Fourth Quarter Net Loss Attributable to
Common Shareholders of $0.50 Per Share
Fourth Quarter Normalized FFO Attributable
to Common Shareholders of $0.27 Per Share
Senior Housing Properties Trust (Nasdaq:SNH) today announced its
financial results for the quarter and year ended December 31,
2018.
Results for the Quarter Ended December 31, 2018:
Net loss attributable to common shareholders was $118.5 million,
or $0.50 per share, for the quarter ended December 31, 2018
compared to net income attributable to common shareholders of $65.0
million, or $0.27 per diluted share, for the quarter ended
December 31, 2017. The net loss attributable to common
shareholders was primarily the result of: (1) unrealized losses on
equity securities of $106.4 million, or $0.45 per share, which are
included in earnings in accordance with new U.S. generally accepted
accounting principles, or GAAP, standards effective January 1,
2018; (2) impairment charges of $61.3 million, or $0.26 per share,
recognized during the quarter ended December 31, 2018; (3)
dispositions since October 1, 2017; and (4) an increase in interest
expense as a result of higher interest rates on SNH's debt. Net
loss attributable to common shareholders was partially offset by:
(1) a decrease in general and administrative expenses due to the
reversal of $10.1 million, or $0.04 per share, of previously
accrued business management incentive fee expense during the
quarter ended December 31, 2018 and (2) acquisitions since October
1, 2017.
Normalized funds from operations attributable to common
shareholders, or Normalized FFO attributable to common
shareholders, were $65.1 million and $59.2 million, or $0.27 and
$0.25 per diluted share, for the quarters ended December 31,
2018 and 2017, respectively.
Reconciliations of net income (loss) 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 December 31, 2018 and 2017
appear later in this press release.
Results for the Year Ended December 31, 2018:
Net income attributable to common shareholders was $286.9
million, or $1.21 per diluted share, for the year
ended December 31, 2018 compared to $147.6 million,
or $0.62 per diluted share, for the year
ended December 31, 2017. This increase in net income
attributable to common shareholders was primarily the result of:
(1) $261.9 million, or $1.10 per diluted share, of net gains on the
sale of properties recognized during 2018; (2) a decrease in
general and administrative expenses as a result of the $40.6
million, or $0.17 per diluted share, of business management
incentive fee expense recognized for the year ended December 31,
2018 as a result of SNH's total shareholder return, as defined,
exceeding the returns for the SNL U.S. REIT Healthcare index by
9.6% over the applicable measurement period compared to the $55.7
million of business management incentive fee expense recognized for
the year ended December 31, 2017; and (3) acquisitions since
January 1, 2017. This increase in net income attributable to common
shareholders was partially offset by: (1) impairment charges of
$66.3 million, or $0.28 per diluted share, recognized during the
year ended December 31, 2018; (2) unrealized losses on equity
securities of $20.7 million, or $0.09 per diluted share, which are
included in earnings in accordance with new GAAP standards
effective January 1, 2018; (3) dispositions since January 1, 2017;
and (4) an increase in interest expense as a result of higher
interest rates applicable to SNH's debt.
Normalized FFO attributable to common shareholders were $377.3
million and $375.2 million, or $1.59 and $1.58 per diluted share,
for the years ended December 31, 2018 and 2017,
respectively.
Reconciliations of net income (loss) attributable to common
shareholders determined in accordance with GAAP to FFO attributable
to common shareholders and Normalized FFO attributable to common
shareholders for the year ended December 31,
2018 and 2017 appear later in this press
release.
Portfolio Operating Results:
For the quarter ended December 31, 2018, consolidated cash
basis net operating income, or Cash Basis NOI, at properties owned
continuously since October 1, 2017, or same property,
decreased 1.2% compared to the quarter ended December 31,
2017.
For the quarter ended December 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 December 31, 2018, 94.5% of MOB square feet
were leased compared to 95.0% as of December 31, 2017. Same
property occupancy was 94.2% as of December 31, 2018 compared
to 95.0% as of December 31, 2017. Same property Cash Basis NOI
from MOBs increased 1.0% for the quarter ended December 31,
2018 compared to the quarter ended December 31, 2017.
