New Senior Investment Group Inc. (“New Senior” or the “Company”)
(NYSE: SNR) announced today its results for the quarter ended
September 30, 2020.
THIRD QUARTER 2020 FINANCIAL
HIGHLIGHTS
- Net loss of $4.4 million, or $(0.05) per diluted share
- Total net operating income (“NOI”) of $33.2 million; total same
store cash NOI of $33.0 million
- Total same store cash NOI decreased 7.6% versus third quarter
2019; year-to-date total same store cash NOI decreased 3.6% versus
the same period of 2019
- Normalized Funds from Operations (“Normalized FFO”) of $12.4
million, or $0.15 per diluted share
- Adjusted Funds from Operations (“AFFO”) of $14.4 million, or
$0.17 per diluted share
- Normalized Funds Available for Distribution (“Normalized FAD”)
of $12.8 million, or $0.15 per diluted share
- Ended the quarter with total available liquidity of
approximately $160 million and no significant debt maturities until
2025
THIRD QUARTER 2020 & RECENT
BUSINESS HIGHLIGHTS
- Delivered solid third quarter 2020 cash NOI and AFFO per share
results, which were at the top end of expectations, despite
continued occupancy declines and additional expenses related to
COVID-19
- Continued to work closely with operators as they adapted their
operating strategies to promote leasing activity and manage
operating expenses while remaining focused on maintaining a safe
environment for residents and associates
- Entered into a 5-year $270 million interest rate swap,
increasing the Company’s fixed rate exposure from 52% to 72%
- Repaid remaining $60 million of borrowings outstanding on the
Company’s revolving credit facility
- Raised full year 2020 expectations based on third quarter 2020
performance and latest operating trends
- Declared a dividend of $0.065 per common share for the third
quarter 2020
Susan Givens, President & Chief Executive Officer of the
Company commented, “Our operators continued to battle the impact of
COVID-19 during the quarter, diligently working to ensure the
safety and wellness of our residents and associates. As always, I
would like to extend our deepest gratitude to our operators and the
associates at our communities who continue to serve our residents
and display unwavering leadership and commitment throughout these
challenging times.”
Givens continued, “While the pandemic continues to have a
significant impact on our business, we remain encouraged by
attributes specific to our Independent Living communities which we
believe have resulted in lower occupancy losses and have allowed
our operators to tightly manage operating expenses. During the
third quarter, we saw a significant improvement in our occupancy
trend as compared to the second quarter as a result of a strong
rebound in leads and move-in volume. Additionally, our operators
achieved ongoing expense reductions which have helped offset the
occupancy declines we have experienced. As a result, for the third
quarter 2020, we delivered financial results that were at the top
end of expectations provided last quarter. Based on third quarter
results and the recent trends we have observed in our portfolio in
the fourth quarter, I am pleased to be able to raise our
expectations for full year 2020 AFFO per share.”
THIRD QUARTER 2020
RESULTS
Dollars in thousands, except per share data
For the Quarter Ended
September 30, 2020
For the Quarter Ended
September 30, 2019
Amount
Per Basic
Share
Per Diluted
Share
Amount
Per Basic
Share
Per Diluted
Share
GAAP (Unaudited) Net income
(loss) attributable to common stockholders
$
(4,355
)
$
(0.05
)
$
(0.05
)
$
28,244
$
0.34
$
0.34
Non-GAAP(A) NOI
$
33,208
N/A
N/A
$
35,380
N/A
N/A
FFO
11,849
0.14
0.14
49,285
0.60
0.59
Normalized FFO
12,408
0.15
0.15
11,989
0.15
0.14
AFFO
14,366
0.17
0.17
14,018
0.17
0.17
Normalized FAD (B)
12,769
0.15
0.15
10,965
0.13
0.13
(A) See end of press release for
reconciliation of non-GAAP measures to net income (loss).
(B) Normalized FAD, which does not reflect
debt principal payments and certain other outflows, does not
represent cash available for distribution to shareholders.
