Senior Housing Properties Trust Agrees to Sell Two Hospitals for $90 Million
September 20 2013 - 7:00AM
Business Wire
Senior Housing Properties Trust (NYSE: SNH) today announced that
it has entered an agreement to sell two rehabilitation hospitals it
owns to a joint venture comprised of affiliates of The Sanders
Trust, LLC of Birmingham, AL and Harrison Street Real Estate
Capital, LLC of Chicago, IL for $90 million. SNH currently expects
to realize a gain upon completion of this sale of over $30
million.
The two hospitals to be sold are New England Rehabilitation
Hospital (198 licensed beds) located in Woburn, MA and Braintree
Rehabilitation Hospital (166 licensed beds) located in Braintree,
MA. These hospitals were acquired by SNH in 2002; and the hospitals
real estate assets are currently leased to Five Star Quality Care,
Inc. (NYSE: FVE). In connection with the transactions, FVE has
agreed to terminate its lease of the hospitals and transfer its
operating rights and obligations, subject to regulatory approvals,
to entities affiliated with Reliant Hospital Partners, LLC
(Reliant), a private company located in Richardson, TX, which will
operate the hospitals when the sale is completed.
A large majority of the revenues at the hospitals are paid by
Medicare. After completion of this sale, only 2% of SNH’s total
revenues (based upon revenues for the three months ended June 30,
2013) will be from the ownership of healthcare facilities where
Medicare and Medicaid represent a majority of revenues. The two
hospitals are leased by SNH to FVE under a combination lease which
also includes 51 senior living properties. The rent reduction which
SNH will experience as a result of this sale will be $9.5 million
per year. After this rent reduction, the total of all rent received
by SNH from FVE under the four combination leases with FVE will
represent only 26% of SNH’s total revenues (based upon revenues for
the three months ended June 30, 2013).
David Hegarty, President and Chief Operating Officer of SNH,
made the following statement concerning the transaction:
“For more than a decade, SNH has been focused on reducing its
exposure to government funded programs like Medicare and Medicaid.
Upon completion of the sale of these hospitals, this plan to reduce
SNH’s exposure to possible future reductions in government funded
Medicare and Medicaid programs will be nearly complete. SNH
believes the rent reduction may be substantially offset by
reinvesting the sale proceeds into additional healthcare related
real estate, and any temporary reduction in earnings is more than
offset by the reduced risk exposure to the politics and vagaries of
government funding.”
The sale of these hospitals is not subject to any financing
condition, but the transaction is subject to various health
regulatory approvals and other closing conditions typical of these
types of transactions. The health regulatory approvals are often
time consuming, and SNH currently expects this sale may be
completed about mid-year 2014.
Senior Housing Properties Trust is a real estate investment
trust, or REIT, that owns independent and assisted living
communities, medical office buildings, nursing homes and wellness
centers located throughout the United States.
WARNING REGARDING
FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
AND OTHER SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE
BASED UPON SNH’S CURRENT BELIEFS AND EXPECTATIONS, BUT THEY ARE NOT
GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR VARIOUS REASONS,
INCLUDING SOME WHICH ARE BEYOND SNH’S CONTROL. FOR EXAMPLE:
- THIS PRESS RELEASE STATES THAT SNH HAS
AGREED TO SELL TWO REHABILITATION HOSPITALS FOR $90 MILLION, SNH
EXPECTS THAT SALE TO RESULT IN A GAIN OF OVER $30 MILLION AND THAT
THIS SALE MAY BE COMPLETED ABOUT MID-YEAR 2014. AS NOTED IN THIS
PRESS RELEASE, THE SALE OF THESE HOSPITALS IS SUBJECT TO HEALTH
REGULATORY APPROVALS AND OTHER CONDITIONS TYPICAL OF THESE TYPES OF
TRANSACTIONS. SNH HAS NO CONTROL OVER THE REQUIRED REGULATORY
APPROVAL PROCESSES OR OVER CERTAIN OTHER CONDITIONS APPLICABLE TO
THIS SALE, THESE APPROVALS MAY NOT BE OBTAINED AND THE CONDITIONS
MAY NOT BE SATISFIED. ACCORDINGLY, THE PROPOSED SALE MAY BE
DELAYED, IT MAY NOT OCCUR OR ITS TERMS MAY CHANGE, AND SNH MAY NOT
RECEIVE THE SALE PROCEEDS OR REALIZE THE OVER $30 MILLION
GAIN.
