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):
August 18,
2009 (August 18, 2009)
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))
FORWARD LOOKING STATEMENTS
THIS CURRENT REPORT ON FORM 8-K CONTAINS STATEMENTS WHICH
CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER FEDERAL SECURITIES
LAWS. FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.
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 WITH RESPECT TO
·
OUR AGREEMENTS TO
PURCHASE CERTAIN MEDICAL OFFICE, CLINIC AND BIOTECH LABORATORY BUILDINGS, OR
MOBS;
·
OUR EXPECTED USE OF THE
PROCEEDS OF OUR MORTGAGE FINANCING WITH THE FEDERAL NATIONAL MORTGAGE
ASSOCIATION, OR FNMA; AND
·
OUR AGREEMENTS TO
PURCHASE CERTAIN SENIOR LIVING PROPERTIES.
OUR 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 INTEND TO USE THE PROCEEDS OF
THE FNMA MORTGAGE LOAN, AMONG OTHER PURPOSES, TO FUND INVESTMENTS, INCLUDING TO
POSSIBLY ACCELERATE THE REMAINING PURCHASE OF MOBS FROM HRPT PROPERTIES TRUST,
OR HRP. WE ARE CURRENTLY CONSIDERING
SEVERAL ACQUISITION OPPORTUNITIES; HOWEVER, THERE CAN BE NO ASSURANCE THAT WE
WILL CONCLUDE ANY OF THESE ACQUISITIONS OR THAT ALTERNATIVE ACQUISITIONS WILL
BE IDENTIFIED AND CLOSED;
·
ALTHOUGH
WE AND HRP HAVE PREVIOUSLY AGREED UPON TERMS FOR OUR PURCHASE OF CERTAIN MOBS,
THE CLOSINGS OF THESE SALES REMAIN SUBJECT TO SATISFACTION OF CUSTOMARY REAL
ESTATE CLOSING CONDITIONS AND WE DO NOT HAVE THE UNILATERAL RIGHT TO ACCELERATE
THESE CLOSINGS WHICH ARE NOW SCHEDULED TO OCCUR BY FEBRUARY 2010. IN PARTICULAR, INVESTORS SHOULD NOTE THAT WE
AND HRP ARE BOTH MANAGED BY REIT MANAGEMENT AND RESEARCH LLC, OR RMR, AND HAVE
CERTAIN COMMON TRUSTEES; ACCORDINGLY, ANY CHANGE TO ACCELERATE THE CLOSINGS OF
SALES BY HRP TO US WILL REQUIRE THE SEPARATE APPROVALS OF TRUSTEES OF US AND
HRP, RESPECTIVELY, WHO ARE NOT ALSO TRUSTEES OF THE OTHER COMPANY; AND
1
·
THIS
CURRENT REPORT ON FORM 8-K STATES THAT WE HAVE ENTERED INTO A PURCHASE AND
SALE AGREEMENT TO ACQUIRE ONE PROPERTY FROM AN UNAFFILIATED PARTY. OUR OBLIGATION TO COMPLETE THIS PURCHASE IS
SUBJECT TO VARIOUS CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE PURCHASES. AS A RESULT OF ANY FAILURE OF THESE
CONDITIONS, THIS PROPERTY MAY NOT BE PURCHASED.
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.
Explanatory Note
As previously
reported in our 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 MOBs from HRP pursuant to a series of purchase
and sale agreements, or the Purchase Agreements, dated as of May 5,
2008. The Purchase Agreements are 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 and / or updated in
our Current Report on Form 8-K/A dated May 22, 2008, in our Current
Report on Form 8-K/A dated September 29, 2008, in our Current Report
on Form 8-K dated December 17, 2008, in our Current Report on Form 8-K
dated April 8, 2009 and in our Current Report on Form 8-K dated July 7,
2009. As of the date of this Current
Report on Form 8-K, we have purchased 43 MOBs from HRP, one of which we
sold to a third party in May 2009.
One of the
remaining buildings with an allocated value of $3.0 million is no longer
subject to our Purchase Agreements.
Our agreements to acquire
these 47 MOBs are described more fully in our Annual Report on Form 10-K
for the year ended December 31, 2008, or the Annual Report.
This Current Report
on Form 8-K provides updated unaudited pro forma financial statements
reflecting the purchase of 43 of the MOBs, the sale of one of these MOBs, the
pending acquisitions of the remaining four MOBs subject to the Purchase
Agreements and the $512.9 million mortgage loan with FNMA discussed below,
which
is secured by first liens on 28 senior living properties that we own
and lease to Five Star Quality Care, Inc., or Five Star. The
updated pro forma financial statements also reflect unrelated properties we
have purchased or agreed to purchase through August 17, 2009.
