Third Quarter Net Income of $0.12 Per
Share
Third Quarter Normalized FFO of $0.45 Per
Share
Senior Housing Properties Trust (Nasdaq: SNH) today announced
its financial results for the three and nine months ended
September 30, 2016.
“During the third quarter we continued to focus on managing our
portfolio and balance sheet,” said David Hegarty, President and
Chief Operating Officer. “We sold $20.4 million of properties
during the quarter; subsequent to the quarter end, we acquired a
MOB for $18.5 million and agreed to acquire two assisted living
communities for $18.6 million. In July 2016, we completed $620.0
million of secured financing at an attractive 10 year, interest
only rate of 3.53% per annum.”
Results for the Quarter Ended September 30,
2016:
Net income was $27.9 million, or $0.12 per diluted share, for
the quarter ended September 30, 2016, compared to $38.2
million, or $0.16 per diluted share, for the quarter ended
September 30, 2015, which represents a decrease of $0.04 per
diluted share. The decline in net income per diluted share for the
quarter ended September 30, 2016 compared to the quarter ended
September 30, 2015 primarily resulted from an increase in
interest expense of approximately $4.4 million, or $0.02 per
diluted share, and non-cash impairment of asset charges of
approximately $4.6 million, or $0.02 per diluted share, recorded
during the three months ended September 30, 2016.
Normalized funds from operations, or Normalized FFO, were $105.7
million, or $0.45 per diluted share, for the quarter ended
September 30, 2016, compared to $108.9 million, or $0.46 per
diluted share, for the quarter ended September 30, 2015, which
represents a decrease of $0.01 per diluted share. The decrease of
$0.01 from the comparison period is primarily attributable to
increased interest expense of $0.02 per diluted share.
Cash basis net operating income, or Cash Basis NOI, was $154.9
million for the quarter ended September 30, 2016, compared to
$151.8 million for the quarter ended September 30, 2015, which
represents an increase of 2.1%. Contributions to the increase in
Cash Basis NOI include $2.5 million from acquisitions and $0.6
million of increases at the same properties over the comparison
period.
Reconciliations 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, 2016 and 2015 appear later in this press
release. Reconciliations of net operating income, or NOI, and Cash
Basis NOI to net income determined in accordance with GAAP for the
quarters ended September 30, 2016 and 2015 also appear later
in this press release. In addition, calculations and
reconciliations of NOI, Cash Basis NOI, same property NOI and same
property Cash Basis NOI by SNH’s operating segments for the
quarters ended September 30, 2016 and 2015 appear later in
this press release.
Results for the Nine Months Ended September 30,
2016:
Net income was $98.4 million, or $0.41 per diluted share, for
the nine months ended September 30, 2016, compared to $114.4
million, or $0.49 per diluted share, for the nine months ended
September 30, 2015, which represents a decrease of $0.08 per
diluted share. The decline in net income per diluted share for the
nine months ended September 30, 2016 primarily resulted from
non-cash impairment of asset charges of $16.9 million, or $0.07 per
diluted share, recorded during the nine months ended
September 30, 2016, as well as an increase in interest expense
of approximately $11.0 million, or $0.03 per diluted share,
partially offset by a gain on sale of $4.1 million, or $0.02 per
diluted share, recorded during the nine months ended
September 30, 2016, related to the sale of one skilled nursing
facility in June 2016.
Normalized FFO were $327.7 million, or $1.38 per diluted share,
for the nine months ended September 30, 2016, compared to
$309.1 million, or $1.34 per diluted share, for the nine months
ended September 30, 2015, which represents an increase of
$0.04 per diluted share. The increase of $0.04 per diluted share
from the comparison period is primarily attributable to
acquisitions, partially offset by increased interest expense of
$0.03 per diluted share.
Cash Basis NOI was $466.9 million for the nine months ended
September 30, 2016, compared to $437.0 million for the nine
months ended September 30, 2015, which represents an increase
of 6.8%. Contributions to the increase in Cash Basis NOI include
$24.0 million from acquisitions and $5.9 million of increases at
the same properties over the comparison period.
