Announces Plan to Internalize Management and
Other Strategic Initiatives
New Senior Investment Group Inc. (“New Senior” or the “Company”)
(NYSE:SNR) announced today its results for the quarter ended June
30, 2018. In addition, the Company announced three strategic
initiatives: (i) a plan to internalize management, (ii) the
expected refinancing of a $720 million loan, and (iii) a change to
the Company’s dividend policy.
SECOND QUARTER 2018 FINANCIAL
HIGHLIGHTS
- Net loss of $39.1 million, or $(0.48)
per basic and diluted share
- Total net operating income (“NOI”) of
$45.3 million
- Total same store cash NOI decreased
3.0% versus the second quarter of 2017
- Normalized Funds from Operations
(“Normalized FFO”) of $12.6 million, or $0.15 per basic and diluted
share
- AFFO of $15.0 million, or $0.18 per
basic and diluted share
- Normalized Funds Available for
Distribution (“Normalized FAD”) of $13.8 million, or $0.17 per
basic and diluted share
STRATEGIC REVIEW UPDATE
- On August 7, reached an agreement in
principle with its external manager to internalize the Company’s
management
- Expect to refinance a $720 million loan
maturing in May 2019 with long-term flexible secured debt
- Dividend re-set to $0.13 per common
share for the quarter ended June 30, 2018
SECOND QUARTER 2018
RESULTS
Dollars in thousands, except per share data
For the Quarter Ended June 30, 2018 For the
Quarter Ended June 30, 2017 Amount
Per Basic Share
Per Diluted Share
Amount
Per Basic Share
Per Diluted Share
GAAP
Net (loss) income
$(39,081) $(0.48) $(0.48) $3,121 $0.04 $0.04
Non-GAAP(A)
NOI $45,342 N/A N/A $55,618 N/A N/A FFO (14,560)
$(0.18)
$(0.18)
20,717 $0.25 $0.25 Normalized FFO 12,609 $0.15 $0.15 24,416 $0.30
$0.29 AFFO 14,990 $0.18 $0.18 22,190 $0.27 $0.27 Normalized FAD (B)
13,836 $0.17 $0.17 20,286 $0.25 $0.25 (A) See end of press
release for reconciliation of non-GAAP measures to net 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 2018 GAAP
RESULTS
New Senior recorded GAAP net loss of $39.1 million, or $(0.48)
per basic and diluted share, for the second quarter of 2018,
compared to GAAP net income of $3.1 million, or $0.04 per basic and
diluted share, for the second quarter of 2017. The year over year
decrease was primarily driven by a $59 million loss on
extinguishment of debt in the second quarter of 2018 partially
offset by a $40 million gain on lease termination in the second
quarter.
SECOND QUARTER 2018 PORTFOLIO
PERFORMANCE
Total NOI decreased 18.5% to $45.3 million compared to $55.6
million for 2Q 2017, primarily driven by approximately $325 million
in asset sales. Total same store cash NOI decreased 3.0% vs. 2Q
2017.
For the managed portfolio, same store average occupancy
decreased 140 basis points to 85.4% compared to 86.8% for 2Q 2017,
and same store RevPOR increased 1.4% to $3,128 compared to $3,085
for 2Q 2017. Year-over-year, same store cash NOI decreased 3.3% to
$24.1 million compared to $24.9 million for 2Q 2017.
For the triple net portfolio, same store cash NOI increased 3.0%
to $1.4 million compared to 2Q 2017. Same store triple net average
occupancy was 89.3% and same store EBITDARM coverage was 1.37x as
of June 30, 2018 . Triple net average occupancy and EBITDARM
coverage are presented one quarter in arrears on a trailing twelve
month basis.
STRATEGIC REVIEW UPDATE
As previously announced on February 23, 2018, the Board,
together with the Company’s management team and legal and financial
advisors, has been exploring a full range of strategic alternatives
to maximize shareholder value. The Board formed a special committee
(the “Special Committee”), composed entirely of independent and
disinterested directors, to address certain aspects of the
strategic review.