THIRD QUARTER 2020 GAAP
RESULTS
New Senior recorded a GAAP net loss of $4.4 million, or $(0.05)
per diluted share, for the third quarter 2020, compared to a net
income of $28.2 million, or $0.34 per diluted share, for the third
quarter 2019. The year-over-year decrease was primarily driven by
the receipt of $38 million of litigation proceeds during the third
quarter 2019 related to the settlement of a derivative lawsuit.
THIRD QUARTER 2020 PORTFOLIO
PERFORMANCE
Same Store Cash NOI
Properties
3Q 2019
3Q 2020
YoY
Managed Properties
102
$
34,222
$
31,465
(8.1%)
NNN Property
1
1,450
1,490
2.7%
Total Portfolio
103
$
35,673
$
32,955
(7.6%)
Total Portfolio
103
$
35,673
$
32,955
(7.6%)
COVID-19 Related Expenses
-
-
785
-
Total Portfolio Adjusted for COVID-19 Related Expenses
103
$
35,673
$
33,740
(5.4%)
THIRD QUARTER DIVIDEND
On October 28, 2020, the Company’s Board of Directors declared a
cash dividend of $0.065 per share for the quarter ended September
30, 2020. The dividend is payable on December 18, 2020 to
shareholders of record on December 4, 2020.
COVID-19 IMPACT ON THE
COMPANY
The third quarter 2020 continued to see the effects of the
COVID-19 pandemic on our financial results. We have outlined our
observations of the impact on our results to date and potential
future implications below:
Overview
As of September 30, 2020, we owned a portfolio of 102
Independent Living (“IL”) properties and one Continuing Care
Retirement Community (“CCRC”). We have approximately 10,000
residents across our 103 properties, which are managed by three
different operators and one tenant.
Status of Our Properties
- All of our properties have remained open and operational since
the start of the COVID-19 pandemic
- During the second quarter 2020, our operators began lifting
some of the restrictions in a phased approach, based on the status
of state and local regulations that affect the property as well as
the status of any COVID-19 cases at the property
- Due to the length and evolving nature of the pandemic, all of
our properties continue to operate in an environment with modified
protocols. Our operators remain focused on maximizing resident
socialization and engagement in an effort to maintain the physical
health and mental and emotional wellbeing of our residents
- However, the ongoing operator protocols, which continue to
prioritize recommended CDC protocols such as social distancing and
limited social gatherings, do require that all of our properties
continue to operate with more restrictions than the pre-pandemic
operating environment
Known Cases
- As of October 28, 2020, our operators reported 41 active cases
across 14 properties (34 residents and 7 associates)
- Of the 14 properties, only 3 have reported more than 3
cases
- To date, 67 total properties (65% of our portfolio) have
reported at least one resident or associate case
- 35% of the properties in our portfolio have not reported a
single resident or associate case to date
Occupancy
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Ending Occupancy
88.7%
87.4%
86.2%
85.6%
84.9%
84.4%
83.9%
83.3%
Sequential Decline
-
(130bps)
(120bps)
(60bps)
(70bps)
(50bps)
(50bps)
(60bps)
- Occupancy trends for the third quarter 2020:
- Ending occupancy fell by 160bps in the third quarter 2020
versus the second quarter 2020, an improvement from the sequential
decline of 250bps in the second quarter 2020
- Leads increased 31% versus the second quarter 2020; September
leads increased 67% versus April low point and decreased only 3%
versus prior year
- Move-ins increased 47% versus the second quarter 2020:
September move-ins increased 106% versus April low point and
decreased only 1% versus prior year
- Move-outs increased 20% versus the second quarter 2020;
September move-outs increased 27% from April low point and
increased 8% versus prior year
- October 2020 outlook:
- October leads expected to increase both month-over-month and
year-over-year
- October occupancy pacing to decline 40bps month-over-month,
which would be the lowest monthly occupancy decline since the start
of the pandemic
Expenses
- While operating expenses increased at the outset of the
pandemic due to incremental COVID-19 costs, our operators have been
able to successfully offset those costs by reducing
occupancy-related and other controllable expenses
- In the third quarter 2020, operating expenses decreased 1.4%
