Senior Housing Properties Trust Announces Results for the Periods Ended September 30, 2007

Cautionary Language

The information appearing on DHC ’s website includes statements which constitute forward looking statements. These forward looking statements are based upon DHC ’s present intents, beliefs or expectations, but forward looking statements are not guaranteed to occur and may not occur. DHC ’s actual results may differ materially from those contained in DHC ’s forward looking statements. The information contained in DHC ’s filings with the Securities and Exchange Commission, including under “Risk Factors" and “Warnings Concerning Forward Looking Statements” in DHC ’s periodic reports and other filings, identifies important factors that could cause DHC ’s actual results to differ materially from those stated in DHC ’s forward looking statements. DHC ’s filings with the SEC are available on the SEC’s website at www.sec.gov and are also accessible on DHC ’s website at the following link: SEC Filings. You should not place undue reliance upon forward looking statements.

The documents provided in this archived section are provided for historical purposes only. The information contained in each document is accurate only as of the date each document was originally issued or such earlier date stated in those documents. Diversified Healthcare Trust does not undertake any obligation to update any information contained in these documents. For current information about the company, please refer to our most recent public SEC Filings.

Cautionary Statement Regarding Forward Looking Statements

The information appearing on Diversified Healthcare Trust’s (“DHC”) website contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Also, whenever DHC uses words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, “will”, “may” and negatives or derivatives of these or similar expressions, it is making forward-looking statements. These forward-looking statements are based upon DHC’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 DHC’s forward-looking statements as a result of various factors. For example: (a) Office Properties Income Trust (“OPI”) and DHC have entered into a definitive merger agreement and the proposed merger is expected to close in the third quarter of 2023. However, the closing of the proposed merger is subject to the satisfaction or waiver of closing conditions, including DHC shareholder approval and the financing or any consents or approvals required or contemplated in connection with the proposed merger, some of which are beyond DHC’s control, and DHC cannot be sure that any or all of these conditions will be satisfied or waived. Accordingly, the proposed merger may not close on the contemplated terms or at all or it may be delayed; (b) DHC shareholders are expected to benefit from an annual dividend of $1.00 per share of the combined company. However, the Board of Trustees of the combined company will consider many factors when setting distribution rates, and thus future distribution rates may be increased or decreased and DHC cannot be sure as to the rate at which future distributions will be paid; (c) the transactions contemplated by the merger agreement and the terms thereof were evaluated, negotiated and recommended to DHC’s Board of Trustees by a special committee of DHC’s Board of Trustees, comprised solely of DHC’s disinterested, Independent Trustees, and were separately approved by DHC’s Independent Trustees and by DHC’s Board of Trustees. Despite this process, DHC could be subject to claims challenging the proposed merger or other transactions or DHC’s entry into the merger and related agreements because of the multiple relationships among DHC, OPI and The RMR Group LLC (“RMR”) and their related persons and entities or other reasons, and defending even meritless claims could be expensive and distracting to management; and (d) DHC’s website contains statements regarding the expectations for proposed merger and the combined company which may imply that the combined company will achieve its expected strategic and financial goals and the shareholders will benefit from the growth potential of the combined company. However, the combined company will be subject to various risks, including: the risk that the combined businesses will not be integrated successfully or that the integration will be more costly or more time-consuming and complex than anticipated; the risk that cost savings and synergies anticipated to be realized by the merger may not be fully realized or may take longer to realize than expected; risks related to future opportunities, plans and strategy for the combined company, including the uncertainty of expected future financial performance, expected access to cash flows and capital, timing of accretion, distribution rates and results of the combined company following completion of the proposed merger and the challenges facing the industries in which each company currently operates and the combined company will, following the closing of the transaction, operate; risks related to the market value of the OPI common shares of beneficial interest to be issued in the proposed merger; risks associated with indebtedness incurred in connection with the proposed merger, including the potential inability to access, or reduced access to, the capital markets or other capital resources or increased cost of borrowings, including as a result of a credit rating downgrade; risks associated with the level of capital expenditures of each company and the combined company following the proposed merger; and risks associated with the impact of general economic, political and market factors on the combined company. As a result, the combined company may not achieve the long-term growth and value creation for shareholder as expected.

The information contained in DHC's periodic reports filed with the Securities and Exchange Commission (the “SEC”), including under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or incorporated therein, also identifies important factors that could cause DHC's actual results to differ materially from those stated in or implied by DHC's forward-looking statements. DHC's filings with the SEC are available on the SEC's website at www.sec.gov and are also accessible on DHC ’s website at the following link: SEC Filings.

You should not place undue reliance upon any forward-looking statements. Except as required by law, DHC does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.

