Senior Housing Properties Trust Closes Sale of Two Hospitals for $90 Million
Expects to Recognize Gain on Sale of Over $30 Million
NEWTON, Mass. -- January 2, 2014
Senior Housing Properties Trust (NYSE: SNH) today announced that on December
31, 2013 it closed the previously announced sale of two rehabilitation
hospitals for $90 million and expects to recognize a gain on sale of over $30
million. The hospitals were sold to a joint venture comprised of affiliates of
The Sanders Trust, LLC of Birmingham, AL and Harrison Street Real Estate
Capital, LLC of Chicago, IL.
The two hospitals sold are New England Rehabilitation Hospital located in
Woburn, MA and Braintree Rehabilitation Hospital located in Braintree, MA.
These hospitals were acquired by SNH in 2002; and the hospitals’ real estate
assets were leased to Five Star Quality Care, Inc. (NYSE: FVE) under SNH’s FVE
Lease No. 2. With the sale, FVE transferred its operating rights and
obligations to entities affiliated with Reliant Hospital Partners, LLC
(Reliant), a private company located in Richardson, TX, which will operate the
A large majority of the revenues at the sold hospitals are paid by Medicare.
With the completion of this sale, only 2% of SNH’s total revenues (based upon
revenues for the three months ended September 30, 2013) are derived from the
ownership of healthcare facilities where Medicare and Medicaid represent a
majority of revenues. The two hospitals were leased by SNH to FVE under a
combination lease which also includes 51 senior living properties. The rent
reduction which SNH will experience as a result of this sale will be $9.5
million per year. With this rent reduction, the total of all rent received by
SNH from FVE under the four combination leases with FVE represents only 26% of
SNH’s total revenues (based upon revenues for the three months ended September
David Hegarty, President and Chief Operating Officer of SNH, made the
following statement concerning the transaction:
“With this sale our decade plus plan, to reduce SNH’s exposure to possible
future reductions in government funded Medicare and Medicaid programs, is
nearly complete. Now, 98% of SNH’s revenues have limited exposure to
government funding. We are pleased that we were able to complete the sale of
these two hospitals ahead of our expected timeframe of mid-year 2014.”
Senior Housing Properties Trust is a real estate investment trust, or REIT,
which owns independent and assisted living communities, medical office
buildings, nursing homes and wellness centers throughout the United States.
SNH is headquartered in Newton, MA.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES
LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON SNH’S CURRENT BELIEFS
AND EXPECTATIONS, BUT THEY ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR FOR
VARIOUS REASONS, INCLUDING SOME WHICH ARE BEYOND SNH’S CONTROL. FOR EXAMPLE:
*THIS PRESS RELEASE STATES THAT SNH EXPECTS TO RECOGNIZE A GAIN ON SALE OF
OVER $30 MILLION. IN FACT, SNH HAS NOT RECEIVED ALL INVOICES FOR SERVICES
ASSOCIATED WITH THIS SALE AND SNH’S FOURTH QUARTER RESULTS HAVE NOT BEEN
AUDITED. THEREFORE, THE GAIN ON SALE MAY END UP BEING MORE OR LESS THAN
*THIS PRESS RELEASE STATES THAT WITH THE HOSPITALS’ SALE, ONLY 2% OF SNH’S
TOTAL REVENUES (BASED UPON REVENUES FOR THE THREE MONTHS ENDED SEPTEMBER
30, 2013) WILL BE FROM THE OWNERSHIP OF HEALTHCARE FACILITIES WHERE
MEDICARE AND MEDICAID REPRESENT A MAJORITY OF REVENUES. THE IMPLICATION OF
THIS STATEMENT MAY BE THAT SNH IS ONLY NOMINALLY EXPOSED TO MEDICARE AND
MEDICAID PROGRAM REVENUES. HOWEVER: (I) SOME RESIDENTS AT SNH OWNED
FACILITIES MAY BECOME ELIGIBLE FOR MEDICARE AND MEDICAID REVENUES BECAUSE
THEIR PRIVATE RESOURCES BECOME EXHAUSTED; (II) THE MEDICARE AND MEDICAID
PROGRAMS MAY BE CHANGED TO PROVIDE PAYMENTS FOR ADDITIONAL RESIDENTS OR
PATIENTS OF SNH OWNED HEALTHCARE FACILITIES; OR (III) SNH MAY IN THE
FUTURE ACQUIRE HEALTHCARE FACILITIES WHERE A MAJORITY OF THE REVENUES ARE
RECEIVED FROM THE MEDICARE AND MEDICAID PROGRAMS. ACCORDINGLY, SNH CANNOT
PROVIDE ANY ASSURANCE THAT ITS FUTURE REVENUES FROM FACILITIES WHERE THE
MAJORITY OF REVENUES ARE RECEIVED FROM THE MEDICARE AND MEDICAID PROGRAMS
WILL NOT INCREASE AS A PERCENTAGE OF SNH’S TOTAL REVENUES.
*THIS PRESS RELEASE STATES THAT WITH THE HOSPITALS’ SALE, THE TOTAL OF ALL
RENTS RECEIVED BY SNH FROM FVE UNDER THE FOUR SNH COMBINATION LEASES WITH
FVE WILL REPRESENT ONLY 26% OF SNH’S TOTAL REVENUES (BASED UPON REVENUES
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013). AN IMPLICATION OF THIS
STATEMENT IS THAT SNH’S CONCENTRATED CREDIT RISK ASSOCIATED WITH FVE’S
OPERATIONS IS 26% AND MAY BE FURTHER REDUCED. HOWEVER: (I) IN ADDITION TO
LEASING PROPERTIES FROM SNH, FVE ALSO MANAGES CERTAIN PROPERTIES FOR SNH’S
TAXABLE SUBSIDIARIES; AND (II) SNH MAY IN THE FUTURE LEASE ADDITIONAL
PROPERTIES TO FVE, INCREASE THE NUMBER OF SENIOR LIVING COMMUNITIES
MANAGED BY FVE OR ENTER OTHER COMMERCIAL ARRANGEMENTS WITH FVE.
ACCORDINGLY, SNH’S EXPOSURE TO FVE’S OPERATIONS MAY BE CONSIDERED TO BE
GREATER THAN 26% OF SNH’S REVENUES AND THAT EXPOSURE MAY INCREASE IN THE
FOR THESE AND OTHER REASONS, INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE UPON FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE.
EXCEPT AS REQUIRED BY APPLICABLE LAW, SNH DOES NOT INTEND TO UNDERTAKE ANY
OBLIGATION TO UPDATE THE FORWARD LOOKING STATEMENTS IN THIS PRESS RELEASE AS A
RESULT OF NEW INFORMATION WHICH MAY COME TO SNH’S ATTENTION, FUTURE EVENTS OR
A Maryland Real Estate Investment Trust with transferable shares of beneficial
interest listed on the New York Stock Exchange.
No shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
Senior Housing Properties Trust
Timothy A. Bonang, 617-796-8234
Vice President, Investor Relations
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