Senior Housing Properties Trust Announces 2013 Fourth Quarter and Year End Results

  Senior Housing Properties Trust Announces 2013 Fourth Quarter and Year End
  Results

Business Wire

NEWTON, Mass. -- February 26, 2014

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

Results for the quarter ended December 31, 2013:

Normalized funds from operations, or Normalized FFO, for the quarter ended
December 31, 2013 were $80.5 million, or $0.43 per share. This compares to
Normalized FFO for the quarter ended December 31, 2012 of $75.5 million, or
$0.43 per share.

Net income was $72.2 million, or $0.38 per share, for the quarter ended
December 31, 2013, compared to net income of $44.6 million, or $0.25 per
share, for the quarter ended December 31, 2012. During the three months ended
December 31, 2013 SNH recognized: a gain on sale of properties of $36.3
million, or $0.19 per share, related to the sale of two rehabilitation
hospitals previously classified as held for sale; and impairment of assets
charges of $12.0 million, or $0.06 per share, to reduce the carrying value of
four senior living communities and two properties (two buildings) leased to
medical providers, medical related businesses, clinics and biotech laboratory
tenants, or MOBs, included in discontinued operations to their aggregate
estimated net sale price. Net income for the three months ended December 31,
2012 includes a gain on lease terminations of approximately $479,000, or less
than $0.01 per share, related to SNH’s agreement with Sunrise Senior Living,
Inc., or Sunrise, to terminate leases for 10 senior living communities SNH
previously leased to Sunrise.

The weighted average number of common shares outstanding totaled 188.2 million
and 176.6 million for the quarters ended December 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 December 31, 2013 and 2012 appears later
in this press release.

Results for the year ended December 31, 2013:

Normalized FFO for the year ended December 31, 2013 were $317.4 million, or
$1.69 per share. This compares to Normalized FFO for the year ended December
31, 2012 of $295.9 million, or $1.75 per share.

Net income was $151.2 million, or $0.81 per share, for the year ended December
31, 2013, compared to net income of $135.9 million, or $0.80 per share, for
the year ended December 31, 2012. During the year ended December 31, 2013 SNH
recognized: a loss on early extinguishment of debt of $797,000, or less than
$0.01 per share, related to the amendment of its revolving credit facility and
the prepayment of mortgages encumbering five properties; a gain on sale of
properties of $37.4 million, or $0.20 per share, related to the sale of two
rehabilitation hospitals and one senior living community previously classified
as held for sale; and impairment of assets charges of $45.6 million, or $0.24
per share, to reduce the carrying value of four senior living communities, one
MOB included in continuing operations and four MOBs (seven buildings) included
in discontinued operations to their estimated net sale price. Net income for
the year ended December 31, 2012 includes: an impairment of asset charge of
$3.1 million, or $0.02 per share, to reduce the carrying value of one MOB
included in continuing operations to its estimated net sale price; 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 SNH’s
Federal National Mortgage Association secured term loan; a gain on lease
terminations of approximately $375,000, or less than $0.01 per share, related
to SNH’s agreement with Sunrise to terminate leases for 10 senior living
communities SNH previously leased to Sunrise; 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 2012.

The weighted average number of common shares outstanding totaled 187.3 million
and 169.2 million for the years ended December 31, 2013 and 2012,
respectively.

A reconciliation of net income determined according to GAAP to FFO and
Normalized FFO for the years ended December 31, 2013 and 2012 appears later in
this press release.

Recent Investment and Sales Activities:

Since October 1, 2013, SNH has acquired seven properties in five transactions
for a combined purchase price of $56.4 million, excluding closing costs:

  *In October 2013, SNH acquired two senior living communities with 153
    private pay assisted living units located in Canton and Ellijay, GA for a
    total of approximately $19.1 million. These communities are operated in
    SNH’s taxable REIT subsidiary, or TRS, structure and managed by Five Star
    Quality Care, Inc., or Five Star, under a long term management agreement;
  *Also in October 2013, SNH acquired a senior living community with 60
    private pay assisted living units located in Jefferson City, TN for
    approximately $9.9 million. This community is operated in SNH’s TRS
    structure and managed by Five Star under a long term management agreement;
  *In November 2013, SNH acquired a senior living community with 68 private
    pay assisted living units located in Verona, WI for approximately $12.0
    million. This community is operated in SNH’s TRS structure and managed by
    Five Star under a long term management agreement; and
  *In December 2013, SNH acquired a portfolio of three MOBs (three buildings)
    with 62,826 square feet located in Orlando, FL for approximately $15.4
    million.

SNH also currently has one property under agreement to be acquired for a
purchase price of approximately $1.125 billion, excluding closing costs:

  *In February 2014, SNH entered into an agreement to acquire one MOB (two
    buildings) with 1,651,037 gross building square feet located in Boston, MA
    for approximately $1.125 billion. This MOB is certified by the U.S. Green
    Building Council as two class A, leadership in energy and environmental
    design, or LEED®, gold, newly-built biotech buildings located on the
    waterfront in the Seaport District, Boston’s fastest growing submarket.

