NEWTON, Mass.--(BUSINESS WIRE)--
Senior Housing Properties Trust (NYSE: SNH) today announced its
financial results for the quarter and year ended December 31, 2011.
Results for the quarter ended December 31, 2011:
Normalized funds from operations, or Normalized FFO, for the quarter
ended December 31, 2011 were $67.9 million, or $0.42 per share. This
compares to Normalized FFO for the quarter ended December 31, 2010 of
$57.2 million, or $0.44 per share. Normalized FFO for the quarter ended
December 31, 2011 were impacted by the timing of acquisitions and
deployment of the proceeds received from our equity and debt offerings
during the quarter, as well as the negative impact of lease value
amortization of our recent acquisitions.
Net income was $38.6 million, or $0.24 per share, for the quarter ended
December 31, 2011, compared to net income of $33.9 million, or $0.26 per
share, for the quarter ended December 31, 2010. Net income for the
quarter ended December 31, 2011 includes a non-cash impairment of assets
charge of approximately $796,000, or less than $0.01 per share, related
to one property. Net income for the quarter ended December 31, 2010
includes a non-cash impairment of assets charge of approximately $4.9
million, or $0.04 per share, related to two properties.
The weighted average number of common shares outstanding totaled 160.9
million and 130.1 million for the quarters ended December 31, 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 December 31, 2011 and
2010 appears later in this press release.
Results for the year ended December 31, 2011:
Normalized FFO for the year ended December 31, 2011 were $258.0 million,
or $1.73 per share. This compares to Normalized FFO for the year ended
December 31, 2010 of $218.8 million, or $1.71 per share.
Net income was $151.4 million, or $1.01 per share, for the year ended
December 31, 2011, compared to net income of $116.5 million, or $0.91
per share, for the year ended December 31, 2010. Net income for the year
ended December 31, 2011 includes a gain on sale of properties of
approximately $21.3 million, or $0.14 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 approximately $2.0 million, or $0.01 per share,
related to four properties. Net income for the year ended December 31,
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 approximately $6.0 million, or $0.05 per
share, related to seven properties.
The weighted average number of common shares outstanding totaled 149.6
million and 128.1 million for the year ended December 31, 2011 and 2010,
respectively.
A reconciliation of net income determined according to GAAP to FFO and
Normalized FFO for the year ended December 31, 2011 and 2010 appears
later in this press release.
Recent Investment and Sales Activities:
Since October 1, 2011, we have acquired, or we currently have under
agreements to acquire, 21 properties for an aggregate purchase price of
approximately $723.1 million, including the assumption of approximately
$229.3 million of mortgage debt and excluding closing costs:
-
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 $162.8 million of mortgage debt and excluding closing
costs. All the residents at these communities pay for services with
private resources. In December 2011, we acquired eight of these nine
communities for approximately $379.0 million, including the assumption
of approximately $130.8 million of mortgage debt and excluding closing
costs. Five Star Quality Care, Inc., or Five Star, manages these
communities under long term contracts. The purchase of the one
remaining community for approximately $99.0 million, including the
assumption of approximately $32.0 million of mortgage debt and
excluding closing costs, is subject to various conditions, including
regulatory and other third party approvals. We currently expect to
acquire this community in 2012; however, we can provide no assurance
that we will purchase this property.
-
In November 2011, we acquired two properties leased to medical
providers or medical related businesses, clinics and biotech
laboratory tenants, or MOBs, with 45,645 square feet located in
Virginia for approximately $11.4 million, including the assumption of
approximately $9.6 million of mortgage debt and excluding closing
costs. Upon acquisition, these properties were 100% leased to three
tenants for weighted (by rents) average lease terms of 6.5 years.
-
In December 2011, we acquired one MOB with 94,238 square feet located
in Indiana for approximately $21.0 million, excluding closing costs.
Upon acquisition, this property was 94.8% leased to eight tenants for
weighted (by rents) average lease terms of 9.8 years.
-
In December 2011, we acquired one senior living community located in
California with 57 assisted living units for approximately $11.3
million, excluding closing costs. All the residents at this community
pay for services with private resources. Five Star manages this
community under a long term contract.
-
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, including $78.2 million of mortgage debt and excluding
closing costs. Substantially all the residents at these communities
pay for services with private resources. Prior to October 1, 2011, we
had closed on the acquisition of 18 of these communities. Five Star
manages 13 of these communities and leases five of these 18
communities under long term contracts. We currently expect to acquire
the remaining 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, in 2012, subject to various closing conditions; accordingly, we
can provide no assurance that we will purchase these properties.