The documents provided in this section are provided for historical purposes only. The information contained in each document is accurate only as of the date each document was originally issued or such earlier date stated in those documents. DHC does not undertake any obligation to update any information contained in these documents. For current information about DHC, please refer to DHC’s most recent public SEC Filings.

IMPORTANT ADDITIONAL INFORMATION ABOUT THE MERGER

The information appearing on DHC ’s website may be deemed to be solicitation material in respect of the proposed merger between DHC and OPI. In connection with the proposed merger, OPI filed a registration statement on Form S-4 with the SEC containing a joint proxy statement/prospectus of DHC and OPI. On July 21, 2023, the registration statement was declared effective by the SEC and DHC and OPI each filed with the SEC and commenced mailing to their respective shareholders the definitive joint proxy statement/prospectus. The proposed transaction involving DHC and OPI will be submitted to DHC’s and OPI’s shareholders for their consideration at special meetings of shareholders to be held on August 30, 2023. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT DHC, OPI AND THE MERGER. Investors are also able to obtain copies of the registration statement and the joint proxy statement/prospectus and other relevant documents (when they become available) free of charge at the SEC’s website (www.sec.gov). Additional copies of documents filed by DHC with the SEC may be obtained for free on DHC’s Investor Relations website at www.dhcreit.com/investors or by contacting the DHC Investor Relations department at 1-617-796-8234. In addition to the registration statement and the joint proxy statement/prospectus, DHC files annual, quarterly and current reports and other information with the SEC. DHC’s filings with the SEC are also available to the public from commercial document-retrieval services and at the website maintained by the SEC at www.sec.gov.

NO OFFER OR SOLICITATION

The information appearing on DHC ’s website is for informational purposes only and is not intended to and does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, any securities or a solicitation of any vote or approval in any jurisdiction with respect to the merger or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

PARTICIPANTS IN THE SOLICITATION

DHC and certain of its trustees and executive officers, OPI and certain of its trustees and executive officers, and RMR, the manager of DHC and OPI, and its parent and certain of their respective directors, officers and employees may be deemed to be participants in the solicitation of proxies from DHC’s and OPI’s shareholders in connection with the merger. Certain information regarding these trustees, executive officers, directors, officers and employees and a description of their direct and indirect interests are set forth in the registration statement and the joint proxy statement/prospectus filed with the SEC by DHC and/or OPI. Information about DHC’s trustees and executive officers is also included in the proxy statement for DHC’s 2023 annual meeting of shareholders, which was filed with the SEC on April 20, 2023. Information about OPI’s trustees and executive officers is included in the proxy statement for OPI’s 2023 annual meeting of shareholders, which was filed with the SEC on April 6, 2023. Copies of the foregoing documents may be obtained as provided above.

Senior Housing Properties Trust Announces Results for the Periods Ended September 30, 2007

NEWTON, Mass.--Senior Housing Properties Trust (NYSE: SNH) today announced its financial results for the quarter and nine months ended September 30, 2007, as follows:

Results for the quarter ended September 30, 2007:

Net income for the quarter ended September 30, 2007 was $20.6 million, or $0.25 per share, compared to net income of $15.4 million, or $0.21 per share, for the quarter ended September 30, 2006.

Funds from operations (FFO) for the quarter ended September 30, 2007 was $34.1 million, or $0.41 per share. This compares to FFO for the quarter ended September 30, 2006 of $27.7 million, or $0.39 per share.

The weighted average number of common shares outstanding totaled 83.7 million and 71.8 million for the quarters ended September 30, 2007 and 2006, respectively.

Results for the nine months ended September 30, 2007:

Net income for the nine months ended September 30, 2007 was $58.8 million, or $0.71 per share, compared to net income of $38.6 million, or $0.54 per share, for the nine months ended September 30, 2006. Net income for the nine months ended September 30, 2007 includes a loss on early extinguishment of debt of $2.0 million, or $0.02 per share, related to the purchase and retirement of $20.0 million of SNH's 8 5/8% senior notes due 2012. Net income for the same period in 2006 includes (1) an impairment of assets charge of $1.4 million, or $0.02 per share, related to three properties that we later sold during the fourth quarter of 2006, (2) a loss on early extinguishment of debt of $1.3 million, or $0.02 per share, related to the $28.2 million redemption of all of SNH's 10.125% junior subordinated debentures and (3) a loss on early extinguishment of debt of $5.2 million, or $0.07 per share, related to the $52.5 million redemption of SNH's 7 7/8% senior notes due 2015.

