Third Quarter Net Income Attributable to
Common Shareholders of $0.14 Per Share
Third Quarter Normalized FFO of $0.44 Per
Share
Senior Housing Properties Trust (Nasdaq: SNH) today announced
its financial results for the quarter and nine months ended
September 30, 2017.
“Operating results were stable during the quarter with
Normalized FFO of $0.44 per share and consolidated same property
Cash Basis NOI growth of 0.5%,” said David Hegarty, President and
Chief Operating Officer. “We continue to reinvest the proceeds we
realized earlier this year from the sale to a sovereign investor of
a noncontrolling interest in our life science property leased to
Vertex Pharmaceuticals in Boston. During the quarter, we purchased
one medical office building for $16 million and subsequent to
quarter end we acquired or entered agreements to acquire an
additional four medical office buildings for $110 million and six
senior living communities for $104 million.”
Results for the Quarter Ended September 30,
2017:
Net income attributable to common shareholders was $34.4
million, or $0.14 per diluted share, for the quarter ended
September 30, 2017, compared to $27.9 million, or $0.12 per
diluted share, for the quarter ended September 30, 2016. This
increase in net income attributable to common shareholders is
primarily the result of acquisitions as well as decreases in
depreciation and amortization expense, asset impairment charges and
interest expense. These decreases were partially offset by an
increase in general and administrative expenses as a result of $8.0
million of estimated business management incentive fees recognized
for the quarter ended September 30, 2017 related to SNH's
outperformance of the SNL U.S. REIT Healthcare index for the
applicable measurement period. Normalized funds from operations, or
Normalized FFO, were $104.0 million and $105.7 million,
respectively, or $0.44 and $0.45 per diluted share, respectively,
for the quarters ended September 30, 2017 and
September 30, 2016.
Reconciliations of net income attributable to common
shareholders 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, 2017
and 2016 appear later in this press release.
Results for the Nine Months Ended September 30,
2017:
Net income attributable to common shareholders was $82.6
million, or $0.35 per diluted share, for the nine months ended
September 30, 2017, compared to $98.4 million, or $0.41 per
diluted share, for the nine months ended September 30, 2016.
This decrease in net income attributable to common shareholders is
primarily the result of increases in general and administrative
expenses and interest expense and a loss on early extinguishment of
debt recognized for the nine months ended September 30, 2017,
partially offset by income from acquisitions since January 1, 2016,
an increase in equity in earnings of an investee and decreases in
depreciation and amortization expense, acquisition and certain
other transaction related costs and asset impairment charges.
Normalized FFO were $316.1 million and $327.7 million,
respectively, or $1.33 and $1.38 per diluted share, respectively,
for the nine months ended September 30, 2017 and
September 30, 2016.
Reconciliations of net income attributable to common
shareholders determined in accordance with GAAP to FFO and
Normalized FFO for the nine months ended September 30, 2017
and 2016 appear later in this press release.
Portfolio Operating Results:
For the quarter ended September 30, 2017, 41.7% of net
operating income, or NOI, came from 236 triple net leased senior
living communities with 26,220 living units. The weighted average
rent coverage for triple net leased senior living communities was
1.26x for the 12 month period ended June 30, 2017 compared to 1.33x
for the 12 month period ended June 30, 2016 (1). Cash basis net
operating income, or Cash Basis NOI, for triple net leased senior
living communities owned continuously since July 1, 2016, or same
property, increased 1.5% for the quarter ended September 30,
2017 compared to the quarter ended September 30, 2016.
For the quarter ended September 30, 2017, 41.3% of NOI came
from 121 properties leased to medical providers, medical related
businesses, clinics and biotech laboratory tenants, or MOBs, with
11.6 million leasable square feet. As of September 30, 2017,
95.8% of MOB square feet were leased compared to 95.9% as of
September 30, 2016. Same property occupancy at MOBs was 95.7%
as of September 30, 2017 compared to 96.4% as of
September 30, 2016. Same property Cash Basis NOI for MOBs
increased 0.9% for the quarter ended September 30, 2017
compared to the quarter ended September 30, 2016. As of
September 30, 2017, our investments in life science properties
constituted approximately half of our total $3.6 billion invested
in MOBs.
