NEWTON, Mass., Feb 26, 2009 (BUSINESS WIRE) -- Senior Housing Properties Trust (NYSE: SNH) today announced its
financial results for the quarter and year ended December 31, 2008, as
follows:
Results for the quarter ended December 31, 2008:
Net income was $32.4 million, or $0.28 per share, for the quarter ended
December 31, 2008, compared to net income of $26.5 million, or $0.31 per
share, for the quarter ended December 31, 2007. Net income for the
quarter ended December 31, 2008, includes an impairment of assets charge
of $5.4 million, or $0.05 per share, related to three properties. Net
income for the quarter ended December 31, 2007, includes an impairment
of assets charge of $1.4 million, or $0.02 per share, related to one
property.
Funds from operations (FFO) for the quarter ended December 31, 2008 was
$48.9 million, or $0.43 per share. This compares to FFO for the quarter
ended December 31, 2007 of $35.2 million, or $0.42 per share. FFO for
the quarters ended December 31, 2008 and 2007 adds back an impairment of
assets charges of $5.4 million and $1.4 million, respectively, as
described above.
The weighted average number of common shares outstanding totaled 114.5
million and 84.5 million for the quarters ended December 31, 2008 and
2007, respectively. The increase in common shares is a result of public
offerings in February and June 2008 of 6.2 million and 19.6 million
common shares, respectively.
Results for the year ended December 31, 2008:
Net income for the year ended December 31, 2008 was $106.5 million, or
$1.01 per share, compared to net income of $85.3 million, or $1.03 per
share, for the year ended December 31, 2007. Net income for the year
ended December 31, 2008 includes an impairment of assets charge of $8.4
million, or $0.08 per share, related to four properties. Net income for
this period also includes a gain of $266,000, or less than $0.01 per
share, relating to the sale of three assisted living properties. Net
income for the year ended December 31, 2007 includes a loss of $2.0
million, or $0.02 per share, related to the early retirement of $20.0
million of 8 5/8% senior notes due 2012. Net income in 2007 also
includes an impairment of assets charge of $1.4 million, or $0.02 per
share, related to one property.
FFO for the year ended December 31, 2008, was $175.5 million, or $1.67
per share. This compares to FFO for the year ended December 31, 2007 of
$134.4 million, or $1.62 per share. FFO for the years ended December 31,
2008 and 2007 adds back an impairment of assets charge of $8.4 million
and $1.4 million, respectively, as described above. FFO for the year
ended December 31, 2007 also includes a loss of $1.8 million, or $0.02
per share, related to the early retirement of the senior notes due 2012,
described above.
The weighted average number of common shares outstanding totaled 105.2
million and 83.2 million for the years ended December 31, 2008 and 2007,
respectively. The increase in common shares is a result of public
offerings in February and June 2008 of 6.2 million and 19.6 million
common shares, respectively.
A reconciliation of income before gain on sale of properties determined
according to U.S. generally accepted accounting principles, or GAAP, to
FFO follows later in this press release.
Investing Activities and Subsequent Events:
During 2008, we acquired 30 senior living properties with a total of
2,507 units for approximately $379.3 million, including closing costs,
from eight unaffiliated parties. We leased these properties to Five Star
Quality Care Inc., or Five Star, for initial rent of $30.3 million.
Percentage rent, based on increases in gross revenues at these
properties, will commence in 2010. We funded these acquisitions using
cash on hand, proceeds from equity issuances, borrowings under our
revolving credit facility and by assuming 15 mortgage loans maturing in
2017 on eight of these properties for $50.5 million with a weighted
average interest rate of 6.5% per annum.
In May 2008, we entered into a series of agreements to acquire 48
medical office, clinic and biotech laboratory buildings from HRPT
Properties Trust, or HRP, an affiliate, for an aggregate purchase price
of approximately $565 million. During 2008, we acquired 37 of these
medical office, clinic and biotech laboratory buildings for
approximately $346.8 million, excluding closing costs. In January 2009,
we acquired one additional clinic for approximately $19.3 million,
excluding closing costs. We funded these acquisitions using cash on
hand, proceeds from equity issuances, borrowings under our revolving
credit facility and by assuming three mortgage loans, totaling $10.8
million with a weighted average interest rate of 7.1% per annum and a
weighted average maturity in 2018, on two properties. The remaining 10
acquisitions are scheduled to close in 2010, but we and HRP may mutually
agree to accelerate the closings of these acquisitions.
In June 2008, we realigned three of our leases with Five Star. Lease no.
1 now includes 100 properties, including nine properties acquired during
the first quarter of 2008. This lease includes independent living
communities, assisted living communities and skilled nursing facilities,
and expires in 2022. Lease no. 2 now includes 32 properties, including
independent living communities, assisted living communities, skilled
nursing facilities and two rehabilitation hospitals, and expires in
2026. Lease no. 3 now includes 44 properties, including 10 properties
acquired during the first quarter of 2008 and 10 properties acquired
during the third quarter of 2008 and one property acquired on November
1, 2008. This lease includes independent living communities, assisted
living communities and skilled nursing facilities and expires in 2024.