Reconciliations of net income determined in accordance with GAAP
to FFO and Normalized FFO for the nine months ended
September 30, 2016 and 2015 appear later in this press
release. Reconciliations of NOI and Cash Basis NOI to net income
determined in accordance with GAAP for the nine months ended
September 30, 2016 and 2015 also appear later in this press
release. In addition, calculations and reconciliations of NOI, Cash
Basis NOI, same property NOI and same property Cash Basis NOI by
SNH’s operating segments for the nine months ended
September 30, 2016 and 2015 appear later in this press
release.
Portfolio Operating Results:
For the quarter ended September 30, 2016, same property
Cash Basis NOI increased 0.4% and same property NOI decreased 0.2%
compared to the quarter ended September 30, 2015.
For the quarter ended September 30, 2016, 41.0% of SNH’s
NOI came from 119 properties leased to medical providers, medical
related businesses, clinics and biotech laboratory tenants, or
MOBs, with 11.4 million leasable square feet. SNH’s MOB same
property Cash Basis NOI increased 0.2% and same property NOI
decreased 0.6% for the quarter ended September 30, 2016
compared to the quarter ended September 30, 2015. As of
September 30, 2016, 95.9% of SNH’s MOB square feet were leased
compared to 96.0% as of September 30, 2015. Same property
occupancy at SNH’s MOBs was 96.3% as of September 30, 2016 and
June 30, 2016, compared to 96.0% as of September 30, 2015.
For the quarter ended September 30, 2016, 41.4% of SNH’s
NOI came from 234 triple net leased senior living communities with
26,094 living units. Same property Cash Basis NOI and same property
NOI from triple net leased senior living communities increased 1.9%
and 1.3%, respectively, for the quarter ended September 30,
2016 compared to the quarter ended September 30, 2015.
Occupancy at triple net leased senior living communities decreased
to 85.3% for the most recently available 12-month period, compared
to 85.8% for the comparable period last year(1). Same property
occupancy at triple net leased senior living communities decreased
to 85.2% for the most recently available 12-month period, compared
to 85.8% for the comparable period last year(1).
For the quarter ended September 30, 2016, 14.8% of SNH's
NOI came from 68 managed senior living communities with 8,797
living units. Same property Cash Basis NOI and same property NOI
from managed senior living communities each decreased 2.9% for the
quarter ended September 30, 2016 compared to the quarter ended
September 30, 2015. Occupancy at managed senior living
communities was 86.7% for the quarter ended September 30,
2016, compared to 87.7% for the comparable period last year. Same
property occupancy at managed senior living communities owned
continuously since July 1, 2015 was 87.2% for the quarter ended
September 30, 2016 compared to 87.1% for the quarter ended
June 30, 2016 and 87.8% for the quarter ended September 30,
2015. Same property average monthly rates increased 1.4% to $4,229
for the quarter ended September 30, 2016 compared to the
quarter ended September 30, 2015.
(1) Occupancy ratios for triple net leased senior living
communities are based upon operating results provided by SNH’s
tenants, and this information is usually provided to SNH three
months after the end of a fiscal quarter end. As a result,
occupancy ratios presented for triple net leased senior living
communities are for the 12 months ended June 30, 2016 and 2015. SNH
has not independently verified tenant operating data.
Acquisition Activities:
In October 2016, SNH acquired one MOB for approximately $18.5
million, excluding closing costs. This MOB contains approximately
96,000 square feet, is located in Ohio and has a remaining lease
term of approximately 14 years.
In September 2016, SNH entered into an agreement to acquire two
senior living communities with a combined 126 living units located
in Illinois for approximately $18.6 million, excluding closing
costs. SNH expects to acquire these communities in the fourth
quarter of 2016. If these communities are acquired, SNH expects to
lease these communities to Five Star Quality Care Inc., or Five
Star, and that these communities will be added to one of SNH's
existing master leases with Five Star.