For the quarter ended September 30, 2017, 14.2% of NOI came
from 68 managed senior living communities with 8,807 living units.
Occupancy at managed senior living communities was 85.8% for the
quarter ended September 30, 2017, compared to 86.7% for the
quarter ended September 30, 2016. Same property occupancy at
managed senior living communities was 86.0% for the quarter ended
September 30, 2017 compared to 86.9% for the quarter ended
September 30, 2016. Same property average monthly rates for
managed senior living communities increased by 1.1% to $4,268 for
the quarter ended September 30, 2017 compared to the quarter
ended September 30, 2016. Same property Cash Basis NOI from
managed senior living communities decreased 3.8% for the quarter
ended September 30, 2017 compared to the quarter ended
September 30, 2016.
Our 10 wellness centers remained 100% leased as of
September 30, 2017 and September 30, 2016 and provided us
with Cash Basis NOI of $4.4 million in each of the three months
ended September 30, 2017 and September 30, 2016.
Consolidated same property Cash Basis NOI increased 0.5% for the
quarter ended September 30, 2017 compared to the quarter ended
September 30, 2016.
Reconciliations of net income determined in accordance with GAAP
to same property Cash Basis NOI by operating segment for the
quarters ended September 30, 2017 and 2016 appear later in
this press release.
Financing Activities:
In August 2017, SNH amended the agreement governing its $1.0
billion revolving credit facility. As a result of the amendment,
the interest rate payable on borrowings under the facility was
reduced from LIBOR plus a premium of 130 basis points per annum to
LIBOR plus a premium of 120 basis points per annum, and the
facility fee was reduced from 30 basis points per annum to 25 basis
points per annum on the total amount of lending commitments under
the facility. The interest rate premium and facility fee are each
subject to adjustment based upon changes to SNH’s credit ratings.
Also as a result of the amendment, the stated maturity date of the
facility was extended from January 15, 2018 to January 15, 2022,
and subject to the payment of an extension fee and meeting other
conditions, SNH has the right to extend the maturity date of the
facility for an additional year. The amended facility also includes
a feature pursuant to which, in certain circumstances, maximum
borrowings under the facility may be increased to up to $2.0
billion.
Also in August 2017, SNH amended the agreement governing its
$200.0 million unsecured term loan. As a result of the amendment,
the interest rate payable on borrowings under the term loan was
reduced from LIBOR plus a premium of 180 basis points per annum to
LIBOR plus a premium of 135 basis points per annum.
Investment Activities:
In July 2017, SNH acquired one MOB (one building) located in
Maryland with approximately 59,000 square feet for approximately
$16.2 million, excluding closing costs.
In October 2017, SNH acquired two MOBs (two buildings) located
in Minnesota and North Carolina with a total of approximately
255,000 square feet for an aggregate purchase price of
approximately $38.7 million, excluding closing costs.
In August and October 2017, SNH entered agreements to acquire
two MOBs (two buildings) located in California and Kansas with a
total of approximately 302,000 square feet for an aggregate
purchase price of approximately $71.1 million, excluding costs.
These acquisitions are expected to close by December 31, 2017.
In November 2017, SNH entered an agreement to acquire six senior
living communities from Five Star Senior Living Inc., or Five Star,
(Nasdaq: FVE) for an aggregate purchase price of approximately
$104.0 million, including SNH’s assumption of approximately $33.7
million of mortgage debt securing certain of these senior living
communities and excluding closing costs. SNH expects to enter
management and pooling arrangements with Five Star to manage these
senior living communities for SNH as these acquisitions occur.
These acquisitions are subject to conditions, including SNH's
assumption of any applicable mortgage debt and receipt of any
applicable regulatory approvals. The closings of these acquisitions
are expected to occur as third party approvals are received between
now and the end of the first quarter of 2018.
During the quarter ended September 30, 2017, SNH invested
approximately $14.7 million in improvements at its owned senior
living communities that has generated or 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 may maintain or enhance the competitive positions of those
properties and may increase its operating revenue from those
properties.
