New Senior Investment Group Inc. (“New Senior”, the “Company” or
“we”) (NYSE: SNR) announced today its results for the quarter ended
September 30, 2017.
THIRD QUARTER 2017 FINANCIAL
HIGHLIGHTS
- Declared cash dividend of $0.26 per
common share
- Net loss of $14.5 million, or $(0.18)
per diluted share
- Total net operating income (“NOI”) of
$54.3 million
- Normalized Funds from Operations
(“Normalized FFO”) of $22.7 million, or $0.27 per diluted
share
- AFFO of $20.6 million, or $0.25 per
diluted share
- Normalized Funds Available for
Distribution (“Normalized FAD”) of $18.8 million, or $0.23 per
diluted share
THIRD QUARTER 2017 BUSINESS
HIGHLIGHTS
- Total same store cash NOI decreased
1.9% vs. 3Q’16
- Managed same store cash NOI decreased
6.6% vs. 3Q’16
- Triple net same store cash NOI
increased 4.5% vs. 3Q’16
ASSET SALE HIGHLIGHTS
- $296 million of asset sales under
contract announced in October, including:
- $109.5 million sale of nine managed
AL/MC properties, which closed on November 1, 2017, and
- $186.0 million sale of six triple net
leased properties, which is expected to close in the fourth quarter
of 2017
- Excluding the managed properties sold
from 3Q’17 results (for illustrative purposes), occupancy would
improve 70 basis points to 86.2%, RevPOR would improve 2.4% to
$3,093 and NOI margin would improve 140 basis points to 32.2%
- Sale of leased properties will
eliminate lowest covering triple net lease portfolio, and excluding
these properties improves 3Q’17 EBITDARM coverage 0.02x to
1.18x
THIRD QUARTER 2017
RESULTS
Dollars in thousands, except per share data
For the Quarter Ended For the Quarter
Ended September 30, 2017 September 30, 2016
Amount
Per BasicShare
Per DilutedShare
Amount
Per BasicShare
Per DilutedShare
GAAP
Net Loss $ (14,539 ) $ (0.18 ) $ (0.18 ) $ (20,241 ) $ (0.25 ) $
(0.25 )
Non-GAAP(A)
NOI $ 54,346 N/A N/A $ 57,103 N/A N/A FFO 20,587 $ 0.25 $ 0.25
25,269 $ 0.31 $ 0.31 Normalized FFO 22,746 $ 0.28 $ 0.27 25,741 $
0.31 $ 0.31 AFFO 20,561 $ 0.25 $ 0.25 22,852 $ 0.28 $ 0.28
Normalized FAD(B) 18,796 $ 0.23 $ 0.23 21,127 $ 0.26 $ 0.26
(A) See end of press release for
reconciliation of non-GAAP measures to net loss. During the third
quarter of 2017, the Company recognized $1.5 million for damage
remediation and other incremental costs associated with Hurricane
Irma, which are included in “Other expense” in the Consolidated
Statements of Operations. These items are included in FFO but
excluded from NOI, Normalized FFO, AFFO and Normalized FAD.
(B) Normalized FAD, which does not reflect
debt principal payments and certain other expenses, does not
represent cash available for distribution to shareholders.
THIRD QUARTER 2017 GAAP
RESULTS
New Senior recorded a GAAP net loss of $14.5 million, or $(0.18)
per diluted share, for the third quarter of 2017, compared to a
GAAP net loss of $20.2 million, or $(0.25) per diluted share, for
the third quarter of 2016. The year-over-year decrease in the third
quarter net loss was primarily driven by a decrease in expenses of
$11.2 million.
THIRD QUARTER 2017 PORTFOLIO
PERFORMANCE
Total NOI decreased 4.8% to $54.3 million compared to $57.1
million for 3Q 2016. Total same store cash NOI decreased 1.9% to
$44.1 million compared to $44.9 million for 3Q 2016.
