Table of
Contents
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended June 30, 2008
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission
File Number 1-15319
SENIOR
HOUSING PROPERTIES TRUST
(Exact Name of
Registrant as Specified in Its Charter)
Maryland
|
|
04-3445278
|
(State or Other Jurisdiction of Incorporation or
Organization)
|
|
(IRS Employer Identification No.)
|
400 Centre Street, Newton, Massachusetts 02458
(Address of Principal Executive Offices) (Zip Code)
617-796-8350
(Registrants Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes
x
No
o
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the
definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check One):
Large Accelerated Filer
x
|
|
Accelerated Filer
o
|
|
|
|
Non Accelerated Filer
o
|
|
Smaller reporting company
o
|
(Do not check if a smaller reporting company)
|
|
|
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
o
No
x
Number of registrants
common shares outstanding as of August 7, 2008: 114,488,559.
Table of Contents
SENIOR HOUSING PROPERTIES TRUST
FORM 10-Q
June 30, 2008
INDEX
In this
Quarterly Report on Form 10-Q, the terms SNH, Senior Housing, the
Company,
we, us and our refer to Senior Housing Properties Trust, and its
consolidated subsidiaries, unless otherwise noted.
Table of
Contents
SENIOR HOUSING PROPERTIES
TRUST
PART I.
Financial Information
Item
1.
Financial
Statements
CONDENSED CONSOLIDATED BALANCE SHEET
(amounts in
thousands, except share data)
(unaudited)
|
|
June 30,
|
|
December 31,
|
|
|
|
2008
|
|
2007
|
|
ASSETS
|
|
|
|
|
|
Real estate
properties, at cost:
|
|
|
|
|
|
Land
|
|
$
|
247,699
|
|
$
|
217,236
|
|
Buildings and
improvements
|
|
2,065,998
|
|
1,723,111
|
|
|
|
2,313,697
|
|
1,940,347
|
|
Less accumulated
depreciation
|
|
351,189
|
|
323,891
|
|
|
|
1,962,508
|
|
1,616,456
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
185,940
|
|
43,521
|
|
Restricted cash
|
|
3,555
|
|
3,642
|
|
Deferred
financing fees, net
|
|
4,999
|
|
5,974
|
|
Acquired real
estate leases, net
|
|
14,039
|
|
2,387
|
|
Other assets
|
|
28,024
|
|
29,914
|
|
Total assets
|
|
$
|
2,199,065
|
|
$
|
1,701,894
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS EQUITY
|
|
|
|
|
|
Unsecured
revolving credit facility
|
|
$
|
|
|
$
|
|
|
Senior unsecured
notes due 2012 and 2015, net of discount
|
|
321,945
|
|
321,873
|
|
Secured debt and
capital leases
|
|
91,515
|
|
104,979
|
|
Accrued interest
|
|
10,695
|
|
10,849
|
|
Acquired real
estate lease obligations, net
|
|
5,795
|
|
4,216
|
|
Other
liabilities
|
|
15,939
|
|
10,567
|
|
Total
liabilities
|
|
445,889
|
|
452,484
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders
equity:
|
|
|
|
|
|
Common shares of
beneficial interest, $0.01 par value: 149,700,000 shares authorized,
114,488,559 and 88,691,892 shares issued and outstanding at June 30,
2008 and December 31, 2007, respectively
|
|
1,145
|
|
887
|
|
Additional
paid-in capital
|
|
2,000,529
|
|
1,476,675
|
|
Cumulative net
income
|
|
468,803
|
|
423,807
|
|
Cumulative
distributions
|
|
(717,482
|
)
|
(653,225
|
)
|
Unrealized gain
on investments
|
|
181
|
|
1,266
|
|
Total
shareholders equity
|
|
1,753,176
|
|
1,249,410
|
|
Total
liabilities and shareholders equity
|
|
$
|
2,199,065
|
|
$
|
1,701,894
|
|
See
accompanying notes.
1
Table of Contents
SENIOR HOUSING PROPERTIES
TRUST
CONDENSED
CONSOLIDATED STATEMENT OF INCOME
(amounts in
thousands, except per share data)
(unaudited)
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
52,680
|
|
$
|
44,406
|
|
$
|
101,663
|
|
$
|
88,708
|
|
Interest and
other income
|
|
710
|
|
556
|
|
1,280
|
|
1,006
|
|
Total revenues
|
|
53,390
|
|
44,962
|
|
102,943
|
|
89,714
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
9,810
|
|
9,160
|
|
19,328
|
|
19,053
|
|
Depreciation
|
|
14,275
|
|
11,704
|
|
27,298
|
|
23,299
|
|
General and
administrative
|
|
4,685
|
|
3,449
|
|
8,381
|
|
7,165
|
|
Impairment of
assets
|
|
2,940
|
|
|
|
2,940
|
|
|
|
Loss on early
extinguishment of debt
|
|
|
|
|
|
|
|
2,026
|
|
Total expenses
|
|
31,710
|
|
24,313
|
|
57,947
|
|
51,543
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
21,680
|
|
$
|
20,649
|
|
$
|
44,996
|
|
$
|
38,171
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
100,302
|
|
83,649
|
|
95,691
|
|
82,240
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
0.22
|
|
$
|
0.25
|
|
$
|
0.47
|
|
$
|
0.46
|
|
See accompanying notes
.
2
Table of
Contents
SENIOR HOUSING PROPERTIES
TRUST
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in
thousands)
(unaudited)
|
|
Six Months Ended
June 30,
|
|
|
|
2008
|
|
2007
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
44,996
|
|
$
|
38,171
|
|
Adjustments to
reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
Depreciation
|
|
27,298
|
|
23,299
|
|
Amortization of
deferred financing fees and debt discounts
|
|
1,047
|
|
1,084
|
|
Amortization of
acquired real estate leases
|
|
(7
|
)
|
|
|
Impairment of
assets
|
|
2,940
|
|
|
|
Loss on early
extinguishment of debt
|
|
|
|
2,026
|
|
Change in assets
and liabilities:
|
|
|
|
|
|
Restricted cash
|
|
87
|
|
(43
|
)
|
Investments in
trading securities
|
|
|
|
(10,153
|
)
|
Other assets
|
|
1,167
|
|
5,228
|
|
Accrued interest
|
|
(154
|
)
|
(972
|
)
|
Other
liabilities
|
|
5,984
|
|
(252
|
)
|
Cash provided by
operating activities
|
|
83,358
|
|
58,388
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Acquisitions
|
|
(386,356
|
)
|
(17,167
|
)
|
Cash used for
investing activities
|
|
(386,356
|
)
|
(17,167
|
)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
issuance of common shares, net
|
|
523,138
|
|
151,670
|
|
Proceeds from
borrowings on revolving credit facility
|
|
210,000
|
|
22,000
|
|
Repayments of
borrowings on revolving credit facility
|
|
(210,000
|
)
|
(134,000
|
)
|
Redemption of
senior notes
|
|
|
|
(21,750
|
)
|
Repayment of
other debt
|
|
(13,464
|
)
|
(853
|
)
|
Distributions to
shareholders
|
|
(64,257
|
)
|
(54,828
|
)
|
Cash provided by
(used for) financing activities
|
|
445,417
|
|
(37,761
|
)
|
|
|
|
|
|
|
Increase in cash
and cash equivalents
|
|
142,419
|
|
3,460
|
|
Cash and cash
equivalents at beginning of period
|
|
43,521
|
|
5,464
|
|
Cash and cash
equivalents at end of period
|
|
$
|
185,940
|
|
$
|
8,924
|
|
|
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
Interest paid
|
|
$
|
19,482
|
|
$
|
18,942
|
|
|
|
|
|
|
|
Non-cash
financing activities:
|
|
|
|
|
|
Issuance of
common shares
|
|
$
|
974
|
|
$
|
959
|
|
See
accompanying notes.
3
Table of Contents
SENIOR HOUSING PROPERTIES
TRUST
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(amounts in thousands,
except per share data or as otherwise stated)
Note 1. Basis of Presentation
The
accompanying condensed consolidated financial statements of Senior Housing
Properties Trust and its subsidiaries, or the Company, have been prepared
without audit. Certain information and
disclosures required by accounting principles generally accepted in the United
States for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate
to make the information presented not misleading. However, the accompanying condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes contained in our Annual Report on Form 10-K
for the year ended December 31, 2007.
In the opinion of our management, all adjustments, which include only
normal recurring adjustments, considered necessary for a fair presentation have
been included. All intercompany
transactions and balances between us and our consolidated subsidiaries have
been eliminated. Operating results for
interim periods are not necessarily indicative of the results that may be
expected for the full year.
Reclassifications have been made to the prior years financial
statements to conform to the current years presentation. These reclassifications had no effect on net
income or shareholders equity.