2
HRP was formerly our parent company, and both we and HRP are managed by
RMR. Because we and HRP are both managed
by RMR and other relationships, we and HRP may be considered to be related
persons, and the terms of our MOB transactions with HRP were negotiated by
special committees of our and HRPs boards of trustees composed of trustees who
were not also trustees of both companies.
Five Star is our largest tenant and is our former subsidiary. RMR also provides management services to Five
Star. Because of these and other
relationships, we and Five Star may be considered related persons, and the
terms of the transactions between us and Five Star described in Item 9.01 below
were negotiated by special committees of our and Five Stars boards comprised
solely of our Independent Trustees and Five Stars independent directors.
For more information about our dealings and relationships with HRP,
Five Star and RMR and their affiliates and about the risks which may arise as a
result of these related person transactions, please see our Annual Report, our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009 and June
30, 2009, and our other filings made with the Securities and Exchange
Commission, or SEC, and in particular, the section captioned Risk Factors in
the Annual Report, the sections captioned Managements Discussion and Analysis
of Financial Condition and Results of Operations Related Person Transactions
in the Annual Report and each Quarterly Report on Form 10-Q, Part II, Item 5 of
our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and the
section captioned Related Person Transactions and Company Review of Such
Transactions in our Proxy Statement dated March 30, 2009 relating to our 2009
Annual Shareholders Meeting.
Item
9.01. Financial Statements and Exhibits.
This Current Report on Form 8-K includes
pro forma financial data for us, which includes the 43 MOBs that have been
acquired and the four MOBs proposed to be acquired from HRP as well as the one
MOB that we sold to a third party, and other acquisitions we have completed
since July 1, 2009 (balance sheet) and January 1, 2008 (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 changes in our portfolio of investments, in interest rates, in our
capital structure and for other reasons.
Between June 1, 2008 and June 30,
2009, we acquired 40 of the MOBs (including one MOB we sold in May 2009)
containing 1.8 million square feet for approximately $416.8 million, plus
closing costs, and sold one MOB containing 22,000 square feet for approximately
$3.1 million. On August 6, 2009, we
acquired three additional MOBs containing 164,000 square feet for approximately
$115.7 million, plus closing costs,
and we expect
the closings of the remaining four acquisitions to occur before February 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, proceeds from mortgage financing 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.
On August 4, 2009, a special purpose
subsidiary of ours closed a $512.9 million mortgage financing with FNMA. This
mortgage loan is secured by first liens on 28 senior living properties that we
own and lease to Five Star with 5,618 living units / beds located in 16 states.
We used a portion of the proceeds from this mortgage financing to repay amounts
outstanding under our revolving credit facility and to purchase three MOBs from
HRP. We intend to use the balance of
the proceeds to fund investments, including possibly accelerating the remaining
MOB acquisitions from HRP, and for general business purposes. For more information about this FNMA
financing and the agreement we entered with Five Star to facilitate this
financing please see Part II, Item 5 of our Quarterly Report on Form 10-Q
for the quarter ended June 30, 2009.
Between January 1, 2008 and August 17,
2009, we acquired the following other properties from unrelated parties
(dollars in thousands):
3
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
|
|
|
14,734
|
|
8/21/08
|
|
GA,
IL, TX, UT
|
|
4
|
|
NA
|
(1)
|
|
100,009
|
|
9/1/08
|
|
IN
|
|
8
|
|
451
|
|
|
62,268
|
|
9/30/08
|
|
NY
|
|
1
|
|
NA
|
(2)
|
|
18,647
|
|
11/1/08
|
|
IN
|
|
1
|
|
252
|
|
|
30,529
|
|
|
|
|
|
35
|
|
2,507
|
|
|
$
|
498,578
|
|
(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. As of the date of this
report, we have an agreement to acquire one senior living property from an
unaffiliated party for approximately $21.0 million.
Certain properties acquired by us, or
proposed to be acquired from HRP, are leased to various tenants, including Five
Star, on a long term basis under net leases that transfer substantially all of
the properties operating and holding costs to the tenants. The other leases,
consisting solely of MOBs, are modified gross leases or full service
leases. We have previously provided
summary financial data and other information regarding Five Star in our
Quarterly Report on Form 10-Q for the quarter and six months ended June 30,
2009 and in our Annual Report on Form 10-K for the fiscal year ended December 31,
2008. Our other 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 in 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 Current Report on Form 8-K,
we believe that each tenant is current in its rent payments. Four of the significant net lease tenants
are: Five Star, Scripps Research Institute, or Scripps; Fallon Community Health
Plan, or Fallon Clinic; and Health Insurance Plan of New York, or HIP. Scripps is one of the largest non-profit
health 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 insurance companies providing clinical services in the New
York City area.
4
(b)
Pro
Forma Financial Information
.