versus the third quarter 2019, and decreased 3.0% excluding
COVID-19 expenses driven by reduced spend on supplies, maintenance
and other controllable items
- Operating expenses associated with COVID-19 were approximately
$0.8 million, or less than 2% of total expenses. These expenses
were down 43% in the third quarter 2020 as compared to the second
quarter 2020 as our operators implemented new strategies to reduce
costs
NOI & AFFO
1Q 2020
2Q 2020
3Q 2020
YTD 2020
Total Same Store Cash NOI YoY
0.1%
(3.1%)
(7.6%)
(3.6%)
AFFO Per Share
$0.17
$0.19
$0.17
$0.53
- In the third quarter 2020, total same store cash NOI decreased
by 7.6% versus the third quarter 2019. Our operators continued to
successfully implement expense reductions to help offset occupancy
declines
- AFFO for the third quarter 2020 was $0.17 per share, a decrease
of $0.02 per share versus the second quarter 2020 and flat versus
the third quarter 2019. NOI declines due to the impact of the
COVID-19 pandemic continue to be offset by interest expense savings
due to the decline in LIBOR
- Year-to-date, total same store cash NOI decreased by 3.6%
versus the same period of 2019; and year-to-date AFFO was $0.53 per
share, an increase of $0.04 per share versus the same period of
2019
- As of September 30, 2020, including the effect of the newly
executed swap, 28% of the Company’s debt is floating rate debt and
subject to fluctuations in LIBOR. Average one-month LIBOR declined
from 50bps in the second quarter 2020 to 16bps in the third quarter
2020, reducing our interest expense by approximately $1 million.
The interest savings offset some of the same store cash NOI decline
resulting from the COVID-19 pandemic
FULL YEAR 2020
EXPECTATIONS
Based on the Company’s financial results to date, as well as the
observations and trends discussed above in “COVID-19 Impact on the
Company,” New Senior is updating its full year 2020 expectations
for total same store cash NOI and AFFO per share as follows:
Full Year 2020
Expectations
Low
High
Total Same Store Cash NOI YoY
(Includes NNN Lease)
(6.0%)
-
(4.0%)
AFFO Per Share
$0.69
-
$0.72
The estimates above are based on a number of assumptions that
are subject to change and many of which are outside of the
Company’s control. If actual results vary from these assumptions,
the Company’s expectations may change. There can be no assurance
that the Company will achieve these results. A reconciliation of
the Company’s expectations to its projected GAAP measures is
included in this press release.
LIQUIDITY & CAPITAL
STRUCTURE
- The Company has taken, and continues to take, actions to
enhance and preserve liquidity in response to COVID-19
- Shortly after the onset of the pandemic in March 2020, and
purely as a precaution, the Company drew $100 million on its
revolving credit facility. Since that time, the Company has paid
down the outstanding borrowings, and the Company ended the third
quarter 2020 with total available liquidity of approximately $160
million
- In the third quarter 2020, the Company executed a $270 million
interest rate swap, effectively converting floating rate debt to
fixed rate debt and increasing fixed rate exposure from 52% to 72%.
The swap further improves the Company’s capital structure and
reduces earnings volatility due to fluctuations in interest
rates
- The Company suspended all discretionary capital expenditure
projects in the second quarter 2020, which significantly reduced
capital expenditure spend. While the Company re-started select
projects in the third quarter 2020, total discretionary capital
expenditure spend will be significantly lower in 2020 than
originally expected. The Company expects to continue spending on
discretionary capital expenditure projects going forward, where
such projects can be completed safely
- As a result of several initiatives completed in 2019 and 2020,
as well as the actions listed above, the Company has materially
improved its cash flow profile and balance sheet
ADDITIONAL INFORMATION
For additional information that management believes to be useful
for investors, including more information regarding the COVID-19
pandemic and its impact on our business, please refer to the
Company Presentation and to the Quarterly Supplement, each of which
is posted in the Investor Relations section of New Senior’s
website, www.newseniorinv.com.
