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 March 31,
2009
|
|
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 (or for such
shorter period that the registrant was required to file such reports), 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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes
o
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 May 6, 2009: 120,454,198.
Table of Contents
SENIOR HOUSING PROPERTIES TRUST
FORM 10-Q
March 31, 2009
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
PART I.
Financial Information
Item 1. Financial
Statements
SENIOR HOUSING PROPERTIES
TRUST
CONDENSED CONSOLIDATED
BALANCE SHEETS
(amounts in thousands, except share data)
(unaudited)
|
|
March 31,
|
|
December 31,
|
|
|
|
2009
|
|
2008
|
|
ASSETS
|
|
|
|
|
|
Real estate
properties, at cost:
|
|
|
|
|
|
Land
|
|
$
|
324,491
|
|
$
|
319,591
|
|
Buildings and
improvements
|
|
2,514,260
|
|
2,487,665
|
|
|
|
2,838,751
|
|
2,807,256
|
|
Less accumulated
depreciation
|
|
398,946
|
|
381,339
|
|
|
|
2,439,805
|
|
2,425,917
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
5,566
|
|
5,990
|
|
Restricted cash
|
|
4,777
|
|
4,344
|
|
Deferred
financing fees, net
|
|
5,303
|
|
5,068
|
|
Acquired real
estate leases, net
|
|
30,636
|
|
30,546
|
|
Other assets
|
|
22,455
|
|
25,009
|
|
Total assets
|
|
$
|
2,508,542
|
|
$
|
2,496,874
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS EQUITY
|
|
|
|
|
|
Unsecured
revolving credit facility
|
|
$
|
181,000
|
|
$
|
257,000
|
|
Senior unsecured
notes due 2012 and 2015, net of discount
|
|
322,053
|
|
322,017
|
|
Secured debt and
capital leases
|
|
150,665
|
|
151,416
|
|
Accrued interest
|
|
8,180
|
|
11,121
|
|
Acquired real
estate lease obligations, net
|
|
8,166
|
|
7,974
|
|
Other
liabilities
|
|
19,079
|
|
15,988
|
|
Total
liabilities
|
|
689,143
|
|
765,516
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders
equity:
|
|
|
|
|
|
Common shares of
beneficial interest, $0.01 par value: 149,700,000 shares authorized,
120,398,384 and 114,542,584 shares issued and outstanding at March 31,
2009 and December 31, 2008, respectively
|
|
1,204
|
|
1,145
|
|
Additional
paid-in capital
|
|
2,097,601
|
|
2,000,865
|
|
Cumulative net
income
|
|
561,851
|
|
530,318
|
|
Cumulative distributions
|
|
(837,729
|
)
|
(797,639
|
)
|
Unrealized gain
on investments
|
|
(3,528
|
)
|
(3,331
|
)
|
Total
shareholders equity
|
|
1,819,399
|
|
1,731,358
|
|
Total
liabilities and shareholders equity
|
|
$
|
2,508,542
|
|
$
|
2,496,874
|
|
See accompanying notes.
1
Table
of Contents
SENIOR HOUSING PROPERTIES
TRUST
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(unaudited)
|
|
Three Months Ended
March 31,
|
|
|
|
2009
|
|
2008
|
|
Revenues:
|
|
|
|
|
|
Rental income
|
|
$
|
68,377
|
|
$
|
49,039
|
|
Interest and
other income
|
|
208
|
|
514
|
|
Total revenues
|
|
68,585
|
|
49,553
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Property
operating expenses
|
|
2,955
|
|
|
|
Interest
|
|
10,776
|
|
9,518
|
|
Depreciation
|
|
18,389
|
|
13,023
|
|
Acquisition
costs
|
|
112
|
|
|
|
General and
administrative
|
|
4,820
|
|
3,696
|
|
Total expenses
|
|
37,052
|
|
26,237
|
|
|
|
|
|
|
|
Net income
|
|
$
|
31,533
|
|
$
|
23,316
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
117,853
|
|
91,080
|
|
|
|
|
|
|
|
Basic and
diluted earnings per share:
|
|
|
|
|
|
Net income
|
|
$
|
0.27
|
|
$
|
0.26
|
|
See
accompanying notes
.
2
Table
of Contents
SENIOR
HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
|
|
Three Months Ended
March 31,
|
|
|
|
2009
|
|
2008
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
31,533
|
|
$
|
23,316
|
|
Adjustments to
reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
Depreciation
|
|
18,389
|
|
13,023
|
|
Amortization of
deferred financing fees and debt discounts
|
|
540
|
|
524
|
|
Amortization of
acquired real estate leases
|
|
160
|
|
(29
|
)
|
Change in assets
and liabilities:
|
|
|
|
|
|
Restricted cash
|
|
(433
|
)
|
(315
|
)
|
Other assets
|
|
2,274
|
|
1,193
|
|
Accrued interest
|
|
(2,941
|
)
|
(2,720
|
)
|
Other
liabilities
|
|
3,119
|
|
2,761
|
|
Cash provided by
operating activities
|
|
52,641
|
|
37,753
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Acquisitions
|
|
(32,252
|
)
|
(288,944
|
)
|
Cash used for
investing activities
|
|
(32,252
|
)
|
(288,944
|
)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
issuance of common shares, net
|
|
96,767
|
|
129,418
|
|
Proceeds from
borrowings on revolving credit facility
|
|
32,000
|
|
176,000
|
|
Repayments of
borrowings on revolving credit facility
|
|
(108,000
|
)
|
(61,000
|
)
|
Repayment of
other debt
|
|
(751
|
)
|
(514
|
)
|
Deferred
financing fees
|
|
(739
|
)
|
|
|
Distributions to
shareholders
|
|
(40,090
|
)
|
(31,042
|
)
|
Cash (used for)
provided by financing activities
|
|
(20,813
|
)
|
212,862
|
|
|
|
|
|
|
|
Decrease in cash
and cash equivalents
|
|
(424
|
)
|
(38,329
|
)
|
Cash and cash
equivalents at beginning of period
|
|
5,990
|
|
43,521
|
|
Cash and cash
equivalents at end of period
|
|
$
|
5,566
|
|
$
|
5,192
|
|
|
|
|
|
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
Interest paid
|
|
$
|
13,717
|
|
$
|
11,714
|
|
|
|
|
|
|
|
Non-cash
financing activities:
|
|
|
|
|
|
Issuance of
common shares pursuant to our incentive share award plan
|
|
28
|
|
|
|
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, 2008.
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 May 2008, the Financial Accounting Standards
Board, or FASB, issued Statement of Financial Accounting Standards No. 162,
The Hierarchy of Generally Accepted Accounting Principles, or SFAS 162. SFAS 162 identifies sources of accounting
principles and a framework for selecting principles to be used in preparation
of financial statements of nongovernmental entities that are prepared in
conformity with generally accepted accounting principles in the United States
(the GAAP Hierarchy). SFAS 162 is
effective 60 days following the Securities and Exchange Commissions, or SECs,
approval of the Public Company Accounting Oversight Boards amendments to
auditing standard AU Section 411, The Meaning of Present Fairly in Conformity
With Generally Accepted Accounting Principles.
We do not expect this standard will result in any change to our current
accounting practices.
In December 2007, the FASB issued Statement of
Financial Accounting Standards No. 141(R), Business Combinations, or
SFAS No. 141(R). SFAS No. 141(R) establishes
principles and requirements for how the 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 fiscal years beginning after December 15, 2008. The adoption of SFAS No. 141(R) does
affect our consolidated financial statements, principally by requiring us to
expense acquisition costs.
