SNH Announces Financial Results For The Periods Ended September 30, 2004.NEWTON Newton, cities, United States Newton. 1 City (1990 pop. 16,700), seat of Harvey co., S central Kans., in an agricultural area; inc. 1872. , Mass. -- Senior Housing Properties Trust (NYSE NYSE See: New York Stock Exchange : SNH SNH Scottish Natural Heritage SNH Sunday Night Heat (wrestling) SNH Society for Netherlandic History SNH Supervision Network Hub ) today announced its financial results for the quarter and nine months ended September September: see month. 30, 2004, as follows (in thousands, except per share data):
Quarter Ended Nine Months Ended
September 30, September 30,
----------------- ------------------
2004 2003 2004 2003
-------- -------- --------- --------
Total revenues $35,744 $32,101 $107,793 $95,293
Income from continuing
operations $12,919 $10,449 $39,010 $33,469
Net income $12,919 $10,449 $40,229 $32,309
Funds from operations (FFO) $23,437 $20,198 $70,434 $62,242
Weighted average shares
outstanding 63,477 58,453 63,102 58,443
Per share data:
Income from continuing
operations $0.20 $0.18 $0.62 $0.57
Net income $0.20 $0.18 $0.64 $0.55
Funds from operations (FFO) $0.37 $0.35 $1.12 $1.06
Distributions declared $0.32 $0.31 $0.94 $0.93
Senior Housing Properties Trust is a real estate investment trust headquartered in Newton, MA that owns 150 senior living properties located in 31 states.
Senior Housing Properties Trust
Financial Information
(in thousands, except per share data)
Income Statement:
Quarter Ended Nine Months Ended
September 30, September 30,
----------------- ------------------
2004 2003 2004 2003
-------- -------- --------- --------
Revenues:
Rental income $35,426 $31,805 $105,444 $93,647
Interest and other income 318 296 2,349 1,646
-------- -------- --------- --------
Total revenues 35,744 32,101 107,793 95,293
-------- -------- --------- --------
Expenses:
Interest(1) 10,285 10,147 30,910 27,659
Depreciation 9,743 9,013 29,015 26,557
General and administrative 2,797 2,492 8,858 7,608
-------- -------- --------- --------
Total expenses 22,825 21,652 68,783 61,824
-------- -------- --------- --------
Income from continuing operations 12,919 10,449 39,010 33,469
Gain (loss) on sale of property - - 1,219 (1,160)
-------- -------- --------- --------
Net income $12,919 $10,449 $40,229 $32,309
======== ======== ========= ========
Weighted average shares
outstanding 63,477 58,453 63,102 58,443
======== ======== ========= ========
Per share data:
Income from continuing operations $0.20 $0.18 $0.62 $0.57
======== ======== ========= ========
Net income $0.20 $0.18 $0.64 $0.55
======== ======== ========= ========
Balance Sheet: At At
September 30, December 31,
2004 2003
--------------- -------------
Assets
------
Real estate properties $1,447,874 $1,418,241
Less accumulated depreciation 188,946 160,426
--------------- -------------
1,258,928 1,257,815
Cash and cash equivalents 2,894 3,530
Restricted cash 5,183 10,108
Deferred financing fees, net 9,854 11,311
Other assets 23,314 21,336
--------------- -------------
Total assets $1,300,173 $1,304,100
=============== =============
Liabilities and Shareholders' Equity
------------------------------------
Unsecured revolving bank credit facility $30,000 $102,000
Senior unsecured notes, net of discount 393,734 393,612
Junior subordinated debentures due 2041(1) 28,241 27,394
Secured debt and capital leases 26,299 31,817
--------------- -------------
Total debt 478,274 554,823
Other liabilities 23,363 21,371
--------------- -------------
Total liabilities 501,637 576,194
Shareholders' equity 798,536 727,906
--------------- -------------
Total liabilities and shareholders'
equity $1,300,173 $1,304,100
=============== =============
(1) Revised FASB Interpretation No. 46, which was issued in December
2003, required that we deconsolidate the entity which had issued
our trust preferred securities. The deconsolidation of this entity
had no impact on our financial condition or net income. However,
instead of presenting trust preferred securities on our balance
sheet, we present the junior subordinated debentures that we
issued to that entity. Distributions on the trust preferred
securities are no longer presented on our income statement, but
the interest on the debentures, which is equal to the
distributions on the trust preferred securities, is included in
interest expense. We reclassified previously reported results for
the quarter and nine months ended September 30, 2003 and the
balance sheet as of December 31, 2003, to conform to the current
presentation.