For the quarter ended December 31, 2018, 42.2% of NOI came
from 228 triple net leased senior living communities with 24,030
living units. The weighted average rent coverage for triple net
leased senior living communities decreased to 1.08x for the 12
month period ended September 30, 2018 compared to 1.22x for the 12
month period ended September 30, 2017(1)(2). Same property Cash
Basis NOI from triple net leased senior living communities was flat
for the quarter ended December 31, 2018 compared to the
quarter ended December 31, 2017.
For the quarter ended December 31, 2018, 13.1% of NOI came
from 76 managed senior living communities with 9,766 living units.
Occupancy at managed senior living communities was 85.8% for the
quarter ended December 31, 2018 compared to 85.9% for the
quarter ended December 31, 2017. Same property occupancy at
managed senior living communities was 86.2% for the quarter ended
December 31, 2018 compared to 85.9% for the quarter ended
December 31, 2017. Same property average monthly rates at
managed senior living communities were $4,223 for the quarter ended
December 31, 2018 compared to $4,256 for the quarter ended
December 31, 2017. Same property Cash Basis NOI from managed
senior living communities decreased 11.8% for the quarter ended
December 31, 2018 compared to the quarter ended
December 31, 2017.
SNH's 10 wellness centers were 100% leased as of each of
December 31, 2018 and December 31, 2017, and generated
Cash Basis NOI of $4.5 million and $4.4 million for the three
months ended December 31, 2018 and 2017, respectively.
Reconciliations of net income (loss) determined in accordance
with GAAP to consolidated NOI, Cash Basis NOI, same property NOI
and Cash Basis NOI by operating segment for the quarters ended
December 31, 2018 and 2017 appear later in this press
release.
_____________________________________________________________________________________________________________________________
(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.
Investment Activities:
During the quarter ended December 31, 2018, SNH invested
approximately $3.7 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.
Disposition Activities:
In December 2018, SNH agreed to sell two MOBs located in
Massachusetts for an aggregate sales price of approximately$2.1
million, excluding closing costs. SNH expects the closings of these
sales to occur during the second quarter of 2019.
In February 2019, SNH sold one MOB located in Florida for a
sales price of $2.9 million, excluding closing costs.
Also in February 2019, SNH agreed to sell one MOB located in
Colorado for a sales price of approximately $2.6 million, excluding
closing costs. SNH expects the closing of this sale to occur during
the second quarter of 2019.
Conference Call:
At 10:00 a.m. Eastern Time this morning, President and Chief
Operating Officer, Jennifer Francis, and Chief Financial Officer
and Treasurer, Richard Siedel, will host a conference call to
discuss SNH's fourth quarter and full year 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 Friday,
March 8, 2019. 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 fourth quarter
conference call are strictly prohibited without the prior written
consent of SNH.
Supplemental Data:
A copy of SNH’s Fourth 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.
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 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 POSITIONS OF THOSE PROPERTIES AND MAY
INCREASE ITS OPERATING REVENUE FROM THOSE PROPERTIES. HOWEVER, SNH
CANNOT BE SURE THAT THE FUTURE COMPETITIVE POSITIONS OF, OR SNH'S
OPERATING REVENUE FROM, THOSE PROPERTIES WILL INCREASE AS A RESULT
OF THESE INVESTMENTS OR OTHERWISE. IN FACT, THE COMPETITIVE
POSITIONS OF, AND SNH’S OPERATING REVENUE FROM, THOSE PROPERTIES
MAY DECLINE.