In connection with the strategic review, the Company retained
J.P. Morgan Securities LLC as its financial advisor and Skadden,
Arps, Slate, Meagher & Flom LLP as its legal advisor. In
addition, the Special Committee retained Morgan Stanley & Co.
LLC as its independent financial advisor and Wachtell, Lipton,
Rosen & Katz as its independent legal advisor.
The strategic review has been a multi-step process. As part of
the strategic review, in May 2018, the Company terminated its
triple net leases with affiliates of Holiday Retirement, which
reduced credit risk and increased the transparency of the Company’s
operating results. Today, the Company is announcing three
additional strategic initiatives, as described in more detail
below. The Board believes that these initiatives, together with the
prior lease termination, will position the Company for growth and
facilitate additional efforts to maximize shareholder value.
1. Plan to Internalize
Management
On August 7, the Special Committee reached an agreement in
principle with New Senior’s external manager, FIG LLC (the
“Manager”) to internalize the Company’s management function. The
agreement in principle was negotiated and unanimously approved by
the Special Committee. Subject to the completion of definitive
documentation, the internalization is expected to be effective by
January 1, 2019. The agreement is non-binding, and there can be no
assurance that the internalization will occur as expected or at
all, or that the final terms of the internalization will be as
described below. The Manager is an affiliate of Fortress Investment
Group LLC.
Currently, New Senior is externally managed and advised by the
Manager, subject to oversight by the Board of Directors. Pursuant
to a management agreement (the “Management Agreement”), the Manager
provides the Company with a management team, other personnel and
corporate infrastructure. Accordingly, all of the individuals who
provide services to the Company are currently employees of the
Manager. In exchange for the Manager’s services, the Company pays
the Manager certain fees, including a management fee and, subject
to performance, an incentive fee. The Company also reimburses the
Manager for certain costs.
The internalization is expected to result in the following
changes:
- Management Agreement. The
Management Agreement is expected to be terminated, and the Company
is expected to pay total consideration to the Manager of $50
million consisting of $10 million in cash and $40 million in
preferred stock with an expected rate of 6% per annum. The
preferred stock is expected to be redeemable by the Company at any
time; in addition, the Manager is expected to be able to cause the
Company to redeem 50% of the preferred stock beginning at the end
of 2020, and the other 50% beginning at the end of 2021. For a
transition period following the internalization, the Manager is
expected to continue to provide certain services, at cost, pursuant
to a transition services agreement.
- People. The Company expects to
become the employer of the individuals who perform services on its
behalf. The Special Committee anticipates that the
post-internalization management team will include several key
employees of the Manager. Personnel decisions are expected to be
finalized prior to entering into a definitive agreement with the
Manager.
The internalization is expected to have the following key
benefits:
- Cost-Savings. The Company
estimates that the internalization will result in a reduction in
general and administrative expenses of approximately $10 million
per year.
- Simplicity and Transparency. The
internalization is expected to simplify the Company’s
organizational structure and increase the transparency of its
financial results.
- Expanded Institutional
Ownership. New Senior’s institutional ownership base could
expand as a result of increased comparability with its peers in the
healthcare REIT sector.
- Continued Manager Support. The
Company expects to receive support from the Manager for certain
functions during a transition period following the
internalization.
The internalization is one of several types of transactions that
were given thorough consideration by the Board and Special
Committee during the course of the strategic review. Having
considered a range of alternatives, the Board believes that
internalizing the Company’s management function will provide the
greatest opportunity to maximize value for shareholders.
2. Refinancing
The Company expects to refinance a $720 million loan maturing in
May 2019 with a long-term loan, increasing the weighted average
maturity of the Company’s debt from approximately three years to
over five years. Both the existing financing and the proposed
refinancing are floating-rate secured loans.
The refinancing is expected to generate meaningful interest rate
savings of more than $11 million annually. The rate on the existing
loan is currently LIBOR plus 400 basis points, or approximately
6.1% based on LIBOR as of August 8, 2018. The rate on the new loan
is expected to be LIBOR plus approximately 240 basis points, or
4.5%.