-
In February 2012, we acquired one senior living community located in
Alabama with 92 assisted living units for approximately $11.3 million,
excluding closing costs. All the residents at this community pay for
services with private resources. Five Star manages this community
under a long term contract.
-
In December 2011 and January and February 2012, we entered five
separate agreements to acquire one senior living community and four
MOBs for an aggregate purchase price of $144.8 million, including the
assumption of approximately $52.0 million of mortgage debt and
excluding closing costs. The senior living community is located in
Missouri and includes 87 independent living units, and all the
residents at this community pay for services with private resources.
The four MOBs are located in Connecticut, Georgia and Hawaii and
include an aggregate of 514,409 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
December 31, 2011, $38.0 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
July 1, 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 $348,000 and $593,000, respectively, for the quarter and year ended
December 31, 2011, which is included in interest and other income in our
condensed consolidated statements of income.
Recent Financing Activities:
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 under
our revolving credit facility.
In December 2011, we sold $300.0 million of 6.75% senior unsecured notes
due 2021, raising net proceeds of approximately $292.2 million. We used
the net proceeds of this offering to repay borrowings outstanding under
our revolving credit facility and for general business purposes,
including funding in part the acquisitions described above.
Conference Call:
On Thursday, February 16, 2012, 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 year ended December 31, 2011.
The conference call telephone number is (800) 700-7860. Participants
calling from outside the United States and Canada should dial (612)
332-0820. 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, February 23, 2012.
To hear the replay, dial (320) 365-3844. The replay pass code is: 227513.
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 fourth quarter
conference call is strictly prohibited without the prior written consent
of SNH.
Supplemental Data:
A copy of SNH's Fourth 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 owned 369
properties located in 38 states and Washington, D.C. as of December 31,
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 December 31,
|
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Year Ended December 31,
|
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
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Revenues:
|
|
|
|
|
|
|
|
|
|
Rental income
|
|
$
|
120,327
|
|
|
$
|
97,363
|
|
|
$
|
422,166
|
|
|
$
|
340,113
|
|
|
Residents fees and services
|
|
|
16,276
|
|
|
|
-
|
|
|
|
27,851
|
|
|
|
-
|
|
|
Total revenues
|
|
|
136,603
|
|
|
|
97,363
|
|
|
|
450,017
|
|
|
|
340,113
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
31,145
|
|
|
|
23,270
|
|
|
|
113,265
|
|
|
|
90,409
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|
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Property operating expenses
|
|
|
27,079
|
|
|
|
6,404
|
|
|
|
68,967
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|
|
|
20,169
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|
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General and administrative
|
|
|
6,528
|
|
|
|
5,345
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|
|
|
26,041
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|
|
|
21,677
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|
|
Acquisition related costs
|
|
|
5,692
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|
|
|
2,885
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|
|
|
12,239
|
|
|
|
3,610
|
|
|
Impairment of assets
|
|
|
796
|
|
|
|
4,870
|
|
|
|
1,990
|
|
|
|
5,965
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|
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Total expenses
|
|
|
71,240
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|
|
|
42,774
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|
|
|
222,502
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|
|
|
141,830
|
|
|
|
|
|
|
|
|
|
|
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Operating income
|
|
|
65,363
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|
|
|
54,589
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|
|
|
227,515
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|
|
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198,283
|
|
|
|
|
|
|
|
|
|
|
|
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Interest and other income
|
|
|
581
|
|
|
|
198
|
|
|
|
1,451
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|
|
|
844
|
|
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Interest expense
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|
|
(27,425
|
)
|
|
|
(20,862
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)
|
|
|
(98,262
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)
|
|
|
(80,017
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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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-
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(427
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)
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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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|
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|
-
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21,315
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|
|
109
|
|
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Equity in earnings (losses) of an investee
|
|
|
28
|
|
|
|
16
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|
|
|
139
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|
|
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(1
|
)
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Income before income tax expense
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38,547
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|
|
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33,941
|
|
|
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151,731
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|
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|
116,785
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|
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Income tax benefit (expense)
|
|
|
52
|
|
|
|
(77
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)
|
|
|
(312
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)
|
|
|
(300
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)
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Net income
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$
|
38,599
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|
|
$
|
33,864
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|
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$
|
151,419