EARNINGS CONFERENCE CALL
Management will host a conference call on October 30, 2020 at
9:00 A.M. Eastern Time. The conference call may be accessed by
dialing (888) 317-6003 (from within the U.S.) or (412) 317-6061
(from outside of the U.S.) ten minutes prior to the scheduled start
of the call; please use entry number “9484455”. A simultaneous
webcast of the conference call will be available to the public on a
listen-only basis at www.newseniorinv.com. Please allow extra time
prior to the call to visit the website and download any necessary
software required to listen to the internet broadcast.
A telephonic replay of the conference call will also be
available approximately two hours following the call’s completion
through November 30, 2020 by dialing (877) 344-7529 (from within
the U.S.) or (412) 317-0088 (from outside the U.S.); please use
access code “10149313.”
ABOUT NEW SENIOR
New Senior Investment Group Inc. (NYSE: SNR) is a
publicly-traded real estate investment trust with a diversified
portfolio of senior housing properties located across the United
States. New Senior is one of the largest owners of senior housing
properties, with 103 properties across 36 states. More information
about New Senior can be found at www.newseniorinv.com.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain information in this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, including without
limitation statements regarding expectations with respect to the
potential range of 2020 financial results, the expected impact of
the COVID-19 pandemic on our business, liquidity, properties,
operators and the health systems and populations that we serve; the
cost and effectiveness of measures we have taken to respond to the
COVID-19 pandemic, including health and safety protocols that are
intended to limit the transmission of COVID-19 at our properties;
and our expected occupancy rates and operating expenses. These
statements are not historical facts. They represent management’s
current expectations regarding future events and are subject to a
number of risks and uncertainties, many of which are beyond our
control, that could cause actual results to differ materially from
those described in the forward-looking statements. These risks and
uncertainties include, but are not limited to, risks and
uncertainties relating to the continuing impact of COVID-19 on our
operations and the operation of our facilities, including ongoing
cases at certain of our facilities, the speed, geographic reach and
duration of the COVID-19 pandemic; the legal, regulatory and
administrative developments that occur at the federal, state and
local levels; the efficacy of our operators’ infectious disease
protocols and prevention efforts; the broader impact of the
pandemic on local economies and labor markets; the overall demand
for our communities in the recovery period following the pandemic;
our ability to successfully manage the asset management by third
parties; and market conditions generally which affect demand and
supply for senior housing. We believe that the adverse impact that
COVID-19 will have on the future operations and financial results
at our communities will depend upon many factors, most of which are
beyond our ability to control or predict. Accordingly, you should
not place undue reliance on any forward-looking statements
contained herein. For a discussion of these and other risks and
important factors that could affect such forward-looking
statements, see the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in the Company’s most recent annual and
quarterly reports filed with the Securities and Exchange
Commission, which are available on the Company’s website
(www.newseniorinv.com). New risks and uncertainties emerge from
time to time, and it is not possible for us to predict or assess
the impact of every factor that may cause our results to differ
materially from those anticipated by any forward-looking
statements. Forward-looking statements contained herein, and all
statements made in this press release, speak only as of the date of
this press release, and the Company expressly disclaims any duty or
obligation to release publicly any updates or revisions to any
statements contained herein to reflect any change in the Company’s
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
Consolidated Balance
Sheets
(dollars in thousands, except
share data)
September 30, 2020
December 31, 2019
(Unaudited)
Assets Real estate investments: Land
$
134,643
$
134,643
Buildings, improvements and other
1,976,544
1,970,036
Accumulated depreciation
(401,779
)
(351,555
)
Net real estate property