5
SENIOR HOUSING PROPERTIES
TRUST
Introduction to Unaudited
Pro Forma Condensed Consolidated Financial Statements
The
following unaudited pro forma condensed consolidated balance sheet as of June 30,
2009, reflects our financial position as if the transactions described in the
footnotes to the unaudited pro forma condensed consolidated financial
statements were completed on June 30, 2009. The unaudited pro forma condensed
consolidated statement of income for the six months ended June 30, 2009
and the year ended December 31, 2008, presents 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,
2009 and 2008, respectively. These
unaudited pro forma condensed consolidated financial statements should be read
in conjunction with our financial statements for the quarter and six months
ended June 30, 2009, included in our Quarterly Report on Form 10-Q,
our financial statements for the year ended December 31, 2008, included in
our Annual Report on Form 10-K, the historical 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 and the unaudited
pro forma condensed consolidated financial statements included in our Current
Report on Form 8-K/A dated September 29, 2008, our Current Report on Form 8-K
dated December 17, 2008, our Current Report on Form 8-K dated April 8,
2009 and our Current Report on Form 8-K dated July 7, 2009.
The
unaudited pro forma financial statements assume the receipt of $512.9 million
of mortgage financing proceeds and the acquisitions of 47 medical office,
clinic and biotech laboratory buildings, or MOBs, from HRPT Properties Trust,
or HRP, which are financed with cash on hand, proceeds from mortgage financing,
proceeds from equity issuances, borrowings under our revolving credit facility
and by assuming three mortgage loans on two of the properties. We expect to fund the pending 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 the pending 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 price of the acquisitions of the MOBs from HRP and
the other property acquisitions described in the notes to the unaudited pro
forma condensed consolidated financial statements and reflected in these
unaudited pro forma condensed consolidated financial statements is 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 and liabilities assumed 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.
F-1
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 HRP are not completed as planned. Differences could also result from future
changes in our portfolio of investments, changes in interest rates, changes in
our capital structure, changes in property level operating expenses, changes in
property level revenues including rents expected to be received on leases in
place or signed during and after 2009 or for other reasons. Consequently, actual future results are
likely to be different than amounts presented in the unaudited pro forma
financial statements related to these transactions.
F-2
SENIOR HOUSING PROPERTIES TRUST
Unaudited Pro Forma
Condensed Consolidated Balance Sheet
June 30, 2009
(dollars in thousands)
|
|
|
|
Pro
Forma Adjustments
|
|
|
|
|
|
Historical
|
|
MOBs
Acquired
(A)
|
|
MOBs
Pending (B)
|
|
Financing,
Other
Pending
Acquisitions and
Adjustments (C)
|
|
Pro
Forma
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties,
at cost
|
|
$
|
2,896,734
|
|
$
|
96,567
|
|
$
|
30,567
|
|
$
|
29,500
|
|
$
|
3,053,368
|
|
Less accumulated
depreciation
|
|
416,697
|
|
|
|
|
|
|
|
416,697
|
|
|
|
2,480,037
|
|
96,567
|
|
30,567
|
|
29,500
|
|
2,636,671
|
|
Cash and cash
equivalents
|
|
5,373
|
|
(115,654
|
)
|
(28,911
|
)
|
232,734
|
|
93,542
|
|
Restricted cash
|
|
4,589
|
|
|
|
|
|
|
|
4,589
|
|
Deferred financing
fees, net
|
|
6,340
|
|
|
|
|
|
6,740
|
|
13,080
|
|
Acquired real estate
leases, net
|
|
31,834
|
|
19,087
|
|
1,562
|
|
|
|
52,483
|
|
Other assets
|
|
32,025
|
|
|
|
|
|
8,960
|
|
40,985
|
|
|
|
$
|
2,560,198
|
|
$
|
|
|
$
|
3,218
|
|
$
|
277,934
|
|
$
|