The Company expects to complete the refinancing during the
fourth quarter of 2018. The refinancing is subject to market and
other conditions, and there can be no assurance that the
refinancing will be completed as expected or at all.
3. Dividend
As previously disclosed, the Board has been actively reviewing
the Company’s dividend policy. Dividend coverage has been an
ongoing focus as the Company’s payout level relative to earnings
has steadily increased. After careful consideration of the
potential impact of the strategic initiatives announced to date, as
well as the Company’s potential for organic growth, investment and
other initiatives, the Board has determined to re-set the dividend
to more closely align the Company’s payout ratios with its industry
peers. Accordingly, the Board declared a cash dividend of $0.13 per
common share for the quarter ended June 30, 2018. The dividend is
payable on September 21, 2018 to shareholders of record on
September 7, 2018.
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 9, 2018 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 2018 Earnings
Call.” A simultaneous webcast of the conference call will be
available to the public on a listen-only basis at
www.newseniorinv.com. Please allow extra time prior to the call to
visit the website and download any necessary software required to
listen to the internet broadcast.
A telephonic replay of the conference call will also be
available approximately two hours following the call’s completion
through 11:59 P.M. Eastern Time on September 9, 2018 by dialing
(855) 859-2056 (from within the U.S.) or (404) 537-3406 (from
outside the U.S.); please reference access code “8673946.”
ABOUT NEW SENIOR
New Senior Investment Group Inc. (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 June 30, 2018, New Senior is one of the largest
owners of senior housing properties, with 133 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 information 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 Company’s exploration of
strategic alternatives, the plans to internalize the Company’s
management and refinance a $720 million loan, including, in each
case, with respect to the terms, timing, potential benefits,
potential costs and completion thereof, and the declaration or
amount of any future dividend. These statements are not historical
facts. They represent management’s current expectations regarding
future events and are subject to a number of risks 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. These risks and uncertainties
include, but are not limited to, risks and uncertainties relating
to the Company’s review of strategic alternatives and announcement
thereof and the Company’s ability to successfully manage the
transition to self-management. Accordingly, you should not place
undue reliance on any forward-looking statements contained herein.
For a discussion of these and other 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
most recent 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 materially 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, 2018 (Unaudited) December 31, 2017
Assets Real estate investments: Land $ 182,238 $ 182,238
Buildings, improvements and other 2,346,680 2,329,524 Accumulated
depreciation (318,982 ) (275,794 ) Net real estate
property 2,209,936 2,235,968 Acquired
lease and other intangible assets 8,638 264,438 Accumulated
amortization (2,682 ) (249,198 ) Net real estate
intangibles 5,956 15,240 Net real
estate investments 2,215,892 2,251,208 Cash and cash
equivalents 170,762 137,327 Straight-line rent receivables 3,148
82,445 Receivables and other assets, net 38,513
37,047
Total Assets $ 2,428,315
$ 2,508,027 Liabilities and
Equity Liabilities Mortgage notes payable, net $
1,951,042 $ 1,907,928 Due to affiliates 13,140 9,550 Accrued
expenses and other liabilities 53,391 84,664
Total Liabilities $ 2,017,573
$ 2,002,142 Commitments and
contingencies
Equity
Preferred stock $0.01 par value,
100,000,000 sharesauthorized and none issued or outstanding as of
both June30, 2018 and December 31, 2017
$ - $ -
Common stock $0.01 par value,
2,000,000,000 sharesauthorized, 82,148,869 shares issued and