On January 1, 2008, we adopted Statement of
Financial Accounting Standards No. 157, Fair Value Measurements, or SFAS
No. 157, for our financial assets and liabilities, primarily investments
in available for sale securities and senior notes (see Note 7). The provisions of SFAS No. 157 relating
to non-financial assets and liabilities that are not required or permitted to
be measured at fair value on a recurring basis was delayed in February 2008
with the issuance of Financial Accounting Standards Board Staff Position No. 157-2,
Effective Date of FASB Statement No. 157, or FSP FASB No. 157-2. Fair value measurements identified in FSP
FASB No. 157-2 were effective for our fiscal year beginning January 1,
2009. The adoption of FSP FASB No. 157-2
primarily resulted in additional disclosures in our consolidated financial
statements with respect to our properties classified as held for sale.
In April 2009, the FASB
issued FASB Staff Position No. FAS 157-4 Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly, or FSP FAS 157-4,
FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and
Presentation of Other-Than-Temporary Impairments, or FSP FAS 115-2 and FAS
124-2, and FASB Staff Position No. FAS 107-1 and APB 28-1 Interim
Disclosures about Fair Value of Financial Instruments, or FSP FAS 107-1 and
APB 28-1. FSP FAS 157-4 provides
additional guidance for estimating fair value in accordance with SFAS No. 157,
when the volume and level of activity for the assets or liabilities have
significantly decreased. FSP FAS 157-4 also includes guidance on
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)
identifying circumstances
that indicate a transaction is not orderly.
FSP FAS 115-2 and FAS 124-2 amend the other-than-temporary impairment
guidance in U.S. GAAP for debt securities to make the guidance more operational
and to improve the presentation and disclosure of other-than-temporary
impairments on debt and equity securities.
FSP FAS 107-2 and APB 28-1 amend FASB Statement No. 107, Disclosures
about Fair Value of Financial Instruments to require disclosures about fair
value of financial instruments for interim reporting periods of publicly traded
companies as well as in annual financial statements, and also amend APB Opinion
No. 28, Interim Financial Reporting to require those disclosures in
summarized financial information at interim reporting periods. Each of these FSPs is effective for interim
and annual reporting periods ending after June 15, 2009. We are currently
evaluating the impact, if any, that these FSPs will have on our consolidated
financial statements.
Note
2. Real Estate Properties
At
March 31, 2009, we owned 272 properties located in 34 states and
Washington, D.C.
In
May 2008, we entered into a series of agreements to acquire 48 medical
office, clinic and biotech laboratory buildings, or MOBs, from HRPT Properties
Trust, or HRP, for an aggregate purchase price of approximately $565.0
million. To date, we have acquired 38 of
these properties containing 1.6 million square feet for approximately $366.0
million, excluding closing costs. One of
the remaining buildings with an allocated value of $3.0 million is no longer
subject to our purchase agreement. We
expect the closings of the remaining nine buildings to occur in 2010. We and
HRP may mutually agree to accelerate the closings of these acquisitions. We funded these acquisitions using cash on
hand, proceeds from 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 and a weighted
average maturity in 2018. Our
obligations to complete the remaining purchases from HRP are subject to various
conditions typical of commercial real estate purchases. We can provide no assurance that we will
purchase all of these buildings or that the remaining purchases will be
completed in 2010 or sooner. As of March 31,
2009, the 47 buildings acquired and to be acquired were 98% leased to
approximately 210 tenants for an average lease term of 7.8 years. As part of this transaction, we also acquired
rights of first refusal to purchase any of 45 additional buildings (containing
approximately 4.6 million square feet of rental space) from HRP that are leased
to tenants in medical related businesses.
HRP was formerly our parent company, and both we and HRP are managed by
Reit Management & Research LLC, or RMR. Because we and HRP are both managed by RMR,
the terms of these transactions were negotiated by special committees of our
and HRPs boards of trustees composed solely of independent trustees who were
not also independent trustees of both companies. For more information about our dealings with
HRP and RMR and about the risks which may arise as a result of these related
party transactions, please see our Annual Report on Form 10-K for the year
ended December 31, 2008.
As
of March 31, 2009, four of our properties are classified as held for
sale. These four properties are included
in real estate properties on our condensed consolidated balance sheets and have
a net carrying value of approximately
$8.7 million
at March 31, 2009. In 2008, we
entered into an agreement to sell one of these properties to an unaffiliated
party for approximately $1.2 million. In
April 2009, we entered into another agreement to sell one of these
properties to an unaffiliated party for approximately $3.1 million. The sales
of these properties are subject to various contingencies, and we can provide no
assurance that we will sell these properties.
During
the three months ended March 31, 2009, pursuant to the terms of our
existing leases with Five Star Quality Care, Inc., or Five Star, we
purchased $12.7 million 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 $1.0 million.
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. Net Unrealized Loss on Investments
On
March 31, 2009, we owned 1,000,000 common shares of HRP and 35,000 common
shares of Five Star, which are carried at fair market value in other assets on
our condensed consolidated balance sheets. The net unrealized loss on
investments shown on our condensed consolidated balance sheets represents the
difference between the quoted market prices of such shares on March 31,
2009 ($3.19 and $1.04 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 months ended March 31, 2009 and 2008:
|
|
Three Months Ended
March 31,
|
|
|
|
2009
|
|
2008
|
|
Net income
|
|
$
|
31,533
|
|
$
|
23,316
|
|
Other
comprehensive income:
|
|
|
|
|
|
Change in net
unrealized loss on investments
|
|
(197
|
)
|
(1,068
|
)
|
Comprehensive
income
|
|
$
|
31,336
|
|
$
|
22,248
|
|
Note
5. Indebtedness
We have an unsecured
revolving credit facility that matures in December 2010. 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 weighted average interest rate payable on borrowings under this
revolving credit facility was
1.3% and 3.5%
at March 31, 2009 and 2008, respectively.
Our revolving credit facility is available for acquisitions, working
capital and general business purposes. As of March 31, 2009 and 2008, we
had $181.0 million and $115.0 million outstanding under this credit facility,
respectively. Subject to certain
conditions, at our option, this credit facilitys maturity date can be extended
to December 31, 2011 upon payment of a fee.
Note
6. Shareholders Equity
On February 13, 2009,
we paid a $0.35 per share, or $40.1 million, distribution to our common
shareholders for the quarter ended December 31, 2008. On April 7, 2009, we declared a
distribution of $0.35 per share, or $42.2 million, to be paid to common
shareholders of record on April 17, 2009, with respect to our results for
the quarter ended March 31, 2009. We expect to pay this distribution on or
about May 15, 2009.
In February 2009, we issued 5.9 million common shares in a public
offering, raising net proceeds of approximately $96.8 million. We used the net proceeds from this offering
to repay borrowings outstanding on our revolving credit facility, to fund the
acquisitions described above and for general business purposes.
On February 24, 2009,
pursuant to our incentive share award plan, we granted 2,000 common
shares of beneficial interest, par value $0.01 per share,
valued at $14.23
per share, the closing price of
our common shares on the New York Stock Exchange on that day, as compensation
to Jeffrey P. Somers, one of our Independent Trustees, who was appointed as a
trustee effective January 30, 2009.
We made this grant pursuant to an exemption from registration contained
in Section 4(2) of the Securities Act of 1933, as amended.
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)
Under the terms of our
business management agreement with RMR, on April 8, 2009 we issued 55,814
common shares in payment of an incentive fee of approximately $789 for services
rendered by RMR during 2008. We issued these shares pursuant to an exemption
from registration contained in Section 4(2) of the Securities Act of
1933, as amended.
