NEWTON, Mass.--(BUSINESS WIRE)--
Senior Housing Properties Trust (NYSE: SNH) today announced its
financial results for the quarter and six months ended June 30, 2011.
Results for the quarter ended June 30, 2011:
Normalized funds from operations, or Normalized FFO, for the quarter
ended June 30, 2011 were $62.6 million, or $0.44 per share. This
compares to Normalized FFO for the quarter ended June 30, 2010 of $53.3
million, or $0.42 per share.
Net income was $51.0 million, or $0.36 per share, for the quarter ended
June 30, 2011, compared to net income of $24.6 million, or $0.19 per
share, for the quarter ended June 30, 2010. Net income for the quarter
ended June 30, 2011 includes a gain on sale of properties of
approximately $21.3 million, or $0.15 per share, related to the sale of
seven properties in the second quarter and a loss on early
extinguishment of debt of approximately $427,000, or less than $0.01 per
share, in connection with replacing our previous $550.0 million
revolving credit facility with a new $750.0 million revolving credit
facility. 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 and a non-cash impairment of
assets charge of $1.1 million, or $0.01 per share, related to five
properties.
The weighted average number of common shares outstanding totaled 141.9
million and 127.4 million for the quarters ended June 30, 2011 and 2010,
respectively.
A reconciliation of net income determined according to U.S. generally
accepted accounting principles, or GAAP, to FFO and Normalized FFO for
the quarters ended June 30, 2011 and 2010 appears later in this press
release.
Results for the six months ended June 30, 2011:
Normalized FFO for the six months ended June 30, 2011 were $124.7
million, or $0.88 per share. This compares to Normalized FFO for the six
months ended June 30, 2010 of $108.1 million, or $0.85 per share.
Net income was $82.8 million, or $0.58 per share, for the six months
ended June 30, 2011, compared to net income of $54.5 million, or $0.43
per share, for the six months ended June 30, 2010. Net income for the
six months ended June 30, 2011 includes a gain on sale of properties of
approximately $21.3 million, or $0.15 per share, related to the sale of
seven properties, a loss on early extinguishment of debt of
approximately $427,000, or less than $0.01 per share, in connection with
replacing our previous $550.0 million revolving credit facility with a
new $750.0 million revolving credit facility and a non-cash impairment
of assets charge of $166,000, or less than $0.01 per share, related to
two properties. 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 and a non-cash
impairment of assets charge of $1.1 million, or $0.01 per share, related
to five properties.
The weighted average number of common shares outstanding totaled 141.9
million and 127.4 million for the six months ended June 30, 2011 and
2010, respectively.
A reconciliation of net income determined according to GAAP to FFO and
Normalized FFO for the six months ended June 30, 2011 and 2010 appears
later in this press release.
Recent Investment and Sales Activities:
Since April 1, 2011, we have acquired, or we currently have under
agreements to acquire, 29 properties for an aggregate purchase price of
approximately $360.9 million, including the assumption of approximately
$91.8 million of mortgage debt and excluding closing costs:
-
In March 2011, we agreed to acquire 20 senior living communities
located in five states with an aggregate 2,111 living units (814
independent living units, 939 assisted living units, 311 Alzheimer's
care units and 47 skilled nursing beds) for approximately $304.0
million, excluding closing costs. In June 2011, we acquired 14 of
these communities for approximately $196.6 million, excluding closing
costs, and in July 2011, we acquired three of these communities for
approximately $44.7 million, excluding closing costs. We funded these
acquisitions using cash on hand, proceeds from an equity offering,
borrowings under our revolving credit facility and by assuming
approximately $48.1 million of mortgage loans in June 2011 and $12.8
million of mortgage loans in July 2011. Five Star Quality Care, Inc.,
or Five Star, has agreed to manage 15 of these 20 communities and to
lease five of these communities under long term contracts. We refer to
the 15 communities as the Managed Communities and the other five
communities as the Leased Communities. Twelve of the 17 communities
acquired in June and July 2011 are Managed Communities and the other
five communities acquired in June and July 2011 are Leased
Communities. The closing of the remaining three Managed Communities
are contingent upon customary closing conditions; accordingly, we can
provide no assurance that we will purchase these properties.
-
In April 2011, we agreed to acquire four medical office buildings, or
MOBs, located in Alachua (Gainesville), FL with a total of 157,076
square feet for an aggregate purchase price of $19.8 million,
including the assumption of approximately $3.7 million of mortgage
debt and excluding closing costs. These properties are 89% leased to
14 tenants for approximately 2.8 years. In June 2011, we acquired
three of these properties for $14.6 million, excluding closing costs.
In July 2011, we acquired the one remaining property for $5.2 million,
including the assumption of approximately $3.7 million of mortgage
debt and excluding closing costs.
