Exhibit 99.2
SENIOR HOUSING PROPERTIES TRUST
Fourth Quarter 2008
Supplemental Operating and Financial Data
Unless otherwise noted, all amounts in this report are unaudited.
TABLE OF CONTENTS
| | Page |
| | |
CORPORATE INFORMATION | |
| | |
| Company Profile | 5 |
| Investor Information | 6 |
| Research Coverage | 7 |
| | |
FINANCIAL INFORMATION | |
| | |
| Key Financial Data | 9 |
| Condensed Consolidated Balance Sheet | 10 |
| Condensed Consolidated Statement of Income | 11 |
| Condensed Consolidated Statement of Cash Flows | 12 |
| Calculation of EBITDA | 13 |
| Calculation of Funds from Operations (FFO) | 14 |
| Debt Summary | 15 |
| Debt Maturity Schedule | 16 |
| Leverage Ratios, Coverage Ratios and Public Debt Covenants | 17 |
| 2008 Investments/Dispositions Information | 18 |
| 2008 Financing Activities | 19 |
| | |
PORTFOLIO INFORMATION | |
| | |
| Portfolio Summary by Property Type and Tenant | 21 |
| Occupancy by Property Type and Tenant | 22 |
| % of Private Pay by Senior Living Property Type and Tenant | 23 |
| Rent Coverage by Tenant (excluding MOBs) | 24 |
| Portfolio Lease Expiration Schedule | 25 |
2
WARNING REGARDING
FORWARD LOOKING STATEMENTS
THIS SUPPLEMENTAL OPERATING AND FINANCIAL DATA REPORT CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER FEDERAL SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS REPORT AND INCLUDE BUT ARE NOT LIMITED TO STATEMENTS REGARDING OUR INTENT, BELIEF OR EXPECTATION, OR THE INTENT, BELIEF OR EXPECTATION OF OUR TRUSTEES AND OFFICERS, WITH RESPECT TO:
• OUR ABIILITY TO PURCHASE OR SELL PROPERTIES;
• OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL;
• OUR ABILITY TO PAY INTEREST AND DEBT PRINCIPAL AND MAKE DISTRIBUTIONS;
• OUR POLICIES AND PLANS REGARDING INVESTMENTS AND FINANCINGS;
• OUR TAX STATUS AS A REAL ESTATE INVESTMENT TRUST; AND
• OTHER MATTERS.
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 OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
• THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS, INCLUDING THE RECENT CHANGES IN THE CAPITAL MARKETS, ON US AND OUR TENANTS;
• COMPETITION WITHIN THE REAL ESTATE INDUSTRY OR THOSE INDUSTRIES IN WHICH OUR TENANTS OPERATE; AND
• CHANGES IN FEDERAL, STATE AND LOCAL LEGISATION.
FOR EXAMPLE:
• THIS REPORT STATES THAT WE MAY SELL PROPERTIES AND THAT CERTAIN PROPERTIES ARE CLASSIFIED AS HELD FOR SALE ON OUR CONSOLIDATED BALANCE SHEET. WE MAY BE UNABLE TO FIND QUALIFIED BUYERS TO PURCHASE THESE PROPERTIES ON FAVORABLE, OR ANY, TERMS, AND MAY NOT PROCEED WITH THESE SALES DUE TO MARKET CONDITIONS, FAILURE TO SATISFY CONTINGENCIES OR OTHER REASONS. AS A RESULT, THESE PROPOSED SALES MAY NOT OCCUR;
• IF THE AVAILABILITY OF DEBT CAPITAL REMAINS RESTRICTED OR BECOMES MORE RESTRICTED, WE MAY BE UNABLE TO REFINANCE OR REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE OR ON TERMS WHICH ARE AS FAVORABLE AS WE NOW HAVE;
• SOME OF OUR TENANTS MAY NOT RENEW EXPIRING LEASES, AND WE MAY BE UNABLE TO LOCATE NEW TENANTS TO MAINTAIN THE HISTORICAL OCCUPANCY RATES OF OUR PROPERTIES;
• RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE;
• OUR TENANTS MAY EXPERIENCE LOSSES AND BECOME UNABLE TO PAY OUR RENTS;
• WE MAY BE UNABLE TO IDENTIFY PROPERTIES WHICH WE WANT TO BUY OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES; AND
• WE MAY BE UNABLE TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS AND FUTURE DISTRIBUTIONS MAY BE SUSPENDED OR PAID AT A LESSER RATE THAN THE DISTRIBUTIONS WE NOW PAY.
