Reports Normalized FFO of $0.43 Per Share
Continuing Accretive Acquisition Strategy and
Further Diversifying Tenants While Maintaining Industry Leading
Private Pay Portfolio
Senior Housing Properties Trust (NYSE: SNH) today announced its
financial results for the quarter ended March 31, 2014.
“We are pleased with our financial results and, in particular,
with our strategic accomplishments during the first quarter,”
stated David Hegarty, President and Chief Operating Officer of SNH.
“The pending acquisition of two, Class A, state-of-the-art biotech
Medical Office Buildings is clearly a highlight and demonstrates
our commitment to strengthening and diversifying our portfolio,
making accretive acquisitions that improve shareholder value, and
increasing the percentage of private pay assets.”
Results for the quarter ended March 31, 2014:
Normalized funds from operations, or Normalized FFO, for the
quarter ended March 31, 2014 were $80.1 million, or $0.43 per
share. This compares to Normalized FFO for the quarter ended March
31, 2013 of $79.0 million, or $0.43 per share.
Net income was $38.6 million, or $0.21 per share, for the
quarter ended March 31, 2014, compared to net income of $35.2
million, or $0.19 per share, for the quarter ended March 31, 2013.
During the three months ended March 31, 2014, SNH recognized: (1) a
gain on sale of properties of $156,000, or less than $0.01 per
share, related to the sale of one senior living community
previously classified as held for sale; and (2) impairment of
assets charges of $721,000, or less than $0.01 per share, to reduce
the carrying value of two properties (five buildings) leased to
medical providers, medical related businesses, clinics and biotech
laboratory tenants, or MOBs, included in discontinued operations to
their aggregate estimated net sale price. Net income for the three
months ended March 31, 2013 included an impairment of assets charge
of $1.3 million, or less than $0.01 per share, to reduce the
carrying value of one of SNH’s properties to its estimated net sale
price.
The weighted average number of common shares outstanding were
188.2 million and 184.6 million for the quarters ended March 31,
2014 and 2013, respectively.
A reconciliation of net income determined according to U.S.
generally accepted accounting principles, or GAAP, to funds from
operations, or FFO, and Normalized FFO for the quarters ended March
31, 2014 and 2013 appears later in this press release.
Recent Investment and Sales Activities:
Since January 1, 2014, SNH has acquired one property. In April
2014, SNH acquired one MOB (one building) with 125,240 square feet
for approximately $32.7 million, including the assumption of $15.6
million of mortgage debt and excluding closing costs. This property
is known as the Texas Center for Athletes in the expanding South
Texas Medical Center area of San Antonio, TX.
SNH currently has one property (two buildings) under agreement
to be acquired for a purchase price of approximately $1.125
billion, excluding closing costs. In February 2014, SNH entered
into an agreement to acquire this property with 1,651,037 gross
building square feet. This recently built property is certified by
the U.S. Green Building Council as a LEED® Gold property and it is
located on the waterfront in Boston’s Seaport District, Boston’s
fastest growing submarket. The property is 96% leased to Vertex
Pharmaceuticals for an initial term ending in 2028. The closing of
this purchase is expected to occur on or about May 7, 2014.
In January 2014, SNH sold one assisted living facility with 36
units located in Kerrville, TX for $2.4 million, excluding closing
costs. As a result, SNH recorded a gain on sale of $156,000. In
April 2014, SNH sold one MOB with 210,879 square feet located in
Manchester, NH for $5.0 million, excluding closing costs.
SNH is also currently marketing for sale nine senior living
communities with 708 living units and three MOBs (six buildings)
with 620,620 square feet. The majority of the combined revenues
generated from the nine senior living communities listed for sale
come from government funded programs, such as Medicare and
Medicaid. The results of operations from the three MOBs (six
buildings) listed for sale and the one MOB (one building) sold in
April 2014 are included in discontinued operations in SNH’s
financial statements.
Recent Financing Activities:
In April 2014, SNH issued 15,525,000 common shares in a public
offering, raising gross proceeds of approximately $337.7 million,
before underwriting discounts and expenses. SNH used the net
proceeds of this offering (approximately $323.3 million after
underwriting discounts and before expenses) to repay borrowings
outstanding under its revolving, unsecured credit facility and the
remainder will be used for general business purposes, including the
partial funding of the pending acquisition of buildings leased to
Vertex described above.
