Senior Housing Properties Trust (NYSE: SNH) today announced its
financial results for the quarter and six months ended June 30,
2010.
Results for the quarter ended June 30, 2010:
Funds from operations, or FFO, for the quarter ended June 30,
2010 was $53.3 million, or $0.42 per share. This compares to FFO
for the quarter ended June 30, 2009 of $52.8 million, or $0.44 per
share.
Net income was $24.6 million, or $0.19 per share, for the
quarter ended June 30, 2010, compared to net income of $30.5
million, or $0.25 per share, for the quarter ended June 30, 2009.
Net income for the quarter ended June 30, 2010 includes a loss on
early extinguishment of debt of approximately $2.4 million, or
$0.02 per share, related to the redemption of all $97.5 million of
our outstanding 7.875% senior notes due 2015. Net income for the
quarter ended June 30, 2010 also includes a non-cash impairment of
assets charge of $1.1 million, or $0.01 per share, related to five
properties. For purposes of calculating FFO, these items are
excluded from our determination of FFO.
The weighted average number of common shares outstanding totaled
127.4 million and 120.5 million for the quarters ended June 30,
2010 and 2009, respectively.
A reconciliation of net income determined according to U.S.
generally accepted accounting principles, or GAAP, to FFO for the
quarters ended June 30, 2010 and 2009 appears later in this press
release.
Results for the six months ended June 30, 2010:
FFO for the six months ended June 30, 2010 was $108.1 million,
or $0.85 per share. This compares to FFO for the six months ended
June 30, 2009 of $105.0 million, or $0.88 per share.
Net income was $54.5 million, or $0.43 per share, for the six
months ended June 30, 2010, compared to net income of $62.0
million, or $0.52 per share, for the six months ended June 30,
2009. Net income for the six months ended June 30, 2010 includes a
loss on early extinguishment of debt of approximately $2.4 million,
or $0.02 per share, related to the redemption of all $97.5 million
of our outstanding 7.875% senior notes due 2015. Net income for the
six months ended June 30, 2010 also includes a non-cash impairment
of assets charge of $1.1 million, or $0.01 per share, related to
five properties. For purposes of calculating FFO, these items are
excluded from our determination of FFO.
The weighted average number of common shares outstanding totaled
127.4 million and 119.2 million for the six months ended June 30,
2010 and 2009, respectively.
A reconciliation of net income determined according to U.S. GAAP
to FFO for the six months ended June 30, 2010 and 2009 appears
later in this press release.
Recent Activities:
On July 29, 2010, Moody’s Investors Service upgraded our senior
unsecured bonds to an investment grade rating of Baa3 from Ba1.
In April 2010, we sold $200.0 million of senior unsecured notes.
The notes require interest at a fixed rate of 6.75% per annum and
are due in 2020. Net proceeds from the sale of the notes, after
underwriting discounts and other expenses, were approximately
$195.0 million. Interest on the notes is payable semi-annually in
arrears. No principal payments are due until maturity. We used a
portion of the net proceeds of this offering to repay $58.0 million
in borrowings under our revolving credit facility, to fund the
redemption of our $97.5 million outstanding 7.875% senior notes due
2015 and for general business purposes, including funding the
acquisitions described below.
As described above, in April 2010, we called all $97.5 million
of our outstanding 7.875% senior notes due 2015 for redemption on
May 17, 2010. As a result of this redemption, we recorded a loss on
early extinguishment of debt of approximately $2.4 million
consisting of the debt prepayment premium of approximately $1.3
million and the write off of unamortized deferred financing fees of
approximately $1.1 million.
In April 2010, we acquired a medical office building located in
Colorado with 14,695 rentable square feet for approximately $4.5
million, excluding closing costs. We funded this acquisition using
cash on hand and by assuming a mortgage loan for $2.5 million at an
interest rate of 6.73% per annum.
In June 2010, we acquired a medical office building located in
Texas with approximately 55,800 rentable square feet for
approximately $12.2 million, excluding closing costs. We funded
this acquisition using cash on hand.
Conference Call:
On Monday, August 2, 2010, at 1 p.m. Eastern Time, David J.
Hegarty, President and Chief Operating Officer, and Richard A.
Doyle, Treasurer and Chief Financial Officer, will host a
conference call to discuss the results for the quarter and six
months ended June 30, 2010. The conference call telephone number is
877-704-5384. Participants calling from outside the United States
and Canada should dial 913-981-4903. No pass code is necessary to
access the call from either number. Participants should dial in
about 15 minutes prior to the scheduled start of the call. A replay
of the conference call will be available through 4:00 p.m. Eastern
Time, Monday, August 9, 2010. To hear the replay, dial
719-457-0820. The replay pass code is 4533390.
A live audio web cast of the conference call will also be
available in listen only mode on the SNH website at
www.snhreit.com. Participants wanting to access the webcast should
visit the website about five minutes before the call. The archived
webcast will be available for replay on the SNH website for about
one week after the call. The recording and retransmission in any
way of SNH’s second quarter conference call is strictly prohibited
without the prior written consent of SNH.
Supplemental Data:
A copy of SNH’s Second Quarter 2010 Supplemental Operating and
Financial Data is available for download from the SNH website,
www.snhreit.com. SNH’s website is not incorporated as part of this
press release.
SNH is a real estate investment trust, or REIT, that owns 300
properties located in 35 states and Washington, D.C. SNH is
headquartered in Newton, MA.