Note 7. Fair Value of Assets and Liabilities
The
table below presents the assets and liabilities measured at fair value at March 31,
2009 categorized by the level of inputs used in the valuation of each asset, in
accordance with SFAS No. 157.
Description
|
|
Total
|
|
Quoted Prices in Active
Markets for Identical
Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for
sale (1)
|
|
$
|
8,671
|
|
$
|
|
|
$
|
8,671
|
|
$
|
|
|
Investments in
available for sale securities (2)
|
|
3,226
|
|
3,226
|
|
|
|
|
|
Senior notes (3)
|
|
282,107
|
|
|
|
282,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Assets held for
sale consist of four of our properties we expect to sell that are reported at
fair value. Level 2 inputs used to
determine fair value include offers to purchase the properties made by third
parties, or comparable sales transactions.
As of March 31, 2009, the net carrying value of these properties
was approximately $8.7 million. We have
recorded impairments to these properties subsequent to their acquisition by us
of approximately $8.6 million in order to reduce their carrying value to fair
value.
(2) Investments in available
for sale securities include our 1,000,000 common shares of HRP and 35,000
common shares of Five Star. The fair values of the common shares are based on
quoted prices in active markets. We have
evaluated the near-term prospects of HRP and Five Star in relation to the
severity and duration of the decline in fair value of their common shares. Based on that evaluation and our ability and
intent to hold these investments for a reasonable period of time sufficient for
a recovery of fair value, we do not consider these investments to be
other-than-temporarily impaired at March 31, 2009.
(3) We estimate the
fair values of our senior notes using discounted cash flow analyses and
currently prevailing interest rates. As of March 31, 2009, the book value
carrying amount of our senior notes was $322.1 million.
In addition to the assets
and liabilities described in the above table, additional financial instruments
of ours include rents receivable, cash and cash equivalents, restricted cash,
secured and unsecured debt and other liabilities. The fair values of these
additional financial instruments approximate their carrying value at March 31,
2009 based upon their liquidity, short term maturity, variable rate pricing or
our estimate of fair value using discounted cash flows analyses and prevailing
interest rates.
Note 8. Segment Reporting
We
have two reportable operating segments: (i) short term and long term
residential care facilities that offer dining for residents and (ii) properties
where medical related services are offered but where residential overnight
stays or dining services are not provided, or MOBs. Properties in the short term and long term
residential care facilities segment include independent living facilities,
assisted living facilities, skilled nursing facilities and rehabilitation
hospitals. Properties in the MOB segment
include medical office, clinic and biotech laboratory buildings. The All Other category in the following
table includes amounts related to corporate business activities and the
operating results of certain properties that offer
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)
fitness,
wellness and spa service to members.
Prior to June 2008, our only operating segments were short term and
long term residential care facilities that offer dining for residents and
properties that offer fitness, wellness and spa services to members included in
the All Other category.
|
|
For the Three Months Ended March 31, 2009
|
|
|
|
Short and
Long Term
Residential
Care Facilities
|
|
MOB
|
|
All Other
|
|
Consolidated
|
|
Rental income
|
|
$
|
54,037
|
|
$
|
10,446
|
|
$
|
3,894
|
|
$
|
68,377
|
|
Interest and
other income
|
|
|
|
13
|
|
195
|
|
208
|
|
Total revenues
|
|
54,037
|
|
10,459
|
|
4,089
|
|
68,585
|
|
|
|
|
|
|
|
|
|
|
|
Property
operating expenses
|
|
|
|
2,955
|
|
|
|
2,955
|
|
Interest expense
|
|
2,030
|
|
184
|
|
8,562
|
|
10,776
|
|
Depreciation
expense
|
|
14,873
|
|
2,594
|
|
922
|
|
18,389
|
|
Acquisition
costs
|
|
|
|
112
|
|
|
|
112
|
|
General and
administrative expense
|
|
|
|
|
|
4,820
|
|
4,820
|
|
Total expenses
|
|
16,903
|
|
5,845
|
|
14,304
|
|
37,052
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
37,134
|
|
$
|
4,614
|
|
$
|
(10,215
|
)
|
$
|
31,533
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,885,213
|
|
$
|
392,770
|
|
$
|
230,559
|
|
$
|
2,508,542
|
|
|
|
For the Three Months Ended March 31, 2008
|
|
|
|
Short and
Long Term
Residential
Care Facilities
|
|
MOB
|
|
All Other
|
|
Consolidated
|
|
Rental income
|
|
$
|
47,353
|
|
$
|
|
|
$
|
1,686
|
|
$
|
49,039
|
|
Interest and
other income
|
|
|
|
|
|
514
|
|
514
|
|
Total revenues
|
|
47,353
|
|
|
|
2,200
|
|
49,553
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
1,449
|
|
|
|
8,069
|
|
9,518
|
|
Depreciation
expense
|
|
12,640
|
|
|
|
383
|
|
13,023
|
|
General and
administrative expense
|
|
|
|
|
|
3,696
|
|
3,696
|
|
Total expenses
|
|
14,089
|
|
|
|
12,148
|
|
26,237
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
33,264
|
|
$
|
|
|
$
|
(9,948
|
)
|
$
|
23,316
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,831,412
|
|
$
|
|
|
$
|
105,560
|
|
$
|
1,936,972
|
|
Note 9. Significant Tenant
Five
Star is the lessee of 66% of our investments, at cost, as of March 31,
2009. The following tables present
summary financial information for Five Star for the three months ended March 31,
2009 and 2008, as reported in its Quarterly Report on Form 10-Q.
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)
Summary Financial Information of Five Star Quality
Care, Inc.
|
|
As of and for the Three Months
Ended
March 31,
|
|
|
|
2009
|
|
2008
|
|
Total revenues
|
|
$
|
295,165
|
|
$
|
258,877
|
|
Operating income
|
|
3,361
|
|
7,355
|
|
Income from
continuing operations
|
|
24,962
|
|
4,419
|
|
Net income
|
|
25,372
|
|
1,617
|
|
|
|
|
|
|
|
Current assets
|
|
116,305
|
|
146,314
|
|
Non-current
assets
|
|
298,535
|
|
240,156
|
|
Total
indebtedness
|
|
129,679
|
|
142,452
|
|
Current
liabilities
|
|
135,797
|
|
124,980
|
|
Non-current
liabilities
|
|
167,272
|
|
172,210
|
|
Total
shareholders equity
|
|
111,771
|
|
89,280
|
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
|
23,090
|
|
21,689
|
|
Net cash
provided by (used in) discontinued operations
|
|
1,532
|
|
(58
|
)
|
Net cash used in
investing activities
|
|
(6,173
|
)
|
(543
|
)
|
Net cash used in
financing activities
|
|
(6,161
|
)
|
(58
|
)
|
Net increase in
cash
|
|
12,288
|
|
21,030
|
|
Cash and cash
equivalents at the beginning of the period
|
|
16,138
|
|
30,999
|
|
Cash and cash
equivalents at the end of the period
|
|
28,426
|
|
52,029
|
|
|
|
|
|
|
|
|
|
The summary financial
information of Five Star is presented to comply with applicable accounting
regulations of the SEC.
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.
Five
Star is our former subsidiary and both we and Five Star have management
contracts with RMR. For information
about our dealings with Five Star and about the risks which may arise as a
result of these related party transactions, please see our Annual Report on Form 10-K
for the year ended December 31, 2008.
