Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT
REPORT PURSUANT
TO SECTION 13
OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event
reported):
December 17, 2008 (December 17,
2008)
SENIOR HOUSING PROPERTIES TRUST
(Exact Name of Registrant as Specified in Its
Charter)
Maryland
|
|
001-15319
|
|
04-3445278
|
(State or Other Jurisdiction of Incorporation)
|
|
(Commission File Number)
|
|
(I.R.S. 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)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Table
of Contents
FORWARD LOOKING STATEMENTS
THIS CURRENT REPORT ON FORM 8-K CONTAINS
FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 AND OTHER FEDERAL SECURITIES
LAWS. 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 CURRENT REPORT ON FORM 8-K
STATES THAT WE HAVE AGREED TO PURCHASE ADDITIONAL MEDICAL OFFICE, CLINIC AND
BIOTECH LABORATORY BUILDINGS. OUR
OBLIGATIONS TO COMPLETE THE CURRENTLY PENDING PURCHASES ARE SUBJECT TO VARIOUS
CONDITIONS TYPICAL OF LARGE COMMERCIAL REAL ESTATE PURCHASES. 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.
OTHER IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN 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.
Explanatory Note
As previously reported in a Current Report on
Form 8-K dated May 9, 2008, or the May 9 Current Report, filed
by Senior Housing Properties Trust, or SNH, or us or we, we agreed to purchase
up to 48 medical office, clinic and biotech laboratory buildings, or MOBs, from
HRPT Properties Trust, or HRPT, pursuant to a series of Purchase and Sale
Agreements, or the Purchase Agreements, dated as of May 5, 2008. The agreements to purchase these 48 MOBs were
more fully described in the May 9 Current Report. Financial statements and pro forma financial
information required by Items 9(a) and (b) of Form 8-K in
connection with the matters reported in the May 9 Current Report were
reported by us in the May 9 Current Report and amended in our Current
Report on Form 8-K/A dated May 22, 2008, or the May 22 Current
Report, and in our Current Report on Form 8-K/A dated September 29,
2008, or the September 29 Current Report.
As of the date of this Current Report on Form 8-K, we have
purchased 29 of the MOBs from HRPT. In
addition,
1
Table of Contents
because a third party consent was not
received, one of the Purchase Agreements was amended so that one of the
remaining 19 MOBs is no longer subject to the Purchase Agreements. Nonetheless, HRPT may receive such third
party consent and we may ultimately purchase that MOB. We previously reported the closings of the
purchase of 28 of these MOBs in our Current Report on Form 8-K dated August 12,
2008, or the August 12 Current Report, and in our September 29
Current Report.
This Current Report on Form 8-K provides
updated unaudited pro forma financial statements reflecting the purchase of 29
of the MOBs, as well as the pending acquisitions of the remaining 18 MOBs
subject to the Purchase Agreements and the one remaining MOB that is no longer
subject to the Purchase Agreements, but that we still believe we will purchase. The updated pro forma financial statements
also reflect unrelated properties we have purchased through December 16,
2008.
Item 9.01.
Financial Statements and Exhibits.
This Current Report on Form 8-K includes pro forma financial data
for us, which includes the 29 MOBs that have been acquired and the 19 MOBs
proposed to be acquired from HRPT as well as other acquisitions we have
completed since January 1, 2008 (balance sheet) and January 1, 2007
(statements of income). Because changes
will likely occur in occupancy, rents and expenses with respect to the
properties to be acquired and because some or all of the acquisitions may not
be completed, the pro forma financial data presented should not be considered
as a projection of future results.
Differences could also result from, among other considerations, changes
in our portfolio of investments, in interest rates and in our capital
structure.
In the August 12 Current Report, we
reported our acquisition pursuant to certain of the Purchase Agreements of the
first 28 MOBs in California, Georgia, Massachusetts, New York, Pennsylvania,
Texas and Rhode Island for an aggregate purchase price of $232.7 million,
excluding closing costs. These
acquisitions consisted of five medical office properties acquired in June 2008
for approximately $83.8 million, three medical office and clinic properties
acquired on July 9, 2008 for approximately $39.1 million and 20 clinic
buildings acquired on August 8, 2008 for approximately $109.9
million. Subsequent to the September 29
Current Report, o
n
October 31, 2008, we acquired one additional medical office building from
HRPT for approximately $29.8 million, excluding closing costs. We funded these acquisitions using cash on hand, proceeds from our equity
issuances, borrowings under our revolving credit facility and by assuming three
mortgage loans on two properties totaling $10.8 million with a weighted average
interest rate of 7.1% per annum.