Senior Housing Properties Trust Financial Information
(in thousands, except per share data) (unaudited)
Income Statement:
Quarter Ended June 30,
Six
Months Ended June 30,
2010
2009
2010
2009
Rental income $ 80,765 $ 69,399 $ 161,212 $
137,776 Expenses: Depreciation 22,345 18,635 44,634
37,024 General and administrative 5,413 5,056 10,914 9,807 Property
operating expenses 4,144 3,219 8,519 6,174 Acquisition costs
404 1,282 439 1,394
Total expenses 32,306 28,192
64,506 54,399 Operating income
48,459 41,207 96,706 83,377 Interest and other income 243
186 500 394 Interest expense (20,515 ) (10,707 ) (38,929 ) (21,483
) Loss on early extinguishment of debt (1) (2,433 ) - (2,433 ) -
Impairment of assets (2) (1,095 ) - (1,095 ) - Equity in losses of
an investee (24 ) (109 ) (52 ) (109 )
Income before income tax expense 24,635 30,577 54,697 62,179 Income
tax expense (76 ) (66 ) (154 ) (135 )
Net income $ 24,559 $ 30,511 $ 54,543 $ 62,044
Weighted average shares outstanding 127,408
120,455 127,394 119,161
Net income per share $ 0.19 $ 0.25 $
0.43 $ 0.52
Balance Sheet:
At June 30, 2010
At December 31, 2009
Assets
Real estate properties $ 3,348,752 $ 3,317,983 Less accumulated
depreciation 496,728 454,317 2,852,024 2,863,666 Cash
and cash equivalents 25,230 10,494 Restricted cash 4,930 4,222
Deferred financing fees, net 16,478 14,882 Acquired real estate
leases, net 41,855 42,769 Other assets 52,710 51,893
Total assets $ 2,993,227 $ 2,987,926 Commitments and Contingencies
Liabilities and Shareholders’ Equity
Unsecured revolving credit facility $ - $ 60,000 Senior unsecured
notes, net of discount 422,708 322,160 Secured debt and capital
leases 658,285 660,059 Accrued interest 14,609 13,693 Acquired real
estate lease obligations, net 9,621 9,687 Other liabilities
25,445 21,677 Total liabilities 1,130,668 1,087,276
Shareholders’ equity 1,862,559 1,900,650 Total
liabilities and shareholders’ equity $ 2,993,227 $ 2,987,926
(1) In May 2010, we redeemed all $97.5 million of our
outstanding 7.875% senior notes due 2015. As a result of this
redemption, we recorded a loss on early extinguishment of debt of
$2.4 million consisting of the debt prepayment premium of
approximately $1.3 million and the write off of unamortized
deferred financing fees and debt discount of approximately $1.1
million.
(2) During the three and six months ended June 30, 2010, we
recognized an impairment of assets charge of approximately $1.1
million related to five properties.
Senior Housing Properties Trust Funds from Operations
(in thousands, except per share
data) (unaudited)
Calculation of Funds from Operations (FFO)( (1)):
Quarter Ended June 30,
Six
Months Ended June 30,
2010
2009
2010
2009
Net income $ 24,559 $ 30,511 $ 54,543 $ 62,044 Add: Depreciation
expense 22,345 18,635 44,634 37,024 Acquisition costs 404 1,282 439
1,394 Loss on early extinguishment of debt (2) 2,433 - 2,433 -
Impairment of assets (3) 1,095 - 1,095 - Deferred percentage rent
(4) 2,500 2,400 5,000 4,500 FFO $
53,336 $ 52,828 $ 108,144 $ 104,962 Weighted average shares
outstanding 127,408 120,455 127,394
119,161 FFO per share $ 0.42 $ 0.44 $ 0.85 $ 0.88
Distributions declared per share $ 0.36 $ 0.36 $ 0.72 $ 0.71
(1) We compute FFO as shown above. Our calculation of FFO
differs from the definition of FFO by the National Association of
Real Estate Investment Trusts, or NAREIT, because we include
deferred percentage rent, if any, exclude loss on early
extinguishment of debt, if any, exclude impairment of assets, if
any, and exclude acquisition costs, if any, in the determination of
FFO. We consider FFO to be an appropriate measure of performance
for a REIT, along with net income and cash flow from operating,
investing and financing activities. We believe that FFO provides
useful information to investors because by excluding the effects of
certain historical amounts, such as depreciation expense,
acquisition costs and gain or loss on sale of properties, FFO can
facilitate a comparison of operating performances by a REIT over
time and among REITs. FFO does not represent cash generated by
operating activities in accordance with GAAP, and should not be
considered an alternative to net income or cash flow from operating
activities as a measure of financial performance or liquidity.
Also, other REITs may calculate FFO differently than we do.
(2) In May 2010, we redeemed all $97.5 million of our
outstanding 7.875% senior notes due 2015. As a result of this
redemption, we recorded a loss on early extinguishment of debt of
$2.4 million consisting of the debt prepayment premium of
approximately $1.3 million and the write off of unamortized
deferred financing fees and debt discount of approximately $1.1
million.
(3) During the three and six months ended June 30, 2010, we
recognized an impairment of assets charge of approximately $1.1
million related to five properties.
(4) Our percentage rents are generally calculated on an annual
basis. We recognize percentage rental income received during the
first, second and third quarters in the fourth quarter when all
contingencies related to percentage rents are satisfied. Although
recognition of this revenue is deferred until the fourth quarter,
our FFO calculation for the first three quarters includes estimated
amounts of deferred percentage rents with respect to those periods.
The fourth quarter calculation of FFO excludes the amounts
recognized during the first three quarters.
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