First Quarter Net Income Attributable to Common Shareholders of $0.99
Per Share
First Quarter Normalized FFO of $0.45 Per Share
NEWTON, Mass.--(BUSINESS WIRE)--
Senior Housing Properties Trust (Nasdaq: SNH) today announced its
financial results for the quarter ended March 31, 2018.
“2018 is off to a strong start, as we were able to put a large amount of
capital to work which will be additive to our portfolio of stable, high
quality healthcare real estate,” said Jennifer Francis, President and
Chief Operating Officer. "During the quarter, we sold $217 million of
senior living communities at low cap rates generating significant book
gains, and accretively recycled the capital into $155 million of senior
living and MOB acquisitions. Since the beginning of 2017, we have sold
$812 million of assets and accretively recycled the proceeds into $307
million of acquisitions. We continue to make good progress selectively
reinvesting capital into high quality healthcare real estate.
We would also like to recognize and thank David Hegarty for his
contributions to SNH since its founding in 1999. His expertise and
commitment helped develop SNH into a premier healthcare REIT.”
Results for the Quarter Ended March 31, 2018:
Net income attributable to common shareholders was $236.0 million, or
$0.99 per diluted share, for the quarter ended March 31, 2018 compared
to $32.2 million, or $0.14 per diluted share, for the quarter ended
March 31, 2017. This increase in net income attributable to common
shareholders is primarily the result of a $181.2 million gain on sale of
properties recognized for the quarter ended March 31, 2018, unrealized
gains and losses on equity securities, net, of $27.2 million which,
effective January 1, 2018, is included in earnings in accordance with an
update to U.S. generally accepted accounting principles, or GAAP, as
well as SNH's acquisitions since January 1, 2017. These increases were
partially offset by an increase in general and administrative expenses
due to the $14.3 million of business management incentive fee expense
recognized for the quarter ended March 31, 2018 as a result of SNH's
total shareholder return, as defined, exceeding the returns for the SNL
U.S. REIT Healthcare index over the applicable measurement period
compared to the $3.3 million of business management incentive fee
expense recognized for the quarter ended March 31, 2017. Normalized
funds from operations, or Normalized FFO, were $107.2 million and $108.4
million, respectively, or $0.45 and $0.46 per diluted share,
respectively, for the quarters ended March 31, 2018 and 2017.
Reconciliations of net income attributable to common shareholders
determined in accordance with GAAP to funds from operations, or FFO, and
Normalized FFO for the quarters ended March 31, 2018 and 2017 appear
later in this press release.
Portfolio Operating Results:
For the quarter ended March 31, 2018, 41.9% of net operating income, or
NOI, came from 129 properties leased to medical providers, medical
related businesses, clinics and biotech laboratory tenants, or MOBs,
with 12.6 million leasable square feet. As of March 31, 2018, 95.1% of
MOB square feet were leased compared to 96.4% as of March 31, 2017.
Occupancy at MOBs owned continuously since January 1, 2017, or same
property, was 94.9% as of March 31, 2018 compared to 96.3% as of
March 31, 2017. Same property cash basis net operating income, or Cash
Basis NOI, from MOBs decreased 1.9% for the quarter ended March 31, 2018
compared to the quarter ended March 31, 2017.
For the quarter ended March 31, 2018, 40.6% of NOI came from 233 triple
net leased senior living communities with 24,947 living units. The
weighted average rent coverage for triple net leased senior living
communities decreased to 1.20x for the 12 month period ended December
31, 2017 compared to 1.26x for the 12 month period ended December 31,
2016(1)(2). Same property Cash Basis NOI from triple net
leased senior living communities increased 1.9% for the quarter ended
March 31, 2018 compared to the quarter ended March 31, 2017.
For the quarter ended March 31, 2018, 14.8% of NOI came from 72 managed
senior living communities with 9,258 living units. Occupancy at managed
senior living communities was 85.8% for the quarter ended March 31, 2018
compared to 86.0% for the quarter ended March 31, 2017. Same property
occupancy at managed senior living communities was 85.8% for the quarter
ended March 31, 2018 compared to 86.0% for the quarter ended March 31,
2017. Same property average monthly rates at managed senior living
communities were $4,318 for the quarter ended March 31, 2018, which
rates were generally consistent with the rates for the quarter ended
March 31, 2017. Same property Cash Basis NOI from managed senior living
communities decreased 1.6% for the quarter ended March 31, 2018 compared
to the quarter ended March 31, 2017.