Note
10. Pro Forma Information
During
the three months ended March 31, 2009, we purchased one MOB for $19.3
million and, pursuant to the terms of our existing leases with Five Star, we
purchased $12.7 million of improvements made to our properties leased to Five
Star. During 2008, we purchased 30
senior living properties, four wellness centers and 38 MOBs for an aggregate of
$842.9 million and $69.4 million of improvements made to our properties leased
to Five Star; repaid in full a mortgage loan on one of our properties for $12.6
million in April 2008; assumed $61.3 million of mortgage debt in
conjunction with our 2008 acquisitions; recorded an impairment charge on four
of our properties for $8.4 million; and sold three assisted living facilities
to Five Star for $21.4 million for a gain on sale of approximately $266 in July 2008. During 2009 and 2008, we issued 5.9 million
and 25.8 million of our common shares, respectively. The
following table presents our pro forma results of operations as if all of these
acquisitions and related financings were completed on
9
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)
January 1, 2008. 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.
|
|
Pro Forma Information
For the Three Months Ended March 31,
|
|
|
|
2009
|
|
2008
|
|
Total revenues
|
|
$
|
68,934
|
|
$
|
69,166
|
|
Income before
gain on sale of properties
|
|
$
|
31,742
|
|
$
|
25,031
|
|
Net income
|
|
$
|
31,742
|
|
$
|
25,297
|
|
|
|
|
|
|
|
Per common share
data:
|
|
|
|
|
|
Income before
gain on sale of properties
|
|
$
|
0.26
|
|
$
|
0.21
|
|
Net income
|
|
$
|
0.26
|
|
$
|
0.21
|
|
Note
11. Affiliates Insurance Company
In February 2009 we
invested $25 in an insurance company with RMR and other companies to which RMR
provides management services, and in April 2009 we invested an additional
$5.0 million in this insurance company.
We currently own approximately 16.67% of this insurance company.
10
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, 2008.
PORTFOLIO
OVERVIEW
The
following tables present an overview of our portfolio:
As of March 31, 2009
(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)
|
|
42
|
|
11,465
|
|
$
|
1,101,141
|
|
38.8%
|
|
$
|
108,029
|
|
38.0%
|
|
Assisted living facilities
|
|
121
|
|
8,531
|
|
908,621
|
|
32.0%
|
|
85,162
|
|
30.0%
|
|
Skilled nursing facilities
|
|
58
|
|
5,844
|
|
229,798
|
|
8.1%
|
|
19,954
|
|
7.1%
|
|
Rehabilitation hospitals
|
|
2
|
|
364
|
|
57,279
|
|
2.0%
|
|
11,348
|
|
4.0%
|
|
Wellness centers (3)
|
|
10
|
|
|
|
180,017
|
|
6.3%
|
|
17,069
|
|
6.0%
|
|
MOBs (4)
|
|
39
|
|
|
|
361,895
|
|
12.8%
|
|
42,355
|
|
14.9%
|
|
Total
|
|
272
|
|
26,204
|
|
$
|
2,838,751
|
|
100.0%
|
|
$
|
283,917
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tenant/Operator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Five Star (Lease No. 1)
|
|
100
|
|
8,600
|
|
$
|
718,621
|
|
25.3%
|
|
$
|
63,764
|
|
22.4%
|
|
Five Star (Lease No. 2)
|
|
32
|
|
7,639
|
|
765,062
|
|
27.0%
|
|
81,942
|
|
28.9%
|
|
Five Star (Lease No. 3)
|
|
44
|
|
3,251
|
|
311,167
|
|
11.0%
|
|
23,746
|
|
8.4%
|
|
Five Star (Lease No. 4)
|
|
7
|
|
614
|
|
66,608
|
|
2.3%
|
|
7,596
|
|
2.7%
|
|
Sunrise/Marriott (5)
|
|
14
|
|
4,091
|
|
325,165
|
|
11.5%
|
|
32,547
|
|
11.5%
|
|
Brookdale Senior Living, Inc.
|
|
18
|
|
894
|
|
61,122
|
|
2.2%
|
|
8,000
|
|
2.8%
|
|
6 private companies (combined)
|
|
8
|
|
1,115
|
|
49,094
|
|
1.6%
|
|
6,898
|
|
2.4%
|
|
Starmark (3)
|
|
6
|
|
|
|
80,008
|
|
2.8%
|
|
6,519
|
|
2.3%
|
|
Life Time Fitness (3)
|
|
4
|
|
|
|
100,009
|
|
3.5%
|
|
10,550
|
|
3.7%
|
|
Multi-tenant MOBs (4)
|
|
39
|
|
|
|
361,895
|
|
12.8%
|
|
42,355
|
|
14.9%
|
|
Total
|
|
272
|
|
26,204
|
|
$
|
2,838,751
|
|
100.0%
|
|
$
|
283,917
|
|
100.0%
|
|
Tenant
Operating Statistics (Quarter Ended December 31, 2008) (6)
|
|
|
|
|
|
|
|
|
|
Percentage of Operating Revenue Sources
|
|
|
|
Rent Coverage
|
|
Occupancy
|
|
Private Pay
|
|
Medicare
|
|
Medicaid
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Five Star (Lease No. 1) (7)
|
|
1.22x
|
|
1.37x
|
|
89%
|
|
90%
|
|
65%
|
|
63%
|
|
13%
|
|
13%
|
|
22%
|
|
24%
|
|
Five Star (Lease No. 2)
|
|
1.40x
|
|
1.56x
|
|
87%
|
|
90%
|
|
68%
|
|
69%
|
|
29%
|
|
28%
|
|
3%
|
|
3%
|
|
Five Star (Lease No. 3) (7)
|
|
1.19x
|
|
2.07x
|
|
85%
|
|
85%
|
|
55%
|
|
23%
|
|
14%
|
|
24%
|
|
31%
|
|
53%
|
|
Five Star (Lease No. 4)
|
|
0.83x
|
|
1.36x
|
|
83%
|
|
81%
|
|
98%
|
|
100%
|
|
|
|
|
|
2%
|
|
|
|
Sunrise/Marriott (5)
|
|
1.31x
|
|
1.90x
|
|
91%
|
|
90%
|
|
77%
|
|
79%
|
|
19%
|
|
17%
|
|
4%
|
|
4%
|
|
Brookdale Senior Living, Inc.
|
|
2.01x
|
|
1.85x
|
|
95%
|
|
91%
|
|
99%
|
|
98%
|
|
|
|
|
|
1%
|
|
2%
|
|
6 private companies (combined)
|
|
1.97x
|
|
2.09x
|
|
83%
|
|
88%
|
|
23%
|
|
24%
|
|
24%
|
|
24%
|
|
53%
|
|
52%
|
|
Starmark (3)
|
|
1.91x
|
|
1.93x
|
|
100%
|
|
100%
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
Life Time Fitness (3)
|
|
2.59x
|
|
NA
|
|
100%
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
Multi-tenant MOBs (4)
|
|
NA
|
|
NA
|
|
99%
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
Tenant
Operating Statistics (Twelve Months Ended December 31, 2008) (6)
|
|
|
|
|
|
|
|
|
|
Percentage of Operating Revenue Sources
|
|
|
|
Rent Coverage
|
|
Occupancy
|
|
Private Pay
|
|
Medicare
|
|
Medicaid
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
Five Star (Lease No. 1) (7)
|
|
1.27x
|
|
1.33x
|
|
89%
|
|
90%
|
|
65%
|
|
64%
|
|
13%
|
|
13%
|
|
22%
|
|
23%
|
|
Five Star (Lease No. 2)
|
|
1.46x
|
|
1.53x
|
|
88%
|
|
90%
|
|
69%
|
|
69%
|
|
28%
|
|
28%
|
|
3%
|
|
3%
|
|
Five Star (Lease No. 3) (7)
|
|
1.41x
|
|
2.73x
|
|
85%
|
|
86%
|
|
45%
|
|
24%
|
|
17%
|
|
24%
|
|
38%
|
|
52%
|
|
Five Star (Lease No. 4)
|
|
1.10x
|
|
1.40x
|
|
84%
|
|
88%
|
|
99%
|
|
100%
|
|
|
|
|
|
1%
|
|
|
|
Sunrise/Marriott (5)
|
|
1.47x
|
|
1.42x
|
|
91%
|
|
89%
|
|
79%
|
|
79%
|
|
17%
|
|
18%
|
|
4%
|
|
3%
|
|
Brookdale Senior Living, Inc.
