Fourth Quarter Net Income of $0.18 Per
Share
Fourth Quarter Normalized FFO of $0.50 Per
Share
Senior Housing Properties Trust (Nasdaq:SNH) today announced its
financial results for the quarter and year ended December 31,
2016.
"In 2016, we employed a disciplined approach to capital
allocation throughout the year,” said David Hegarty, President and
Chief Operating Officer. "In the fourth quarter we acquired two
assisted living communities and one medical office building for a
total purchase price of approximately $37 million, bringing our
gross acquisition volume for 2016 to approximately $226 million.
2016 acquisitions were done at a weighted average cap rate of 9.3%.
Additionally, in the fourth quarter we prepaid approximately $48
million of secured debt with an average annual interest rate of
6.5%."
Results for the Quarter Ended December 31, 2016:
Net income was $42.9 million, or $0.18 per diluted share, for
the quarter ended December 31, 2016, compared to $9.5 million,
or $0.04 per diluted share, for the quarter ended December 31,
2015, which represents an increase of $0.14 per diluted share. This
increase in net income is primarily attributable to a non-cash loss
on the distribution of The RMR Group Inc. (Nasdaq: RMR) common
stock to SNH’s shareholders of $38.4 million, or $0.16 per diluted
share, that SNH recognized in December 2015. This was partially
offset by an increase in interest expense of approximately $5.7
million, or $0.02 per diluted share, for the three months ended
December 31, 2016 compared to December 31, 2015.
Normalized funds from operations, or Normalized FFO, were $118.6
million, or $0.50 per diluted share, for the quarter ended
December 31, 2016, compared to $120.6 million, or $0.51 per
diluted share, for the quarter ended December 31, 2015, which
represents a decrease of $0.01 per diluted share. This decrease in
Normalized FFO is primarily attributable to increased interest
expense of $0.02 per diluted share.
Cash basis net operating income, or Cash Basis NOI, was $167.9
million for the quarter ended December 31, 2016, compared to
$161.0 million for the quarter ended December 31, 2015, which
represents an increase of 4.3%. The increase in Cash Basis NOI
includes $4.6 million from acquisitions and $2.3 million of
increases at the same properties owned since October 1, 2015.
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
December 31, 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 December 31, 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
December 31, 2016 and 2015 appear later in this press
release.
Results for the Year Ended December 31, 2016:
Net income was $141.3 million, or $0.60 per diluted share, for
the year ended December 31, 2016, compared to $124.0 million,
or $0.53 per diluted share, for the year ended December 31,
2015, which represents an increase of $0.07 per diluted share. This
increase is primarily attributable to a non-cash loss on the
distribution of RMR common stock to SNH’s shareholders of $38.4
million, or $0.16 per diluted share, that SNH recognized in
December 2015. The increase to net income was partially offset by
an increase in interest expense of approximately $16.7 million, or
$0.06 per diluted share, as well as an increase in impairment of
assets of $18.5 million, or $0.08 per diluted share. Net income for
the year ended December 31, 2016 also included a gain on sale
of $4.1 million, or $0.02 per diluted share, related to SNH's sale
of a skilled nursing facility in June 2016.
Normalized FFO were $446.4 million, or $1.88 per diluted share,
for the year ended December 31, 2016, compared to $429.7
million, or $1.84 per diluted share, for the year ended
December 31, 2015, which represents an increase of $0.04 per
diluted share. This increase in Normalized FFO is primarily
attributable to acquisitions, partially offset by increased
interest expense of $0.06 per diluted share.
Cash Basis NOI was $634.9 million for the year ended
December 31, 2016, compared to $598.1 million for the year
ended December 31, 2015, which represents an increase of 6.2%.
Contributions to the increase in Cash Basis NOI include $29.3
million from acquisitions and $7.5 million of increases at the same
properties owned since January 1, 2015.
Reconciliations of net income determined in accordance with GAAP
to FFO and Normalized FFO for the years ended December 31,
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 years ended December 31, 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 years
ended December 31, 2016 and 2015 appear later in this press
release.