1,709,408
1,753,124
Acquired lease and other intangible assets
7,642
7,642
Accumulated amortization
(2,505
)
(2,238
)
Net real estate intangibles
5,137
5,404
Net real estate investments
1,714,545
1,758,528
Assets from discontinued operations
-
363,489
Cash and cash equivalents
51,680
39,614
Receivables and other assets, net
36,460
33,078
Total Assets
$
1,802,685
$
2,194,709
Liabilities, Redeemable Preferred Stock and Equity
Liabilities Debt, net
$
1,487,407
$
1,590,632
Liabilities from discontinued operations
-
267,856
Accrued expenses and other liabilities
66,594
59,320
Total Liabilities
1,554,001
1,917,808
Commitments and contingencies Redeemable preferred stock,
$0.01 par value with $100 liquidation preference, 400,000 shares
authorized, issued and outstanding as of September 30, 2020 and
December 31, 2019
40,506
40,506
Equity Preferred stock, $0.01 par value, 99,600,000 shares
(excluding 400,000 shares of redeemable preferred stock)
authorized, none issued or outstanding as of both September 30,
2020 and December 31, 2019
—
—
Common stock, $0.01 par value, 2,000,000,000 shares authorized,
83,023,846 and 82,964,438 shares issued and outstanding as of
September 30, 2020 and December 31, 2019, respectively
830
830
Additional paid-in capital
905,833
901,889
Accumulated deficit
(684,901
)
(660,588
)
Accumulated other comprehensive loss
(13,584
)
(5,736
)
Total Equity
208,178
236,395
Total Liabilities, Redeemable Preferred Stock and Equity
$
1,802,685
$
2,194,709
Consolidated Statements of Operations
(dollars in thousands, except
share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
(unaudited)
(unaudited)
Revenues Resident fees and services
$
81,582
$
84,373
$
249,540
$
254,943
Rental revenue
1,583
1,583
4,748
4,748
Total revenues
83,165
85,956
254,288
259,691
Expenses Property operating expense
49,957
50,576
149,782
154,208
Interest expense
14,540
18,962
47,040
58,382
Depreciation and amortization
16,204
17,323
50,522
51,304
General and administrative expense
5,905
5,410
17,645
15,747
Acquisition, transaction and integration expense
43
503
195
1,169
Loss on extinguishment of debt
-
-
5,884
335
Other expense
192
16
520
1,393
Total expenses
86,841
92,790
271,588
282,538
Loss on sale of real estate
-
-
-
(122
)
Litigation proceeds, net
-
38,226
-
38,226
Income (loss) before income taxes
(3,676
)
31,392
(17,300
)
15,257
Income tax expense
74
37
156
110
Income (loss) from continuing operations
(3,750
)
31,355
(17,456
)
15,147
Discontinued Operations: Gain on sale of real estate
-
-
19,992
-
Loss from discontinued operations
-
(2,506
)
(3,107
)
(7,077
)
Discontinued operations, net
-
(2,506
)
16,885
(7,077
)
Net income (loss)
(3,750
)
28,849
(571
)
8,070
Deemed dividend on redeemable preferred stock
(605
)
(605
)
(1,802
)
(1,802
)
Net income (loss) attributable to common stockholders
($
4,355
)
$
28,244
($
2,373
)
$
6,268
Basic earnings per common share: (A) Income (loss)
from continuing operations attributable to common stockholders
($
0.05
)
$
0.37
($
0.23
)
$
0.16
Discontinued operations, net
-
(0.03
)
0.20
(0.09
)
Net income (loss) attributable to common stockholders
(0.05
)
0.34
(0.03
)
0.08
Diluted earnings per common share: Income (loss) from
continuing operations attributable to common stockholders
($
0.05
)
$
0.37
($
0.23
)
$
0.16
Discontinued operations, net
-
(0.03
)
0.20
(0.08
)
Net income (loss) attributable to common stockholders
(0.05
)
0.34
(0.03
)
0.07
Weighted average number of shares of common stock
outstanding Basic
82,568,919
82,209,844
82,472,115
82,207,610
Diluted (B)
82,568,919
83,964,231
82,472,115
83,588,648
Dividends declared per share of common stock
$
0.07
$
0.13
$
0.26
$
0.39
(A) Basic earnings per common share (“EPS”) is calculated by
dividing net income (loss) attributable to common stockholders by
the weighted average number of shares of common stock outstanding.
The outstanding shares used to calculate the weighted average basic
shares exclude 454,921 and 754,594 restricted stock awards, net of
forfeitures, as of September 30, 2020 and 2019 respectively, as
those shares were issued but were not vested and therefore, not
considered outstanding for purposes of computing basic income
(loss) per share. Diluted EPS is computed by dividing net income
(loss) attributable to common stockholders by the weighted average
number of shares of common stock outstanding plus the additional
dilutive effect, if any, of common stock equivalents during each
period. (B) Dilutive share equivalents and options were
excluded for the three and nine months ended September 30, 2020 as
their inclusion would have been anti-dilutive given our loss
position.
