NEWTON, Mass.--(BUSINESS WIRE)--
Senior Housing Properties Trust (NYSE: SNH) today announced its
financial results for the quarter and nine months ended September 30,
2011.
Results for the quarter ended September 30, 2011:
Normalized funds from operations, or Normalized FFO, for the quarter
ended September 30, 2011 were $65.4 million, or $0.43 per share. This
compares to Normalized FFO for the quarter ended September 30, 2010 of
$53.5 million, or $0.42 per share.
Net income was $30.0 million, or $0.20 per share, for the quarter ended
September 30, 2011, compared to net income of $28.1 million, or $0.22
per share, for the quarter ended September 30, 2010. Net income for the
quarter ended September 30, 2011 includes a non-cash impairment of
assets charge of $1.0 million, or $0.01 per share, related to one
property. Net income for the quarter ended September 30, 2010 includes a
gain on sale of properties of approximately $109,000, or less than $0.01
per share, related to the sale of four properties in August 2010.
The weighted average number of common shares outstanding totaled 153.4
million and 127.4 million for the quarters ended September 30, 2011 and
2010, respectively.
A reconciliation of net income determined according to U.S. generally
accepted accounting principles, or GAAP, to funds from operations, or
FFO, and Normalized FFO for the quarters ended September 30, 2011 and
2010 appears later in this press release.
Results for the nine months ended September 30, 2011:
Normalized FFO for the nine months ended September 30, 2011 were $190.1
million, or $1.30 per share. This compares to Normalized FFO for the
nine months ended September 30, 2010 of $161.6 million, or $1.27 per
share.
Net income was $112.8 million, or $0.77 per share, for the nine months
ended September 30, 2011, compared to net income of $82.6 million, or
$0.65 per share, for the nine months ended September 30, 2010. Net
income for the nine months ended September 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 $1.2 million, or $0.01 per
share, related to three properties. Net income for the nine months ended
September 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, a gain on sale of properties of approximately $109,000, or
less than $0.01 per share, related to the sale of four properties in
August 2010 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 145.7
million and 127.4 million for the nine months ended September 30, 2011
and 2010, respectively.
A reconciliation of net income determined according to GAAP to FFO and
Normalized FFO for the nine months ended September 30, 2011 and 2010
appears later in this press release.
Recent Investment and Sales Activities:
Since July 1, 2011, we have acquired, or we currently have under
agreements to acquire, 33 properties for an aggregate purchase price of
approximately $801.0 million, including the assumption of approximately
$207.5 million of mortgage debt and excluding closing costs:
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In July and August 2011, we acquired four senior living communities
located in Florida with an aggregate 473 units (97 independent living
units, 294 assisted living units, 63 Alzheimer's care units and 19
skilled nursing beds) for approximately $61.8 million, including the
assumption of approximately $25.2 million of mortgage debt and
excluding closing costs. These acquisitions were pursuant to our
previously announced March 2011 agreement to acquire 20 senior living
communities for approximately $304.0 million, including $78.2 million
of mortgage debt and excluding closing costs. To date, we have closed
on the acquisition of 18 of these communities for $258.4 million,
including the assumption of $73.3 million of mortgage debt and
excluding closing costs. Five Star Quality Care, Inc., or Five Star,
manages 13 of these communities and leases five of these 18
communities under long term agreements. The acquisition of two of
these 20 communities for an aggregate purchase price of approximately
$45.3 million, including the assumption of approximately $4.9 million
of mortgage debt and excluding closing costs, remain pending; the
closings of these two communities are contingent upon various closing
conditions; accordingly, we can provide no assurance that we will
purchase these communities.
-
In July 2011, we acquired a property used for medical related
services, manufacturing or research activities, or an MOB, located in
Alachua (Gainesville), FL with 32,476 square feet for $5.2 million,
including the assumption of approximately $3.7 million of mortgage
debt and excluding closing costs. This property is the last of a four
biotechnology buildings campus acquisition announced at the end of the
second quarter 2011.
-
In September 2011, we acquired 13 MOBs located in eight states with
1.3 million square feet from CommonWealth REIT for an aggregate
purchase price of $167.0 million, excluding closing costs. These
properties are 95% leased to 105 tenants with a weighted average
remaining lease term of approximately 5.0 years.