Portfolio Operating Results:
For the quarter ended December 31, 2016, same property Cash
Basis NOI and same property NOI each increased 1.4% compared to the
quarter ended December 31, 2015.
For the quarter ended December 31, 2016, 38.6% 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 2.2% and same property NOI
increased 2.7% for the quarter ended December 31, 2016
compared to the quarter ended December 31, 2015. As of
December 31, 2016, 96.5% of SNH’s MOB square feet were leased
compared to 96.4% as of December 31, 2015. Same property
occupancy at SNH’s MOBs remained unchanged at 96.3% as of both
December 31, 2016 and December 31, 2015.
For the quarter ended December 31, 2016, 44.7% of SNH’s NOI
came from 236 triple net leased senior living communities with
26,220 living units. Same property Cash Basis NOI and same property
NOI from triple net leased senior living communities increased 2.3%
and 1.8%, respectively, for the quarter ended December 31,
2016 compared to the quarter ended December 31, 2015.
Occupancy at triple net leased senior living communities decreased
to 85.1% for the most recently available 12 month period, compared
to 85.6% for the comparable period last year(1). Same property
occupancy at triple net leased senior living communities decreased
to 85.1% for the most recently available 12 month period, compared
to 85.6% for the comparable period last year(1).
For the quarter ended December 31, 2016, 14.1% of SNH's NOI
came from 68 managed senior living communities with 8,788 living
units. As a result of casualty losses and hurricane evacuation
costs, same property Cash Basis NOI and same property NOI from
managed senior living communities each decreased 3.1% for the
quarter ended December 31, 2016 compared to the quarter ended
December 31, 2015. Occupancy at managed senior living
communities was 86.8% for the quarter ended December 31, 2016,
compared to 87.7% for the quarter ended December 31, 2015. Same
property occupancy at managed senior living communities owned and
managed by the same operator continuously since October 1, 2015 was
87.1% for the quarter ended December 31, 2016, compared to
87.7% for the quarter ended December 31, 2015. Same property
average monthly rates increased 1.6% to $4,245 for the quarter
ended December 31, 2016 compared to the quarter ended
December 31, 2015.
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 14.1 years.
In December 2016, SNH acquired two senior living communities for
approximately $18.6 million, excluding closing costs. These senior
living communities contain a combined 126 living units, are located
in Illinois and are leased to Five Star Quality Care, Inc.
In January 2017, SNH acquired one MOB for approximately $15.5
million, excluding closing costs. This MOB contains approximately
117,000 square feet, is located in Kansas and has a remaining lease
term of approximately 10.6 years.
During the quarter ended December 31, 2016, SNH invested
approximately $8.9 million on improvements at its owned senior
living communities that will generate additional rent under the
terms of its existing senior living communities’ leases. SNH
regularly makes additional investments at its owned MOBs and its
owned and managed senior living communities that it expects will
increase its operating revenue from those properties.
Disposition Activities:
In December 2016, SNH sold one MOB located in Pennsylvania for
approximately $2.8 million, excluding closing costs. Also in
December 2016, SNH sold a formerly managed memory care building
located in Florida for approximately $2.1 million, excluding
closing costs.
Financing Activities:
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 December 2016, SNH
prepaid, at par plus accrued interest, a mortgage note encumbering
one property which had a maturity date in March 2017, an
outstanding principal balance of approximately $5.4 million and an
annual interest rate of 5.86%.
Conference Call:
On Monday, February 27, 2017, at 10:00 a.m. Eastern
Time, President and Chief Operating Officer, David Hegarty, and
Chief Financial Officer and Treasurer, Rick Siedel, will host a
conference call to discuss SNH's fourth quarter and full year 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 Monday, March 6, 2017. To hear the replay, dial (412)
317-0088. The replay pass code is 10099816.
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 following the call for about one week.
The transcription, recording and retransmission in any way of
SNH’s fourth quarter conference call are strictly prohibited
without the prior written consent of SNH.
Supplemental Data:
A copy of SNH’s Fourth 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.