Conference Call:
On Thursday, November 9, 2017, at 1:00 p.m. Eastern
Time, President and Chief Operating Officer, David Hegarty, and
Chief Financial Officer and Treasurer, Richard Siedel, will host a
conference call to discuss SNH's third quarter 2017 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 Thursday, November 16, 2017. To hear the replay, dial (412)
317-0088. The replay pass code is 10113395.
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 third quarter conference call are strictly prohibited without
the prior written consent of SNH.
Supplemental Data:
A copy of SNH’s Third Quarter 2017 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 and life science
properties 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 and Normalized FFO,
and NOI and Cash Basis NOI and reconciliations of net income
attributable to common shareholders and net income, respectively,
determined in accordance with GAAP to these amounts.
(1) SNH reports rent coverage one quarter in arrears
because operating results from tenants are usually provided to SNH
three months after the end of a fiscal quarter. Operating data from
triple net leased senior living communities are provided by tenants
and SNH has not independently verified this information .
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:
- THIS PRESS RELEASE DISCUSSES CERTAIN
AMENDMENTS AND TERMS APPLICABLE TO SNH’S REVOLVING CREDIT FACILITY
AND $200 MILLION TERM LOAN; HOWEVER, CONTINUED AVAILABILITY OF
BORROWINGS UNDER SNH’S REVOLVING CREDIT FACILITY IS SUBJECT TO
SNH’S SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CREDIT
FACILITY CONDITIONS THAT IT MAY BE UNABLE TO SATISFY; ACTUAL COSTS
UNDER SNH’S REVOLVING CREDIT FACILITY WILL BE HIGHER THAN LIBOR
PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH THE
FACILITY; INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER SNH’S
REVOLVING CREDIT FACILITY IS SUBJECT TO SNH’S OBTAINING ADDITIONAL
COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR; SNH’S RIGHT TO
EXTEND THE MATURITY DATE OF ITS REVOLVING CREDIT FACILITY IS
SUBJECT TO ITS PAYMENT OF A FEE AND MEETING OTHER CONDITIONS AND
SUCH CONDITIONS MAY NOT BE MET; AND FUTURE CHANGES IN SNH’S CREDIT
RATINGS MAY CAUSE THE INTEREST AND FEES SNH PAYS ON ITS REVOLVING
CREDIT FACILITY AND $200 MILLION TERM LOAN TO INCREASE.
- THIS PRESS RELEASE INCLUDES A STATEMENT
THAT SNH EXPECTS THE ADDITIONAL INVESTMENTS IT REGULARLY MAKES AT
ITS OWNED MOBS AND ITS OWNED AND MANAGED SENIOR LIVING COMMUNITIES
MAY MAINTAIN OR ENHANCE THE COMPETITIVE POSITION OF THOSE
PROPERTIES AND MAY INCREASE ITS OPERATING REVENUE FROM THOSE
PROPERTIES. HOWEVER, THERE CAN BE NO ASSURANCE THAT THE FUTURE
COMPETITIVE POSITION OF, OR THE OPERATING REVENUE FROM, THOSE
PROPERTIES WILL INCREASE OR REMAIN AT CURRENT LEVELS. IN FACT, THE
COMPETITIVE POSITION OF, AND SNH’S REVENUES FROM, THOSE PROPERTIES
MAY DECLINE.
- SNH HAS ENTERED AGREEMENTS TO ACQUIRE
TWO MOBS FOR $71.1 MILLION, EXCLUDING CLOSING COSTS. THESE
ACQUISITIONS ARE SUBJECT TO CONDITIONS. THESE CONDITIONS MAY NOT BE
MET AND THESE ACQUISITIONS MAY NOT OCCUR, MAY BE DELAYED OR THEIR
TERMS MAY CHANGE.