In September 2006, the Financial Accounting
Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 157,
Fair Value Measurement, or SFAS No. 157, which defines fair value, establishes
a framework for measuring fair value, and expands disclosures about fair value
measurement. This statement is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. As required, we adopted SFAS No. 157 on January 1,
2008 and the effect was not material to our consolidated financial statements.
In December 2007, the FASB issued Statement of
Financial Accounting Standards No. 141 (revised 2007), Business Combinations,
or SFAS No. 141(R). SFAS No. 141(R) establishes principles and
requirements for how an acquirer shall recognize and measure in its financial
statements the identifiable assets acquired, liabilities assumed, any
noncontrolling interest in the acquiree and goodwill acquired in a business
combination. SFAS No. 141(R) is
effective for business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after December 15,
2008. The Company is currently
evaluating the effect that the adoption of SFAS No. 141(R) will have
on our consolidated financial statements.
Note 2. Real Estate Properties
At
June 30, 2008, we owned 226 properties located in 33 states.
In
May 2008, we announced that we have entered into a series of agreements to
acquire 48 medical office, clinic and biotech laboratory buildings from HRPT
Properties Trust, or HRPT, for an aggregate purchase price of approximately
$565.0 million. These buildings were
98.3% leased to more than 370 tenants for an average term of 6.7 years at the
time of the announcement. We expect the
closings of these acquisitions to occur over the next three quarters. Our obligations to complete these purchases
are subject to various conditions typical of commercial real estate purchases
including, with respect to certain of these properties, obtaining waivers of
rights of first refusal from tenants.
Also, we have a financing contingency relating to certain properties. We can provide no assurance that we will
purchase all of these buildings or that the purchases will be completed in the
next three quarters. In addition, we also acquired a right of first refusal to
purchase any of 45 additional buildings (containing approximately 4.6 million
square feet of rental space) that are leased to tenants in medical related
business which the seller will continue to own after these transactions. Because we and the seller are both managed by
Reit Management & Research LLC, or RMR, the terms of these transactions
were negotiated by special committees of our and the sellers board of trustees
composed solely of Independent Trustees of each company.
4
Table of Contents
SENIOR HOUSING PROPERTIES
TRUST
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(amounts in thousands, except per share data
or as otherwise stated)
In June 2008, we acquired five medical office,
clinic and biotech laboratory buildings from HRPT pursuant to these contracts
for approximately $83.8 million, excluding closing costs.
On July 9, 2008, we acquired three additional
medical office and clinic properties from HRPT for approximately $39.1 million,
excluding closing costs.
We funded these acquisitions using cash on
hand
and assumed
three mortgage loans on two properties totaling $10.8 million with a weighted
average interest rate of 7.08% per annum.
Intangible lease assets and liabilities recorded by us for these
acquisitions totaled $11.8 million and $1.7 million, respectively.
On June 30, 2008, we
realigned our three leases with Five Star Quality Care, Inc., or Five
Star. Lease no. 1 now includes 100
properties, including nine properties acquired during the first quarter of
2008. This lease includes independent living communities, assisted living
communities and skilled nursing facilities, and expires in 2022. Lease no. 2
now includes 32 properties, including independent living communities, assisted
living communities, skilled nursing facilities and two rehabilitation
hospitals, and expires in 2026. Lease no. 3 now includes 33 properties,
including 10 properties acquired during the first quarter of 2008; this lease
includes independent living communities, assisted living communities and
skilled nursing facilities, and expires in 2024. The rent payable by Five Star
to us is unchanged as a result of this lease realignment and the increased rent
payable, if and as we purchase improvements to the leased properties, will be
the greater of 8.0% per annum or the 10 year Treasury rate plus 300 basis
points.
On July 1, 2008, we
sold three assisted living properties with 259 living units that were formerly
operated by NewSeasons Assisted Living Communities, Inc., or NewSeasons,
to Five Star for $21.4 million and Five Star assumed the NewSeasons and
Independence Blue Cross, or IBC, lease obligations to SNH for the remaining
seven properties that were formerly operated by NewSeasons. The rent payable by Five Star for these seven
properties is approximately $7.6 million per annum under a separate lease
between us and Five Star which we call our Five Star lease no. 4.
On
August 1, 2008, we acquired, from an unaffiliated party, two senior living
properties with a total of 112 units for approximately $14.1 million, excluding
closing costs. The properties have been
leased to Five Star until 2024 under our Five Star lease no. 3 described above
and rent under that lease was increased by $1.1 million. Percentage rent, based on increases in gross
revenues at these properties, will commence in 2010. We funded this acquisition using cash on
hand.
In
June 2008, we agreed to purchase, from an unaffiliated party, eight senior
living properties with a total of 451 units for approximately $62.7
million. This acquisition has not closed
as of the date of this report. We intend
to lease these properties to Five Star and to add them to our Five Star lease
no. 3, as described above, for a term expiring in 2024, and we expect the
annual rent under this lease will increase by approximately $5.0 million. We expect percentage rent, based on increases
in gross revenues at these properties, will commence in 2010. We expect to fund this acquisition using cash
on hand and by assuming 15 mortgages on these eight properties for a total of
$50.5 million at a weighted average interest rate of 6.54% per annum maturing
in 2017. The purchase of these properties
is contingent upon our and Five Stars completion of diligence, other customary
closing conditions and the approval of mortgage lenders. We can provide no assurance that we will
purchase or lease these properties.
As of June 30, 2008,
two of our properties are classified as held for sale as we intend to sell them
in 2008. At December 31, 2007 and June 30,
2008, we recorded an impairment charge on one of these properties of $1.4
million and $2.9 million, respectively, to reduce the carrying value to its
estimated fair value. These two
properties are included in real estate properties on our condensed consolidated
balance sheet and have a net carrying value of approximately $6.6 million at June 30,
2008.
During
the six
months ended June 30,
2008 and 2007, pursuant to the terms of our existing leases with Five Star, we
purchased $27.3 million and $17.1 million, respectively, of improvements made
to our properties leased to Five Star, and, as a result, the annual rent
payable to us by Five Star was increased by approximately $2.4 million and $1.7
million, respectively.
5
Table of Contents
SENIOR HOUSING PROPERTIES
TRUST
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(amounts in thousands, except per share data
or as otherwise stated)
Note 3. Unrealized Gain on Investments
On June 30, 2008, we
owned 1,000,000 common shares of HRPT Properties Trust and 35,000 common shares
of Five Star, which are carried at fair market value in other assets on our
condensed consolidated balance sheet. The net unrealized gain on investments
shown on our condensed consolidated balance sheet represents the difference
between the quoted market prices (level 1) of such shares on June 30, 2008
($6.77 and $4.73 per share, respectively) and their cost on the dates they were
acquired ($6.50 and $7.26 per share, respectively).
Note 4. Comprehensive Income
The following is a
reconciliation of net income to comprehensive income for the three and six
months ended June 30, 2008 and 2007 (dollars in thousands):
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Net income
|
|
$
|
21,680
|
|
$
|
20,649
|
|
$
|
44,996
|
|
$
|
38,171
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
|
Change in
unrealized gain on investments
|
|
(17
|
)
|
(1,981
|
)
|
(1,085
|
)
|
(2,061
|
)
|
Comprehensive
income
|
|
$
|
21,663
|
|
$
|
18,668
|
|
$
|
43,911
|
|
$
|
36,110
|
|
Note
5.
Indebtedness
We have an unsecured revolving credit facility that
matures in December 2010, with our option to extend the maturity by one
additional year upon payment of a fee.
Our revolving credit facility permits borrowings up to $550.0
million. The annual interest payable for
amounts drawn under the facility is LIBOR plus a premium. The interest rate
payable on borrowings under this revolving credit facility was
3.26% and 6.10% at June 30, 2008 and 2007, respectively. Our revolving credit facility is available
for acquisitions, working capital and general business purposes. As of June 30,
2008 and 2007, we had no amounts outstanding under this credit facility.
In April 2008, we paid in full a mortgage loan on
one of our properties for $12.6 million.
We used cash on hand and borrowings under our revolving credit facility
to fund this payment.
Note 6. Shareholders Equity
Under the terms of our management agreement with RMR,
on April 11, 2008 we issued 27,310 common shares in payment of an
incentive fee of approximately $624,000 for services rendered by RMR during
2007. These restricted securities were
issued pursuant to an exemption from registration contained in Section 4(2) of
the Securities Act of 1933, as amended.
On May 15, 2008, we granted each of our five
trustees 2,000 common shares of beneficial interest, par value $0.01 per share,
valued at $22.91 per share, the closing price of our common shares on the New
York Stock Exchange on that day. We made these grants pursuant to an exemption
from registration contained in Section 4(2) of the Securities Act of
1933, as amended.