During the quarter ended September 30, 2016, SNH spent
approximately $5.3 million on capital investments that will
generate additional rent under its existing senior living
communities’ leases.
Disposition Activities:
In July 2016, SNH sold four MOBs located in Oklahoma for
approximately $20.2 million, excluding closing costs. In September
2016, SNH sold one skilled nursing facility located in Wisconsin
for approximately $0.2 million, excluding closing costs. As of
September 30, 2016, one MOB located in Pennsylvania and a former
memory care building at a senior living community located in
Florida were classified as held for sale.
Financing Activities:
In July 2016, SNH entered into loan agreements and obtained
an aggregate $620.0 million secured debt financing. These loans are
secured by one MOB (two buildings), located in Massachusetts, and
mature in August 2026. The loans carry a weighted average
fixed annual interest rate of 3.53%. SNH used the proceeds from
these loans to repay in part the then outstanding amount under its
unsecured revolving credit facility and for general business
purposes.
In July 2016, SNH prepaid, at par plus accrued interest, a
mortgage note encumbering one property which had a maturity date in
November 2016, an outstanding principal balance of
approximately $11.9 million and an annual interest rate of 6.25%.
In September 2016, SNH prepaid, at par plus accrued interest,
mortgage notes encumbering two properties which had maturity dates
in November 2016, an aggregate outstanding principal balance
of approximately $80.0 million and a weighted average annual
interest rate of 5.92%. In October 2016, SNH prepaid, at par plus
prepayment premiums and accrued interest, mortgage notes
encumbering eight properties which had maturity dates in May 2017,
an aggregate outstanding principal balance of approximately $42.5
million and a weighted average annual interest rate of 6.54%. In
October 2016, SNH gave notice of its intention to prepay, at par
plus accrued interest, a mortgage note encumbering one property
which has a maturity date in March 2017, an outstanding principal
balance of $5.4 million and an annual interest rate of 5.86%; SNH
expects to make this prepayment in December 2016.
Conference Call:
On Friday, November 4, 2016, at 10:00 a.m. Eastern
Time, David J. Hegarty, President and Chief Operating Officer, and
Richard W. Siedel, Jr., Chief Financial Officer and Treasurer,
will host a conference call to discuss the third quarter 2016
financial results. The conference call telephone number is (877)
329-4297. Participants calling from outside the United States and
Canada should dial (412) 317-5435. 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 on Friday, November 11, 2016. To hear the
replay, dial (412) 317-0088. The replay pass code is 10092984.
A live audio webcast of the conference call will also be
available in a listen only mode on the company’s website, which is
located at www.snhreit.com. Participants wanting to access the
webcast should visit the company’s website about five minutes
before the call. The archived webcast will be available for replay
on the company’s website after the call. The transcription,
recording and retransmission in any way of SNH’s third quarter 2016
conference call are strictly prohibited without the prior written
consent of SNH.
Supplemental Data:
A copy of SNH’s Third Quarter 2016 Supplemental Operating and
Financial Data is available for download at SNH’s 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, which owns
senior living communities, medical office buildings and wellness
centers throughout the United States. SNH is managed by the
operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an
alternative asset management company that is headquartered in
Newton, MA.
Please see the pages attached hereto for a more detailed
statement of SNH’s operating results and financial condition, and
for an explanation of SNH’s calculation of FFO, Normalized FFO, NOI
and Cash Basis NOI.
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”, "WILL", “MAY” AND NEGATIVES OR
DERIVATIVES OF THESE 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 SNH’S FORWARD LOOKING STATEMENTS AS A RESULT OF
VARIOUS FACTORS. FOR EXAMPLE:
- SNH HAS AGREED TO ACQUIRE TWO SENIOR
LIVING COMMUNITIES LOCATED IN ILLINOIS AND EXPECTS THE CLOSING TO
OCCUR IN THE FOURTH QUARTER OF 2016. IF THESE ACQUISITIONS ARE
COMPLETED, SNH EXPECTS THAT IT WILL LEASE THESE COMMUNITIES TO FIVE
STAR. THIS TRANSACTION IS SUBJECT TO CONDITIONS. AS A RESULT, THESE
ACQUISITIONS AND LEASING ARRANGEMENTS MAY NOT OCCUR, MAY BE DELAYED
OR THE TERMS MAY CHANGE.