- SNH HAS ENTERED AN AGREEMENT TO ACQUIRE
SIX SENIOR LIVING COMMUNITIES FROM FIVE STAR FOR APPROXIMATELY
$104.0 MILLION, INCLUDING SNH’S ASSUMPTION OF APPROXIMATELY $33.7
MILLION OF MORTGAGE DEBT AND EXCLUDING CLOSING COSTS, AND SNH
EXPECTS TO ENTER MANAGEMENT AND POOLING ARRANGEMENTS WITH FIVE STAR
FOR FIVE STAR TO MANAGE THESE SENIOR LIVING COMMUNITIES FOR SNH.
THESE ACQUISITIONS ARE SUBJECT TO CONDITIONS. THESE CONDITIONS MAY
NOT BE MET AND THESE ACQUISITIONS AND RELATED MANAGEMENT AND
POOLING ARRANGEMENTS MAY NOT OCCUR, MAY BE DELAYED BEYOND THE FIRST
QUARTER OF 2018 OR THEIR 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,
2017 2016 2017
2016 Revenues: Rental income $ 168,348 $ 165,503 $ 501,437 $
490,922 Residents fees and services 98,331 98,480
294,816 292,803 Total revenues 266,679 263,983
796,253 783,725 Expenses: Property operating expenses
104,714 103,347 308,565 298,776 Depreciation and amortization
66,619 72,344 209,463 214,938 General and administrative 19,883
12,107 57,889 34,931 Acquisition and certain other transaction
related costs — 824 292 1,443 Impairment of assets — 4,578
5,082 16,930 Total expenses 191,216
193,200 581,291 567,018 Operating
income 75,463 70,783 214,962 216,707 Dividend income 659 659
1,978 1,449 Interest and other income 128 89 323 330 Interest
expense (40,105 ) (43,438 ) (124,394 ) (123,837 ) Loss on early
extinguishment of debt (274 ) (84 ) (7,627 ) (90 )
Income from continuing operations before
income tax expense
and equity in earnings of an investee
35,871 28,009 85,242 94,559 Income tax expense (109 ) (119 ) (300 )
(318 ) Equity in earnings of an investee 31 13 533
107 Income before gain on sale of properties 35,793
27,903 85,475 94,348 Gain on sale of properties — — —
4,061 Net income 35,793 27,903 85,475 98,409 Net
income attributable to noncontrolling interest (1,379 ) —
(2,865 ) — Net income attributable to common shareholders $
34,414 $ 27,903 $ 82,610 $ 98,409
Weighted average common shares outstanding (basic) 237,421
237,347 237,404 237,329 Weighted average common shares outstanding
(diluted) 237,460 237,396 237,445 237,369
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.14 $ 0.12
$ 0.35 $ 0.41
SENIOR HOUSING PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF FFO AND
NORMALIZED FFO
(amounts in thousands, except per share
data)
(unaudited)
Calculation of FFO and Normalized
FFO (1):
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2017 2016 2017
2016 Net income attributable to common shareholders $ 34,414
$ 27,903 $ 82,610 $ 98,409 Depreciation and amortization expense
66,619 72,344 209,463 214,938 Noncontrolling interest's share of
net FFO adjustments (5,305 ) — (11,066 ) — Gain on sale of
properties — — — (4,061 ) Impairment of assets — 4,578
5,082 16,930 FFO 95,728 104,825 286,089
326,216 Estimated business management incentive fees (2)
8,022 — 22,048 — Acquisition and certain other transaction related
costs — 824 292 1,443 Loss on early extinguishment of debt 274
84 7,627 90 Normalized FFO $ 104,024
$ 105,733 $ 316,056 $ 327,749
Weighted average common shares outstanding (basic) 237,421 237,347
237,404 237,329 Weighted average common shares outstanding
(diluted) 237,460 237,396 237,445 237,369
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.14 $ 0.12
$ 0.35 $ 0.41 FFO $ 0.40 $ 0.44
$ 1.20 $ 1.37 Normalized FFO $ 0.44 $ 0.45
$ 1.33 $ 1.38 Distributions declared $ 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
attributable to common shareholders, 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 and the difference between net income attributable to
common shareholders and FFO attributable to noncontrolling
interest, 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 be payable
when all contingencies for determining such fees are known at the
end of the calendar year, and SNH excludes acquisition and certain
other transaction related costs expensed under GAAP 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 Normalized FFO from noncontrolling interest, net
of FFO, if any. SNH considers FFO and Normalized FFO to be
appropriate supplemental measures of operating performance for a
REIT, along with net income, net income attributable to common
shareholders 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 alternatives to net income, net income
attributable to common shareholders or operating income as
indicators of SNH’s operating performance or as measures of SNH’s
liquidity. These measures should be considered in conjunction with
net income, net income attributable to common shareholders 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) Incentive fees under SNH’s business management agreement are
payable after the end of each calendar year, are calculated based
on common share total return, as defined, and are included in
general and administrative expense in SNH’s Condensed Consolidated
Statements of Income. In calculating net income attributable to
common shareholders in accordance with GAAP, SNH recognizes
estimated business management incentive fee expense, if any, in the
first, second and third quarters. Although SNH recognizes this
expense, if any, in the first, second and third quarters for
purposes of calculating net income attributable to common
shareholders, SNH does not include these amounts in the calculation
of Normalized FFO until the fourth quarter, when the amount of the
business management incentive fee expense for the calendar year, if
any, is determined.