-
In May 2011, we acquired one senior living community located in
Rockford (Chicago area), IL with 73 living units for approximately
$7.5 million, excluding closing costs. We leased this property to Five
Star for initial rent of approximately $608,000 per year. Percentage
rent, based on increases in gross revenues at this property, will
commence in 2013.
-
In May 2011, we acquired an MOB located in Shoreview (St. Paul), MN
with 49,809 square feet. This property is 100% leased to four tenants
for approximately 7.7 years. The purchase price was $7.2 million,
excluding closing costs.
-
In May and July 2011, we entered two separate agreements to acquire
one senior living community and two MOBs for an aggregate purchase
price of $22.7 million, including the assumption of approximately $9.7
million of mortgage debt and excluding closing costs. The senior
living community is located in California and includes 57 assisted
living units, and the two MOBs are located in Virginia and include an
aggregate of 45,578 square feet. The closings of these acquisitions
are contingent upon completion of our diligence and other customary
closing conditions; accordingly, we can provide no assurance that we
will purchase these properties.
During the second quarter of 2011, we sold seven properties, including
four skilled nursing facilities with 485 beds, two MOBs with an
aggregate of 12,578 square feet and one former assisted living community
which is being converted to another use, for combined sales prices
totaling approximately $39.5 million, excluding closing costs. We
recognized a net gain on sale of these properties of approximately $21.3
million.
In May 2011, we and Five Star entered into a loan agreement under which
we agreed to lend Five Star up to $80.0 million, or the Bridge Loan, to
fund Five Star's purchase of six senior living communities. In June
2011, Five Star acquired two of these senior living communities and, in
connection with that acquisition, borrowed $41.0 million under the
Bridge Loan; and Five Star subsequently repaid $32.0 million of this
advance in June 2011. As of June 30, 2011, there was $9.0 million
outstanding and $39.0 million available to borrow under this Bridge
Loan. In July 2011, Five Star acquired one more of these senior living
communities, and, in connection with that acquisition, borrowed $15.0
million under the Bridge Loan. As of July 28, 2011, there is $24.0
million outstanding and $24.0 million available to borrow under this
Bridge Loan. The Bridge Loan is secured by mortgages on three of the
senior living communities that Five Star acquired and on four other
senior living communities owned by Five Star. The Bridge Loan matures on
July 1, 2012 and bears interest at a rate equal to the annual rates of
interest applicable to our borrowings under our revolving credit
facility, plus 1%. We recognized interest income from this Bridge Loan
of $58,000 in the three months ended June 30, 2011, which is included in
interest and other income in our condensed consolidated statements of
income.
In June 2011, we acquired 1.0 million shares of Five Star common stock
in Five Star's public offering of 11.5 million shares of common stock
for an aggregate purchase price of $5.0 million.
Recent Financing Activities:
In June 2011, we entered into a new $750.0 million unsecured revolving
credit facility that we use for acquisitions, working capital and
general business purposes. The new facility replaces our previous $550.0
million unsecured revolving credit facility, which had a maturity date
of December 31, 2011. The maturity date of the new facility is June 24,
2015 and includes an option for us to extend the facility for one year
to June 24, 2016. Interest paid under the new facility is set at LIBOR
plus 160 basis points, subject to adjustments based on our credit
ratings.
In July 2011, we issued 11.5 million common shares in a public offering,
raising net proceeds of approximately $247.5 million. We used the net
proceeds of this offering to repay borrowings outstanding on our
revolving credit facility and for general business purposes, including
the partial funding of the July 2011 acquisitions described above.
Conference Call:
On Thursday, July 28, 2011, 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, 2011. The
conference call telephone number is (800) 230-1074. Participants calling
from outside the United States and Canada should dial (612) 288-0329. No
pass code is necessary to access the call from either number.
Participants should dial in about 15 minutes prior to the scheduled
start of the call. A replay of the conference call will be available
through 11:59 p.m. Eastern Time, Thursday, August 4, 2011. To hear the
replay, dial (320) 365-3844. The replay pass code is: 179320.
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 2011 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 339 properties
located in 37 states and Washington, D.C. as of June 30, 2011. SNH is
headquartered in Newton, MA.