- SNH HAS AGREED TO SELL THREE MOBS FOR
AN AGGREGATE SALES PRICE OF APPROXIMATELY $4.7 MILLION, EXCLUDING
CLOSING COSTS. THESE SALES ARE SUBJECT TO CONDITIONS. THESE
CONDITIONS MAY NOT BE MET AND THESE SALES MAY NOT OCCUR, MAY BE
DELAYED BEYOND THE SECOND QUARTER OF 2019 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
TRUSTCONSOLIDATED STATEMENTS OF INCOME (LOSS)(amounts
in thousands, except per share data)(unaudited)
Three Months Ended
December 31, Year Ended December 31, 2018
2017 2018
2017 Revenues: Rental income $ 178,680 $ 179,585 $ 700,641 $
681,022 Residents fees and services 106,542 98,958
416,523 393,707 Total revenues 285,222 278,543
1,117,164 1,074,729 Expenses: Property operating expenses
117,440 104,842 451,581 413,492 Depreciation and amortization
71,935 67,398 286,235 276,861 General and administrative (1) 657
45,813 85,885 103,694 Acquisition and certain other transaction
related costs 56 255 194 403 Impairment of assets 61,273 —
66,346 5,082 Total expenses 251,361 218,308
890,241 799,532 Gain on sale of properties — 46,055 261,916
46,055 Dividend income 923 659 2,901 2,637 Unrealized losses on
equity securities(2) (106,367 ) — (20,724 ) — Interest and other
income 305 83 667 406 Interest expense (45,506 ) (40,625 ) (179,287
) (165,019 ) Loss on early extinguishment of debt — —
(22 ) (7,627 ) (Loss) income from continuing operations before
income tax expense and equity in (losses) earnings of an investee
(116,784 ) 66,407 292,374 151,649 Income tax expense (32 ) (154 )
(476 ) (454 ) Equity in (losses) earnings of an investee (366 ) 75
516 608 Net (loss) income (117,182 ) 66,328
292,414 151,803 Net income attributable to noncontrolling interest
(1,361 ) (1,328 ) (5,542 ) (4,193 ) Net (loss) income attributable
to common shareholders $ (118,543 ) $ 65,000 $ 286,872
$ 147,610 Weighted average common shares
outstanding (basic) 237,568 237,467 237,511
237,420 Weighted average common shares outstanding (diluted)
237,573 237,475 237,546 237,452
Per common share data (basic and diluted): Net
(loss) income attributable to common shareholders $ (0.50 ) $ 0.27
$ 1.21 $ 0.62
(1) General and administrative expenses include the reversal of
$10,066 of previously accrued business management incentive fee
expense and $33,693 of business management incentive fee expense
for the three months ended December 31, 2018 and 2017,
respectively, and business management incentive fee expense of
$40,642 and $55,740 for the years ended December 31, 2018 and
2017, respectively.(2) Unrealized losses on equity securities
represent the adjustment required to adjust the carrying value of
SNH's investments in RMR Inc. 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 TRUSTFUNDS
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
December 31, Year Ended December 31, 2018
2017 2018
2017 Net (loss) income attributable to common shareholders $
(118,543 ) $ 65,000 $ 286,872 $ 147,610 Depreciation and
amortization expense 71,935 67,398 286,235 276,861 FFO attributable
to noncontrolling interest (5,300 ) (5,304 ) (21,200 ) (16,370 )
Gain on sale of properties — (46,055 ) (261,916 ) (46,055 )
Impairment of assets 61,273 — 66,346 5,082
FFO attributable to common shareholders 9,365 81,039 356,337
367,128 Estimated business management incentive fees (2)
(50,708 ) (22,048 ) — — Acquisition and certain other transaction
related costs 56 255 194 403 Loss on early extinguishment of debt —
— 22 7,627 Unrealized losses on equity securities(3) 106,367
— 20,724 — Normalized FFO attributable to
common shareholders $ 65,080 $ 59,246 $ 377,277
$ 375,158 Weighted average common shares
outstanding (basic) 237,568 237,467 237,511