THE INFORMATION CONTAINED IN SNH’S FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK
FACTORS” IN SNH’S PERIODIC REPORTS, OR INCORPORATED
THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE
SNH’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR
IMPLIED BY 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 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
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
(amounts in thousands, except per share
data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 2016 2015 Revenues: Rental
income $ 165,503 $ 158,863 $ 490,922 $ 460,193 Residents fees and
services 98,480 96,412 292,803 271,061
Total revenues
263,983 255,275 783,725 731,254 Expenses: Property operating
expenses 103,347 96,927 298,776 276,313 Depreciation and
amortization 72,344 70,016 214,938 186,234 General and
administrative 12,107 10,316 34,931 32,563 Acquisition and certain
other transaction related costs 824 742 1,443 6,517 Impairment of
assets 4,578 (98 ) 16,930 (98 ) Total expenses
193,200 177,903 567,018 501,529
Operating income 70,783 77,372 216,707 229,725 Dividend
income 659 — 1,449 — Interest and other income 89 57 330 274
Interest expense (43,438 ) (38,989 ) (123,837 ) (112,838 ) Loss on
early extinguishment of debt (84 ) (21 ) (90 ) (1,469 ) Income from
continuing operations before income tax expense and equity in
earnings (losses) of an investee 28,009 38,419 94,559 115,692
Income tax expense (119 ) (146 ) (318 ) (385 ) Equity in earnings
(losses) of an investee 13 (24 ) 107 70 Income
from continuing operations 27,903 38,249 94,348 115,377
Discontinued operations: Loss from discontinued operations — — —
(350 ) Impairment of assets from discontinued operations — —
— (602 ) Income before gain on sale of properties
27,903 38,249 94,348 114,425 Gain on sale of properties — —
4,061 — Net income $ 27,903 $ 38,249
$ 98,409 $ 114,425 Weighted average
shares outstanding (basic) 237,347 237,263 237,329
231,454 Weighted average shares outstanding (diluted)
237,396 237,293 237,369 231,486
Per common share amounts (basic and diluted): Income from
continuing operations $ 0.12 $ 0.16 $ 0.41 $ 0.50 Loss from
discontinued operations — — — (0.01 ) Net
income per share $ 0.12 $ 0.16 $ 0.41 $ 0.49
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)(2):
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, 2016 2015
2016 2015 Net income $ 27,903 $ 38,249
$ 98,409 $ 114,425 Depreciation and amortization expense 72,344
70,016 214,938 186,234 Gain on sale of properties — — (4,061 ) —
Impairment of assets from continuing operations 4,578 (98 ) 16,930
(98 ) Impairment of assets from discontinued operations — —
— 602 FFO 104,825 108,167 326,216 301,163
Acquisition and certain other transaction related costs 824
742 1,443 6,517 Loss on early extinguishment of debt 84 21
90 1,469 Normalized FFO $ 105,733 $
108,930 $ 327,749 $ 309,149
Weighted average shares outstanding (basic) 237,347
237,263 237,329 231,454 Weighted
average shares outstanding (diluted) 237,396 237,293
237,369 231,486 Net
income per share (basic and diluted) $ 0.12 $ 0.16 $
0.41 $ 0.49 FFO per share (basic and diluted) $ 0.44
$ 0.46 $ 1.37 $ 1.30 Normalized FFO per
share (basic and diluted) $ 0.45 $ 0.46 $ 1.38
$ 1.34 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
includes business management incentive fees, if any, only in the
fourth quarter versus the quarter when they are recognized as
expense in accordance with GAAP due to their quarterly volatility
not necessarily being indicative of SNH’s core operating
performance and the uncertainty as to whether any such business
management incentive fees will ultimately be payable when all
contingencies for determining any such fees are determined at the
end of the calendar year, and SNH excludes acquisition and certain
other transaction related costs such as legal and professional fees
associated with SNH's acquisition and disposition activities and
gains and losses on early extinguishment of debt, if any. SNH
considers FFO and Normalized FFO to be appropriate supplemental
measures of operating performance for a REIT, along with net income
and operating income. 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
SNH's 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
its shareholders. Other factors include, but are not limited to,
requirements to maintain SNH’s qualification for taxation as a
REIT, limitations in SNH’s revolving credit facility and term loan
agreements and SNH’s public debt covenants, the availability to SNH
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 or operating income as an indicator of SNH’s
operating performance or as a measure of SNH’s liquidity. These
measures should be considered in conjunction with net income and
operating income as presented in SNH’s Condensed Consolidated
Statements of Income. Other REITs and real estate companies may
calculate FFO and Normalized FFO differently than SNH does.