On May 15, 2008, we paid a $0.35 per share, or
$33.2 million, distribution to our common shareholders for the quarter ended March 31,
2008. On July 8, 2008, we declared
a distribution of $0.35 per share, or $40.1 million, to be paid to common
shareholders of record on July 18, 2008, with respect to our results for
the quarter ended June 30, 2008. We expect to pay this distribution on or
about August 14, 2008.
6
Table of Contents
SENIOR HOUSING PROPERTIES
TRUST
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(amounts
in thousands, except per share data or as otherwise stated)
In June 2008, we issued 19.6 million of our
common shares in a public offering, raising net proceeds of $393.7 million. We
used the net proceeds from this offering to repay borrowings outstanding on our
revolving credit facility and for general business purposes, including funding,
in part, the acquisitions described in Note 2 above.
Note 7. Segment Reporting
We
have one reportable operating segment: short term and long term residential
care facilities that offer dining for residents. Properties in this segment include
independent living facilities, assisted living facilities, skilled nursing
facilities and rehabilitation hospitals.
The All Other category in the following table includes amounts related
to corporate business activities and the operating results of our specialized
facilities that offer medical related services, fitness, wellness and spa
service to members operating segment. Prior to October 2007, our only
operating segment was short term and long term residential care facilities that
offer dining for residents.
|
|
For the three months ended June 30, 2008
|
|
|
|
Short and Long
Term Residential
Care Facilities
|
|
All Other
|
|
Consolidated
|
|
Rental income
|
|
$
|
50,789
|
|
$
|
1,891
|
|
$
|
52,680
|
|
Interest and other income
|
|
|
|
710
|
|
710
|
|
Total revenues
|
|
50,789
|
|
2,601
|
|
53,390
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
1,220
|
|
8,590
|
|
9,810
|
|
Depreciation and amortization expense
|
|
13,824
|
|
451
|
|
14,275
|
|
General and administrative expense
|
|
|
|
4,685
|
|
4,685
|
|
Impairment of assets
|
|
2,940
|
|
|
|
2,940
|
|
Total expenses
|
|
17,984
|
|
13,726
|
|
31,710
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
32,805
|
|
$
|
(11,125
|
)
|
$
|
21,680
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,827,693
|
|
$
|
371,372
|
|
$
|
2,199,065
|
|
|
|
For the six months ended June 30, 2008
|
|
|
|
Short and Long
Term Residential
Care Facilities
|
|
All Other
|
|
Consolidated
|
|
Rental income
|
|
$
|
98,024
|
|
$
|
3,639
|
|
$
|
101,663
|
|
Interest and other income
|
|
|
|
1,280
|
|
1,280
|
|
Total revenues
|
|
98,024
|
|
4,919
|
|
102,943
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
2,668
|
|
16,660
|
|
19,328
|
|
Depreciation and amortization expense
|
|
26,464
|
|
834
|
|
27,298
|
|
General and administrative expense
|
|
|
|
8,381
|
|
8,381
|
|
Impairment of assets
|
|
2,940
|
|
|
|
2,940
|
|
Total expenses
|
|
32,072
|
|
25,875
|
|
57,947
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
65,952
|
|
$
|
(20,956
|
)
|
$
|
44,996
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,827,693
|
|
$
|
371,372
|
|
$
|
2,199,065
|
|
7
Table of Contents
SENIOR HOUSING PROPERTIES
TRUST
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(amounts in thousands, except per share data or as
otherwise stated)
Note 8. Significant Tenant
Five
Star is the lessee of 70.8% of our investments, at cost, as of June 30,
2008. The following tables present
summary financial information for Five Star for the three and six months ended June 30,
2008 and 2007, as reported in its Quarterly Report on Form 10-Q.
Summary Financial Information of Five Star Quality
Care, Inc.
(in thousands)
|
|
Three Months
Ended
June 30, 2008
|
|
Three Months
Ended
June 30, 2007
|
|
Total revenues
|
|
$
|
271,144
|
|
$
|
240,138
|
|
Operating income
|
|
6,075
|
|
4,751
|
|
Income from
continuing operations
|
|
4,237
|
|
5,143
|
|
Net income
|
|
3,489
|
|
4,080
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2008
|
|
Six Months Ended
June 30, 2007
|
|
Total revenues
|
|
$
|
530,021
|
|
$
|
477,165
|
|
Operating income
|
|
13,430
|
|
7,242
|
|
Income from
continuing operations
|
|
8,656
|
|
10,625
|
|
Net income
|
|
5,106
|
|
8,844
|
|
Current assets
|
|
137,455
|
|
171,826
|
|
Non-current
assets
|
|
243,390
|
|
180,640
|
|
Total
indebtedness
|
|
142,393
|
|
142,582
|
|
Current
liabilities
|
|
116,315
|
|
105,622
|
|
Non-current
liabilities
|
|
172,980
|
|
171,282
|
|
Total
shareholders equity
|
|
91,550
|
|
75,562
|
|
Net cash
provided by operating activities
|
|
22,229
|
|
48,377
|
|
Net cash used in
discontinued operations
|
|
(398
|
)
|
(1,726
|
)
|
Net cash used in
investing activities
|
|
(6,829
|
)
|
(21,649
|
)
|
Net cash used in
financing activities
|
|
(117
|
)
|
(28,757
|
)
|
Net increase
(decrease) in cash
|
|
14,885
|
|
(3,755
|
)
|
Cash and cash
equivalents at the beginning of the period
|
|
30,999
|
|
46,241
|
|
Cash and cash
equivalents at the end of the period
|
|
45,884
|
|
42,486
|
|
|
|
|
|
|
|
|
|
The
summary financial information of Five Star is presented to comply with
applicable accounting regulations of the Securities and Exchange Commission.
References
in these financial statements to the Quarterly Report on Form 10-Q for
Five Star are included as textual references only, and the information in such
Quarterly Report is not incorporated by reference into these financial
statements.
Note
9. Pro Forma Information
During
the three months ended June 30, 2008, we purchased five properties for
$83.8 million and, pursuant to the terms of our existing leases with Five Star,
we purchased $10.7 million of improvements made to our properties leased to
Five Star. During the six months ended June 30,
2008, we purchased 24 properties for $356.1 million and $27.3 million of
improvements made to our properties leased to Five Star. On April 1, 2008, we paid in full a
mortgage loan on one of our properties for $12.6 million. During the three and six months ended June 30,
2008, we recorded an impairment charge on one of our properties for $2.9
million. During the three and six months
ended June 30, 2008, we issued 19.6 million and 25.8 million of our common
shares, respectively.
8
Table of Contents
SENIOR HOUSING PROPERTIES
TRUST
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(amounts in thousands, except per share data or as otherwise stated)
During
2007, we purchased six wellness centers for $76.8 million and $47.7 million of
improvements made to our properties lease to Five Star. We assumed $14.9 million of mortgage debt in
conjunction with the wellness centers acquisition. We purchased and redeemed $20.0 million of
our senior notes in January 2007.
We recorded an impairment charge on one of our properties for $1.4
million. In February and December 2007,
we issued 5.0 million and 6.0 million of our common shares, respectively.
The following table presents our pro forma results
of operations as if these acquisitions and related financings were completed on
January 1, 2007. This pro forma
data is not necessarily indicative of what actual results of operations would
have been for the periods presented, nor does it represent the results of
operations for any future period.
Differences could result from, but are not limited to, additional
property sales or investments, changes in interest rates and changes in our
debt or equity structure.
|
|
For the Three Months Ended
June 30,
|
|
For the Six Months Ended
June 30,
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Total revenues
|
|
$
|
55,591
|
|
$
|
55,727
|
|
$
|
111,450
|
|
$
|
111,452
|
|
Net income
|
|
$
|
23,213
|
|
$
|
26,131
|
|
$
|
50,816
|
|
$
|
50,681
|
|
|
|
|
|
|
|
|
|
|
|
Per common share
data:
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
0.20
|
|
$
|
0.23
|
|
$
|
0.44
|
|
$
|
0.44
|
|
9
Table of Contents
Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion should be read in conjunction
with our consolidated financial statements and notes thereto included in this
quarterly report and our Annual Report on Form 10-K for the year ended December 31,
2007.
