Senior Housing Properties Trust (NYSE: SNH) today announced its
financial results for the quarter and twelve months ended December
31, 2010.
Results for the quarter ended December 31, 2010:
Funds from operations, or FFO, for the quarter ended December
31, 2010 was $57.2 million, or $0.44 per share. This compares to
FFO for the quarter ended December 31, 2009 of $52.4 million, or
$0.41 per share.
Net income was $33.9 million, or $0.26 per share, for the
quarter ended December 31, 2010, compared to net income of $32.1
million, or $0.25 per share, for the quarter ended December 31,
2009. Net income for the quarter ended December 31, 2010 includes a
non cash impairment of assets charge of $4.9 million, or $0.04 per
share, related to two properties. Net income for the quarter ended
December 31, 2009 includes a non cash impairment of assets charge
of $4.3 million, or $0.03 per share, related to three properties
and a gain of $397,000, or less than $0.01 per share, relating to
the sale of two skilled nursing facilities.
The weighted average number of common shares outstanding totaled
130.1 million and 127.4 million for the quarters ended December 31,
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 December 31, 2010 and 2009 appears later in this
press release.
Results for the year ended December 31, 2010:
FFO for the year ended December 31, 2010 was $218.8 million, or
$1.71 per share. This compares to FFO for the year ended December
31, 2009 of $206.8 million, or $1.70 per share.
Net income was $116.5 million, or $0.91 per share, for the year
ended December 31, 2010, compared to net income of $109.7 million,
or $0.90 per share, for the year ended December 31, 2009. Net
income for the year ended December 31, 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
year ended December 31, 2010 also includes a gain on sale of
approximately $109,000, or less than $0.01 per share, related to
the sale of four properties in August 2010 and a non cash
impairment of assets charge of $6.0 million, or $0.05 per share,
related to seven properties. Net income for the year ended December
31, 2009 includes a non cash impairment of assets charge of $15.5
million, or $0.13 per share, related to 11 properties and a gain of
$397,000, or less than $0.01 per share, related to the sale of two
skilled nursing facilities.
The weighted average number of common shares outstanding totaled
128.1 million and 121.9 million for the years ended December 31,
2010 and 2009, respectively.
A reconciliation of net income determined according to GAAP to
FFO for the years ended December 31, 2010 and 2009 appears later in
this press release.
Recent Investment and Sales Activities:
Since October 1, 2010, SNH has acquired 29 medical office
buildings, or MOBs, for an aggregate purchase price of
approximately $499.2 million, excluding closing costs. SNH has also
agreed to sell four senior living communities for an aggregate sale
price of $18.8 million, excluding closing costs.
- In October 2010, SNH acquired a MOB
located in Conroe (Houston), TX with 58,605 square feet. This
property is 100% leased to Montgomery County Management Company,
LLC for approximately 13.8 years. The purchase price was $15.0
million, excluding closing costs.
- In November 2010, we entered into a
series of agreements to acquire 27 MOBs from CommonWealth REIT
located in 12 states for an aggregate purchase price of
approximately $470.0 million. The properties we agreed to acquire
have a current average occupancy of 95%. Between November and
December 31, 2010, we acquired 21 of these properties containing
2.1 million square feet for approximately $374.1 million, excluding
closing costs. In January 2011, we acquired the remaining six
properties containing 737,000 square feet for approximately $95.9
million, excluding closing costs.
- In January 2011, we acquired a MOB
located in Mendota Heights (Minneapolis), MN with 82,854 square
feet. This property is 100% leased to WuXi AppTec for approximately
8.2 years. The purchase price was $14.2 million, excluding closing
costs.
- In November 2010, we agreed to sell
three skilled nursing facilities in Georgia with an aggregate 329
licensed beds that are leased to Five Star Quality Care Inc., or
Five Star, for an aggregate sales price of approximately $18.0
million, excluding closing costs, and we expect Five Star’s annual
rent payable to us to be decreased by approximately $1.8 million
after the sale closes. We expect the sale of these properties to
occur during the first quarter of 2011; however, the sale of these
properties is contingent upon customary closing conditions and we
can provide no assurance that we will sell these properties.
- In January 2011, we agreed to sell one
assisted living community in Pennsylvania with 70 licensed units
that is leased to Five Star for a sales price of approximately
$800,000, and we expect Five Star’s annual rent to us to be
decreased by approximately $72,000 after the sale closes. We expect
the sale of this property to occur during the second quarter of
2011; however, the sale of this property is contingent upon
customary closing conditions and we can provide no assurance that
we will sell this property.
Recent Financing Activities:
In December 2010, we issued 14.4 million common shares in a
public offering, raising net proceeds of approximately $281.9
million. We used the net proceeds from this offering to repay
borrowings outstanding under our revolving credit facility and for
general business purposes, including funding in part the
acquisitions described above.
In January 2011, we sold $250.0 million of 4.30% senior
unsecured notes due 2016, raising net proceeds of approximately
$245.4 million. We used the net proceeds of this offering to repay
borrowings outstanding under our revolving credit facility and for
general business purposes, including funding in part the
acquisitions described above.
Conference Call:
On Wednesday, February 23, 2011, 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 year
ended December 31, 2010. The conference call telephone number is
(800) 230-1059. Participants calling from outside the United States
and Canada should dial (612) 234-9959. 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 11:59 p.m. Eastern
Time, Wednesday, March 2, 2011. To hear the replay, dial (320)
365-3844. The replay pass code is: 179294.
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 fourth quarter and year end conference call is
strictly prohibited without the prior written consent of SNH.
Supplemental Data:
A copy of SNH’s Fourth 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 327
properties located in 37 states and Washington, D.C. SNH is
headquartered in Newton, MA.