In December 2013, SNH sold two rehabilitation hospitals with 364 licensed beds
located in Braintree and Woburn, MA for $90.0 million, excluding closing
costs. The majority of the revenues at these hospitals come from Medicare. SNH
recorded a gain of $36.3 million from this sale.

In January 2014, SNH sold one assisted living facility with 36 units located
in Kerrville, TX for $2.4 million, excluding closing costs.

SNH is also currently marketing for sale nine senior living communities with
708 living units and four MOBs (seven buildings) with 831,499 square feet. The
majority of the combined revenues generated from the nine senior living
communities listed for sale come from government funded programs, such as
Medicare and Medicaid. The results of operations from the four MOBs (seven
buildings) listed for sale are included in discontinued operations in SNH’s
financial statements.

Recent Financing Activities:

Simultaneous with entering the agreement to acquire the one MOB (two
buildings) in Boston, MA noted above, SNH received a term loan commitment for
$800 million from Jefferies Finance, LLC and Wells Fargo Bank, N.A. The term
loan will have an interest rate of LIBOR plus 140 basis points, can be repaid
in part or whole at any time without penalty and will mature five years from
closing. Prior to closing the acquisition of these buildings, the term loan is
expected to be syndicated to a group of lenders, and the term loan is expected
to close simultaneous with the closing of this acquisition.

Conference Call:

On Wednesday, February 26, 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 year ended December 31, 2013. The conference call telephone number
is (877) 531-2986. Participants calling from outside the United States and
Canada should dial (651) 224-7472. 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, Wednesday, March 5, 2014. To hear
the replay, dial (320) 365-3844. The replay pass code is: 318032.

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 fourth quarter conference call are strictly prohibited
without the prior written consent of SNH.

Supplemental Data:

A copy of SNH’s Fourth 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 375 properties (401
buildings) located in 40 states and Washington, D.C. as of December 31, 2013.
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.

                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 PROPERTY. THIS TRANSACTION IS SUBJECT TO VARIOUS TERMS AND
    CONDITIONS TYPICAL OF COMMERCIAL REAL ESTATE TRANSACTIONS FOR A PROPERTY
    OF THIS TYPE. SUCH TERMS AND 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 DESCRIBES CERTAIN EXPECTED TERMS OF AN $800 MILLION
    TERM LOAN WHICH SNH MAY INCUR IN CONNECTION WITH THE ACQUISITION OF TWO
    BIOTECH MEDICAL OFFICE BUILDINGS. THE COMMITMENTS WHICH WE RECEIVED FOR
    THE TERM LOAN ARE SUBJECT TO VARIOUS CONDITIONS, INCLUDING MUTUALLY
    SATISFACTORY DOCUMENTATION. THERE CAN BE NO ASSURANCE THAT ALL THE
    CONDITIONS WILL BE SATISFIED, THAT THE TERMS OF THE TERM LOAN WILL NOT
    CHANGE, OR THAT THE TERM LOAN WILL BE AVAILABLE TO US TIMELY OR AT ALL. WE
    ARE NOT COMMITTED TO INCUR THE ENTIRE TERM LOAN OR ANY PORTION THEREOF,
    AND MAY UTILIZE OTHER DEBT OR EQUITY FINANCING FOR ALL OR A PORTION OF THE
    ACQUISITION;
  *THIS PRESS RELEASE STATES THAT THE INTEREST RATE UNDER THE TERM LOAN WILL
    BE LIBOR PLUS 140 BASIS POINTS. THIS INTEREST RATE IS BASED ON OUR CURRENT
    DEBT RATINGS AND THE INTEREST RATE MAY BE HIGHER OR LOWER THAN LIBOR PLUS
    140 BASIS POINTS IN THE FUTURE DEPENDING ON OUR FUTURE DEBT RATINGS. THIS
    INTEREST RATE IS ALSO SUBJECT TO CONTRACTUAL PROVISIONS THAT WOULD ADJUST
    THE LENDERS' YIELD TO MARKET CONDITIONS AT THE TIME OF SYNDICATION; AND
  *THIS PRESS RELEASE STATES THAT SNH HAS NINE SENIOR LIVING COMMUNITIES AND
    FOUR MOBS CURRENTLY LISTED FOR SALE. SNH MAY NOT BE ABLE TO SELL THESE
    PROPERTIES ON ACCEPTABLE TERMS, AND THE SALES OF ANY OR ALL OF THESE
    PROPERTIES MAY NOT OCCUR.

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.


