Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: David J. Hegarty, President
or John R. Hoadley, Treasurer
(617) 796-8350
www.snhreit.com
SNH Announces Financial Results for the Periods Ended June 30, 2003
Newton, MA (July 30, 2003): Senior Housing Properties Trust (NYSE: SNH) today announced its financial results for the quarter and six months ended June 30, 2003, as follows (in thousands, except per share data):
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| Quarter Ended |
| Six Months Ended |
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| 2003 |
| 2002 |
| 2003 |
| 2002 |
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Total revenues |
| $ | 31,842 |
| $ | 30,378 |
| $ | 63,192 |
| $ | 59,085 |
|
Net income |
| 9,801 |
| 10,596 |
| 21,860 |
| 22,216 |
| ||||
Funds from operations (FFO) |
| 20,572 |
| 20,096 |
| 42,044 |
| 37,953 |
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Weighted average shares outstanding |
| 58,439 |
| 58,424 |
| 58,438 |
| 54,362 |
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Per share data: |
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Net income |
| $ | 0.17 |
| $ | 0.18 |
| $ | 0.37 |
| $ | 0.41 |
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Funds from operations (FFO) |
| 0.35 |
| 0.34 |
| 0.72 |
| 0.70 |
| ||||
Distributions declared |
| 0.31 |
| 0.31 |
| 0.62 |
| 0.62 |
| ||||
Senior Housing Properties Trust is a real estate investment trust headquartered in Newton, MA that has investments in 144 senior housing properties located in 31 states.
Senior Housing Properties Trust
(in thousands, except per share amounts)
Income Statement:
|
| Quarter Ended June 30, |
| Six Months Ended June 30, |
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|
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| ||||
Revenues: |
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Rental income |
| $ | 31,568 |
| $ | 28,261 |
| $ | 61,842 |
| $ | 54,796 |
|
FF&E reserve income (1) |
| — |
| 1,838 |
| — |
| 3,502 |
| ||||
Interest and other income |
| 274 |
| 279 |
| 1,350 |
| 787 |
| ||||
Total revenues |
| 31,842 |
| 30,378 |
| 63,192 |
| 59,085 |
| ||||
Expenses: |
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| ||||
Interest |
| 8,960 |
| 6,439 |
| 16,106 |
| 13,821 |
| ||||
Depreciation |
| 8,891 |
| 8,098 |
| 17,544 |
| 15,226 |
| ||||
General and administrative (2) |
| 2,327 |
| 2,071 |
| 5,116 |
| 3,925 |
| ||||
Total |
| 20,178 |
| 16,608 |
| 38,766 |
| 32,972 |
| ||||
Income from continuing operations before distributions on trust preferred securities |
| 11,664 |
| 13,770 |
| 24,426 |
| 26,113 |
| ||||
Distributions on trust preferred securities |
| 703 |
| 703 |
| 1,406 |
| 1,406 |
| ||||
Income from continuing operations |
| 10,961 |
| 13,067 |
| 23,020 |
| 24,707 |
| ||||
Loss from discontinued operations |
| — |
| (2,471 | ) | — |
| (2,491 | ) | ||||
Loss on sale of property |
| (1,160 | ) | — |
| (1,160 | ) | — |
| ||||
Net income |
| $ | 9,801 |
| $ | 10,596 |
| $ | 21,860 |
| $ | 22,216 |
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Weighted average shares outstanding |
| 58,439 |
| 58,424 |
| 58,438 |
| 54,362 |
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Per share data: |
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Income from continuing operations |
| $ | 0.19 |
| $ | 0.22 |
| $ | 0.39 |
| $ | 0.45 |
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Net income |
| $ | 0.17 |
| $ | 0.18 |
| $ | 0.37 |
| $ | 0.41 |
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Balance Sheet:
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| At |
| At |
| ||
Assets |
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Real estate properties |
| $ | 1,306,069 |
| $ | 1,238,487 |
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Accumulated depreciation |
| (142,243 | ) | (125,039 | ) | ||
|
| 1,163,826 |
| 1,113,448 |
| ||
Mortgage receivable |
| 6,051 |
| — |
| ||
Cash and cash equivalents |
| 5,460 |
| 8,654 |
| ||
Restricted cash |
| 10,455 |
| 12,364 |
| ||
Deferred financing fees, net |
| 12,133 |
| 9,512 |
| ||
Other assets |
| 18,615 |
| 14,222 |
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Total assets |
| $ | 1,216,540 |
| $ | 1,158,200 |
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Liabilities and Shareholders’ Equity |
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Unsecured revolving bank credit facility |
| $ | 6,000 |
| $ | 81,000 |
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Senior unsecured notes, net of discounts |
| 393,530 |
| 243,746 |
| ||
Secured debt and capital leases |
| 32,579 |
| 32,618 |
| ||
Total debt |
| 432,109 |
| 357,364 |
| ||
Other liabilities |