2,841,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured revolving
credit facility
|
|
$
|
235,000
|
|
$
|
|
|
$
|
|
|
$
|
(235,000
|
)
|
$
|
|
|
Senior unsecured notes
due 2012 and 2015, net of discount
|
|
322,089
|
|
|
|
|
|
|
|
322,089
|
|
Secured debt and
capital leases
|
|
149,931
|
|
|
|
|
|
512,934
|
|
662,865
|
|
Acquired real estate
lease obligations, net
|
|
8,509
|
|
|
|
3,218
|
|
|
|
11,727
|
|
Other liabilities
|
|
35,096
|
|
|
|
|
|
|
|
35,096
|
|
Shareholders equity
|
|
1,809,573
|
|
|
|
|
|
|
|
1,809,573
|
|
|
|
$
|
2,560,198
|
|
$
|
|
|
$
|
3,218
|
|
$
|
277,934
|
|
$
|
2,841,350
|
|
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
F-3
SENIOR HOUSING PROPERTIES TRUST
Unaudited Pro Forma
Condensed Consolidated Statement of Income
Six Months Ended June 30, 2009
(amounts in thousands, except per share amounts)
|
|
Historical
|
|
MOBs
Acquired
(D)
|
|
MOBs
Pending (E)
|
|
Pro
Forma
Adjustments
|
|
Pro
Forma
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
137,776
|
|
$
|
|
|
$
|
|
|
$
|
(81
|
) (F)
|
$
|
137,695
|
|
MOB rental income
|
|
|
|
7,002
|
|
1,280
|
|
296
|
(G)
|
8,578
|
|
Interest and other
income
|
|
394
|
|
|
|
|
|
|
(H)
|
394
|
|
Total revenues
|
|
138,170
|
|
7,002
|
|
1,280
|
|
215
|
|
146,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
6,174
|
|
1,782
|
|
51
|
|
(4
|
) (I)
|
8,003
|
|
Interest
|
|
21,483
|
|
|
|
|
|
16,022
|
(J)
|
37,505
|
|
Depreciation
|
|
37,024
|
|
|
|
|
|
2,680
|
(K)
|
39,704
|
|
Acquisition costs
|
|
1,394
|
|
|
|
|
|
|
|
1,394
|
|
General and
administrative
|
|
10,051
|
|
|
|
|
|
386
|
(L)
|
10,437
|
|
Total expenses
|
|
76,126
|
|
1,782
|
|
51
|
|
19,084
|
|
97,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before loss on
sale of property
|
|
62,044
|
|
5,220
|
|
1,229
|
|
(18,869
|
)
|
49,624
|
|
Loss on sale of
property
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
62,044
|
|
$
|
5,220
|
|
$
|
1,229
|
|
$
|
(18,869
|
)
|
$
|
49,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
119,161
|
|
|
|
|
|
1,303
|
(M)
|
120,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
Income before loss on
sale of property
|
|
$
|
0.52
|
|
|
|
|
|
|
|
$
|
0.41
|
|
Net income
|
|
$
|
0.52
|
|
|
|
|
|
|
|
$
|
0.41
|
|
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
F-4
SENIOR HOUSING PROPERTIES TRUST
Unaudited Pro Forma
Condensed Consolidated Statement of Income
Year Ended December 31, 2008
(amounts in thousands, except per share amounts)
|
|
Historical
|
|
MOBs
Acquired
(N)
|
|
MOBs
Pending (O)
|
|
Pro
Forma
Adjustments
|
|
Pro
Forma
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
233,210
|
|
$
|
|
|
$
|
|
|
$
|
15,102
|
(P)
|
$
|
248,312
|
|
MOB rental income
|
|
|
|
41,155
|
|
2,557
|
|
5,303
|
(Q)
|
49,015
|
|
Interest and other
income
|
|
2,327
|
|
|
|
|
|
|
(R)
|
2,327
|
|
Total revenues
|
|
235,537
|
|
41,155
|
|
2,557
|
|
20,405
|
|
299,654
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Property operating
expenses
|
|
2,792
|
|
11,990
|
|
84
|
|
560
|
(S)
|
15,426
|
|
Interest
|
|
40,154
|
|
|
|
|
|
34,918
|
(T)
|
75,072
|
|
Depreciation
|
|
60,831
|
|
|
|
|
|
17,408
|
(U)
|
78,239
|
|
General and
administrative
|
|
17,136
|
|
|
|
|
|
2,685
|
(V)
|
19,821
|
|
Impairment of assets
|
|
8,379
|
|
|
|
|
|
|
|
8,379
|
|
Total expenses
|
|
129,292
|
|
11,990
|
|
84
|
|
55,571
|
|
196,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before gain on
sale of properties
|
|
106,245
|
|
29,165
|
|
2,473
|
|
(35,166
|
)
|
102,717
|
|
Gain on sale of
properties
|
|
266
|
|
|
|
|
|
|
|
266
|
|
Net income
|
|
$
|
106,511
|
|
$
|
29,165
|
|
$
|
2,473
|
|
$
|
(35,166
|
)
|
$
|
102,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
105,153
|
|
|
|
|
|
15,311
|
(W)
|
120,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
Income before gain on
sale of properties
|
|
$
|
1.01
|
|
|
|
|
|
|
|
$
|
0.85
|
|
Net income
|
|
$
|
1.01
|
|
|
|
|
|
|
|
$
|
0.85
|
|
See accompanying notes to unaudited pro forma
condensed consolidated financial statements.