SENIOR HOUSING PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share data)
(unaudited)
 Income                                        
  Statement:
                       Quarter Ended December        Year Ended December 31,
                        31,
                        2013         2012           2013          2012
Revenues:
  Rental income         $ 122,912      $ 121,578      $ 459,380       $ 450,769
  Residents fees and     77,424        70,125        302,058        184,031
  services
             Total        200,336        191,703        761,438         634,800
             revenues
                                                                        
Expenses:
  Property operating      76,985         72,584         299,878         197,696
  expenses
  Depreciation            38,554         36,369         153,026         139,042
  General and             8,042          7,411          32,657          31,517
  administrative
  Acquisition related     788            2,580          3,378           9,394
  costs
  Impairment of          2,314         -             7,989          3,071
  assets
             Total       126,683       118,944       496,928        380,720
             expenses
                                                                        
Operating income          73,653         72,759         264,510         254,080
                                                                        
Interest and other        99             160            711             1,117
income
Interest expense          (29,284)       (29,814)       (117,819)       (117,240)
Loss on early
extinguishment of         -              -              (797)           (6,349)
debt
Gain on lease             -              479            -               375
terminations
Gain (loss) on sale      36,251        -             37,392         (101)
of properties
Income from
continuing operations     80,719         43,584         183,997         131,882
before income tax
expense
  and equity in
  earnings of an
  investee
Income tax expense        (195)          (85)           (600)           (375)
Equity in earnings of    115           80            334            316
an investee
Income from              80,639        43,579        183,731        131,823
continuing operations
Discontinued
operations:
  Income from
  discontinued            1,281          1,057          5,043           4,061
  operations
  Loss on asset
  impairment from        (9,714)       -             (37,610)       -
  discontinued
  operations
  Net income            $ 72,206       $ 44,636       $ 151,164       $ 135,884
                                                                        
Weighted average         188,168       176,554       187,251        169,176
shares outstanding
                                                                        
Income from
continuing operations   $ 0.43         $ 0.25         $ 0.98          $ 0.78
per share
(Loss) income from
discontinued             (0.05)        0.00          (0.17)         0.02
operations per share
Net income per share    $ 0.38         $ 0.25         $ 0.81          $ 0.80
                                                                        


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):
                                                    
                     Quarter Ended December 31,     Year Ended December 31,
                     2013          2012          2013          2012
                                                                       
Net income           $ 72,206         $ 44,636      $ 151,164        $ 135,884
Depreciation
expense from           38,554           36,369        153,026          139,042
continuing
operations
Depreciation
expense from           -                600           799              2,414
discontinued
operations
(Gain) loss on
sale of                (36,251)         -             (37,392)         101
properties
Impairment of
assets from            2,314            -             7,989            3,071
continuing
operations
Impairment of
assets from           9,714           -            37,610          -
discontinued
operations
  FFO                  86,537           81,605        313,196          280,512
Acquisition            788              2,580         3,378            9,394
related costs
Loss on early
extinguishment         -                -             797              6,349
of debt
Gain on lease          -                (479)         -                (375)
terminations
Percentage rent       (6,800)         (8,200)      -               -
adjustment (2)
  Normalized FFO     $ 80,525         $ 75,506      $ 317,371        $ 295,880
                                                                       
Weighted average
shares                188,168         176,554      187,251         169,176
outstanding
                                                                       
FFO per share        $ 0.46           $ 0.46        $ 1.67           $ 1.66
Normalized FFO       $ 0.43           $ 0.43        $ 1.69           $ 1.75
per share
                                                                       

(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 these calculations. 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 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 its
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, if any, and public debt covenants, the
availability of debt and equity capital, SNH’s expectation of its future
capital requirements and operating performance and its 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.

(2) 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 recognized
during the first three quarters.


SENIOR HOUSING PROPERTIES TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)

Balance Sheet:
                                                         
                                               December 31,       December 31,
                                               2013               2012
ASSETS
Real estate properties                         $  5,263,625       $  5,019,615
Less accumulated depreciation                    (840,760)         (714,687)
                                                  4,422,865          4,304,928
Cash and cash equivalents                         39,233             42,382
Restricted cash                                   12,514             9,432
Deferred financing fees, net                      27,975             29,410
Acquired real estate leases and other             103,494            113,986
intangible assets, net
Other assets                                     158,585           247,864
Total assets                                   $  4,764,666       $  4,748,002
                                                                     
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility            $  100,000         $  190,000
Senior unsecured notes, net of discount           1,093,337          1,092,053
Secured debt and capital leases                   699,427            724,477
Accrued interest                                  15,839             15,757
Assumed real estate lease obligations,            12,528             13,482
net
Other liabilities                                66,546            65,665
Total liabilities                                 1,987,677          2,101,434
                                                                     
Total shareholders’ equity                       2,776,989         2,646,568
Total liabilities and shareholders’            $  4,764,666       $  4,748,002
equity
                                                                     

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, 617-796-8237
Vice President, Investor Relations,
or
Kimberly Brown, 617-796-8237
Director, Investor Relations
www.snhreit.com
 
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