| 17,902 |
| 21,116 |
| ||
Total liabilities |
| 450,011 |
| 378,480 |
| ||
Trust preferred equity securities |
| 27,394 |
| 27,394 |
| ||
Shareholders’ equity |
| 739,135 |
| 752,326 |
| ||
Total liabilities and shareholders’ equity |
| $ | 1,216,540 |
| $ | 1,158,200 |
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(1) One of our leases which began in January 2002 provided that a percentage of revenues at the leased properties be paid to us as additional rent, which was escrowed for future capital expenditures at the leased facilities. This lease was amended October 1, 2002. As a result of this amendment, amounts for capital expenditures are not paid to us but are deposited into accounts owned by the tenant, Five Star, while we have security and remainder interests in these accounts and in property purchased with funding from these accounts. Accordingly, we no longer record FF&E reserve income.
(2) Includes expenses incurred with respect to litigations with Marriott International and HEALTHSOUTH of $100,000 for the three months ended June 30, 2003 and $700,000 for the six months ended June 30, 2003.
2
Senior Housing Properties Trust
Other Data
(dollars in thousands, except per share amounts)
Calculation of Funds From Operations (FFO)(1):
|
| Quarter Ended June 30, |
| Six Months Ended June 30, |
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|
| 2003 |
| 2002 |
| 2003 |
| 2002 |
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Income from continuing operations |
| $ | 10,961 |
| $ | 13,067 |
| $ | 23,020 |
| $ | 24,707 |
| |
Add: | Depreciation expense |
| 8,891 |
| 8,098 |
| 17,544 |
| 15,226 |
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| Deferred percentage rent(2) |
| 720 |
| 769 |
| 1,480 |
| 1,522 |
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Less: | FF&E reserve income |
| — |
| (1,838 | ) | — |
| (3,502 | ) | ||||
FFO |
| $ | 20,572 |
| $ | 20,096 |
| $ | 42,044 |
| $ | 37,953 |
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Weighted average shares outstanding |
| 58,439 |
| 58,424 |
| 58,438 |
| 54,362 |
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FFO per share |
| $ | 0.35 |
| $ | 0.34 |
| $ | 0.72 |
| $ | 0.70 |
| |
Distributions declared |
| $ | 0.31 |
| $ | 0.31 |
| $ | 0.62 |
| $ | 0.62 |
| |
Leverage Ratios:
|
| At |
| At |
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Total debt / Total assets |
| 35.5 | % | 30.9 | % |
Total debt / Real estate properties before depreciation |
| 33.1 | % | 28.9 | % |
Total debt / Total book capitalization |
| 36.0 | % | 31.4 | % |
Secured debt / Total debt |
| 7.5 | % | 9.1 | % |
Secured debt / Total assets |
| 2.7 | % | 2.8 | % |
Variable rate debt / Total debt |
| 3.5 | % | 25.2 | % |
Coverage Ratios:
|
| Quarter Ended |
| Six Months Ended |
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|
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| ||||
Income from continuing operations |
| $ | 10,961 |
| $ | 13,067 |
| $ | 23,020 |
| $ | 24,707 |
|
Deferred percentage rent |
| 720 |
| 769 |
| 1,480 |
| 1,522 |
| ||||
Interest expense |
| 8,960 |
| 6,439 |
| 16,106 |
| 13,821 |
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Trust preferred distributions |
| 703 |
| 703 |
| 1,406 |
| 1,406 |
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Depreciation expense |
| 8,891 |
| 8,098 |
| 17,544 |
| 15,226 |
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EBITDA(1) |
| $ | 30,235 |
| $ | 29,076 |
| $ | 59,556 |
| $ | 56,682 |
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EBITDA / Interest expense |
| 3.4 | x | 4.5 | x | 3.7 | x | 4.1 | x | ||||
EBITDA / Interest expense + trust preferred distributions |
| 3.1 | x | 4.1 | x | 3.4 | x | 3.7 | x | ||||
(1) We compute FFO and EBITDA as shown in the calculations above. Our calculation of FFO differs from the NAREIT definition of FFO because we include deferred percentage rent as discussed in Note 2 below. Also, in order to facilitate comparison of FFO with historical results, the historical FFO presentation for the three and six months ended June 30, 2002, eliminates FF&E reserve income (see Note 1 on page 2). We consider FFO and EBITDA to be appropriate measures of performance, liquidity and cash flow for a REIT. Along with net income and cash flow from operating, investing and financing activities, FFO and EBITDA provide investors with an indication of a REIT’s operating performance and its ability to incur and service debt, make capital expenditures, pay distributions and fund other cash needs. FFO and EBITDA do 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 for 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 includes estimated amounts with respect to periods shown.