PORTFOLIO OVERVIEW
The
following tables present an overview of our portfolio:
As of June 30, 2008
(dollars in thousands)
|
|
# of
Properties
|
|
# of Units/Beds
|
|
Carrying Value
of Investment (1)
|
|
% of
Investment
|
|
Annualized
Current Rent
|
|
% of
Annualized
Current Rent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Facility Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Independent
living communities (2)
|
|
41
|
|
11,213
|
|
$
|
1,041,038
|
|
45.5
|
%
|
$
|
103,248
|
|
46.0
|
%
|
Assisted living
facilities (3)
|
|
111
|
|
7,968
|
|
817,326
|
|
35.7
|
%
|
75,918
|
|
33.8
|
%
|
Skilled nursing
facilities
|
|
58
|
|
5,869
|
|
226,941
|
|
9.9
|
%
|
19,237
|
|
8.6
|
%
|
Rehabilitation
hospitals
|
|
2
|
|
364
|
|
49,931
|
|
2.2
|
%
|
10,760
|
|
4.8
|
%
|
Wellness centers
(4)
|
|
6
|
|
|
|
80,008
|
|
3.5
|
%
|
6,519
|
|
2.9
|
%
|
Medical office
buildings (MOBs) (5)
|
|
5
|
|
|
|
75,010
|
|
3.2
|
%
|
8,770
|
|
3.9
|
%
|
Total (3)
|
|
223
|
|
25,414
|
|
$
|
2,290,254
|
|
100.0
|
%
|
$
|
224,452
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant/Operator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five Star (Lease
No. 1) (6)
|
|
100
|
|
8,600
|
|
$
|
700,423
|
|
30.6
|
%
|
$
|
61,091
|
|
27.2
|
%
|
Five Star (Lease
No. 2) (6)
|
|
32
|
|
7,639
|
|
732,288
|
|
32.0
|
%
|
80,197
|
|
35.8
|
%
|
Five Star (Lease
No. 3) (6)
|
|
33
|
|
2,436
|
|
202,946
|
|
8.9
|
%
|
14,619
|
|
6.5
|
%
|
Five Star (Lease
No. 4) (3)
|
|
7
|
|
614
|
|
64,198
|
|
2.8
|
%
|
6,807
|
|
3.0
|
%
|
Sunrise/Marriott
(7)
|
|
14
|
|
4,091
|
|
325,165
|
|
14.2
|
%
|
31,746
|
|
14.2
|
%
|
Alterra/Brookdale
(8)
|
|
18
|
|
894
|
|
61,122
|
|
2.7
|
%
|
7,873
|
|
3.5
|
%
|
6 private
companies (combined)
|
|
8
|
|
1,140
|
|
49,094
|
|
2.1
|
%
|
6,830
|
|
3.0
|
%
|
Starmark (4)
|
|
6
|
|
|
|
80,008
|
|
3.5
|
%
|
6,519
|
|
2.9
|
%
|
Multi-tenant MOBs
(5)
|
|
5
|
|
|
|
75,010
|
|
3.2
|
%
|
8,770
|
|
3.9
|
%
|
Total (3)
|
|
223
|
|
25,414
|
|
$
|
2,290,254
|
|
100.0
|
%
|
$
|
224,452
|
|
100.0
|
%
|
Tenant
Operating Statistics (Quarter Ended March 31, 2008) (9)
|
|
|
|
|
|
|
|
|
|
Percentage of Operating Revenue Sources
|
|
|
|
Rent Coverage
|
|
Occupancy
|
|
Private Pay
|
|
Medicaid
|
|
Medicare
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Five Star (Lease
No. 1) (6) (10)
|
|
1.27
|
x
|
1.21
|
x
|
87
|
%
|
89
|
%
|
64
|
%
|
65
|
%
|
14
|
%
|
13
|
%
|
22
|
%
|
22
|
%
|
Five Star (Lease
No. 2) (6)
|
|
1.59
|
x
|
1.38
|
x
|
89
|
%
|
91
|
%
|
68
|
%
|
68
|
%
|
29
|
%
|
28
|
%
|
3
|
%
|
4
|
%
|
Five Star (Lease
No. 3) (6) (10)
|
|
2.67
|
x
|
2.73
|
x
|
84
|
%
|
88
|
%
|
25
|
%
|
24
|
%
|
24
|
%
|
25
|
%
|
51
|
%
|
51
|
%
|
Five Star (Lease
No. 4) (3)
|
|
1.28
|
x
|
1.45
|
x
|
88
|
%
|
88
|
%
|
100
|
%
|
100
|
%
|
|
|
|
|
|
|
|
|
Sunrise/Marriott
(7)
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
Alterra/Brookdale
(8)
|
|
2.23
|
x
|
2.13
|
x
|
91
|
%
|
87
|
%
|
99
|
%
|
98
|
%
|
|
|
|
|
1
|
%
|
2
|
%
|
6 private
companies (combined)
|
|
2.25
|
x
|
1.68
|
x
|
87
|
%
|
88
|
%
|
27
|
%
|
25
|
%
|
24
|
%
|
24
|
%
|
49
|
%
|
51
|
%
|
Starmark(4)
|
|
1.91
|
x
|
NA
|
|
NA
|
|
NA
|
|
100
|
%
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
(1)
|
|
Amounts are before
depreciation, but after impairment write downs, if any.
|
(2)
|
|
Properties where the majority
of units are independent living apartments are classified as independent
living communities.
|
(3)
|
|
On July 1, 2008, we sold
three assisted living properties with 259 living units that were formerly
operated by NewSeasons to Five Star for $21.4 million and Five Star assumed
the NewSeasons and IBC lease obligations to SNH for the remaining seven
properties that were formerly operated by NewSeasons. The data provided above
represents the seven properties we continue to own.
|
(4)
|
|
In October and
November 2007, we acquired six wellness centers that are leased to
affiliates of Starmark Holdings, LLC, or Starmark. These wellness centers
have a total of 354,000 square feet.
|
(5)
|
|
In June 2008, we acquired
five medical office, clinic and biotech laboratory buildings, or MOBs. The
carrying value of this investment is before depreciation and includes
intangible lease assets and liabilities. These MOBs have a total of 449,000
square feet.
|
(6)
|
|
On June 30, 2008, we
realigned our three leases with Five Star. The rent payable by Five Star to
us is unchanged as a result of this lease realignment and the increased rent
payable, if and as we purchase improvements to the leased properties, will be
the greater of 8.0% per annum or the 10 year Treasury rate plus 300 basis
points.
|
(7)
|
|
Marriott
International, Inc., or Marriott, guarantees this lease. Sunrise has not
filed its Quarterly Report on Form 10-Q for the first quarter of 2008
with the Securities and Exchange Commission due to accounting issues. Because
we do not know what impact the resolution of these accounting issues may have
on the reported performance of our properties, we do not report operating
data for this tenant.
|
(8)
|
|
Brookdale Senior
Living, Inc., or Brookdale, guarantees this lease.
|
(9)
|
|
All tenant operating data presented are based upon
the operating results provided by our tenants for the indicated quarterly
periods, or the most recent prior period for which tenant operating results
are available to us from our tenants. Rent coverage is calculated as
operating cash flow from our tenants operations of our properties, before
subordinated charges, divided by rent payable to us. We have not included
operating data for our medical office buildings because we acquired them in
June 2008. We have not independently verified our tenants operating
data.
|
(10)
|
|
Includes data for periods
prior to our ownership of certain properties included in this lease.
|
10
Table of Contents
RESULTS OF OPERATIONS
Three Months Ended June 30,
2008, Compared to Three Months Ended June 30, 2007:
|
|
2008
|
|
2007
|
|
Change
|
|
% Change
|
|
|
|
(in thousands, except per share amounts)
|
|
|
|
Rental income
|
|
$
|
52,680
|
|
$
|
44,406
|
|
$
|
8,274
|
|
18.6
|
%
|
Interest and
other income
|
|
710
|
|
556
|
|
154
|
|
27.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
9,810
|
|
9,160
|
|
650
|
|
7.1
|
%
|
Depreciation
expense
|
|
14,275
|
|
11,704
|
|
2,571
|
|
22.0
|
%
|
General and
administrative expense
|
|
4,685
|
|
3,449
|
|
1,236
|
|
35.8
|
%
|
Impairment of
assets
|
|
2,940
|
|
|
|
2,940
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
21,680
|
|
$
|
20,649
|
|
$
|
1,031
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
100,302
|
|
83,649
|
|
16,653
|
|
19.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
$
|
0.22
|
|
$
|
0.25
|
|
$
|
(0.03
|
)
|
(12.0
|
)%
|
Rental
income increased because of rents earned from our real estate acquisitions
since April 1, 2007.
Interest and other income increased
as a result of
higher levels of investable cash in money market funds.
Interest
expense increased because of greater amounts outstanding under our revolving
credit facility offset by lower rates under our revolving credit facility. This
increase was also reduced by our prepayment of a mortgage on April 1, 2008
that had a maturity date of June 30, 2008.
Our weighted average balance outstanding and interest rate under our
revolving credit facility was $87.6 million and 3.6% and $53.5 million and 6.1%
for the three months ended June 30, 2008 and 2007, respectively.
Depreciation
expense for the second quarter of 2008 increased because of acquisitions since April 1,
2007. General and administrative expenses increased in 2008 due to our
acquisitions since April 1, 2007, and higher state taxes, accounting fees
and stock grants in the second quarter of 2008 than in 2007, offset by
decreases in legal fees.
