Third Quarter Net Income Attributable to
Common Shareholders of $0.19 Per Share
Third Quarter Normalized FFO Attributable to
Common Shareholders of $0.42 Per Share
Senior Housing Properties Trust (Nasdaq: SNH) today announced
its financial results for the quarter and nine months ended
September 30, 2018.
“Our consolidated portfolio of diverse healthcare properties
once again produced stable results this quarter, with a 0.3%
increase in consolidated same property Cash Basis NOI during the
quarter,” stated Jennifer Francis, President and Chief Operating
Officer. “Our medical office and life science portfolios produced
the strongest results, with same property Cash Basis NOI growing
2.4% during the quarter. Within our managed senior living
portfolio, same property occupancy also increased 50 basis points
to 86.3% during the quarter. Although we did not acquire any
additional medical office or life science properties during the
third quarter, we still have ample borrowing capacity to pursue our
strategy of growing this segment of our portfolio.”
Results for the Quarter Ended September 30,
2018:
Net income attributable to common shareholders was $45.8
million, or $0.19 per diluted share, for the quarter ended
September 30, 2018 compared to $34.4 million, or $0.14 per
diluted share, for the quarter ended September 30, 2017. This
increase in net income attributable to common shareholders is
primarily the result of: (1) unrealized gains and losses on equity
securities, net, of $35.1 million, or $0.15 per diluted share,
which is included in earnings in accordance with new U.S. generally
accepted accounting principles, or GAAP, standards effective
January 1, 2018 and (2) acquisitions since July 1, 2017. This
increase in net income attributable to common shareholders was
partially offset by: (1) an increase in general and administrative
expenses due to the $18.8 million, or $0.08 per diluted share, of
business management incentive fee expense recognized for the
quarter ended September 30, 2018 as a result of SNH's total
shareholder return, as defined, exceeding the returns for the SNL
U.S. REIT Healthcare index by 45.9% over the applicable measurement
period compared to the $8.0 million of business management
incentive fee expense recognized for the quarter ended
September 30, 2017, (2) the disposition of six triple net
leased senior living communities since July 1, 2017, (3) an
increase in interest expense as a result of higher interest rates,
and (4) impairment charges recognized for the quarter ended
September 30, 2018.
Normalized funds from operations attributable to common
shareholders, or Normalized FFO attributable to common
shareholders, were $100.2 million and $104.0 million, or $0.42 and
$0.44 per diluted share, for the quarters ended September 30,
2018 and 2017, respectively.
Reconciliations of net income attributable to common
shareholders determined in accordance with GAAP to funds from
operations attributable to common shareholders, or FFO attributable
to common shareholders, and Normalized FFO attributable to common
shareholders for the quarters ended September 30, 2018 and
2017 appear later in this press release.
Results for the Nine Months Ended September 30,
2018:
Net income attributable to common shareholders was $405.4
million, or $1.71 per diluted share, for
the nine months ended September 30, 2018
compared to $82.6 million, or $0.35 per diluted
share, for the nine months ended September 30,
2017. This increase in net income attributable to common
shareholders is primarily the result of: (1) $261.9 million, or
$1.10 per diluted share, of net gains on the sale of properties
recognized for the nine months ended September 30, 2018,
(2) unrealized gains and losses on equity securities, net, of $85.6
million, or $0.21 per diluted share, which is included in earnings
in accordance with new GAAP standards effective January 1, 2018,
and (3) acquisitions since January 1, 2017. This increase in
net income attributable to common shareholders was partially offset
by: (1) an increase in general and administrative expenses due to
the $50.7 million, or $0.21 per diluted share, of business
management incentive fee expense recognized for
the nine months ended September 30, 2018 as a result
of SNH's total shareholder return, as defined, exceeding the
returns for the SNL U.S. REIT Healthcare index by 45.9% over the
applicable measurement period compared to the $22.0 million of
business management incentive fee expense recognized for the
nine months ended September 30, 2017, (2) the disposition
of six triple net leased senior living communities since January 1,
2017, and (3) an increase in interest expense as a result of higher
interest rates.
Normalized FFO attributable to common shareholders were $312.2
million and $315.9 million, or $1.31 and $1.33 per diluted share,
for the nine months ended September 30, 2018 and 2017,
respectively.
Reconciliations of net income attributable to common
shareholders determined in accordance with GAAP to FFO attributable
to common shareholders and Normalized FFO attributable to common
shareholders for the nine months
ended September 30, 2018 and 2017 appear
later in this press release.