OTHER IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN OUR FORWARD LOOKING STATEMENTS ARE DESCRIBED MORE FULLY UNDER “ITEM 1A. RISK FACTORS” IN OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2007.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
3
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
The Company:
Senior Housing Properties Trust, or SNH, is a real estate investment trust, or REIT, which owns independent and assisted living properties, continuing care retirement communities, nursing homes, hospitals, wellness centers and medical office, clinic and biotech laboratory buildings located throughout the United States. We are included in a number of stock indices, including the Russell 2000®, the MSCI US REIT Index, FTSE EPRA/NAREIT United States Index and the S&P REIT Composite Index.
Management:
SNH is managed by Reit Management & Research LLC, or RMR. RMR was founded in 1986 to manage public investments in real estate. As of December 31, 2008, RMR managed one of the largest portfolios of publicly owned real estate in North America, including approximately 1,300 properties located in 45 states, Washington, D.C., Puerto Rico and Ontario, Canada. RMR has approximately 585 employees in its headquarters and regional offices located throughout the United States. In addition to managing SNH, RMR manages Hospitality Properties Trust, or HPT, a publicly traded REIT that owns hotels and travel centers, and HRPT Properties Trust, a publicly traded REIT that primarily owns office buildings and industrial properties. RMR also provides management services to Travel Centers of America LLC, a tenant of HPT, and to Five Star Quality Care, Inc., or Five Star, a healthcare services company which is our largest tenant. An affiliate of RMR, RMR Advisors, Inc., is the investment manager of several publicly traded mutual funds, the RMR funds, which principally invest in securities of unaffiliated real estate companies. The public companies managed by RMR and its affiliates had combined total gross assets of approximately $16 billion as of December 31, 2008. We believe that being managed by RMR is a competitive advantage for SNH because RMR provides SNH with a depth of management and experience which may be unequaled in the real estate industry. We also believe RMR is able to provide management services to us at costs that are lower than we would have to pay for similar quality services.
Strategy:
Our present business plan is to maintain an investment portfolio of independent and assisted living properties, continuing care retirement communities, nursing homes and medical office, clinic and biotech laboratory buildings and to acquire additional healthcare related properties primarily for income and secondarily for appreciation potential. Our current growth strategy is primarily focused on making acquisitions of geographically diverse, primarily independent and assisted senior living properties where the majority of the residents pay for occupancy and services with their private resources rather than through government programs. We sometimes invest in properties other than senior living properties, such as the wellness centers. We have recently begun to invest in medical office, clinic and biotech laboratory buildings. We base our acquisition decisions on the historical and projected operating results of the target properties and the financial strength of the proposed tenants and their guarantors, among other considerations. We do not have any investments in joint ventures or partnerships.
Stock Exchange Listing: | Corporate Headquarters: |
| |
New York Stock Exchange | 400 Centre Street |
| Newton, MA 02458 |
Trading Symbol: | (t) (617) 796-8350 |
| (f) (617) 796-8349 |
Common Shares — SNH | |
Senior Unsecured Debt Ratings:
Moody’s — Ba1
Standard & Poor’s — BBB-
Portfolio Concentration by Facility Type (as of 12/31/08):
| | Number of | | Number of | | Carrying Value of | | | | Annualized | | | |
| | Properties | | Units/Beds | | Investment (1) | | Percent | | Current Rent | | Percent | |
Independent living (2) | | 42 | | 11,465 | | $1,094,131 | | 39.0 | % | $107,467 | | 38.4 | % |
