Normalized FFO Per Share Increases to $0.44
Compared to $0.42 Last Year
Senior Housing Properties Trust (NYSE: SNH) today announced its
financial results for the quarter and nine months ended September
30, 2014.
SNH President and Chief Operating Officer David Hegarty made the
following statement:
“SNH’s third quarter results continued to show improvement as
normalized FFO per share increased 4.8% year-over-year. Our MOB
portfolio, which now represents our largest property operating
segment, based on NOI contribution, continues to perform well, with
a 2.6% increase in same property cash basis NOI during the quarter,
largely from positive leasing activity. Same property NOI, or
rental income, within our same property triple net leased senior
living communities increased 2.3% during the quarter. Our managed
senior living communities experienced increases in monthly rental
rates and occupancy on a same property basis during the quarter,
but same property NOI remained flat largely because of high
operating expenses during the quarter. During the first nine months
of 2014, we have also remained active and focused on acquiring high
quality, private pay healthcare assets with strong credit quality
tenants.”
Results for the quarter ended September 30, 2014:
Normalized funds from operations, or Normalized FFO, for the
quarter ended September 30, 2014 were $89.6 million, or $0.44 per
share. This compares to Normalized FFO for the quarter ended
September 30, 2013 of $78.8 million, or $0.42 per share.
Net income was $37.1 million, or $0.18 per share, for the
quarter ended September 30, 2014, compared to net income of $38.1
million, or $0.20 per share, for the quarter ended September 30,
2013. During the three months ended September 30, 2014, SNH
recognized an impairment of assets adjustment of $216,000, or less
than $0.01 per share, to add back a portion of previously recorded
impairments to the carrying value of one property (one building)
leased to medical providers, medical related businesses, clinics
and biotech laboratory tenants, or MOBs, included in discontinued
operations to its actual net sale price realized during the third
quarter. During the three months ended September 30, 2013, SNH
recognized: (1) a loss on early extinguishment of debt of $692,000,
or less than $0.01 per share, related to the amendment of its
revolving credit facility and the prepayment of one mortgage; and
(2) a gain on sale of properties of $1.1 million, or less than
$0.01 per share, related to the sale of one senior living community
previously classified as held for sale.
The weighted average number of common shares outstanding were
203.8 million and 188.1 million for the quarters ended September
30, 2014 and 2013, respectively.
A reconciliation of net income determined in accordance with
U.S. generally accepted accounting principles, or GAAP, to funds
from operations, or FFO, and Normalized FFO for the quarters ended
September 30, 2014 and 2013 appears later in this press
release.
Results for the nine months ended September 30, 2014:
Normalized FFO for the nine months ended September 30, 2014 were
$256.3 million, or $1.30 per share. This compares to Normalized FFO
for the nine months ended September 30, 2013 of $236.9 million, or
$1.27 per share.
Net income was $113.4 million, or $0.57 per share, for the nine
months ended September 30, 2014, compared to net income of $79.0
million, or $0.42 per share, for the nine months ended September
30, 2013. During the nine months ended September 30, 2014, SNH
recognized: (1) a gain on sale of properties of $2.6 million, or
$0.01 per share, related to the sale of three senior living
communities previously classified as held for sale; and (2)
impairment of assets charges of $117,000, or less than $0.01 per
share, to adjust the carrying value of one MOB (four buildings)
included in discontinued operations to its aggregate estimated net
sale price, which charge was partially offset by the add back of a
portion of previously recorded impairments to the carrying value of
three MOBs (three buildings) to their net sale prices. During the
nine months ended September 30, 2013, SNH recognized: (1)
impairment of assets charges of $5.7 million, or $0.03 per share,
to reduce the carrying value of four senior living communities and
one parcel of land included in continuing operations to their
aggregate estimated net sale prices; (2) a loss of on early
extinguishment of debt of $797,000, or less than $0.01 per share,
related to the amendment of its revolving credit facility and the
prepayment of mortgages encumbering five properties; (3) a gain on
sale of properties of $1.1 million, or less than $0.01 per share,
related to the sale of one senior living community previously
classified as held for sale; and (4) impairment of assets charges
of $27.9 million, or $0.15 per share, to reduce the carrying value
of four MOBs (seven buildings) included in discontinued operations
to their aggregate estimated net sale prices.