SNH's 10 wellness centers remained 100% leased as of March 31, 2018 and
March 31, 2017, and provided SNH with Cash Basis NOI of $4.4 million in
each of the three months ended March 31, 2018 and 2017.
Reconciliations of net income determined in accordance with GAAP to same
property Cash Basis NOI by operating segment for the quarters ended
March 31, 2018 and 2017 appear later in this press release.
Financing Activities:
In January 2018, SNH prepaid approximately $4.3 million of secured debt
encumbering one senior living community with an annual interest rate of
4.375% and a maturity date in September 2043.
In February 2018, SNH issued $500.0 million of 4.75% senior unsecured
notes due 2028. SNH used the net proceeds of this offering to reduce the
outstanding balance under its revolving credit facility.
Investment Activities:
In November 2017, SNH agreed to acquire six senior living communities
from Five Star Senior Living Inc. (Nasdaq: FVE), or Five Star, for an
aggregate purchase price of approximately $104.0 million, including
SNH’s assumption of approximately $33.7 million of mortgage debt secured
by certain of these senior living communities and excluding closing
costs. In December 2017, SNH acquired two of these communities for an
aggregate purchase price of approximately $39.2 million, excluding
closing costs. In January 2018, SNH acquired one of these communities
for approximately $19.7 million, excluding closing costs. In February
2018, SNH acquired one of these communities for approximately $22.2
million, including the assumption of approximately $16.8 million of
mortgage debt and excluding closing costs. In connection with these
acquisitions, SNH entered management and pooling agreements with Five
Star for Five Star to manage these senior living communities for SNH,
and SNH expects to enter management and pooling agreements with Five
Star concurrent with the acquisition of the remaining two communities.
The closings of the acquisitions of the remaining two communities for an
aggregate purchase price of approximately $23.3 million, including SNH's
assumption of approximately $16.8 million of mortgage debt, are expected
to occur by the end of the second quarter of 2018 as third party
approvals are received.
In January 2018, SNH acquired three MOBs (three buildings) located in
Kansas, Missouri and California with a total of approximately 400,000
square feet for an aggregate purchase price of approximately $91.2
million, excluding closing costs.
In March 2018, SNH acquired one MOB (one building) located in Virginia
with approximately 135,000 square feet for a purchase price of
approximately $22.8 million, including the assumption of approximately
$11.1 million of mortgage debt and excluding closing costs.
During the quarter ended March 31, 2018, SNH invested approximately $2.2
million in improvements at its owned senior living communities that has
generated or will generate additional rent under the terms of its
existing senior living communities’ leases. SNH regularly makes
additional investments at its MOBs and its managed senior living
communities that it expects may maintain or enhance the competitive
positions of those properties and may increase its operating revenue
from those properties.
Disposition Activities:
In March 2018, SNH sold two senior living communities that were leased
to Sunrise Senior Living, LLC, or Sunrise, for an aggregate sales price
of $217.0 million, excluding closing costs, resulting in a gain of
approximately $181.2 million. SNH has agreed to sell an additional
senior living community leased to Sunrise for a sales price of $96.0
million, and expects the closing of this sale to occur before the end of
the second quarter of 2018. SNH expects to realize a gain of
approximately $80.0 million related to this sale.
In March 2018, SNH agreed to sell one skilled nursing facility, or SNF,
leased to Five Star for a sales price of approximately $6.5 million,
excluding closing costs. SNH expects the closing of the sale of this SNF
to occur before the end of 2018. SNH expects to realize a gain of
approximately $3.0 million related to this sale.
Conference Call:
At 8:00 a.m. Eastern Time on Thursday, May 10, 2018, President and Chief
Operating Officer, Jennifer Francis, and Chief Financial Officer and
Treasurer, Richard Siedel, will host a conference call to discuss SNH's
first quarter 2018 financial results. The conference call telephone
number is (877) 329-4297. Participants calling from outside the United
States and Canada should dial (412) 317-5435. 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. on Thursday, May
17, 2018. To access the replay, dial (412) 317-0088. The replay pass
code is 10118590.
A live audio webcast of the conference call will also be available in a
listen-only mode on SNH’s website, which is located at www.snhreit.com.
Participants wanting to access the webcast should visit SNH’s website
about five minutes before the call. The archived webcast will be
available for replay on SNH’s website following the call for about one
week. The transcription, recording and retransmission in any way of
SNH’s first quarter conference call are strictly prohibited without the
prior written consent of SNH.