SENIOR HOUSING PROPERTIES TRUST
CALCULATION AND RECONCILIATION OF NET
OPERATING INCOME (NOI) AND CASH BASIS NOI
(amounts in thousands)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2017 2016 2017 2016
Calculation of
NOI and Cash Basis NOI(1):
Revenues: Rental income $ 168,348 $ 165,503 $ 501,437 $ 490,922
Residents fees and services 98,331 98,480 294,816
292,803 Total revenues 266,679 263,983 796,253
783,725 Property operating expenses (104,714 ) (103,347 ) (308,565
) (298,776 ) Property net operating income (NOI): 161,965 160,636
487,688 484,949 Non-cash straight line rent adjustments (3,621 )
(4,292 ) (10,485 ) (13,598 ) Lease value amortization (1,352 )
(1,236 ) (3,963 ) (3,795 ) Lease termination fee amortization — — —
(42 ) Non-cash amortization included in property operating
expenses(2) (199 ) (199 ) (598 ) (597 ) Cash Basis NOI $ 156,793
$ 154,909 $ 472,642 $ 466,917
Reconciliation of
Net Income to Cash Basis NOI:
Net income $ 35,793 $ 27,903 $ 85,475 $ 98,409 Gain on sale of
properties — — — (4,061 ) Income before gain
on sale of properties 35,793 27,903 85,475 94,348 Equity in
earnings of an investee (31 ) (13 ) (533 ) (107 ) Income tax
expense 109 119 300 318 Loss on early extinguishment of debt 274 84
7,627 90 Interest expense 40,105 43,438 124,394 123,837 Interest
and other income (128 ) (89 ) (323 ) (330 ) Dividend income (659 )
(659 ) (1,978 ) (1,449 ) Operating income 75,463 70,783 214,962
216,707 Impairment of assets — 4,578 5,082 16,930
Acquisition and certain other transaction related costs — 824 292
1,443 General and administrative expense 19,883 12,107 57,889
34,931 Depreciation and amortization expense 66,619 72,344
209,463 214,938 Property NOI 161,965 160,636
487,688 484,949 Non-cash amortization included in property
operating expenses(2) (199 ) (199 ) (598 ) (597 ) Lease termination
fee amortization — — — (42 ) Lease value amortization (1,352 )
(1,236 ) (3,963 ) (3,795 ) Non-cash straight line rent adjustments
(3,621 ) (4,292 ) (10,485 ) (13,598 ) Cash Basis NOI $ 156,793
$ 154,909 $ 472,642 $ 466,917 (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 that SNH records 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
alternatives to net income, net income attributable to common
shareholders or operating income as indicators of SNH’s operating
performance or as measures of SNH’s liquidity. These measures
should be considered in conjunction with net income, net income
attributable to common shareholders 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 expense, which is
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,
2017 For the Three Months Ended September 30,
2016 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 $ 67,662 $ 98,331 $ 96,116 $ 4,570 $ 266,679 $ 66,520 $
98,480 $ 94,404 $ 4,579 $ 263,983 Property operating expenses —
(75,556 ) (29,158 ) — (104,714 ) (47 ) (74,763 )
(28,537 ) — (103,347 ) Property net operating income (NOI) $
67,662 $ 22,775 $ 66,958 $ 4,570 $
161,965 $ 66,473 $ 23,717 $ 65,867 $
4,579 $ 160,636 NOI change 1.8 % (4.0 )% 1.7 % (0.2
)% 0.8 % Property NOI $ 67,662 $ 22,775 $ 66,958 $ 4,570 $