The weighted average number of common shares outstanding were
197.3 million and 186.9 million for the nine months ended September
30, 2014 and 2013, respectively.
A reconciliation of net income determined in accordance with
GAAP to FFO and Normalized FFO for the nine months ended September
30, 2014 and 2013 appears later in this press release.
Segment Operating Results for the quarter ended September 30,
2014:
For the three months ended September 30, 2014, 42.1% of SNH’s
net operating income, or NOI, came from 98 MOBs with 9.1 million
square feet. As of September 30, 2014, 95.6% of our MOB square feet
were leased, compared to 95.6% as of June 30, 2014 and 95.0% as of
September 30, 2013. Same property occupancy for MOBs owned
continuously since July 1, 2013 remained unchanged at 94.9% as of
September 30, 2014 compared to September 30, 2013. Same property
cash basis NOI increased 2.6% during the quarter ended September
30, 2014.
For the three months ended September 30, 2014, 41.1% of SNH’s
consolidated NOI came from 218 triple net leased senior living
communities with 24,383 living units. Occupancy at triple net
leased senior living communities was 85.2% during the most recent
reported period, compared to 85.1% during the comparable period
last year.(1) Same property occupancy for triple net leased senior
living communities owned continuously from July 1, 2013 decreased
0.4 percentage points to 85.2% during the most recent reported
period, from 85.6% during the comparable period last year.(1) Same
property NOI increased 2.3% during the quarter ended September 30,
2014.
For the three months ended September 30, 2014, 13.4% of SNH’s
NOI came from 44 managed senior living communities with 7,051
living units. Occupancy at managed senior living communities was
88.2% during the quarter ended September 30, 2014, compared to
87.6% during the comparable period last year. Same property
occupancy for managed senior living communities owned continuously
since July 1, 2013 increased 0.8 percentage points to 88.1% during
the quarter ended September 30, 2014, from 87.3% during the
comparable period last year. Same property NOI remained unchanged
for the quarter ended September 30, 2014 compared to the quarter
ended September 30, 2013.
A reconciliation of NOI and cash basis NOI to net income,
determined in accordance with GAAP, for the quarters and nine
months ended September 30, 2014 and 2013 appears later in this
press release.
Recent Investment and Sales Activities:
In August 2014, SNH entered into an agreement to acquire 23
MOBs, for approximately $539.0 million, including the assumption of
approximately $30.0 million of mortgage debt. The MOBs contain
approximately 2.2 million square feet and are located in 12 states.
The 23 properties will be purchased in connection with the
acquisition by Select Income REIT (NYSE: SIR) of Cole Corporate
Income Trust (“CCIT”) pursuant to an agreement and plan of merger
between SIR, a wholly owned subsidiary of SIR and CCIT, which
provides for the merger of CCIT with and into the SIR subsidiary,
or the Merger. SNH’s acquisition is contingent upon the completion
of the Merger. The Merger is expected to be completed in the first
half of 2015 and SNH’s acquisition of the 23 MOBs is expected to
close substantially concurrently with the closing of the Merger,
subject to the satisfaction of the other conditions of the SNH
purchase transaction. The Merger is subject to various conditions
and contingencies, including approval by the shareholders of SIR
and the stockholders of CCIT; accordingly, SNH may not purchase
some or all of these properties, the SNH purchase may be delayed or
the terms of the SNH purchase may change.
In July 2014, SNH entered into an agreement to acquire one
senior living community with 52 private pay assisted living units
located in Jackson, WI, for approximately $7.0 million, excluding
closing costs. In September 2014, SNH entered into an agreement to
acquire one senior living community with 176 private pay
independent and assisted living units located in Madison, WI, for
approximately $40.4 million, excluding closing costs. SNH intends
to acquire these communities using a taxable REIT subsidiary
structure and it expects to enter into long term management
agreements with Five Star Quality Care, Inc., or Five Star, to
manage these communities.
In September 2014, SNH sold one MOB (one building) with 62,000
square feet located in Rhode Island for $675,000, excluding closing
costs and recorded no gain or loss on the sale.
