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Senior Housing Properties Trust Announces 2012 Third Quarter Results

  Senior Housing Properties Trust Announces 2012 Third Quarter Results

Business Wire

NEWTON, Mass. -- October 29, 2012

Senior Housing Properties Trust (NYSE: SNH) today announced its financial
results for the quarter and nine months ended September 30, 2012.

Results for the quarter ended September 30, 2012:

Normalized funds from operations, or Normalized FFO, for the quarter ended
September 30, 2012 were $74.8 million, or $0.43 per share. This compares to
Normalized FFO for the quarter ended September 30, 2011 of $65.4 million, or
$0.43 per share.

Net income was $25.6 million, or $0.15 per share, for the quarter ended
September 30, 2012, compared to net income of $30.0 million, or $0.20 per
share, for the quarter ended September 30, 2011. Net income for the quarter
ended September 30, 2012 was negatively impacted by the timing of acquisitions
and the deployment of the proceeds received from our capital raises in July
2012. Net income for the quarter ended September 30, 2012 includes a loss on
early extinguishment of debt of approximately $6.3 million, or $0.04 per
share, related to the prepayment of a portion of the outstanding principal
balance of our FNMA secured term loan, a loss on lease terminations of
approximately $104,000, or less than $0.01 per share, related to our agreement
with Sunrise Senior Living, Inc., or Sunrise, to terminate 10 senior living
communities we leased to them that were scheduled to expire in December 2013
and a loss on sale of properties of approximately $101,000, or less than $0.01
per share, related to the sale of one property in July 2012. Net income for
the quarter ended September 30, 2011 includes a non-cash impairment of assets
charge of $1.0 million, or $0.01 per share, related to one property.

The weighted average number of common shares outstanding totaled 174.7 million
and 153.4 million for the quarters ended September 30, 2012 and 2011,
respectively.

A reconciliation of net income determined according to U.S. generally accepted
accounting principles, or GAAP, to funds from operations, or FFO, and
Normalized FFO for the quarters ended September 30, 2012 and 2011 appears
later in this press release.

Results for the nine months ended September 30, 2012:

Normalized funds from operations, or Normalized FFO, for the nine months ended
September 30, 2012 were $220.4 million, or $1.32 per share. This compares to
Normalized FFO for the nine months ended September 30, 2011 of $190.1 million,
or $1.30 per share.

Net income was $91.2 million, or $0.55 per share, for the nine months ended
September 30, 2012, compared to net income of $112.8 million, or $0.77 per
share, for the nine months ended September 30, 2011. Net income for the nine
months ended September 30, 2012 includes a loss on early extinguishment of
debt of $6.3 million, or $0.04 per share, related to the prepayment of a
portion of the outstanding principal balance of our FNMA secured term loan, a
non-cash impairment of assets charge of approximately $3.1 million, or $0.02
per share, related to one property, a loss on lease terminations of
approximately $104,000, or less than $0.01 per share, related to our agreement
with Sunrise to terminate 10 senior living communities we leased to them that
were scheduled to expire in December 2013 and a loss on sale of properties of
approximately $101,000, or less than $0.01 per share, related to the sale of
one property in July 2012. Net income for the nine months ended September 30,
2011 includes a gain on sale of properties of approximately $21.3 million, or
$0.15 per share, related to the sale of seven properties in the second quarter
of 2011, a non-cash impairment of assets charge of approximately $1.2 million,
or $0.01 per share, related to three properties and a loss on early
extinguishment of debt of approximately $427,000, or less than $0.01 per
share, in connection with replacing our revolving credit facility in June
2011.

The weighted average number of common shares outstanding totaled 166.7 million
and 145.7 million for the nine months ended September 30, 2012 and 2011,
respectively.

A reconciliation of net income determined according to GAAP to FFO and
Normalized FFO for the nine months ended September 30, 2012 and 2011 appears
later in this press release.