F-5
SENIOR HOUSING PROPERTIES TRUST
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements
(dollars
in tables in thousands, or as otherwise stated)
Unaudited Pro Forma
Condensed Consolidated Balance Sheet Adjustments
(A)
Represents the
impact of our completed acquisition from HRP of three MOBs which were acquired
subsequent to June 30, 2009 and related financing. This acquisition was funded with cash on
hand. The value of in-place leases and
the fair market value of above market leases and customer relationships for the
three MOBs acquired subsequent to June 30, 2009 is as follows:
Acquired assets other than real estate:
Origination Costs
|
|
$
|
4,053
|
|
Above Market Leases
|
|
15,034
|
|
Total
|
|
$
|
19,087
|
|
Included
in the June 30, 2009 historical numbers are 39 MOBs that were acquired between
June 2008 and June 30, 2009 from HRP for approximately $411.9
million, plus 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. The June 30,
2009 historical column also includes one MOB acquired in September 2008
from an unaffiliated party for $18.6 million, plus closing costs. Intangible lease assets and liabilities
recorded by us for these acquisitions totaled $33.6 million and $5.4 million,
respectively.
(B)
Represents the
impact of our pending acquisitions of the remaining four MOBs we expect to
acquire from HRP and relating financings.
These pending acquisitions are expected to be funded with cash on hand
and borrowings under our revolving credit facility, if needed. The estimated purchase prices of these four
MOBs are subject to change based on contractual terms of the applicable
purchase agreement. The funding of these
acquisitions is subject to change based on capital market conditions at the
time of the closings. The value of
in-place leases and the fair market value of above or below market leases and
customer relationships for the four pending MOBs is as follows:
Pending assets to be acquired other than real estate:
Origination Costs
|
|
$
|
1,562
|
|
Assumed liabilities:
Below Market Leases
|
|
$
|
3,218
|
|
(C)
Represents the
impact of a pending senior living property that we have agreed to acquire from
an unaffiliated party for approximately $21.0 million. We expect to fund this acquisition using cash
on hand and borrowings on our revolving credit facility, if needed.
F-6
SENIOR HOUSING PROPERTIES TRUST
Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars
in tables in thousands, or as otherwise stated)
On
August 4, 2009, a special purpose subsidiary of ours closed a $512.9
million mortgage financing with FNMA. This mortgage loan is secured by first
liens on 28 senior living properties that we own and lease to Five Star Quality
Care Inc., or Five Star, with 5,618 living units / beds located in 16 states.
We used a portion of the proceeds from this mortgage financing to repay amounts
outstanding under our revolving credit facility and to purchase three MOBs from
HRP. We intend to use the balance of
the proceeds to fund investments, including possibly accelerating the remaining
MOB acquisitions from HRP, and for general business purposes.
In
connection with this transaction, SNH and Five Star agreed that SNH would pay
Five Star $18.6 million as consideration for their cooperation with the FNMA
transaction. The preliminary allocation
of this consideration is as follows:
Purchase of Five Star PP&E in FNMA mortgaged properties
|
|
$
|
8,500
|
|
Purchase of 3.2 million common shares of Five Star at $2.80 per share
(closing price August 4, 2009)
|
|
8,960
|
|
Deferred Financing Fees
|
|
1,140
|
|
Total Compensation to Five Star
|
|
$
|
18,600
|
|
Also,
we agreed to reduce the annual rent payable to us under one of the leases, but
not the lease under which the mortgaged properties are leased, by $2.0 million
per year for the term of that lease, which will expire in 2026.
For
more information about this FNMA financing and the agreement we entered with
Five Star to facilitate this financing please see Part II, Item 5 of our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2009,
filed with the Securities and Exchange Commission on August 10, 2009.
We
estimate the total deferred financing fees in completing this transaction with
FNMA to be $9.5 million that will be amortized over the ten year loan
term. The breakout of this deferred
financing fees is as follows:
Total Estimated Deferred Financing Fees
|
|
$
|
9,500
|
|
FNMA Deferred Financing Fees Accrued at June 30, 2009
|
|
(2,760
|
)
|
Balance
|
|
$
|
6,740
|
(1)
|
(1) Includes
$1,140 of deferred financing fees as part of the Five Star transaction
discussed above.
The
breakout of additions to real estate properties is as follows:
Pending Senior Living Acquisition from an Unaffiliated Party
|
|
$
|
21,000
|
|
Purchase of Five Star PP&E in FNMA Mortgaged Properties
|
|
8,500
|
|
Total
|
|
$
|
29,500
|
|
F-7
SENIOR HOUSING PROPERTIES TRUST
Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars
in tables in thousands, or as otherwise stated)
Unaudited Pro Forma
Condensed Consolidated Statement of Income Adjustments for the Six Months Ended
June 30, 2009
(D)
Represents the
impact on rental income, reimbursement income and operating expenses for the
six months ended June 30, 2009 of the historical results of the three MOBs
acquired by us subsequent to June 30, 2009 and prorated results of the one
MOB acquired by us in January 2009 and two MOBs acquired in May 2009,
as if these acquisitions occurred on January 1, 2009. Included in rental income, interest expense,
depreciation and acquisition costs in the historical column are $21.5 million,
$374,000, $5.3 million and $1.4 million, respectively, of the 40 MOBs acquired
from HRP (one of which we sold in May 2009), the one MOB acquired from an
unaffiliated party and the pro rated results of the one MOB sold prior to June 30,
2009. A management fee of 3% of gross
rents is included in property operating expenses.