- THIS PRESS RELEASE STATES THAT AFTER
COMPLETION OF THE DESCRIBED HOSPITAL SALE, ONLY 2% OF SNH’S TOTAL
REVENUES (BASED UPON REVENUES FOR THE THREE MONTHS ENDED JUNE 30,
2013) WILL BE FROM THE OWNERSHIP OF HEALTHCARE FACILITIES WHERE
MEDICARE AND MEDICAID REPRESENT A MAJORITY OF REVENUES. THE
IMPLICATION OF THIS STATEMENT MAY BE THAT SNH IS ONLY NOMINALLY
EXPOSED TO MEDICARE AND MEDICAID PROGRAM REVENUES. HOWEVER: (I)
SOME RESIDENTS AT SNH OWNED FACILITIES MAY BECOME ELIGIBLE FOR
MEDICARE AND MEDICAID REVENUES BECAUSE THEIR PRIVATE RESOURCES
BECOME EXHAUSTED; (II) THE MEDICARE AND MEDICAID PROGRAMS MAY BE
CHANGED TO PROVIDE PAYMENTS FOR ADDITIONAL RESIDENTS OR PATIENTS OF
SNH OWNED HEALTHCARE FACILITIES; OR (III) SNH MAY IN THE FUTURE
ACQUIRE HEALTHCARE FACILITIES WHERE A MAJORITY OF THE REVENUES ARE
RECEIVED FROM THE MEDICARE AND MEDICAID PROGRAMS. ACCORDINGLY, SNH
CAN NOT PROVIDE ANY ASSURANCE THAT ITS FUTURE REVENUES FROM
FACILITIES WHERE THE MAJORITY OF REVENUES ARE RECEIVED FROM THE
MEDICARE AND MEDICAID PROGRAMS WILL NOT INCREASE AS A PERCENTAGE OF
SNH’S TOTAL REVENUES.
- THIS PRESS RELEASE STATES THAT, AFTER
THE COMPLETION OF THE DESCRIBED HOSPITALS’ SALE, THE TOTAL OF ALL
RENTS RECEIVED BY SNH FROM FVE UNDER THE FOUR SNH COMBINATION
LEASES WITH FVE WILL REPRESENT ONLY 26% OF SNH’S TOTAL REVENUES
(BASED UPON REVENUES FOR THE THREE MONTHS ENDED JUNE 30, 2013). AN
IMPLICATON OF THIS STATEMENT IS THAT SNH’S CONCENTRATED CREDIT RISK
ASSOCIATED WITH FVE’S OPERATIONS IS 26% AND MAY BE FURTHER REDUCED.
HOWEVER: (I) IN ADDITION TO LEASING PROPERTIES FROM SNH, FVE ALSO
MANAGES CERTAIN PROPERTIES FOR SNH’S TAXABLE SUBSIDIARIES; AND (II)
SNH MAY IN THE FUTURE LEASE ADDITIONAL PROPERTIES TO FVE.
ACCORDINGLY, SNH’S EXPOSURE TO FVE’S OPERATIONS MAY BE CONSIDERED
TO BE GREATER THAN 26% OF SNH’S REVENUES AND THAT EXPOSURE MAY
INCREASE IN THE FUTURE.
- THIS PRESS RELEASE STATES THAT SNH
BELIEVES THAT THE REDUCED RENT WHICH SNH WILL RECEIVE WHEN THE SALE
OF THE HOSPITALS CLOSES MAY BE SUBSTANTIALLY OFFSET BY ITS
REINVESTING THE SALE PROCEEDS INTO ADDITIONAL HEALTHCARE RELATED
REAL ESTATE AND THAT ANY TEMPORARY REDUCTION IN EARNINGS WHICH SNH
MAY EXPERIENCE IS MORE THAN OFFSET BY THE REDUCED RISK EXPOSURE TO
THE POLITICS AND VAGARIES OF GOVERNMENT FUNDING. SNH’S ABILITY TO
REINVEST SALE PROCEEDS DEPENDS UPON SNH’S ABILITY TO LOCATE AND
ACQUIRE ADDITIONAL HEALTHCARE RELATED REAL ESTATE FROM PERSONS
BEYOND SNH’S CONTROL. ANY ACQUISITION MADE WITH SALE PROCEEDS MAY
PRODUCE LESS RENTS THAN THE AMOUNT OF RENT REDUCTION WHICH SNH WILL
REALIZE FROM FVE. ALSO, THE VALUE OF REDUCED RISK EXPOSURE TO THE
POLITICS AND VAGARIES OF GOVERNMENT FUNDING IS A SUBJECTIVE CONCEPT
NOT READILY SUSCEPTIBLE TO QUANTITATIVE MEASUREMENT. ACCORDINGLY,
THE RENT REDUCTION WHICH SNH MAY REALIZE AS A CONSEQUENCE OF
SELLING THE HOSPITALS AS DESCRIBED IN THIS PRESS RELEASE MAY BE
SIGNIFICANT AND PERMANENT, AND SOME ANALYSTS AND INVESTORS MAY NOT
PLACE ANY MONETARY VALUE ON THE REDUCED RISK EXPOSURE TO GOVERNMENT
FUNDING.
FOR THESE AND OTHER REASONS, INVESTORS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS
RELEASE.
EXCEPT AS REQUIRED BY APPLICABLE LAW, SNH DOES NOT INTEND TO
UNDERTAKE ANY OBLIGATION TO UPDATE THE FORWARD LOOKING STATEMENTS
IN THIS PRESS RELEASE AS A RESULT OF NEW INFORMATION WHICH MAY COME
TO SNH’S ATTENTION, 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.
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