In April 2014, SNH sold $400 million of 3.25% senior unsecured
notes due 2019 and $250 million of 4.75% senior unsecured notes due
2024, raising net proceeds of approximately $644.9 million after
underwriting discounts and before expenses. SNH plans to use the
net proceeds of this offering for general business purposes,
including partially funding the pending acquisition described
above.
Simultaneous with entering the agreement to acquire the MOB
property in Boston, MA described above, SNH received a term loan
commitment for $800 million from Jefferies Finance, LLC and Wells
Fargo Bank, N.A. The term loan will have an interest rate of LIBOR
plus 140 basis points, can be repaid in part or whole at any time
without penalty and will mature five years from closing. SNH
currently intends to utilize approximately $350 million of the
commitment and may not draw the balance. This term loan is expected
to be syndicated to a group of lenders, and the term loan is
expected to close during the second quarter of 2014.
Conference Call:
On Friday, May 2, 2014, at 1:00 p.m. Eastern Time, David J.
Hegarty, President and Chief Operating Officer, and Richard A.
Doyle, Chief Financial Officer, will host a conference call to
discuss the financial results for the quarter ended March 31, 2014.
The conference call telephone number is (800) 230-1085.
Participants calling from outside the United States and Canada
should dial (612) 332-0107. 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,
Friday, May 9, 2014. To hear the replay, dial (320) 365-3844. The
replay pass code is: 325139.
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 transcription, recording and retransmission in any way of
SNH’s first quarter conference call are strictly prohibited without
the prior written consent of SNH.
Supplemental Data:
A copy of SNH’s First Quarter 2014 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 owned 374
properties (400 buildings) located in 40 states and Washington,
D.C. as of March 31, 2014. SNH is headquartered in Newton, MA.
Please see the pages attached hereto for a more detailed
statement of SNH’s operating results and financial condition.
WARNING CONCERNING
FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD
LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO,
WHENEVER SNH USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”,
“INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR EXPRESSIONS, SNH IS MAKING
FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE
BASED UPON SNH’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT
FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT
OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN
OR IMPLIED BY THESE FORWARD LOOKING STATEMENTS AS A RESULT OF
VARIOUS FACTORS. FOR EXAMPLE:
- THIS PRESS RELEASE STATES THAT SNH HAS
ENTERED INTO AN AGREEMENT TO ACQUIRE A LARGE MOB LOCATED IN BOSTON.
THIS TRANSACTION IS SUBJECT TO VARIOUS CLOSING CONDITIONS. THESE
CONDITIONS MAY NOT BE MET. AS A RESULT, THIS TRANSACTION MAY NOT
OCCUR OR MAY BE DELAYED OR ITS TERMS MAY CHANGE;
- THIS PRESS RELEASE DESCRIBES CERTAIN
EXPECTED TERMS OF AN $800 MILLION TERM LOAN ON WHICH SNH EXPECTS TO
DRAW APPROXIMATELY $350 MILLION IN CONNECTION WITH THE ACQUISITION
OF THE BOSTON MOB. THE COMMITMENTS WHICH WE RECEIVED FOR THE TERM
LOAN ARE SUBJECT TO VARIOUS CONDITIONS, INCLUDING MUTUALLY
SATISFACTORY DOCUMENTATION. THERE CAN BE NO ASSURANCE THAT ALL THE
CONDITIONS WILL BE SATISFIED, THAT THE TERMS OF THE TERM LOAN WILL
NOT CHANGE, OR THAT THE TERM LOAN WILL BE AVAILABLE TO US TIMELY OR
AT ALL. WE ARE NOT COMMITTED TO INCUR THE ENTIRE TERM LOAN OR ANY
PORTION THEREOF, AND MAY UTILIZE OTHER DEBT OR EQUITY FINANCING FOR
ALL OR A PORTION OF THE ACQUISITION;
- THIS PRESS RELEASE STATES THAT THE
INTEREST RATE UNDER THE TERM LOAN WILL BE LIBOR PLUS 140 BASIS
POINTS. THIS INTEREST RATE IS BASED ON OUR CURRENT DEBT RATINGS AND
THE INTEREST RATE MAY BE HIGHER OR LOWER THAN LIBOR PLUS 140 BASIS
POINTS IN THE FUTURE DEPENDING ON OUR FUTURE DEBT RATINGS. THIS
INTEREST RATE IS ALSO SUBJECT TO CONTRACTUAL PROVISIONS THAT MIGHT
ADJUST THE LENDERS' YIELD TO MARKET CONDITIONS AT THE TIME OF
SYNDICATION; AND
- THIS PRESS RELEASE STATES THAT SNH HAS
NINE SENIOR LIVING COMMUNITIES AND THREE MOBS CURRENTLY LISTED FOR
SALE. SNH MAY NOT BE ABLE TO SELL THESE PROPERTIES ON ACCEPTABLE
TERMS, AND THE SALES OF ANY OR ALL OF THESE PROPERTIES MAY NOT
OCCUR.