Financial Information
(in thousands, except per share data)
(unaudited)
Income Statement:
Quarter Ended
December 31,
Year Ended December
31,
2010
2009
2010
2009
Rental income $96,836 $86,992 $339,009
$296,777 Expenses: Depreciation 23,270 21,870 90,409
78,583 Property operating expenses 6,075 3,987 19,195 14,273
General and administrative 5,408 4,900 21,865 19,899 Acquisition
related costs 2,885 1,416 3,610 3,327
Total expenses 37,638 32,173 135,079 116,082
Operating income 59,198 54,819 203,930 180,695
Interest and other income 459 253 1,162 1,003 Interest expense
(20,862 ) (18,972 ) (80,017 ) (56,404 ) Loss on early
extinguishment of debt (1) - - (2,433 ) - Impairment of assets (2)
(4,870 ) (4,281 ) (5,965 ) (15,530 ) Gain on sale of properties (3)
- 397 109 397 Equity in earnings (losses) of an investee 16
(2 ) (1 ) (134 ) Income before income tax expense 33,941 32,214
116,785 110,027 Income tax expense (77 ) (108 ) (300 ) (312 ) Net
income $33,864 $32,106 $116,485 $109,715
Weighted average shares outstanding 130,136
127,378 128,092 121,863 Net income per
share $0.26 $0.25 $0.91 $0.90
Balance Sheet:
At December 31, 2010 At December 31, 2009
Assets
Real estate properties $3,761,712 $3,317,983 Less accumulated
depreciation 538,872 454,317 3,222,840 2,863,666 Cash and cash
equivalents 10,866 10,494 Restricted cash 4,994 4,222 Deferred
financing fees, net 16,262 14,882 Acquired real estate leases, net
63,593 42,769 Other assets 74,101 51,893 Total assets $3,392,656
$2,987,926 Commitments and Contingencies
Liabilities and
Shareholders’ Equity
Unsecured revolving credit facility $128,000 $60,000 Senior
unsecured notes, net of discount 422,880 322,160 Secured debt and
capital leases 654,010 660,059 Accrued interest 14,993 13,693
Acquired real estate lease obligations, net 18,239 9,687 Other
liabilities 26,557 21,677 Total liabilities 1,264,679 1,087,276
Shareholders’ equity 2,127,977 1,900,650 Total liabilities and
shareholders’ equity $3,392,656 $2,987,926
(1) During the second quarter of 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 fourth quarters of 2010 and 2009, we recognized
an impairment of assets charge of $4.9 million related to two
properties and $4.3 million related to three properties,
respectively. During the years ended December 31, 2010 and 2009, we
recognized an impairment of assets charge of $6.0 million related
to seven properties and $15.5 million related to 11 properties,
respectively.
(3) During the third quarter of 2010, we sold four skilled
nursing facilities located in Nebraska with an aggregate 196
licensed beds for $1.5 million and recognized a gain on sale of
approximately $109. During the fourth quarter of 2009, we sold two
skilled nursing facilities for $1.9 million and recognized a gain
on sale of approximately $397.
Funds from Operations
(in thousands, except per share data)
(unaudited)
Calculation of Funds from Operations
(FFO) (1):
Quarter Ended
December 31,
Year Ended December
31,
2010
2009
2010
2009
Net income $33,864 $32,106 $116,485 $109,715
Add:
Depreciation expense
23,270 21,870 90,409 78,583
Acquisition related costs
2,885 1,416 3,610 3,327
Loss on early extinguishment of debt
(2)
- - 2,433 -
Impairment of assets (3)
4,870 4,281 5,965 15,530
Less:
Deferred percentage rent (4)
(7,700 ) (6,900 ) - -
Gain on sale of properties (5)
- (397 ) (109 ) (397 ) FFO $57,189 $52,376
$218,793 $206,758 Weighted average shares
outstanding 130,136 127,378 128,092 121,863
FFO per share $0.44 $0.41 $1.71
$1.70 Distributions declared per share $0.37 $0.36
$1.46 $1.43
(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 related 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 related 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) During the second quarter of 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 fourth quarters of 2010 and 2009, we recognized
an impairment of assets charge of $4.9 million related to two
properties and $4.3 million related to three properties,
respectively. During the years ended December 31, 2010 and 2009, we
recognized an impairment of assets charge of $6.0 million related
to seven properties and $15.5 million related to 11 properties,
respectively.
(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. During the fourth
quarters of 2010 and 2009, we recognized $10.3 million and $9.1
million of percentage rent for the years ended December 31, 2010
and 2009, respectively.
(5) During the third quarter of 2010, we sold four skilled
nursing facilities located in Nebraska with an aggregate 196
licensed beds for $1.5 million and recognized a gain on sale of
approximately $109. During the fourth quarter of 2009, we sold two
skilled nursing facilities for $1.9 million and recognized a gain
on sale of approximately $397.
WARNING CONCERNING
FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE 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 AND
THEIR IMPLICATIONS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR
EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS
ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. 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 PRESS RELEASE STATES THAT WE HAVE
ENTERED INTO AGREEMENTS TO SELL FOUR PROPERTIES AND THAT THE SALES
ARE EXPECTED TO OCCUR DURING THE FIRST AND SECOND QUARTERS OF 2011.
THE CLOSINGS OF THESE SALES ARE SUBJECT TO VARIOUS CONDITIONS
TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS. AS A RESULT, SOME
OR ALL OF THESE SALES MAY BE DELAYED OR MAY NOT OCCUR.
THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING UNDER “RISK FACTORS” IN OUR PERIODIC
REPORTS, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN OR IMPLIED BY OUR
FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION ARE AVAILABLE ON ITS WEBSITE AT
WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR 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.
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the New York
Stock Exchange.No shareholder, Trustee or officer is personally
liable for any act or obligation of the Trust.
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