Assisted living | | 121 | | 8,531 | | 905,905 | | 32.3 | % | 84,943 | | 30.3 | % |
Nursing homes | | 58 | | 5,844 | | 229,126 | | 8.2 | % | 19,874 | | 7.1 | % |
Rehabilitation hospitals | | 2 | | 364 | | 54,714 | | 1.9 | % | 11,143 | | 4.0 | % |
Wellness centers (3) | | 10 | | — | | 180,017 | | 6.4 | % | 16,097 | | 5.8 | % |
Medical office buildings (MOBs) (4) | | 38 | | — | | 343,363 | | 12.2 | % | 40,419 | | 14.4 | % |
Total | | 271 | | 26,204 | | $2,807,256 | | 100.0 | % | $279,943 | | 100.0 | % |
Operating Statistics by Tenant:
| | | | | | | | Q3 2008 | |
| | Number of | | Number of | | Annualized | | Rent | | | | Percent | |
Tenant | | Properties | | Units/Beds | | Current Rent | | Coverage (5) | | Occupancy (5) | | Private Pay (5) (6) | |
Five Star (Lease No. 1) (7) | | 100 | | 8,600 | | $ | 63,197 | | 1.30x | | 91 | % | 65 | % |
Five Star (Lease No. 2) (7) | | 32 | | 7,639 | | 81,489 | | 1.40x | | 88 | % | 70 | % |
Five Star (Lease No. 3) (7) | | 44 | | 3,251 | | 23,727 | | 1.37x | | 84 | % | 49 | % |
Five Star (Lease No. 4) (8) | | 7 | | 614 | | 7,596 | | 1.04x | | 86 | % | 98 | % |
Sunrise / Marriott (9) | | 14 | | 4,091 | | 32,547 | | 1.52x | | 91 | % | 80 | % |
Brookdale Senior Living, Inc. | | 18 | | 894 | | 8,000 | | 2.01x | | 93 | % | 99 | % |
6 private companies (combined) | | 8 | | 1,115 | | 6,872 | | 1.69x | | 82 | % | 25 | % |
Starmark Holdings, LLC (3) | | 6 | | — | | 6,519 | | 2.12x | | 100 | % | — | |
Life Time Fitness, Inc. (3) | | 4 | | — | | 9,577 | | 2.75x | | 100 | % | — | |
Multi-tenant MOBs (4) | | 38 | | — | | 40,419 | | — | | 99 | % | — | |
Total | | 271 | | 26,204 | | $ | 279,943 | | | | | | | |
(1) | | Amounts are before depreciation, but after impairment write downs, if any. |
(2) | | Properties where the majority of units are independent living apartments are classified as independent living communities. |
(3) | | In August 2008, we acquired four wellness centers that are leased to a subsidiary of Life Time Fitness, Inc., or Life Time Fitness. These wellness centers have 458,000 square feet of total floor space. In October and November 2007, we acquired six wellness centers that are leased to subsidiaries of Starmark Holdings, LLC, or Starmark. These wellness centers have 354,000 square feet of total floor space. |
(4) | | From June 2008 through December 2008, we acquried a total of 38 medical office, clinic and biotech laboratory buildings, or MOBs. These MOBs have a total of approximately 1.6 million square feet. |
(5) | | All tenant operating data presented is based upon the operating results provided by our tenants for the indicated periods. Rent coverage is calculated as operating cash flow from our tenants’ facility operations, before subordinated charges, divided by the minimum rent payable to us. We have not independently verified our tenants' operating data. |
(6) | | Represents the percentage of SNH's rental income that is derived from senior living properties where the operating revenues are greater than 80% from sources other than Medicare and Medicaid. |
(7) | | In June 2008, we realigned three of our leases with Five Star. The total rent payable by Five Star to us was unchanged as a result of this lease realignment. The increased rent payable for these three leases with Five Star, if and as we purchase improvements to the leased properties, will be the greaterof 8.0% per annum or the 10 year Treasury rate plus 300 basis points, but may not exceed 11.5%. |
(8) | | In July 2008, we sold three assisted living properties with 259 living units, which were formerly operated by NewSeasons Assisted Living Communities, Inc., or NewSeasons, to Five Star for $21.4 million. Five Star also assumed the NewSeasons and Independence Blue Cross, or IBC, lease obligations to us for the remaining seven properties that were formerly operated by NewSeasons. The data provided above represents the seven properties we continue to own. |
(9) | | Marriott International, Inc., or Marriott, guarantees this lease. |
5
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
Barry M. Portnoy | | Adam D. Portnoy |
Managing Trustee | | Managing Trustee |
| | |
Jeffrey P. Somers (1) | | Frederick N. Zeytoonjian |