Senior Housing Properties Trust
Other Data
(in thousands, except per share and ratio data)
Calculation of Funds From Operations (FFO)(1):
Quarter Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2004 2003 2004 2003
-------- -------- -------- --------
Income from continuing operations $12,919 $10,449 $39,010 $33,469
Add: Depreciation expense 9,743 9,013 29,015 26,557
Deferred percentage rent(2) 775 736 2,409 2,216
-------- -------- -------- --------
FFO $23,437 $20,198 $70,434 $62,242
======== ======== ======== ========
Weighted average shares outstanding 63,477 58,453 63,102 58,443
======== ======== ======== ========
FFO per share $0.37 $0.35 $1.12 $1.06
======== ======== ======== ========
Distributions declared $0.32 $0.31 $0.94 $0.93
======== ======== ======== ========
Leverage Ratios:
At At
September 30, December 31,
2004 2003
-------------- ---------------
Total debt/Total assets 36.8% 42.6%
Total debt/Real estate properties
before depreciation 33.0% 39.1%
Total debt/Total book capitalization 37.5% 43.3%
Secured debt/Total debt 5.5% 5.7%
Secured debt/Total assets 2.0% 2.4%
Variable rate debt/Total debt 7.1% 20.0%
Variable rate debt/Total assets 2.6% 8.5%
Coverage Ratios:
Quarter Ended Nine Months Ended
September 30, September 30,
----------------- ------------------
2004 2003 2004 2003
-------- -------- --------- --------
Income from continuing operations $12,919 $10,449 $39,010 $33,469
Deferred percentage rent 775 736 2,409 2,216
Interest expense 10,285 10,147 30,910 27,659
Depreciation expense 9,743 9,013 29,015 26,557
-------- -------- --------- --------
EBITDA(3) $33,722 $30,345 $101,344 $89,901
======== ======== ========= ========
EBITDA/Interest expense 3.3x 3.0x 3.3x 3.3x
======== ======== ========= ========
(1) We compute FFO as shown in the calculation above. Our calculation
of FFO differs from the NAREIT definition of FFO because we
include deferred percentage rent as discussed in Note 2 below. We
consider FFO to be an appropriate measure of performance for a
REIT, along with net income and cash flow from operating,
investing and financing activities. We believe that FFO provides
useful information to investors because by excluding the effects
of certain historical costs, such as depreciation expense, and
gain or losses on sale of properties, FFO can facilitate
comparison of current operating performance among REITs. FFO does
not represent cash generated by operating activities in accordance
with generally accepted accounting principles, or GAAP, and should
not be considered an alternative to net income or cash flow from
operating activities as a measure of financial performance or
liquidity. FFO is one important factor considered by our board of
trustees in determining the amount of distributions to
shareholders. Other important factors include, but are not limited
to, requirements to maintain our status as a REIT, limitations in
our revolving bank credit facility and public debt covenants, the
availability of debt and equity capital to us and our expectation
of our future performance.
(2) We recognize percentage rental income received during the first,
second and third quarters in the fourth quarter. Although
recognition of revenue is deferred until the fourth quarter for
purposes of calculating net income, the calculation of FFO for the
first three quarters includes estimated amounts with respect to
those periods. The fourth quarter FFO calculation excludes the
amounts recognized during the first three quarters.
(3) We compute EBITDA as income from continuing operations plus
interest expense, depreciation expense and deferred percentage
rent. We consider EBITDA to be an appropriate measure of
performance for a REIT, along with net income and cash flow from
operating, investing and financing activities. EBITDA does not
represent cash generated by operating activities in accordance
with GAAP and should not be considered an alternative to net
income or cash flow from operating activities as a measure of
financial performance or liquidity.