Financial Information
(in thousands, except per share data)
(unaudited)
|
|
|
|
|
|
Income Statement:
|
|
|
|
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
99,904
|
|
|
$
|
80,765
|
|
|
$
|
197,981
|
|
|
$
|
161,212
|
|
Residents fees and services
|
|
|
844
|
|
|
|
-
|
|
|
|
844
|
|
|
|
-
|
|
Total revenues
|
|
|
100,748
|
|
|
|
80,765
|
|
|
|
198,825
|
|
|
|
161,212
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
26,935
|
|
|
|
22,345
|
|
|
|
53,296
|
|
|
|
44,634
|
|
Property operating expenses
|
|
|
10,815
|
|
|
|
4,154
|
|
|
|
20,818
|
|
|
|
8,539
|
|
General and administrative
|
|
|
6,876
|
|
|
|
5,403
|
|
|
|
13,010
|
|
|
|
10,894
|
|
Acquisition related costs
|
|
|
2,814
|
|
|
|
404
|
|
|
|
3,927
|
|
|
|
439
|
|
Impairment of assets
|
|
|
-
|
|
|
|
1,095
|
|
|
|
166
|
|
|
|
1,095
|
|
Total expenses
|
|
|
47,440
|
|
|
|
33,401
|
|
|
|
91,217
|
|
|
|
65,601
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
53,308
|
|
|
|
47,364
|
|
|
|
107,608
|
|
|
|
95,611
|
|
|
|
|
|
|
|
|
|
|
Interest and other income
|
|
|
254
|
|
|
|
243
|
|
|
|
509
|
|
|
|
500
|
|
Interest expense
|
|
|
(23,361
|
)
|
|
|
(20,515
|
)
|
|
|
(46,107
|
)
|
|
|
(38,929
|
)
|
Loss on early extinguishment of debt
|
|
|
(427
|
)
|
|
|
(2,433
|
)
|
|
|
(427
|
)
|
|
|
(2,433
|
)
|
Gain on sale of properties
|
|
|
21,315
|
|
|
|
-
|
|
|
|
21,315
|
|
|
|
-
|
|
Equity in earnings (losses) of an investee
|
|
|
46
|
|
|
|
(24
|
)
|
|
|
83
|
|
|
|
(52
|
)
|
Income before income tax expense
|
|
|
51,135
|
|
|
|
24,635
|
|
|
|
82,981
|
|
|
|
54,697
|
|
Income tax expense
|
|
|
(87
|
)
|
|
|
(76
|
)
|
|
|
(158
|
)
|
|
|
(154
|
)
|
Net income
|
|
$
|
51,048
|
|
|
$
|
24,559
|
|
|
$
|
82,823
|
|
|
$
|
54,543
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
141,869
|
|
|
|
127,408
|
|
|
|
141,862
|
|
|
|
127,394
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
$
|
0.36
|
|
|
$
|
0.19
|
|
|
$
|
0.58
|
|
|
$
|
0.43
|
|
Financial Information (continued)
(in thousands, except per share data)
(unaudited)
|
|
|
|
|
|
Balance Sheet:
|
|
|
|
|
|
|
At June 30, 2011
|
|
At December 31, 2010
|
Assets
|
|
|
|
|
Real estate properties
|
|
$
|
4,076,397
|
|
$
|
3,761,712
|
Less accumulated depreciation
|
|
|
577,277
|
|
|
538,872
|
|
|
|
3,499,120
|
|
|
3,222,840
|
Cash and cash equivalents
|
|
|
28,082
|
|
|
10,866
|
Restricted cash
|
|
|
5,712
|
|
|
4,994
|
Deferred financing fees, net
|
|
|
23,718
|
|
|
16,262
|
Acquired real estate leases, net
|
|
|
70,843
|
|
|
63,593
|
Loan receivable
|
|
|
9,000
|
|
|
-
|
Other assets
|
|
|
96,943
|
|
|
74,101
|
Total assets
|
|
$
|
3,733,418
|
|
$
|
3,392,656
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
Unsecured revolving credit facility
|
|
$
|
184,000
|
|
$
|
128,000
|
Senior unsecured notes, net of discount
|
|
|
670,630
|
|
|
422,880
|
Secured debt and capital leases
|
|
|
697,531
|
|
|
654,010
|
Accrued interest
|
|
|
20,093
|
|
|
14,993
|
Assumed real estate lease obligations, net
|
|
|
18,034
|
|
|
18,239
|
Other liabilities
|
|
|
40,108
|
|
|
26,557
|
Total liabilities
|
|
|
1,630,396
|
|
|
1,264,679
|
Shareholders' equity
|
|
|
2,103,022
|
|
|
2,127,977
|
Total liabilities and shareholders' equity
|
|
$
|
3,733,418
|
|
$
|
3,392,656
|
Funds from Operations and Normalized Funds from Operations
(in thousands, except per share data)
(unaudited)
|
|
|
|
|
|
Calculation of Funds from Operations (FFO) and Normalized FFO
(1):
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
Net income
|
|
$
|
51,048
|
|
|
$
|
24,559
|
|
$
|
82,823
|
|
|
$
|
54,543
|
Depreciation expense
|
|
|
26,935
|
|
|
|
22,345
|
|
|
53,296
|
|
|
|
44,634
|
Gain on sale of properties
|
|
|
(21,315
|
)
|
|
|
-
|
|
|
(21,315
|
)
|
|
|
-
|
FFO
|
|
|
56,668
|
|
|
|
46,904
|
|
|
114,804
|
|
|
|
99,177
|
Acquisition related costs
|
|
|
2,814
|
|
|
|
404
|
|
|
3,927
|
|
|
|
439
|
Loss on early extinguishment of debt
|
|
|
427
|
|
|
|
2,433
|
|
|
427
|
|
|
|
2,433
|
Impairment of assets
|
|
|
-
|
|
|
|
1,095
|
|
|
166
|
|
|
|
1,095
|
Percentage rent (2)
|
|
|
2,700
|
|
|
|
2,500
|
|
|
5,400
|
|
|
|
5,000
|
Normalized FFO
|
|
$
|
62,609
|
|
|
$
|
53,336
|
|
$
|
124,724
|
|
|
$
|
108,144
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
141,869
|
|
|
|
127,408
|
|
|
141,862
|
|
|
|
127,394
|
|
|
|
|
|
|
|
|
|
FFO per share
|
|
$
|
0.40
|
|
|
$
|
0.37
|
|
$
|
0.81
|
|
|
$
|
0.78
|
Normalized FFO per share
|
|
$
|
0.44
|
|
|
$
|
0.42
|
|
$
|
0.88
|
|