Recent Investment and Sales Activities:

Since July 1, 2012, we have acquired, or we currently have agreements to
acquire, 15 properties for total purchase prices of approximately $308.6
million, including the assumption of approximately $77.4 million of mortgage
debt and excluding closing costs:

  *In July 2012, we acquired a previously disclosed senior living community
    located in South Carolina with 232 living units for approximately $37.3
    million, excluding closing costs. Substantially all the residents at this
    community currently pay for occupancy and services with private resources.
    A subsidiary of Five Star Quality Care, Inc., which, together with its
    subsidiaries, we refer to as Five Star, manages this community for our
    taxable REIT subsidiary, or TRS, pursuant to a long term management
    agreement.
  *In July 2012, we acquired a previously disclosed property leased to
    medical providers, medical related businesses, clinics and biotech
    laboratory tenants, or an MOB, with 63,082 square feet located in Texas
    for approximately $16.8 million, excluding closing costs. Upon
    acquisition, this property was 100% leased to 11 tenants for weighted (by
    rents) average lease terms of 6.0 years.
  *In July 2012, we acquired another previously disclosed MOB with 52,858
    square feet located in Florida for approximately $7.7 million, excluding
    closing costs. Upon acquisition, this property was 80% leased to 18
    tenants for weighted (by rents) average lease terms of 2.0 years.
  *In July 2012, we acquired four previously disclosed senior living
    communities located in Colorado, Idaho and Washington State with a total
    of 511 living units for total purchase prices of approximately $36.5
    million, including the assumption of approximately $6.9 million of
    mortgage debt and excluding closing costs. All the residents at these
    communities currently pay for occupancy and services with private
    resources. We leased these properties to Stellar Senior Living, LLC, a
    privately owned senior living operating company, for initial rent of
    approximately $2.9 million per year. Percentage rent, based on increases
    in gross revenues at these properties, will commence in 2014.
  *In August 2012, we acquired a previously disclosed senior living community
    located in New York with 310 living units for approximately $99.0 million,
    including the assumption of approximately $31.2 million of mortgage debt
    and excluding closing costs. All the residents at this community currently
    pay for occupancy and services with private resources. Five Star manages
    this community for our TRS pursuant to a long term management agreement.
  *In August 2012, we acquired another previously disclosed senior living
    community located in Missouri with 87 living units for approximately $11.3
    million, including the assumption of approximately $5.8 million of
    mortgage debt and excluding closing costs. All the residents at this
    community currently pay for occupancy and services with private resources.
    Five Star manages this community for our TRS pursuant to a long term
    management agreement.
  *In September 2012, we acquired a previously disclosed MOB with 33,600
    square feet located in Massachusetts for approximately $16.4 million,
    including the assumption of approximately $11.5 million of mortgage debt
    and excluding closing costs. Upon acquisition, this property was 100%
    leased to Hallmark Health System for approximately 14.1 years.
  *We have previously disclosed an agreement to acquire one MOB, which has
    not yet closed, for approximately $15.3 million, including the assumption
    of approximately $9.7 million of mortgage debt and excluding closing
    costs. The MOB is located in Minnesota and includes 76,637 square feet.
    The closing of this acquisition is contingent upon customary closing
    conditions; accordingly, we can provide no assurance that we will purchase
    this property.
  *In August and October 2012, we entered into four separate agreements to
    acquire three senior living communities and one MOB for total purchase
    prices of approximately $68.3 million, including the assumption of
    approximately $12.3 million of mortgage debt and excluding closing costs.
    The three senior living communities are located in Mississippi, Tennessee
    and Washington State and include a total of 437 living units and the MOB
    is located in Tennessee and includes 33,796 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 July 2012, we sold one MOB located in Massachusetts for a sale price of
approximately $1.1 million, excluding closing costs, and recognized a loss on
the sale of this property of approximately $101,000. We are also currently
marketing for sale a senior living community located in Pennsylvania which is
classified as held for sale as of September 30, 2012.

Recent Financing Activities:

In July 2012, we issued 13,800,000 common shares for $21.75 per share in a
public offering, raising net proceeds of approximately $287.1 million. We used
the net proceeds of this offering to repay borrowings outstanding under our
revolving credit facility.

In July 2012, we sold $350.0 million of 5.625% unsecured senior notes due
2042, raising net proceeds of approximately $338.6 million. We used a part of
the net proceeds of this offering to repay borrowings outstanding under our
revolving credit facility and we used the remaining net proceeds from this
offering to prepay a part of our FNMA secured term loan and for general
business purposes, which included funding a part of our recent acquisitions of
properties described above.

In August 2012, we prepaid approximately $199.2 million of the outstanding
principal balance of our FNMA secured term loan that had an interest rate of
6.4% at August 31, 2012 and a maturity date in September 2019, using, among
other funds, net proceeds from our July 2012 debt offering described above. As
a result of this prepayment, 11 of the 28 properties securing this loan were
released from the related mortgage.