-
In July 2011, we agreed to acquire nine senior living communities
located in six states with an aggregate 2,226 living units (1,708
independent living units, 471 assisted living units and 47 Alzheimer's
care units) for approximately $478.0 million, including the assumption
of approximately $164.0 million of mortgage debt and excluding closing
costs. We expect these communities to be managed by Five Star under
long term agreements. The purchases of these communities are subject
to various conditions, including regulatory and other third party
approvals. We currently expect to acquire the majority of these
communities in the fourth quarter of 2011 and the remaining
communities are expected to be acquired in 2012; however, we can
provide no assurance that we will purchase all or any of these
properties.
-
In May, July and September 2011, we entered three separate agreements
to acquire one senior living community and three MOBs for an aggregate
purchase price of $43.7 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 three MOBs are located in
Indiana and Virginia and include an aggregate of 138,606 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.
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 September
2011, Five Star completed the acquisition of these communities. As of
September 30, 2011, $48.0 million in aggregate principal amount was
outstanding and no additional borrowings were available 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
July1, 2012 and bears interest at a rate equal to the annual rate of
interest applicable to our borrowings under our revolving credit
facility, plus 1%. We recognized interest income from this Bridge Loan
of $187 and $245, respectively, for the three and nine months ended
September 30, 2011, which is included in interest and other income in
our condensed consolidated statements of income.
Recent Financing Activities:
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 acquisitions described above.
In October 2011, we issued 9.2 million common shares in a public
offering, raising net proceeds of approximately $184.7 million. We used
the net proceeds of this offering to repay borrowings outstanding on our
revolving credit facility.
Conference Call:
On Thursday, October 27, 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 nine months ended September 30, 2011. The
conference call telephone number is (800) 553-5275. Participants calling
from outside the United States and Canada should dial (612) 332-0725. 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, November 3, 2011. To hear the
replay, dial (320) 365-3844. The replay pass code is: 218249.
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 third quarter
conference call is strictly prohibited without the prior written consent
of SNH.
Supplemental Data:
A copy of SNH's Third 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 357 properties
located in 37 states and Washington, D.C. as of September 30, 2011. SNH
is headquartered in Newton, MA.
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Financial Information
(in thousands, except per share data)
(unaudited)
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Income Statement:
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Quarter Ended September 30,
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Nine Months Ended September 30,
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2011
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2010
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2011
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2010
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Revenues:
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Rental income
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$
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102,546
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$
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80,961
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$
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300,527
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$
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242,173
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Residents fees and services
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10,731
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-
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11,575
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-
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Total revenues
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113,277
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80,961
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312,102
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242,173
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Expenses:
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Depreciation
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28,824
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22,505
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82,120
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67,139
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Property operating expenses
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19,754
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4,599
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40,572
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13,138
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General and administrative
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6,608
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5,545
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19,618
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16,439
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Acquisition related costs
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2,620
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286
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6,547
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725
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Impairment of assets
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1,028
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-
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1,194
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1,095
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Total expenses
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58,834
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32,935
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150,051
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98,536
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Operating income
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54,443
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48,026
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162,051
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143,637
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Interest and other income
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462
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203
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971
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703
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Interest expense
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(24,730
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)
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(20,226
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)
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(70,837
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)
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(59,155
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)
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Loss on early extinguishment of debt
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-
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-
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(427
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(2,433
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)
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Gain on sale of properties
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-
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109
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21,315
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109
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Equity in earnings (losses) of an investee
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28
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35
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111
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(17
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Income before income tax expense
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30,203
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28,147
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113,184
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82,844
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Income tax expense
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(207
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)
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(69
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)
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(365
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)
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(223
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Net income
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$
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29,996
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$
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28,078
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$
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112,819
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$
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82,621
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Weighted average shares outstanding
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153,385
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127,423
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145,745
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127,404
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Net income per share
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$
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0.20
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$
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0.22
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$
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0.77
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$
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0.65
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Financial Information (continued)
(in thousands, except per share data)
(unaudited)
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Balance Sheet:
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At September 30, 2011
