First Quarter Net Income Attributable to
Common Shareholders of $0.99 Per Share
First Quarter Normalized FFO of $0.45 Per
Share
Senior Housing Properties Trust (Nasdaq: SNH) today announced
its financial results for the quarter ended March 31,
2018.
“2018 is off to a strong start, as we were able to put a large
amount of capital to work which will be additive to our portfolio
of stable, high quality healthcare real estate,” said Jennifer
Francis, President and Chief Operating Officer. "During the
quarter, we sold $217 million of senior living communities at low
cap rates generating significant book gains, and accretively
recycled the capital into $155 million of senior living and MOB
acquisitions. Since the beginning of 2017, we have sold $812
million of assets and accretively recycled the proceeds into $307
million of acquisitions. We continue to make good progress
selectively reinvesting capital into high quality healthcare real
estate.
We would also like to recognize and thank David Hegarty for his
contributions to SNH since its founding in 1999. His expertise
and commitment helped develop SNH into a premier healthcare
REIT.”
Results for the Quarter Ended March 31, 2018:
Net income attributable to common shareholders was $236.0
million, or $0.99 per diluted share, for the quarter ended
March 31, 2018 compared to $32.2 million, or $0.14 per diluted
share, for the quarter ended March 31, 2017. This increase in
net income attributable to common shareholders is primarily the
result of a $181.2 million gain on sale of properties recognized
for the quarter ended March 31, 2018, unrealized gains and
losses on equity securities, net, of $27.2 million which, effective
January 1, 2018, is included in earnings in accordance with an
update to U.S. generally accepted accounting principles, or GAAP,
as well as SNH's acquisitions since January 1, 2017. These
increases were partially offset by an increase in general and
administrative expenses due to the $14.3 million of business
management incentive fee expense recognized for the quarter ended
March 31, 2018 as a result of SNH's total shareholder return,
as defined, exceeding the returns for the SNL U.S. REIT Healthcare
index over the applicable measurement period compared to the $3.3
million of business management incentive fee expense recognized for
the quarter ended March 31, 2017. Normalized funds from operations,
or Normalized FFO, were $107.2 million and $108.4 million,
respectively, or $0.45 and $0.46 per diluted share, respectively,
for the quarters ended March 31, 2018 and 2017.
Reconciliations of net income attributable to common
shareholders determined in accordance with GAAP to funds from
operations, or FFO, and Normalized FFO for the quarters ended
March 31, 2018 and 2017 appear later in this press
release.
Portfolio Operating Results:
For the quarter ended March 31, 2018, 41.9% of net
operating income, or NOI, came from 129 properties leased to
medical providers, medical related businesses, clinics and biotech
laboratory tenants, or MOBs, with 12.6 million leasable square
feet. As of March 31, 2018, 95.1% of MOB square feet were
leased compared to 96.4% as of March 31, 2017. Occupancy at
MOBs owned continuously since January 1, 2017, or same property,
was 94.9% as of March 31, 2018 compared to 96.3% as of
March 31, 2017. Same property cash basis net operating income,
or Cash Basis NOI, from MOBs decreased 1.9% for the quarter ended
March 31, 2018 compared to the quarter ended March 31,
2017.
For the quarter ended March 31, 2018, 40.6% of NOI came
from 233 triple net leased senior living communities with 24,947
living units. The weighted average rent coverage for triple net
leased senior living communities decreased to 1.20x for the 12
month period ended December 31, 2017 compared to 1.26x for the 12
month period ended December 31, 2016(1)(2). Same property Cash
Basis NOI from triple net leased senior living communities
increased 1.9% for the quarter ended March 31, 2018 compared
to the quarter ended March 31, 2017.
For the quarter ended March 31, 2018, 14.8% of NOI came
from 72 managed senior living communities with 9,258 living units.
Occupancy at managed senior living communities was 85.8% for the
quarter ended March 31, 2018 compared to 86.0% for the quarter
ended March 31, 2017. Same property occupancy at managed
senior living communities was 85.8% for the quarter ended
March 31, 2018 compared to 86.0% for the quarter ended
March 31, 2017. Same property average monthly rates at managed
senior living communities were $4,318 for the quarter ended
March 31, 2018, which rates were generally consistent with the
rates for the quarter ended March 31, 2017. Same property Cash
Basis NOI from managed senior living communities decreased 1.6% for
the quarter ended March 31, 2018 compared to the quarter ended
March 31, 2017.