During
the second quarter of 2008, we recognized an impairment of assets charge of
$2.9 million related to one property that we intend to sell in 2008.
Net income increased because of the changes in
revenues and expenses described above. Net income per share decreased because
of the changes in revenues and expenses described above offset by the effect of
an increase in the weighted average number of shares outstanding resulting from
our issuance of common shares in December 2007 and February and June 2008.
11
Table of Contents
Six Months Ended June 30,
2008, Compared to Six Months Ended June 30, 2007:
|
|
2008
|
|
2007
|
|
Change
|
|
% Change
|
|
|
|
(in thousands, except per share amounts)
|
|
|
|
Rental income
|
|
$
|
101,663
|
|
$
|
88,708
|
|
$
|
12,955
|
|
14.6
|
%
|
Interest and
other income
|
|
1,280
|
|
1,006
|
|
274
|
|
27.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
19,328
|
|
19,053
|
|
275
|
|
1.4
|
%
|
Depreciation
expense
|
|
27,298
|
|
23,299
|
|
3,999
|
|
17.2
|
%
|
General and
administrative expense
|
|
8,381
|
|
7,165
|
|
1,216
|
|
17.0
|
%
|
Impairment of
assets
|
|
2,940
|
|
|
|
2,940
|
|
100.0
|
%
|
Loss on early
extinguishment of debt
|
|
|
|
2,026
|
|
(2,026
|
)
|
(100.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
44,996
|
|
$
|
38,171
|
|
$
|
6,825
|
|
17.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
95,691
|
|
82,240
|
|
13,451
|
|
16.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
$
|
0.47
|
|
$
|
0.46
|
|
$
|
0.01
|
|
2.2
|
%
|
Rental
income increased because of rents earned from our real estate acquisitions
since January 1, 2007.
Interest and other income increased
as a result of
higher levels of investable cash in money market funds.
Interest
expense increased because of greater amounts outstanding under our revolving
credit facility offset by lower rates under our revolving credit facility. This
increase was also reduced by our prepayment of a mortgage on April 1, 2008
that had a maturity date of June 30, 2008.
Our weighted average balance outstanding and interest rate under our
revolving credit facility was $56.3 million and 3.8% and $53.5 million and 6.1%
for the six months ended June 30, 2008 and 2007, respectively.
Depreciation
expense for the first six months of 2008 increased as a result of real estate
acquisition since January 1, 2007.
General and administrative expenses increased in 2008 due to our
acquisitions since January 1, 2007, and higher state taxes, accounting
fees and stock grants in the six months of 2008 than in the 2007 period, offset
by decreases in legal fees.
During
the six months ended June 30, 2008, we recognized an impairment of assets
charge of $2.9 million related to one property that we intend to sell in 2008.
In
January 2007, we purchased and retired $20.0 million of our 8 5/8% senior
notes due 2012 and recognized a loss on early retirement of debt of $2.0
million in connection with this purchase.
Net income increased because of the changes in
revenues and expenses described above. Net income per share increased because
of the changes in revenues and expenses described above offset by the effect of
an increase in the weighted average number of shares outstanding resulting from
our issuance of common shares in February and December 2007 and February and
June 2008.
12
Table of Contents
LIQUIDITY AND CAPITAL RESOURCES
Our
Operating Liquidity and Resources
Rents from our properties are our principal source of
funds for current expenses, debt service and distributions to
shareholders. We generally receive
minimum rents monthly or quarterly from our tenants and we receive percentage
rents monthly, quarterly or annually.
This flow of funds has historically been sufficient for us to pay our
operating expenses, debt service and distributions to shareholders. We believe that this operating cash flow will
be sufficient to meet our operating expenses, debt service and distribution
payments for the foreseeable future.
Our
Investment and Financing Liquidity and Resources
In
order to fund acquisitions and to accommodate cash needs that may result from
timing differences between our receipts of rents and our need or desire to pay
operating expenses and distributions to our shareholders, we maintain a
revolving credit facility with a group of institutional lenders. Our revolving
credit facility matures in December 2010, and we may extend it to December 2011
upon payment of an extension fee. The revolving credit facility permits us to
borrow up to $550.0 million, and includes a feature which may permit us to
increase the maximum borrowing to $1.1 billion, in certain circumstances.
Borrowings under our revolving credit facility are unsecured. We may borrow,
repay and reborrow funds until maturity. No principal repayment is due until
maturity. We pay interest on borrowings under the revolving credit facility at
LIBOR plus a premium. At June 30, 2008, the annual interest rate payable
on our revolving credit facility was 3.26%.
As of June 30, 2008, we had no amounts outstanding under this
credit facility.
In February 2008, we issued 6.2 million common
shares in a public offering, raising net proceeds of $129.4 million. We used
the net proceeds from this offering to repay borrowings outstanding on our revolving
credit facility and for general business purposes, including funding, in part,
the acquisitions described below.
During the three months
ended March 31, 2008, we purchased 19 senior living properties with a
total of 1,692 units for approximately $272.3 million from five unaffiliated
parties. We leased these properties to Five Star for initial rent of $21.8
million and added them to what we now refer to as Five Star lease no. 1 and
lease no. 3, which have a current term expiring in 2022 and 2024, respectively. Percentage rent, based on increases in gross
revenues at these properties, will commence in 2010. We funded these
acquisitions using cash on hand, proceeds from equity issuances and borrowings
under our revolving credit facility.
On April 1, 2008, we paid in full a mortgage loan
on one of our properties for $12.6 million.
We used cash on hand and borrowings under our revolving credit facility
to fund this payment.
In June 2008, we issued 19.6 million common
shares in a public offering, raising net proceeds of $393.7 million. We used
the net proceeds from this offering to repay borrowings outstanding on our
revolving credit facility and for general business purposes, including funding,
in part, the acquisitions described below.
In May 2008, we announced
that we have entered into a series of agreements to acquire 48 medical office,
clinic and biotech laboratory buildings for an aggregate purchase price of
approximately $565.0 million. These
buildings were 98.3% leased to more than 370 tenants for an average term of 6.7
years at the time of the announcement.
We expect the closings of these acquisitions to occur over the next
three quarters. Our obligations to
complete these purchases are subject to various conditions typical of
commercial real estate purchases including, with respect to certain of these
properties, obtaining waivers of rights of first refusal from tenants. Also, we have a financing contingency
relating to certain properties. We can
provide no assurance that we will purchase all of these buildings or that the
purchases will be completed within the next three quarters. In addition, we also acquired a right of first refusal to purchase any of 45
additional buildings (containing approximately 4.6 million square feet of
rental space) that are leased to tenants in medical related business
which the seller will continue to own after these transactions. Because we and the seller are both managed by
RMR, final terms of these transactions
were negotiated by special committees of our and the sellers board of trustees
composed solely of Independent Trustees of each company.
13
Table of Contents
In June 2008, we acquired five medical
office, clinic and biotech laboratory buildings pursuant to these contracts for
approximately $83.8 million, excluding closing costs. On July 9, 2008, we acquired three
additional medical office, clinic and biotech laboratory properties for
approximately $39.1 million, excluding closing costs. We funded these acquisitions using cash on
hand and assumed three mortgage loans on two properties totaling $10.8 million
with a weighted average interest rate of 7.08% per annum.
On June 30, 2008, we realigned our three leases
with Five Star. Lease no. 1 now includes
100 properties, including nine properties acquired during the first quarter of
2008. This lease includes independent living communities, assisted living
communities and skilled nursing facilities, and expires in 2022. Lease no. 2
now includes 32 properties, including independent living communities, assisted
living communities, skilled nursing facilities and two rehabilitation
hospitals, and expires in 2026. Lease no. 3 now includes 33 properties,
including 10 properties acquired during the first quarter of 2008; this lease
includes independent living communities, assisted living communities and
skilled nursing facilities, and expires in 2024. The rent payable by Five Star
to us is unchanged as a result of this lease realignment and the increased rent
payable, if and as we purchase improvements to the leased properties, will be
the greater of 8.0% per annum or the 10 year Treasury rate plus 300 basis
points.
On July 1, 2008, we
sold three assisted living properties with 259 living units that were formerly
operated by NewSeasons to Five Star for $21.4 million and Five Star assumed the
NewSeasons and IBC lease obligations to SNH for the remaining seven properties
that were formerly operated by NewSeasons.
The rent payable by Five Star for these seven properties is
approximately $7.6 million per annum under a separate lease between us and Five
Star which we call our Five Star lease no. 4.
