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Exhibit 99.1

 

GRAPHIC

 

FOR IMMEDIATE RELEASE

 

 

Contact:

 

Kimberly Brown, Director, Investor Relations

 

(617) 796-8237

 

www.snhreit.com

 

Senior Housing Properties Trust Announces 2014 Second Quarter Results

 

Normalized FFO of $0.43 Per Share

Same Property NOI Growth Across all Property Segments

 

Newton, MA (August 4, 2014):  Senior Housing Properties Trust (NYSE: SNH) today announced its financial results for the quarter and six months ended June 30, 2014.

 

SNH President and Chief Operating Officer David Hegarty made the following statement:

 

“SNH’s second quarter results improved as we reported same property NOI growth across all property types,  we completed the $1.1 billion acquisition of the Vertex Pharmaceuticals headquarters located in the Seaport District of Boston, and we successfully completed a disciplined capital raising program to finance that acquisition so as to produce accretive results for shareholders. In addition, SNH remains active in selectively pursuing acquisitions and dispositions to further strengthen its senior housing and medical office portfolios.”

 

Results for the quarter ended June 30, 2014:

 

Normalized funds from operations, or Normalized FFO, for the quarter ended June 30, 2014 were $86.6 million, or $0.43 per share. This compares to Normalized FFO for the quarter ended June 30, 2013 of $79.1 million, or $0.42 per share.

 

Net income was $37.7 million, or $0.19 per share, for the quarter ended June 30, 2014, compared to net income of $5.6 million, or $0.03 per share, for the quarter ended June 30, 2013.  During the three months ended June 30, 2014, SNH recognized: (1) a gain on sale of properties of $2.4 million, or $0.01 per share, related to the sale of two senior living communities previously classified as held for sale; and (2) impairment of assets adjustments of $387,000, or less than $0.01 per share, to add back previously recorded impairments to the carrying value of two properties (two buildings) leased to medical providers, medical related businesses, clinics and biotech laboratory tenants, or MOBs, included in discontinued operations to their actual net sales prices realized during the second quarter. During the three months

 

GRAPHIC

 



 

ended June 30, 2013, SNH recognized:  (1) impairment of assets charges of $4.4 million, or $0.02 per share, to reduce the carrying value of four senior living communities to their aggregate estimated net sale price; (2) a loss of $105,000, or less than $0.01 per share, related to the early extinguishment of four mortgage debts; and (3) impairment of assets charges of $27.9 million, or $0.15 per share, to reduce the carrying value of four MOBs (seven buildings) included in discontinued operations to their aggregate estimated net sale price.

 

The weighted average number of common shares outstanding were 199.8 million and 188.1 million for the quarters ended June 30, 2014 and 2013, respectively.

 

A reconciliation of net income determined in accordance with U.S. generally accepted accounting principles, or GAAP, to funds from operations, or FFO, and Normalized FFO for the quarters ended June 30, 2014 and 2013 appears later in this press release.

 

Results for the six months ended June 30, 2014:

 

Normalized FFO for the six months ended June 30, 2014 were $166.7 million, or $0.86 per share. This compares to Normalized FFO for the six months ended June 30, 2013 of $158.1 million, or $0.85 per share.

 

Net income was $76.2 million, or $0.39 per share, for the six months ended June 30, 2014, compared to net income of $40.8 million, or $0.22 per share, for the six months ended June 30, 2013.  During the six months ended June 30, 2014, SNH recognized: (1) a gain on sale of properties of $2.6 million, or $0.01 per share, related to the sale of three senior living communities previously classified as held for sale; and (2) impairment of assets charges of $334,000, or less than $0.01 per share, to adjust the carrying value of one MOB (four buildings) included in discontinued operations to their aggregate estimated net sale price, which charge was partially offset by the add back of previously recorded impairments to the carrying value of two MOBs (two buildings) to their net sales prices. During the six months ended June 30, 2013, SNH recognized:  (1) impairment of assets charges of $5.7 million, or $0.03 per share, to reduce the carrying value of four senior living communities and one parcel of land included in continuing operations to their aggregate estimated net sale price; (2) a loss of $105,000, or less than $0.01 per share, related to the early extinguishment of four mortgage debts; and (3) impairment of assets charges of $27.9 million, or $0.15 per share, to reduce the carrying value of four MOBs (seven buildings) included in discontinued operations to their aggregate estimated net sale price.