161,965 $ 66,473 $ 23,717 $ 65,867 $ 4,579 $ 160,636 Less: Non-cash
straight line rent adjustments 750 — 2,733 138 3,621 865 — 3,290
137 4,292 Lease value amortization — — 1,297 55 1,352 — — 1,181 55
1,236 Non-cash amortization included in property operating expenses
(3) — — 199 — 199 — —
199 — 199 Cash Basis NOI $ 66,912
$ 22,775 $ 62,729 $ 4,377 $ 156,793
$ 65,608 $ 23,717 $ 61,197 $ 4,387
$ 154,909 Cash Basis NOI change 2.0 % (4.0 )% 2.5 %
(0.2 )% 1.2 %
Reconciliation of NOI to Same Property
NOI: Property NOI $ 67,662 $ 22,775 $ 66,958 $ 4,570 $ 161,965
$ 66,473 $ 23,717 $ 65,867 $ 4,579 $ 160,636 Less: NOI not included
in same property 350 864 1,006 — 2,220 (82 ) 936 (60 ) — 794
Same
property NOI (4) $ 67,312 $ 21,911 $ 65,952 $
4,570 $ 159,745 $ 66,555 $ 22,781 $
65,927 $ 4,579 $ 159,842 Same property NOI
change 1.1 % (3.8 )% 0.0 % (0.2 )% (0.1 )%
Reconciliation
of Same Property NOI to Same Property Cash Basis NOI: Same
property NOI (4) $ 67,312 $ 21,911 $ 65,952 $ 4,570 $ 159,745 $
66,555 $ 22,781 $ 65,927 $ 4,579 $ 159,842 Less: Non-cash straight
line rent adjustments 750 — 2,632 138 3,520 1,000 — 3,304 137 4,441
Lease value amortization — — 1,301 55 1,356 — — 1,181 55 1,236
Non-cash amortization included in property operating expenses (3) —
— 199 — 199 — —
198 — 198 Same property cash basis NOI (4) $
66,562 $ 21,911 $ 61,820 $ 4,377 $
154,670 $ 65,555 $ 22,781 $ 61,244 $
4,387 $ 153,967 Same property cash basis NOI change
1.5 % (3.8 )% 0.9 % (0.2 )% 0.5 % (1) See above for
the calculation of NOI and a reconciliation of net income
determined in accordance with GAAP to that amount. 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, please see footnote 1 to the table
included on page 7. (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 expense, which is included in property operating expenses. (4)
Consists of properties owned continuously and properties owned and
managed continuously by the same operator since July 1, 2016 and
includes SNH's MOB (two buildings) that is owned in a joint venture
arrangement 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 Nine Months Ended September 30,
2017 For the Nine Months Ended September 30,
2016 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 $ 202,340 $ 294,816 $ 285,413 $ 13,684 $ 796,253 $ 198,269
$ 292,803 $ 278,964 $ 13,689 $ 783,725 Property operating expenses
— (224,585 ) (83,980 ) — (308,565 ) (833 ) (218,582 )
(79,361 ) — (298,776 ) Property net operating income (NOI) $
202,340 $ 70,231 $ 201,433 $ 13,684 $
487,688 $ 197,436 $ 74,221 $ 199,603 $
13,689 $ 484,949 NOI change 2.5 % (5.4 )% 0.9 % (0.0
)% 0.6 % Property NOI $ 202,340 $ 70,231 $ 201,433 $ 13,684
$ 487,688 $ 197,436 $ 74,221 $ 199,603 $ 13,689 $ 484,949 Less:
Non-cash straight line rent adjustments 2,304 — 7,769 412 10,485
3,184 — 10,002 412 13,598 Lease value amortization — — 3,797 166
3,963 — — 3,629 166 3,795 Lease termination fee amortization — — —
— — — — 42 — 42 Non-cash amortization included in property
operating expenses (3) — — 598 — 598
— — 597 — 597 Cash Basis
NOI $ 200,036 $ 70,231 $ 189,269 $ 13,106