In October 2014, SNH sold one senior living community with 70
units located in Virginia for $2.85 million, excluding closing
costs. Also in October 2014, SNH sold two senior living communities
with 177 units located in Arizona for $5.9 million, excluding
closing costs. SNH will record the gain or loss, if any, on these
sales during the period ending December 31, 2014 when all of the
costs of the sales are known.
SNH is also currently marketing for sale four senior living
communities with 305 living units and one MOB (four buildings) with
an aggregate of 323,541 square feet. In aggregate, the majority of
the combined revenues generated from the four senior living
communities listed for sale comes from government funded programs,
such as Medicare and Medicaid. The results of operations from the
one MOB (four buildings) listed for sale and the one MOB (one
building) sold during the third quarter are included in
discontinued operations in SNH’s financial statements.
Recent Financing Activities:
In October 2014, SNH prepaid at par its $14.7 million loan
incurred in connection with certain revenue bonds that were
scheduled to mature in December 2027. That loan had an interest
rate of 5.875%. Also in October 2014, SNH prepaid a mortgage note
encumbering one property with a principal balance of approximately
$11.9 million and an interest rate of 6.25% that was scheduled to
mature in May 2015.
Conference Call:
On Monday, November 3, 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 and nine months ended
September 30, 2014. The conference call telephone number is (877)
407-4019. Participants calling from outside the United States and
Canada should dial (201) 689-8337. 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, Monday, November 10, 2014. To hear the replay, dial (201)
612-7415. The replay pass code is: 13593422.
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 third quarter conference call are strictly prohibited without
the prior written consent of SNH.
Supplemental Data:
A copy of SNH’s Third 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 371
properties (398 buildings) located in 38 states and Washington,
D.C. as of September 30, 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.
(1) Most recent reported data is based upon the operating
results provided by our tenants for the 12 months ended June 30,
2014 and 2013 or the most recent prior period for which tenant
operating results are available.
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
AGREED TO ACQUIRE 23 MOBS. THE CLOSING OF THIS TRANSACTION IS
SUBJECT TO CONDITIONS AND CONTINGENCIES, INCLUDING THE CLOSING OF
THE MERGER OF SIR AND CCIT WHICH IS EXPECTED TO OCCUR IN THE FIRST
HALF OF 2015. THE MERGER IS ITSELF SUBJECT TO CONDITIONS AND
CONTINGENCIES, INCLUDING APPROVALS BY THE SHAREHOLDERS OF SIR AND
STOCKHOLDERS OF CCIT. SNH CAN PROVIDE NO ASSURANCE THAT THE
CONDITIONS AND CONTINGENCIES TO THE MERGER OR THE OTHER CONDITIONS
AND CONTINGENCIES TO SNH’S ACQUISITION OF THE 23 MOBS WILL BE
SATISFIED. ACCORDINGLY, SNH CAN PROVIDE NO ASSURANCE THAT THE
ACQUISITION OF THE 23 MOBS WILL BE CONSUMMATED, THAT IT WILL NOT BE
DELAYED OR THAT ITS TERMS WILL NOT CHANGE;
- THIS PRESS RELEASE STATES THAT SNH HAS
ENTERED INTO AGREEMENTS TO ACQUIRE TWO SENIOR LIVING COMMUNITIES.
THESE TRANSACTIONS ARE SUBJECT TO CLOSING CONDITIONS. THESE
CONDITIONS MAY NOT BE MET. AS A RESULT, THESE TRANSACTIONS
MAY NOT OCCUR OR MAY BE DELAYED OR THEIR TERMS
MAY CHANGE;
- THIS PRESS RELEASE STATES THAT SNH HAS
FOUR SENIOR LIVING COMMUNITIES AND ONE MOB CURRENTLY LISTED FOR
SALE. SNH MAY NOT BE ABLE TO SELL THESE PROPERTIES ON TERMS
ACCEPTABLE TO IT OR OTHERWISE, AND THE SALES OF ANY OR ALL OF THESE
PROPERTIES MAY NOT OCCUR; AND
- THIS PRESS RELEASE STATES THAT SNH
EXPECTS TO ENTER INTO LONG TERM MANAGEMENT AGREEMENTS WITH FIVE
STAR TO MANAGE TWO SENIOR LIVING COMMUNITIES SNH HAS AGREED TO
ACQUIRE. HOWEVER, THERE CAN BE NO ASSURANCE THAT SNH WILL ACQUIRE
THESE COMMUNITIES OR THAT SNH AND FIVE STAR WILL ENTER INTO AN
ADDITIONAL MANAGEMENT AGREEMENT.