Independent Trustee | | Independent Trustee |
| | |
John L. Harrington | | |
Independent Trustee | | |
David J. Hegarty | | Richard A. Doyle |
President & Chief Operating Officer | | Treasurer & Chief Financial Officer |
Investor Relations | | Inquiries |
Senior Housing Properties Trust | | Financial inquiries should be directed to Richard A. Doyle, |
400 Centre Street | | Treasurer and Chief Financial Officer, at (617) 219-1405 |
Newton, MA 02458 | | or rdoyle@snhreit.com. |
(t) (617) 796-8350 | | |
(f) (617) 796-8349 | | Investor and media inquiries should be directed to |
(email) info@snhreit.com | | Timothy A. Bonang, Director of Investor Relations, or |
(website) www.snhreit.com | | Katherine L. Johnston, Manager of Investor Relations, at |
| | (617) 796-8234 or tbonang@snhreit.com, or kjohnston@snhreit.com. |
(1) | | On January 7, 2009, Frank J. Bailey, one of our independent trustees, notified our board of trustees of his resignation from the board effective January 30, 2009. Mr. Bailey advised the board that the resignation was in connection with his recent appointment to serve as a United States Bankruptcy Judge for the District of Massachusetts. On January 30, 2009, our board of trustees elected Jeffery P. Somers, a member of the law firm of Morse Barnes-Brown Pendleton PC, as an independent trustee to fill the vacancy created by Mr. Bailey’s resignation. |
6
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
Cantor Fitzgerald | | RBC |
Matt Thorp | | Kevin Ellich |
(312) 469-7484 | | (612) 313-1247 |
| | |
Keefe, Bruyette & Woods | | Stifel, Nicolaus |
Steve Swett | | Jerry Doctrow |
(212) 887-3680 | | (443) 224-1309 |
| | |
Oppenheimer | | UBS |
Mark Biffert | | Omotayo Okusanya |
(212) 667-7062 | | (212) 713-1864 |
| | |
Raymond James | | Wachovia |
Paul Puryear | | Christopher Haley |
(727) 567-2253 | | (443) 263-6773 |
UBS | | |
Steven Valiquette | | |
(203) 719-2347 | | |
Moody’s Investors Service | | Standard and Poor’s |
Lori Marks | | James Fielding |
(212) 553-1098 | | (212) 438-2452 |
SNH is followed by the analysts and its publicly held debt is rated by the rating agencies listed above. Please note that any opinions, estimates or forecasts regarding SNH's performance made by these analysts or agencies do not represent opinions, forecasts or predictions of SNH or its management. SNH does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies.
7
Senior Housing Properties Trust
Supplemental Operating and Financial Data
(share amounts and dollars in thousands, except per share data)
| | As of and For the Three Months Ended |
| | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | | 12/31/2007 |
| | | | | | | | | | |
Shares Outstanding: | | | | | | | | | | |
Common shares outstanding (at end of period) | | 114,543 | | 114,531 | | 114,489 | | 94,901 | | 88,692 |
Weighted average common shares outstanding - basic and diluted (1) | | 114,533 | | 114,493 | | 100,302 | | 91,080 | | 84,505 |
| | | | | | | | | | |
Common Share Data: | | | | | | | | | | |
Price at end of period | | $ | 17.92 | | $ | 23.83 | | $ | 19.53 | | $ | 23.70 | | $ | 22.68 |
High during period | | $ | 23.66 | | $ | 24.98 | | $ | 25.08 | | $ | 25.21 | | $ | 24.66 |
Low during period | | $ | 9.82 | | $ | 18.82 | | $ | 19.21 | | $ | 18.01 | | $ | 19.20 |
Annualized dividends paid per share | | $ | 1.40 | | $ | 1.40 | | $ | 1.40 | | $ | 1.40 | | $ | 1.40 |
Annualized dividend yield (at end of period) | | 7.8% | | 5.9% | | 7.2% | | 5.9% | | 6.2% |
| | | | | | | | | | |
Market Capitalization: | | | | | | | | | | |
Total debt (book value) | | $ | 730,433 | | $ | 567,093 | | $ | 413,460 | | $ | 541,374 | | $ | 426,852 |
Plus: market value of common shares (at end of period) | | 2,052,611 | | 2,729,226 | | 2,235,970 | | 2,249,154 | | 2,011,535 |
Total market capitalization | | $ | 2,783,044 | | 3,296,319 | | $ | 2,649,430 | | $ | 2,790,528 | | $ | 2,438,387 |
Total debt / total market capitalization | | 26.2% | | 17.2% | | 15.6% | | 19.4% | | 17.5% |
| | | | | | | | | | |
Book Capitalization: | | | | | | | | | | |
Total debt | | $ | 730,433 | | $ | 567,093 | | $ | 413,460 | | $ | 541,374 | | $ | 426,852 |