(2) Effective as of the quarter ended June 30, 2016, SNH
changed its calculation of Normalized FFO to no longer include
adjustments for estimated percentage rent. Historically, when
calculating Normalized FFO, SNH estimated an amount of percentage
rental income for each of the first three quarters of the year and
then, in the fourth quarter, excluded the amounts that had been
included in the first three quarters. In calculating net income in
accordance with GAAP, SNH recognizes percentage rental income for
the full year in the fourth quarter, which is when all
contingencies are met and the income is earned. Normalized FFO for
historical periods has been restated to be comparable with the
current period calculation.
SENIOR HOUSING PROPERTIES TRUST
CALCULATION AND RECONCILIATION OF NET
OPERATING INCOME (NOI) AND CASH BASIS NOI
(amounts in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, 2016
September 30, 2015
September 30, 2016
September 30, 2015
Calculation of
NOI and Cash Basis NOI(1):
Revenues: Rental income $ 165,503 $ 158,863 $ 490,922 $ 460,193
Residents fees and services 98,480 96,412
292,803 271,061 Total revenues
263,983 255,275 783,725 731,254 Property operating expenses
(103,347 ) (96,927 ) (298,776 ) (276,313 )
Property net operating income (NOI): 160,636 158,348 484,949
454,941 Non-cash straight line rent adjustments (4,292 ) (5,040 )
(13,598 ) (13,739 ) Lease value amortization (1,236 ) (1,084 )
(3,795 ) (3,461 ) Lease termination fee amortization — (244 ) (42 )
(512 ) Non-cash amortization included in property operating
expenses(2) (199 ) (204 ) (597 ) (204 )
Cash Basis NOI $ 154,909 $ 151,776 $ 466,917 $
437,025
Reconciliation of
Cash Basis NOI to Net Income:
Cash Basis NOI $ 154,909 $ 151,776 $ 466,917 $ 437,025 Non-cash
straight line rent adjustments 4,292 5,040 13,598 13,739 Lease
value amortization 1,236 1,084 3,795 3,461 Lease termination fee
amortization — 244 42 512 Non-cash amortization included in
property operating expenses(2) 199 204
597 204 Property NOI 160,636 158,348
484,949 454,941 Depreciation and amortization expense (72,344 )
(70,016 ) (214,938 ) (186,234 ) General and administrative expense
(12,107 ) (10,316 ) (34,931 ) (32,563 ) Acquisition and certain
other transaction related costs (824 ) (742 ) (1,443 ) (6,517 )
Impairment of assets (4,578 ) 98
(16,930 ) 98 Operating income 70,783 77,372 216,707
229,725 Dividend income 659 — 1,449 — Interest and other
income 89 57 330 274 Interest expense (43,438 ) (38,989 ) (123,837
) (112,838 ) Loss on early extinguishment of debt (84 )
(21 ) (90 ) (1,469 ) Income before income tax
expense and equity in earnings (losses) of an investee 28,009
38,419 94,559 115,692 Income tax expense (119 ) (146 ) (318 ) (385
) Equity in earnings (losses) of an investee 13
(24 ) 107 70 Income from
continuing operations 27,903 38,249 94,348 115,377 Discontinued
operations Loss from discontinued operations — — — (350 )
Impairment of assets from discontinued operations —
— — (602 ) Income before gain on
sale of properties 27,903 38,249 94,348 114,425 Gain on sale of
properties — — 4,061
— Net income $ 27,903 $ 38,249 $ 98,409
$ 114,425
(1) The calculations of NOI and Cash Basis NOI exclude certain
components of net income in order to provide results that are more
closely related to SNH’s property level results of operations. SNH
calculates NOI and Cash Basis NOI as shown above. 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 because SNH records those
amounts as depreciation and amortization. SNH defines Cash Basis
NOI as NOI excluding non-cash straight line rent adjustments, lease
value amortization, lease termination fee amortization, if any, and
non-cash amortization included in property operating expenses. 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 SNH’s 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 generated and incurred
at the property level and may facilitate comparisons of its
operating performance between periods and with other REITs. 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 or operating income as an indicator of
SNH’s operating performance or as a measure of SNH’s liquidity.