The total rent payable by Five Star to us for these properties was
unchanged as a result of this lease realignment. The increased rent
payable for these three leases with Five Star, if and as we purchase
improvements to the leased properties, will be the greater of 8.0% per
annum or the 10 year Treasury rate plus 300 basis points, but may not
exceed 11.5%.
In July 2008, we sold three assisted living properties with 259 living
units, which were formerly operated by NewSeasons Assisted Living
Communities, Inc., or NewSeasons, to Five Star for $21.4 million. Five
Star also assumed the NewSeasons and Independence Blue Cross lease
obligations to us for the remaining seven properties that were formerly
operated by NewSeasons. The rent payable by Five Star for these seven
properties is approximately $7.6 million per annum under lease no. 4
between us and Five Star.
In August 2008, we acquired four wellness centers for approximately $100
million, excluding closing costs, from an unaffiliated party. We leased
these wellness centers to a subsidiary of Life Time Fitness, Inc., for
initial rent of $9.1 million, plus rent increases of 10% every five
years. This lease has a current term expiring in 2028, plus renewal
options. We funded this acquisition using cash on hand and borrowings
under our revolving credit facility.
In September 2008, we acquired, from an unaffiliated party, one medical
office building for approximately $18.6 million, excluding closing
costs. This building is currently 100% leased to 12 tenants for an
average lease term of 6.3 years. We funded this acquisition using cash
on hand and borrowings under our revolving credit facility.
In February 2009, we issued 5.9 million common shares in a public
offering, raising net proceeds of approximately $96.8 million. We used
the net proceeds from this offering to repay borrowings outstanding on
our revolving credit facility and for general business purposes.
Conference Call:
On Friday, February 27, 2009, at 10:00 a.m. Eastern Time, David J.
Hegarty, President and Chief Operating Officer, and Richard A. Doyle,
Chief Financial Officer, will host a conference call to discuss the
results for the fourth quarter and year ended December 31, 2008. The
conference call telephone number is 800-273-4998. Participants calling
from outside the United States and Canada should dial 913-981-5583. 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 1:00 p.m. Eastern Time, Friday, March 6, 2009. To hear the
replay, dial 719-457-0820. The replay pass code is 2442261.
A live audio web cast of the conference call will also be available in
listen only mode on the SNH website. Participants wanting to access the
webcast should visit the website about five minutes before the call. The
archived webcast will be available for replay on the SNH website for
about one week after the call.
Supplemental Data:
A copy of SNH's Fourth Quarter 2008 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 272 properties located in 34 states and Washington, D.C.
SNH is headquartered in Newton, Massachusetts.
Senior Housing Properties Trust |
Financial Information |
(in thousands, except per share data)
|
| | | |
Income Statement: | | | |
| Quarter Ended December 31, | | Year Ended December 31, |
| 2008 | | 2007 | | 2008 | | 2007 |
Revenues:
| | | | | | | |
Rental income
|
$72,619
| |
$52,591
| |
$233,210
| |
$185,952
|
Interest and other income
|
302
| |
493
| |
2,327
| |
2,070
|
Total revenues
|
72,921
| |
53,084
| |
235,537
| |
188,022
|
Expenses:
| | | | | | | |
Property operating expenses
|
1,668
| |
-
| |
2,792
| |
-
|
Interest
|
11,219
| |
9,479
| |
40,154
| |
37,755
|
Depreciation
|
17,596
| |
12,264
| |
60,831
| |
47,384
|
General and administrative
|
4,631
| |
3,422
| |
17,136
| |
14,154
|
Impairment of assets (1) |
5,439
| |
1,400
| |
8,379
| |
1,400
|
Loss on early extinguishment of debt(2) |
-
| |
-
| |
-
| |
2,026
|
Total expenses
|
40,553
| |
26,565
| |
129,292
| |
102,719
|
| | | | | | | |
Income before gain on sale of properties
|
32,368
| |
26,519
| |
106,245
| |
85,303
|
Gain on sale of properties
|
-
| |
-
| |
266
| |
-
|
Net income
|
$32,368
| |
$26,519
| |
$106,511
| |
$85,303
|
| | | | | | | |
Weighted average shares outstanding
|
114,533
| |
84,505
| |
105,153
| |
83,168
|
Per share data:
| | | | | | | |
Income before gain on sale of properties
|
$0.28
| |
$0.31
| |
$1.01
| |
$1.03
|
Net income
|
$0.28
| |
$0.31
| |
$1.01
| |
$1.03
|
Balance Sheet: | | | |
|
At December 31, 2008
| |
At December 31, 2007
|
Assets | | | |
Real estate properties
|
$2,807,256
| |
$1,940,347
|
Less accumulated depreciation
|
381,339
| |
323,891
|
|
2,425,917
| |
1,616,456
|
Cash and cash equivalents
|
5,990
| |
43,521
|
Restricted cash
|
4,344
| |
3,642
|
Deferred financing fees, net
|
5,068
| |
5,974
|
Acquired real estate leases, net
|
30,546
| |
2,387
|
Other assets
|
25,009
| |
29,914
|
Total assets
|
$2,496,874
| |
$1,701,894
|
Liabilities and Shareholders' Equity | | | |
Unsecured revolving credit facility
|
$257,000
| |
$ -
|
Senior unsecured notes, net of discount
|
322,017
| |
321,873
|
Secured debt and capital leases
|
151,416
| |
104,979
|
Total debt
|
730,433
| |
426,852
|
Acquired real estate lease obligations, net
|
7,974
| |
4,216
|
Other liabilities
|
27,109
| |
21,416
|
Total liabilities
|
765,516
| |
452,484
|
Shareholders' equity
|
1,731,358
| |
1,249,410
|
Total liabilities and shareholders' equity
|
$2,496,874
| |
$1,701,894
|
(1) During the quarters ended December 31, 2008 and 2007, we recognized
an impairment of assets charge of $5.4 million related to three
properties and $1.4 million related to one property, respectively.