Portfolio Operating Results:
For the quarter ended September 30, 2018, consolidated cash
basis net operating income, or Cash Basis NOI, at properties owned
continuously since July 1, 2017, or same property, increased
0.3% compared to the quarter ended September 30, 2017.
For the quarter ended September 30, 2018, 44.1% 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 September 30, 2018, 95.6% of MOB square feet
were leased compared to 95.8% as of September 30, 2017. Same
property occupancy was 95.3% as of September 30, 2018 compared
to 95.8% as of September 30, 2017. Same property Cash Basis
NOI from MOBs increased 2.4% for the quarter ended
September 30, 2018 compared to the quarter ended
September 30, 2017.
For the quarter ended September 30, 2018, 39.6% of NOI came
from 229 triple net leased senior living communities with 24,298
living units. The weighted average rent coverage for triple net
leased senior living communities decreased to 1.13x for the 12
month period ended June 30, 2018 compared to 1.22x for the 12 month
period ended June 30, 2017(1)(2). Same property Cash Basis NOI from
triple net leased senior living communities increased 1.8% for the
quarter ended September 30, 2018 compared to the quarter ended
September 30, 2017.
For the quarter ended September 30, 2018, 13.5% of NOI came
from 75 managed senior living communities with 9,515 living units.
Occupancy at managed senior living communities was 86.7% for the
quarter ended September 30, 2018 compared to 85.8% for the
quarter ended September 30, 2017. Same property occupancy at
managed senior living communities was 86.3% for the quarter ended
September 30, 2018 compared to 85.8% for the quarter ended
September 30, 2017. Same property average monthly rates at
managed senior living communities were $4,225 for the quarter ended
September 30, 2018 compared to $4,243 for the quarter ended
September 30, 2017. Same property Cash Basis NOI from managed
senior living communities decreased 10.5% for the quarter ended
September 30, 2018 compared to the quarter ended
September 30, 2017. The primary reason for the decrease in
same property Cash Basis NOI was an increase in property operating
expenses.
SNH's 10 wellness centers remained 100% leased as of
September 30, 2018 and September 30, 2017, and provided
SNH with Cash Basis NOI of $4.5 million and $4.4 million for the
three months ended September 30, 2018 and 2017,
respectively.
Reconciliations of net income determined in accordance with GAAP
to consolidated NOI, Cash Basis NOI and same property NOI and Cash
Basis NOI by operating segment for the quarters ended
September 30, 2018 and 2017 appear later in this press
release.
Investment Activities:
During the quarter ended September 30, 2018, SNH invested
approximately $7.4 million in improvements at its senior living
communities that has generated or will generate additional rent
under the terms of the applicable leases. In addition, 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.
Financing Activities:
In July 2018, SNH prepaid approximately $90.6 million of secured
debts encumbering 12 senior living communities that had a weighted
average annual interest rate of 5.0% and maturity dates in October
2018.
In September 2018, SNH prepaid approximately $6.3 million of
secured debt encumbering one senior living community that had an
annual interest rate of 4.7% and a maturity date in January
2019.
Conference Call:
At 10:00 a.m. Eastern Time on Tuesday, November 6, 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 third 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 Tuesday,
November 13, 2018. To access the replay, dial (412) 317-0088. The
replay pass code is 10123763.
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 third quarter
conference call are strictly prohibited without the prior written
consent of SNH.
Supplemental Data:
A copy of SNH’s Third 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
medical office and life science properties, senior living
communities and wellness centers throughout the United States. SNH
is managed by the operating subsidiary of The RMR Group Inc.
(Nasdaq: RMR), or RMR Inc., 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 attributable to
common shareholders, Normalized FFO attributable to common
shareholders, 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’S STATEMENTS IN THIS PRESS
RELEASE REGARDING SNH’S CONSOLIDATED PORTFOLIO PERFORMANCE AND
INCREASED CONSOLIDATED SAME PROPERTY CASH BASIS NOI MAY IMPLY THAT
SIMILAR OR BETTER RESULTS WILL BE ACHIEVED IN THE FUTURE. HOWEVER,
SNH CANNOT BE SURE THAT IT WILL REALIZE SIMILAR OR BETTER RESULTS
IN THE FUTURE.