These measures should be considered in conjunction with net income
and operating income as presented in SNH’s Condensed Consolidated
Statements of Income. Other REITs and real estate companies may
calculate NOI and Cash Basis NOI differently than SNH does.
(2) SNH recorded a liability for the amount by which the
estimated fair value for accounting purposes exceeded the price SNH
paid for its investment in RMR common stock in June 2015. A
portion of this liability is being amortized on a straight line
basis through December 31, 2035 as a reduction to property
management fees, which are included in property operating
expenses.
SENIOR HOUSING PROPERTIES TRUST
Calculation and Reconciliation of NOI,
Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI
by Segment (1)
(dollars in thousands)
(unaudited)
For the Three Months Ended September 30, 2016 For
the Three Months Ended September 30, 2015 Calculation of NOI
and Cash Basis NOI:
Triple NetLeased
SeniorLivingCommunities
ManagedSenior
LivingCommunities
MOBs
Non-Segment (2)
Total
Triple NetLeased
SeniorLivingCommunities
ManagedSenior
LivingCommunities
MOBs
Non-Segment (2)
Total Rental income / residents fees and
services $ 66,520 $ 98,480 $ 94,404 $ 4,579 $ 263,983 $ 64,222 $
96,412 $ 90,072 $ 4,569 $ 255,275 Property operating expenses (47 )
(74,763 ) (28,537 ) — (103,347 ) — (71,983 ) (24,944
) — (96,927 ) Property net operating income (NOI) $ 66,473
$ 23,717 $ 65,867 $ 4,579 $ 160,636
$ 64,222 $ 24,429 $ 65,128 $ 4,569
$ 158,348 NOI change 3.5 % (2.9 )% 1.1 % 0.2 % 1.4 %
Property NOI $ 66,473 $ 23,717 $ 65,867 $ 4,579 $ 160,636 $
64,222 $ 24,429 $ 65,128 $ 4,569 $ 158,348 Less: Non-cash straight
line rent adjustments 865 — 3,290 137 4,292 1,373 — 3,530 138 5,041
Lease value amortization — — 1,181 55 1,236 — — 1,029 55 1,084
Lease termination fee amortization — — — — — — — 244 — 244 Non-cash
amortization included in property operating expenses (3) — —
199 — 199 — — 203
— 203 Cash Basis NOI $ 65,608 $ 23,717
$ 61,197 $ 4,387 $ 154,909 $ 62,849 $
24,429 $ 60,122 $ 4,376 $ 151,776 Cash
Basis NOI change 4.4 % (2.9 )% 1.8 % 0.3 % 2.1 %
Reconciliation of NOI to Same Property NOI: Property NOI $
66,473 $ 23,717 $ 65,867 $ 4,579 $ 160,636 $ 64,222 $ 24,429 $
65,128 $ 4,569 $ 158,348 Less: NOI not included in same property
2,435 (317 ) 2,146 — 4,264 981 (312 ) 993 — 1,662
Same
property NOI (4) $ 64,038 $ 24,034 $ 63,721 $
4,579 $ 156,372 $ 63,241 $ 24,741 $
64,135 $ 4,569 $ 156,686 Same property NOI
change 1.3 % (2.9 )% (0.6 )% 0.2 % (0.2 )%
Reconciliation
of Same Property NOI to Same Property Cash Basis NOI: Same
property NOI (4) $ 64,038 $ 24,034 $ 63,721 $ 4,579 $ 156,372 $
63,241 $ 24,741 $ 64,135 $ 4,569 $ 156,686 Less: Non-cash straight
line rent adjustments 948 — 3,033 137 4,118 1,339 — 3,594 138 5,071
Lease value amortization — — 1,118 55 1,173 — — 968 55 1,023 Lease
termination fee amortization — — — — — — — 117 — 117 Non-cash
amortization included in property operating expenses (3) — —
199 — 199 — — 199