(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. As a result,
occupancy ratios presented for triple net leased senior living
communities are for the 12 months ended September 30, 2016 and
2015. SNH has not independently verified tenant operating data.
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:
- MR. HEGARTY STATES IN THIS PRESS
RELEASE THAT SNH EMPLOYED A DISCIPLINED APPROACH TO CAPITAL
ALLOCATION. THIS MAY IMPLY THAT SNH WILL LIMIT ITS FUTURE
ACQUISITIONS. IN FACT, SNH INTENDS TO PURSUE FUTURE ACQUISITIONS
WHENEVER ATTRACTIVE OPPORTUNITIES BECOME AVAILABLE TO IT. IN THE
FUTURE, SNH MAY PURSUE A LARGE NUMBER OF EXPENSIVE ACQUISITIONS
EVEN IF DOING SO MAY REQUIRE IT TO RAISE ADDITIONAL CAPITAL. THERE
IS NO STATED LIMIT ON THE ACQUISITIONS SNH MAY PURSUE AND
ACQUISITIONS CREATE RISKS THAT EXPECTED RESULTS MAY NOT BE
ACHIEVED.
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 Year Ended December 31,
December 31, 2016 2015 2016
2015 Revenues: Rental income $ 175,277 $ 170,706 $
666,200 $ 630,899 Residents fees and services 99,019 96,813
391,822 367,874 Total revenues 274,296 267,519
1,058,022 998,773 Expenses: Property operating expenses
101,021 101,266 399,790 377,579 Depreciation and amortization
72,893 71,549 287,831 257,783 General and administrative 11,619
10,266 46,559 42,830 Acquisition and certain other transaction
related costs 642 337 2,085 6,853 Impairment of assets 1,744
292 18,674 194 Total expenses 187,919
183,710 754,939 685,239 Operating
income 86,377 83,809 303,083 313,534 Dividend income 659
2,773 2,108 2,773 Interest and other income 99 106 430 379 Interest
expense (43,737 ) (38,043 ) (167,574 ) (150,881 ) Loss on
distribution to common shareholders of RMR common stock — (38,437 )
— (38,437 ) Loss on early extinguishment of debt (437 ) (425 ) (526
) (1,894 ) Income from continuing operations before income tax
expense and equity in earnings (losses) of an investee 42,961 9,783
137,521 125,474 Income tax expense (106 ) (189 ) (424 ) (574 )
Equity in earnings (losses) of an investee 30 (50 ) 137
20 Income from continuing operations 42,885 9,544
137,234 124,920 Discontinued operations: Loss from discontinued
operations — — — (350 ) Loss on impairment of assets from
discontinued operations — — — (602 ) Income
before gain on sale of properties 42,885 9,544 137,234 123,968 Gain
on sale of properties — — 4,061 — Net
income $ 42,885 $ 9,544 $ 141,295 $ 123,968
Weighted average shares outstanding (basic) 237,391
237,313 237,345 232,931 Weighted
average shares outstanding (diluted) 237,393 237,320
237,382 232,963 Per common share amounts
(basic and diluted): Income from continuing operations $ 0.18 $
0.04 $ 0.60 $ 0.54 Loss from discontinued operations — —
— (0.01 ) Net income per share $ 0.18 $ 0.04
$ 0.60 $ 0.53
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 EndedDecember 31, Year
EndedDecember 31, 2016 2015
2016 2015 Net income $ 42,885 $ 9,544 $
141,295 $ 123,968 Depreciation and amortization expense 72,893
71,549 287,831 257,783 Gain on sale of properties — — (4,061 ) —
Impairment of assets from continuing operations 1,744 292 18,674
194 Impairment of assets from discontinued operations — —
— 602 FFO 117,522 81,385 443,739 382,547
Acquisition and certain other transaction related costs 642 337
2,085 6,853 Loss on distribution to common shareholders of RMR
common stock (3) — 38,437 — 38,437 Loss on early extinguishment of
debt 437 425 526 1,894 Normalized FFO $
118,601 $ 120,584 $ 446,350 $ 429,731
Weighted average shares outstanding (basic) 237,391 237,313
237,345 232,931 Weighted average shares outstanding
(diluted) 237,393 237,320 237,382 232,963
Net income per share (basic and diluted) $ 0.18 $
0.04 $ 0.60 $ 0.53 FFO per share (basic and diluted)
$ 0.50 $ 0.34 $ 1.87 $ 1.64 Normalized FFO per
share (basic and diluted) $ 0.50 $ 0.51 $ 1.88
$ 1.84 Distributions declared per share $ 0.39 $ 0.39
$ 1.56 $ 1.56 (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, gains and losses on early extinguishment of
debt, if any, and loss on distribution to common shareholders of
RMR common stock. 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 and amortization 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. (3) Amounts
represent a non-cash loss recorded as a result of the closing price
of RMR common stock being lower than SNH’s carrying amount per
share on the day SNH distributed shares of RMR common stock to
SNH’s shareholders.