Supplemental Data:
A copy of SNH’s First Quarter 2018 Supplemental Operating and Financial
Data is available for download at SNH’s website, which is located at 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 senior living
communities, medical office and life science properties and wellness
centers throughout the United States. SNH is managed by the operating
subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset
management company that is headquartered in Newton, MA.
Please see the pages attached hereto for a more detailed statement of
SNH’s operating results and financial condition, and for an explanation
of SNH’s calculation of FFO, Normalized FFO, NOI and Cash Basis NOI and
a reconciliation of those amounts to amounts determined in accordance
with GAAP.
__________________________________________________________________________________________________________________________________
(1) SNH reports rent coverage one quarter in arrears because
operating results from tenants are usually provided to SNH three months
after the end of a fiscal quarter. Operating data from triple net leased
senior living communities are provided by tenants and SNH has not
independently verified this information.
(2) Excludes data for periods prior to SNH's ownership
of certain properties, as well as properties sold or classified as held
for sale during the periods presented.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING
STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER SNH USES
WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”,
“ESTIMATE”, "WILL", “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR
SIMILAR EXPRESSIONS, SNH IS MAKING FORWARD LOOKING STATEMENTS. THESE
FORWARD LOOKING STATEMENTS ARE BASED UPON SNH’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 SNH’S FORWARD LOOKING STATEMENTS AS A RESULT
OF VARIOUS FACTORS. FOR EXAMPLE:
-
MS. FRANCIS NOTES SNH’S STRONG START TO 2018 WITH RESPECT TO CAPITAL
REINVESTMENT. HOWEVER, SNH CANNOT BE SURE THAT IT WILL SUSTAIN THE
LEVEL OF DISPOSITION AND ACQUISITION ACTIVITY IT HAS ACHIEVED SINCE
THE BEGINNING OF 2017, AND IN FACT, SNH’S DISPOSITION AND ACQUISITION
ACTIVITY AND CORRESPONDING CAPITAL REINVESTMENT COULD DECLINE OR NOT
BE AS ACCRETIVE AS IN THE PAST.
-
THIS PRESS RELEASE INCLUDES A STATEMENT THAT SNH EXPECTS THE
ADDITIONAL INVESTMENTS IT REGULARLY MAKES AT ITS MOBS AND SENIOR
LIVING COMMUNITIES MAY MAINTAIN OR ENHANCE THE COMPETITIVE POSITION OF
THOSE PROPERTIES AND MAY INCREASE ITS OPERATING REVENUE FROM THOSE
PROPERTIES. HOWEVER, THERE CAN BE NO ASSURANCE THAT THE FUTURE
COMPETITIVE POSITION OF, OR THE OPERATING REVENUE FROM, THOSE
PROPERTIES WILL INCREASE AS A RESULT OF THESE INVESTMENTS OR
OTHERWISE. IN FACT, THE COMPETITIVE POSITION OF, AND SNH’S REVENUES
FROM, THOSE PROPERTIES MAY DECLINE.
-
SNH HAS AGREED TO ACQUIRE TWO SENIOR LIVING COMMUNITIES FOR
APPROXIMATELY $23.3 MILLION, INCLUDING SNH’S ASSUMPTION OF
APPROXIMATELY $16.8 MILLION OF MORTGAGE DEBT AND EXCLUDING CLOSING
COSTS, AND SNH EXPECTS TO ENTER MANAGEMENT AND POOLING AGREEMENTS WITH
FIVE STAR FOR FIVE STAR TO MANAGE THESE TWO SENIOR LIVING COMMUNITIES.
THESE ACQUISITIONS ARE SUBJECT TO CONDITIONS. THESE CONDITIONS MAY NOT
BE MET AND THESE ACQUISITIONS AND ANY RELATED MANAGEMENT AND POOLING
AGREEMENTS MAY NOT OCCUR, MAY BE DELAYED BEYOND THE SECOND QUARTER OF
2018 OR THEIR TERMS MAY CHANGE.
-
SNH HAS AGREED TO SELL ONE SENIOR LIVING COMMUNITY AND ONE SNF FOR AN
AGGREGATE SALES PRICE OF APPROXIMATELY $102.5 MILLION, EXCLUDING
CLOSING COSTS, AND REALIZE AGGREGATE GAINS OF $83.0 MILLION. THESE
SALES ARE SUBJECT TO CONDITIONS. THESE CONDITIONS MAY NOT BE MET AND
THESE SALES MAY NOT OCCUR, MAY BE DELAYED OR THEIR TERMS MAY CHANGE,
AND SNH MAY NOT REALIZE THE EXPECTED GAINS ON THESE SALES.