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At December 31, 2010
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Assets
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Real estate properties
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$
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4,294,821
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$
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3,761,712
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Less accumulated depreciation
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603,309
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538,872
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3,691,512
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3,222,840
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Cash and cash equivalents
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26,845
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10,866
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Restricted cash
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7,169
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4,994
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Deferred financing fees, net
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22,844
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16,262
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Acquired real estate leases, net
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98,840
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63,593
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Loan receivable
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48,000
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-
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Other assets
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108,103
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74,101
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Total assets
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$
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4,003,313
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$
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3,392,656
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Commitments and Contingencies
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Liabilities and Shareholders' Equity
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Unsecured revolving credit facility
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$
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210,000
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$
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128,000
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Senior unsecured notes, net of discount
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670,849
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422,880
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Secured debt and capital leases
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723,928
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654,010
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Accrued interest
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15,933
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14,993
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Assumed real estate lease obligations, net
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18,853
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18,239
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Other liabilities
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54,226
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26,557
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Total liabilities
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1,693,789
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1,264,679
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Shareholders' equity
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2,309,524
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2,127,977
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Total liabilities and shareholders' equity
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$
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4,003,313
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$
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3,392,656
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Funds from Operations and Normalized Funds from Operations
(in thousands, except per share data)
(unaudited)
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Calculation of Funds from Operations (FFO) and Normalized FFO
(1):
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Quarter Ended September 30,
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Nine Months Ended September 30,
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2011
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2010
|
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2011
|
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2010
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Net income
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$
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29,996
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$
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28,078
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$
|
112,819
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$
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82,621
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Depreciation expense
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28,824
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22,505
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82,120
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67,139
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Gain on sale of properties
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-
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(109
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)
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(21,315
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)
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(109
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FFO
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58,820
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50,474
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173,624
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149,651
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Acquisition related costs
|
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2,620
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|
286
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6,547
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|
|
725
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Loss on early extinguishment of debt
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|
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-
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-
|
|
|
|
|
427
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|
2,433
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Impairment of assets
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|
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|
|
1,028
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-
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1,194
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1,095
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Percentage rent (2)
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2,900
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2,700
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8,300
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|
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7,700
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Normalized FFO
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$
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65,368
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$
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53,460
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$
|
190,092
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$
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161,604
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Weighted average shares outstanding
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153,385
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127,423
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145,745
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127,404
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FFO per share
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$
|
0.38
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$
|
0.40
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$
|
1.19
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$
|
1.17
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Normalized FFO per share
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$
|
0.43
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$
|
0.42
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$
|
1.30
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$
|
1.27
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Distributions declared per share
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$
|
0.38
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$
|
0.37
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$
|
1.12
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$
|
1.09
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(1) We compute FFO and Normalized FFO as shown above. 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 provide 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. 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 this
data may facilitate an 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 Condensed Consolidated Statements of Income. 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 ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR
EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS 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, INCLUDING SOME THAT ARE BEYOND OUR CONTROL. FOR EXAMPLE:
-
OUR PENDING ACQUISITIONS OF SENIOR LIVING COMMUNITIES AND MOBS AND
CERTAIN RELATED MANAGEMENT ARRANGEMENTS ARE CONTINGENT UPON VARIOUS
CLOSING CONDITIONS, INCLUDING IN SOME CASES, OUR COMPLETION OF
DILIGENCE AND / OR REGULATORY, LENDER OR OTHER THIRD PARTY APPROVALS.
ACCORDINGLY, SOME OR ALL OF THESE PURCHASES AND ANY RELATED MANAGEMENT
ARRANGEMENTS MAY BE DELAYED OR MAY NOT OCCUR.
THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, OR THE SEC, INCLUDING UNDER "RISK FACTORS" IN OUR
PERIODIC REPORTS, OR INCORPORATED THEREIN, 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 SEC ARE AVAILABLE ON THE SEC'S 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.
Timothy A. Bonang, Vice President, Investor Relations
or
Elisabeth
Heiss, Manager, Investor Relations
617-796-8234
www.snhreit.com
Source: Senior Housing Properties Trust
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