Senior Housing Properties Trust
Other Data
The following additional data is intended to respond
to frequently asked questions.
At September 30, 2004
(dollars in thousands)
----------------------------------------------------------------------
Investment:
carrying % of
value Annua- Annua-
# of # of before % of lized lized
Pro- Units/ depre- Invest- Current Current
perties Beds ciation ment Rent Rent
------- ------ --------- ------- ---------- ---------
Facility Type
-------------
Independent living
communities(1) 36 10,412 $898,585 62.1% $90,247 62.3%
Assisted living
facilities 51 3,724 282,964 19.5% 29,099 20.1%
Skilled nursing
facilities 61 6,433 222,772 15.4% 16,989 11.6%
Hospitals 2 364 43,553 3.0% 8,700 6.0%
------- ------ ---------- ------- --------- ---------
Total 150 20,933 $1,447,874 100.0% $145,035 100.0%
======= ====== ========== ======= ========= =========
Tenant/Operator
---------------
Five Star/Sunrise(2) 31 7,307 $625,569 43.2% $63,876 44.1%
Sunrise/Marriott(3) 14 4,091 325,473 22.5% 31,204 21.6%
Five Star 67 6,118 255,517 17.6% 18,324 12.6%
NewSeasons/IBC(4) 10 1,019 87,641 6.1% 9,287 6.4%
HEALTHSOUTH(5) 2 364 43,553 3.0% 8,700 6.0%
Alterra Healthcare 18 894 61,126 4.2% 7,225 5.0%
Genesis HealthCare 1 156 13,007 0.9% 1,522 1.0%
5 private companies
(combined) 7 984 35,988 2.5% 4,897 3.3%
------- ------ ---------- ------- ---------- --------
Total 150 20,933 $1,447,874 100.0% $145,035 100.0%
======= ====== ========== ======= ========== ========
----------------------------------------------------------------------
Tenant Operating Statistics (Quarter Ended September 30)(6)
Rent Coverage Occupancy
-------------- --------------
2004 2003 2004 2003
-------------- --------------
Five Star/Sunrise (2) 1.0x 1.0x 90% 89%
Sunrise/Marriott (3) 1.2x 1.2x 91% 87%
Five Star (7) 2.2x 1.6x 89% 89%
NewSeasons/IBC(4) (7) 1.2x 1.1x 80% 80%
HEALTHSOUTH(8) NA NA NA NA
Alterra Healthcare(7) 1.6x 1.6x 82% 85%
Genesis HealthCare 1.9x 1.6x 97% 97%
5 private companies
(combined) 2.2x 2.2x 85% 85%
Percentage of Operating Revenue Sources
------------------------------------------------
Private Pay Medicare Medicaid
2004 2003 2004 2003 2004 2003
----- ------- ------- ------- ------- -------
Five Star/Sunrise(2) 85% 86% 11% 10% 4% 4%
Sunrise/Marriott(3) 82% 83% 14% 13% 4% 4%
Five Star (7) 31% 33% 22% 17% 47% 50%
NewSeasons/IBC(4)(7) 100% 100% - - - -
HEALTHSOUTH(8) NA NA NA NA NA NA
Alterra Healthcare(7) 98% 98% - - 2% 2%
Genesis HealthCare 22% 25% 33% 31% 45% 44%
5 private companies
(combined) 25% 24% 19% 19% 56% 57%
----------------------------------------------------------------------
Tenant Operating Statistics (Nine Months Ended September 30)(6)
Rent Coverage Occupancy
-------------- --------------
2004 2003 2004 2003
-------------- --------------
Five Star/Sunrise (2) 1.1x 1.0x 90% 90%
Sunrise/Marriott (3) 1.3x 1.2x 89% 87%
Five Star (7) 1.9x 1.6x 89% 90%
NewSeasons/IBC(4)(7) 1.1x 1.1x 79% 79%
HEALTHSOUTH(8) NA NA NA NA
Alterra Healthcare(7) 1.6x 1.6x 82% 86%
Genesis HealthCare 1.9x 1.3x 96% 97%
5 private companies
(combined) 2.2x 2.3x 86% 86%
Percentage of Operating Revenue Sources
------------------------------------------------
Private Pay Medicare Medicaid
2004 2003 2004 2003 2004 2003
------ ------ ------- ------ ------ ------
Five Star/Sunrise (2) 85% 86% 11% 10% 4% 4%
Sunrise/Marriott (3) 82% 83% 13% 13% 5% 4%
Five Star (7) 31% 33% 22% 17% 47% 50%
NewSeasons/IBC(4) (7) 100% 100% - - - -
HEALTHSOUTH(8) NA NA NA NA NA NA
Alterra Healthcare(7) 98% 98% - - 2% 2%
Genesis HealthCare 21% 23% 33% 34% 46% 43%
5 private companies
(combined) 25% 23% 21% 19% 54% 58%
(1) Properties where the majority of units are independent living
apartments are classified as independent living communities.