- MS. FRANCIS’S STATEMENTS IN THIS PRESS
RELEASE THAT SNH'S MEDICAL OFFICE AND LIFE SCIENCE PORTFOLIO
INCREASED SAME PROPERTY CASH BASIS NOI AND SNH'S MANAGED SENIOR
LIVING PORTFOLIO INCREASED SAME PROPERTY OCCUPANCY MAY IMPLY THAT
SIMILAR OR BETTER RESULTS WILL BE ACHIEVED IN THE FUTURE. HOWEVER,
SNH CANNOT BE SURE THAT IT WILL REALIZE SIMILAR OR BETTER RESULTS
IN THE FUTURE.
- THIS PRESS RELEASE INCLUDES A STATEMENT
THAT SNH HAS AMPLE BORROWING CAPACITY TO PURSUE THE STRATEGY OF
GROWING THE MEDICAL OFFICE AND LIFE SCIENCE PROPERTIES SEGMENT OF
ITS PORTFOLIO. SNH CANNOT BE SURE THAT IT WILL IN FACT GROW THE
MEDICAL OFFICE AND LIFE SCIENCE PROPERTIES SEGMENT OF ITS PORTFOLIO
OR THE NOI REALIZED BY SNH FROM THAT SEGMENT OF ITS PORTFOLIO.
- THIS PRESS RELEASE INCLUDES A STATEMENT
THAT SNH EXPECTS THE ADDITIONAL INVESTMENTS IT REGULARLY MAKES AT
ITS MOBS 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 AS A
RESULT OF THESE INVESTMENTS OR OTHERWISE. IN FACT, THE COMPETITIVE
POSITION OF, AND SNH’S OPERATING REVENUE FROM, THOSE PROPERTIES MAY
DECLINE.
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 September 30, Nine Months Ended
September 30, 2018 2017 2018
2017 Revenues: Rental income $ 173,648 $
168,348 $ 521,961 $ 501,437 Residents fees and services 105,321
98,325 309,981 294,748 Total revenues
278,969 266,673 831,942 796,185 Expenses: Property operating
expenses 115,987 104,689 334,141 308,650 Depreciation and
amortization 71,661 66,619 214,300 209,463 General and
administrative (1) 31,032 19,883 85,228 57,880 Acquisition and
certain other transaction related costs 51 19 138 148 Impairment of
assets 4,525 — 5,073 5,082 Total
expenses 223,256 191,210 638,880 581,223 Gain on sale of
properties — — 261,916 — Dividend income 660 659 1,978 1,978
Unrealized gains and losses on equity securities, net (2) 35,137 —
85,643 — Interest and other income 248 128 362 323 Interest expense
(45,416 ) (40,105 ) (133,781 ) (124,394 ) Gain (loss) on early
extinguishment of debt 108 (274 ) (22 ) (7,627 ) Income from
continuing operations before income tax expense and equity in
earnings of an investee 46,450 35,871 409,158 85,242 Income tax
expense (79 ) (109 ) (444 ) (300 ) Equity in earnings of an
investee 831 31 882 533 Net income
47,202 35,793 409,596 85,475 Net income attributable to
noncontrolling interest (1,397 ) (1,379 ) (4,181 ) (2,865 ) Net
income attributable to common shareholders $ 45,805 $ 34,414
$ 405,415 $ 82,610 Weighted average
common shares outstanding (basic) 237,511 237,421
237,492 237,404 Weighted average common shares
outstanding (diluted) 237,562 237,460 237,526
237,445
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.19 $ 0.14
$ 1.71 $ 0.35 (1) General and
administrative expenses include estimated business management
incentive fee expense of $18,751 and $8,022 for the three months
ended September 30, 2018 and 2017, respectively, and $50,708 and
$22,048 for the nine months ended September 30, 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. (Nasdaq: RMR) and
Five Star Senior Living Inc. (Nasdaq: FVE), or Five Star, common
stock to their fair value as of the end of the period in accordance
with new GAAP standards effective January 1, 2018.