During the years ended December 31, 2008 and 2007, we recognized an
impairment of assets charge of $8.4 million related to four properties
and $1.4 million related to one property, respectively.
(2) In January 2007, we purchased and retired $20.0 million of our 8
5/8% senior notes due 2012, and we paid a premium of $1.8 million and
wrote off $276,000 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 December 31, | | Year Ended December 31, |
|
2008 | | 2007 | | 2008 | | 2007 |
Income before gain on sale of properties
|
$32,368
| |
$26,519
| |
$106,245
| |
$85,303
|
Add: Depreciation expense
|
17,596
| |
12,264
| |
60,831
| |
47,384
|
Impairment of assets (2) |
5,439
| |
1,400
| |
8,379
| |
1,400
|
Loss on early extinguishment of debt
|
-
| |
-
| |
-
| |
2,026
|
Less: Deferred percentage rent (3) |
(6,550)
| |
(4,961)
| |
-
| |
-
|
Loss on early extinguishment of debt settled in cash (4) |
-
| |
-
| |
-
| |
(1,750)
|
FFO
|
$48,853
| |
$35,222
| |
$175,455
| |
$134,363
|
| | | | | | | |
Weighted average shares outstanding
|
114,533
| |
84,505
| |
105,153
| |
83,168
|
| | | | | | | |
FFO per share
|
$0.43
| |
$0.42
| |
$1.67
| |
$1.62
|
Distributions declared
|
$0.35
| |
$0.35
| |
$1.40
| |
$1.38
|
(1) We compute FFO as shown in the calculation above. This calculation
begins with income before gain on sale of properties or, if that amount
is the same as net income, with net income, which we believe is the
closest measure of our performance based on U.S. generally accepted
accounting principles, or GAAP. 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 Note (3) 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 a comparison of our current operating
performance with our past operating performance and of operating
performances among REITs. FFO does not represent cash generated by
operating activities in accordance with 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 our 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) During the quarters ended December 31, 2008 and 2007, we recognized
an impairment of assets charge of $5.4 million related to three
properties and $1.4 million related to one property, respectively.
During the years ended December 31, 2008 and 2007, we recognized an
impairment of assets charge of $8.4 million related to four properties
and $1.4 million related to one property, respectively.
(3) 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.
(4) FFO for the year ended December 31, 2007 includes a $1.8 million
loss for the cash premium paid relating to our early retirement of $20.0
million of our 8 5/8% senior notes due 2012.
WARNING CONCERNING FORWARD LOOKING
STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND
OTHER FEDERAL SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS
"BELIEVE", "EXPECT", "ANTICIPATE", "INTEND", "PLAN", "ESTIMATE" OR
SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE
FORWARD LOOKING STATEMENTS ARE BASED UPON OUR 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 OUR FORWARD LOOKING STATEMENTS AS A RESULT OF
VARIOUS FACTORS. FOR EXAMPLE:
-
THIS PRESS RELEASE STATES THAT WE HAVE AGREED TO PURCHASE MEDICAL
OFFICE, CLINIC AND BIOTECH LABORATORY BUILDINGS. OUR OBLIGATIONS TO
COMPLETE THE CURRENTLY PENDING PURCHASES IS SUBJECT TO VARIOUS
CONDITIONS TYPICAL OF LARGE COMMERCIAL REAL ESTATE PURCHASES. AS A
RESULT OF ANY FAILURE OF THESE CONDITIONS, SOME OF THE PROPERTIES MAY
NOT BE PURCHASED OR SOME OF THESE PURCHASES MAY BE ACCELERATED OR
DELAYED.
OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN OUR FORWARD LOOKING STATEMENTS ARE DESCRIBED
MORE FULLY UNDER "ITEM 1A. RISK FACTORS" IN OUR ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 2007.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW, WE UNDERTAKE NO OBLIGATION
TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.
A Maryland Real Estate Investment Trust with transferable shares of
beneficial interest listed on the New York Stock Exchange.
No shareholder, Trustee or officer is personally liable for any act
or obligation of the Trust.
SOURCE: Senior Housing Properties Trust
Senior Housing Properties Trust
Timothy A. Bonang, 617-796-8234
Director of Investor Relations
or
Katherine L. Johnston, 617-796-8234
Manager of Investor Relations
www.snhreit.com
Copyright Business Wire 2009