Reconciliation of NOI to Net Income
(dollars in thousands)
For the Quarter Ended
September 30, 2020
Total revenues
$
83,165
Property operating expense
(49,957
)
NOI
33,208
Interest expense
(14,540
)
Depreciation and amortization
(16,204
)
General and administrative expense
(5,905
)
Acquisition, transaction and integration expense
(43
)
Other expense
(192
)
Income tax expense
(74
)
Net loss
(3,750
)
Deemed dividend on redeemable preferred stock
(605
)
Net loss attributable to common stockholders
$
(4,355
)
Reconciliation of Net Income to FFO, Normalized FFO, AFFO and
Normalized FAD (unaudited) (dollars and shares in thousands,
except per share data)
For the Quarter Ended
September 30, 2020
Net loss attributable to common stockholders
$
(4,355
)
Adjustments: Depreciation and amortization
16,204
FFO
$
11,849
FFO per basic and diluted share
$
0.14
Acquisition, transaction and integration expense
43
Compensation expense related to transition awards
296
Other expense(1)
220
Normalized FFO
$
12,408
Normalized FFO per basic and diluted share
$
0.15
Straight-line rent
(95
)
Amortization of deferred financing costs
803
Amortization of deferred community fees and other(2)
(158
)
Amortization of equity-based compensation
1,408
AFFO
$
14,366
AFFO per basic and diluted share
$
0.17
Routine capital expenditures
(1,596
)
Normalized FAD
$
12,769
Normalized FAD per basic and diluted share
$
0.15
Weighted average basic shares outstanding
82,569
Weighted average diluted shares outstanding
83,220
1) Primarily includes insurance recoveries and casualty related
charges. 2) Includes amortization of deferred community fees and
other, which includes the net change in deferred community fees and
other rent discounts or incentives.
Reconciliation of
Year-over-Year Cash NOI (unaudited)
(dollars in thousands)
3Q 2020
3Q 2019
Managed
Other
Managed
Other
IL Properties
Properties
Total
IL Properties
Properties
Total
Same Store Cash NOI (excluding COVID-19 related expenses)
$32,250
$1,490
$33,740
$34,222
$1,450
$35,673
COVID-19 related expenses
(785
)
-
(785
)
-
-
-
Same Store Cash NOI
31,465
1,490
32,955
34,222
1,450
35,673
Straight-line rental revenue
-
95
95
-
134
134
Amortization of deferred community fees and other(1)
160
(2
)
158
(426
)
(2
)
(428
)
Segment / Total NOI
$31,625
$1,583
$33,208
$33,797
$1,583
$35,380
Interest expense
(14,540
)
(18,962
)
Depreciation and amortization
(16,204
)
(17,323
)
General and administrative expense
(5,905
)
(5,410
)
Acquisition, transaction & integration expense
(43
)
(503
)
Other expense
(192
)
(16
)
Income tax expense
(74
)
(37
)
Litigation proceeds, net
—
38,226
Loss from continuing operations
(3,750
)
31,355
Income (loss) from discontinued operations
—
(2,506
)
Discontinued operations, net
—
(2,506
)
Net income (loss)
(3,750
)
28,849
Deemed dividend on redeemable preferred stock
(605
)
(605
)
Net income (loss) attributable to common stockholders
($4,355
)
$28,244
(1) Consists of amortization of deferred community fees and
other, which includes the net change in deferred community fees and
other rent discounts or incentives.