THE INFORMATION CONTAINED IN SNH’S FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION “RISK
FACTORS” IN ITS PERIODIC REPORTS, OR INCORPORATED THEREIN,
IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES
FROM SNH’S FORWARD LOOKING STATEMENTS. SNH’S FILINGS WITH THE SEC
ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON SNH’S FORWARD LOOKING
STATEMENTS.
EXCEPT AS REQUIRED BY LAW, SNH DOES NOT INTEND TO UPDATE OR
CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.
SENIOR HOUSING PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF
INCOME
(amounts in thousands, except per share
data)
(unaudited)
Income Statement:
Quarter EndedMarch 31, 2014
2013 Revenues: Rental income $ 112,055 $ 111,852
Residents fees and services 79,442 75,056
Total revenues 191,497 186,908 Expenses: Property
operating expenses 77,802 73,679 Depreciation 38,355 37,703 General
and administrative 8,290 8,648 Acquisition related costs 122 1,903
Impairment of assets - 1,304 Total
expenses 124,569 123,237
Operating income 66,928 63,671 Interest and other income 105
173 Interest expense (28,900 ) (29,564 ) Income from
continuing operations before income tax expense and equity in
earnings of an investee 38,133 34,280 Income tax expense (191 )
(140 ) Equity in (losses) / earnings of an investee (97 )
76 Income from continuing operations 37,845 34,216
Discontinued operations: Income from discontinued operations 1,300
1,019 Impairment of assets from discontinued operations (721
) - Income before gain on sale of properties 38,424
35,235 Gain on sale of properties 156 -
Net income $ 38,580 $ 35,235 Weighted average
shares outstanding 188,176 184,605
Income from continuing operations per share 0.21 0.18 Income
from discontinued operations per share 0.00
0.01 Net income per share $ 0.21 $ 0.19
SENIOR HOUSING PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF FUNDS FROM
OPERATIONS AND NORMALIZED FUNDS FROM OPERATIONS
(amounts in thousands, except per share
data)
(unaudited)
Calculation of Funds from Operations
(FFO) and Normalized FFO (1):
Quarter Ended March 31, 2014
2013 Net income $ 38,580 $ 35,235
Depreciation expense from continuing operations 38,355 37,703
Depreciation expense from discontinued operations - 599 Gain on
sale of properties (156 ) - Impairment of assets - 1,304 Impairment
of assets from discontinued operations 721 -
FFO 77,500 74,841 Estimated business management incentive fees (2 )
- 75 Acquisition related costs from continuing operations 122 1,903
Percentage rent adjustment (3 ) 2,500 2,200
Normalized FFO $ 80,122 $ 79,019 Weighted average
shares outstanding 188,176 184,605 FFO
per share $ 0.41 $ 0.41 Normalized FFO per share $ 0.43
$ 0.43
(1) SNH calculates FFO and Normalized FFO as shown above. FFO is
calculated on the basis defined by The National Association of Real
Estate Investment Trusts, or NAREIT, which is net income,
calculated in accordance with GAAP, excluding any gain or loss on
sale of properties and impairment of real estate assets, plus real
estate depreciation and amortization, as well as certain other
adjustments currently not applicable to SNH. SNH’s calculation of
Normalized FFO differs from NAREIT’s definition of FFO because
SNH’s includes estimated percentage rent in the period to which it
estimates that it relates rather than when it is recognized as
income in accordance with GAAP and excludes acquisition related
costs, gain or loss on early extinguishment of debt, gain or loss
on lease terminations, estimated business management incentive fees
and loss on impairment of intangible assets, if any. SNH considers
FFO and Normalized FFO to be appropriate measures of operating
performance for a real estate investment trust, or REIT, along with
net income, operating income and cash flow from operating
activities. SNH believes that FFO and Normalized FFO provide useful
information to investors because by excluding the effects of
certain historical amounts, such as depreciation expense, FFO and