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$
|
116,485
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|
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|
|
|
|
|
|
|
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Weighted average shares outstanding
|
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160,946
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|
|
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130,136
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|
|
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149,577
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|
|
|
128,092
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|
|
|
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|
|
|
|
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Net income per share
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$
|
0.24
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|
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$
|
0.26
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|
|
$
|
1.01
|
|
|
$
|
0.91
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|
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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 December 31, 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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4,721,591
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$
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3,761,712
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Less accumulated depreciation
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630,261
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538,872
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|
|
|
|
4,091,330
|
|
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3,222,840
|
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Cash and cash equivalents
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|
23,560
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|
|
10,866
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Restricted cash
|
|
|
7,128
|
|
|
4,994
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Deferred financing fees, net
|
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|
25,434
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|
|
16,262
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Acquired real estate leases, net
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|
100,235
|
|
|
63,593
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Loan receivable
|
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|
38,000
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|
-
|
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Other assets
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97,361
|
|
|
74,101
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Total assets
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$
|
4,383,048
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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
|
|
$
|
-
|
|
$
|
128,000
|
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Senior unsecured notes, net of discount
|
|
|
965,770
|
|
|
422,880
|
|
Secured debt and capital leases
|
|
|
861,615
|
|
|
654,010
|
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Accrued interest
|
|
|
22,281
|
|
|
14,993
|
|
Assumed real estate lease obligations, net
|
|
|
17,778
|
|
|
18,239
|
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Other liabilities
|
|
|
42,998
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|
|
26,557
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Total liabilities
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|
|
1,910,442
|
|
|
1,264,679
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|
Shareholders' equity
|
|
|
2,472,606
|
|
|
2,127,977
|
|
Total liabilities and shareholders' equity
|
|
$
|
4,383,048
|
|
$
|
3,392,656
|
|
Funds from Operations and Normalized Funds from Operations
(in thousands, except per share data)
(unaudited)
|
|
|
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|
|
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Calculation of Funds from Operations (FFO) and Normalized FFO
(1):
|
|
|
|
Quarter Ended December 31,
|
|
Year Ended December 31,
|
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
2011
|
|
|
|
2010
|
|
|
Net income
|
|
$
|
38,599
|
|
|
$
|
33,864
|
|
|
$
|
151,419
|
|
|
$
|
116,485
|
|
|
Depreciation expense
|
|
|
31,145
|
|
|
|
23,270
|
|
|
|
113,265
|
|
|
|
90,409
|
|
|
Impairment of assets
|
|
|
796
|
|
|
|
4,870
|
|
|
|
1,990
|
|
|
|
5,965
|
|
|
Gain on sale of properties
|
|
|
-
|
|
|
|
-
|
|
|
|
(21,315
|
)
|
|
|
(109
|
)
|
|
FFO
|
|
|
70,540
|
|
|
|
62,004
|
|
|
|
245,359
|
|
|
|
212,750
|
|
|
Acquisition related costs
|
|
|
5,692
|
|
|
|
2,885
|
|
|
|
12,239
|
|
|
|
3,610
|
|
|
Loss on early extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
427
|
|
|
|
2,433
|
|
|
Percentage rent (2)
|
|
|
(8,300
|
)
|
|
|
(7,700
|
)
|
|
|
-
|
|
|
|
-
|
|
|
Normalized FFO
|
|
$
|
67,932
|
|
|
$
|
57,189
|
|
|
$
|
258,025
|
|
|
$
|
218,793
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
160,946
|
|
|
|
130,136
|
|
|
|
149,577
|
|
|
|
128,092
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO per share
|
|
$
|
0.44
|
|
|
$
|
0.48
|
|
|
$
|
1.64
|
|
|
$
|
1.66
|
|
|
Normalized FFO per share
|
|
$
|
0.42
|
|
|
$
|
0.44
|
|
|
$
|
1.73
|
|
|
$
|
1.71
|
|
|
Distributions declared per share
|
|
$
|
0.38
|
|
|
$
|
0.37
|
|
|
$
|
1.50
|
|
|
$
|
1.46
|
|
(1) We calculate FFO and Normalized FFO as shown above. FFO is
calculated on the basis defined by The National Association of Real
Estate Investment Trusts, or NAREIT, which is net income, calculated in
accordance with GAAP, excluding gain or loss on sale of properties and
impairment of assets, 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 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
our 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. FFO and Normalized FFO 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 FFO and Normalized FFO 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 Consolidated
Statements of Income and Consolidated Statements of Cash Flows. 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. During the fourth quarters of
2011 and 2010, we recognized $11.3 million and $10.3 million of
percentage rent for the years ended December 31, 2011 and 2010,
respectively.
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. 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. OUR ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE CONTAINED IN OUR FORWARD LOOKING STATEMENTS AS A
RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
-
OUR PENDING ACQUISITIONS OF SENIOR LIVING COMMUNITIES AND MOBS 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 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, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS
THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
STATED IN 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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