Between January 1, 2008 and December 16, 2008, we acquired
the following other properties from unaffiliated parties (dollars in
thousands):
2
Table of Contents
Date
Acquired
|
|
Location
|
|
Number of
Properties
|
|
Units
|
|
Purchase
Price
|
|
1/1/08
|
|
WI
|
|
5
|
|
568
|
|
$
|
66,767
|
|
2/7/08
|
|
TX
|
|
2
|
|
98
|
|
10,292
|
|
2/17/08
|
|
NE
|
|
1
|
|
138
|
|
9,338
|
|
3/1/08
|
|
MN
|
|
1
|
|
228
|
|
48,549
|
|
3/31/08
|
|
CA, DE, MD
|
|
10
|
|
660
|
|
137,445
|
|
8/1/08
|
|
AL
|
|
2
|
|
112
|
|
14,110
|
|
8/21/08
|
|
GA, IL, TX, UT
|
|
4
|
|
NA
|
(1)
|
100,000
|
|
9/1/08
|
|
IN
|
|
8
|
|
451
|
|
62,075
|
|
9/30/08
|
|
NY
|
|
1
|
|
NA
|
(2)
|
18,550
|
|
11/1/08
|
|
IN
|
|
1
|
|
249
|
|
29,000
|
|
|
|
|
|
35
|
|
2,504
|
|
$
|
496,126
|
|
(1) On
August 21, 2008, we acquired four wellness centers with a total of 458,000
square feet.
(2) On September 30, 2008, we acquired one medical office
building from an unaffiliated party with a total of 89,000 square feet.
We funded these acquisitions using cash on hand, proceeds from equity
issuances, borrowings under our revolving credit facility and by assuming 15 mortgage
loans for $50.5 million on eight of these properties.
Certain properties acquired by us, or proposed to be acquired from
HRPT, are leased to various tenants, including Five Star Quality Care, Inc.,
or Five Star, on a long term basis under net leases that transfer substantially
all of the properties operating and holding costs to the tenants. We have
previously provided summary financial data and other information for Five Star
in our Amendment No. 1 to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2007, and in our Quarterly Report on Form 10-Q
for the quarter ended September 30, 2008. The remaining tenants with net
leases are engaged in a range of industries including health services,
biotechnology research, and pharmaceutical research and manufacturing with no
significant concentration within any particular industry. The majority of these net lease tenants are
privately owned. Certain leases are guaranteed
by affiliates of the tenants. As of the
date of this report, we believe that each tenant is current in its rent
payments. Five of the significant net
lease tenants, other than Five Star, are: Scripps Research Institute, or
Scripps; Fallon Community Health Plan, or Fallon Clinic; Health Insurance Plan
of New York, or HIP; EPIX Pharmaceuticals, Inc., or EPIX; and The Oklahoma
City Clinics. Scripps is one of the
largest non-profit research institutes in the Country and is located in La
Jolla, California. Fallon Clinic is one
of the largest multi-specialty group practices providing healthcare services in
Central Massachusetts.
HIP is one of the largest
health care companies providing health care services to approximately 1.4
million individuals. EPIX is a biopharmaceutical company focused on
discovering and developing novel therapeutics.
EPIX is listed on NASDAQ Global Market under the symbol EPIX. The Oklahoma City Clinics are a medical
practice group operating in Oklahoma City and the surrounding area.
3
Table of
Contents
SENIOR HOUSING PROPERTIES
TRUST
Introduction to Unaudited
Pro Forma Condensed Consolidated Financial Statements
The
following unaudited pro forma condensed consolidated balance sheet as of September 30,
2008, reflects our financial position as if the transactions described in the
footnotes to the unaudited pro forma condensed consolidated financial
statements were completed on September 30, 2008. The unaudited pro forma condensed
consolidated statements of income for the nine months ended September 30,
2008, and the year ended December 31, 2007, present our results of
operations as if the transactions described in the notes to the unaudited pro
forma condensed consolidated financial statements were completed on January 1,
2007. These unaudited pro forma
condensed consolidated financial statements should be read in conjunction with
our financial statements for the three and nine months ended September 30,
2008, included in our Quarterly Report on Form 10-Q, our financial
statements for the year ended December 31, 2007, included in our Annual
Report on Form 10-K, and the financial statements included in our Current
Report on Form 8-K dated May 9, 2008 and in our Current Report on Form 8-K/A
dated May 22, 2008.
The
unaudited pro forma financial statements assume the acquisitions of 48 medical
office, clinic and biotech laboratory buildings, or MOBs, from HRPT Properties
Trust, or HRPT, are financed with cash on hand, borrowings under our revolving
credit facility and by assuming three mortgage debts on two of the properties
totaling $10.8 million. We expect to
eventually fund these acquisitions with a mix of long term capital determined
based upon market conditions. These
unaudited pro forma financial statements are provided for informational
purposes only and upon completion of the planned long term financing for these
acquisitions our financial position and results of our operations will be
significantly different than what is presented in these unaudited pro forma
financial statements. In the opinion of
management, all adjustments necessary to reflect the effects of the
transactions described above have been included in the pro forma financial
statements.