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)
Three Months Ended Nine Months Ended
September 30, September 30, 2014
2013 2014 2013 Revenues: Rental
income $ 137,614 $ 112,319 $ 377,339 $ 336,468 Residents fees and
services 79,259 74,946 237,740 224,634
Total revenues 216,873 187,265 615,079 561,102 Expenses:
Property operating expenses 82,706 74,729 240,297 222,893
Depreciation 50,074 38,473 135,132 114,472 General and
administrative 10,384 7,798 28,250 24,615 Acquisition related costs
15 396 2,649 2,590 Impairment of assets — — —
5,675 Total expenses 143,179 121,396
406,328 370,245 Operating income 73,694 65,869
208,751 190,857 Interest and other income 78 42 336 612
Interest expense (36,201) (29,405) (99,213) (88,536) Loss on early
extinguishment of debt — (692) — (797)
Income from continuing operations
beforeincome tax expense and equity in earnings of an investee
37,571 35,814 109,874 102,136 Income tax expense (156) (125) (502)
(405) Equity in earnings of an investee 38 64
59 219 Income from continuing operations 37,453 35,753
109,431 101,950 Discontinued operations: (Loss) income from
discontinued operations (557) 1,231 1,484 3,762 Impairment of
assets from discontinued operations 216 —
(117) (27,896) Income before gain on sale of properties
37,112 36,984 110,798 77,816 Gain on sale of properties —
1,141 2,552 1,141 Net income $ 37,112 $ 38,125
$ 113,350 $ 78,957 Weighted average shares outstanding
203,792 188,102 197,317 186,942
Income from continuing operations per share 0.18 0.19 0.56 0.55
Income (loss) from discontinued operations per share —
0.01 0.01 (0.13) Basic and diluted net income
per share $ 0.18 $ 0.20 $ 0.57 $ 0.42
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):
Three Months Ended Nine Months Ended
September 30, September 30, 2014
2013 2014 2013 Net income $
37,112 $ 38,125 $ 113,350 $ 78,957 Depreciation expense from
continuing operations 50,074 38,473 135,132 114,472 Depreciation
expense from discontinued operations — — — 799 Gain on sale of
properties — (1,141) (2,552) (1,141) Impairment of assets — — —
5,675 Impairment of assets from discontinued operations
(216) — 117 27,896 FFO 86,970 75,457 246,047
226,658 Estimated business management incentive fees(2) — — — 75
Acquisition related costs from continuing operations 15 396 2,649
2,590 Loss on early extinguishment of debt — 692 — 797 Percentage
rent adjustment(3) 2,600 2,300 7,600
6,800 Normalized FFO $ 89,585 $ 78,845 $ 256,296 $ 236,920
Weighted average shares outstanding 203,792 188,102
197,317 186,942 FFO per share $ 0.43 $ 0.40 $
1.25 $ 1.21 Normalized FFO per share $ 0.44 $ 0.42 $ 1.30 $ 1.27
Net income per share $ 0.18 $ 0.20 $ 0.57 $ 0.42 Distributions
declared per share $ 0.39 $ 0.39 $ 1.17 $ 1.17
(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 and public
debt covenants, the availability of debt and equity capital, SNH’s
expectation of its future capital requirements and operating
performance and SNH’s 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 and (ii) beginning in 2014 based on
common share total return. In calculating net income in accordance
with GAAP, SNH recognizes an estimated business management
incentive fee expense, if any, each quarter. Although SNH
recognizes this expense, if any, 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 the
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 included during the
first three quarters.