In October 2012, we repaid a mortgage loan encumbering one of our properties
that had a principal balance of $4.2 million, an interest rate of 6.5% and a
maturity date in January 2013.

Other Recent Developments:

In May 2012, we entered into an operations transfer agreement, or the
Operations Transfer Agreement, with Sunrise and Five Star related to 10 senior
living communities that we were then leasing to Sunrise. The Operations
Transfer Agreement provides that we and Sunrise will accelerate the December
31, 2013 termination date of these Sunrise leases, that we will lease the 10
communities to our TRS and that Five Star will manage the communities pursuant
to long term management agreements. The Operations Transfer Agreement provides
that these transactions will occur when we and Five Star have obtained
required regulatory approvals to operate the 10 communities. In September and
October 2012, we and Sunrise terminated Sunrise’s leases for three and five of
the 10 communities, respectively, and we entered into management agreements
with Five Star with respect to these eight communities. We currently expect
the termination of the leases for, and the transition of the operations of,
the remaining two communities to occur before December 31, 2012.

Conference Call:

On Monday, October 29, 2012, at 1:00 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 financial
results for the quarter and nine months ended September 30, 2012. The
conference call telephone number is (800) 230-1059. Participants calling from
outside the United States and Canada should dial (612) 234-9959. 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,
November 5, 2012. To hear the replay, dial (320) 365-3844. The replay pass
code is: 260112.

A live audio web cast of the conference call will also be available in listen
only mode on the SNH website at www.snhreit.com. Participants wanting to
access the webcast should visit the website about five minutes before the
call. The archived webcast will be available for replay on the SNH website for
about one week after the call. The recording and retransmission in any way of
SNH’s third quarter conference call is strictly prohibited without the prior
written consent of SNH.

Supplemental Data:

A copy of SNH’s Third Quarter 2012 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 384 properties
located in 40 states and Washington, D.C. as of September 30, 2012. SNH is
headquartered in Newton, MA.

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

                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 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.
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY
THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:

  *OUR PENDING ACQUISITIONS OF SENIOR LIVING COMMUNITIES AND MOBS ARE
    CONTINGENT UPON VARIOUS CONDITIONS, INCLUDING IN SOME CASES, 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,
  *THIS PRESS RELEASE STATES THAT WE EXPECT THE REMAINING TWO SUNRISE LEASE
    TERMINATIONS, THE TRS LEASES AND THE FIVE STAR MANAGEMENT AGREEMENTS
    REGARDING THE REMAINING TWO COMMUNITIES TO BE COMPLETED BEFORE DECEMBER
    31, 2012. THESE TWO COMMUNITIES ARE OWNED BY US FREE AND CLEAR OF MORTGAGE
    DEBTS AND NO LENDER APPROVALS WILL BE REQUIRED FOR THE LEASE TERMINATIONS,
    THE TRS LEASES OR THE NEW MANAGEMENT AGREEMENTS. HOWEVER, THE TRANSFERS OF
    OPERATING CONTROL OF THESE REMAINING TWO COMMUNITIES ARE SUBJECT TO
    REGULATORY APPROVALS IN THE STATES WHERE THESE COMMUNITIES ARE LOCATED AS
    WELL AS SOME APPROVALS FROM CERTAIN THIRD PARTY PAYORS FOR RESIDENT
    SERVICES. WE CANNOT CONTROL THE RESULTS OR TIMING OF THESE APPROVAL
    PROCESSES. ACCORDINGLY, THESE APPROVALS MAY BE DELAYED OR MAY NOT OCCUR
    AND THE CANCELLATION OF THE REMAINING TWO SUNRISE LEASES AND TRANSFER OF
    OPERATIONS TO OUR TRS MAY BE DELAYED OR MAY NOT OCCUR, AND
  *THIS PRESS RELEASE STATES THAT WE HAVE ONE PROPERTY CLASSIFIED AS HELD FOR
    SALE. WE MAY NOT BE ABLE TO SELL THIS PROPERTY ON TERMS ACCEPTABLE TO US
    OR OTHERWISE.