For the managed portfolio, same store average occupancy
decreased 170 basis points to 87.3% compared to 89.0% for 3Q 2016,
and same store RevPOR increased 2.0% to $3,092 compared to $3,031
for 3Q 2016. Same store cash NOI decreased 6.6% to $24.2 million
compared to $25.9 million for 3Q 2016.
For the triple net portfolio, same store cash NOI increased 4.5%
to $19.9 million compared to $19.1 million for 3Q 2016. Same store
triple net average occupancy decreased 220 basis points to 88.3%
compared to 90.5% for 3Q 2016. Same store EBITDARM coverage as of
September 30, 2017 was 1.18x, down from 1.23x as of September 30,
2016. Triple net average occupancy and EBITDARM coverage are
presented one quarter in arrears on a trailing twelve month
basis.
ASSET SALE UPDATE
In October, announced $296 million of asset sales comprised of
the following:
- $109.5 million sale of nine managed
AL/MC properties, which closed on November 1, 2017 (the “Managed
Portfolio Sale”). In connection with the sale, the Company repaid
approximately $79 million of debt. The Company expects to realize a
gain on sale of approximately $7 million.
- $186.0 million sale of six triple net
leased properties, comprised of four continuing care retirement
communities, one independent living property and one AL/MC
property, as well as termination of the related lease with LCS (the
“Leased Portfolio Sale”). In connection with the sale, which is
expected to close in the fourth quarter of 2017, the Company
expects to repay approximately $98 million of debt.
- The Asset Sales are expected to
generate approximately $110 million of net proceeds to the Company.
The Company intends to use the net proceeds for general corporate
purposes, which may include new investments, debt prepayment and/or
repurchases of common stock, depending on market conditions.
The Asset Sales are expected to provide the following strategic
benefits:
- Improved Triple Net Lease Portfolio
Coverage: The Leased Portfolio Sale will eliminate the
Company’s lowest covering triple net lease portfolio. For
illustrative purposes, excluding these properties would improve
EBITDARM coverage from 1.16x to 1.18x for the third quarter of
2017. EBITDARM coverage is presented one quarter in arrears on a
trailing twelve month basis.
- Improved Managed Portfolio
Quality: Excluding the Managed Portfolio Sale properties from
third quarter 2017 results (for illustrative purposes), occupancy
would increase 70 basis points to 86.2%, RevPOR would increase 2.4%
to $3,093, and NOI margin would increase 140 basis points to
32.2%.
- Increased Independent Living
Exposure: Excluding all sale properties from third quarter 2017
results (for illustrative purposes), the Company’s exposure to IL
assets as a percentage of NOI would improve from 73% to 81%.
- Improved Geographic
Concentration: All of the sale properties are located in
Florida and Texas, which are the states that currently account for
the greatest concentration of the Company’s NOI, followed by
California. Excluding these properties from third quarter results
(for illustrative purposes), NOI concentration from these three
states would decline from 39% to 32%.
THIRD QUARTER DIVIDEND
On November 2, 2017, the Company’s board of directors declared a
cash dividend of $0.26 per share for the quarter ended September
30, 2017. The dividend is payable on December 22, 2017 to
shareholders of record on December 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 November 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 Third 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 December 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 “96816759.”