 

The weighted average number of common shares outstanding were 194.0 million and 186.4 million for the six months ended June 30, 2014 and 2013, respectively.

 

A reconciliation of net income determined in accordance with GAAP to FFO and Normalized FFO for the six months ended June 30, 2014 and 2013 appears later in this press release.

 

2



 

Operating Results:

 

For the three months ended June 30, 2014, 43.5% of SNH’s consolidated net operating income, or NOI, came from 218 triple net leased senior living communities with 24,383 living units.  Occupancy at triple net leased senior living communities was 85.2% during the most recent reported period, compared to 85.6% during the comparable period last year. (1)  Same property occupancy for triple net leased senior living communities owned continuously from April 1, 2013 decreased 0.6 percentage points to 85.2% during the most recent reported period, from 85.8% during the comparable period last year.(1)  Same property NOI increased 2.2% during the quarter ended June 30, 2014.

 

For the three months ended June 30, 2014, 14.5% of SNH’s NOI came from 44 managed senior living communities with 7,051 living units.  Occupancy at managed senior living communities was 88.5% during the quarter ended June 30, 2014, compared to 87.4% during the comparable period last year.  Same property occupancy for managed senior living communities owned continuously since April 1, 2013 increased 0.9 percentage points to 88.3% during the quarter ended June 30, 2014, from 87.4% during the comparable period last year.  Same property NOI increased 6.4% during the quarter ended June 30, 2014.

 

For the three months ended June 30, 2014, 38.5% of SNH’s NOI came from 98 MOBs with 9.1 million square feet.  As of June 30, 2014, 95.6% of MOB square feet was leased, compared to 95.0% as of March 31, 2014 and 94.1% as of June 30, 2013.  Same property occupancy for MOBs owned continuously since April 1, 2013 increased 0.7 percentage points to 94.8% as of June 30, 2014, from 94.1% as of June 30, 2013.  Same property cash basis NOI increased 1.3% during the quarter ended June 30, 2014.

 

A reconciliation of NOI and cash basis NOI to net income, determined in accordance with GAAP, for the quarters ended June 30, 2014 and 2013 appears later in this press release.

 

Recent Investment and Sales Activities:

 

Since April 1, 2014, SNH has acquired two properties. In April 2014, SNH acquired one MOB (one building) with 125,240 square feet for approximately $32.7 million, including the assumption of $15.6 million of mortgage debt, excluding closing costs. This property is known as the Texas Center for Athletes and it is located in the South Texas Medical Center area of San Antonio, TX. In May 2014, SNH acquired one property (two buildings) with approximately 1,651,037 gross building square feet for approximately $1.125 billion, excluding closing costs. This recently built property is certified by the U.S. Green Building Council as a LEED® Gold property and it is located on the waterfront in Boston’s Seaport District, Boston’s fastest growing submarket. The property is 96% leased to Vertex Pharmaceuticals Incorporated, or Vertex, for an initial term ending in 2028.

 


(1) Most recent reported data is based upon the operating results provided by our tenants for the 12 months ended March 31, 2014 and 2013 or the most recent prior period for which tenant operating results are available.

 

3



 

In July 2014, SNH entered into an agreement to acquire one senior living community with 52 private pay assisted living units located in Jackson, WI, for approximately $7.0 million, excluding closing costs.  SNH intends to acquire this community using a taxable REIT subsidiary structure and it expects to enter into a long term management agreement with Five Star Quality Care, Inc. to manage this community.

 

In April 2014, SNH sold one MOB (one building) with 210,879 square feet located in New Hampshire for $5.0 million, excluding closing costs, and in June 2014, SNH sold another MOB (one building) with 235,079 square feet located in Pennsylvania for $6.0 million, excluding closing costs and recorded no gain or loss on these sales.

 

In June 2014, SNH sold two skilled nursing facilities with 156 units located in Wisconsin for $4.5 million, excluding closing costs. As a result, SNH recorded a gain on sale of $2.4 million.