SNH's 10 wellness centers remained 100% leased as of
March 31, 2018 and March 31, 2017, and provided SNH with
Cash Basis NOI of $4.4 million in each of the three months ended
March 31, 2018 and 2017.
Reconciliations of net income determined in accordance with GAAP
to same property Cash Basis NOI by operating segment for the
quarters ended March 31, 2018 and 2017 appear later in this
press release.
Financing Activities:
In January 2018, SNH prepaid approximately $4.3 million of
secured debt encumbering one senior living community with an annual
interest rate of 4.375% and a maturity date in September 2043.
In February 2018, SNH issued $500.0 million of 4.75% senior
unsecured notes due 2028. SNH used the net proceeds of this
offering to reduce the outstanding balance under its revolving
credit facility.
Investment Activities:
In November 2017, SNH agreed to acquire six senior living
communities from Five Star Senior Living Inc. (Nasdaq: FVE), or
Five Star, for an aggregate purchase price of approximately $104.0
million, including SNH’s assumption of approximately $33.7 million
of mortgage debt secured by certain of these senior living
communities and excluding closing costs. In December 2017, SNH
acquired two of these communities for an aggregate purchase price
of approximately $39.2 million, excluding closing costs. In January
2018, SNH acquired one of these communities for approximately $19.7
million, excluding closing costs. In February 2018, SNH acquired
one of these communities for approximately $22.2 million, including
the assumption of approximately $16.8 million of mortgage debt and
excluding closing costs. In connection with these acquisitions, SNH
entered management and pooling agreements with Five Star for Five
Star to manage these senior living communities for SNH, and SNH
expects to enter management and pooling agreements with Five Star
concurrent with the acquisition of the remaining two communities.
The closings of the acquisitions of the remaining two communities
for an aggregate purchase price of approximately $23.3 million,
including SNH's assumption of approximately $16.8 million of
mortgage debt, are expected to occur by the end of the second
quarter of 2018 as third party approvals are received.
In January 2018, SNH acquired three MOBs (three buildings)
located in Kansas, Missouri and California with a total of
approximately 400,000 square feet for an aggregate purchase price
of approximately $91.2 million, excluding closing costs.
In March 2018, SNH acquired one MOB (one building) located in
Virginia with approximately 135,000 square feet for a purchase
price of approximately $22.8 million, including the assumption of
approximately $11.1 million of mortgage debt and excluding closing
costs.
During the quarter ended March 31, 2018, SNH invested
approximately $2.2 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 MOBs and
its 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.
Disposition Activities:
In March 2018, SNH sold two senior living communities that were
leased to Sunrise Senior Living, LLC, or Sunrise, for an aggregate
sales price of $217.0 million, excluding closing costs, resulting
in a gain of approximately $181.2 million. SNH has agreed to sell
an additional senior living community leased to Sunrise for a sales
price of $96.0 million, and expects the closing of this sale to
occur before the end of the second quarter of 2018. SNH expects to
realize a gain of approximately $80.0 million related to this
sale.
In March 2018, SNH agreed to sell one skilled nursing facility,
or SNF, leased to Five Star for a sales price of approximately $6.5
million, excluding closing costs. SNH expects the closing of the
sale of this SNF to occur before the end of 2018. SNH expects to
realize a gain of approximately $3.0 million related to this
sale.
Conference Call:
At 8:00 a.m. Eastern Time on Thursday, May 10, 2018,
President and Chief Operating Officer, Jennifer Francis, and Chief
Financial Officer and Treasurer, Richard Siedel, will host a
conference call to discuss SNH's first quarter 2018 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. on Thursday,
May 17, 2018. To access the replay, dial (412) 317-0088. The replay
pass code is 10118590.
A live audio webcast of the conference call will also be
available in a listen-only mode on SNH’s website, which is located
at www.snhreit.com. Participants wanting to access the webcast
should visit SNH’s website about five minutes before the call. The
archived webcast will be available for replay on SNH’s website
following the call for about one week. The transcription,
recording and retransmission in any way of SNH’s first quarter
conference call are strictly prohibited without the prior written
consent of SNH.
Supplemental Data:
A copy of SNH’s First Quarter 2018 Supplemental Operating and
Financial Data is available for download at SNH’s website, which is
located at www.snhreit.com. SNH’s website is not incorporated
as part of this press release.