(E)
Represents the
impact on rental income, reimbursement income and operating expenses for the
six months ended June 30, 2009 of the historical results of our pending acquisitions
from HRP of four MOBs as if these acquisitions occurred on January 1, 2009. A management fee of 3% of gross rents is
included in property operating expenses.
(F)
We have agreed
to acquire one senior living property from an unaffiliated party for
approximately $21.0 million. We intend
to lease this property for initial rent of $1.8 million. We expect to fund this acquisition using cash
on hand and borrowings under our revolving credit facility, if needed. The adjustment to rental income represents
the six month impact assuming we acquired this one senior living property on January 1,
2009. This adjustment also includes a
$1.0 million rental income reduction related to the FNMA transaction described
in Note (C), as if this transaction occurred on January 1, 2009. The adjustments are as follows:
Pending Senior Living Acquisition from an Unaffiliated Party
|
|
$
|
919
|
|
Five Star Rent Reduction
|
|
(1,000
|
)
|
Total
|
|
$
|
(81
|
)
|
(G)
Represents the
rental income adjustment for the sale of one MOB to an unaffiliated party for
$3.1 million in May 2009 and the straight-line rent adjustment for the
three MOBs acquired subsequent to June 30, 2009 and pending purchase of
four MOBs from HRP as if these transactions occurred on January 1,
2009. Also includes the preliminary
amortization of capitalized above and below market lease values for these
acquired and pending acquisitions. The
adjustments are as follows:
MOB Sold to Unaffiliated Party
|
|
$
|
(137
|
)
|
MOBs Acquired from HRP (Straight-line)
|
|
744
|
|
MOBs Pending from HRP (Straight-line)
|
|
129
|
|
MOBs Acquired from HRP (Above Market Leases)
|
|
(601
|
)
|
MOBs Pending from HRP (Below Market Leases)
|
|
161
|
|
Total
|
|
$
|
296
|
|
F-8
SENIOR HOUSING PROPERTIES TRUST
Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars
in tables in thousands, or as otherwise stated)
(H)
Does not
include the estimated interest income on the balance of the net proceeds of the
FNMA financing. We intend to use the
balance of the net proceeds to fund investments, including possibly
accelerating the remaining MOB acquisitions from HRP, and for general business
purposes.
(I)
Represents the
property operating expense adjustment for the sale of one MOB to an
unaffiliated party in May 2009. The
adjustment represents the six month impact assuming this transaction occurred
on January 1, 2009.
(J)
Represents the
impact on interest expense for the $512.9 million FNMA financing described in
Note (C) used to repay borrowings outstanding on our revolving credit
facility and to fund the acquisition of three MOBs from HRP in August 2009,
as well as the amortization of $9.5 million of estimated deferred financing
fees in relation to this FNMA financing as if this transaction occurred on January 1,
2009. The additional net interest
expense is as follows:
FNMA Financing
|
|
$
|
16,906
|
|
FNMA Proceeds Repay Amounts Outstanding on Revolving Credit
Facility
|
|
(1,359
|
)
|
FNMA Financing Amortization of Deferred Financing Fees
|
|
475
|
|
Total
|
|
$
|
16,022
|
|
(K)
Represents the impact on depreciation expense for the six months ended June 30,
2009, of properties acquired by us in 2009 described in Note (D), the impact of
the acquisitions of the four pending MOBs described in Note (E) and the
impact on the one pending senior living acquisition described in Note (C). Also includes the preliminary amortization of
capitalized origination costs for these acquired and pending MOBs. The additional depreciation expense is as
follows:
MOBs Acquired from HRP
|
|
$
|
2,022
|
|
MOBs Pending from HRP
|
|
372
|
|
Pending Senior Living Acquisition from an
Unaffiliated Party
|
|
270
|
|
MOBs Acquired from HRP (Origination Costs)
|
|
(83
|
)
|
MOBs Pending from HRP (Origination Costs)
|
|
99
|
|
Total
|
|
$
|
2,680
|
|
(L)
Represents the impact on general and administrative expenses for the six
months ended June 30, 2009, of properties acquired by us in 2009 described
in Note (D), the impact of the acquisitions of the four pending MOBs described
in Note (E) and the impact of the one pending senior living acquisition
described in Note (C). The increase in
general and administrative expense represents the management fees payable to
Reit Management & Research LLC, or RMR. The management fees paid by us to RMR with
respect to the acquired and pending MOBs from HRP will be the same as the
F-9
SENIOR HOUSING PROPERTIES TRUST
Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars
in tables in thousands, or as otherwise stated)
management fees that are currently being paid by HRP
with respect to these MOBs and they will not increase as a result of our
purchase prices being higher than HRPs historical costs of these MOBs. The additional general and administrative
expenses are as follows:
MOBs Acquired from HRP
|
|
$
|
280
|
|
MOBs Pending from HRP
|
|
53
|
|
Pending Senior Living Acquisition from an
Unaffiliated Party
|
|
53
|
|
Total
|
|
$
|
386
|
|
(M)
In February 2009,
we issued 5.9 million of our common shares in an underwritten public offering,
raising net proceeds of $96.8 million.