 

SNH is also currently marketing for sale seven senior living communities with 552 living units and two MOBs (five buildings) with an aggregate of 385,541 square feet. The majority of the combined revenues generated from the seven senior living communities listed for sale comes from government funded programs, such as Medicare and Medicaid. The results of operations from the two MOBs (five buildings) listed for sale and the two MOBs (two buildings) sold during the second quarter are included in discontinued operations in SNH’s financial statements.

 

Recent Financing Activities:

 

In April 2014, SNH issued 15,525,000 common shares in a public offering, raising gross proceeds of approximately $337.7 million, before underwriting discounts and expenses.  SNH used the net proceeds of this offering (approximately $323.3 million after underwriting discounts but before expenses) to repay borrowings outstanding under its unsecured revolving credit facility, with the remainder used for general business purposes, including the partial funding of the acquisition of the property leased to Vertex described above.

 

In April 2014, SNH sold $400 million of 3.25% senior unsecured notes due 2019 and $250 million of 4.75% senior unsecured notes due 2024, raising net proceeds of approximately $644.9 million after underwriting discounts but before expenses.  SNH used the net proceeds of this offering for general business purposes, including partially funding the acquisition of the property leased to Vertex described above.

 

In May 2014, SNH entered into a term loan agreement with Wells Fargo Bank, National Association and a syndicate of other lenders, pursuant to which SNH obtained a $350.0 million unsecured term loan. This term loan matures on January 15, 2020, and is prepayable without penalty at any time.  In addition, the term loan includes a feature under which maximum borrowings may be increased to up to $700.0 million in certain circumstances. The term loan bears interest at a rate of LIBOR plus a premium of

 

4



 

140 basis points that is subject to adjustment based upon changes to SNH’s senior unsecured debt ratings.  SNH used the net proceeds of its term loan to repay amounts outstanding under its revolving credit facility, to repay existing mortgage notes and for general business purposes.

 

In June 2014, SNH repaid mortgage notes at maturity that encumbered two of its properties that had an aggregate principal balance of $35.3 million and a weighted average interest rate of 5.8%.

 

Conference Call:

 

On Monday, August 4, 2014, at 1:00 p.m. Eastern Time, David J. Hegarty, President and Chief Operating Officer, and Richard A. Doyle, Chief Financial Officer, will host a conference call to discuss the financial results for the quarter and six months ended June 30, 2014.  The conference call telephone number is (800) 230-1085.  Participants calling from outside the United States and Canada should dial (612) 288-0329.  No pass code is necessary to access the call from either number.  Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 11:59 p.m. Eastern Time, Monday, August 11, 2014. To hear the replay, dial (320) 365-3844. The replay pass code is: 332523.

 

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 transcription, recording and retransmission in any way of SNH’s second quarter conference call are strictly prohibited without the prior written consent of SNH.

 

Supplemental Data:

 

A copy of SNH’s Second Quarter 2014 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 372 properties (399 buildings) located in 39 states and Washington, D.C. as of June 30, 2014. SNH is headquartered in Newton, MA.

 

Please see the pages attached hereto for a more detailed statement of SNH’s operating results and financial condition.

 

5



 

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” 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 THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS.  FOR EXAMPLE:

 

·                  THIS PRESS RELEASE STATES THAT SNH HAS ENTERED INTO AN AGREEMENT TO ACQUIRE ONE SENIOR LIVING COMMUNITY.  THIS TRANSACTION IS SUBJECT TO CLOSING CONDITIONS. THESE CONDITIONS MAY NOT BE MET.  AS A RESULT, THIS TRANSACTION MAY NOT OCCUR OR MAY BE DELAYED OR ITS TERMS MAY CHANGE;

 

·                  THIS PRESS RELEASE STATES THAT SNH HAS SEVEN SENIOR LIVING COMMUNITIES AND TWO MOBS CURRENTLY LISTED FOR SALE.  SNH MAY NOT BE ABLE TO SELL THESE PROPERTIES ON TERMS ACCEPTABLE TO IT OR OTHERWISE, AND THE SALES OF ANY OR ALL OF THESE PROPERTIES MAY NOT OCCUR;

 

·                  INCREASING THE MAXIMUM BORROWINGS UNDER SNH’S TERM LOAN IS SUBJECT TO SNH OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR; AND

 

·                  THIS PRESS RELEASE STATES THAT SNH EXPECTS TO ENTER INTO A LONG TERM MANAGEMENT AGREEMENT WITH FIVE STAR TO MANAGE A SENIOR LIVING COMMUNITY SNH HAS AGREED TO ACQUIRE. HOWEVER, THERE CAN BE NO ASSURANCE THAT SNH WILL ACQUIRE THIS COMMUNITY OR THAT SNH AND FIVE STAR WILL ENTER INTO ANY ADDITIONAL MANAGEMENT AGREEMENTS.