|
|
2.11x
|
|
2.05x
|
|
93%
|
|
89%
|
|
99%
|
|
98%
|
|
|
|
|
|
1%
|
|
2%
|
|
6 private companies (combined)
|
|
1.95x
|
|
1.92x
|
|
84%
|
|
88%
|
|
26%
|
|
24%
|
|
23%
|
|
24%
|
|
51%
|
|
52%
|
|
Starmark (3)
|
|
2.00x
|
|
NA
|
|
100%
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
Life Time Fitness (3)
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
Multi-tenant MOBs (4)
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
NA
|
|
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)
|
The
Starmark and Life Time Fitness wellness centers have a total of 812,000 square
feet.
|
(4)
|
Since
June 2008, we have acquired a total of 39 medical office, clinic and
biotech laboratory buildings, or MOBs. The carrying value of these
investments is before depreciation and includes intangible lease assets and
liabilities. These MOBs have a total of approximately 1.7 million square
feet.
|
(5)
|
Marriott
International, Inc., or Marriott, guarantees this lease.
|
(6)
|
All
tenant operating data presented are based upon the operating results provided
by our tenants for the indicated quarterly or annual 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 independently verified our tenants
operating data.
|
(7)
|
Excludes data for periods
prior to our ownership of certain properties included in this lease.
|
11
Table of Contents
RESULTS
OF OPERATIONS
Three Months Ended March 31,
2009 Compared to Three Months Ended March 31, 2008:
|
|
2009
|
|
2008
|
|
Change
|
|
% Change
|
|
|
|
(in thousands, except per share amounts)
|
|
Rental income
|
|
$
|
68,377
|
|
$
|
49,039
|
|
$
|
19,338
|
|
39.4
|
%
|
|
Interest and
other income
|
|
208
|
|
514
|
|
(306
|
)
|
(59.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
operating expenses
|
|
2,955
|
|
|
|
2,955
|
|
|
|
|
Interest expense
|
|
10,776
|
|
9,518
|
|
1,258
|
|
13.2
|
%
|
|
Depreciation
expense
|
|
18,389
|
|
13,023
|
|
5,366
|
|
41.2
|
%
|
|
Acquisition
costs
|
|
112
|
|
|
|
112
|
|
|
|
|
General and
administrative expense
|
|
4,820
|
|
3,696
|
|
1,124
|
|
30.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
31,533
|
|
$
|
23,316
|
|
$
|
8,217
|
|
35.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
117,853
|
|
91,080
|
|
26,773
|
|
29.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share
|
|
$
|
0.27
|
|
$
|
0.26
|
|
$
|
0.01
|
|
3.8
|
%
|
|
Rental
income increased because of rents earned from our real estate acquisitions
since April 1, 2008, including $10.4 million of rental income in the first
quarter of 2009 due to our acquisition of 39 MOBs, offset by rent reductions
resulting from the sale of three properties during the third quarter of
2008. Interest and other income decreased
as a result of lower levels of investable cash in money market funds and lower
interest rates.
Property
operating expenses for the quarter ended March 31, 2009 is the result of
our acquisition of 39 MOBs since June 2008 and principally includes expenses related to real estate taxes, utilities,
cleaning costs and property management fees paid to Reit Management &
Research LLC, or RMR.
Interest
expense increased because of greater amounts outstanding under our revolving
credit facility offset by lower interest rates under our revolving credit
facility. Our weighted average balance
outstanding and interest rate under our revolving credit facility was $216.2
million and 1.3% and $24.0 million and 4.6% for the three months ended March 31,
2009 and 2008, respectively. This
increase was also due to $61.3 million of debt assumed as part of our third
quarter 2008 acquisitions offset by our prepayment of a mortgage of $12.6
million on April 1, 2008.
Depreciation
expense for the first quarter of 2009 increased because of acquisitions since April 1,
2008. Acquisition costs represent the closing costs associated with our
acquisitions that are expensed under Statement of Financial Accounting
Standards No. 141(R), Business Combinations, commencing January 1,
2009. General and administrative expenses
increased in 2009 principally due to our acquisitions since April 1, 2008,
and higher legal fees and accounting fees.
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 June 2008 and February 2009.
12
Table of
Contents
LIQUIDITY AND CAPITAL RESOURCES
Our principal source of
funds to meet operating expenses, debt service and pay planned distributions on
our shares is rental income from our properties. This flow of funds has
historically been sufficient to pay operating expenses and debt service
relating to our properties. We believe that our operating cash flow will be
sufficient to meet our operating expenses, debt service and planned
distributions on our shares for the foreseeable future. Our future cash flows
from operating activities will depend primarily upon our ability to:
·
maintain or improve the
occupancy of and the current rent rates at our properties;
·
control operating cost
increases at our properties; and
·
purchase additional
properties which produce positive cash flows from operations.
Our
Operating Liquidity and Resources
Rents from our properties are our principal sources 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. During the three months ended March 31,
2009, we generated $52.6 million of cash from operations and at March 31,
2009, we had $5.6 million of cash and cash equivalents. We believe that our operating cash flow will
be sufficient to meet our operating expenses, debt service and expected
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. The facility
matures in December 2010. The revolving credit facility permits us to
borrow up to $550.0 million. 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 March 31, 2009, the weighted average
interest rate payable on our revolving credit facility was 1.3%. As of March 31, 2009, we had $181.0
million outstanding under this credit facility and as of May 6, 2009, we
had $165.0 million outstanding under this credit facility.
Subject to certain
conditions, at our option, this credit facilitys maturity date can be extended
to December 31, 2011 upon payment of a fee.
In May 2008, we entered into a series of
agreements to acquire 48 MOBs from HRPT Properties Trust, or HRP, for an
aggregate purchase price of approximately $565.0 million. To date, we have acquired 38 of these
properties containing 1.6 million square feet for approximately $366.0 million,
excluding closing costs. One of the
remaining buildings with an allocated value of $3.0 million is no longer subject
to our purchase agreement. We expect the
closings of the remaining nine buildings to occur in 2010. We and HRP may
mutually agree to accelerate the closings of these acquisitions. We funded these acquisitions using cash on
hand, proceeds from 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 and a weighted
average maturity in 2018. Our
obligations to complete the remaining purchases from HRP are subject to various
conditions typical of commercial real estate purchases. We can provide no assurance that we will
purchase all of these buildings or that the remaining purchases will be
completed in 2010 or sooner. As of March 31,
2009, the 47 buildings acquired and to be acquired were 98% leased to
approximately 210 tenants for an average lease term of 7.8 years. As part of this transaction, we also acquired
rights of first refusal to purchase any of 45 additional buildings (containing
approximately 4.6 million square feet of rental space) from HRP that are leased
to tenants in medical related businesses.