On
August 1, 2008, we acquired, from an unaffiliated party, two senior living
properties with a total of 112 units for approximately $14.1 million, excluding
closing costs. The properties have been
leased to Five Star until 2024 under our Five Star lease no. 3 described above
and rent under that lease was increased by $1.1 million. Percentage rent, based on increases in gross
revenues at these properties, will commence in 2010. We funded this acquisition using cash on
hand.
In
June 2008, we agreed to purchase, from an unaffiliated party, eight senior
living properties with a total of 451 units for approximately $62.7
million. This acquisition has not closed
as of the date of this report. We intend
to lease these properties to Five Star and to add them to our Five Star lease
no. 3, as described above, for a term expiring in 2024, and we expect the
annual rent under this lease will increase by approximately $5.0 million. We expect percentage rent, based on increases
in gross revenues at these properties, will commence in 2010. We expect to fund this acquisition using cash
on hand and by assuming 15 mortgages on these eight properties for a total of
$50.5 million at a weighted average interest rate of 6.54% per annum maturing
in 2017. The purchase of these
properties is contingent upon our and Five Stars completion of diligence,
other customary closing conditions and the approval of mortgage lenders. We can provide no assurance that we will
purchase or lease these properties.
At June 30, 2008, we had $185.9 million of cash
and cash equivalents and $550.0 million available under our revolving credit
facility. We expect to use cash
balances, borrowings under our revolving credit facility and net proceeds of
offerings of equity or debt securities to fund future working capital
requirements, property acquisitions and expenditures related to the repair,
maintenance or renovation of our properties.
14
Table of Contents
When
significant amounts are outstanding under our revolving credit facility or as
the maturity dates of our revolving credit facility and term debts approach, we
explore alternatives for the repayment of amounts due. Such alternatives may
include incurring additional debt and issuing new equity securities. We have an
effective shelf registration statement that allows us to issue public
securities on an expedited basis, but it does not assure that there will be
buyers for such securities. Also, we may
be unable to raise reasonably priced capital because of reasons related to our
business or for reasons beyond our control, such as the current downturn in the
real estate and capital markets which has limited the availability of debt
financing. Although there can be no assurance that we will complete any debt or
equity offerings or other financings, we believe we will have access to various
types of financings, including debt or equity offerings, to finance future
acquisitions and to pay our debts and other obligations.
On February 15, 2008, we paid a $0.35 per common
share, or $31.0 million, distribution to our common shareholders for the
quarter ended December 31, 2007. On
May 15, 2008, we paid a $0.35 per common share, or $33.2 million,
distribution to our common shareholders for the quarter ended March 31,
2008. On July 8, 2008, we declared
a distribution of $0.35 per common share, or $40.1 million, to be paid to our
common shareholders of record on July 18, 2008 with respect to our results
for the quarter ended June 30, 2008. We expect to pay this distribution on
or about August 14, 2008, using cash on hand and borrowings under our
revolving credit facility.
As of August 7, 2008, we have no off balance
sheet arrangements, commercial paper, derivatives, swaps, hedges, joint
ventures or partnerships.
Debt Covenants
Our principal debt obligations at June 30, 2008,
were our unsecured revolving credit facility, two public issues totaling $322.5
million of unsecured senior notes and $76.1 million of mortgage debts and bonds
secured by 23 of our properties. Our senior notes are governed by an indenture.
This indenture and related supplements and our revolving credit facility
contain a number of financial ratio covenants which generally restrict our
ability to incur debts, including debts secured by mortgages on our properties
in excess of calculated amounts, require us to maintain a minimum net worth,
restrict our ability to make distributions under certain circumstances and
require us to maintain various financial ratios. As of June 30, 2008 we believe we were
in compliance with all of the covenants under our indenture and related
supplements and our revolving credit facility.
None of our indenture and
related supplements, our revolving credit facility or our other debt
obligations contains provisions for acceleration which could be triggered by
our debt ratings. However, in certain circumstances our revolving credit
facility uses our senior debt rating to determine the fees and the interest
rate payable.
Our public debt indenture
and related supplements contain cross default provisions to any other debts of
$10.0 million or more. Similarly, a default on our public debt indenture would
be a default under our revolving credit facility.
Related
Person Transactions
Under the terms of our management agreement with
RMR, on April 11, 2008, we issued 27,310 common shares in payment of an
incentive fee of approximately $624,000 for services rendered by RMR during
2007.
In
May 2008, we announced that we have entered into a series of agreements to
acquire 48 medical office, clinic and biotech laboratory buildings from HRPT
for an aggregate purchase price of approximately $565.0 million. These buildings were 98.3% leased to more
than 370 tenants for an average term of 6.7 years at the time of the
announcement. We expect the closings of
these acquisitions to occur over the next three quarters. Our obligations to complete these purchases
are subject to various conditions typical of commercial real estate purchases
including, with respect to certain of these properties, obtaining waivers of
rights of first refusal from tenants.
Also, we have a financing contingency relating to certain
properties. We can provide no assurance
that we will purchase all of these buildings or that the purchases will be
completed in the next three quarters. In
addition, we also acquired a right of
first refusal to purchase any of 45 additional buildings (containing
approximately 4.6 million square feet of rental space) that are leased by HRPT
to tenants in medical related business which HRPT will continue to own after
these transactions. Because we and HRPT
are both managed by RMR, the final terms of these transactions were negotiated
by special committees of our and HRPTs board of trustees composed solely of
Independent Trustees of each company.
15
Table of Contents
In June 2008, we
acquired five of these medical office, clinic and biotech laboratory buildings
from HRPT for approximately $83.8 million, excluding closing costs pursuant to
the May 2008 agreements.
We funded
these acquisitions using cash on hand.
On July 9,
2008, we acquired three additional medical office and clinic properties from
HRPT for approximately $39.1 million, excluding closing costs. We funded these acquisitions using cash on
hand and assumed three mortgage loans on two properties totaling $10.8 million
with a weighted average interest rate of 7.08% per annum.
Five Star is our
former subsidiary. On June 30, 2008, we realigned our three
leases with Five Star. Lease no. 1 now
includes 100 properties, including nine properties acquired during the first
quarter of 2008. This lease includes independent living communities, assisted
living communities and skilled nursing facilities, and expires in 2022. Lease
no. 2 now includes 32 properties, including independent living communities,
assisted living communities, skilled nursing facilities and two rehabilitation
hospitals, and expires in 2026. Lease no. 3 now includes 33 properties,
including 10 properties acquired during the first quarter of 2008; this lease
includes independent living communities, assisted living communities and
skilled nursing facilities, and expires in 2024. The rent payable by Five Star
to us is unchanged as a result of this lease realignment and the increased rent
payable, if and as we purchase improvements to the leased properties, will be
the greater of 8.0% per annum or the 10 year Treasury rate plus 300 basis
points.
On July 1, 2008, we
sold three assisted living properties with 259 living units that were formerly
operated by NewSeasons to Five Star for $21.4 million and Five Star assumed the
NewSeasons and Independence Blue Cross, or IBC, lease obligations to SNH for
the remaining seven properties that were formerly operated by NewSeasons. The rent payable by Five Star for these seven
properties is approximately $7.6 million per annum under a separate lease
between us and Five which we call our Five Star lease no. 4.
On
August 1, 2008, we acquired, from an unaffiliated party, two senior living
properties with a total of 112 units for approximately $14.1 million, excluding
closing costs. The properties have been
leased to Five Star until 2024 under our Five Star lease no. 3 described above
and rent under that lease was increased by $1.1 million. Percentage rent, based on increases in gross
revenues at these properties, will commence in 2010. We funded this acquisition using cash on
hand.
In
June 2008, we agreed to purchase, from an unaffiliated party, eight senior
living properties with a total of 451 units for approximately $62.7
million. This acquisition has not closed
as of the date of this report. We intend
to lease these properties to Five Star and to add them to our Five Star lease
no. 3, as described above, for a term expiring in 2024, and we expect the
annual rent under this lease will increase by approximately $5.0 million. We expect percentage rent, based on increases
in gross revenues at these properties, will commence in 2010. We expect to fund this acquisition using cash
on hand and by assuming 15 mortgages on these eight properties for a total of
$50.5 million at a weighted average interest rate of 6.54% per annum maturing
in 2017. The purchase of these
properties is contingent upon our and Five Stars completion of diligence,
other customary closing conditions and the approval of mortgage lenders. We can provide no assurance that we will
purchase or lease these properties.
16
Table of Contents
During the six months ended June 30, 2008 and 2007, pursuant to
the terms of our existing leases with Five Star, we purchased $27.3 million and
$17.1 million, respectively, of improvements made to our properties leased to
Five Star, and, as a result, the annual rent payable to us by Five Star was
increased by
approximately $2.4 million and $1.7 million, respectively.
Item 4. Controls and Procedures
As of the end of the period covered by this report, our management
carried out an evaluation, under the supervision and with the participation of
our managing trustees, President and Chief Operating Officer and Treasurer and
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, our managing
trustees, President and Chief Operating Officer and Treasurer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective.