Plus: total shareholders’ equity | | 1,731,358 | | 1,742,620 | | 1,753,176 | | 1,370,034 | | 1,249,410 |
Total book capitalization | | $ | 2,461,791 | | 2,309,713 | | $ | 2,166,636 | | $ | 1,911,408 | | $ | 1,676,262 |
Total debt / total book capitalization | | 29.7% | | 24.6% | | 19.1% | | 28.3% | | 25.5% |
| | | | | | | | | | |
Selected Balance Sheet Data: | | | | | | | | | | |
Total assets | | $ | 2,496,874 | | $ | 2,349,042 | | $ | 2,199,065 | | $ | 1,936,972 | | $ | 1,701,894 |
Total liabilities | | $ | 765,516 | | $ | 606,422 | | $ | 445,889 | | $ | 566,938 | | $ | 452,484 |
Gross book value of real estate assets (2) | | $ | 2,807,256 | | $ | 2,645,268 | | $ | 2,313,697 | | $ | 2,229,291 | | $ | 1,940,347 |
Total debt / gross book value of real estate assets (2) | | 26.0% | | 21.4% | | 17.9% | | 24.3% | | 22.0% |
| | | | | | | | | | |
Selected Income Statement Data: | | | | | | | | | | |
Total revenues (3) | | $ | 72,921 | | $ | 59,673 | | $ | 53,390 | | $ | 49,553 | | $ | 53,084 |
EBITDA (4) | | $ | 60,072 | | $ | 56,646 | | $ | 51,005 | | $ | 47,807 | | $ | 44,701 |
Income before gain on sale of properties | | $ | 32,368 | | $ | 28,881 | | $ | 21,680 | | $ | 23,316 | | $ | 26,519 |
Net income | | $ | 32,368 | | $ | 29,147 | | $ | 21,680 | | $ | 23,316 | | $ | 26,519 |
Funds from operations (FFO) (5) | | $ | 48,853 | | $ | 47,040 | | $ | 41,195 | | $ | 38,289 | | $ | 35,222 |
Common distributions paid | | $ | 40,090 | | $ | 40,085 | | $ | 40,071 | | $ | 33,215 | | $ | 31,042 |
| | | | | | | | | | |
Per Share Data: | | | | | | | | | | |
Income before gain on sale of properties | | $ | 0.28 | | $ | 0.25 | | $ | 0.22 | | $ | 0.26 | | $ | 0.31 |
Net income | | $ | 0.28 | | $ | 0.25 | | $ | 0.22 | | $ | 0.26 | | $ | 0.31 |
FFO (5) | | $ | 0.43 | | $ | 0.41 | | $ | 0.41 | | $ | 0.42 | | $ | 0.42 |
Common distributions paid | | $ | 0.35 | | $ | 0.35 | | $ | 0.35 | | $ | 0.35 | | $ | 0.35 |
FFO payout ratio (5) | | 81.4% | | 85.4% | | 85.4% | | 83.3% | | 83.3% |
| | | | | | | | | | |
Coverage Ratios: | | | | | | | | | | |
EBITDA (3) / interest expense | | 5.4x | | 5.9x | | 5.2x | | 5.0x | | 4.7x |
(1) SNH has no outstanding common share equivalents, such as units, convertible debt or stock options.
(2) Gross book value of real estate assets is real estate properties, at cost, after impairment write downs, if any.
(3) During the fourth quarter of 2008 and 2007, we recognized $8.4 and $6.6 million of percentage rent for the years ended December 31, 2008 and 2007, respectively.
(4) See page 13 for calculation of EBITDA.
(5) See page 14 for calculation of FFO.
9
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
CONDENSED CONSOLIDATED BALANCE SHEET
(amounts in thousands, except share data)
| | As of
December 31,
2008 | | As of
December 31,
2007 | |
| | | | | |
ASSETS | | | | | |
Real estate properties, at cost: | | | | | |
Land | | $ | 319,591 | | $ | 217,236 | |
Buildings and improvements | | 2,487,665 | | 1,723,111 | |
| | 2,807,256 | | 1,940,347 | |
Less accumulated depreciation | | 381,339 | | 323,891 | |
| | 2,425,917 | | 1,616,456 | |
| | | | | |
Cash and cash equivalents | | 5,990 | | 43,521 | |
Restricted cash | | 4,344 | | 3,642 | |
Deferred financing fees, net | | 5,068 | | 5,974 | |
Acquired real estate leases, net | | 30,546 | | 2,387 | |
Other assets | | 25,009 | | 29,914 | |
Total assets | | $ | 2,496,874 | | $ | 1,701,894 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
Unsecured revolving credit facility | | $ | 257,000 | | $ | — | |
Senior unsecured notes due 2012 and 2015, net of discount | | 322,017 | | 321,873 | |
Secured debt and capital leases | | 151,416 | | 104,979 | |
Accrued interest | | 11,121 | | 10,849 | |
Acquired real estate lease obligations, net | | 7,974 | | 4,216 | |
Other liabilities | | 15,988 | | 10,567 | |
Total liabilities | | 765,516 | | 452,484 | |
| | | | | |
Commitments and contingencies | | | | | |
| | | | | |
Shareholders’ equity: | | | | | |
Common shares of beneficial interest, $0.01 par value: | | | | | |
149,700,000 shares authorized; 114,542,584 and 88,691,892 shares issued and outstanding at December 31, 2008 and December 31, 2007, respectively | | 1,145 | | 887 | |