outstanding as ofboth June 30, 2018 and December 31, 2017,
respectively
821 821 Additional paid-in capital 898,135 898,132 Accumulated
deficit (488,214 ) (393,068 )
Total Equity
$ 410,742 $ 505,885
Total Liabilities and Equity $
2,428,315 $ 2,508,027
Consolidated Statements of Operations (unaudited)
(dollars in thousands, except share data)
Three Months
Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017 Revenues
Resident fees and services $ 96,484 $ 86,039 $ 171,827 $ 172,765
Rental revenue 12,368 28,247 36,243
56,494 Total revenues 108,852 114,286 208,070
229,259
Expenses Property operating expense 63,510
58,668 115,609 118,252 Depreciation and amortization 24,521 35,943
51,246 73,461 Interest expense 25,755 23,505 47,678 46,571
Acquisition, transaction and integration expense 8,683 446 11,571
794 Management fees and incentive compensation to affiliate 3,687
6,754 7,439 10,578 General and administrative expense 3,140 3,726
6,892 7,737 Loss on extinguishment of debt 58,544 297 58,544 672
Other expense 32 26 1,412
161 Total expenses $ 187,872 $ 129,365 $ 300,391 $ 258,226
Gain on sale of real estate - 18,347 - 22,546 Gain on lease
termination 40,090 - 40,090
-
(Loss) Income before income taxes
(38,930 ) 3,268 (52,231 ) (6,421 ) Income tax expense 151
147 199 353
Net (loss)
income $ (39,081 ) $ 3,121 $ (52,430 ) $ (6,774 )
Net
(loss) income per share of common stock(A) Basic $ (0.48
) $ 0.04 $ (0.64 ) $ (0.08 ) Diluted $ (0.48 ) $ 0.04 $ (0.64 ) $
(0.08 )
Weighted average number of shares of common stock
outstanding Basic 82,148,869 82,142,562
82,148,869 82,141,661 Diluted(B)
82,148,869 82,778,761 82,148,869
82,141,661
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, 2018 2017 Cash
Flows From Operating Activities Net loss $ (52,430 ) $ (6,774 )
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation of tangible assets and amortization of
intangible assets 51,281 73,535 Amortization of deferred financing
costs 5,294 4,774 Amortization of deferred revenue, net 1,196 204
Amortization of premium on mortgage notes payable - (296 ) Non-cash
straight-line rent (5,019 ) (9,133 ) Gain on sale of real estate -
(22,546 ) Non-cash adjustment on lease termination(A) 29,910 - Loss
on extinguishment of debt 58,544 672 Provision for uncollectible
receivables 900 1,242 Other non-cash expense 1,257 206 Changes in:
Receivables and other assets, net (5,103 ) 238 Due to affiliates
3,590 514 Accrued expenses and other liabilities 12,464
5,374
Net cash provided by operating
activities $ 101,884 $
48,010 Cash Flows From Investing
Activities Proceeds from the sale of real estate, net $ - $
47,354 Capital expenditures, net of insurance proceeds
(8,185 ) (10,309 )
Net cash provided by (used in)
investing activities $ (8,185 ) $
37,045 Cash Flows From Financing
Activities Principal payments of mortgage notes payable $
(12,782 ) $ (11,657 ) Proceeds from mortgage notes payable 720,000
- Repayments of mortgage notes payable and capital lease
obligations (663,796 ) (27,968 ) Payment of exit fee on
extinguishment of debt (51,886 ) (311 ) Payment of deferred
financing costs (12,320 ) - Purchase of interest rate caps (341 ) -
Payment of common stock dividend (42,716 ) (42,714 )
Net cash used in financing activities $
(63,841 ) $ (82,650 ) Net
increase (decrease) in cash, cash equivalents and restricted cash
29,858 2,405 Cash, cash equivalents and restricted cash, beginning
of period 157,485 97,517
Cash, cash
equivalents and restricted cash, end of period $
187,343 $ 99,922
Supplemental Disclosure of Cash Flow Information Cash paid
during the period for interest expense $ 42,234 $ 42,134 Cash paid
during the period for income taxes 326 271
Supplemental
Disclosure of Non-Cash Investing and Financing Activities
Issuance of common stock $ - $ 214 Capital lease obligations $ 121
$ - Furniture, fixtures, equipment and other improvements(B) $
9,975 $ -
(A) Primarily includes the non-cash
write-offs of straight-line rent receivables and net above-market
rent lease intangible assets, offset by the fair value of
furniture, fixtures, equipment and other improvements received by
us as a result of the lease termination with affiliates of Holiday
Retirement.