— 199 Same property cash basis NOI (4) $ 63,090
$ 24,034 $ 59,371 $ 4,387 $ 150,882
$ 61,902 $ 24,741 $ 59,257 $ 4,376
$ 150,276 Same property cash basis NOI change 1.9 %
(2.9 )% 0.2 % 0.3 % 0.4 %
(1) See above for the calculation of NOI and a
reconciliation of that amount to net income determined in
accordance with GAAP, and for a definition of NOI and Cash Basis
NOI, a description of why management believes they are appropriate
supplemental measures and a description of how management uses
these measures.(2) Includes the operating results of certain
properties that offer wellness, fitness and spa services to
members.(3) SNH recorded a liability for the amount by which
the estimated fair value for accounting purposes exceeded the price
SNH paid for its investment in RMR common stock in June 2015.
A portion of this liability is being amortized on a straight line
basis through December 31, 2035 as a reduction to property
management fees, which are included in property operating
expenses.(4) Consists of properties owned continuously since
July 1, 2015 and excludes properties classified as held for
sale.
SENIOR HOUSING PROPERTIES TRUST
Calculation and Reconciliation of NOI,
Cash Basis NOI, Same Property NOI and Same Property Cash Basis NOI
by Segment (1)
(dollars in thousands)
(unaudited)
For the Nine Months Ended September 30, 2016 For
the Nine Months Ended September 30, 2015 Calculation of NOI
and Cash Basis NOI:
Triple NetLeased
SeniorLivingCommunities
ManagedSenior
LivingCommunities
MOBs
Non-Segment (2)
Total
Triple NetLeased
SeniorLivingCommunities
ManagedSenior
LivingCommunities
MOBs
Non-Segment (2)
Total Rental income / residents fees and
services $ 198,269 $ 292,803 $ 278,964 $ 13,689 $ 783,725 $ 180,820
$ 271,061 $ 265,664 $ 13,709 $ 731,254 Property operating expenses
(833 ) (218,582 ) (79,361 ) — (298,776 ) — (204,178 )
(72,135 ) — (276,313 ) Property net operating income (NOI) $
197,436 $ 74,221 $ 199,603 $ 13,689 $
484,949 $ 180,820 $ 66,883 $ 193,529 $
13,709 $ 454,941 NOI change 9.2 % 11.0 % 3.1 % (0.1
)% 6.6 % Property NOI $ 197,436 $ 74,221 $ 199,603 $ 13,689
$ 484,949 $ 180,820 $ 66,883 $ 193,529 $ 13,709 $ 454,941 Less:
Non-cash straight line rent adjustments 3,184 — 10,002 412 13,598
2,675 — 10,651 412 13,738 Lease value amortization — — 3,629 166
3,795 — — 3,296 166 3,462 Lease termination fee amortization — — 42
— 42 — — 512 — 512 Non-cash amortization included in property
operating expenses (3) — — 597 — 597
— — 203 — 203 Cash Basis
NOI $ 194,252 $ 74,221 $ 185,333 $ 13,111
$ 466,917 $ 178,145 $ 66,883 $ 178,867
$ 13,131 $ 437,026 Cash Basis NOI change 9.0 %
11.0 % 3.6 % (0.2 )% 6.8 %
Reconciliation of NOI to Same
Property NOI: Property NOI $ 197,436 $ 74,221 $ 199,603 $
13,689 $ 484,949 $ 180,820 $ 66,883 $ 193,529 $ 13,709 $ 454,941
Less: NOI not included in same property 30,382 11,572 31,065 —
73,019 15,752 5,874 26,181 — 47,807
Same property NOI (4) $
167,054 $ 62,649 $ 168,538 $ 13,689 $
411,930 $ 165,068 $ 61,009 $ 167,348 $
13,709 $ 407,134 Same property NOI change 1.2 % 2.7 %