Reconciliation of
Quarter-over-Quarter Cash NOI (unaudited)
(dollars in thousands)
3Q 2020
2Q 2020
Managed
Other
Managed
Other
IL Properties
Properties
Total
IL Properties
Properties
Total
Same Store Cash NOI (excluding COVID-19 related expenses)
$32,250
$1,490
$33,740
$35,228
$1,477
$36,705
COVID-19 related expenses
(785
)
-
(785
)
(1,470
)
-
(1,470
)
Same Store Cash NOI
31,465
1,490
32,955
33,758
1,477
35,234
Straight-line rental revenue
-
95
95
-
108
108
Amortization of deferred community fees and other(1)
160
(2
)
158
434
(2
)
432
Segment / Total NOI
$31,625
$1,583
$33,208
$34,191
$1,582
$35,773
Interest expense
(14,540
)
(15,281
)
Depreciation and amortization
(16,204
)
(16,782
)
General and administrative expense
(5,905
)
(5,894
)
Acquisition, transaction & integration expense
(43
)
(19
)
Other expense
(192
)
(433
)
Income tax expense
(74
)
(22
)
Net loss
(3,750
)
(2,658
)
Deemed dividend on redeemable preferred stock
(605
)
(599
)
Net loss attributable to common stockholders
($4,355
)
($3,257
)
(1) Consists of amortization of deferred community fees and
other, which includes the net change in deferred community fees and
other rent discounts or incentives.
Interest Expense
Reconciliation
(dollars in thousands)
3Q 2020
2Q 2020
Interest expense
$
14,540
$
15,281
Amortization of deferred financing costs
(803
)
(872
)
Cash interest expense
$
13,737
$
14,409
2020 Expectations
Reconciliation
Reconciliation of Net Loss to
FFO, Normalized FFO and AFFO (unaudited)
Full Year 2020
Per Share
Low
High
Net loss attributable to
common stockholders
$(0.09)
-
$(0.06)
Gain on sale of real estate
(0.24)
-
(0.24)
Depreciation &
amortization
0.79
-
0.79
FFO
$0.46
-
$0.49
Compensation expense related to
transition awards
0.02
-
0.02
Loss on extinguishment of
debt
0.11
-
0.11
Acquisition, transaction &
integration expense
0.02
-
0.02
Normalized FFO
$0.61
-
$0.64
Amortization of deferred
financing costs
0.04
-
0.04
Amortization of deferred
community fees & other
(0.02)
-
(0.02)
Amortization of equity-based
compensation
0.06
-
0.06
AFFO
$0.69
-
$0.72
ROUNDING
Throughout this Press Release, totals and subtotals of certain
tables may not sum due to rounding.
NON-GAAP FINANCIAL
MEASURES
The tables above set forth reconciliations of non-GAAP measures
to net income (loss), which is the most directly comparable GAAP
financial measure.
A non-GAAP financial measure is a measure of historical or
future financial performance, financial position or cash flows that
excludes or includes amounts that are not excluded from or included
in the most comparable GAAP measure. We consider certain non-GAAP
financial measures to be useful supplemental measures of our
operating performance. GAAP accounting for real estate assets
assumes that the value of real estate assets diminishes predictably
over time, even though real estate values historically have risen
or fallen with market conditions. As a result, many industry
investors look to non-GAAP financial measures for supplemental
information about real estate companies.
You should not consider non-GAAP measures as alternatives to
GAAP net (loss) income, which is an indicator of our financial
performance, or as alternatives to GAAP cash flow from operating
activities, which is a liquidity measure, nor are non-GAAP measures
necessarily indicative of our ability to satisfy our funding
requirements. In order to facilitate a clear understanding of our
consolidated historical operating results, you should examine our
non-GAAP measures in conjunction with GAAP net (loss) income as
presented in our Consolidated Financial Statements and other
financial data included elsewhere in this press release. Moreover,
the comparability of non-GAAP financial measures across companies
may be limited as a result of differences in the manner in which
real estate companies calculate such measures, the capital
structure of such companies or other factors.
Below is a description of the non-GAAP financial measures
presented herein.
NOI, Cash NOI and Cash Interest Expense
The Company evaluates the performance of each of its three
business segments based on NOI. The Company defines NOI as total
revenues less property-level operating expenses, which include
property management fees and travel cost reimbursements. The sum of
the NOI for each segment is total NOI, which the Company uses to
evaluate the aggregate performance of its segments. The Company
defines Cash NOI as NOI excluding the effects of straight-line
rent, amortization of above / below market lease intangibles and
amortization of deferred community fees and other, which includes
the net change in deferred community fees and other rent discounts
or incentives. We believe that NOI and Cash NOI serve as useful
supplemental measures to net income because they allow investors,
analysts and management to measure unlevered property-level
operating results and to compare our operating results between
periods and to the operating results of other real estate companies
on a consistent basis.