Additional paid-in capital | | 2,000,865 | | 1,476,675 | |
Cumulative net income | | 530,318 | | 423,807 | |
Cumulative distributions | | (797,639 | ) | (653,225 | ) |
Unrealized gain on investments | | (3,331 | ) | 1,266 | |
Total shareholders’ equity | | 1,731,358 | | 1,249,410 | |
Total liabilities and shareholders’ equity | | $ | 2,496,874 | | $ | 1,701,894 | |
10
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(amounts in thousands, except per share data)
| | For the Three Months Ended | | For the Year Ended | |
| | 12/31/2008 | | 12/31/2007 | | 12/31/2008 | | 12/31/2007 | |
Revenues: | | | | | | | | | |
Rental income (1) | | $ | 72,619 | | $ | 52,591 | | $ | 233,210 | | $ | 185,952 | |
Interest and other income | | 302 | | 493 | | 2,327 | | 2,070 | |
Total revenues | | 72,921 | | 53,084 | | 235,537 | | 188,022 | |
| | | | | | | | | |
Expenses: | | | | | | | | | |
Property operating expenses | | 1,668 | | — | | 2,792 | | — | |
Interest | | 11,219 | | 9,479 | | 40,154 | | 37,755 | |
Depreciation | | 17,596 | | 12,264 | | 60,831 | | 47,384 | |
General and administrative | | 4,631 | | 3,422 | | 17,136 | | 14,154 | |
Impairment of assets (2) | | 5,439 | | 1,400 | | 8,379 | | 1,400 | |
Loss on early extinguishment of debt (3) | | — | | — | | — | | 2,026 | |
Total expenses | | 40,553 | | 26,565 | | 129,292 | | 102,719 | |
| | | | | | | | | |
Income before gain on sale of properties | | 32,368 | | 26,519 | | 106,245 | | 85,303 | |
Gain on sale of properties | | | | — | | 266 | | — | |
Net income | | $ | 32,368 | | $ | 26,519 | | $ | 106,511 | | $ | 85,303 | |
| | | | | | | | | |
Weighted average common shares outstanding | | 114,533 | | 84,505 | | 105,153 | | 83,168 | |
| | | | | | | | | |
Basic and diluted earnings per share: | | | | | | | | | |
Income before gain on sale of properties | | $ | 0.28 | | $ | 0.31 | | $ | 1.01 | | $ | 1.03 | |
Net income | | $ | 0.28 | | $ | 0.31 | | $ | 1.01 | | $ | 1.03 | |
| | | | | | | | | |
Additional Data: | | | | | | | | | |
Straight-line rent included in rental income (1) | | $ | 455 | | $ | 319 | | 343 | | $ | 997 | |
Lease Value Amortization (1) | | $ | (91 | ) | $ | 16 | | $ | (60 | ) | $ | 16 | |
Deferred percentage rent (4) | | $ | (6,550 | ) | $ | (4,961 | ) | $ | — | | $ | — | |
Non-cash stock based compensation | | $ | 190 | | $ | 203 | | $ | 978 | | $ | 719 | |
(1) | We report rental income on a straight line basis over the terms of the respective leases. Rental income includes non-cash straight line rent adjustments. Rental income also includes non-cash amortization of intangible lease assets and liabilities. |
| |
(2) | During the quarters ended December 31, 2008 and 2007, we recognized an impairment of assets charge of $5.4 million related to three properties and $1.4 million related to one property that we have classified as held for sale, respectively. During the years ended December 31, 2008 and 2007, we recognized an impairment of assets charge of $8.4 million related to four properties and $1.4 million related to one property that we have classified as held for sale, respectively. |
| |
(3) | In January 2007, we purchased and retired $20.0 million of our 8 5/8% senior notes due 2012 and paid a premium of $1.8 million and wrote off $276,000 of deferred financing fees and unamortized discount related to these senior notes. |
| |
(4) | Our percentage rents are generally calculated on an annual basis. We recognize percentage rental income received during the first, second and third quarters in the fourth quarter when all contingencies related to percentage rents are satisfied. Although recognition of revenue is deferred until the fourth quarter, deferred percentage rent for the first three quarters includes estimated amounts of deferred percentage rents with respect to those periods. The fourth quarter calculations exclude the amounts recognized during the first three quarters. |
11
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands)
| | For the Year Ended | |
| | 12/31/2008 | | 12/31/2007 | |
Cash flows from operating activities: | | | | | |
Net income | | $ | 106,511 | | $ | 85,303 | |
Adjustments to reconcile net income to cash provided by operating activities: | | | | | |