THE INFORMATION CONTAINED IN SNH’S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER “RISK FACTORS” IN SNH’S
PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT
FACTORS THAT COULD CAUSE SNH’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE STATED IN OR IMPLIED BY SNH’S FORWARD LOOKING STATEMENTS. SNH’S
FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, SNH DOES NOT INTEND TO UPDATE OR CHANGE ANY
FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS
OR OTHERWISE.
|
|
|
|
SENIOR HOUSING PROPERTIES TRUST CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (amounts in
thousands, except per share data) (unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
Revenues:
|
|
|
|
|
|
Rental income
|
|
|
$
|
173,728
|
|
|
$
|
166,443
|
|
Residents fees and services
|
|
|
102,087
|
|
|
98,118
|
|
Total revenues
|
|
|
275,815
|
|
|
264,561
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Property operating expenses
|
|
|
108,143
|
|
|
101,057
|
|
Depreciation and amortization
|
|
|
70,339
|
|
|
73,175
|
|
General and administrative (1)
|
|
|
25,118
|
|
|
15,083
|
|
Acquisition and certain other transaction related costs
|
|
|
20
|
|
|
292
|
|
Total expenses
|
|
|
203,620
|
|
|
189,607
|
|
|
|
|
|
|
|
Operating income
|
|
|
72,195
|
|
|
74,954
|
|
|
|
|
|
|
|
Dividend income
|
|
|
659
|
|
|
659
|
|
Unrealized gains and losses on equity securities, net (2)
|
|
|
27,241
|
|
|
|
—
|
|
Interest and other income
|
|
|
54
|
|
|
120
|
|
Interest expense
|
|
|
(43,552
|
)
|
|
(43,488
|
)
|
Loss on early extinguishment of debt
|
|
|
(130
|
)
|
|
—
|
|
Income from continuing operations before income tax expense and
equity in earnings of an investee
|
|
|
56,467
|
|
|
32,245
|
|
Income tax expense
|
|
|
(260
|
)
|
|
(92
|
)
|
Equity in earnings of an investee
|
|
|
44
|
|
|
128
|
|
Income before gain on sale of properties
|
|
|
56,251
|
|
|
32,281
|
|
Gain on sale of properties
|
|
|
181,154
|
|
|
—
|
|
Net income
|
|
|
237,405
|
|
|
32,281
|
|
Net income attributable to noncontrolling interest
|
|
|
(1,383
|
)
|
|
(126
|
)
|
Net income attributable to common shareholders
|
|
|
$
|
236,022
|
|
|
$
|
32,155
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (basic)
|
|
|
237,478
|
|
|
237,391
|
|
Weighted average common shares outstanding (diluted)
|
|
|
237,493
|
|
|
237,416
|
|
|
|
|
|
|
|
Per common share data (basic and diluted):
|
|
|
|
|
|
Net income attributable to common shareholders
|
|
|
$
|
0.99
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
(1) General and administrative expenses include estimated business
management incentive fee expense of $14,347 and $3,266 for the three
months ended March 31, 2018 and 2017, respectively.
(2) Unrealized gains and losses on equity securities, net, represent the
adjustment required to adjust the carrying value of SNH's investments in
RMR Inc. and Five Star common shares to their fair value as of March 31,
2018 in accordance with new GAAP standards effective January 1, 2018.