SENIOR HOUSING PROPERTIES TRUST
FUNDS FROM OPERATIONS AND NORMALIZED
FUNDS FROM OPERATIONS ATTRIBUTABLE TO COMMON SHAREHOLDERS
(amounts in thousands, except per share
data)
(unaudited)
Calculation of FFO and Normalized FFO
Attributable to Common Shareholders(1):
Three Months Ended September 30, Nine Months Ended
September 30, 2018 2017 2018
2017 Net income attributable to common
shareholders $ 45,805 $ 34,414 $ 405,415 $ 82,610 Depreciation and
amortization expense 71,661 66,619 214,300 209,463 Noncontrolling
interest's share of net FFO adjustments (5,300 ) (5,305 ) (15,900 )
(11,066 ) Gain on sale of properties — — (261,916 ) — Impairment of
assets 4,525 — 5,073 5,082 FFO
attributable to common shareholders 116,691 95,728 346,972 286,089
Estimated business management incentive fees (2) 18,751
8,022 50,708 22,048 Acquisition and certain other transaction
related costs 51 19 138 148 (Gain) loss on early extinguishment of
debt (108 ) 274 22 7,627 Unrealized gains and losses on equity
securities, net (3) (35,137 ) — (85,643 ) —
Normalized FFO attributable to common shareholders $ 100,248
$ 104,043 $ 312,197 $ 315,912 Weighted
average common shares outstanding (basic) 237,511 237,421
237,492 237,404 Weighted average common shares
outstanding (diluted) 237,562 237,460 237,526
237,445
Per common share
data (basic and diluted):
Net income attributable to common shareholders $ 0.19 $ 0.14
$ 1.71 $ 0.35 FFO attributable to common
shareholders $ 0.49 $ 0.40 $ 1.46 $ 1.20
Normalized FFO attributable to common shareholders $ 0.42
$ 0.44 $ 1.31 $ 1.33 Distributions
declared $ 0.39 $ 0.39 $ 1.17 $ 1.17
(1) SNH calculates FFO attributable to common
shareholders and Normalized FFO attributable to common shareholders
as shown above. FFO attributable to common shareholders 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 real estate 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 attributable to common shareholders 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, net of FFO, from noncontrolling
interest, if any. SNH considers FFO attributable to common
shareholders and Normalized FFO attributable to common shareholders
to be appropriate supplemental measures of operating performance
for a REIT, along with net income and net income attributable to
common shareholders. SNH believes that FFO attributable to common
shareholders and Normalized FFO attributable to common shareholders
provide useful information to investors, because by excluding the
effects of certain historical amounts, such as depreciation and
amortization expense, FFO attributable to common shareholders and
Normalized FFO attributable to common shareholders may facilitate a
comparison of SNH's operating performance between periods and with
other REITs. FFO attributable to common shareholders and Normalized
FFO attributable to common shareholders 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 attributable to common shareholders and
Normalized FFO attributable to common shareholders do not represent
cash generated by operating activities in accordance with GAAP and
should not be considered alternatives to net income or net income
attributable to common shareholders as indicators of SNH’s
operating performance or as measures of SNH’s liquidity. These
measures should be considered in conjunction with net income and
net income attributable to common shareholders 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 attributable to common shareholders
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 stock to their fair value as of the end of the period in
accordance with new GAAP standards effective January 1, 2018.
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, 2018 2017 2018
2017
Calculation of
NOI and Cash Basis NOI(1):
Revenues: Rental income $ 173,648 $ 168,348 $ 521,961 $ 501,437
Residents fees and services 105,321 98,325 309,981
294,748 Total revenues 278,969 266,673 831,942
796,185 Property operating expenses (115,987 ) (104,689 ) (334,141