SENIOR HOUSING PROPERTIES TRUST
CALCULATION AND RECONCILIATION OF NET
OPERATING INCOME (NOI) AND CASH BASIS NOI
(amounts in thousands)
(unaudited)
For the Three Months Ended For the Nine Months
Ended 9/30/2014 9/30/2013
9/30/2014 9/30/2013 Calculation of
NOI (1):
Revenues: Rental income $ 137,614 $ 112,319 $ 377,339 $ 336,468
Residents fees and services 79,259 74,946 237,740 224,634 Total
revenues 216,873 187,265 615,079 561,102 Property operating
expenses 82,706 74,729 240,297 222,893 Property net operating
income (NOI): 134,167 112,536 374,782 338,209 Non cash straight
line rent adjustments (2,876) (1,567) (6,806) (5,413) Lease value
amortization (1,264) 858 (1,111) 2,692 Lease termination fees - (4)
- (7) Cash Basis NOI $ 130,027 $ 111,823 $ 366,865 $ 335,481
Reconciliation of Cash Basis NOI to Net Income:
Cash Basis NOI 130,027 111,823 $ 366,865 $ 335,481 Non cash
straight line rent adjustments 2,876 1,567 6,806 5,413 Lease value
amortization 1,264 (858) 1,111 (2,692) Lease termination fees - 4 -
7 Property NOI 134,167 112,536 374,782 338,209 Depreciation expense
(50,074) (38,473) (135,132) (114,472) General and administrative
expense (10,384) (7,798) (28,250) (24,615) Acquisition related
costs (15) (396) (2,649) (2,590) Impairment of assets - - - (5,675)
Operating income 73,694 65,869 208,751 190,857 Interest and
other income 78 42 336 612 Interest expense (36,201) (29,405)
(99,213) (88,536) Loss on early extinguishment of debt - (692) -
(797) Loss on lease terminations - - - - Income before income tax
expense and equity in earnings of an investee 37,571 35,814 109,874
102,136 Income tax expense (156) (125) (502) (405) Equity in
earnings of an investee 38 64 59 219 Income from continuing
operations 37,453 35,753 109,431 101,950 Discontinued operations
Income from discontinued operations (557) 1,231 1,484 3,762
Impairment of assets from discontinued operations 216 - (117)
(27,896) Income before gain on sale of properties 37,112 36,984
110,798 77,816 Gain on sale of properties - 1,141 2,552 1,141 Net
income $ 37,112 $ 38,125 $ 113,350 $ 78,957
(1)
SNH calculates NOI and Cash Basis NOI as shown above
excluding properties classified as discontinued operations. SNH
defines NOI as income from its real estate less its property
operating expenses. NOI excludes amortization of capitalized tenant
improvement costs and leasing commissions. SNH defines Cash Basis
NOI as NOI less non cash straight line rent adjustments, lease
value amortization and lease termination fees, if any. SNH
considers NOI and Cash Basis NOI to be appropriate supplemental
measures to net income because they may help both investors and
management to understand the operations of our properties. SNH uses
NOI and Cash Basis NOI internally to evaluate individual and
company wide property level performance, and it believes that NOI
and Cash Basis NOI provide useful information to investors
regarding its results of operations because these measures reflect
only those income and expense items that are incurred at the
property level and may facilitate comparisons of its operating
performance between periods and with other REITs. The calculation
of NOI and Cash Basis NOI excludes certain components of net income
in order to provide results that are more closely related to its
properties' results of operations. NOI and Cash Basis NOI do not
represent cash generated by operating activities in accordance with
GAAP and should not be considered as an alternative 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 NOI and Cash
Basis NOI differently than SNH does.
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE
SHEETS
(amounts in thousands)
(unaudited)
Balance Sheet:
September 30, December 31, 2014 2013
ASSETS Real estate properties $ 6,184,068 $ 5,263,625
Less accumulated depreciation (946,566) (840,760)
5,237,502 4,422,865 Cash and cash equivalents 80,750 39,233
Restricted cash 10,986 12,514 Deferred financing fees, net 32,021
27,975 Acquired real estate leases and other intangible assets, net
482,564 103,494 Other assets 145,299 158,585 Total
assets $ 5,989,122 $ 4,764,666
LIABILITIES AND
SHAREHOLDERS’ EQUITY Unsecured revolving credit facility $ —
$ 100,000 Unsecured term loan 350,000 — Senior unsecured notes, net
of discount 1,743,272 1,093,337 Secured debt and capital leases
669,011 699,427 Accrued interest 32,555 15,839 Assumed real estate
lease obligations, net 125,493 12,528 Other liabilities
84,576 66,546 Total liabilities 3,004,907 1,987,677
Total shareholders’ equity 2,984,215 2,776,989 Total
liabilities and shareholders’ equity $ 5,989,122 $ 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
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