(2) These 31 properties leased to Five Star Quality Care, Inc., or
Five Star, are managed by Sunrise Senior Living, Inc., or Sunrise.
Sunrise does not guaranty our lease with Five Star. Rent coverage
is after non-subordinated management fees of $5.5 million and
$14.6 million and $4.3 million and $12.7 million in the quarter
and nine months ended September 30, 2004 and 2003, respectively.
(3) Marriott International, Inc., or Marriott, guarantees the lease
for the 14 properties leased to Sunrise.
(4) Independence Blue Cross, or IBC, a Pennsylvania health insurer,
guarantees the lease for the 10 properties leased to NewSeasons
Assisted Living Communities, Inc., or NewSeasons.
(5) Since April 2003, we have been in litigation with HEALTHSOUTH
Corporation. We are seeking that our lease with HEALTHSOUTH be
reformed to increase the rent payable to us under this lease,
among other matters. We have had settlement discussions with the
new management of HEALTHSOUTH, but a final settlement was not
achieved. This litigation remains pending and no trial date has
been set. On October 26, 2004, we sent a notice of lease
termination to HEALTHSOUTH. Our lease with HEALTHSOUTH requires it
to manage the properties for a transition period for a management
fee. Through October 2004, HEALTHSOUTH has continued to pay
monthly rent to us at the rate of $8.7 million per year, but we
can not predict how HEALTHSOUTH may respond to the notice of lease
termination.
(6) All tenant operating data presented are based upon the operating
results provided by our tenants for the indicated periods ending
September 30, 2004, or the most recent prior period tenant
operating results available to us from our tenants. Rent coverage
is calculated as operating cash flow from our tenants' facility
operations, before subordinated charges and capital expenditure
reserves, divided by rent payable to us. We have not independently
verified our tenants' operating data.
(7) Includes data for periods prior to our ownership of these
properties.
(8) During 2003, HEALTHSOUTH issued a press release stating that its
historical financial information should not be relied upon. In
2004, HEALTHSOUTH issued a press release stating that audited
financial information would not be available until 2005. Because
we have reason to doubt the financial information we have from
HEALTHSOUTH we do not disclose any operating data for this tenant.
Warning Regarding Forward Looking Statements The foregoing press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and Federal Securities Laws. These statements represent our present beliefs and expectations but they may not occur for various reasons. For example, as noted above, we are currently involved in litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. with HEALTHSOUTH HealthSouth Corporation NYSE: HLS, based in Birmingham, Alabama, is one of the nations largest healthcare services provider. Best known for its rehabilitation services, HealthSouth has more than 200 facilities in United States and Puerto Rico. concerning the amount of rent payable to us, our settlement discussions with HEALTHSOUTH have terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: , we have sent HEALTHSOUTH a lease termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. notice and HEALTHSOUTH has continued to pay our rent through the date of the notice of lease termination at a disputed amount. The forward looking implications of these statements may be that our rent may increase, that HEALTHSOUTH will manage the properties following the lease termination, that we may be able to lease these properties for higher rent or that HEALTHSOUTH may continue to pay our rent at the current rate. We cannot predict how HEALTHSOUTH may react to our recent notice of lease termination. Discovery during lawsuits or decisions by courts may result in conclusions that are different from any of these implications. You should not place undue reliance upon forward looking statements. |
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