FFO for the nine months ended September 30, 2007 was $99.1 million, or $1.20 per share. FFO includes a loss on early extinguishment of debt paid in cash of $1.8 million, or $0.02 per share, related to the purchase and retirement of the senior notes due 2012 described above. This compares to FFO for the nine months ended September 30, 2006 of $79.0 million, or $1.10 per share. FFO for the nine months ended September 30, 2006 includes a $4.1 million, or $ 0.06 per share, loss for the cash premium paid for partial redemption of the senior notes due 2015 described above.

The weighted average number of common shares outstanding totaled 82.7 million and 71.8 million for the nine months ended September 30, 2007 and 2006, respectively.

A reconciliation of FFO to net income determined according to U.S. generally accepted accounting principles, or GAAP, is set forth below.

Investment Activities and Subsequent Events:

In September 2007, SNH agreed to purchase six wellness centers for approximately $76.8 million. These wellness centers are leased to Starmark Holdings, LLC who will continue to operate them under the brand name "Wellbridge". We acquired four of these wellness centers for $42.1 million on October 30, 2007 using cash on hand and borrowings under our revolving credit facility. We expect to fund the acquisition of the two remaining wellness centers using cash on hand, by borrowings under our revolving credit facility and by assuming a mortgage for $14.9 million at 6.9% per annum.

In October 2007, SNH agreed to purchase six senior living properties with a total of 707 units for approximately $78.5 million. We intend to lease these properties to Five Star Quality Care, Inc., or Five Star, and to add them to our combined lease for 114 properties with Five Star, which has a current term expiring in 2020. We expect to fund these acquisitions using cash on hand and by borrowings under our revolving credit facility.

On October 11, 2007, SNH raised its regular quarterly common share dividend by $0.01 to $0.35 per common share ($1.40 per share per year). This regular quarterly dividend will be paid to common shareholders of record as of the close of business on October 22, 2007, and distributed on or about November 15, 2007.

Conference Call:

On Thursday, November 1, 2007, at 1:00 p.m. EST, David J. Hegarty, president and chief operating officer, and Richard A. Doyle, treasurer and chief financial officer, will host a conference call to discuss the results for the third quarter ended September 30, 2007. The conference call telephone number is 1-800-930-1353. Participants calling from outside the United States and Canada should dial 1-913-312-1395. 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 4:00 p.m., Thursday, November 8, 2007. To hear the replay, dial 1-719-457-0820. The replay pass code is 3783264.

A live audio web cast of the conference call will also be available in listen only mode on the SNH web site. Participants wanting to access the webcast should visit the web site about five minutes before the call. The archived webcast will be available for replay on the SNH web site for about one week after the call.

Supplemental Data:

A copy of SNH's Third Quarter 2007 Supplemental Operating and Financial Data is available for download from the SNH website, www.snhreit.com.

Senior Housing Properties Trust is a real estate investment trust, or REIT, that owns 200 properties located in 32 states. SNH is headquartered in Newton, Massachusetts.

                                   Senior Housing Properties Trust 
                                          Financial Information 
                                 (in thousands, except per share data) 
 

Income Statement:
                                          Quarter Ended September 30,      Nine Months Ended September 30,
                                               2007         2006                  2007          2006  
Revenues: 
     Rental income                          $ 44,653     $ 41,983              $ 133,361     $ 123,727
     Interest and other income                   571          334                  1,577         1,034  
     Total revenues                           45,224       42,317                134,938       124,761
Expenses: 
     Interest                                  9,223       11,833                 28,276        34,751 
     Depreciation                             11,821       10,978                 35,120        32,631 
     General and administrative                3,567        4,088                 10,732        10,870 
     Impairment of assets (1)                     -            -                      -          1,420  
     Loss on early extinguishment of debt (2)     -            -                   2,026         6,526  
     Total expenses                           24,611       26,899                 76,154        86,198 
Net income                                  $ 20,613     $ 15,418               $ 58,784      $ 38,563 
Weighted average shares outstanding           83,659       71,824                  2,718        71,818 
Per share data: 
     Net income                               $ 0.25       $ 0.21                 $ 0.71        $ 0.54 
 
Balance Sheet: 
                                               At September 30,     At December 31, 
                                                    2007                 2006 
Assets 
Real estate properties                          $ 1,847,192          $ 1,814,358
Less accumulated depreciation                        11,627              276,507
                                                  1,535,565            1,537,851
Cash and cash equivalents                             3,645                5,464
Restricted cash                                       3,010                2,435
Deferred financing fees, net                          6,461                8,173
Other assets                                         28,257               30,851
     Total assets                               $ 1,576,938          $ 1,584,774 
   
Liabilities and Shareholders' Equity 
Unsecured revolving credit facility             $        -           $   112,000
Senior unsecured notes, net of discountb            321,837              341,673
Secured debt and capital leases                      90,143               91,412
     Total debt                                     411,980              545,085
Other liabilities                                    19,421               20,223
     Total liabilities                              431,401              565,308
Shareholders' equity                              1,145,537            1,019,466
Total liabilities and shareholders' equity      $ 1,576,938          $ 1,584,774

(1) During the nine months ended September 30, 2006, we recognized an impairment of assets charge of $1.4 million related to three properties that were sold during the fourth quarter of 2006.