We used the net proceeds from this offering to repay borrowings
outstanding on our revolving credit facility and for general business purposes,
including funding, in part, the acquisitions described in Note (D). The adjustment to our weighted average shares
outstanding shows the effect on our weighted average shares outstanding for the
six months ended June 30, 2009, as if we issued the additional shares on January 1,
2009.
Unaudited Pro Forma
Condensed Consolidated Statement of Income Adjustments for the Year Ended December 31,
2008
(N)
Represents the
impact on rental income, reimbursement income and operating expenses for the
year ended December 31, 2008 of the historical results of the six MOBs
acquired by us subsequent to December 31, 2008 and pro rated results of
the 37 MOBs acquired by us between June and December 31, 2008, as if
these acquisitions occurred on January 1, 2008. Included in rental income, interest expense,
depreciation, general and administrative expenses and impairment of assets in
the historical column are $12.3 million, $346,000, $3.3 million, $16,000 and
$1.4 million, respectively, of the 37 MOBs acquired from HRP and the one MOB
acquired from an unaffiliated party since June 1, 2008 from the date of
acquisition through December 31, 2008.
A management fee of 3% of gross rents is included in property operating
expenses.
(O)
Represents the
impact on rental income, reimbursement income and operating expenses for the
year ended December 31, 2008 of the historical results of our pending
acquisitions from HRP of four MOBs as if these acquisitions occurred on January 1,
2008. A management fee of 3% of gross
rents is included in property operating expenses.
(P)
During the year
ended December 31, 2008, we purchased 30 senior living properties with a
total of 2,507 units and four wellness centers with a total of 458,000 square
feet for approximately $379.3 million and $100.0 million, respectively, from
nine unaffiliated parties. We leased
these properties for initial rent of $39.4 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
F-10
SENIOR HOUSING PROPERTIES TRUST
Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars
in tables in thousands, or as otherwise stated)
living
properties totaling $50.5 million at a weighted average interest rate of 6.5%
per annum. Also includes the pending
acquisition of one senior living property from an unaffiliated party described
in Note (C) and the rent reduction related to the FNMA and Five Star
transaction described in Note (C). The
adjustment to rental income represents the full year impact assuming these
transactions occurred on January 1, 2008.
The adjustments are as follows:
2008 Senior Living and Wellness Center
Acquisitions
|
|
$
|
15,264
|
|
Pending Senior Living Acquisition from an
Unaffiliated Party
|
|
1,838
|
|
Five Star Rent Reduction
|
|
(2,000
|
)
|
Total
|
|
$
|
15,102
|
|
(Q)
Represents the
rental income adjustment for the one MOB acquired from an unaffiliated party on
September 30, 2008, the sale of one MOB to an unaffiliated party for $3.1
million in May 2009 and the straight-line rent adjustment for the 43
acquired MOBs (including one MOB we sold in May 2009) and four pending
MOBs from HRP. Also includes the
preliminary amortization of capitalized above and below market lease values for
these acquired and pending acquisitions.
The adjustments are as follows:
MOBs Acquired from Unaffiliated Party
|
|
$
|
1,832
|
|
MOB Sold to Unaffiliated Party
|
|
(319
|
)
|
MOBs Acquired from HRP (Straight-line)
|
|
4,636
|
|
MOBs Pending from HRP (Straight-line)
|
|
258
|
|
MOBs Acquired from HRP (Above Market Leases)
|
|
(1,511
|
)
|
MOBs Acquired from Unaffiliated Party (Above Market Leases)
|
|
(41
|
)
|
MOBs Acquired from HRP (Below Market Leases)
|
|
85
|
|
MOBs Pending from HRP (Below Market Leases)
|
|
322
|
|
MOBs Acquired from Unaffiliated Party (Below Market Leases)
|
|
41
|
|
Total
|
|
$
|
5,303
|
|
(R)
Does not
include the estimated interest income on the balance of the net proceeds of the
FNMA financing. We intend to use the
balance of the net proceeds to fund investments, including possibly
accelerating the remaining MOB acquisitions from HRP, and for general business
purposes.