The
allocation of the purchase prices of the acquisitions of the MOBs from HRPT and
the other property acquisitions described in the notes to the unaudited pro
forma condensed financial statements and reflected in these unaudited pro forma
condensed consolidated financial statements have been based upon preliminary
estimates of the fair value of assets acquired and liabilities assumed. A final determination of the fair values of
the MOBs acquired or to be acquired will be based on the actual net tangible
and intangible assets that exist as of the dates of the completion of the
transactions. Consequently, amounts
preliminarily allocated to assets acquired and liabilities assumed could change
significantly from those used in the unaudited pro forma financial statements.
These
unaudited pro forma financial statements are not necessarily indicative of the
expected results of operations for any future period. Differences will result if the acquisitions
of the MOBs from HRPT are not completed as planned. Differences could also result from, among
other considerations, future changes in our portfolio of investments, changes
in interest rates, changes in our capital structure, changes in property level
operating expenses, and changes in property level revenues including rents
expected to be received on leases in place or signed
F-1
Table of
Contents
during
and after 2008. Consequently, amounts
presented in the unaudited pro forma financial statements related to these
transactions are likely to be different than actual future results.
F-2
Table of
Contents
SENIOR HOUSING PROPERTIES TRUST
Unaudited Pro Forma
Condensed Consolidated Balance Sheet
September 30, 2008
(dollars in thousands)
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
Historical
|
|
MOBs
Acquired (A)
(C)
|
|
MOBs
Pending (B)
(C)
|
|
Other
Acquired
Properties
(D)
|
|
Pro Forma
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties, at cost
|
|
$
|
2,645,268
|
|
$
|
29,050
|
|
$
|
277,722
|
|
$
|
29,000
|
|
$
|
2,981,040
|
|
Less accumulated depreciation
|
|
364,366
|
|
|
|
|
|
|
|
364,366
|
|
|
|
2,280,902
|
|
29,050
|
|
277,722
|
|
29,000
|
|
2,616,674
|
|
Cash and cash equivalents
|
|
7,191
|
|
|
|
|
|
|
|
7,191
|
|
Restricted cash
|
|
4,443
|
|
|
|
|
|
|
|
4,443
|
|
Deferred financing fees, net
|
|
5,098
|
|
|
|
|
|
|
|
5,098
|
|
Acquired real estate leases, net
|
|
23,691
|
|
1,350
|
|
29,947
|
|
|
|
54,988
|
|
Other assets
|
|
27,717
|
|
|
|
|
|
|
|
27,717
|
|
|
|
$
|
2,349,042
|
|
$
|
30,400
|
|
$
|
307,669
|
|
$
|
29,000
|
|
$
|
2,716,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured revolving credit facility
|
|
$
|
93,000
|
|
$
|
29,829
|
|
$
|
302,429
|
|
$
|
29,000
|
|
$
|
454,258
|
|
Senior unsecured notes due 2012 and 2015, net of discount
|
|
321,981
|
|
|
|
|
|
|
|
321,981
|
|
Secured debt and capital leases
|
|
152,112
|
|
|
|
|
|
|
|
152,112
|
|
Acquired real estate lease obligations, net
|
|
7,075
|
|
571
|
|
5,240
|
|
|
|
12,886
|
|
Other liabilities
|
|
32,254
|
|
|
|
|
|
|
|
32,254
|
|
Shareholders equity
|
|
1,742,620
|
|
|
|
|
|
|
|
1,742,620
|
|
|
|
$
|
2,349,042
|
|
$
|
30,400
|
|
$
|
307,669
|
|
$
|
29,000
|
|
$
|
2,716,111
|
|
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
F-3
Table of
Contents
SENIOR HOUSING PROPERTIES TRUST
Unaudited Pro Forma
Condensed Consolidated Statement of Income
Nine Months Ended September 30, 2008
(amounts in thousands, except per share amounts)
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
Historical
|
|
MOBs
Acquired
(E)
|
|
MOBs Pending
(F)
|
|
Other
Acquired
Properties
(G)
|
|
Adjustments
|
|
Pro Forma
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
160,560
|
|
$
|
|
|
$
|
|
|
$
|
1,740
|
|
$
|
13,331
|
(H)
|
$
|
175,631
|
|
MOB rental income
|
|
|
|
11,641
|
|
18,412
|
|
|
|
5,462
|
(I)
|
35,515
|
|
Interest and other income
|
|
2,056
|
|
2,063
|
|
4,351
|
|
|
|
|
|
8,470
|
|
Total revenues
|
|
162,616
|
|
13,704
|
|
22,763
|
|
1,740
|
|
18,793
|
|
219,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses
|
|
1,124
|
|
3,186
|
|
6,690
|
|
|
|
569
|
(J)
|
11,569
|
|
Interest
|
|
28,934
|
|
|
|
|
|
482
|
|
8,180
|
(K)
|
37,596
|
|
Depreciation
|
|
43,235
|
|
|
|
|
|
559
|
|
14,450
|
(L)
|
58,244
|
|
General and administrative
|
|
12,506
|
|
|
|
|
|
109
|
|
2,155
|
(M)
|
14,770
|
|
Impairment of assets
|
|
2,940
|
|
|
|
|
|
|
|
|
|
2,940
|
|
Total expenses
|
|
88,739
|
|
3,186
|
|
6,690
|
|
1,150
|
|
25,354
|
|
125,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before gain on sale of properties
|
|
73,877
|
|
10,518
|
|
16,073
|
|
590
|
|
(6,561
|
)
|
94,497
|
|
Gain on sale of properties
|
|
266
|
|
|
|
|
|
|
|
|
|
266
|
|
Net income
|
|
$
|
74,143
|
|
$
|
10,518
|
|
$
|
16,073
|
|
$
|
590
|
|
$
|
(6,561
|
)
|
$
|
94,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
102,004
|
|
|
|
|
|
|
|
12,527
|
(N)
|
114,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before gain on sale of properties
|
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
$
|
0.83
|
|
Net income
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
|
$
|
0.83
|
|
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
F-4
Table of
Contents
SENIOR HOUSING PROPERTIES TRUST
Unaudited Pro Forma
Condensed Consolidated Statement of Income
Year Ended December 31, 2007
(amounts in thousands, except per share amounts)
|
|
|
|
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
|
Historical
|
|
MOBs Acquired
(O)
|
|
MOBs Pending
(P)
|
|
Other
Acquired
Properties
(Q)
|
|
Adjustments
|
|
Pro Forma
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
185,936
|
|
$
|
|
|
$
|
|
|
$
|
2,320
|
|
$
|
42,655
|
(R)
|
$
|
230,911
|
|
MOB rental income
|
|
|
|
20,666
|
|
26,795
|
|
|
|
6,801
|
(S)
|
54,262
|
|
Interest and other income
|
|
2,086
|
|
3,607
|
|
3,758
|
|
|
|
|
|
9,451
|
|
Total revenues
|
|
188,022
|
|
24,273
|
|
30,553
|
|
2,320
|
|
49,456
|
|
294,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operating expenses
|
|
|
|
5,061
|
|
8,291
|
|
|
|
758
|
(T)
|
14,110
|
|
Interest
|
|
37,755
|
|
|
|
|
|
642
|
|
13,680
|
(U)
|
52,077
|
|
Depreciation
|
|
47,384
|
|
|
|
|
|
746
|
|
29,711
|
(V)
|
77,841
|
|
General and administrative
|
|
14,154
|
|
|
|
|
|
145
|
|
4,670
|
(W)
|
18,969
|
|
Loss on early extinguishment of debt
|
|
2,026
|
|
|
|
|
|
|
|
|
|
2,026
|
|
Impairment of assets
|
|
1,400
|
|
|
|
|
|
|
|
|
|
1,400
|
|
Total expenses
|
|
102,719
|
|
5,061
|
|
8,291
|
|
1,533
|
|
48,819
|
|
166,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
85,303
|
|
$
|
19,212
|
|
$
|
22,262
|
|
$
|
787
|
|
$
|
637
|
|
$
|
128,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
83,168
|
|
|
|
|
|
|
|
31,363
|
(X)
|
114,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
$
|
1.12
|
|
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
F-5
Table of Contents
SENIOR HOUSING PROPERTIES TRUST
Notes to
Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars and square feet in thousands, or as otherwise stated)
Unaudited Pro Forma Condensed Consolidated
Balance Sheet Adjustments
(A)
Represents
the impact of our completed acquisitions from HRPT Properties Trust, or HRPT,
of the one medical office building which was acquired subsequent to September 30,
2008 and related financing. This
acquisition was funded with borrowings under our revolving credit
facility. Included in the September 30,
2008 historical numbers are 28 medical office, clinic and biotech laboratory
buildings, or MOBs, that were acquired prior to September 30, 2008 from
HRPT for approximately $232.7 million, excluding closing costs, including the
assumption of three mortgage loans that encumber two properties totaling $10.8
million at a weighted average interest rate of 7.1% per annum. Also included in the September 30, 2008
historical column is one MOB acquired from an unaffiliated party for $18.6
million, excluding closing costs.
(B)
Represents
the impact of our pending acquisitions of the remaining 19 MOBs we expect to
acquire from HRPT and relating financings.