Same store NOI and same store cash NOI include only properties
owned for the entirety of comparable periods. Properties acquired,
sold, transitioned to other operators or between segments, or
classified as held for sale or discontinued operations during the
comparable periods are excluded from the same store amounts. Please
see the Company’s most recent quarterly report filed with the
Securities and Exchange Commission for more information.
Cash interest expense is defined as interest expense excluding
the amortization of deferred financing costs and includes the
interest expense on debt repaid upon the sale of the AL/MC
portfolio (classified as discontinued operations).
FFO and Other Non-GAAP Measures
We use Funds From Operations ("FFO") and Normalized FFO as
supplemental measures of our operating performance. We use the
National Association of Real Estate Investment Trusts ("NAREIT")
definition of FFO. NAREIT defines FFO as GAAP net income (loss)
attributable to common stockholders, which includes loss from
discontinued operations, excluding gains (losses) from sales of
depreciable real estate assets and impairment charges of
depreciable real estate, plus real estate depreciation and
amortization, and after adjustments for unconsolidated entities and
joint ventures to reflect FFO on the same basis. FFO does not
account for debt principal payments and is not intended as a
measure of a REIT’s ability to satisfy such payments or any other
cash requirements.
Normalized FFO, as defined below, measures the financial
performance of our portfolio of assets excluding items that,
although incidental to, are not reflective of the day-to-day
operating performance of our portfolio of assets. We believe that
Normalized FFO is useful because it facilitates the evaluation of
our portfolio’s operating performance (i) between periods on a
consistent basis and (ii) to the operating performance of other
real estate companies. However, comparability may be limited
because our calculation of Normalized FFO may differ significantly
from that of other companies or because of features of our business
that are not present in other companies.
We define Normalized FFO as FFO excluding the following income
and expense items, as applicable: (a) acquisition, transaction and
integration related expenses; (b) the write off of unamortized
discounts, premiums, deferred financing costs, or additional costs,
make whole payments and penalties or premiums incurred as the
result of early repayment of debt (collectively “Gain (Loss) on
extinguishment of debt”); (c) incentive compensation to affiliate
recognized as a result of sales of real estate; (d) the
remeasurement of deferred tax assets; (e) valuation allowance on
deferred tax assets, net; (f) termination fee to the affiliate; (g)
gain on lease termination; (h) compensation expense related to
transition awards; (i) litigation proceeds; and (j) other items
that we believe are not indicative of operating performance,
generally reported as “Other expense (income)” in our Consolidated
Statements of Operations.
We also use Adjusted FFO (“AFFO”) and Normalized FAD as
supplemental measures of our operating performance. We believe AFFO
is useful because it facilitates the evaluation of (i) the current
economic return on our portfolio of assets between periods on a
consistent basis and (ii) our portfolio versus those of other real
estate companies that report AFFO. However, comparability may be
limited because our calculation of AFFO may differ significantly
from that of other companies, or because of features of our
business that are not present in other companies.
We define AFFO as Normalized FFO excluding the impact of the
following: (a) straight-line rents; (b) amortization of above /
below market lease intangibles; (c) amortization of deferred
financing costs; (d) amortization of premium or discount on
mortgage notes payable; (e) amortization of deferred community fees
and other, which includes the net change in deferred community fees
and other rent discounts or incentives, and (f) amortization of
equity-based compensation expense.
We define Normalized FAD as AFFO less routine capital
expenditures, which we view as a cost associated with the current
economic return. Normalized FAD, which does not reflect debt
principal payments and certain other expenses, does not represent
cash available for distribution to shareholders. We believe
Normalized FAD is useful because it fully reflects the additional
economic costs of maintaining the condition of the portfolio.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201030005163/en/
Jane Ryu (646) 822-3700
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