) (308,650 ) Property net operating income (NOI): 162,982 161,984
497,801 487,535 Non-cash straight line rent adjustments (2,484 )
(3,621 ) (8,507 ) (10,485 ) Lease value amortization (1,493 )
(1,352 ) (4,290 ) (3,963 ) Non-cash amortization included in
property operating expenses(2) (199 ) (199 ) (597 ) (598 ) Cash
Basis NOI $ 158,806 $ 156,812 $ 484,407 $
472,489
Reconciliation of Net Income to Cash
Basis NOI: Net income $ 47,202 $ 35,793 $ 409,596 $
85,475 Equity in earnings of an investee (831 ) (31 ) (882 )
(533 ) Income tax expense 79 109 444 300 (Gain) loss on early
extinguishment of debt (108 ) 274 22 7,627 Interest expense 45,416
40,105 133,781 124,394 Interest and other income (248 ) (128 ) (362
) (323 ) Unrealized gains and losses on equity securities, net
(35,137 ) — (85,643 ) — Dividend income (660 ) (659 ) (1,978 )
(1,978 ) Gain on sale of properties — — (261,916 ) — Impairment of
assets 4,525 — 5,073 5,082 Acquisition and certain other
transaction related costs 51 19 138 148 General and administrative
expense 31,032 19,883 85,228 57,880 Depreciation and amortization
expense 71,661 66,619 214,300 209,463
Property NOI 162,982 161,984 497,801 487,535 Non-cash
amortization included in property operating expenses(2) (199 ) (199
) (597 ) (598 ) Lease value amortization (1,493 ) (1,352 ) (4,290 )
(3,963 ) Non-cash straight line rent adjustments (2,484 ) (3,621 )
(8,507 ) (10,485 ) Cash Basis NOI $ 158,806 $ 156,812
$ 484,407 $ 472,489 (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 or net
income attributable to common shareholders as indicators of SNH’s
operating performance or as measures of SNH’s liquidity. These
measures should be considered in conjunction with net income and
net income attributable to common shareholders 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 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, 2018 For
the Three Months Ended September 30, 2017 Calculation of NOI
and Cash Basis NOI: MOBs
Triple NetLeasedSenior
LivingCommunities
ManagedSenior
LivingCommunities
Non-Segment (2)
Total MOBs
Triple NetLeasedSenior
LivingCommunities
ManagedSenior
LivingCommunities
Non-Segment (2)
Total Rental income / residents fees and
services $ 104,492 $ 64,538 $ 105,321 $ 4,618 $ 278,969 $ 96,116 $
67,662 $ 98,325 $ 4,570 $ 266,673 Property operating expenses
(32,652 ) — (83,335 ) — (115,987 ) (29,158 ) —
(75,531 ) — (104,689 ) Property net operating income (NOI) $
71,840 $ 64,538 $ 21,986 $ 4,618 $
162,982 $ 66,958 $ 67,662 $ 22,794 $
4,570 $ 161,984 NOI change 7.3 % (4.6 )% (3.5 )% 1.1
% 0.6 % Property NOI $ 71,840 $ 64,538 $ 21,986 $ 4,618 $
162,982 $ 66,958 $ 67,662 $ 22,794 $ 4,570 $ 161,984 Less: Non-cash
straight line rent adjustments 1,912 548 — 24 2,484 2,733 750 — 138
3,621 Lease value amortization 1,438 — — 55 1,493 1,297 — — 55
1,352 Non-cash amortization included in property operating expenses
(3) 199 — — — 199 199 —
— — 199 Cash Basis NOI $ 68,291
$ 63,990 $ 21,986 $ 4,539 $ 158,806 $
62,729 $ 66,912 $ 22,794 $ 4,377 $
156,812 Cash Basis NOI change 8.9 % (4.4 )% (3.5 )% 3.7 %
1.3 %
Reconciliation of NOI to Same Property NOI:
Property NOI $ 71,840 $ 64,538 $ 21,986 $ 4,618 $ 162,982 $ 66,958
$ 67,662 $ 22,794 $ 4,570 $ 161,984 Less: NOI not included in same
property 4,651 — 1,536 — 6,187
347 4,070 (49 ) — 4,368 Same property
NOI (4) $ 67,189 $ 64,538 $ 20,450 $ 4,618
$ 156,795 $ 66,611 $ 63,592 $ 22,843
$ 4,570 $ 157,616 Same property NOI change 0.9
% 1.5 % (10.5 )% 1.1 % (0.5 )%
Reconciliation of Same
Property NOI to Same Property Cash Basis NOI: Same property NOI
(4) $ 67,189 $ 64,538 $ 20,450 $ 4,618 $ 156,795 $ 66,611 $ 63,592
$ 22,843 $ 4,570 $ 157,616 Less: Non-cash straight line rent
adjustments 1,581 548 — 24 2,153 2,714 710 — 138 3,562 Lease value
amortization 1,500 — — 55 1,555 1,297 — — 55 1,352 Non-cash
amortization included in property operating expenses (3) 199
— — — 199 199 — —
— 199 Same property cash basis NOI (4) $ 63,909
$ 63,990 $ 20,450 $ 4,539 $ 152,888
$ 62,401 $ 62,882 $ 22,843 $ 4,377
