Senior Housing Properties Trust Announces Results for the Periods Ended June 30, 2010

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 June 30, 2010

NEWTON, Mass., Aug 02, 2010 (BUSINESS WIRE) -- Senior Housing Properties Trust (NYSE: SNH) today announced its financial results for the quarter and six months ended June 30, 2010.

Results for the quarter ended June 30, 2010:

Funds from operations, or FFO, for the quarter ended June 30, 2010 was $53.3 million, or $0.42 per share. This compares to FFO for the quarter ended June 30, 2009 of $52.8 million, or $0.44 per share.

Net income was $24.6 million, or $0.19 per share, for the quarter ended June 30, 2010, compared to net income of $30.5 million, or $0.25 per share, for the quarter ended June 30, 2009. Net income for the quarter ended June 30, 2010 includes a loss on early extinguishment of debt of approximately $2.4 million, or $0.02 per share, related to the redemption of all $97.5 million of our outstanding 7.875% senior notes due 2015. Net income for the quarter ended June 30, 2010 also includes a non-cash impairment of assets charge of $1.1 million, or $0.01 per share, related to five properties. For purposes of calculating FFO, these items are excluded from our determination of FFO.

The weighted average number of common shares outstanding totaled 127.4 million and 120.5 million for the quarters ended June 30, 2010 and 2009, respectively.

A reconciliation of net income determined according to U.S. generally accepted accounting principles, or GAAP, to FFO for the quarters ended June 30, 2010 and 2009 appears later in this press release.

Results for the six months ended June 30, 2010:

FFO for the six months ended June 30, 2010 was $108.1 million, or $0.85 per share. This compares to FFO for the six months ended June 30, 2009 of $105.0 million, or $0.88 per share.

Net income was $54.5 million, or $0.43 per share, for the six months ended June 30, 2010, compared to net income of $62.0 million, or $0.52 per share, for the six months ended June 30, 2009. Net income for the six months ended June 30, 2010 includes a loss on early extinguishment of debt of approximately $2.4 million, or $0.02 per share, related to the redemption of all $97.5 million of our outstanding 7.875% senior notes due 2015. Net income for the six months ended June 30, 2010 also includes a non-cash impairment of assets charge of $1.1 million, or $0.01 per share, related to five properties. For purposes of calculating FFO, these items are excluded from our determination of FFO.

The weighted average number of common shares outstanding totaled 127.4 million and 119.2 million for the six months ended June 30, 2010 and 2009, respectively.

A reconciliation of net income determined according to U.S. GAAP to FFO for the six months ended June 30, 2010 and 2009 appears later in this press release.

Recent Activities:

On July 29, 2010, Moody's Investors Service upgraded our senior unsecured bonds to an investment grade rating of Baa3 from Ba1.

In April 2010, we sold $200.0 million of senior unsecured notes. The notes require interest at a fixed rate of 6.75% per annum and are due in 2020. Net proceeds from the sale of the notes, after underwriting discounts and other expenses, were approximately $195.0 million. Interest on the notes is payable semi-annually in arrears. No principal payments are due until maturity. We used a portion of the net proceeds of this offering to repay $58.0 million in borrowings under our revolving credit facility, to fund the redemption of our $97.5 million outstanding 7.875% senior notes due 2015 and for general business purposes, including funding the acquisitions described below.

As described above, in April 2010, we called all $97.5 million of our outstanding 7.875% senior notes due 2015 for redemption on May 17, 2010. As a result of this redemption, we recorded a loss on early extinguishment of debt of approximately $2.4 million consisting of the debt prepayment premium of approximately $1.3 million and the write off of unamortized deferred financing fees of approximately $1.1 million.

In April 2010, we acquired a medical office building located in Colorado with 14,695 rentable square feet for approximately $4.5 million, excluding closing costs. We funded this acquisition using cash on hand and by assuming a mortgage loan for $2.5 million at an interest rate of 6.73% per annum.

In June 2010, we acquired a medical office building located in Texas with approximately 55,800 rentable square feet for approximately $12.2 million, excluding closing costs. We funded this acquisition using cash on hand.

Conference Call:

On Monday, August 2, 2010, at 1 p.m. Eastern Time, 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 quarter and six months ended June 30, 2010. The conference call telephone number is 877-704-5384. Participants calling from outside the United States and Canada should dial 913-981-4903. 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. Eastern Time, Monday, August 9, 2010. To hear the replay, dial 719-457-0820. The replay pass code is 4533390.

A live audio web cast of the conference call will also be available in listen only mode on the SNH website at www.snhreit.com. 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. The recording and retransmission in any way of SNH's second quarter conference call is strictly prohibited without the prior written consent of SNH.

Supplemental Data:

A copy of SNH's Second Quarter 2010 Supplemental Operating and Financial Data is available for download from the SNH website, 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 300 properties located in 35 states and Washington, D.C. SNH is headquartered in Newton, MA.