|
SENIOR HOUSING PROPERTIES TRUST CONSOLIDATED
STATEMENTS OF FFO AND NORMALIZED FFO (amounts in
thousands, except per share data) (unaudited)
|
Calculation of FFO and Normalized FFO (1):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
Net income attributable to common shareholders
|
|
|
$
|
236,022
|
|
|
$
|
32,155
|
|
Depreciation and amortization expense
|
|
|
70,339
|
|
|
73,175
|
|
Noncontrolling interest's share of net FFO adjustments
|
|
|
(5,300
|
)
|
|
(456
|
)
|
Gain on sale of properties
|
|
|
(181,154
|
)
|
|
—
|
|
FFO
|
|
|
119,907
|
|
|
104,874
|
|
|
|
|
|
|
|
Estimated business management incentive fees (2)
|
|
|
14,347
|
|
|
3,266
|
|
Acquisition and certain other transaction related costs
|
|
|
20
|
|
|
292
|
|
Loss on early extinguishment of debt
|
|
|
130
|
|
|
—
|
|
Unrealized gains and losses on equity securities, net (3)
|
|
|
(27,241
|
)
|
|
—
|
|
Normalized FFO
|
|
|
$
|
107,163
|
|
|
$
|
108,432
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (basic)
|
|
|
237,478
|
|
|
237,391
|
|
Weighted average common shares outstanding (diluted)
|
|
|
237,493
|
|
|
237,416
|
|
|
|
|
|
|
|
Per common share data (basic and diluted):
|
|
|
|
|
|
Net income attributable to common shareholders
|
|
|
$
|
0.99
|
|
|
$
|
0.14
|
|
FFO
|
|
|
$
|
0.50
|
|
|
$
|
0.44
|
|
Normalized FFO
|
|
|
$
|
0.45
|
|
|
$
|
0.46
|
|
Distributions declared
|
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
(1) SNH calculates 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 attributable to
common shareholders, calculated in accordance with GAAP, excluding any
gain or loss on sale of properties and loss on impairment of real estate
assets, if any, plus real estate depreciation and amortization and the
difference between net income attributable to common shareholders and
FFO attributable to noncontrolling interest, as well as certain other
adjustments currently not applicable to SNH. SNH’s calculation of
Normalized FFO differs from Nareit’s definition of FFO because SNH
includes business management incentive fees, if any, only in the fourth
quarter versus the quarter when they are recognized as expense in
accordance with GAAP due to their quarterly volatility not necessarily
being indicative of SNH’s core operating performance and the uncertainty
as to whether any such business management incentive fees will be
payable when all contingencies for determining such fees are known at
the end of the calendar year, and SNH excludes acquisition and certain
other transaction related costs expensed under GAAP such as legal and
professional fees associated with SNH's acquisition and disposition
activities, gains and losses on early extinguishment of debt, if any,
unrealized gains and losses on equity securities, net, if any, and
Normalized FFO from noncontrolling interest, net of FFO, if any. SNH
considers FFO and Normalized FFO to be appropriate supplemental measures
of operating performance for a REIT, along with net income, net income
attributable to common shareholders and operating income. SNH believes
that FFO and Normalized FFO provide useful information to investors,
because by excluding the effects of certain historical amounts, such as
depreciation and amortization expense, FFO and Normalized FFO may
facilitate a comparison of SNH's operating performance between periods
and with other REITs. FFO and Normalized FFO are among the factors
considered by SNH’s Board of Trustees when determining the amount of
distributions to its shareholders. Other factors include, but are not
limited to, requirements to maintain SNH’s qualification for taxation as
a REIT, limitations in SNH’s revolving credit facility and term loan
agreements and SNH’s public debt covenants, the availability to SNH of
debt and equity capital, SNH’s expectation of its future capital
requirements and operating performance and SNH’s expected needs for and
availability of cash to pay its obligations. FFO and Normalized FFO do
not represent cash generated by operating activities in accordance with
GAAP and should not be considered alternatives to net income, net income
attributable to common shareholders or operating income as indicators of
SNH’s operating performance or as measures of SNH’s liquidity. These
measures should be considered in conjunction with net income, net income
attributable to common shareholders and operating income as presented in
SNH’s condensed consolidated statements of income. Other real estate
companies and REITs may calculate FFO and Normalized FFO differently
than SNH does.
(2) Incentive fees under SNH’s business management agreement are payable
after the end of each calendar year, are calculated based on common
share total return, as defined, and are included in general and
administrative expense in SNH’s consolidated statements of income. In
calculating net income attributable to common shareholders in accordance
with GAAP, SNH recognizes estimated business management incentive fee
expense, if any, in the first, second and third quarters. Although SNH
recognizes this expense, if any, in the first, second and third quarters
for purposes of calculating net income attributable to common
shareholders, SNH does not include these amounts in the calculation of
Normalized FFO until the fourth quarter, when the amount of the business
management incentive fee expense for the calendar year, if any, is
determined.
(3) Unrealized gains and losses on equity securities, net, represent the
adjustment required to adjust the carrying value of SNH's investments in
RMR Inc. and Five Star common shares to their fair value as of March 31,
2018 in accordance with new GAAP standards effective January 1, 2018.
