% (0.2 )% (0.7 )%
(1) See above for the calculation of NOI and a reconciliation of
net income determined in accordance with GAAP to that amount. For a
definition of NOI and Cash Basis NOI, a description of why
management believes they are appropriate supplemental measures and
a description of how management uses these measures, please see
footnote 1 to the table included on page 7.(2) Includes the
operating results of certain properties that offer wellness,
fitness and spa services to members.(3) SNH recorded a liability
for the amount by which the estimated fair value for accounting
purposes exceeded the price SNH paid for its investment in RMR
common stock in June 2015. A portion of this liability is
being amortized on a straight line basis through December 31,
2035 as a reduction to property management fees, which are included
in property operating expenses.(4) Consists of properties owned
continuously and properties owned and managed continuously by the
same operator since April 1, 2016 and includes SNH's MOB (two
buildings) that is subject to a joint venture arrangement and
excludes properties classified as held for sale, if any.
SENIOR HOUSING PROPERTIES TRUST
Calculation and Reconciliation of NOI,
Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI
by Segment (1)
(dollars in thousands)
(unaudited)
For the Six Months Ended June 30, 2017 For the Six
Months Ended June 30, 2016 Calculation of NOI and Cash Basis
NOI: Triple Net
Leased Senior
Living
Communities
Managed
Senior Living
Communities
MOBs
Non-Segment (2)
Total Triple Net
Leased Senior
Living
Communities
Managed
Senior Living
Communities
MOBs
Non-Segment (2)
Total Rental income / residents fees
and services $ 134,678 $ 196,484 $ 189,297 $ 9,115 $ 529,574 $
131,749 $ 194,323 $ 184,559 $ 9,111 $ 519,742 Property operating
expenses — (149,028 ) (54,823 ) — (203,851 ) (786 )
(143,820 ) (50,816 ) — (195,422 ) Property net operating
income (NOI) $ 134,678 $ 47,456 $ 134,474 $
9,115 $ 325,723 $ 130,963 $ 50,503 $
133,743 $ 9,111 $ 324,320 NOI change 2.8 %
(6.0 )% 0.5 % — % 0.4 % Property NOI $ 134,678 $ 47,456 $
134,474 $ 9,115 $ 325,723 $ 130,963 $ 50,503 $ 133,743 $ 9,111 $
324,320 Less: Non-cash straight line rent adjustments 1,554 — 5,035
276 6,865 2,320 — 6,711 275 9,306 Lease value amortization — —
2,500 110 2,610 — — 2,448 110 2,558 Lease termination fee
amortization — — — — — — — 42 — 42 Non-cash amortization included
in property operating expenses (3) — — 399 —
399 — — 398 — 398
Cash Basis NOI $ 133,124 $ 47,456 $ 126,540 $
8,729 $ 315,849 $ 128,643 $ 50,503 $
124,144 $ 8,726 $ 312,016 Cash Basis NOI
change 3.5 % (6.0 )% 1.9 % — % 1.2 %
Reconciliation of
NOI to Same Property NOI: Property NOI $ 134,678 $ 47,456 $
134,474 $ 9,115 $ 325,723 $ 130,963 $ 50,503 $ 133,743 $ 9,111 $
324,320 Less: NOI not included in same property 4,913 2,251 5,884 —
13,048 2,625 2,589 3,633 — 8,847
Same property NOI (4) $ 129,765
$ 45,205 $ 128,590 $ 9,115 $ 312,675
$ 128,338 $ 47,914 $ 130,110 $ 9,111
$ 315,473 Same property NOI change 1.1 % (5.7 )% (1.2
)% — % (0.9 )%
Reconciliation of Same Property NOI to
Same Property Cash Basis NOI: Same property NOI (4) $ 129,765 $
45,205 $ 128,590 $ 9,115 $ 312,675 $ 128,338 $ 47,914 $ 130,110 $
9,111 $ 315,473 Less: Non-cash straight line rent adjustments 1,554
— 4,378 276 6,208 2,224 — 6,602 275 9,101 Lease value amortization
— — 2,428 110 2,538 — — 2,185 110 2,295 Non-cash amortization
included in property operating expenses (3) — — 399
— 399 — — 393 —
393 Same property cash basis NOI (4) $ 128,211 $
45,205 $ 121,385 $ 8,729 $ 303,530 $
126,114 $ 47,914 $ 120,930 $ 8,726 $
303,684 Same property cash basis NOI change 1.7 % (5.7 )%
0.4 % — % (0.1 )%
(1) See above for the calculation of NOI and a reconciliation of
net income determined in accordance with GAAP to that amount. For a
definition of NOI and Cash Basis NOI, a description of why
management believes they are appropriate supplemental measures and
a description of how management uses these measures, please see
footnote 1 to the table included on page 7.(2) Includes the
operating results of certain properties that offer wellness,
fitness and spa services to members.(3) SNH recorded a liability
for the amount by which the estimated fair value for accounting
purposes exceeded the price SNH paid for its investment in RMR
common stock in June 2015. A portion of this liability is
being amortized on a straight line basis through December 31,
2035 as a reduction to property management fees, which are included
in property operating expenses.(4) Consists of properties owned
continuously and properties owned and managed continuously by the
same operator since January 1, 2016 and includes SNH's MOB (two
buildings) that is subject to a joint venture arrangement and
excludes properties classified as held for sale, if any.
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE
SHEETS
(amounts in thousands)
(unaudited)
June 30, 2017
December 31, 2016
ASSETS
Real estate properties $ 7,799,820 $ 7,730,523 Accumulated
depreciation (1,426,382 ) (1,328,011 ) 6,373,438 6,402,512
Cash and cash equivalents 27,160 31,749 Restricted cash 13,776
3,829 Acquired real estate leases and other intangible assets, net
476,494 514,446 Other assets, net 292,752 275,218
Total assets $ 7,183,620 $ 7,227,754
LIABILITIES AND
EQUITY
Unsecured revolving credit facility $ 434,000 $ 327,000 Unsecured
term loans, net 547,434 547,058 Senior unsecured notes, net
1,724,210 1,722,758 Secured debt and capital leases, net 817,083
1,117,649 Accrued interest 17,486 18,471 Assumed real estate lease
obligations, net 101,007 106,038 Other liabilities 201,621
189,375 Total liabilities 3,842,841 4,028,349 Total
equity 3,340,779 3,199,405 Total liabilities and
equity $ 7,183,620 $ 7,227,754
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the Nasdaq.No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170803005371/en/
Senior Housing Properties TrustBrad Shepherd,
617-796-8234Director, Investor Relations
Senior Housing Properties (NASDAQ:SNH)
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