3
Senior Housing Properties Trust
Other Data
The following additional data is intended to respond
to frequently asked questions (dollars in thousands)
at June 30, 2003
|
| # of |
| # of |
| Investment |
| % of |
| Current |
| % of |
| ||
Facility Type |
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Independent living communities(1) |
| 36 |
| 10,497 |
| $ | 851,176 |
| 64.9 | % | $ | 85,545 |
| 65.7 | % |
Assisted living facilities |
| 42 |
| 2,368 |
| 184,816 |
| 14.1 | % | 18,870 |
| 14.4 | % | ||
Skilled nursing facilities |
| 64 |
| 6,745 |
| 232,575 |
| 17.7 | % | 17,146 |
| 13.2 | % | ||
Hospitals |
| 2 |
| 364 |
| 43,553 |
| 3.3 | % | 8,700 |
| 6.7 | % | ||
Total |
| 144 |
| 19,974 |
| $ | 1,312,120 |
| 100.0 | % | $ | 130,261 |
| 100.0 | % |
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Tenant/Operator |
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Five Star/Sunrise (2) |
| 31 |
| 7,465 |
| $ | 616,397 |
| 46.9 | % | $ | 63,000 |
| 48.4 | % |
Marriott/Sunrise (2) |
| 14 |
| 4,030 |
| 325,472 |
| 24.8 | % | 31,182 |
| 23.9 | % | ||
HEALTHSOUTH |
| 2 |
| 364 |
| 43,553 |
| 3.3 | % | 8,700 |
| 6.7 | % | ||
Alterra Healthcare (3) |
| 23 |
| 1,076 |
| 67,058 |
| 5.1 | % | 7,499 |
| 5.8 | % | ||
Five Star #1 |
| 53 |
| 4,889 |
| 139,595 |
| 10.6 | % | 6,894 |
| 5.3 | % | ||
Five Star #2 |
| 12 |
| 890 |
| 70,378 |
| 5.4 | % | 6,935 |
| 5.3 | % | ||
Genesis Health Ventures |
| 1 |
| 156 |
| 13,007 |
| 1.0 | % | 1,496 |
| 1.1 | % | ||
Integrated Health Services |
| 1 |
| 140 |
| 15,598 |
| 1.2 | % | 1,200 |
| 1.0 | % | ||
4 private companies (combined) |
| 7 |
| 964 |
| 21,062 |
| 1.7 | % | 3,355 |
| 2.5 | % | ||
Total |
| 144 |
| 19,974 |
| $ | 1,312,120 |
| 100.0 | % | $ | 130,261 |
| 100.0 | % |
Quarter Ended June 30,
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| Percentage of Operating Revenue Sources |
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Tenant Operating Statistics (4) |
| Rent Coverage |
| Occupancy |
| Private Pay |
| Medicare |
| Medicaid |
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| 2003 |
| 2002 |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| |
Five Star/Sunrise (2)(5) |
| 1.0 | x | 1.0 | x | 89 | % | 90 | % | 86 | % | 86 | % | 11 | % | 10 | % | 3 | % | 4 | % |
Marriott/Sunrise (2) |
| 1.2 | x | 1.4 | x | 90 | % | 87 | % | 82 | % | 84 | % | 14 | % | 13 | % | 4 | % | 3 | % |
HEALTHSOUTH(6) |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
|
Alterra Healthcare |
| 1.5 | x | 1.5 | x | 82 | % | 85 | % | 98 | % | 99 | % | — |
| — |
| 2 | % | 1 | % |
Five Star #1 |
| 2.6 | x | 2.7 | x | 90 | % | 88 | % | 22 | % | 21 | % | 20 | % | 21 | % | 58 | % | 58 | % |
Five Star #2 |
| 1.1 | x | 1.4 | x | 85 | % | 88 | % | 100 | % | 100 | % | — |
| — |
| — |
| — |
|
Genesis Health Ventures |
| 1.3 | x | 1.7 | x | 97 | % | 95 | % | 24 | % | 22 | % | 33 | % | 41 | % | 43 | % | 37 | % |
Integrated Health Services |
| 1.1 | x | 2.2 | x | 86 | % | 88 | % | 27 | % | 28 | % | 19 | % | 23 | % | 54 | % | 49 | % |