|
SENIOR HOUSING PROPERTIES TRUST CALCULATION AND
RECONCILIATION OF NET OPERATING INCOME (NOI) AND CASH BASIS NOI (amounts
in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2018
|
|
2017
|
Calculation of NOI and Cash Basis NOI(1):
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Rental income
|
|
|
$
|
173,728
|
|
|
$
|
166,443
|
|
Residents fees and services
|
|
|
102,087
|
|
|
98,118
|
|
Total revenues
|
|
|
275,815
|
|
|
264,561
|
|
Property operating expenses
|
|
|
(108,143
|
)
|
|
(101,057
|
)
|
Property net operating income (NOI):
|
|
|
167,672
|
|
|
163,504
|
|
Non-cash straight line rent adjustments
|
|
|
(2,993
|
)
|
|
(3,429
|
)
|
Lease value amortization
|
|
|
(1,381
|
)
|
|
(1,291
|
)
|
Non-cash amortization included in property operating expenses(2)
|
|
|
(199
|
)
|
|
(199
|
)
|
Cash Basis NOI
|
|
|
$
|
163,099
|
|
|
$
|
158,585
|
|
|
|
|
|
|
|
Reconciliation of Net Income to Cash
Basis NOI:
|
|
|
|
|
|
Net income
|
|
|
$
|
237,405
|
|
|
$
|
32,281
|
|
Gain on sale of properties
|
|
|
(181,154
|
)
|
|
—
|
|
Income before gain on sale of properties
|
|
|
56,251
|
|
|
32,281
|
|
|
|
|
|
|
|
Equity in earnings of an investee
|
|
|
(44
|
)
|
|
(128
|
)
|
Income tax expense
|
|
|
260
|
|
|
92
|
|
Loss on early extinguishment of debt
|
|
|
130
|
|
|
—
|
|
Interest expense
|
|
|
43,552
|
|
|
43,488
|
|
Interest and other income
|
|
|
(54
|
)
|
|
(120
|
)
|
Unrealized gains and losses on equity securities, net
|
|
|
(27,241
|
)
|
|
—
|
|
Dividend income
|
|
|
(659
|
)
|
|
(659
|
)
|
Operating income
|
|
|
72,195
|
|
|
74,954
|
|
|
|
|
|
|
|
Acquisition and certain other transaction related costs
|
|
|
20
|
|
|
292
|
|
General and administrative expense
|
|
|
25,118
|
|
|
15,083
|
|
Depreciation and amortization expense
|
|
|
70,339
|
|
|
73,175
|
|
Property NOI
|
|
|
167,672
|
|
|
163,504
|
|
|
|
|
|
|
|
Non-cash amortization included in property operating expenses(2)
|
|
|
(199
|
)
|
|
(199
|
)
|
Lease value amortization
|
|
|
(1,381
|
)
|
|
(1,291
|
)
|
Non-cash straight line rent adjustments
|
|
|
(2,993
|
)
|
|
(3,429
|
)
|
Cash Basis NOI
|
|
|
$
|
163,099
|
|
|
$
|
158,585
|
|
|
|
|
|
|
|
|
|
|
|
(1) The calculations of NOI and Cash Basis NOI exclude certain
components of net income in order to provide results that are more
closely related to SNH’s property level results of operations. SNH
calculates NOI and Cash Basis NOI as shown above. SNH defines NOI as
income from its real estate less its property operating expenses. NOI
excludes amortization of capitalized tenant improvement costs and
leasing commissions that SNH records as depreciation and amortization.
SNH defines Cash Basis NOI as NOI excluding non-cash straight line rent
adjustments, lease value amortization, lease termination fee
amortization, if any, and non-cash amortization included in property
operating expenses. SNH considers NOI and Cash Basis NOI to be
appropriate supplemental measures to net income because they may help
both investors and management to understand the operations of SNH’s
properties. SNH uses NOI and Cash Basis NOI to evaluate individual and
company wide property level performance, and it believes that NOI and
Cash Basis NOI provide useful information to investors regarding its
results of operations because these measures reflect only those income
and expense items that are generated and incurred at the property level
and may facilitate comparisons of its operating performance between
periods and with other REITs. NOI and Cash Basis NOI do not represent
cash generated by operating activities in accordance with GAAP and
should not be considered alternatives to net income, net income
attributable to common shareholders or operating income as indicators of
SNH’s operating performance or as measures of SNH’s liquidity. These
measures should be considered in conjunction with net income, net income
attributable to common shareholders and operating income as presented in
SNH’s condensed consolidated statements of income. Other real estate
companies and REITs may calculate NOI and Cash Basis NOI differently
than SNH does.