|
$
|
0.85
|
Distributions declared per share
|
|
$
|
0.37
|
|
|
$
|
0.36
|
|
$
|
0.74
|
|
|
$
|
0.72
|
(1)
|
|
We compute FFO and Normalized FFO as shown above. These measures do
not represent cash generated by operating activities in accordance
with GAAP and should not be considered as alternatives to net income
or cash flow from operating activities determined in accordance with
GAAP as indicators of our financial performance or liquidity, nor
are these measures necessarily indicative of sufficient cash flow to
fund all of our needs. We believe that in order to facilitate a
clearer understanding of our consolidated historical operating
results, these measures should be considered in conjunction with net
income and cash flow from operating activities as presented in our
Consolidated Statement of Income. FFO is computed on the basis
defined by The National Association of Real Estate Investment
Trusts, or NAREIT, which is net income, computed in accordance with
GAAP, excluding gain or loss on sale of properties, plus real estate
depreciation and amortization. Our calculation of Normalized FFO
differs from NAREIT's definition of FFO because we include
percentage rent and exclude loss on early extinguishment of debt,
impairment of assets and acquisition related costs. We consider FFO
and Normalized FFO to be appropriate measures of performance for a
REIT, along with net income and cash flow from operating, investing
and financing activities. We believe that FFO and Normalized FFO
provides useful information to investors because by excluding the
effects of certain historical amounts, such as depreciation expense,
FFO and Normalized FFO can facilitate a comparison of operating
performances between periods. FFO and Normalized FFO are among the
factors considered by our Board of Trustees when determining the
amount of distributions to shareholders. Other 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 capital requirements and operating
performance. Other REITs and real estate companies may calculate FFO
and Normalized FFO differently than we do.
|
|
(2)
|
|
Our percentage rents are generally determined on an annual basis. We
defer recognition of percentage rental income we receive during the
first, second and third quarters until the fourth quarter when all
contingencies related to percentage rents are satisfied. Although
recognition of this revenue is deferred until the fourth quarter,
our Normalized FFO calculation for the first three quarters includes
estimated amounts of percentage rents with respect to those periods.
The fourth quarter calculation of Normalized FFO excludes percentage
rents we presented for the first three quarters.
|
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. 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 AND THEIR IMPLICATIONS ARE BASED UPON OUR
PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS
AND THEIR IMPLICATIONS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.
OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR
IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS
FACTORS. FOR EXAMPLE:
-
CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT
FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND
MEETING OTHER CUSTOMARY CONDITIONS,
-
ACTUAL ANNUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY WILL BE HIGHER
THAN LIBOR PLUS A PREMIUM ON DRAWINGS BECAUSE OF OTHER FEES AND
EXPENSES ASSOCIATED WITH THE CREDIT FACILITY. ALSO, ACTUAL ANNUAL
COSTS UNDER THE CREDIT FACILITY MAY BE HIGHER THAN LIBOR PLUS A
PREMIUM ON DRAWINGS BECAUSE THE INTEREST RATE WILL INCREASE IF OUR
CREDIT RATINGS DECREASE, AND
-
OUR PENDING ACQUISITIONS OF SENIOR LIVING COMMUNITIES AND MOBS ARE
CONTINGENT UPON OUR COMPLETION OF DILIGENCE AND / OR OTHER CUSTOMARY
CLOSING CONDITIONS. ACCORDINGLY, SOME OR ALL OF THESE PURCHASES MAY BE
DELAYED OR MAY NOT OCCUR.
THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING UNDER "RISK FACTORS" IN OUR PERIODIC
REPORTS, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE OUR ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY OUR
FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION ARE AVAILABLE ON ITS WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND 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.
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
Source: Senior Housing Properties Trust
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