(S)
Represents the
property operating expense adjustments for the sale of one MOB to an
unaffiliated party in May 2009 and the one MOB acquired from an
unaffiliated party on September 30, 2008.
These adjustments represent the full year impact assuming they occurred
on January 1, 2008. The adjustments
are as follows:
MOB Sold to Unaffiliated Party
|
|
$
|
(9
|
)
|
MOB Acquired from Unaffiliated Party
|
|
569
|
|
Total
|
|
$
|
560
|
|
F-11
SENIOR HOUSING PROPERTIES TRUST
Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars
in tables in thousands, or as otherwise stated)
(T)
Represents the
impact on 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 (P). Also represents the
impact on interest expense for the $512.9 million FNMA financing described in
Note (C) used to repay borrowings outstanding on our revolving credit
facility and to fund the acquisitions of three MOBs from HRP in August 2009,
as well as the amortization of $9.5 million of estimated deferred financing
fees in relation to this FNMA financing as if these transactions occurred on January 1,
2008. The additional net interest
expense is as follows:
FNMA Financing
|
|
$
|
33,813
|
|
FNMA Proceeds Repay Amounts Outstanding on LOC
|
|
(2,508
|
)
|
FNMA Financing Amortization of Deferred Financing Fees
|
|
950
|
|
MOBs Acquired Debt Assumption
|
|
461
|
|
Senior Living Properties Acquired Debt Assumption
|
|
2,202
|
|
Total
|
|
$
|
34,918
|
|
(U)
Represents the impact on depreciation expense for the year ended December 31,
2008, of properties acquired by us during the year ended December 31, 2008
described in Note (P), the impact of the acquisitions of the 43 acquired MOBs
and four pending MOBs described in Notes (N) and (O), respectively, and
the impact of the one pending senior living acquisition described in Note (C),
as if these transaction occurred on January 1, 2008. Also includes the preliminary amortization of
capitalized origination costs for these acquired and pending MOB
acquisitions. The additional
depreciation expense is as follows:
2008 Senior Living and Wellness Center
Acquisitions
|
|
$
|
4,681
|
|
MOBs Acquired from HRP
|
|
10,128
|
|
MOBs Pending from HRP
|
|
786
|
|
MOBs Acquired from Unaffiliated Party
|
|
342
|
|
Pending Senior Living Acquisition from an
Unaffiliated Party
|
|
540
|
|
MOBs Acquired from HRP (Origination Costs)
|
|
670
|
|
MOBs Pending from HRP (Origination Costs)
|
|
156
|
|
MOBs Acquired from Unaffiliated Party
(Origination Costs)
|
|
105
|
|
Total
|
|
$
|
17,408
|
|
(V)
Represents the impact on general and administrative expenses for the year
ended December 31, 2008, of properties acquired by us during the year
ended December 31, 2008 described in Note (P), the impact of the
acquisitions of the 43 acquired MOBs (including one MOB that we sold in May 2009)
and four pending MOBs described in Notes (N) and (O), respectively, and
the impact of the one pending senior living acquisition described in Note (C),
as if these acquisitions occurred on January 1, 2008. The increase in general and administrative
expense represents the management fees
F-12
SENIOR HOUSING PROPERTIES TRUST
Notes
to Unaudited Pro Forma Condensed Consolidated Financial Statements
(dollars
in tables in thousands, or as otherwise stated)
payable to RMR.
The management fees paid by us to RMR with respect to the acquired and
pending MOBs from HRP will be the same as the management fees that are
currently being paid by HRP with respect to these MOBs and they will not
increase as a result of our purchase prices being higher than HRPs historical
costs of these MOBs. The additional
general and administrative expenses are as follows:
2008 Senior Living and Wellness Center
Acquisitions
|
|
$
|
912
|
|
MOBs Acquired from HRP
|
|
1,492
|
|
MOBs Pending from HRP
|
|
106
|
|
MOBs Acquired from Unaffiliated Party
|
|
70
|
|
Pending Senior Living Acquisition from an
Unaffiliated Party
|
|
105
|
|
Total
|
|
$
|
2,685
|
|
(W)
In February 2008,
June 2008 and February 2009, we issued 6.2 million, 19.6 million and
5.9 million of our common shares in underwritten public offerings, raising net
proceeds of $129.4 million, $393.7 million and $96.8 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 (N) and (P). The adjustment to our weighted average shares
outstanding shows the effect on our weighted average shares outstanding for the
year ended December 31, 2008, as if we issued the additional shares on January 1,
2008.
F-13
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/ Richard A. Doyle
|
|
|
Richard A. Doyle
|
|
|
Treasurer and Chief
Financial Officer
|
|
|
Dated: August 18,
2009
|
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