(2) SNH recorded a liability for the amount by which the estimated fair
value for accounting purposes exceeded the price SNH paid for its
investment in RMR Inc. common stock in June 2015. A portion of this
liability is being amortized on a straight line basis through
December 31, 2035 as a reduction to property management fee expense,
which is included in property operating expenses.
|
|
|
|
|
|
SENIOR HOUSING PROPERTIES TRUST Calculation and
Reconciliation of NOI, Cash Basis NOI, Same Property NOI and Same
Property Cash Basis NOI by Segment (1) (dollars
in thousands) (unaudited)
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2018
|
|
For the Three Months Ended March 31, 2017
|
Calculation of NOI and Cash Basis NOI:
|
|
|
Triple Net Leased Senior Living Communities
|
|
Managed Senior Living Communities
|
|
MOBs
|
|
Non- Segment (2)
|
|
Total
|
|
Triple Net Leased Senior Living Communities
|
|
Managed Senior Living Communities
|
|
MOBs
|
|
Non- Segment (2)
|
|
Total
|
Rental income / residents fees and services
|
|
|
$
|
67,975
|
|
|
$
|
102,087
|
|
|
$
|
101,151
|
|
|
$
|
4,602
|
|
|
$
|
275,815
|
|
|
$
|
67,252
|
|
|
$
|
98,118
|
|
|
$
|
94,646
|
|
|
$
|
4,545
|
|
|
$
|
264,561
|
|
Property operating expenses
|
|
|
—
|
|
|
(77,205
|
)
|
|
(30,938
|
)
|
|
—
|
|
|
(108,143
|
)
|
|
—
|
|
|
(73,880
|
)
|
|
(27,177
|
)
|
|
—
|
|
|
(101,057
|
)
|
Property net operating income (NOI)
|
|
|
$
|
67,975
|
|
|
$
|
24,882
|
|
|
$
|
70,213
|
|
|
$
|
4,602
|
|
|
$
|
167,672
|
|
|
$
|
67,252
|
|
|
$
|
24,238
|
|
|
$
|
67,469
|
|
|
$
|
4,545
|
|
|
$
|
163,504
|
|
NOI change
|
|
|
1.1
|
%
|
|
2.7
|
%
|
|
4.1
|
%
|
|
1.3
|
%
|
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property NOI
|
|
|
$
|
67,975
|
|
|
$
|
24,882
|
|
|
$
|
70,213
|
|
|
$
|
4,602
|
|
|
$
|
167,672
|
|
|
$
|
67,252
|
|
|
$
|
24,238
|
|
|
$
|
67,469
|
|
|
$
|
4,545
|
|
|
$
|
163,504
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash straight line rent adjustments
|
|
|
619
|
|
|
—
|
|
|
2,236
|
|
|
138
|
|
|
2,993
|
|
|
776
|
|
|
—
|
|
|
2,515
|
|
|
138
|
|
|
3,429
|
|
Lease value amortization
|
|
|
—
|
|
|
—
|
|
|
1,326
|
|
|
55
|
|
|
1,381
|
|
|
—
|
|
|
—
|
|
|
1,236
|
|
|
55
|
|
|
1,291
|
|
Non-cash amortization included in property operating expenses (3)
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
199
|
|
Cash Basis NOI
|
|
|
$
|
67,356
|
|
|
$
|
24,882
|
|
|
$
|
66,452
|
|
|
$
|
4,409
|
|
|
$
|
163,099
|
|
|
$
|
66,476
|
|
|
$
|
24,238
|
|
|
$
|
63,519
|
|
|
$
|
4,352
|
|
|
$
|
158,585
|
|
Cash Basis NOI change
|
|
|
1.3
|
%
|
|
2.7
|
%
|
|
4.6
|
%
|
|
1.3
|
%
|
|
2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of NOI to Same Property NOI:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property NOI
|
|
|
$
|
67,975
|
|
|
$
|
24,882
|
|
|
$
|
70,213
|
|
|
$
|
4,602
|
|
|
$
|
167,672
|
|
|
$
|
67,252
|
|
|
$
|
24,238
|
|
|
$
|
67,469
|
|
|
$
|
4,545
|
|
|
$
|
163,504
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI not included in same property
|
|
|
1,762
|
|
|
1,025
|
|
|
4,626
|
|
|
—
|
|
|
7,413
|
|
|
2,124
|
|
|
5
|
|
|
266
|
|
|
—
|
|
|
2,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same property NOI (4)
|
|
|
$
|
66,213
|
|
|
$
|
23,857
|
|
|
$
|
65,587
|
|
|
$
|
4,602
|
|
|
$
|
160,259
|
|
|
$
|
65,128
|
|
|
$
|
24,233
|
|
|
$
|
67,203
|
|
|
$
|
4,545
|
|
|
$
|
161,109
|
|
Same property NOI change
|
|
|
1.7
|
%
|
|
(1.6
|
)%
|
|
(2.4
|
)%
|
|
1.3
|
%
|
|
(0.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Same Property NOI to Same Property Cash Basis
NOI:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same property NOI (4)
|
|
|
$
|
66,213