These pending acquisitions are expected to be funded with borrowings
under our revolving credit facility. The
estimated purchase prices of these 19 MOBs are subject to change based on
contractual terms of any applicable purchase agreement. The form of funds for these acquisitions is
subject to change based on capital market conditions at the time of closings.
(C)
Includes
the impact of the preliminary purchase accounting adjustments for the completed
acquisition of one MOB acquired subsequent to September 30, 2008 and the
pending acquisitions of 19 MOBs from HRPT for the value of in-place leases and
the fair market value of above or below market leases and customer
relationships.
The allocation of assets is as follows:
MOBs Acquired:
|
|
|
|
Origination Costs
|
|
$
|
789
|
|
Above Market Leases
|
|
561
|
|
Total MOBs Acquired
|
|
$
|
1,350
|
|
|
|
|
|
MOBs Pending:
|
|
|
|
Origination Costs
|
|
$
|
10,871
|
|
Above Market Leases
|
|
19,076
|
|
Total MOBs Pending
|
|
$
|
29,947
|
|
The allocation of liabilities is as follows:
Below Market Leases:
|
|
|
|
MOBs Acquired
|
|
$
|
571
|
|
MOBs Pending
|
|
5,240
|
|
Total Below Market Leases
|
|
$
|
5,811
|
|
F-6
Table
of Contents
SENIOR HOUSING PROPERTIES TRUST
Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements
(dollars and square feet in thousands, or as otherwise stated)
Included in the September 30, 2008 historical numbers are the
preliminary purchase accounting adjustments for the 28 MOBs that were acquired
prior to September 30, 2008 from HRPT and one MOB acquired in September 2008
from an unaffiliated party. Intangible
lease assets and liabilities recorded by us for these acquisitions totaled
$22.0 million and $3.2 million, respectively.
(D)
Includes
the acquisition of one senior living facility from an unaffiliated party
subsequent to September 30, 2008 for approximately $29.0 million,
excluding closing costs. This
acquisition was funded with borrowings under our revolving credit facility.
Unaudited Pro Forma Condensed Consolidated
Statement of Income Adjustments for the Nine Months Ended September 30,
2008
(E)
Represents
the impact on rental income, reimbursement income and operating expenses for
the nine months ended September 30, 2008 of the historical results of the
one MOB acquired by us subsequent to September 30, 2008 and pro rated
results of the 28 MOBs acquired by us since June 1, 2008 as if these
acquisitions occurred on January 1, 2008.
Included in rental income, interest expense, depreciation and general
and administrative expenses in the historical column are $5.0 million,
$173,000, $1.3 million and $2,000, respectively, of the 28 MOBs acquired from
HRPT and the one MOB acquired from an unaffiliated party since June 1,
2008 from the date of acquisition through September 30, 2008. A management fee of 3% of gross rents is
included in MOB property operating expenses.
(F)
Represents
the impact on rental income, reimbursement income and operating expenses for
the nine months ended September 30, 2008 of the historical results of our
pending acquisitions from HRPT of 19 MOBs as if these acquisitions occurred on January 1,
2008. A management fee of 3% of gross
rents is included in MOB property operating expenses.
(G)
Represents
the impact on revenues and expenses for the nine months ended September 30,
2008 of the acquisition of one senior living property from an unaffiliated
party subsequent to September 30, 2008, as if this acquisition occurred on
January 1, 2008. The aggregate
purchase price for this acquisition was approximately $29.0 million, excluding
closing costs. This acquisition was
funded with borrowings under our revolving credit facility at our current
interest rate of 2.2% per annum. The
impact on depreciation expense is the pro forma impact as if this acquisition
occurred on January 1, 2008. The
increase in general and administrative expense represents the management fees
payable to Reit Management and Research, LLC, or RMR.
(H)
During
the nine months ended September 30, 2008, we purchased 29 senior living
properties with a total of 2,255 units and four wellness centers with a total
of 458,000 square feet for approximately $348.6 million and $100.0 million,
respectively, from eight unaffiliated parties.
We leased these properties for initial rent of $37.0 million. We funded these acquisitions using cash on
hand, proceeds from equity issuances in
F-7
Table
of Contents
SENIOR HOUSING PROPERTIES TRUST
Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements
(dollars and square feet in thousands, or as otherwise stated)
December 2007 and February and June 2008, borrowings
under our revolving credit facility and the assumption of 15 mortgage loans
that encumber eight of these senior living properties totaling $50.5 million at
a weighted average interest rate of 6.5% per annum. The adjustment to rental income represents
the full nine month impact assuming we acquired these 29 senior living
properties and four wellness centers on January 1, 2008.