SNH is a real estate investment trust, or REIT, that 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, Normalized FFO, NOI
and Cash Basis NOI and a reconciliation of those amounts to amounts
determined in accordance with GAAP.
__________________________________________________________________________________________________________________________________
(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.
(2) Excludes data for periods prior to SNH's ownership of
certain properties, as well as properties sold or classified as
held for sale during the periods presented.
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:
- MS. FRANCIS NOTES SNH’S STRONG START TO
2018 WITH RESPECT TO CAPITAL REINVESTMENT. HOWEVER, SNH CANNOT BE
SURE THAT IT WILL SUSTAIN THE LEVEL OF DISPOSITION AND ACQUISITION
ACTIVITY IT HAS ACHIEVED SINCE THE BEGINNING OF 2017, AND IN FACT,
SNH’S DISPOSITION AND ACQUISITION ACTIVITY AND CORRESPONDING
CAPITAL REINVESTMENT COULD DECLINE OR NOT BE AS ACCRETIVE AS IN THE
PAST.
- THIS PRESS RELEASE INCLUDES A STATEMENT
THAT SNH EXPECTS THE ADDITIONAL INVESTMENTS IT REGULARLY MAKES AT
ITS MOBS AND 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 AS A RESULT OF THESE
INVESTMENTS OR OTHERWISE. IN FACT, THE COMPETITIVE POSITION OF, AND
SNH’S REVENUES FROM, THOSE PROPERTIES MAY DECLINE.
- SNH HAS AGREED TO ACQUIRE TWO SENIOR
LIVING COMMUNITIES FOR APPROXIMATELY $23.3 MILLION, INCLUDING SNH’S
ASSUMPTION OF APPROXIMATELY $16.8 MILLION OF MORTGAGE DEBT AND
EXCLUDING CLOSING COSTS, AND SNH EXPECTS TO ENTER MANAGEMENT AND
POOLING AGREEMENTS WITH FIVE STAR FOR FIVE STAR TO MANAGE THESE TWO
SENIOR LIVING COMMUNITIES. THESE ACQUISITIONS ARE SUBJECT TO
CONDITIONS. THESE CONDITIONS MAY NOT BE MET AND THESE ACQUISITIONS
AND ANY RELATED MANAGEMENT AND POOLING AGREEMENTS MAY NOT OCCUR,
MAY BE DELAYED BEYOND THE SECOND QUARTER OF 2018 OR THEIR TERMS MAY
CHANGE.
- SNH HAS AGREED TO SELL ONE SENIOR
LIVING COMMUNITY AND ONE SNF FOR AN AGGREGATE SALES PRICE OF
APPROXIMATELY $102.5 MILLION, EXCLUDING CLOSING COSTS, AND REALIZE
AGGREGATE GAINS OF $83.0 MILLION. THESE SALES ARE SUBJECT TO
CONDITIONS. THESE CONDITIONS MAY NOT BE MET AND THESE SALES MAY NOT
OCCUR, MAY BE DELAYED OR THEIR TERMS MAY CHANGE, AND SNH MAY NOT
REALIZE THE EXPECTED GAINS ON THESE SALES.
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
TRUSTCONDENSED CONSOLIDATED STATEMENTS OF
INCOME(amounts in thousands, except per share
data)(unaudited)
Three Months Ended March 31, 2018
2017 Revenues: Rental income $ 173,728 $ 166,443 Residents
fees and services 102,087 98,118 Total revenues
275,815 264,561 Expenses: Property operating expenses
108,143 101,057 Depreciation and amortization 70,339 73,175 General
and administrative (1) 25,118 15,083 Acquisition and certain other
transaction related costs 20 292 Total expenses
203,620 189,607 Operating income 72,195 74,954
Dividend income 659 659 Unrealized gains and losses on
equity securities, net (2) 27,241
— Interest and other income 54 120 Interest expense (43,552 )
(43,488 ) Loss on early extinguishment of debt (130 ) —
Income from continuing operations before income tax expense and
equity in earnings of an investee 56,467 32,245 Income tax expense
(260 ) (92 ) Equity in earnings of an investee 44 128
Income before gain on sale of properties 56,251 32,281 Gain on sale
of properties 181,154 — Net income 237,405 32,281 Net
income attributable to noncontrolling interest (1,383 ) (126 ) Net
income attributable to common shareholders $ 236,022 $
32,155 Weighted average common shares outstanding
(basic) 237,478 237,391 Weighted average common
shares outstanding (diluted) 237,493 237,416
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.99 $ 0.14
(1) General and administrative expenses include estimated
business management incentive fee expense of $14,347 and $3,266 for
the three months ended March 31, 2018 and 2017, respectively.