$ 472,642 $ 194,252 $ 74,221 $ 185,333
$ 13,111 $ 466,917 Cash Basis NOI change 3.0 %
(5.4 )% 2.1 % (0.0 )% 1.2 %
Reconciliation of NOI to Same
Property NOI: Property NOI $ 202,340 $ 70,231 $ 201,433 $
13,684 $ 487,688 $ 197,436 $ 74,221 $ 199,603 $ 13,689 $ 484,949
Less: NOI not included in same property 7,374 3,197 9,185 — 19,756
4,650 3,596 5,771 — 14,017
Same property NOI (4) $ 194,966
$ 67,034 $ 192,248 $ 13,684 $ 467,932
$ 192,786 $ 70,625 $ 193,832 $ 13,689
$ 470,932 Same property NOI change 1.1 % (5.1 )% (0.8
)% (0.0 )% (0.6 )%
Reconciliation of Same Property NOI to
Same Property Cash Basis NOI: Same property NOI (4) $ 194,966 $
67,034 $ 192,248 $ 13,684 $ 467,932 $ 192,786 $ 70,625 $ 193,832 $
13,689 $ 470,932 Less: Non-cash straight line rent adjustments
2,304 — 6,788 412 9,504 3,224 — 9,637 412 13,273 Lease value
amortization — — 3,689 166 3,855 — — 3,303 166 3,469 Non-cash
amortization included in property operating expenses (3) — —
598 — 598 — — 591
— 591 Same property cash basis NOI (4) $ 192,662
$ 67,034 $ 181,173 $ 13,106 $ 453,975
$ 189,562 $ 70,625 $ 180,301 $ 13,111
$ 453,599 Same property cash basis NOI change 1.6 %
(5.1 )% 0.5 % (0.0 )% 0.1 % (1) See above for the
calculation of NOI and a reconciliation of net income determined in
accordance with GAAP to that amount. 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, please see footnote 1 to the table
included on page 7. (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 expense, which is included in property operating expenses. (4)
Consists of properties owned continuously and properties owned and
managed continuously by the same operator since January 1, 2016 and
includes SNH's MOB (two buildings) that is owned in a joint venture
arrangement and excludes properties classified as held for sale, if
any.
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE
SHEETS
(amounts in thousands)
(unaudited)
September 30, 2017
December 31, 2016
ASSETS
Real estate properties $ 7,837,448 $ 7,730,523 Accumulated
depreciation (1,475,360 ) (1,328,011 ) 6,362,088 6,402,512
Cash and cash equivalents 28,870 31,749 Restricted cash 14,088
3,829 Acquired real estate leases and other intangible assets, net
463,802 514,446 Other assets, net 318,893 275,218
Total assets $ 7,187,741 $ 7,227,754
LIABILITIES AND
EQUITY
Unsecured revolving credit facility $ 471,000 $ 327,000 Unsecured
term loans, net 547,253 547,058 Senior unsecured notes, net
1,724,936 1,722,758 Secured debt and capital leases, net 815,500
1,117,649 Accrued interest 32,185 18,471 Assumed real estate lease
obligations, net 98,498 106,038 Other liabilities 210,814
189,375 Total liabilities 3,900,186 4,028,349 Total
equity 3,287,555 3,199,405 Total liabilities and
equity $ 7,187,741 $ 7,227,754
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/20171109005486/en/
For Senior Housing Properties Trust:Brad Shepherd,
617-796-8234Director, Investor Relations
Senior Housing Properties (NASDAQ:SNH)
Historical Stock Chart
From May 2024 to Jun 2024
Senior Housing Properties (NASDAQ:SNH)
Historical Stock Chart
From Jun 2023 to Jun 2024