Depreciation | | 60,831 | | 47,384 | |
Amortization of deferred financing fees and debt discounts | | 2,117 | | 2,124 | |
Amortization of acquired real estate leases | | 60 | | (16 | ) |
Impairment of assets | | 8,379 | | 1,400 | |
Loss on early extinguishment of debt | | — | | 2,026 | |
Gain on sale of properties | | (266 | ) | — | |
Change in assets and liabilities: | | | | | |
Restricted cash | | (702 | ) | (1,207 | ) |
Purchase of trading securities | | — | | 10,153 | |
Sales of trading securities | | — | | (10,153 | ) |
Other assets | | 295 | | (3,177 | ) |
Accrued interest | | 272 | | (845 | ) |
Other liabilities | | 6,963 | | 2,906 | |
Cash provided by operating activities | | 184,460 | | 135,898 | |
| | | | | |
Cash flows used for investing activities: | | | | | |
Acquisitions | | (862,908 | ) | (110,238 | ) |
Proceeds from sale of real estate | | 21,336 | | — | |
Cash used for investing activities, net | | (841,572 | ) | (110,238 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
Proceeds from issuance of common shares, net | | 522,907 | | 260,447 | |
Proceeds from borrowings on revolving credit facility | | 510,000 | | 87,000 | |
Repayments of borrowings on revolving credit facility | | (253,000 | ) | (199,000 | ) |
Redemption of senior notes | | — | | (21,750 | ) |
Repayment of other debt | | (14,845 | ) | (1,738 | ) |
Deferred financing fees | | (1,067 | ) | — | |
Distributions to shareholders | | (144,414 | ) | (112,562 | ) |
Cash provided by financing activities | | 619,581 | | 12,397 | |
| | | | | |
(Decrease) increase in cash and cash equivalents | | (37,531 | ) | 38,057 | |
Cash and cash equivalents at beginning of period | | 43,521 | | 5,464 | |
Cash and cash equivalents at end of period | | $ | 5,990 | | $ | 43,521 | |
| | | | | |
Supplemental cash flow information: | | | | | |
Interest paid | | $ | 37,766 | | $ | 36,476 | |
| | | | | |
Non-cash investing activities: | | | | | |
Real estate acquisitions | | (61,282 | ) | (14,875 | ) |
| | | | | |
Non-cash financing activities: | | | | | |
Assumption of mortgage notes payable | | 61,282 | | 14,875 | |
Issuance of common shares pursuant to our incentive share award plans | | 1,541 | | 1,476 | |
12
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
(dollars in thousands)
| | For the Three Months Ended | | For the Year Ended | |
| | 12/31/2008 | | 12/31/2007 | | 12/31/2008 | | 12/31/2007 | |
| | | | | | | | | |
Income before gain on sale of properties | | $ | 32,368 | | $ | 26,519 | | $ | 106,245 | | $ | 85,303 | |
Plus: | interest expense | | 11,219 | | 9,479 | | 40,154 | | 37,755 | |
| depreciation expense | | 17,596 | | 12,264 | | 60,831 | | 47,384 | |
| impairment of assets (1) | | 5,439 | | 1,400 | | 8,379 | | 1,400 | |
| loss on early extinguishment of debt (2) | | — | | — | | — | | 2,026 | |
Less: | deferred percentage rent adjustment (3) | | (6,550 | ) | (4,961 | ) | — | | — | |
EBITDA | | $ | 60,072 | | $ | 44,701 | | $ | 215,609 | | $ | 173,868 | |
(1) | | During the quarters ended December 31, 2008 and 2007, we recognized an impairment of assets charge of $5.4 million related to three properties and $1.4 million related to one property that we have classified as held for sale, respectively. During the years ended December 31, 2008 and 2007, we recognized an impairment of assets charge of $8.4 million related to four properties and $1.4 million related to one property that we have classified as held for sale, respectively. |
| | |
(2) | | In January 2007, we purchased and retired $20.0 million of our 8 5/8% senior notes due 2012 and paid a premium of $1.8 million and wrote off $276,000 of deferred financing fees and unamortized discount related to these senior notes. |
| | |
(3) | | Our percentage rents are generally calculated on an annual basis. We recognize percentage rental income received during the first, second and third quarters in the fourth quarter when all contingencies related to percentage rents are satisfied. Although recognition is deferred until the fourth quarter, for purposes of this calculation, total revenues for the first three quarters includes estimated amounts of deferred percentage rents with respect to those periods. The fourth quarter calculation excludes the amounts recognized during the first three quarters. |