SENIOR
HOUSING PROPERTIES TRUST CALCULATION AND RECONCILIATION OF
NET OPERATING INCOME (NOI) AND CASH BASIS NOI (amounts in
thousands) (unaudited) Three Months Ended
December 31, Year Ended December 31, 2016
2015 2016 2015
Calculation of
NOI and Cash Basis NOI(1):
Revenues:
Rental income $ 175,277 $ 170,706 $ 666,200 $ 630,899 Residents
fees and services 99,019 96,813 391,822
367,874 Total revenues 274,296 267,519 1,058,022 998,773
Property operating expenses (101,021 ) (101,266 ) (399,790 )
(377,579 ) Property net operating income (NOI): 173,275 166,253
658,232 621,194 Non-cash straight line rent adjustments (4,006 )
(4,300 ) (17,604 ) (18,039 ) Lease value amortization (1,147 ) (599
) (4,941 ) (4,061 ) Lease termination fee amortization — (127 ) —
(639 ) Non-cash amortization included in property operating
expenses(2) (199 ) (199 ) (798 ) (402 ) Cash Basis NOI $ 167,923
$ 161,028 $ 634,889 $ 598,053
Reconciliation of
Cash Basis NOI to Net Income:
Cash Basis NOI $ 167,923 $ 161,028 $ 634,889 $ 598,053 Non-cash
straight line rent adjustments 4,006 4,300 17,604 18,039 Lease
value amortization 1,147 599 4,941 4,061 Lease termination fee
amortization — 127 — 639 Non-cash amortization included in property
operating expenses(2) 199 199 798 402
Property NOI 173,275 166,253 658,232 621,194 Depreciation and
amortization expense (72,893 ) (71,549 ) (287,831 ) (257,783 )
General and administrative expense (11,619 ) (10,266 ) (46,559 )
(42,830 ) Acquisition and certain other transaction related costs
(642 ) (337 ) (2,085 ) (6,853 ) Impairment of assets (1,744 ) (292
) (18,674 ) (194 ) Operating income 86,377 83,809 303,083 313,534
Dividend income 659 2,773 2,108 2,773 Interest and other
income 99 106 430 379 Interest expense (43,737 ) (38,043 ) (167,574
) (150,881 ) Loss on distribution to common shareholders of RMR
common stock (3) — (38,437 ) — (38,437 ) Loss on early
extinguishment of debt (437 ) (425 ) (526 ) (1,894 ) Income before
income tax expense and equity in earnings (losses) of an investee
42,961 9,783 137,521 125,474 Income tax expense (106 ) (189 ) (424
) (574 ) Equity in earnings (losses) of an investee 30 (50 )
137 20 Income from continuing operations 42,885 9,544
137,234 124,920 Discontinued operations Loss from discontinued
operations — — — (350 ) Loss on impairment of assets from
discontinued operations — — — (602 ) Income
before gain on sale of properties 42,885 9,544 137,234 123,968 Gain
on sale of properties — — 4,061 — Net
income $ 42,885 $ 9,544 $ 141,295 $ 123,968
(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. (3) Amounts represent a
non-cash loss recorded as a result of the closing price of RMR
common stock being lower than SNH’s carrying amount per share on
the day SNH distributed shares of RMR common stock.