(2) Unrealized gains and losses on equity securities, net,
represent the adjustment required to adjust the carrying value of
SNH's investments in RMR Inc. and Five Star common shares to their
fair value as of March 31, 2018 in accordance with new GAAP
standards effective January 1, 2018.
SENIOR HOUSING PROPERTIES
TRUSTCONSOLIDATED STATEMENTS OF FFO AND NORMALIZED
FFO(amounts in thousands, except per share
data)(unaudited)
Calculation of FFO and Normalized
FFO (1):
Three Months Ended March 31,
2018 2017 Net income attributable to common
shareholders $ 236,022 $ 32,155 Depreciation and amortization
expense 70,339 73,175 Noncontrolling interest's share of net FFO
adjustments (5,300 ) (456 ) Gain on sale of properties (181,154 ) —
FFO 119,907 104,874 Estimated business management
incentive fees (2) 14,347 3,266 Acquisition and certain other
transaction related costs 20 292 Loss on early extinguishment of
debt 130 — Unrealized gains and losses on equity securities, net
(3) (27,241 ) — Normalized FFO $ 107,163 $ 108,432
Weighted average common shares outstanding (basic)
237,478 237,391 Weighted average common shares
outstanding (diluted) 237,493 237,416
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.99 $ 0.14
FFO $ 0.50 $ 0.44 Normalized FFO $ 0.45
$ 0.46 Distributions declared $ 0.39 $ 0.39
(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 loss on
impairment of real estate assets, if any, 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, unrealized
gains and losses on equity securities, net, 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 for
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 real estate companies and
REITs 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 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.
(3) Unrealized gains and losses on equity securities, net,
represent the adjustment required to adjust the carrying value of
SNH's investments in RMR Inc. and Five Star common shares to their
fair value as of March 31, 2018 in accordance with new GAAP
standards effective January 1, 2018.
SENIOR HOUSING PROPERTIES
TRUSTCALCULATION AND RECONCILIATION OF NET OPERATING INCOME
(NOI) AND CASH BASIS NOI(amounts in
thousands)(unaudited)
Three Months Ended March 31,
2018 2017
Calculation of
NOI and Cash Basis NOI(1):
Revenues: Rental income $ 173,728 $ 166,443 Residents fees and
services 102,087 98,118 Total revenues 275,815
264,561 Property operating expenses (108,143 ) (101,057 ) Property
net operating income (NOI): 167,672 163,504 Non-cash straight line
rent adjustments (2,993 ) (3,429 ) Lease value amortization (1,381
) (1,291 ) Non-cash amortization included in property operating
expenses(2) (199 ) (199 ) Cash Basis NOI $ 163,099 $ 158,585
Reconciliation of
Net Income to Cash Basis NOI:
Net income $ 237,405 $ 32,281 Gain on sale of properties (181,154 )
— Income before gain on sale of properties 56,251 32,281
Equity in earnings of an investee (44 ) (128 ) Income tax
expense 260 92 Loss on early extinguishment of debt 130 — Interest
expense 43,552 43,488 Interest and other income (54 ) (120 )
Unrealized gains and losses on equity securities, net (27,241 ) —
Dividend income (659 ) (659 ) Operating income 72,195 74,954
Acquisition and certain other transaction related costs 20 292
General and administrative expense 25,118 15,083 Depreciation and
amortization expense 70,339 73,175 Property NOI
167,672 163,504 Non-cash amortization included in property
operating expenses(2) (199 ) (199 ) Lease value amortization (1,381
) (1,291 ) Non-cash straight line rent adjustments (2,993 ) (3,429
) Cash Basis NOI $ 163,099 $ 158,585
(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 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 real estate companies and REITs 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 Inc. 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 fee expense, which is included in property operating
expenses.