(I)
Represents
the rental income adjustment for the one MOB acquired from an unaffiliated
party on September 30, 2008 and the straight-line rent adjustment for the
29 acquired MOBs and 19 pending MOBs from HRPT.
Also includes the preliminary amortization of capitalized above and
below market lease values for these acquired and pending acquisitions. The allocation of the adjustment is as
follows:
MOBs Acquired from Unaffiliated Party
|
|
$
|
1,832
|
|
MOBs Acquired from HRPT (Straight-line)
|
|
1,942
|
|
MOBs Pending from HRPT (Straight-line)
|
|
2,641
|
|
MOBs Acquired from HRPT (Above Market
Leases)
|
|
(81
|
)
|
MOBs Pending from HRPT (Above Market
Leases)
|
|
(1,456
|
)
|
MOBs Acquired from Unaffiliated Party
(Above Market Leases)
|
|
(41
|
)
|
MOBs Acquired from HRPT (Below Market
Leases)
|
|
107
|
|
MOBs Pending from HRPT (Below Market
Leases)
|
|
477
|
|
MOBs Acquired from Unaffiliated Party
(Below Market Leases)
|
|
41
|
|
Total
|
|
$
|
5,462
|
|
(J)
Represents
the property operating expenses adjustment for the one MOB acquired from an
unaffiliated party on September 30, 2008.
The adjustment represents the full nine month impact assuming we
acquired this property on January 1, 2008.
(K)
Represents
the impact on interest expense for the nine months ended September 30,
2008, from $332.3 million outstanding on our revolving credit facility at our
current interest rate of 2.2% per annum for the 29 acquired MOBs and 19 pending
MOBs described in Notes (A) and (B), respectively. Also includes the interest expense on the
assumption of three mortgage loans that encumber two of the MOBs totaling $10.8
million at a weighted average interest rate of 7.1% per annum described above
in Note (A) and the assumption of 15 mortgage loans that encumber eight of
the senior living properties totaling $50.5 million at a weighted average
interest rate of 6.5% per annum described above in Note (H). The allocation of interest expense is as
follows:
MOBs Acquired
|
|
$
|
495
|
|
MOBs Acquired Debt Assumption
|
|
461
|
|
MOBs Pending
|
|
5,022
|
|
Senior Living Properties Acquired Debt
Assumption
|
|
2,202
|
|
Total
|
|
$
|
8,180
|
|
F-8
Table
of Contents
SENIOR HOUSING PROPERTIES TRUST
Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements
(dollars and square feet in thousands, or as otherwise stated)
(L)
Represents the impact on depreciation expense
for the nine months ended September 30, 2008, of properties acquired by us
during the nine months ended September 30, 2008 described in Notes (H) and
(I) and the pro forma impact of the acquisitions of the 29 acquired MOBs
and 19 pending MOBs described in Notes (E) and (F), respectively. Also includes the preliminary amortization of
capitalized origination costs for these acquired and pending MOB
acquisitions. The allocation of
depreciation expense is as follows:
2008 Senior Living and Wellness Center
Acquisitions
|
|
$
|
4,060
|
|
MOBs Acquired from HRPT
|
|
3,500
|
|
MOBs Pending from HRPT
|
|
5,356
|
|
MOBs Acquired from Unaffiliated Party
|
|
322
|
|
MOBs Acquired from HRPT (Origination Costs)
|
|
131
|
|
MOBs Pending from HRPT (Origination Costs)
|
|
976
|
|
MOBs Acquired from Unaffiliated Party
(Origination Costs)
|
|
105
|
|
Total
|
|
$
|
14,450
|
|
(M)
Represents the impact on general and
administrative expenses for the nine months ended September 30, 2008, of
properties acquired by us during
the nine months ended September 30, 2008 described in Notes (H) and (I) and
the pro forma impact of the acquisitions of the 29 acquired MOBs and 19 pending
MOBs described in Notes (E) and (F), respectively. The increase in general and administrative
expense represents the management fees payable to RMR. The management fees paid by us to RMR with
respect to the acquired and pending MOBs from HRPT will be the same as the
management fees that are currently being paid by HRPT with respect to these
MOBs and they will not increase as a result of our purchase prices being higher
than HRPTs historical costs of these MOBs.
The allocation of general and administrative expenses is as follows:
2008 Senior Living and Wellness Center
Acquisitions
|
|
$
|
791
|
|
MOBs Acquired from HRPT
|
|
438
|
|
MOBs Pending from HRPT
|
|
856
|
|
MOBs Acquired from Unaffiliated Party
|
|
70
|
|
Total
|
|
$
|
2,155
|
|
(N)
In
February 2008 and June 2008, we issued 6.2 million and 19.6 million
of our common shares in underwritten public offerings, raising net proceeds of
$129.4 million and $393.7 million, respectively. We used the net proceeds from these offerings
to repay borrowings outstanding on our revolving credit facility and for general
business purposes, including funding, in part, the acquisitions described in
Notes (E), (G), (H) and (I). The
adjustment to our weighted average shares outstanding shows the impact of our
common shares issued and outstanding at September 30, 2008, as if we
issued these shares on January 1, 2008.