HRP was formerly our parent company, and both we and HRP are managed by
RMR. Because we and
13
Table
of Contents
Item 2.
Managements Discussion and Analysis of Financial Condition and Results
of Operations (continued)
HRP are both managed by RMR, the terms of these transactions were
negotiated by special committees of our and HRPs boards of trustees composed
solely of independent trustees who were not also independent trustees of both
companies.
In February 2009, we issued 5.9 million
common shares in a public offering, raising net proceeds of approximately $96.8
million. We used the net proceeds from
this offering to repay borrowings outstanding on our revolving credit facility,
to fund the real estate acquisitions described above and for general business
purposes.
During the three months ended March 31,
2009, we purchased $12.7 million of improvements made to our properties that
are leased to Five Star Quality Care, Inc., or Five Star. We used cash on hand and borrowings under our
revolving credit facility to fund these purchases.
At March 31, 2009, we had $5.6 million of cash and cash
equivalents and $369.0 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.
In
2008, we entered into an agreement to sell one of our properties to an
unaffiliated party for approximately $1.2 million. In April 2009, we entered into another
agreement to sell one of our properties to an unaffiliated party for
approximately $3.1 million. These
properties are classified as held for sale as of March 31, 2009. The sales of these properties are subject to
various contingencies, and we can provide no assurance that we will sell these
properties.
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
will 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.
Recent
capital markets conditions have been challenging. The availability and cost of credit have been
and may continue to be adversely affected by illiquid capital markets and wide
credit rate spreads, and equity markets have been extremely volatile. While we believe we will have access to various
types of financings, including debt or equity, to fund our future acquisitions
and to pay our debts and other obligations, there can be no assurance that we
will be able to complete any debt or equity offerings or that our cost of any
future financings will be reasonable. If
current market conditions continue or worsen, one or more lenders under our
revolving credit facility may be unable or unwilling to fund advances which we
request, our lenders may be unable or unwilling to renew our credit facilities
and we may not be able to access additional capital. Our
ability to continue to access capital could be impacted by various factors,
including general market conditions and the continuing slowdown in the economy,
interest rates, credit ratings on our securities, the market price of our capital
stock and the financial performance of our tenants. Also, the current market conditions have led
to materially increased credit spreads which, if they continue, may result in
material increases in the interest costs under our floating rate debts and our
fixed rate debts when we refinance or when we incur new debt. These interest cost increases could have
material and adverse impact on our results of operations and financial
conditions.
On February 13, 2009,
we paid a $0.35 per common share, or $40.1 million, distribution to our common
shareholders for the quarter ended December 31, 2008. On April 7, 2009, we declared a
distribution of $0.35 per common share, or $42.2 million, to be paid to our
common shareholders of record on April 17, 2009 with respect to our
results for the quarter ended March 31, 2009. We expect to pay this
distribution on or about May 15, 2009, using cash on hand and borrowings
under our revolving credit facility.
14
Table
of Contents
Item 2.
Managements Discussion and Analysis of Financial Condition and Results
of Operations (continued)
We are
currently negotiating terms of a mortgage financing that may be sold to Fannie
Mae in the amount of approximately $500.0 million. We may determine not to continue to pursue
this financing or to pursue other financings, in this amount or in materially
higher or lower amounts, and in any event there can be no assurance that this
financing will occur, especially in view of current conditions in the debt
capital markets.
As of May 6, 2009, we have no off balance sheet
arrangements, commercial paper, derivatives, swaps, hedges, joint ventures or
partnerships.
Debt
Covenants
Our principal debt obligations at March 31, 2009,
were our unsecured revolving credit facility, two public issues totaling $322.5
million of unsecured senior notes and $136.0 million of mortgage debt and bonds
secured by 33 of our properties. Our senior
notes are governed by an indenture. The
indenture for our unsecured senior notes 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 other ratios. As of March 31,
2009, we were in compliance with all of the covenants under our indenture and
related supplements, our revolving credit facility and other debt obligations.
None of our indentures
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, our revolving credit facility contains a cross-default
provision to any other debts of $25.0 million or more that are recourse debts
and to any other debts of $75.0 million or more that are non-recourse debts.
Related Person Transactions
In May 2008, we entered into a series of
agreements to acquire 48 MOBs from HRP for an aggregate purchase price of
approximately $565.0 million. To date, we
have acquired 38 of these properties containing 1.6 million square feet for
approximately $366.0 million, excluding closing costs. One of the remaining
buildings with an allocated value of $3.0 million is no longer subject to our
purchase agreement. We expect the
closings of the remaining nine buildings to occur in 2010. We and HRP may
mutually agree to accelerate the closings of these acquisitions
.
Our obligations to
complete our outstanding purchases from HRP are subject to various conditions
typical of commercial real estate purchases.
We can provide no assurance that we will purchase all of these buildings
or that the remaining purchases will be completed in 2010 or sooner. As of March 31, 2009, the 47 buildings
acquired and to be acquired were 98% leased to approximately 210 tenants for an
average lease term of 7.8 years.
HRP was
formerly our parent. We were spun off to
HRPs shareholders in 1999 and, at the time of this spin off, we and HRP
entered into a transaction agreement which, among other things, prohibited us
from purchasing MOBs. Concurrently with
the execution and delivery of the purchase agreements described above, we and
HRP entered into an amendment to that transaction agreement, or the first
amendment agreement, to permit us, rather than HRP, to invest in medical
office, clinic and
15
Table
of Contents
Item 2.
Managements Discussion and Analysis of Financial Condition and Results
of Operations (continued)
biomedical,
pharmaceutical and laboratory buildings.
The first amendment agreement is subject, in the case of mixed use
buildings, to HRPs retaining the right to invest in any mixed use building for
which the rentable square footage is less than 50% medical office, clinic and
biomedical, pharmaceutical and laboratory use.
Also, concurrently with the execution and delivery of the purchase
agreements, we entered into a right of first refusal agreement under which we
were granted a right of first refusal to purchase up to 45 additional
identified other properties (containing approximately 4.6 million square feet
of rental space) HRP owns which are leased to tenants in medical related
businesses in the event HRP determines to sell such properties or in the event
of an indirect sale as a result of HRPs change of control or a change of
control of HRPs subsidiary which owns such properties.
Both we and HRP are managed by RMR, Barry
Portnoy and Adam Portnoy are managing trustees of both us and HRP and Frederick
Zeytoonjian is an Independent Trustee of both us and HRP. Because of these relationships, the terms of
our agreements entered in 2008 with HRP were negotiated and approved by special
committees of our and HRPs boards composed of independent trustees of each
company who are not independent trustees of both. For more information about
the terms of the purchase agreements, the first amendment agreement and the
right of first refusal agreement between us and HRP, please read these
agreements, copies of which are filed as exhibits to our Current Report on Form 8-K
dated May 9, 2008.
Five Star is our largest tenant. Five Star is our former subsidiary. In addition to being our manager, RMR also
provides management services to Five Star.
One of our trustees, Mr. Barry Portnoy, is currently a Managing
Director of Five Star. Because of these
and other relationships we and Five Star may be considered related
persons. As of March 31, 2009, we
leased 181
senior living communities and two
rehabilitation hospitals to Five Star for total annual minimum rent of $177.0
million. Because of the relationships
between us and Five Star, all of our transactions with Five Star are separately
approved by our Independent Trustees and Five Stars independent directors.
During the three months ended March 31, 2009, pursuant to the
terms of our existing leases with Five Star, we purchased $12.7 million 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 $1.0
million.