4 private companies (combined) |
| 2.7 | x | 2.2 | x | 88 | % | 87 | % | 18 | % | 17 | % | 20 | % | 24 | % | 62 | % | 59 | % |
Six Months Ended June 30,
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| Percentage of Operating Revenue Sources |
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Tenant Operating Statistics (4) |
| Rent Coverage |
| Occupancy |
| Private Pay |
| Medicare |
| Medicaid |
| ||||||||||
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| 2003 |
| 2002 |
| |
Five Star/Sunrise (2)(5) |
| 1.0 | x | 1.1 | x | 89 | % | 90 | % | 86 | % | 86 | % | 10 | % | 10 | % | 4 | % | 4 | % |
Marriott/Sunrise (2) |
| 1.2 | x | 1.5 | x | 89 | % | 88 | % | 83 | % | 84 | % | 13 | % | 13 | % | 4 | % | 3 | % |
HEALTHSOUTH(6) |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
|
Alterra Healthcare |
| 1.5 | x | 1.5 | x | 83 | % | 85 | % | 98 | % | 99 | % | — |
| — |
| 2 | % | 1 | % |
Five Star #1 |
| 2.6 | x | 2.7 | x | 90 | % | 88 | % | 21 | % | 22 | % | 21 | % | 21 | % | 58 | % | 57 | % |
Five Star #2 |
| 1.0 | x | 1.4 | x | 85 | % | 88 | % | 100 | % | 100 | % | — |
| — |
| — |
| — |
|
Genesis Health Ventures |
| 1.2 | x | 1.6 | x | 97 | % | 95 | % | 22 | % | 26 | % | 35 | % | 41 | % | 43 | % | 33 | % |
Integrated Health Services |
| 1.1 | x | 1.9 | x | 86 | % | 89 | % | 25 | % | 28 | % | 20 | % | 25 | % | 55 | % | 47 | % |
4 private companies (combined) |
| 2.6 | x | 2.2 | x | 89 | % | 87 | % | 17 | % | 17 | % | 20 | % | 24 | % | 63 | % | 59 | % |
(1) Properties where the majority of units are independent living apartments are classified as independent living communities.
(2) On March 28, 2003, Marriott International, Inc. sold its senior living division, Marriott Senior Living Services, Inc. (“MSLS”), to Sunrise Assisted Living, Inc. (“Sunrise”). Effective on that date, Sunrise became the manager of the 31 properties leased to Five Star Quality Care, Inc. (“Five Star”) and the tenant/manager of the 14 properties leased to MSLS. Marriott International continues to guarantee the lease for the 14 properties.
(3) Includes owned real estate and a $6,051 investment secured by a first mortgage on five assisted living facilities.
(4) All tenant operating statistics are calculated based upon the operating results for the indicated periods ending June 30, or the most recent prior period tenant operating results available to us from our tenants. Tenant operating statistics include data from properties prior to their date of purchase by us. 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.
(5) Rent coverage is after non-subordinated management fees of $4.4 million and $8.4 million and $4.1 million and $8.3 million in the quarter and six months ended June 30, 2003 and 2002, respectively.
(6) In March 2003, HEALTHSOUTH issued a press release stating that its historical financial information should not be relied upon. Because we have reason to doubt the financial information we have from HEALTHSOUTH we do not disclose any lease coverage information for this tenant.
4