$ 152,503 Same property cash basis NOI change 2.4 %
1.8 % (10.5 )% 3.7 % 0.3 % (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 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, 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 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, 2018 For
the Nine Months Ended September 30, 2017 Calculation of NOI
and Cash Basis NOI: MOBs
Triple NetLeasedSenior
LivingCommunities
ManagedSenior
LivingCommunities
Non-Segment (2)
Total MOBs
Triple NetLeasedSenior
LivingCommunities
ManagedSenior
LivingCommunities
Non-Segment (2)
Total Rental income / residents fees and
services $ 309,497 $ 198,626 $ 309,981 $ 13,838 $ 831,942 $ 285,413
$ 202,340 $ 294,748 $ 13,684 $ 796,185 Property operating expenses
(94,773 ) — (239,368 ) — (334,141 ) (83,980 ) —
(224,670 ) — (308,650 ) Property net operating income
(NOI) $ 214,724 $ 198,626 $ 70,613 $ 13,838
$ 497,801 $ 201,433 $ 202,340 $ 70,078
$ 13,684 $ 487,535 NOI change 6.6 % (1.8 )%
0.8 % 1.1 % 2.1 % Property NOI $ 214,724 $ 198,626 $ 70,613
$ 13,838 $ 497,801 $ 201,433 $ 202,340 $ 70,078 $ 13,684 $ 487,535
Less: Non-cash straight line rent adjustments 6,486 1,722 — 299
8,507 7,769 2,304 — 412 10,485 Lease value amortization 4,124 — —
166 4,290 3,797 — — 166 3,963 Non-cash amortization included in
property operating expenses (3) 597 — — —
597 598 — — — 598
Cash Basis NOI $ 203,517 $ 196,904 $ 70,613 $
13,373 $ 484,407 $ 189,269 $ 200,036 $
70,078 $ 13,106 $ 472,489 Cash Basis NOI
change 7.5 % (1.6 )% 0.8 % 2.0 % 2.5 %
Reconciliation of
NOI to Same Property NOI: Property NOI $ 214,724 $ 198,626 $
70,613 $ 13,838 $ 497,801 $ 201,433 $ 202,340 $ 70,078 $ 13,684 $
487,535 Less: NOI not included in same property 14,733 5,371
4,066 — 24,170 1,155 12,223
(140 ) — 13,238 Same property NOI (4) $
199,991 $ 193,255 $ 66,547 $ 13,838 $
473,631 $ 200,278 $ 190,117 $ 70,218 $
13,684 $ 474,297 Same property NOI change (0.1 )% 1.7
% (5.2 )% 1.1 % (0.1 )%
Reconciliation of Same Property
NOI to Same Property Cash Basis NOI: Same property NOI (4) $
199,991 $ 193,255 $ 66,547 $ 13,838 $ 473,631 $ 200,278 $ 190,117 $
70,218 $ 13,684 $ 474,297 Less: Non-cash straight line rent
adjustments 5,505 1,691 — 299 7,495 7,656 2,185 — 412 10,253 Lease
value amortization 4,299 — — 166 4,465 3,805 — — 166 3,971 Non-cash
amortization included in property operating expenses (3) 598
— — — 598 598 — —
— 598 Same property cash basis NOI (4) $ 189,589
$ 191,564 $ 66,547 $ 13,373 $ 461,073
$ 188,219 $ 187,932 $ 70,218 $ 13,106
$ 459,475 Same property cash basis NOI change 0.7 %
1.9 % (5.2 )% 2.0 % 0.3 % (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 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, 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 TRUST
CONDENSED CONSOLIDATED BALANCE
SHEETS
(amounts in thousands)
(unaudited)
September 30, 2018 December 31, 2017
ASSETS
Real estate properties $ 8,017,214 $ 7,824,763 Accumulated
depreciation (1,607,602 ) (1,454,477 ) 6,409,612 6,370,286
Cash and cash equivalents 47,657 31,238 Restricted cash 108,335
16,083 Acquired real estate leases and other intangible assets, net
450,219 472,265 Other assets, net 437,621 404,147
Total assets $ 7,453,444 $ 7,294,019
LIABILITIES AND
EQUITY
Unsecured revolving credit facility $ 195,000 $ 596,000 Unsecured
term loans, net 548,080 547,460 Senior unsecured notes, net
2,215,900 1,725,662 Secured debt and capital leases, net 745,269
805,404 Accrued interest 34,727 17,987 Assumed real estate lease
obligations, net 88,692 96,018 Other liabilities 231,296
228,300 Total liabilities 4,058,964 4,016,831 Total
equity 3,394,480 3,277,188 Total liabilities and
equity $ 7,453,444 $ 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/20181106005230/en/
Senior Housing Properties TrustBrad Shepherd, 617-796-8234Senior
Director, Investor Relations
Senior Housing Properties (NASDAQ:SNH)
Historical Stock Chart
From Jun 2024 to Jul 2024
Senior Housing Properties (NASDAQ:SNH)
Historical Stock Chart
From Jul 2023 to Jul 2024