237,420 Weighted average common shares outstanding (diluted)
237,573 237,475 237,546 237,452
Per common share data (basic and diluted): Net
(loss) income attributable to common shareholders $ (0.50 ) $ 0.27
$ 1.21 $ 0.62 FFO attributable to common
shareholders $ 0.04 $ 0.34 $ 1.50 $ 1.55
Normalized FFO attributable to common shareholders $ 0.27
$ 0.25 $ 1.59 $ 1.58 Distributions
declared $ 0.39 $ 0.39 $ 1.56 $ 1.56
(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 (loss)
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
(loss) 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 or losses on early extinguishment of
debt, if any, unrealized gains or 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 (loss) and net income (loss)
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 (loss) or net income (loss) 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 (loss) and net income
(loss) attributable to common shareholders as presented in SNH’s
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 (loss) 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 (loss) 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. Normalized FFO
attributable to common shareholders includes business management
incentive fee expense of $40,642 and $55,740 for the three months
and years ended December 31, 2018 and 2017, respectively.(3)
Unrealized losses on equity securities 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
TRUSTCALCULATION AND RECONCILIATION OF NET OPERATING INCOME
(NOI) AND CASH BASIS NOI(amounts in
thousands)(unaudited)
Three Months Ended
December 31, Year Ended December 31, 2018
2017 2018
2017 Calculation of NOI and Cash Basis
NOI(1): Revenues: Rental income $ 178,680
$ 179,585 $ 700,641 $ 681,022 Residents fees and services 106,542
98,958 416,523 393,707 Total revenues
285,222 278,543 1,117,164 1,074,729 Property operating expenses
(117,440 ) (104,842 ) (451,581 ) (413,492 ) Property net operating
income (NOI): 167,782 173,701 665,583 661,237 Non-cash straight
line rent adjustments (1,720 ) (3,473 ) (10,227 ) (13,958 ) Lease
value amortization (1,497 ) (1,386 ) (5,787 ) (5,349 ) Non-cash
amortization included in property operating expenses(2) (200 ) (200
) (797 ) (798 ) Cash Basis NOI $ 164,365 $ 168,642 $
648,772 $ 641,132
Reconciliation of
Net (Loss) Income to Cash Basis NOI: Net (loss) income $
(117,182 ) $ 66,328 $ 292,414 $ 151,803 Equity in losses
(earnings) of an investee 366 (75 ) (516 ) (608 ) Income tax
expense 32 154 476 454 Loss on early extinguishment of debt — — 22
7,627 Interest expense 45,506 40,625 179,287 165,019 Interest and
other income (305 ) (83 ) (667 ) (406 ) Unrealized losses on equity
securities 106,367 — 20,724 — Dividend income (923 ) (659 ) (2,901
) (2,637 ) Gain on sale of properties — (46,055 ) (261,916 )
(46,055 ) Impairment of assets 61,273 — 66,346 5,082 Acquisition
and certain other transaction related costs 56 255 194 403 General
and administrative expense 657 45,813 85,885 103,694 Depreciation
and amortization expense 71,935 67,398 286,235
276,861 Property NOI 167,782 173,701 665,583 661,237
Non-cash amortization included in property operating expenses(2)
(200 ) (200 ) (797 ) (798 ) Lease value amortization (1,497 )
(1,386 ) (5,787 ) (5,349 ) Non-cash straight line rent adjustments
(1,720 ) (3,473 ) (10,227 ) (13,958 ) Cash Basis NOI $ 164,365
$ 168,642 $ 648,772 $ 641,132
(1) The calculations of NOI, Cash Basis NOI, same property NOI
and same property Cash Basis NOI exclude certain components of net
income (loss) 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
calculates same property NOI and same property Cash Basis NOI in