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 December 31, 2016 For the Three Months
Ended December 31, 2015 Calculation of NOI and Cash Basis
NOI:
Triple Net Leased Senior
Living Communities
Managed Senior Living
Communities
MOBs
Non-Segment (2)
Total
Triple Net Leased Senior
Living Communities
Managed Senior Living
Communities
MOBs
Non-Segment (2)
Total Rental income / residents fees and services $
77,428 $ 99,019 $ 93,270 $ 4,579 $ 274,296 $ 75,215 $ 96,813 $
90,922 $ 4,569 $ 267,519 Property operating expenses —
(74,613 ) (26,408 ) — (101,021 ) — (74,064 ) (27,202
) — (101,266 ) Property net operating income (NOI) $ 77,428
$ 24,406 $ 66,862 $ 4,579 $ 173,275
$ 75,215 $ 22,749 $ 63,720 $ 4,569
$ 166,253 NOI change 2.9 % 7.3 % 4.9 % 0.2 % 4.2 %
Property NOI $ 77,428 $ 24,406 $ 66,862 $ 4,579 $ 173,275 $
75,215 $ 22,749 $ 63,720 $ 4,569 $ 166,253 Less: Non-cash straight
line rent adjustments 948 — 2,921 137 4,006 1,376 — 2,787 137 4,300
Lease value amortization — — 1,092 55 1,147 — — 545 54 599 Lease
termination fee amortization — — — — — — — 127 — 127 Non-cash
amortization included in property operating expenses (3) — —
199 — 199 — — 199
— 199 Cash Basis NOI $ 76,480 $ 24,406
$ 62,650 $ 4,387 $ 167,923 $ 73,839 $
22,749 $ 60,062 $ 4,378 $ 161,028 Cash
Basis NOI change 3.6 % 7.3 % 4.3 % 0.2 % 4.3 %
Reconciliation of NOI to Same Property NOI: Property NOI $
77,428 $ 24,406 $ 66,862 $ 4,579 $ 173,275 $ 75,215 $ 22,749 $
63,720 $ 4,569 $ 166,253 Less: NOI not included in same property
2,091 1,586 2,437 — 6,114 1,229
(798 ) 988 — 1,419 Same property NOI
(4) $ 75,337 $ 22,820 $ 64,425 $ 4,579
$ 167,161 $ 73,986 $ 23,547 $ 62,732 $
4,569 $ 164,834 Same property NOI change 1.8 % (3.1
)% 2.7 % 0.2 % 1.4 %
Reconciliation of Same Property NOI
to Same Property Cash Basis NOI: Same property NOI (4) $ 75,337
$ 22,820 $ 64,425 $ 4,579 $ 167,161 $ 73,986 $ 23,547 $ 62,732 $
4,569 $ 164,834 Less: Non-cash straight line rent adjustments 948 —
2,605 137 3,690 1,303 — 2,860 137 4,300 Lease value amortization —
— 1,118 55 1,173 — — 483 54 537 Non-cash amortization included in
property operating expenses (3) — — 199 —
199 — — 197 — 197
Same property cash basis NOI (4) $ 74,389 $ 22,820 $
60,503 $ 4,387 $ 162,099 $ 72,683 $
23,547 $ 59,192 $ 4,378 $ 159,800 Same
property cash basis NOI change 2.3 % (3.1 )% 2.2 % 0.2 % 1.4 %
(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 October 1, 2015 and
excludes properties classified as held for sale, if any.