There have been no changes in our internal control over financial
reporting during the quarter ended June 30, 2008 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
17
Table of Contents
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS
QUARTERLY REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER FEDERAL
SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS BELIEVE, EXPECT,
ANTICIPATE, INTEND, PLAN, ESTIMATE OR SIMILAR EXPRESSIONS, WE ARE
MAKING FORWARD LOOKING STATEMENTS. THESE
FORWARD LOOKING STATEMENTS ARE BASED UPON OUR 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 OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
·
THIS QUARTERLY REPORT STATES THAT WE HAVE
AGREED TO PURCHASE MEDICAL OFFICE, CLINIC AND BIOTECH LABORATORY
BUILDINGS. OUR OBLIGATIONS TO COMPLETE
THE CURRENTLY PENDING PURCHASES IS SUBJECT TO VARIOUS CONDITIONS TYPICAL OF
LARGE COMMERCIAL REAL ESTATE PURCHASES, INCLUDING, WITH RESPECT TO CERTAIN
PROPERTIES, OBTAINING WAIVERS OF RIGHTS OF FIRST REFUSAL FROM TENANTS. ALSO, WE HAVE FINANCING CONTINGENCIES
RELATING TO CERTAIN PROPERTIES. AS A
RESULT OF ANY FAILURE OF THESE CONDITIONS, SOME OF THE PROPERTIES MAY NOT
BE PURCHASED, THE PURCHASE PRICES PAYABLE BY US MAY BE CHANGED OR SOME OF
THESE PURCHASES MAY BE ACCELERATED OR DELAYED.
·
THIS QUARTERLY REPORT STATES THAT WE HAVE
AGREED TO PURCHASE EIGHT PROPERTIES FOR $62.7 MILLION AND TO LEASE THEM TO FIVE
STAR. OUR DILIGENCE REGARDING THIS TRANSACTION HAS NOT YET BEEN COMPLETED AND
WE MAY DECIDE NOT TO PROCEED WITH THIS PURCHASE FOR VARIOUS REASONS. AS A
RESULT, THIS PROPOSED PURCHASE AND LEASE MAY NOT OCCUR.
·
THIS QUARTERLY REPORT STATES THAT WE
INTEND TO SELL TWO PROPERTIES THAT ARE CLASSIFIED AS HELD FOR SALE ON OUR
CONSOLIDATED BALANCE SHEET. WE MAY BE
UNABLE TO FIND QUALIFIED BUYERS TO PURCHASE THESE PROPERTIES ON FAVORABLE, OR
ANY, TERMS, AND MAY DECIDE NOT TO PROCEED WITH THESE SALES DUE TO MARKET
CONDITIONS OR OTHER REASONS. AS A
RESULT, THESE PROPOSED SALES MAY NOT OCCUR.
OTHER
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE IN OUR FORWARD LOOKING STATEMENTS ARE DESCRIBED MORE FULLY UNDER ITEM 1A. RISK FACTORS IN OUR ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2007.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD
LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION
TO UPDATE OR REVISE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.
STATEMENT
CONCERNING LIMITED LIABILITY
THE
ARTICLES OF AMENDMENT AND RESTATEMENT OF THE DECLARATION OF TRUST ESTABLISHING
SENIOR HOUSING PROPERTIES TRUST, DATED SEPTEMBER 20, 1999, A COPY OF WHICH,
TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS THERETO, IS DULY FILED IN THE
OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND,
PROVIDES THAT THE NAME SENIOR HOUSING PROPERTIES TRUST REFERS TO THE TRUSTEES
UNDER THE DECLARATION OF TRUST, AS AMENDED AND SUPPLEMENTED, AS TRUSTEES, BUT
NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF SENIOR HOUSING PROPERTIES TRUST SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SENIOR HOUSING PROPERTIES TRUST.
ALL PERSONS DEALING WITH SENIOR HOUSING PROPERTIES TRUST, IN ANY WAY,
SHALL LOOK ONLY TO THE ASSETS OF SENIOR HOUSING PROPERTIES TRUST FOR THE
PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
18
Table of Contents
PART II.
Other Information
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
As
further described in our Annual Report on Form 10-K for the year ended December 31,
2007, we have an agreement with RMR, whereby RMR provides management services
to us. Under the terms of this
agreement, on April 11, 2008, we issued 27,310 common shares in payment of
an incentive fee of approximately $624,000 for services rendered by RMR during
2007. These restricted securities were
issued pursuant to an exemption from registration contained in Section 4(2) of
the Securities Act of 1933, as amended.
On May 15, 2008, we granted
each of our five trustees 2,000 common shares of beneficial interest, par value
$0.01 per share, valued at $22.91 per share, the closing price of our common
shares on the New York Stock Exchange on that day. We made these grants
pursuant to an exemption from registration contained in Section 4(2) of
the Securities Act of 1933, as amended.
Item 4. Submission of Matters to a Vote of
Security Holders
At our
regular annual meeting held on May 15, 2008, our shareholders re-elected
Frederick N. Zeytoonjian (79,008,966 shares voted for and 7,706,208 shares
withheld) as one of our Independent Trustees. The term of office of Mr. Zeytoonjian
will extend until our annual meeting of shareholders in 2011. Messrs. Frank
J. Bailey, Ba
rry M. Portnoy, John L. Harrington and Adam D.
Portnoy continue to serve as trustees with terms of office expiring in 2009,
2009, 2010 and 2010, respectively.
Item 6. Exhibits
|
3.1
|
Composite Copy of the
Companys Amended and Restated Declaration of Trust, dated September 20,
1999, as amended to date. (Incorporated by reference to the Companys Current
Report on Form 8-K dated June 3, 2008)
|
|
|
|
|
4.1
|
Form of Common Shares
Certificate. (Filed herewith)
|
|
|
|
|
10.1
|
Summary of Trustee
Compensation. (Incorporated by reference to the Companys Current Report on
Form 8-K dated June 2, 2008)
|
|
|
|
|
10.2
|
Purchase and Sale
Agreement, dated as of May 5, 2008, among HRPT Properties Trust, Hub
Properties Trust and MOB Realty Trust, as Sellers, and the Company, as
Purchaser (with respect to 21 properties located in Massachusetts,
Pennsylvania, and New York). (Incorporated by reference to the Companys
Current Report on Form 8-K dated May 9, 2008)
|
|
|
|
|
10.3
|
Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to Torrey Pines, 3030-50,
Science Park Road, San Diego, California). (Incorporated by reference to the
Companys Current Report on Form 8-K dated May 9, 2008)
|
|
|
|
|
10.4
|
Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to Amelia Building, 855
Kempsville Road, Norfolk, Virginia). (Incorporated by reference to the
Companys Current Report on Form 8-K dated May 9, 2008)
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10.5
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to Halifax Building, 6161
Kempsville Circle, Norfolk, Virginia). (Incorporated by reference to the
Companys Current Report on Form 8-K dated May 9, 2008)
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10.6
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to Fair Oaks, 4001 Fair
Ridge Drive, Fairfax, Virginia). (Incorporated by reference to the Companys
Current Report on Form 8-K dated May 9, 2008)
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10.7
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to 2141 K Street, NW,
Washington, DC). (Incorporated by reference to the Companys Current Report
on Form 8-K dated May 9, 2008)
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10.8
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to 6818 Austin Center
Blvd., Austin, Texas). (Incorporated by reference to the Companys Current
Report on Form 8-K dated May 9, 2008)
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10.9
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to 1145 19th Street, NW,
Washington, DC). (Incorporated by reference to the Companys Current Report
on Form 8-K dated May 9, 2008)
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10.10
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to Oklahoma Clinics, 8315
So. Walker Ave., 701 NE 10th Street, 200 N. Bryant, 600 National Ave.,
Oklahoma City, Oklahoma). (Incorporated by reference to the Companys Current
Report on Form 8-K dated May 9, 2008)
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10.11
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Purchase and Sale
Agreement, dated as of May 5, 2008, between HRPT Properties Trust, as
Seller, and the Company, as Purchaser (with respect to HIP of White Plains,
15 North Broadway, White Plains, New York). (Incorporated by reference to the
Companys Current Report on Form 8-K dated May 9, 2008)
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10.12
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to 4770 Regent Boulevard,
Irving, Texas). (Incorporated by reference to the Companys Current Report on
Form 8-K dated May 9, 2008)
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10.13
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub RI Properties Trust, as
Seller, and the Company, as Purchaser (with respect to 701 George Washington
Highway, Lincoln, Rhode Island). (Incorporated by reference to the Companys
Current Report on Form 8-K dated May 9, 2008)
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10.14
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Purchase and Sale
Agreement, dated as of May 5, 2008, between 4 Maguire Road Realty Trust,
as Seller, and the Company, as Purchaser (with respect to 4 Maguire Road,
Lexington, Massachusetts). (Incorporated by reference to the Companys
Current Report on Form 8-K dated May 9, 2008)
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10.15
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to 4000 Old Court Road,
Pikesville, Maryland). (Incorporated by reference to the Companys Current
Report on Form 8-K dated May 9, 2008)
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10.16
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as Seller,
and the Company, as Purchaser (with respect to 1825, 1911 and 1925 N. Mills
Avenue, Orlando, Florida). (Incorporated by reference to the Companys
Current Report on Form 8-K dated May 9, 2008)
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Table of Contents
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10.17
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to Bailey Square, 1111 W.