the same manner that it calculates the corresponding NOI and Cash
Basis NOI amounts, except that it only includes same properties in
calculating same property NOI and same property Cash Basis NOI. SNH
considers NOI, Cash Basis NOI, same property NOI and same property
Cash Basis NOI to be appropriate supplemental measures to net
income (loss) and net income (loss) attributable to common
shareholders because they may help both investors and management to
understand the operations of SNH’s properties. SNH uses NOI, Cash
Basis NOI, same property NOI and same property Cash Basis NOI to
evaluate individual and company wide property level performance,
and SNH believes that NOI, Cash Basis NOI, same property NOI and
same property 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, Cash Basis NOI, same property NOI and same
property Cash Basis NOI do not represent cash generated by
operating activities in accordance with GAAP and should not be
considered alternatives to net income (loss) or net income (loss)
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 (loss)
and net income (loss) attributable to common shareholders as
presented in SNH’s consolidated statements of income. Other real
estate companies and REITs may calculate NOI, Cash Basis NOI, same
property NOI and same property 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
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 December 31, 2018 For the Three Months Ended December
31, 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 $ 103,316 $ 70,886 $ 106,542 $ 4,478 $ 285,222 $
96,714 $ 78,301 $ 98,958 $ 4,570 $ 278,543 Property operating
expenses (32,959 ) — (84,481 ) — (117,440 ) (28,950 )
— (75,892 ) — (104,842 ) Property net operating
income (NOI) $ 70,357 $ 70,886 $ 22,061 $
4,478 $ 167,782 $ 67,764 $ 78,301 $
23,066 $ 4,570 $ 173,701 NOI change 3.8 % (9.5
)% (4.4 )% (2.0 )% (3.4 )% Property NOI $ 70,357 $ 70,886 $
22,061 $ 4,478 $ 167,782 $ 67,764 $ 78,301 $ 23,066 $ 4,570 $
173,701 Less: Non-cash straight line rent adjustments 1,703 130 —
(113 ) 1,720 2,577 759 — 137 3,473 Lease value amortization 1,442 —
— 55 1,497 1,331 — — 55 1,386 Non-cash amortization included in
property operating expenses (3) 200 — — —
200 200 — — — 200
Cash Basis NOI $ 67,012 $ 70,756 $ 22,061 $
4,536 $ 164,365 $ 63,656 $ 77,542 $
23,066 $ 4,378 $ 168,642 Cash Basis NOI change
5.3 % (8.8 )% (4.4 )% 3.6 % (2.5 )%
Reconciliation of NOI
to Same Property NOI: Property NOI $ 70,357 $ 70,886 $ 22,061 $
4,478 $ 167,782 $ 67,764 $ 78,301 $ 23,066 $ 4,570 $ 173,701 Less:
NOI not included in same property 4,390 264 1,734
— 6,388 1,482 7,166 29 —
8,677 Same property NOI (4) $ 65,967 $ 70,622
$ 20,327 $ 4,478 $ 161,394 $ 66,282
$ 71,135 $ 23,037 $ 4,570 $ 165,024
Same property NOI change (0.5 )% (0.7 )% (11.8 )% (2.0 )%
(2.2 )%
Reconciliation of Same Property NOI to Same
Property Cash Basis NOI: Same property NOI (4) $ 65,967 $
70,622 $ 20,327 $ 4,478 $ 161,394 $ 66,282 $ 71,135 $ 23,037 $
4,570 $ 165,024 Less: Non-cash straight line rent adjustments 1,390
103 — (113 ) 1,380 2,507 621 — 137 3,265 Lease value amortization
1,505 — — 55 1,560 1,331 — — 55 1,386 Non-cash amortization
included in property operating expenses (3) 199 — —
— 199 199 — — —
199 Same property cash basis NOI (4) $ 62,873 $
70,519 $ 20,327 $ 4,536 $ 158,255 $
62,245 $ 70,514 $ 23,037 $ 4,378 $
160,174 Same property cash basis NOI change 1.0 % 0.0 %
(11.8 )% 3.6 % (1.2 )%
(1) See above for the calculation of NOI and a reconciliation of
net income (loss) determined in accordance with GAAP to that
amount. For a definition of NOI, Cash Basis NOI, same property NOI