Under the terms of
our business management agreement with RMR, on April 8, 2009 we issued
55,814 common shares in payment of an incentive fee of approximately $789,000
for services rendered by RMR during 2008.
In February 2009 we invested $25,000 in an
insurance company with RMR and other companies to which RMR provides management
services, and in April 2009 we invested an additional $5.0 million in this
insurance company. We currently own
approximately 16.67% of this insurance company.
For more information about our dealings with our
managing trustees, Five Star, HRP and their affiliates and the insurance
company in which we have invested and about the risks which may arise as a
result of these related party transactions please see our Annual Report on Form 10-K
for the year ended December 31, 2008.
Item 3. Quantitative and Qualitative Disclosures
about Market Risk
We are exposed to risks
associated with market changes in interest rates. We manage our exposure to this market risk by
monitoring available financing alternatives.
Our strategy to manage exposure to changes in interest rates is
unchanged since December 31, 2008. Other than as described below, we do not
foresee any significant changes in our exposure to fluctuations in interest
rates or in how we manage this exposure in the future.
16
Table of Contents
Item 3. Quantitative
and Qualitative Disclosures about Market Risk (continued)
At
March 31, 2009, our outstanding fixed rate debt included the following
(dollars in thousands):
Debt
|
|
Principal
Balance
|
|
Annual
Interest
Rate
|
|
Annual
Interest
Expense
|
|
Maturity
|
|
Interest
Payments Due
|
|
Unsecured senior
notes
|
|
$
|
225,000
|
|
8.625%
|
|
$
|
19,406
|
|
2012
|
|
Semi-Annually
|
|
Unsecured senior
notes
|
|
97,500
|
|
7.875%
|
|
7,678
|
|
2015
|
|
Semi-Annually
|
|
Mortgages
|
|
49,968
|
|
6.54%
|
|
3,268
|
|
2017
|
|
Monthly
|
|
Mortgages
|
|
33,682
|
|
6.97%
|
|
2,348
|
|
2012
|
|
Monthly
|
|
Mortgage
|
|
14,962
|
|
6.91%
|
|
1,034
|
|
2013
|
|
Monthly
|
|
Mortgages
|
|
11,659
|
|
6.11%
|
|
712
|
|
2013
|
|
Monthly
|
|
Mortgage
|
|
4,436
|
|
6.50%
|
|
288
|
|
2013
|
|
Monthly
|
|
Mortgage
|
|
4,103
|
|
7.31%
|
|
300
|
|
2022
|
|
Monthly
|
|
Mortgage
|
|
2,002
|
|
7.85%
|
|
157
|
|
2022
|
|
Monthly
|
|
Bonds
|
|
14,700
|
|
5.875%
|
|
864
|
|
2027
|
|
Semi-Annually
|
|
|
|
$
|
458,012
|
|
|
|
$
|
36,055
|
|
|
|
|
|
No
principal payments are due under our unsecured notes or bonds until maturity.
Our mortgages require principal and interest payments through maturity pursuant
to amortization schedules. Because these debts bear interest at a fixed rate,
changes in market interest rates during the term of these debts will not affect
our operating results. If these debts
are refinanced at interest rates which are 10% higher or lower than shown
above, our per annum interest cost would increase or decrease by approximately
$2.7 million. Changes in market interest
rates also affect the fair value of our fixed rate debt obligations; increases
in market interest rates decrease the fair value of our fixed rate debt, while
decreases in market interest rates increase the fair value of our fixed rate
debt. Based on the balances outstanding
at March 31, 2009, and discounted cash flow analysis through the maturity
date of our fixed rate debt obligations, a hypothetical immediate 10% change in
interest rates would change the fair value of those obligations by
approximately $13.2 million.
We are allowed to make prepayments of our unsecured
senior notes, in whole or in part, at par plus a premium, as defined. Our
mortgages contain provisions that allow us to make repayment at par plus
premiums which is generally designed to preserve a stated yield to the mortgage
holder. Also, as we did in January 2007, we occasionally have the
opportunity to purchase our outstanding debt by open market purchases. These
prepayment rights may afford us the opportunity to mitigate the risk of
refinancing at maturity.
17
Table
of Contents
Item 3. Quantitative
and Qualitative Disclosures about Market Risk (continued)
Our unsecured revolving credit facility accrues
interest at floating rates and matures in December 2010. Subject to certain conditions, at our option,
this credit facilitys maturity date can be extended to December 31, upon
payment of a fee. At March 31, 2009, we had $181.0 million outstanding and
$369.0 million available for borrowing under our revolving credit
facility. At May 6, 2009, we had
$165.0 million outstanding and $385.0 million available for borrowing under our
revolving credit facility. We may make repayments and drawings under our
revolving credit facility at any time without penalty. We borrow in U.S. dollars and borrowings
under our revolving credit facility accrue interest at LIBOR plus a premium.
Accordingly, we are vulnerable to changes in U.S. dollar based short term
interest rates, specifically LIBOR. A
change in interest rates would not affect the value of this floating rate debt
but would affect our operating results.
For example, the weighted average interest rate payable on our
outstanding revolving indebtedness of $181.0 million at March 31, 2009 was
1.31% per annum. The following table
presents the impact a 10% change in interest rates would have on our floating
rate interest expense at March 31, 2009 (dollars in thousands):
|
|
Impact of Changes in Interest Rates
|
|
|
|
Interest Rate
Per Year
|
|
Outstanding
Debt
|
|
Total Interest
Expense Per
Year
|
|
At
March 31, 2009
|
|
1.31%
|
|
$
|
181,000
|
|
$
|
2,371
|
|
10% reduction
|
|
1.18%
|
|
$
|
181,000
|
|
$
|
2,136
|
|
10% increase
|
|
1.44%
|
|
$
|
181,000
|
|
$
|
2,606
|
|
The foregoing table shows
the impact of an immediate change in floating interest rates. If interest rates were to change gradually
over time, the impact would be spread over time. Our exposure to fluctuations in floating
interest rates will increase or decrease in the future with increases or
decreases in the outstanding amount under our revolving credit facility or
other floating rate debt
. The following table presents the impact a 10%
change in interest rates would have on our floating rate interest expense at March 31,
2009 if we were fully drawn on our revolving credit facility (dollars in
thousands):
|
|
Impact of Changes in Interest Rates
|
|
|
|
Interest Rate
Per Year
|
|
Outstanding
Debt
|
|
Total Interest
Expense Per
Year
|
|
At
March 31, 2009
|
|
1.31%
|
|
$
|
550,000
|
|
$
|
7,205
|
|
10% reduction
|
|
1.18%
|
|
$
|
550,000
|
|
$
|
6,490
|
|
10% increase
|
|
1.44%
|
|
$
|
550,000
|
|
$
|
7,920
|
|
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 the
Securities Exchange Act of 1934, as amended, 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 March 31,
2009 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
18
Table
of Contents
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS QUARTERLY REPORT ON FORM 10-Q
CONTAINS STATEMENTS WHICH CONSTITUTE 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. FORWARD LOOKING STATEMENTS IN
THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:
·
OUR ABILITY TO PURCHASE OR SELL PROPERTIES;
·
OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL;
·
OUR ABILITY TO PAY INTEREST AND DEBT
PRINCIPAL AND MAKE DISTRIBUTIONS;
·
OUR ABILITY TO RETAIN OUR EXISTING TENANTS
AND MAINTAIN CURRENT RENTAL RATES;
·
OUR AGREEMENTS TO PURCHASE CERTAIN MOBS;
·
OUR ENTRY INTO AGREEMENTS TO SELL PROPERTIES
CLASSIFIED AS HELD FOR SALE ON OUR CONSOLIDATED BALANCE SHEET;
·
OUR PARTICIPATING IN THE INSURANCE COMPANY
BEING FORMED AND LICENSED IN THE STATE OF INDIANA WITH RMR AND COMPANIES TO
WHICH RMR PROVIDES MANAGEMENT SERVICES;
·
OUR CURRENT NEGOTIATIONS WITH RESPECT TO THE
TERMS OF A MORTGAGE FINANCING THAT WILL BE SOLD TO FANNIE MAE IN AN AMOUNT OF
APPROXIMATELY $500.0 MILLION; AND
·
OTHER
MATTERS.