F-9
Table of Contents
SENIOR HOUSING PROPERTIES TRUST
Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements
(dollars and square feet in thousands, or as otherwise stated)
Unaudited Pro
Forma Condensed Consolidated Statement of Income Adjustments for the Year Ended
December 31, 2007
(O)
Represents
the impact on rental income, reimbursement income and operating expenses for
the year ended December 31, 2007 of the historical results of the 29 MOBs
acquired by us from HRPT, as if these acquisitions occurred on January 1,
2007. A management fee of 3% of gross
rents is included in MOB property operating expenses.
(P)
Represents
the impact on rental income, reimbursement income and operating expenses for
the year ended December 31, 2007 of the historical results of our pending
acquisitions from HRPT of 19 MOBs as if these acquisitions occurred on January 1,
2007. A management fee of 3% of gross
rents is included in MOB property operating expenses.
(Q)
Represents
the impact on revenues and expenses for the year ended December 31, 2007
of the acquisition of one senior living property from an unaffiliated party
subsequent to September 30, 2008, as if this acquisition occurred on January 1,
2007. The aggregate purchase price for
this acquisition was approximately $29.0 million, excluding closing costs. This acquisition was funded with borrowings
under our revolving credit facility at our current interest rate of 2.2% per
annum. The impact on depreciation
expense is the pro forma impact as if this acquisition occurred on January 1,
2007. The increase in general and
administrative expense represents the management fees payable to RMR.
(R)
During
the nine months ended September 30, 2008, we purchased 29 senior living
properties with a total of 2,255 units and four wellness centers with a total
of 458,000 square feet for approximately $348.6 million and $100.0 million, respectively,
from eight unaffiliated parties. We
leased these properties for initial rent of $37.0 million. We funded these acquisitions using cash on
hand, proceeds from equity issuances in December 2007 and February and
June 2008, borrowings under our revolving credit facility and the
assumption of 15 mortgage loans that encumber eight of these senior living
properties totaling $50.5 million at a weighted average interest rate of 6.5%
per annum. The adjustment to rental
income represents the full year impact assuming we acquired these 29 senior
living properties and four wellness centers on January 1, 2007. Also included is an adjustment for the six
wellness centers that we purchased in October and November 2007 to
show the full year impact of the rent in connection with this purchase, as if
these wellness centers were acquired on January 1, 2007. The allocation of rental income is as
follows:
2008 Senior Living and Wellness Center
Acquisitions
|
|
$
|
36,977
|
|
Wellness Centers Acquired in 2007
|
|
5,678
|
|
Total
|
|
$
|
42,655
|
|
(S)
Represents
the rental income adjustment for the one MOB acquired from an unaffiliated
party on September 30, 2008 and the straight-line rent adjustment for the
29 acquired MOBs and 19 pending MOBs from HRPT.
Also includes the preliminary
F-10
Table of Contents
SENIOR HOUSING PROPERTIES TRUST
Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements
(dollars and square feet in thousands, or as otherwise stated)
amortization of capitalized above and below
market lease values for these acquired and pending MOB acquisitions. The allocation of the adjustment is as
follows:
MOBs Acquired from Unaffiliated Party
|
|
$
|
2,443
|
|
MOBs Acquired from HRPT (Straight-line)
|
|
2,141
|
|
MOBs Pending from HRPT (Straight-line)
|
|
3,521
|
|
MOBs Acquired from HRPT (Above Market
Leases)
|
|
(1,740
|
)
|
MOBs Pending from HRPT (Above Market
Leases)
|
|
(1,942
|
)
|
MOBs Acquired from Unaffiliated Party
(Above Market Leases)
|
|
(54
|
)
|
MOBs Acquired from HRPT (Below Market
Leases)
|
|
1,742
|
|
MOBs Pending from HRPT (Below Market
Leases)
|
|
635
|
|
MOBs Acquired from Unaffiliated Party
(Below Market Leases)
|
|
55
|
|
Total
|
|
$
|
6,801
|
|
(T)
Represents
the property operating expenses adjustment for the one MOB acquired from an
unaffiliated party on September 30, 2008.
The adjustment represents the full year impact assuming we acquired this
property on January 1, 2007.