Normalized FFO may facilitate a comparison of its operating
performance between periods and with other REITs. FFO and
Normalized FFO are among the factors considered by SNH’s Board of
Trustees when determining the amount of distributions to
shareholders. Other factors include, but are not limited to,
requirements to maintain its status as a REIT, limitations in its
revolving credit facility agreement, term loan agreement, if any,
and public debt covenants, the availability of debt and equity
capital, SNH’s expectation of its future capital requirements and
operating performance and its expected needs and availability of
cash to pay its obligations. FFO and Normalized FFO do not
represent cash generated by operating activities in accordance with
GAAP and should not be considered as alternatives to net income,
operating income or cash flow from operating activities, determined
in accordance with GAAP, or as indicators of SNH’s financial
performance or liquidity, nor are these measures necessarily
indicative of sufficient cash flow to fund all of SNH’s needs.
These measures should be considered in conjunction with net income,
operating income and cash flow from operating activities as
presented in SNH’s Consolidated Statements of Income and
Comprehensive Income and Consolidated Statements of Cash Flows.
Other REITs and real estate companies may calculate FFO and
Normalized FFO differently than SNH does.
(2) Amounts represent estimated incentive fees under SNH’s
business management agreement payable in common shares after the
end of each calendar year calculated: (i) prior to 2014 based upon
increases in annual Normalized FFO per share, as defined, and (ii)
beginning in 2014 based on common share total return. In
calculating net income in accordance with GAAP, SNH recognizes
estimated business management incentive fee expense each quarter.
Although SNH recognizes this expense each quarter for purposes of
calculating net income, SNH does not include these amounts in the
calculation of Normalized FFO until the fourth quarter, which is
when the actual expense amount for the year is determined.
Adjustments were made to prior period amounts to conform to current
period Normalized FFO calculation.
(3) In calculating net income in accordance with GAAP, SNH
recognizes percentage rental income received for the first, second
and third quarters in the fourth quarter, which is when all
contingencies are met and the income is earned. Although SNH defers
recognition of this revenue until the fourth quarter for purposes
of calculating net income, it includes these estimated amounts in
its calculation of Normalized FFO for each quarter of the year. The
fourth quarter Normalized FFO calculation excludes the amounts
recognized during the first three quarters.
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE
SHEETS
(amounts in thousands)
(unaudited)
Balance Sheet:
March 31, December 31, 2014 2013
ASSETS
Real estate properties
$ 5,283,335 $ 5,263,625 Less accumulated depreciation
(873,157 ) (840,760 ) 4,410,178 4,422,865 Cash and cash
equivalents 32,967 39,233 Restricted cash 10,502 12,514 Deferred
financing fees, net 26,810 27,975 Acquired real estate leases and
other intangible assets, net 96,469 103,494 Other assets
201,742 158,585 Total assets $ 4,778,668
$ 4,764,666
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility $ 145,000 $ 100,000 Senior
unsecured notes, net of discount 1,093,658 1,093,337 Secured debt
and capital leases 695,668 699,427 Accrued interest 21,899 15,839
Assumed real estate lease obligations, net 11,773 12,528 Other
liabilities 69,952 66,546 Total
liabilities 2,037,950 1,987,677
Total shareholders’ equity
2,740,718 2,776,989 Total liabilities
and shareholders’ equity $ 4,778,668 $ 4,764,666
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 TrustKimberly Brown,
617-796-8237Director, Investor Relationswww.snhreit.com
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