 

THE INFORMATION CONTAINED IN SNH’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, OR SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN ITS PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM 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 SNH’S 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.

 

6



 

SENIOR HOUSING PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

Revenues:

 

 

 

 

 

 

 

 

 

Rental income

 

$

127,669

 

$

112,297

 

$

239,724

 

$

224,150

 

Residents fees and services

 

79,039

 

74,631

 

158,481

 

149,687

 

Total revenues

 

206,708

 

186,928

 

398,205

 

373,837

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Property operating expenses

 

79,786

 

74,484

 

157,590

 

148,163

 

Depreciation

 

46,703

 

38,296

 

85,058

 

75,999

 

General and administrative

 

9,577

 

8,168

 

17,866

 

16,816

 

Acquisition related costs

 

2,512

 

292

 

2,635

 

2,187

 

Impairment of assets

 

 

4,371

 

 

5,675

 

Total expenses

 

138,578

 

125,611

 

263,149

 

248,840

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

68,130

 

61,317

 

135,056

 

124,997

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

154

 

397

 

258

 

570

 

Interest expense

 

(34,112

)

(29,567

)

(63,012

)

(59,131

)

Loss on early extinguishment of debt

 

 

(105

)

 

(105

)

Income from continuing operations before income tax expense and equity in earnings of an investee

 

34,172

 

32,042

 

72,302

 

66,331

 

Income tax expense

 

(155

)

(140

)

(346

)

(280

)

Equity in earnings of an investee

 

118

 

79

 

21

 

155

 

Income from continuing operations

 

34,135

 

31,981

 

71,977

 

66,206

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

741

 

1,513

 

2,041

 

2,523

 

Impairment of assets from discontinued operations

 

387

 

(27,896

)

(334

)

(27,896

)

Income before gain on sale of properties

 

35,263

 

5,598

 

73,684

 

40,833

 

Gain on sale of properties

 

2,396

 

 

2,552

 

 

Net income

 

$

37,659

 

$

5,598

 

$

76,236

 

$

40,833

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

199,810

 

188,081

 

194,025

 

186,350

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations per share

 

0.18

 

0.17

 

0.38

 

0.36

 

Income (loss) from discontinued operations per share

 

0.01

 

(0.14

)

0.01

 

(0.14

)

Net income per share

 

$

0.19

 

$

0.03

 

$

0.39

 

$

0.22

 

 

7



 

SENIOR HOUSING PROPERTIES TRUST

CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS AND NORMALIZED FUNDS FROM OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

 

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

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

37,659

 

$

5,598

 

$

76,236

 

$

40,833

 

Depreciation expense from continuing operations

 

46,703

 

38,296

 

85,058

 

75,999

 

Depreciation expense from discontinued operations

 

 

199

 

 

799

 

Gain on sale of properties

 

(2,396

)

 

(2,552

)

 

Impairment of assets

 

 

4,371

 

 

5,675

 

Impairment of assets from discontinued operations

 

(387

)

27,896

 

334

 

27,896

 

FFO

 

81,579

 

76,360

 

159,076

 

151,202

 

Estimated business management incentive fees (2)

 

 

 

 

75

 

Acquisition related costs from continuing operations

 

2,512

 

292

 

2,635

 

2,187

 

Loss on early extinguishment of debt

 

 

105

 

 

105

 

Percentage rent adjustment (3)

 

2,500

 

2,300

 

5,000

 

4,500

 

Normalized FFO

 

$

86,591

 

$

79,057

 

$

166,711

 

$

158,069

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

199,810

 

188,081

 

194,025

 

186,350

 

 

 

 

 

 

 

 

 

 

 

FFO per share

 

$

0.41

 

$

0.41

 

$

0.82

 

