Senior Housing Properties Trust Announces 2013 First Quarter Results

  Senior Housing Properties Trust Announces 2013 First Quarter Results

Business Wire

NEWTON, Mass. -- April 29, 2013

Senior Housing Properties Trust (NYSE: SNH) today announced its financial
results for the quarter ended March 31, 2013.

Results for the quarter ended March 31, 2013:

Normalized funds from operations, or Normalized FFO, for the quarter ended
March 31, 2013 were $78.9 million, or $0.43 per share. This compares to
Normalized FFO for the quarter ended March 31, 2012 of $72.4 million, or $0.45
per share.

Net income was $35.2 million, or $0.19 per share, for the quarter ended March
31, 2013, compared to net income of $32.4 million, or $0.20 per share, for the
quarter ended March 31, 2012. During the three months ended March 31, 2013 and
2012, we recorded impairment of assets charges of $1.3 million and $3.1
million, respectively, to reduce the carrying value of one of our properties
to its estimated net sale price.

The weighted average number of common shares outstanding totaled 184.6 million
and 162.6 million for the quarters ended March 31, 2013 and 2012,
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 March 31, 2013 and 2012 appears later in
this press release.

Recent Investment and Sales Activities:

Since January 1, 2013, we have acquired four properties for a combined
purchase price of approximately $75.0 million, including the assumption of
approximately $12.3 million of mortgage debt and excluding closing costs:

  *In January 2013, we acquired a previously disclosed senior living
    community located in Redmond, WA with 150 living units for approximately
    $22.4 million, including the assumption of approximately $12.3 million of
    mortgage debt and excluding closing costs. All the residents at this
    community currently pay for occupancy and services with private resources.
    We are leasing this property to subsidiaries of Stellar Senior Living,
    LLC, a privately owned senior living operating company pursuant to a long
    term lease.
  *In February 2013, we acquired two previously disclosed properties leased
    to medical providers, medical related businesses, clinics and biotech
    laboratory tenants, or MOBs, with a total of 144,900 square feet located
    in Bothell, WA for a combined purchase price of approximately $38.0
    million, excluding closing costs. Upon acquisition, these properties were
    100% leased to Seattle Genetics, Inc. for a remaining lease term of 5.4
    years.
  *In March 2013, we acquired a previously disclosed MOB with 71,824 square
    feet located in Hattiesburg, MS for approximately $14.6 million, excluding
    closing costs. Upon acquisition, this property was 100% leased to six
    tenants (Forrest General Hospital, an A rated hospital system, is the
    largest tenant) for a weighted (by rents) average lease term of 6.8 years.

In April 2013, we entered into an agreement to acquire an MOB with
approximately 54,000 square feet located in Cherry Hill, NJ for approximately
$21.5 million, excluding closing costs. Also in April 2013, we entered into an
agreement to acquire one senior living community with 93 private pay assisted
living units located in Cumming, GA, for approximately $22.0 million,
excluding closing costs. 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.

We are also currently marketing for sale a senior living community located in
Pittsburgh, PA which we classified as held for sale as of March 31, 2013.

Recent Financing Activities:

In January 2013, we issued 11,500,000 common shares in a public offering,
raising gross proceeds of approximately $273.7 million, before underwriting
discounts and expenses. We used the net proceeds (approximately $262.1 million
before expenses) of this offering to repay borrowings outstanding under our
revolving credit facility and for general business purposes, including funding
in part acquisitions of properties described above, with the remainder to be
used for possible future acquisitions.

Conference Call:

On Monday, April 29, 2013, 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 ended March 31, 2013. The conference call telephone number is (800)
230-1951. Participants calling from outside the United States and Canada
should dial (612) 332-0342. 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, May 6, 2013. To hear the replay, dial
(320) 365-3844. The replay pass code is: 290596.

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 first quarter conference call is strictly prohibited
without the prior written consent of SNH.