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
Year Ended December 31, 2016 For the Year Ended December 31,
2015 Calculation of NOI and Cash Basis NOI:
Triple Net Leased Senior
Living Communities
Managed Senior Living
Communities
MOBs
Non-Segment (2)
Total
Triple Net Leased Senior
Living Communities
Managed Senior Living
Communities
MOBs
Non-Segment (2)
Total Rental income / residents fees and services $
275,697 $ 391,822 $ 372,233 $ 18,270 $ 1,058,022 $ 256,035 $
367,874 $ 356,586 $ 18,278 $ 998,773 Property operating expenses
(833 ) (293,195 ) (105,762 ) — (399,790 ) — (278,242
) (99,337 ) — (377,579 ) Property net operating income (NOI)
$ 274,864 $ 98,627 $ 266,471 $ 18,270 $
658,232 $ 256,035 $ 89,632 $ 257,249 $
18,278 $ 621,194 NOI change 7.4 % 10.0 % 3.6 % —
%
6.0 % Property NOI $ 274,864 $ 98,627 $ 266,471 $ 18,270 $
658,232 $ 256,035 $ 89,632 $ 257,249 $ 18,278 $ 621,194 Less:
Non-cash straight line rent adjustments 4,133 — 12,922 549 17,604
4,051 — 13,438 550 18,039 Lease value amortization — — 4,720 221
4,941 — — 3,840 221 4,061 Lease termination fee amortization — — —
— — — — 639 — 639 Non-cash amortization included in property
operating expenses (3) — — 798 — 798
— — 402 — 402 Cash Basis
NOI $ 270,731 $ 98,627 $ 248,031 $ 17,500
$ 634,889 $ 251,984 $ 89,632 $ 238,930
$ 17,507 $ 598,053 Cash Basis NOI change 7.4 %
10.0 % 3.8 % — % 6.2 %
Reconciliation of NOI to Same
Property NOI:
Property NOI $ 274,864 $ 98,627 $ 266,471 $ 18,270 $ 658,232 $
256,035 $ 89,632 $ 257,249 $ 18,278 $ 621,194 Less: NOI not
included in same property 41,317 15,557 41,931
— 98,805 25,617 7,536 35,667 —
68,820 Same property NOI (4) $ 233,547 $
83,070 $ 224,540 $ 18,270 $ 559,427 $
230,418 $ 82,096 $ 221,582 $ 18,278 $
552,374 Same property NOI change 1.4 % 1.2 % 1.3 % — % 1.3 %
Reconciliation of Same Property NOI to Same Property Cash
Basis NOI: Same property NOI (4) $ 233,547 $ 83,070 $ 224,540 $
18,270 $ 559,427 $ 230,418 $ 82,096 $ 221,582 $ 18,278 $ 552,374
Less: Non-cash straight line rent adjustments 356 — 10,025 549
10,930 913 — 11,039 550 12,502 Lease value amortization — — 4,469
221 4,690 — — 3,647 221 3,868 Non-cash amortization included in
property operating expenses (3) — — 695 —
695 — — 348 — 348
Same property cash basis NOI (4) $ 233,191 $ 83,070 $
209,351 $ 17,500 $ 543,112 $ 229,505 $
82,096 $ 206,548 $ 17,507 $ 535,656
Same property cash basis NOI change 1.6 % 1.2 % 1.4 % — % 1.4 % (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 January 1, 2015 and excludes properties
classified as held for sale, if any.
SENIOR HOUSING PROPERTIES TRUST CONDENSED
CONSOLIDATED BALANCE SHEETS (amounts in thousands)
(unaudited) Balance Sheet:
December 31, 2016
December 31, 2015
ASSETS
Real estate properties $ 7,730,523 $ 7,456,940 Accumulated
depreciation (1,328,011 ) (1,147,540 ) 6,402,512 6,309,400
Cash and cash equivalents 31,749 37,656 Restricted cash 3,829 6,155
Acquired real estate leases and other intangible assets, net
514,446 604,286 Other assets, net 275,218 202,593
Total assets $ 7,227,754 $ 7,160,090
LIABILITIES AND
SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility $ 327,000 $ 775,000 Unsecured
term loans, net 547,058 546,305 Senior unsecured notes, net
1,722,758 1,478,536 Secured debt and capital leases, net 1,117,649
679,295 Accrued interest 18,471 16,974 Assumed real estate lease
obligations, net 106,038 115,363 Other liabilities 189,375
188,857 Total liabilities 4,028,349 3,800,330
Total shareholders’ equity 3,199,405 3,359,760 Total
liabilities and shareholders’ equity $ 7,227,754 $ 7,160,090
A Maryland Real Estate Investment Trust
with transferable shares of beneficial interest listed 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/20170227005410/en/
Senior Housing Properties TrustBrad Shepherd, (617)
796-8234Director, Investor Relations
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