and same property 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 October 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
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 Year Ended
December 31, 2018 For the Year Ended December 31, 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 $ 412,813 $ 269,512 $ 416,523 $ 18,316 $ 1,117,164 $
382,127 $ 280,641 $ 393,707 $ 18,254 $ 1,074,729 Property operating
expenses (127,732 ) — (323,849 ) — (451,581 )
(112,930 ) — (300,562 ) — (413,492 ) Property net
operating income (NOI) $ 285,081 $ 269,512 $ 92,674
$ 18,316 $ 665,583 $ 269,197 $ 280,641
$ 93,145 $ 18,254 $ 661,237 NOI change
5.9 % (4.0 )% (0.5 )% 0.3 % 0.7 % Property NOI $ 285,081 $
269,512 $ 92,674 $ 18,316 $ 665,583 $ 269,197 $ 280,641 $ 93,145 $
18,254 $ 661,237 Less: Non-cash straight line rent adjustments
8,189 1,851 — 187 10,227 10,346 3,063 — 549 13,958 Lease value
amortization 5,566 — — 221 5,787 5,128 — — 221 5,349 Non-cash
amortization included in property operating expenses (3) 797
— — — 797 798 — —
— 798 Cash Basis NOI $ 270,529 $ 267,661
$ 92,674 $ 17,908 $ 648,772 $ 252,925
$ 277,578 $ 93,145 $ 17,484 $ 641,132
Cash Basis NOI change 7.0 % (3.6 )% (0.5 )% 2.4 % 1.2 %
Reconciliation of NOI to Same Property NOI: Property
NOI $ 285,081 $ 269,512 $ 92,674 $ 18,316 $ 665,583 $ 269,197 $
280,641 $ 93,145 $ 18,254 $ 661,237 Less: NOI not included in same
property 20,291 7,995 5,801 — 34,087
3,816 21,713 (110 ) — 25,419
Same property NOI (4) $ 264,790 $ 261,517 $ 86,873
$ 18,316 $ 631,496 $ 265,381 $ 258,928
$ 93,255 $ 18,254 $ 635,818 Same
property NOI change (0.2 )% 1.0 % (6.8 )% 0.3 % (0.7 )%
Reconciliation of Same Property NOI to Same Property Cash Basis
NOI: Same property NOI (4) $ 264,790 $ 261,517 $ 86,873 $
18,316 $ 631,496 $ 265,381 $ 258,928 $ 93,255 $ 18,254 $ 635,818
Less: Non-cash straight line rent adjustments 6,921 1,561 — 187
8,669 10,153 2,516 — 549 13,218 Lease value amortization 5,806 — —
221 6,027 5,141 — — 221 5,362 Non-cash amortization included in
property operating expenses (3) 796 — — —
796 796 — — — 796
Same property cash basis NOI (4) $ 251,267 $ 259,956
$ 86,873 $ 17,908 $ 616,004 $ 249,291 $
256,412 $ 93,255 $ 17,484 $ 616,442
Same property cash basis NOI change 0.8 % 1.4 % (6.8 )% 2.4 % (0.1
)%
(1) See above for the calculation of NOI and a reconciliation of
net income (loss) determined in accordance with GAAP to that
amount. For a definition of NOI, Cash Basis NOI, same property NOI
and same property 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
TRUSTCONDENSED CONSOLIDATED BALANCE SHEETS(amounts in
thousands)(unaudited)
December 31, 2018
December 31, 2017
ASSETS
Real estate properties $ 7,876,300 $ 7,824,763 Accumulated
depreciation (1,534,392 ) (1,454,477 ) 6,341,908 6,370,286
Cash and cash equivalents 54,976 31,238 Restricted cash 15,095
16,083 Acquired real estate leases and other intangible assets, net
419,244 472,265 Other assets, net 329,203 404,147
Total assets $ 7,160,426 $ 7,294,019
LIABILITIES AND
EQUITY
Unsecured revolving credit facility $ 139,000 $ 596,000 Unsecured
term loans, net 548,286 547,460 Senior unsecured notes, net
2,216,945 1,725,662 Secured debt and capital leases, net 744,186
805,404 Accrued interest 26,182 17,987 Assumed real estate lease
obligations, net 86,304 96,018 Other liabilities 219,653
228,300 Total liabilities 3,980,556 4,016,831 Total
equity 3,179,870 3,277,188 Total liabilities and
equity $ 7,160,426 $ 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/20190301005120/en/
Brad Shepherd, Senior Director, Investor Relations(617)
796-8234www.snhreit.com
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