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 AT THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD
LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

Financial Information
(amounts appearing in the table [but not in the footnotes] below are in
thousands, except per share data)
(unaudited)
                                              
Income
Statement:
                   Quarter Ended September           Nine Months Ended
                   30,                               September 30,
                   2012         2011               2012         2011
                                                                               
Revenues:
Rental income      $116,281       $102,969           $336,772       $301,839
Residents fees     42,352        10,731            113,906       11,575   
and services
Total revenues     158,633        113,700            450,678        313,414
                                                                               
Expenses:
Depreciation       35,880         28,824             104,487        82,120
Property
operating          47,807         20,153             127,875        41,888
expenses
General and        8,352          6,564              24,106         19,513
administrative
Acquisition        4,297          2,620              6,814          6,547
related costs
Impairment of      -             1,028             3,071         1,194    
assets
Total expenses     96,336        59,189            266,353       151,262  
                                                                               
Operating          62,297         54,511             184,325        162,152
income
                                                                               
Interest and       248            394                957            870
other income
Interest           (30,417  )     (24,730  )         (87,426  )     (70,837  )
expense
Loss on early
extinguishment     (6,349   )     -                  (6,349   )     (427     )
of debt ^(1)
Loss on lease
terminations       (104     )     -                  (104     )     -
^(2)
Loss (gain) on
sale of            (101     )     -                  (101     )     21,315
properties
^(3)
Equity in
earnings of an     115           28                236           111      
investee
Income before
income tax         25,689         30,203             91,538         113,184
expense
Income tax         (43      )     (207     )         (290     )     (365     )
expense
Net income         $25,646       $29,996           $91,248       $112,819 
                                                                               
Weighted
average shares     174,690       153,385           166,698       145,745  
outstanding
                                                                               
Net income per     $0.15         $0.20             $0.55         $0.77    
share
                                                                               

(1) In August 2012, we prepaid approximately $199.2 million of the outstanding
principal balance of our FNMA secured term loan. As a result of this
prepayment, we recorded a loss on early extinguishment of debt of
approximately $6.3 million consisting of a debt prepayment premium, legal fees
and the write off of unamortized deferred financing fees.

(2) In May 2012, we entered an agreement with Sunrise for early terminations
of leases for 10 senior living communities which were previously scheduled to
terminate on December 31, 2013; in September 2012, the leases for three senior
living communities were terminated and, in October 2012, the leases for five
additional senior living communities were terminated. During the three and
nine months ended September 30, 2012, we recognized a loss on lease
terminations of approximately $104,000. We currently expect the termination of
the leases for, and the transition of the operations of, the remaining two
communities to occur before December 31, 2012.

(3) In July 2012, we sold one MOB for approximately $1.1 million and
recognized a loss on sale of approximately $101,000. During the second quarter
of 2011, we sold seven properties for total sales prices of approximately
$39.5 million and recognized a gain on sale of approximately $21.3 million.

Financial Information (continued)
(dollars appearing in the table [but not in the footnotes] below are in
thousands)
(unaudited)
                                                     
Balance Sheet:
                                    At September 30,        At December 31, 
                                    2012                     2011
Assets
Real estate properties              $5,091,665               $4,721,591
Less accumulated depreciation       719,224                 630,261         
                                    4,372,441                4,091,330
Cash and cash equivalents           20,985                   23,560
Restricted cash                     11,377                   7,128
Deferred financing fees, net        30,328                   25,434
Acquired real estate leases
and other intangible assets,        106,943                  100,235
net
Loan receivable ^(1)                -                        38,000
Other assets                        104,221                 97,361          
Total assets                        $4,646,295              $4,383,048      
                                                                             
Commitments and Contingencies
                                                                             
Liabilities and Shareholders’
Equity
Unsecured revolving credit          $55,000                  $-
facility
Senior unsecured notes, net         1,091,732                965,770
of discount ^(2)
Secured debt and capital            721,579                  861,615
leases ^(3)
Accrued interest                    22,018                   22,281
Assumed real estate lease           14,304                   17,778
obligations, net
Other liabilities                   70,851                  42,998          
Total liabilities                   1,975,484                1,910,442
Shareholders’ equity                2,670,811               2,472,606       
Total liabilities and               $4,646,295              $4,383,048      
shareholders’ equity
                                                                             

(1) In May 2011, we and Five Star entered into a Bridge Loan under which we
agreed to lend Five Star up to $80.0 million to fund a portion of Five Star’s
purchase of a portfolio of six senior living communities. In April 2012, Five
Star repaid the $38.0 million which was then outstanding under this Bridge
Loan, resulting in the termination of the Bridge Loan.