(B) Fair value of furniture, fixtures,
equipment and other improvements received by us as a result of the
lease termination with affiliates of Holiday Retirement.
Reconciliation of NOI to Net Loss (dollars
in thousands) For the Quarter Ended
June 30, 2018 Total revenues $ 108,852 Property operating
expense (63,510 )
NOI 45,342
Depreciation and amortization (24,521 ) Interest expense (25,755 )
Acquisition, transaction and integration expense (8,683 )
Management fees and incentive compensation to affiliate (3,687 )
General and administrative expense (3,140 ) Loss on extinguishment
of debt (58,544 ) Other expense (32 ) Gain on lease termination
40,090 Income tax expense (151 )
Net Loss $
(39,081 ) Reconciliation of Net Loss
to FFO, Normalized FFO, AFFO and Normalized FAD (dollars and
shares in thousands, except per share data)
For the Quarter Ended June 30, 2018 Net
loss $ (39,081 ) Adjustments: Depreciation
and amortization 24,521
FFO $ (14,560 ) FFO per diluted
share $ (0.18 )
Acquisition, transaction and integration expense 8,683 Loss on
extinguishment of debt 58,544 Gain on lease termination (40,090 )
Other expense 32
Normalized
FFO $ 12,609 Normalized FFO per diluted
share $ 0.15
Straight-line rent (1,693 ) Amortization of deferred financing
costs 3,162 Amortization of deferred community fees and other(1)
912
AFFO $
14,990 AFFO per diluted share
$ 0.18 Routine capital expenditures
(1,154 )
Normalized FAD $
13,836 Normalized FAD per diluted share
$ 0.17 Weighted average diluted
shares outstanding(2) 82,769 (1) Consists of (i)
amortization of above / below market lease intangibles, (ii)
amortization of premium on mortgage notes payable and (iii)
amortization of deferred community fees and other, which includes
the net change in deferred community fees and other rent discounts
or incentives. (2) Includes dilutive effect of options.
Reconciliation of Year-over-Year
Cash NOI (unaudited) (dollars in thousands) 2Q
2017 2Q 2018
Same
StoreNNNProperties
Non-SameStore
NNNProperties
Same
StoreManagedProperties
Non-SameStoreManagedProperties
Total
Same
StoreNNNProperties
Non-SameStore
NNNProperties
Same
StoreManagedProperties
Non-SameStoreManagedProperties
Total Cash NOI $1,358 $22,378 $24,898 $2,602
$51,236 $1,398 $9,291 $24,083 $9,789 $44,561 Straight-line rent 225
4,327 - - 4,552 186 1,507 - - 1,693 Amortization of deferred
community fees and other(1) (2) (39)
(253) 124 (170) (2) (12)
(107) (791) (912)
Segment / Total NOI $1,581
$26,666 $24,645
$2,726 $55,618 $1,582
$10,786 $23,976
$8,998 $45,342 Depreciation and amortization
(35,943) (24,521) Interest expense (23,505) (25,755) Acquisition,
transaction & integration expense (446) (8,683)
Management fees and incentive
compensationto affiliate
(6,754) (3,687) General and administrative expense (3,726) (3,140)
Loss on extinguishment of debt (297) (58,544) Other expense (26)
(32) Gain on sale of real estate 18,347 - Gain on lease termination
- 40,090 Income tax expense (147) (151)
Net income (loss)
$3,121 ($39,081) (1) Consists of (i)
amortization of above / below market lease intangibles and (ii)
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 (loss) 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 (loss) 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 between segments,
classified as held for sale during the comparable periods are
excluded from the same store amounts. Accordingly, same store
results exclude the performance of the Holiday portfolio that was
transitioned from the Triple Net Lease segment to the Managed
Properties segment as a result of the lease termination in May
2018.
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 (loss)
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 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 real estate; (d)
the remeasurement of deferred tax assets; (e) gain on lease
termination; and (f) 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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version on businesswire.com: https://www.businesswire.com/news/home/20180809005198/en/
New Senior Investment Group Inc.David Smith, 212-515-7783
New Senior Investment (NYSE:SNR)
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