(U)
Represents
the impact on interest expense for the year ended December 31, 2007, from
$391.6 million outstanding on our revolving credit facility at our current
interest rate of 2.2% per annum for the acquired and pending acquisitions
described above in Notes (A), (B) and (R) and an adjustment for the
six wellness centers that we purchased in October and November 2007
to show the impact on interest expense on the 6.9% mortgage loan we assumed in
connection with this purchase. Also
includes the interest expense on the assumption of three mortgage debts that
encumber two of the MOB properties totaling $10.8 million at a weighted average
interest rate of 7.1% per annum as described in Note (A) and the
assumption of 15 mortgage loans that encumber eight of the senior living
properties totaling $50.5 million at a weighted average interest rate of 6.5%
per annum described above in Note (R).
The allocation of interest expense is as follows:
MOBs Acquired
|
|
$
|
660
|
|
MOBs Acquired Debt Assumption
|
|
763
|
|
MOBs Pending
|
|
6,697
|
|
2008 Senior Living and Wellness Center
Acquisitions
|
|
1,313
|
|
Mortgage on wellness centers
|
|
944
|
|
Senior Living Properties Acquired Debt
Assumption
|
|
3,303
|
|
Total
|
|
$
|
13,680
|
|
(V
)
Represents the impact on depreciation expense
for the year ended December 31, 2007, of the wellness centers acquired in October and
November 2007, properties acquired by us during the nine months ended September 30,
2008 described in Note (R), the pro forma impact of the acquisitions of the 29
acquired MOBs and 19 pending MOBs described in Notes (O) and (P),
respectively, and the pro forma impact of one MOB acquired from an unaffiliated
party on September 30, 2008 described above in Note (S).
F-11
Table
of Contents
SENIOR HOUSING PROPERTIES TRUST
Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements
(dollars and square feet in thousands, or as otherwise stated)
Also includes the preliminary
amortization of capitalized origination costs for these acquired and pending
MOB acquisitions. The allocation of
depreciation expense is as follows:
Wellness Centers Acquired in 2007
|
|
$
|
1,740
|
|
2008 Senior Living and Wellness Center
Acquisitions
|
|
11,536
|
|
MOBs Acquired from HRPT
|
|
6,371
|
|
MOBs Pending from HRPT
|
|
7,141
|
|
MOBs Acquired from Unaffiliated Party
|
|
456
|
|
MOBs Acquired from HRPT (Origination Costs)
|
|
1,025
|
|
MOBs Pending from HRPT (Origination Costs)
|
|
1,302
|
|
MOBs Acquired from Unaffiliated Party (Origination
Costs)
|
|
140
|
|
Total
|
|
$
|
29,711
|
|
(W)
Represents the impact on general and
administrative expenses for the year ended December 31, 2007, of the
wellness
centers
acquired in October and November 2007,
properties acquired by us during the nine months ended September 30, 2008
described in Notes (R) and (S) and the pro forma impact of the
acquisitions of the 29 acquired MOBs and 19 pending MOBs described in Notes (O) and
(P), respectively. The increase in
general and administrative expense represents the management fees payable to
RMR. The management fees paid by us to
RMR with respect to the acquired and pending MOB acquisitions from HRPT will be
the same as the management fees that are currently being paid by HRPT with
respect to these MOBs and they will not increase as a result of our purchase
prices being higher than HRPTs historical costs of these MOBs. The allocation of general and administrative
expenses is as follows:
Wellness Centers
|
|
$
|
338
|
|
2008 Senior Living and Wellness Center Acquisitions
|
|
2,243
|
|
MOBs Acquired from HRPT
|
|
848
|
|
MOBs Pending from HRPT
|
|
1,148
|
|
MOBs Acquired from Unaffiliated Party
|
|
93
|
|
Total
|
|
$
|
4,670
|
|
(X)
In
February 2007 and December 2007, we issued 6.0 and 5.0 million of our
common shares in an underwritten public offering, raising net proceeds of
$151.6 million and $108.8 million, respectively. In February 2008 and June 2008, we
issued 6.2 million and 19.6 million of our common shares in underwritten public
offerings, raising net proceeds of $129.4 million and $393.7 million,
respectively. We used the net proceeds
from these offerings to repay borrowings outstanding on our revolving credit
facility and for general business purposes, including funding, in part, the acquisitions
described in Notes (O), (Q) (R) and (S). The adjustment shows the impact to our
weighted average shares outstanding at December 31, 2007, as if we issued
these shares on January 1, 2007.
F-12
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.
|
SENIOR HOUSING PROPERTIES TRUST
|
|
|
|
|
|
By:
|
/s/ David J. Hegarty
|
|
|
David J. Hegarty
|
|
|
President and Chief Operating Officer
|
|
|
Dated: December 17, 2008
|
|
|
|
|
|
/s/ Richard A. Doyle
|
|
|
Richard A. Doyle
|
|
|
Treasurer and Chief Financial Officer
|
|
|
Dated: December 17, 2008
|
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