$

0.81

 

Normalized FFO per share

 

$

0.43

 

$

0.42

 

$

0.86

 

$

0.85

 

Net income per share

 

$

0.19

 

$

0.03

 

$

0.39

 

$

0.22

 

Distributions declared per share

 

$

0.39

 

$

0.39

 

$

0.78

 

$

0.78

 

 


(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, calculated in accordance with GAAP, excluding any gain or loss on sale of properties and impairment of real estate assets, plus real estate depreciation and amortization, 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’s includes estimated percentage rent in the period to which it estimates that it relates rather than when it is recognized as income in accordance with GAAP and excludes acquisition related costs, gain or loss on early extinguishment of debt, gain or loss on lease terminations, estimated business management incentive fees and loss on impairment of intangible assets, if any.  SNH considers FFO and Normalized FFO to be appropriate measures of operating performance for a real estate investment trust, or REIT, along with net income, operating income and cash flow from operating activities.  SNH believes 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 may facilitate a comparison of its 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 shareholders.  Other factors include, but are not limited to, requirements to maintain its status as a REIT, limitations in its revolving credit facility agreement, term loan agreement and public debt covenants, the availability of debt and equity capital, SNH’s expectation of its future capital requirements and operating performance and SNH’s expected needs 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 as alternatives to net income, operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of SNH’s financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of SNH’s needs.  These measures should be considered in conjunction with net income, operating income and cash flow from operating activities as presented in SNH’s Consolidated Statements of Income and Comprehensive Income and Consolidated Statements of Cash Flows.  Other REITs and real estate companies may calculate FFO and Normalized FFO differently than SNH does.

 

8



 

(2)               Amounts represent estimated incentive fees under SNH’s business management agreement payable in common shares after the end of each calendar year calculated: (i) prior to 2014 based upon increases in annual Normalized FFO per share and (ii) beginning in 2014 based on common share total return.  In calculating net income in accordance with GAAP, SNH recognizes an estimated business management incentive fee expense, if any, each quarter.  Although SNH recognizes this expense each quarter for purposes of calculating net income, SNH does not include these amounts in the calculation of Normalized FFO until the fourth quarter, which is when the actual expense amount for the year is determined. Adjustments were made to prior period amounts to conform to the current period Normalized FFO calculation.

 

(3)               In calculating net income in accordance with GAAP, SNH recognizes percentage rental income received for the first, second and third quarters in the fourth quarter, which is when all contingencies are met and the income is earned.  Although SNH defers recognition of this revenue until the fourth quarter for purposes of calculating net income, it includes these estimated amounts in its calculation of Normalized FFO for each quarter of the year.  The fourth quarter Normalized FFO calculation excludes the amounts included during the first three quarters.

 

9



 

SENIOR HOUSING PROPERTIES TRUST

CALCULATION AND RECONCILIATION OF NET OPERATING INCOME (NOI) AND CASH BASIS NOI

(amounts in thousands)

(unaudited)

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

6/30/2014

 

6/30/2013

 

6/30/2014

 

6/30/2013

 

Calculation of NOI (1):

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Rental income

 

$

127,669

 

$

112,297

 

$

239,724

 

$

224,150

 

Residents fees and services

 

79,039

 

74,631

 

158,481

 

149,687

 

Total revenues

 

206,708

 

186,928

 

398,205

 

373,837

 

Property operating expenses

 

79,786

 

74,484

 

157,590

 

148,163

 

Property net operating income (NOI):

 

126,922

 

112,444

 

240,615

 

225,674

 

Non cash straight line rent adjustments

 

(2,351

)

(1,939

)

(3,929

)

(3,846

)

Lease value amortization

 

(569

)

916

 

153

 

1,834

 

Lease termination fees

 

 

(4

)

 

(4

)

Cash Basis NOI

 

$

124,002

 

$

111,417

 

$

236,839

 

$

223,658

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Cash Basis NOI to Net Income:

 

 

 

 

 

 

 

 

 

Cash Basis NOI

 

$

124,002

 

$

111,417

 

$

236,839

 

$

223,658

 

Non cash straight line rent adjustments

 

2,351

 

1,939

 

3,929

 

3,846

 

Lease value amortization

 

569

 

(916

)

(153

)