|
|
|
$
|
23,857
|
|
|
$
|
65,587
|
|
|
$
|
4,602
|
|
|
$
|
160,259
|
|
|
$
|
65,128
|
|
|
$
|
24,233
|
|
|
$
|
67,203
|
|
|
$
|
4,545
|
|
|
$
|
161,109
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash straight line rent adjustments
|
|
|
619
|
|
|
—
|
|
|
1,938
|
|
|
138
|
|
|
2,695
|
|
|
776
|
|
|
—
|
|
|
2,488
|
|
|
138
|
|
|
3,402
|
|
Lease value amortization
|
|
|
—
|
|
|
—
|
|
|
1,373
|
|
|
55
|
|
|
1,428
|
|
|
—
|
|
|
—
|
|
|
1,238
|
|
|
55
|
|
|
1,293
|
|
Non-cash amortization included in property operating expenses
(3)
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
—
|
|
|
199
|
|
Same property cash basis NOI (4)
|
|
|
$
|
65,594
|
|
|
$
|
23,857
|
|
|
$
|
62,077
|
|
|
$
|
4,409
|
|
|
$
|
155,937
|
|
|
$
|
64,352
|
|
|
$
|
24,233
|
|
|
$
|
63,278
|
|
|
$
|
4,352
|
|
|
$
|
156,215
|
|
Same property cash basis NOI change
|
|
|
1.9
|
%
|
|
(1.6
|
)%
|
|
(1.9
|
)%
|
|
1.3
|
%
|
|
(0.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See above for the calculation of NOI and a reconciliation of net
income determined in accordance with GAAP to that amount. For a
definition of NOI and Cash Basis NOI, a description of why management
believes they are appropriate supplemental measures and a description of
how management uses these measures, please see footnote 1 to the table
included on page 7.
(2) Includes the operating results of certain
properties that offer wellness, fitness and spa services to members.
(3)
SNH recorded a liability for the amount by which the estimated fair
value for accounting purposes exceeded the price SNH paid for its
investment in RMR Inc. common stock in June 2015. A portion of this
liability is being amortized on a straight line basis through
December 31, 2035 as a reduction to property management fee expense,
which is included in property operating expenses.
(4) Consists of
properties owned continuously and properties owned and managed
continuously by the same operator since January 1, 2017 and includes
SNH's MOB (two buildings) that is owned in a joint venture arrangement
and excludes properties classified as held for sale, if any.
|
|
|
|
|
SENIOR HOUSING PROPERTIES TRUST CONDENSED
CONSOLIDATED BALANCE SHEETS (amounts in thousands) (unaudited)
|
|
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
ASSETS
|
|
|
|
|
Real estate properties
|
|
$
|
7,958,274
|
|
|
$
|
7,824,763
|
|
Accumulated depreciation
|
|
(1,505,427
|
)
|
|
(1,454,477
|
)
|
|
|
6,452,847
|
|
|
6,370,286
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
39,161
|
|
|
31,238
|
|
Restricted cash
|
|
14,080
|
|
|
16,083
|
|
Acquired real estate leases and other intangible assets, net
|
|
490,505
|
|
|
472,265
|
|
Other assets, net
|
|
387,471
|
|
|
404,147
|
|
Total assets
|
|
$
|
7,384,064
|
|
|
$
|
7,294,019
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Unsecured revolving credit facility
|
|
$
|
55,000
|
|
|
$
|
596,000
|
|
Unsecured term loans, net
|
|
547,666
|
|
|
547,460
|
|
Senior unsecured notes, net
|
|
2,213,811
|
|
|
1,725,662
|
|
Secured debt and capital leases, net
|
|
828,318
|
|
|
805,404
|
|
Accrued interest
|
|
35,075
|
|
|
17,987
|
|
Assumed real estate lease obligations, net
|
|
93,543
|
|
|
96,018
|
|
Other liabilities
|
|
194,534
|
|
|
228,300
|
|
Total liabilities
|
|
3,967,947
|
|
|
4,016,831
|
|
|
|
|
|
|
Total equity
|
|
3,416,117
|
|
|
3,277,188
|
|
Total liabilities and equity
|
|
$
|
7,384,064
|
|
|
$
|
7,294,019
|
|
|
|
|
|
|
|
|
|
|
A Maryland Real Estate Investment Trust with transferable shares of
beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180509006567/en/
Source: Senior Housing Properties Trust