(2) In July 2012, we sold $350.0 million of 5.625% unsecured senior notes due
2042. We used a part of the net proceeds of this offering to repay borrowings
outstanding under our revolving credit facility and we used the remaining net
proceeds from this offering to prepay a part of our FNMA secured term loan and
for general business purposes, which included funding some of our recent
acquisitions.

(3) In August 2012, we prepaid approximately $199.2 million of the outstanding
principal balance of our FNMA secured term loan, using, among other funds, net
proceeds from our July 2012 unsecured senior notes offering described above.

Funds from Operations and Normalized Funds from Operations
(amounts appearing in the table [but not in the footnotes] below are in
thousands, except per share data)
(unaudited)
                                             
Calculation of Funds from Operations (FFO) and Normalized FFO ^ (1):
                                                                               
                     Quarter Ended                   Nine Months Ended
                     September 30,                   September 30,
                     2012       2011              2012        2011
Net income           $25,646       $29,996           $91,248        $112,819
^(2)
Depreciation         35,880        28,824            104,487        82,120
expense
Loss (gain) on
sale of              101           -                 101            (21,315  )
properties
^(3)
Impairment of        -            1,028            3,071         1,194    
assets
FFO                  61,627        59,848            198,907        174,818
Acquisition          4,297         2,620             6,814          6,547
related costs
Loss on early
extinguishment       6,349         -                 6,349          427
of debt ^(4)
Loss on lease
terminations         104           -                 104            -
^(5)
Percentage           2,400        2,900            8,200         8,300    
rent ^(2) (6)
Normalized FFO       $74,777      $65,368          $220,374      $190,092 
                                                                               
Weighted
average shares       174,690      153,385          166,698       145,745  
outstanding
                                                                               
FFO per share        $0.35        $0.39            $1.19         $1.20    
Normalized FFO       $0.43        $0.43            $1.32         $1.30    
per share
Distributions
declared per         $0.39        $0.38            $1.15         $1.12    
share
                                                                               

(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 any 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 estimated
percentage rent in the period to which it relates rather than when it is
recognized as income in accordance with GAAP and exclude acquisition related
costs, loss on early extinguishment of debt and loss on lease terminations, if
any. We consider FFO and Normalized FFO to be appropriate measures of
performance for a REIT, along with net income, operating 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 our operating performance
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, operating income or cash flow from operating
activities determined in accordance with GAAP, or 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 historical
operating results. These measures should be considered in conjunction with net
income, operating income and cash flow from operating activities as presented
in our Condensed Consolidated Statements of Income and Comprehensive Income
and Condensed Consolidated Statements of Cash Flows. Other REITs and real
estate companies may calculate FFO and Normalized FFO differently than us.

(2) Net income for the three and nine months ended September 30, 2012 includes
$350,000 of percentage rent as a result of the September 1, 2012 lease
terminations of three senior living communities formerly leased to Sunrise.

(3) In July 2012, we sold one MOB for approximately $1.1 million and
recognized a loss on sale of approximately $101,000. During the second quarter
of 2011, we sold seven properties for total sales prices of approximately
$39.5 million and recognized a gain on sale of approximately $21.3 million.

(4) In August 2012, we prepaid approximately $199.2 million of the outstanding
principal balance of our FNMA secured term loan. As a result of this
prepayment, we recorded a loss on early extinguishment of debt of
approximately $6.3 million consisting of a debt prepayment premium, legal fees
and the write off of unamortized deferred financing fees.

(5) In May 2012, we entered an agreement with Sunrise for early terminations
of leases for 10 senior living communities which were previously scheduled to
terminate on December 31, 2013; in September 2012, the leases for three senior
living communities were terminated and, in October 2012, the leases for five
additional senior living communities were terminated. During the three and
nine months ended September 30, 2012, we recognized a loss on lease
terminations of approximately $104,000. We currently expect the termination of
the leases for, and the transition of the operations of, the remaining two
communities to occur before December 31, 2012.

(6) In calculating net income in accordance with GAAP, we recognize 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 we defer recognition of this revenue until the fourth quarter for
purposes of calculating net income, we include these estimated amounts in our
calculation of Normalized FFO for each quarter of the year. The fourth quarter
Normalized FFO calculation excludes the amounts recognized during the first
three quarters.

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.

Contact:

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