ABOUT NEW SENIOR
New Senior Investment Group (NYSE: SNR) is a publicly-traded
real estate investment trust with a diversified portfolio of senior
housing properties located across the United States. As of
September 30, 2017, New Senior is one of the largest owners of
senior housing properties, with 148 properties 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, including without
limitation statements regarding the anticipated timing and benefits
of asset sales and the use of proceeds therefrom. 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) September 30, 2017
Assets (Unaudited) December 31, 2016 Real
estate investments: Land $ 182,238 $ 220,317 Buildings,
improvements and other 2,324,798 2,552,862 Accumulated depreciation
(254,523 ) (218,968 ) Net real estate property
2,252,513 2,554,211 Acquired lease and other
intangible assets 264,438 319,929 Accumulated amortization
(239,090 ) (255,452 ) Net real estate intangibles
25,348 64,477 Net real estate investments
2,277,861 2,618,688 Cash and cash equivalents 48,379 58,048
Straight-line rent receivables 87,285 73,758 Assets held for sale
232,489 10,824 Receivables and other assets, net 61,003
60,410
Total Assets $
2,707,017 $ 2,821,728
Liabilities and Equity Liabilities Mortgage notes
payable, net $ 2,089,438 $ 2,130,387 Due to affiliates 15,568
11,623 Accrued expenses and other liabilities 108,288
100,823
Total Liabilities $
2,213,294 $ 2,242,833
Commitments and contingencies
Equity
Preferred stock $0.01 par value,
100,000,000 shares authorized and none issued or outstanding as of
both September 30, 2017 and December 31, 2016
$ - $ - Common stock $0.01 par value, 2,000,000,000 shares
authorized, 82,148,869 and 82,127,247 shares issued and outstanding
as of September 30, 2017 and December 31, 2016, respectively 821
821 Additional paid-in capital 898,132 897,918 Accumulated deficit
(405,230 ) (319,844 )
Total Equity $
493,723 $ 578,895
Total Liabilities and Equity $ 2,707,017
$ 2,821,728
Consolidated Statements of Operations (unaudited)
(dollars in thousands, except share data)
Three Months Ended September 30, Nine Months Ended
September 30, 2017 2016 2017 2016
Revenues Resident fees and services $ 84,708 $ 90,217 $
257,473 $ 270,220 Rental revenue 28,247 28,240
84,741 84,723 Total revenues
112,955 118,457 342,214
354,943
Expenses Property operating
expense 58,609 61,354 176,861 182,585 Depreciation and amortization
35,126 45,510 108,587 146,743 Interest expense 23,898 23,065 70,469
68,658 Acquisition, transaction and integration expense 675 364
1,469 1,770 Management fees and incentive compensation to affiliate
3,824 3,839 14,402 12,197 General and administrative expense 3,958
3,676 11,695 11,600 Loss on extinguishment of debt - - 672 - Other
expense 1,484 108 1,645
806 Total expenses $ 127,574 $ 137,916 $ 385,800 $
424,359 Gain on sale of real estate - -
22,546 -
Loss before income
taxes (14,619 ) (19,459 ) (21,040 ) (69,416 ) Income tax
(benefit) expense (80 ) 782 273
31
Net loss
$
(14,539 ) $ (20,241 ) $ (21,313 ) $ (69,447 )
Net loss
per share of common stock Basic and diluted (A)
$
(0.18 )
$
(0.25 )
$
(0.26 )
$
(0.84 )
Weighted average number of shares of common stock
outstanding Basic and diluted (B) 82,148,869
82,126,397 82,144,090 82,434,609
Dividends declared per share of common stock
$
0.26
$
0.26
$
0.78
$
0.78 (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, 2017 2016 Cash Flows From Operating
Activities Net loss $ (21,313 ) $ (69,447 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation of tangible assets and amortization of intangible
assets 108,698 146,852 Amortization of deferred financing costs
6,997 7,216 Amortization of deferred revenue, net 219 1,995
Amortization of premium on mortgage notes payable (456 ) (447 )
Non-cash straight line rent (13,527 ) (16,463 ) Gain on sale of
real estate (22,546 ) - Loss on extinguishment of debt 672 -