(1,834

)

Lease termination fees

 

 

4

 

 

4

 

Property NOI

 

$

126,922

 

$

112,444

 

$

240,615

 

$

225,674

 

Depreciation expense

 

(46,703

)

(38,296

)

(85,058

)

(75,999

)

General and administrative expense

 

(9,577

)

(8,168

)

(17,866

)

(16,816

)

Acquisition related costs

 

(2,512

)

(292

)

(2,635

)

(2,187

)

Impairment of assets

 

 

(4,371

)

 

(5,675

)

Operating income

 

68,130

 

61,317

 

135,056

 

124,997

 

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

154

 

397

 

258

 

570

 

Interest expense

 

(34,112

)

(29,567

)

(63,012

)

(59,131

)

Loss on early extinguishment of debt

 

 

(105

)

 

(105

)

Income before income tax expense and equity in earnings of an investee

 

34,172

 

32,042

 

72,302

 

66,331

 

Income tax expense

 

(155

)

(140

)

(346

)

(280

)

Equity in earnings of an investee

 

118

 

79

 

21

 

155

 

Income from continuing operations

 

34,135

 

31,981

 

71,977

 

66,206

 

Discontinued operations

 

 

 

 

 

 

 

 

 

Income from discontinued operations

 

741

 

1,513

 

2,041

 

2,523

 

Impairment of assets from discontinued operations

 

387

 

(27,896

)

(334

)

(27,896

)

Income before gain on sale of properties

 

35,263

 

5,598

 

73,684

 

40,833

 

Gain on sale of properties

 

2,396

 

 

2,552

 

 

Net income

 

$

37,659

 

$

5,598

 

$

76,236

 

$

40,833

 

 


(1)         SNH calculates NOI as shown above excluding properties classified as discontinued operations.  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.  SNH defines Cash Basis NOI as NOI less non cash straight line rent adjustments, lease value amortization and lease termination fees, if any. 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 our properties.  SNH uses NOI and Cash Basis NOI internally 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 incurred at the property level and may facilitate comparisons of its operating performance between periods and with other REITs.  The calculation of NOI and Cash Basis NOI excludes certain components of net income in order to provide results that are more closely related to its properties’ results of operations.  NOI and Cash Basis NOI do not represent cash generated by operating activities in accordance with GAAP and should not be considered as an alternative to net income, operating income or cash flow from operating activities determined in accordance with GAAP, or as indicators of SNH’s financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of its needs.  These measures should be considered in conjunction with net income, operating income and cash flow from operating activities as presented in our Consolidated Statements of Income and Comprehensive Income and Consolidated Statements of Cash Flows. Other REITs and real estate companies may calculate NOI and Cash Basis NOI differently than SNH does.

 

10



 

SENIOR HOUSING PROPERTIES TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)

 

Balance Sheet:

 

 

 

June 30,

 

December 31,

 

 

 

2014

 

2013

 

ASSETS

 

 

 

 

 

Real estate properties

 

$

6,167,692

 

$

5,263,625

 

Less accumulated depreciation

 

(909,021

)

(840,760

)

 

 

5,258,671

 

4,422,865

 

Cash and cash equivalents

 

79,392

 

39,233

 

Restricted cash

 

10,960

 

12,514

 

Deferred financing fees, net

 

33,500

 

27,975

 

Acquired real estate leases and other intangible assets, net

 

495,782

 

103,494

 

Other assets

 

138,550

 

158,585

 

Total assets

 

$

6,016,855

 

$

4,764,666

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Unsecured revolving credit facility

 

$

 

$

100,000

 

Unsecured term loan

 

350,000

 

 

Senior unsecured notes, net of discount

 

1,742,893

 

1,093,337

 

Secured debt and capital leases

 

672,761

 

699,427

 

Accrued interest

 

20,401

 

15,839

 

Assumed real estate lease obligations, net

 

128,207

 

12,528

 

Other liabilities

 

73,012

 

66,546

 

Total liabilities

 

2,987,274

 

1,987,677

 

 

 

 

 

 

 

Total shareholders’ equity

 

3,029,581

 

2,776,989

 

Total liabilities and shareholders’ equity

 

$

6,016,855

 

$

4,764,666

 

 

(END)

 

11