Senior Housing Properties Trust
Financial Information
(in thousands, except per share data)
(unaudited)
Income Statement:

	Quarter Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Rental income	$	80,765		$	69,399		$	161,212		$	137,776

Expenses:
Depreciation		22,345			18,635			44,634			37,024
General and administrative		5,413			5,056			10,914			9,807
Property operating expenses		4,144			3,219			8,519			6,174
Acquisition costs		404			1,282			439			1,394
Total expenses		32,306			28,192			64,506			54,399

Operating income		48,459			41,207			96,706			83,377

Interest and other income		243			186			500			394
Interest expense		(20,515	)		(10,707	)		(38,929	)		(21,483	)
Loss on early extinguishment of debt ⁽¹⁾		(2,433	)		-			(2,433	)		-
Impairment of assets ⁽²⁾		(1,095	)		-			(1,095	)		-
Equity in losses of an investee		(24	)		(109	)		(52	)		(109	)
Income before income tax expense		24,635			30,577			54,697			62,179
Income tax expense		(76	)		(66	)		(154	)		(135	)
Net income	$	24,559		$	30,511		$	54,543		$	62,044

Weighted average shares outstanding		127,408			120,455			127,394			119,161

Net income per share	$	0.19		$	0.25		$	0.43		$	0.52

Balance Sheet:
	At June 30, 2010		At December 31, 2009
Assets
Real estate properties	$	3,348,752	$	3,317,983
Less accumulated depreciation		496,728		454,317
		2,852,024		2,863,666
Cash and cash equivalents		25,230		10,494
Restricted cash		4,930		4,222
Deferred financing fees, net		16,478		14,882
Acquired real estate leases, net		41,855		42,769
Other assets		52,710		51,893
Total assets	$	2,993,227	$	2,987,926

Commitments and Contingencies

Liabilities and Shareholders' Equity
Unsecured revolving credit facility	$	-	$	60,000
Senior unsecured notes, net of discount		422,708		322,160
Secured debt and capital leases		658,285		660,059
Accrued interest		14,609		13,693
Acquired real estate lease obligations, net		9,621		9,687
Other liabilities		25,445		21,677
Total liabilities		1,130,668		1,087,276
Shareholders' equity		1,862,559		1,900,650
Total liabilities and shareholders' equity	$	2,993,227	$	2,987,926

(1) In May 2010, we redeemed all $97.5 million of our outstanding 7.875% senior notes due 2015. As a result of this redemption, we recorded a loss on early extinguishment of debt of $2.4 million consisting of the debt prepayment premium of approximately $1.3 million and the write off of unamortized deferred financing fees and debt discount of approximately $1.1 million.

(2) During the three and six months ended June 30, 2010, we recognized an impairment of assets charge of approximately $1.1 million related to five properties.

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

Calculation of Funds from Operations (FFO)( (1)):

	Quarter Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Net income	$	24,559	$	30,511	$	54,543	$	62,044
Add: Depreciation expense		22,345		18,635		44,634		37,024
Acquisition costs		404		1,282		439		1,394
Loss on early extinguishment of debt ⁽²⁾		2,433		-		2,433		-
Impairment of assets ⁽³⁾		1,095		-		1,095		-
Deferred percentage rent ⁽⁴⁾		2,500		2,400		5,000		4,500
FFO	$	53,336	$	52,828	$	108,144	$	104,962

Weighted average shares outstanding		127,408		120,455		127,394		119,161

FFO per share	$	0.42	$	0.44	$	0.85	$	0.88
Distributions declared per share	$	0.36	$	0.36	$	0.72	$	0.71

(1) We compute FFO as shown above. Our calculation of FFO differs from the definition of FFO by the National Association of Real Estate Investment Trusts, or NAREIT, because we include deferred percentage rent, if any, exclude loss on early extinguishment of debt, if any, exclude impairment of assets, if any, and exclude acquisition costs, if any, in the determination of FFO. We consider FFO to be an appropriate measure of performance for a 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 amounts, such as depreciation expense, acquisition costs and gain or loss on sale of properties, FFO can facilitate a comparison of operating performances by a REIT over time and 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. Also, other REITs may calculate FFO differently than we do.

(2) In May 2010, we redeemed all $97.5 million of our outstanding 7.875% senior notes due 2015. As a result of this redemption, we recorded a loss on early extinguishment of debt of $2.4 million consisting of the debt prepayment premium of approximately $1.3 million and the write off of unamortized deferred financing fees and debt discount of approximately $1.1 million.

(3) During the three and six months ended June 30, 2010, we recognized an impairment of assets charge of approximately $1.1 million related to five properties.

(4) 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 this 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.

SOURCE: Senior Housing Properties Trust

Senior Housing Properties Trust
Timothy A. Bonang, 617-796-8234
Vice President, Investor Relations
or
Elisabeth Heiss, 617-796-8234
Manager, Investor Relations
www.snhreit.com

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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 June 30, 2010