Equity-based compensation 75 144 Provision for uncollectible
receivables 1,719 1,552 Other non-cash expense 1,221 665 Changes
in: Receivables and other assets, net (7,916 ) (8,647 ) Due to
affiliates 3,945 1,142 Accrued expenses and other liabilities
7,304 15,124
Net cash provided by
operating activities $ 65,092 $
79,686 Cash Flows From Investing
Activities Proceeds from the sale of real estate $ 47,354 $ -
Capital expenditures, net of insurance proceeds (14,476 ) (15,753 )
Reimbursements (escrows) for capital expenditures, net 4,596 (1,266
) Deposits refunded for real estate investments -
584
Net cash provided by (used in) investing
activities $ 37,474 $
(16,435 ) Cash Flows From Financing
Activities Principal payments of mortgage notes payable $
(19,304 ) $ (11,794 ) Repayments of mortgage notes payable (27,968
) - Payment of exit fee on extinguishment of debt (311 ) - Payment
of deferred financing costs (579 ) - Payment of common stock
dividend (64,073 ) (64,059 ) Repurchase of common stock -
(30,884 )
Net cash used in financing
activities $ (112,235 ) $
(106,737 ) Net increase (decrease) in cash and cash
equivalents (9,669 ) (43,486 ) Cash and cash equivalents, beginning
of period 58,048 116,881
Cash and
cash equivalents, end of period $ 48,379
$ 73,395 Supplemental Disclosure of
Cash Flow Information Cash paid during the period for interest
expense $ 63,860 $ 61,932 Cash paid during the period of income
taxes 274 266
Supplemental Disclosure of Non-Cash
Investing and Financing Activities Issuance of common stock $
214 $ 139
Reconciliation of NOI to Net Income
(dollars in thousands) For the Quarter Ended
September 30, 2017 Total revenues $ 112,955 Property
operating expense (58,609 )
NOI 54,346
Depreciation and amortization (35,126 ) Interest expense (23,898 )
Acquisition, transaction and integration expense (675 ) Management
fees and incentive compensation to affiliate (3,824 ) General and
administrative expense (3,958 ) Other expense (1,484 ) Income tax
benefit 80
Net Loss $ (14,539
) 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 September 30, 2017 Net Loss $
(14,539 ) Adjustments: Depreciation and amortization
35,126
FFO $ 20,587
FFO per diluted share $ 0.25
Acquisition, transaction and integration expense 675 Other
expense(1) 1,484
Normalized FFO
$ 22,746 Normalized FFO per diluted share
$ 0.27 Straight-line rent (4,394 )
Amortization of deferred financing costs 2,223 Amortization of
deferred community fees and other(2) (14 )
AFFO $ 20,561 AFFO per diluted share
$ 0.25 Routine capital expenditures
(1,765 )
Normalized FAD $ 18,796
Normalized FAD per diluted share $ 0.23
Weighted average diluted shares outstanding 82,751
(1) Primarily includes damage remediation costs due to
Hurricane Irma and casualty related charges. (2) 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)
3Q 2016 3Q 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 $ 19,071
$
3,737 $ 25,878 $ 3,308 $ 51,994 $ 19,925
$
3,969 $ 24,171 $ 2,033 $ 50,098 Straight-line rent 4,816 563 - -
5,379 3,975 419 - - 4,394 Amortization of deferred community fees
and other(1) (17 ) 70 (356 ) 33
(270 ) (25 ) (16 ) (128 ) 23
(146 )
Segment / Total NOI $ 23,870
$ 4,370 $ 25,522 $
3,341 $ 57,103 $ 23,875
$ 4,372 $ 24,043 $
2,056 $ 54,346 Depreciation and
amortization (45,510 ) (35,126 ) Interest expense (23,065 ) (23,898
) Acquisition, transaction & integration expense (364 ) (675 )
Management fees and incentive compensation to affiliate (3,839 )
(3,824 ) General and administrative expense (3,676 ) (3,958 ) Other
expense (108 ) (1,484 ) Income tax benefit (expense) (782 )
80
Net loss $ (20,241 )
$ (14,539 ) (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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171103005208/en/
For New Senior Investment Group Inc.David Smith,
212-515-7783
New Senior Investment (NYSE:SNR)
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