Supplemental Data:

A copy of SNH’s First Quarter 2013 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 395 properties
located in 40 states and Washington, D.C. as of March 31, 2013. 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:

  *THIS PRESS RELEASE STATES THAT WE HAVE ENTERED INTO AGREEMENTS TO ACQUIRE
    A MOB AND A SENIOR LIVING COMMUNITY. THESE TRANSACTIONS ARE SUBJECT TO
    VARIOUS TERMS AND CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE
    TRANSACTIONS FOR PROPERTIES OF THESE TYPES. THESE TERMS AND CONDITIONS MAY
    NOT BE MET. AS A RESULT, THESE TRANSACTIONS MAY NOT OCCUR OR MAY BE
    DELAYED OR THEIR TERMS MAY CHANGE; 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, OR SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN OUR PERIODIC
REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT
COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH
THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

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

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

                                      

SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(unaudited)

Income Statement:
                                          
                                          Quarter Ended
                                          March31,
                                            2013         2012
                                                        
Revenues:
Rental income                             $ 114,373     $ 109,505
Residents fees and services                75,056      35,568  
Total revenues                              189,429       145,073
                                                        
Expenses:
Property operating expenses                 74,582        39,334
Depreciation                                38,302        33,377
General and administrative                  8,648         7,685
Acquisition related costs                   1,903         688
Impairment of assets                       1,304       3,071   
Total expenses                             124,739     84,155  
                                                        
Operating income                            64,690        60,918
                                                        
Interest and other income                   173           482
Interest expense                            (29,564 )     (28,889 )
Equity in earnings of an investee          76          45      
Income before income tax expense            35,375        32,556
Income tax expense                         (140    )    (204    )
Net income                                $ 35,235     $ 32,352  
                                                        
Weighted average shares outstanding        184,605     162,647 
                                                        
Net income per share                      $ 0.19       $ 0.20    

                                                     
                                                          
SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
                                                          
Balance Sheet:
                                                          
                                      At March31, 2013   At December31, 2012
Assets
Real estate properties                $   5,261,340      $    5,183,307   
Less accumulated depreciation            782,111            750,903     
                                          4,479,229            4,432,404
Cash and cash equivalents                 38,989               42,382
Restricted cash                           11,876               9,432
Deferred financing fees, net              28,409               29,410
Acquired real estate leases and           120,732              115,837
other intangible assets, net
Other assets                             132,034            118,537     
Total assets                          $   4,811,269      $    4,748,002   
                                                          
Liabilities and Shareholders’
Equity
Unsecured revolving credit            $   -               $    190,000
facility
Senior unsecured notes, net of            1,092,374            1,092,053
discount
Secured debt and capital leases           734,227              724,477
Accrued interest                          21,595               15,757
Assumed real estate lease                 15,121               13,692
obligations, net
Other liabilities                        63,807             65,455      
Total liabilities                         1,927,124            2,101,434
Shareholders’ equity                     2,884,145          2,646,568   
Total liabilities and                 $   4,811,269      $    4,748,002   
shareholders’ equity

                                  

SENIOR HOUSING PROPERTIES TRUST
CONDENSED 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):
                                        
                                        Quarter Ended
                                        March31,
                                            2013                2012
Net income                              $   35,235           $   32,352    
Depreciation expense                        38,302                33,377
Impairment of assets                       1,304               3,071     
FFO                                         74,841                68,800
Acquisition related costs                   1,903                 688
Percentage rent ^(2)                       2,200               2,900     
Normalized FFO                          $   78,944           $   72,388    
                                                              
Weighted average shares                    184,605             162,647   
outstanding
                                                              
FFO per share                           $   0.41             $   0.42      
Normalized FFO per share                $   0.43             $   0.45      
Distributions declared per              $   0.39             $   0.38      
share

    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
    real estate assets, plus real estate depreciation and amortization, as
    well as other adjustments currently not applicable to us. Our calculation
    of Normalized FFO differs from NAREIT’s definition of FFO because we
    include estimated percentage rent in the period to which we estimate that
    it relates rather than when it is recognized as income in accordance with
    GAAP and exclude acquisition related costs, gain or loss on early
    extinguishment of debt, gain or loss on lease terminations and loss on
    impairment of intangible assets, if any. We consider FFO and Normalized
    FFO to be appropriate measures of operating performance for a REIT, along
    with net income, operating income and cash flow from operating 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 may facilitate a
    comparison of our operating performance between periods and between us and
(1) other REITs. 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 agreement and public debt covenants, the availability of debt and
    equity capital to us, our expectation of our future capital requirements
    and operating performance and our expected needs and availability of cash
    to pay our 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 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 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 we do.
    
    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
(2) 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, Vice President, Investor Relations, or
Elisabeth H. Olmsted, Manager, Investor Relations
617-796-8234
www.snhreit.com
 
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