0.7 % (0.1 )% 1.2 %
Reconciliation of Same Property NOI
to Same Property Cash Basis NOI: Same property NOI (4) $
167,054 $ 62,649 $ 168,538 $ 13,689 $ 411,930 $ 165,068 $ 61,009 $
167,348 $ 13,709 $ 407,134 Less: Non-cash straight line rent
adjustments 275 — 7,855 412 8,542 748 — 8,867 412 10,027 Lease
value amortization — — 3,339 166 3,505 — — 3,134 166 3,300 Lease
termination fee amortization — — — — — — — 153 — 153 Non-cash
amortization included in property operating expenses (3) — —
519 — 519 — — 176
— 176 Same property cash basis NOI (4) $ 166,779
$ 62,649 $ 156,825 $ 13,111 $ 399,364
$ 164,320 $ 61,009 $ 155,018 $ 13,131
$ 393,478 Same property cash basis NOI change 1.5 %
2.7 % 1.2 % (0.2 )% 1.5 %
(1) See above for the calculation of NOI and a
reconciliation of that amount to net income determined in
accordance with GAAP, and for a definition of NOI and Cash Basis
NOI, a description of why management believes they are appropriate
supplemental measures and a description of how management uses
these measures. Excludes properties classified in discontinued
operations.(2) Includes the operating results of certain
properties that offer wellness, fitness and spa services to
members.(3) SNH recorded a liability for the amount by which
the estimated fair value for accounting purposes exceeded the price
SNH paid for its investment in RMR common stock in June 2015.
A portion of this liability is being amortized on a straight line
basis through December 31, 2035 as a reduction to property
management fees, which are included in property operating
expenses.(4) Consists of properties owned continuously since
January 1, 2015 and excludes properties classified as held for
sale.
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE
SHEETS
(amounts in thousands)
(unaudited)
Balance Sheet:
September 30, 2016
December 31, 2015
ASSETS
Real estate properties $ 7,667,919 $ 7,456,940 Accumulated
depreciation (1,280,778 ) (1,147,540 ) 6,387,141
6,309,400 Cash and cash equivalents 40,773 37,656 Restricted cash
6,325 6,155 Acquired real estate leases and other intangible
assets, net 532,205 604,286 Other assets, net 263,654
202,593 Total assets $ 7,230,098 $ 7,160,090
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility $ 215,000 $ 775,000 Unsecured
term loans, net 546,869 546,305 Senior unsecured notes, net
1,722,032 1,478,536 Secured debt and capital leases, net 1,168,827
679,295 Accrued interest 33,130 16,974 Assumed real estate lease
obligations, net 109,164 115,363 Other liabilities 196,108
188,857 Total liabilities 3,991,130 3,800,330
Total shareholders’ equity
3,238,968 3,359,760 Total liabilities and
shareholders’ equity $ 7,230,098 $ 7,160,090
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest on the Nasdaq.No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161104005154/en/
Senior Housing Properties TrustBrad Shepherd,
617-796-8234Director, Investor Relations
Senior Housing Properties (NASDAQ:SNH)
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