SENIOR HOUSING PROPERTIES
TRUSTCalculation 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 March 31, 2018 For the
Three Months Ended March 31, 2017 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 $
67,975 $ 102,087 $ 101,151 $ 4,602 $ 275,815 $ 67,252 $ 98,118 $
94,646 $ 4,545 $ 264,561 Property operating expenses —
(77,205 ) (30,938 ) — (108,143 ) — (73,880 ) (27,177
) — (101,057 ) Property net operating income (NOI) $ 67,975
$ 24,882 $ 70,213 $ 4,602 $ 167,672
$ 67,252 $ 24,238 $ 67,469 $ 4,545
$ 163,504 NOI change 1.1 % 2.7 % 4.1 % 1.3 % 2.5 %
Property NOI $ 67,975 $ 24,882 $ 70,213 $ 4,602 $ 167,672 $
67,252 $ 24,238 $ 67,469 $ 4,545 $ 163,504 Less: Non-cash straight
line rent adjustments 619 — 2,236 138 2,993 776 — 2,515 138 3,429
Lease value amortization — — 1,326 55 1,381 — — 1,236 55 1,291
Non-cash amortization included in property operating expenses (3) —
— 199 — 199 — —
199 — 199 Cash Basis NOI $ 67,356 $
24,882 $ 66,452 $ 4,409 $ 163,099 $
66,476 $ 24,238 $ 63,519 $ 4,352 $
158,585 Cash Basis NOI change 1.3 % 2.7 % 4.6 % 1.3 % 2.8 %
Reconciliation of NOI to Same Property NOI: Property
NOI $ 67,975 $ 24,882 $ 70,213 $ 4,602 $ 167,672 $ 67,252 $ 24,238
$ 67,469 $ 4,545 $ 163,504 Less: NOI not included in same property
1,762 1,025 4,626 — 7,413 2,124 5 266 — 2,395
Same property NOI
(4) $ 66,213 $ 23,857 $ 65,587 $ 4,602
$ 160,259 $ 65,128 $ 24,233 $ 67,203 $
4,545 $ 161,109 Same property NOI change 1.7 % (1.6
)% (2.4 )% 1.3 % (0.5 )%
Reconciliation of Same Property
NOI to Same Property Cash Basis NOI: Same property NOI (4) $
66,213 $ 23,857 $ 65,587 $ 4,602 $ 160,259 $ 65,128 $ 24,233 $
67,203 $ 4,545 $ 161,109 Less: Non-cash straight line rent
adjustments 619 — 1,938 138 2,695 776 — 2,488 138 3,402 Lease value
amortization — — 1,373 55 1,428 — — 1,238 55 1,293 Non-cash
amortization included in property operating expenses (3) — —
199 — 199 — — 199
— 199 Same property cash basis NOI (4) $ 65,594
$ 23,857 $ 62,077 $ 4,409 $ 155,937
$ 64,352 $ 24,233 $ 63,278 $ 4,352
$ 156,215 Same property cash basis NOI change 1.9 %
(1.6 )% (1.9 )% 1.3 % (0.2 )%
(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 Inc.
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 fee 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, 2017 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
TRUSTCONDENSED CONSOLIDATED BALANCE SHEETS(amounts in
thousands)(unaudited)
March 31, 2018 December 31, 2017
ASSETS
Real estate properties $ 7,958,274 $ 7,824,763 Accumulated
depreciation (1,505,427 ) (1,454,477 ) 6,452,847 6,370,286
Cash and cash equivalents 39,161 31,238 Restricted cash 14,080
16,083 Acquired real estate leases and other intangible assets, net
490,505 472,265 Other assets, net 387,471 404,147
Total assets $ 7,384,064 $ 7,294,019
LIABILITIES AND
EQUITY
Unsecured revolving credit facility $ 55,000 $ 596,000 Unsecured
term loans, net 547,666 547,460 Senior unsecured notes, net
2,213,811 1,725,662 Secured debt and capital leases, net 828,318
805,404 Accrued interest 35,075 17,987 Assumed real estate lease
obligations, net 93,543 96,018 Other liabilities 194,534
228,300 Total liabilities 3,967,947 4,016,831 Total
equity 3,416,117 3,277,188 Total liabilities and
equity $ 7,384,064 $ 7,294,019
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: https://www.businesswire.com/news/home/20180509006567/en/
Senior Housing Properties TrustBrad Shepherd,
617-796-8234Director, Investor Relations
Senior Housing Properties (NASDAQ:SNH)
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