(2) In January 2007, we purchased and retired $20.0 million of our 8 5/8% senior notes due 2012 and paid a premium of $1.8 million and wrote off $276,000 of deferred financing fees and unamortized discount related to these senior notes. In June 2006, we redeemed all of our $28.2 million of 10.125% junior subordinated debentures; loss on early extinguishment of debt includes a $1.3 million write off of unamortized deferred financing fees related to these debentures. In January 2006, we redeemed $52.5 million of our 7 7/8% senior unsecured notes and paid a $4.1 million redemption premium and wrote off $1.1 million of deferred financing fees and unamortized discount related to these senior notes.

                                             Senior Housing Properties Trust
                                                   Funds from Operations 
                                          (in thousands, except per share data) 
 

Calculation of Funds from Operations (FFO) (1) :
                                                                  Quarter Ended            Nine Months Ended
                                                                  September 30,              September 30, 
                                                                2007          2006        2007          2006
Net income                                                   $ 20,613      $ 15,418    $ 58,784      $ 38,563
Add: Depreciation expense                                      11,821        10,978      35,120        32,631 
     Impairment of assets                                          -             -           -          1,420
     Loss on early extinguishment of debt                          -             -        2,026         6,526
     Deferred percentage rent (2)                               1,700         1,263       4,961         4,016
Less: Loss on early extinguishment of debt settled in cash (3)     -             -       (1,750)       (4,134)
FFO                                                          $ 34,134      $ 27,659    $ 99,141      $ 79,022

Weighted average shares outstanding                            83,659        71,824      82,718        71,818 

FFO per share                                                  $ 0.41        $ 0.39      $ 1.20        $ 1.10
Distributions declared                                         $ 0.35        $ 0.33      $ 1.03        $ 0.98

(1) We compute FFO as shown in the calculation above. This calculation begins with income from continuing operations or, if that amount is the same as net income, with net income. Our calculation of FFO differs from the National Association of Real Estate Investment Trusts, or NAREIT, definition of FFO because we include deferred percentage rent in FFO as discussed in footnote (2) below and we exclude loss on early extinguishment of debt not settled in cash from FFO. We consider FFO to be an appropriate measure of performance for a real estate investment trust, or REIT, along with net income and cash flow from operating, investing and financing activities. We believe that FFO provides useful information to investors because by excluding the effects of certain historical costs, such as depreciation expense and gain or loss on sale of properties, FFO can facilitate comparison of current operating performance among REITs. FFO does not represent cash generated by operating activities in accordance with U.S. generally accepted accounting principles, or GAAP, and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity. FFO is one important factor considered by our board of trustees in determining the amount of distributions to shareholders. Other important factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving credit facility and public debt covenants, the availability of debt and equity capital to us and our expectation of our future performance.

(2) Our percentage rents are generally calculated on an annual basis. We recognize percentage rental income received during the first, second and third quarters in the fourth quarter when all contingencies related to percentage rents are satisfied. Although recognition of revenue is deferred until the fourth quarter, our FFO calculation for the first three quarters includes estimated amounts of deferred percentage rents with respect to those periods. The fourth quarter calculation of FFO excludes the amounts recognized during the first three quarters.

(3) FFO for the nine months ended September 30, 2007 includes a $1.8 million loss for the cash premium paid for our retirement of $20.0 million of our 8 5/8% senior notes due 2012. FFO of the nine months ended September 30, 2006 includes a $4.1 million loss for the cash premium paid for our redemption of $52.5 million of our 7 7/8% senior notes due 2015.

Timothy A. Bonang
617-796-8234
Manager of Investor Relations
or
Katherine L. Johnston
617-796-8234
Investor Relations Analyst
Senior Housing Properties Trust
www.snhreit.com

Search Site

Cautionary Language

Cautionary Statement Regarding Forward Looking Statements

IMPORTANT ADDITIONAL INFORMATION ABOUT THE MERGER

NO OFFER OR SOLICITATION

PARTICIPANTS IN THE SOLICITATION

Senior Housing Properties Trust Announces Results for the Periods Ended September 30, 2007