OUR
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY
OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR FORWARD LOOKING STATEMENTS AND UPON OUR
BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, FUNDS FROM OPERATIONS,
CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO:
·
THE IMPACT OF CHANGES IN THE ECONOMY AND THE
CAPITAL MARKETS, INCLUDING THE RECENT CHANGES IN THE CAPITAL MARKETS, ON US AND
OUR TENANTS;
·
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST
WITH OUR MANAGING TRUSTEES, FIVE STAR, RMR AND THEIR AFFILIATES;
·
CHANGES IN FEDERAL, STATE AND LOCAL
LEGISLATION, GOVERNMENTAL REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR
MATTERS; AND
19
Table
of Contents
·
COMPETITION WITHIN THE REAL ESTATE INDUSTRY
OR THOSE INDUSTRIES IN WHICH OUR TENANTS OPERATE.
FOR
EXAMPLE:
·
OUR OBLIGATIONS
TO COMPLETE THE CURRENTLY PENDING MOB 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 OR SOME OF THESE
PURCHASES MAY BE ACCELERATED OR DELAYED;
·
WE MAY NOT
PROCEED WITH OUR PENDING PROPERTY SALES DUE TO MARKET CONDITIONS, FAILURE TO
SATISFY CONTINGENCIES OR OTHER REASONS;
·
OUR
PARTICIPATION IN THE INSURANCE BUSINESS WITH RMR AND ITS AFFILIATES INVOLVES
POTENTIAL FINANCIAL RISKS AND REWARDS TYPICAL OF ANY START UP BUSINESS VENTURE
AS WELL AS OTHER FINANCIAL RISKS AND REWARDS SPECIFIC TO INSURANCE COMPANIES.
AMONG THE RISKS THAT ARE SPECIFIC TO INSURANCE COMPANIES IS THE RISK THAT THE
INSURANCE COMPANY MAY NOT BE ABLE TO ADEQUATELY PAY CLAIMS WHICH COULD
LEAVE OUR COMPANY UNDERINSURED AND INCREASE ITS FUNDING EXPOSURE FOR CLAIMS
THAT MIGHT OTHERWISE HAVE BEEN FUNDED IF INSURANCE WAS PURCHASED FROM
FINANCIALLY MORE SECURE INSURERS.
ACCORDINGLY, OUR EXPECTED FINANCIAL BENEFITS FROM OUR INITIAL OR FUTURE
INVESTMENTS IN THIS INSURANCE COMPANY MAY BE DELAYED OR MAY NOT OCCUR
AND THE INSURANCE COMPANY MAY REQUIRE A LARGER INVESTMENT THAN WE EXPECT;
·
WE MAY DETERMINE
NOT TO CONTINUE TO PURSUE MORTGAGE FINANCING OR TO PURSUE OTHER FINANCINGS, IN
AN AMOUNT OF $500.0 MILLION OR IN A MATERIALLY HIGHER OR LOWER AMOUNT, AND IN
ANY EVENT THERE CAN BE NO ASSURANCE THAT THE FINANCING WILL OCCUR;
·
IF THE AVAILABILITY OF DEBT CAPITAL REMAINS RESTRICTED OR BECOMES MORE
RESTRICTED, WE MAY BE UNABLE TO REFINANCE OR REPAY OUR DEBT OBLIGATIONS
WHEN THEY BECOME DUE OR ON TERMS WHICH ARE AS FAVORABLE AS WE NOW HAVE;
·
OUR ABILITY TO
MAKE FUTURE DISTRIBUTIONS DEPENDS UPON OUR FUTURE EARNINGS. WE MAY BE UNABLE TO MAINTAIN OUR CURRENT
RATE OF DISTRIBUTIONS AND FUTURE DISTRIBUTIONS MAY BE SUSPENDED OR PAID AT
A LESSER RATE THAN THE DISTRIBUTIONS WE NOW PAY;
·
OUR ABILITY TO
GROW OUR BUSINESS AND PAY OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR
ABILITY TO BUY PROPERTIES AND LEASE THEM FOR RENTS WHICH EXCEED OUR CAPITAL
COSTS. WE MAY BE UNABLE TO IDENTIFY
PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES,
ACQUISITION FINANCING OR LEASE TERMS FOR NEW PROPERTIES;
·
SOME OF OUR TENANTS MAY NOT RENEW
EXPIRING LEASES, AND WE MAY BE UNABLE TO LOCATE NEW TENANTS TO MAINTAIN
THE HISTORICAL OCCUPANCY RATES OF OUR PROPERTIES;
·
RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE;
AND
20
Table
of Contents
·
OUR TENANTS MAY EXPERIENCE
LOSSES AND BECOME UNABLE TO PAY OUR RENTS.
THESE
RESULTS COULD OCCUR DUE TO MANY DIFFERENT REASONS, SOME OF WHICH, SUCH AS
NATURAL DISASTERS OR CHANGES IN OUR MANAGERS OR TENANTS REVENUES OR COSTS, OR
CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY, ARE BEYOND OUR CONTROL.
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, 2008.
YOU
SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR
CHANGE 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.
21
Table
of Contents
PART II.
Other Information
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
On February 24, 2009, pursuant to our incentive
share award plan, we granted 2,000 common
shares of
beneficial interest, par value $0.01 per share, valued at $14.23
per share, the closing price of our common shares on the
New York Stock Exchange on that day, as compensation to Jeffrey P. Somers, one
of our Independent Trustees, who was appointed as a trustee effective January 30,
2009. We made this grant pursuant to an
exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended.
As
further described in our Annual Report on Form 10-K for the year ended December 31,
2008, RMR provides management services to us. Under the terms of our
business management agreement with RMR, on April 8, 2009, we issued 55,814
common shares to RMR in payment of an incentive fee for services rendered by
RMR during 2008. We issued these shares pursuant to an exemption from
registration contained in Section 4(2) of the Securities Act of 1933,
as amended.
Item 6. Exhibits
12.1
Computation of
Ratio of Earnings to Fixed Charges.
(Filed herewith)
31.1
Rule 13a-14(a) Certification.
(Filed herewith)
31.2
Rule 13a-14(a) Certification.
(Filed herewith)
31.3
Rule 13a-14(a) Certification.
(Filed herewith)
31.4
Rule 13a-14(a) Certification.
(Filed herewith)
32.1
Section 1350 Certification.
(Furnished herewith)
22
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:
May 7, 2009
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
Richard A. Doyle
|
|
|
|
Richard
A. Doyle
|
|
|
|
Treasurer
and Chief Financial Officer
|
|
|
|
(principal
financial and accounting officer)
|
|
|
|
Dated:
May 7, 2009
|
23
Senior Housing Properties (NASDAQ:SNH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Senior Housing Properties (NASDAQ:SNH)
Historical Stock Chart
From Jul 2023 to Jul 2024