34th Street, Austin, Texas). (Incorporated by reference to the Companys
Current Report on Form 8-K dated May 9, 2008)
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10.18
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Purchase and Sale Agreement,
dated as of May 5, 2008, between Hub Properties Trust, as Seller, and
the Company, as Purchaser (with respect to Brittonfield II and III, Lot 5E-2
and Lot 5E-1, 5008 Brittonfield Parkway, East Syracuse, New York).
(Incorporated by reference to the Companys Current Report on Form 8-K
dated May 9, 2008)
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10.19
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to Centre Commons, 5750
Centre Ave., Pittsburgh, Pennsylvania). (Incorporated by reference to the
Companys Current Report on Form 8-K dated May 9, 2008)
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10.20
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to 710 North Euclid,
Anaheim, California). (Incorporated by reference to the Companys Current
Report on Form 8-K dated May 9, 2008)
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10.21
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Properties Trust, as
Seller, and the Company, as Purchaser (with respect to 525 Virginia Drive,
Fort Washington, Pennsylvania). (Incorporated by reference to the Companys
Current Report on Form 8-K dated May 9, 2008)
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10.22
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Purchase and Sale
Agreement, dated as of May 5, 2008, between Hub Northeast Medical Arts
Center LLC, as Seller, and the Company, as Purchaser (with respect to
Northeast Medical Arts Center, 2801 North Decatur Road, Decatur, Georgia).
(Incorporated by reference to the Companys Current Report on Form 8-K
dated May 9, 2008)
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10.23
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Right of First Refusal
Agreement dated as of May 5, 2008 between HRPT Properties Trust, Blue
Dog Properties Trust, Cedars LA LLC, HRP NOM L.P., HRP NOM 2 L.P., HRPT
Medical Buildings Realty Trust, Hub Properties Trust, Lakewood Property
Trust, LTMAC Properties LLC, Hub Mid-West LLC, and Rosedale Properties
Limited Liability Company, as Grantors, and the Company. (Incorporated by
reference to the Companys Current Report on Form 8-K dated May 9,
2008)
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10.24
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First Amendment to
Transaction Agreement, dated as of May 5, 2008, between the Company and
HRPT Properties Trust. (Incorporated by reference to the Companys Current
Report on Form 8-K dated May 9, 2008)
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10.25
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First Amendment to
Purchase and Sale Agreement, dated as of June 11, 2008, between Hub
Properties Trust, as Seller, and the Company, as Purchaser (with respect to
Centre Commons, 5750 Centre Ave., Pittsburgh, Pennsylvania). (Filed herewith)
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10.26
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First Amendment to Amended
and Restated Advisory Agreement, dated as of June 11, 2008, between the
Company and Reit Management & Research LLC. (Incorporated by
reference to the Companys Current Report on Form 8-K dated
June 12, 2008)
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10.27
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Master Management
Agreement, dated as of June 11, 2008, between the Company and Reit
Management & Research LLC. (Incorporated by reference to the
Companys Current Report on Form 8-K dated June 12, 2008)
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10.28
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First Amendment to
Purchase and Sale Agreement, dated as of June 25, 2008, between Hub
Properties Trust, as Seller, and the Company, as Purchaser (with respect to
525 Virginia Drive, Fort Washington, Pennsylvania). (Filed herewith)
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Table of Contents
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10.29
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First Amendment to
Purchase and Sale Agreement, dated as of June 25, 2008, between Hub RI
Properties Trust, as Seller, and the Company, as Purchaser (with respect to 701
George Washington Highway, Lincoln, Rhode Island). (Filed herewith)
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10.30
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First Amendment to
Purchase and Sale Agreement, dated as of June 25, 2008, between Hub
Properties Trust, as Seller, and the Company, as Purchaser (with respect to
Bailey Square, 1111 W. 34th Street, Austin, Texas). (Filed herewith)
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10.31
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First Amendment to
Purchase and Sale Agreement, dated as of June 25, 2008, between Hub
Properties Trust, as Seller, and the Company, as Purchaser (with respect to
4770 Regent Boulevard, Irving, Texas). (Filed herewith)
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10.32
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Amended and Restated
Master Lease Agreement (Lease No. 1), dated as of June 30, 2008, by
and among certain subsidiaries of the Company, as Landlord, and Five Star
Quality Care Trust, as Tenant. (Incorporated by reference to the Companys
Current Report on Form 8-K dated July 7, 2008)
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10.33
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Amended and Restated
Guaranty Agreement (Lease No. 1), dated as of June 30, 2008, made
by Five Star Quality Care, Inc., as Guarantor, for the benefit of
certain subsidiaries of the Company. (Incorporated by reference to the
Companys Current Report on Form 8-K dated July 7, 2008)
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10.34
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Amended and Restated
Master Lease Agreement (Lease No. 2), dated as of June 30, 2008, by
and among certain subsidiaries of the Company, as Landlord, and FS
Commonwealth LLC, FS Patriot LLC, FS Tenant Holding Company Trust and FS
Tenant Pool III Trust, as Tenant. (Incorporated by reference to the Companys
Current Report on Form 8-K dated July 7, 2008)
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10.35
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Amended and Restated Guaranty
Agreement (Lease No. 2), dated as of June 30, 2008, made by Five
Star Quality Care, Inc., as Guarantor, for the benefit of certain
subsidiaries of the Company. (Incorporated by reference to the Companys
Current Report on Form 8-K dated July 7, 2008)
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10.36
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Amended and Restated
Master Lease Agreement (Lease No. 3), dated as of June 30, 2008, by
and among certain subsidiaries of the Company, as Landlord, and Five Star
Quality Care Trust, as Tenant. (Incorporated by reference to the Companys Current
Report on Form 8-K dated July 7, 2008)
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10.37
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Amended and Restated
Guaranty Agreement (Lease No. 3), dated as of June 30, 2008, made
by Five Star Quality Care, Inc., as Guarantor, for the benefit of
certain subsidiaries of the Company. (Incorporated by reference to the
Companys Current Report on Form 8-K dated July 7, 2008)
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10.38
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First Amendment to
Purchase and Sale Agreement, dated as of July 9, 2008, between Hub
Northeast Medical Arts Center LLC, as Seller, and the Company, as Purchaser (with
respect to Northeast Medical Arts Center, 2801 North Decatur Road, Decatur,
Georgia). (Filed herewith)
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10.39
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First Amendment to
Purchase and Sale Agreement, dated as of July 9, 2008, between Hub
Properties Trust, as Seller, and the Company, as Purchaser (with respect to
710 North Euclid, Anaheim, California). (Filed herewith)
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10.40
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First Amendment to
Purchase and Sale Agreement, dated as of July 9, 2008, between Hub
Properties Trust, as Seller, and the Company, as Purchaser (with respect to
Brittonfield II and III, Lot 5E-2 and Lot 5E-1, 5008 Brittonfield Parkway,
East Syracuse, New York). (Filed herewith)
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22
Table of Contents
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10.41
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First Amendment to Amended
and Restated Master Lease Agreement (Lease No. 3) dated as of
August 1, 2008, by and among certain subsidiaries of the Company, as
Landlord, and Five Star Quality Care Trust, as Tenant. (Filed herewith)
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12.1
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Computation of Ratio of
Earnings to Fixed Charges.
(Filed herewith.)
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31.1
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Rule 13a-14(a) Certification.
(Filed herewith.)
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31.2
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Rule 13a-14(a) Certification.
(Filed herewith.)
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31.3
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Rule 13a-14(a) Certification.
(Filed herewith.)
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31.4
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Rule 13a-14(a) Certification.
(Filed herewith.)
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32.1
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Section 1350
Certification.
(Furnished herewith.)
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23
Table of Contents
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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SENIOR HOUSING
PROPERTIES TRUST
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By:
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/s/ David J. Hegarty
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David J. Hegarty
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President and Chief
Operating Officer
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Dated: August 8,
2008
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By:
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/s/ Richard A. Doyle
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Richard A. Doyle
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Treasurer and Chief
Financial Officer
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(principal financial
and accounting officer)
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Dated:
August 8, 2008
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24
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