| | |
| | We compute EBITDA as shown in the calculation above. This calculation begins with income before gain on sale of properties, or if such amount is the same as net income, with net income, which we believe is the closest measure of our performance based on U.S. generally accepted accounting principles, or GAAP. We consider EBITDA to be an appropriate measure of our performance as a REIT, along with net income and cash flow from operating, investing and financing activities. We believe EBITDA provides useful information to investors because by excluding the effects of certain historical costs, such as interest and depreciation and amortization expense, EBITDA can facilitate a comparison of our current operating performance with our past operating performance and of operating performances among REITs. 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. |
13
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
CALCULATION OF FUNDS FROM OPERATIONS (FFO)
(amounts in thousands, except per share data)
| | For the Three Months Ended | | For the Year Ended | |
| | 12/31/2008 | | 12/31/2007 | | 12/31/2008 | | 12/31/2007 | |
| | | | | | | | | |
Income before gain on sale of properties | | $ | 32,368 | | $ | 26,519 | | $ | 106,245 | | $ | 85,303 | |
Plus: | depreciation expense | | 17,596 | | 12,264 | | 60,831 | | 47,384 | |
| impairment of assets (1) | | 5,439 | | 1,400 | | 8,379 | | 1,400 | |
| loss on early extinguishment of debt | | — | | — | | — | | 2,026 | |
Less: | deferred percentage rent adjustment (2) | | (6,550 | ) | (4,961 | ) | — | | — | |
| loss on early extinguishment of debt settled in cash (3) | | — | | — | | — | | (1,750 | ) |
FFO | | | $ | 48,853 | | $ | 35,222 | | $ | 175,455 | | $ | 134,363 | |
| | | | | | | | | |
Weighted average shares outstanding | | 114,533 | | 84,505 | | 105,153 | | 83,168 | |
| | | | | | | | | |
Income before gain on sale of properties per share | | $ | 0.28 | | $ | 0.31 | | $ | 1.01 | | $ | 1.03 | |
FFO per share | | $ | 0.43 | | $ | 0.42 | | $ | 1.67 | | $ | 1.62 | |
| | | | | | | | | |
Supplemental data: | | | | | | | | | |
Straight-line rent included in rental income (4) | | $ | 455 | | $ | 319 | | $ | 343 | | $ | 997 | |
Amortization of deferred financing fees and debt discounts | | $ | 546 | | $ | 523 | | $ | 2,116 | | $ | 2,128 | |
Non-cash stock based compensation | | $ | 190 | | $ | 203 | | $ | 978 | | $ | 719 | |
Lease value amortization (4) | | $ | (91 | ) | $ | 16 | | $ | (60 | ) | $ | 16 | |
(1) | | During the quarters ended December 31, 2008 and 2007, we recognized an impairment of assets charge of $5.4 million related to three properties and $1.4 million related to one property that we have classified as held for sale, respectively. During the years ended December 31, 2008 and 2007, we recognized an impairment of assets charge of $8.4 million related to four properties and $1.4 million related to one property that we have classified as held for sale, respectively. |
| | |
(2) | | Our percentage rents are generally calculated on an annual basis. We recognize percentage rental income received during the first, second and third quarters in the fourth quarter when all contingencies related to percentage rents are satisfied. Although recognition of revenue is deferred until the fourth quarter, our FFO calculation for the first three quarters include estimated amounts of deferred percentage rents with respect to those periods. The fourth quarter calculation of FFO excludes the amounts recognized during the first three quarters. |
| | |
(3) | | FFO for the year ended December 31, 2007 includes a $1.8 million cash loss relating to our early retirement of $20.0 million of our 8 5/8% senior notes due 2012. |
| | |
(4) | | We report rental income on a straight line basis over the terms of the respective leases. Rental income includes non-cash straight line rent adjustments. Rental income also includes non-cash amortization of intangible lease assets and liabilities. |
| | |
| | We compute FFO as shown in the calculation above. This calculation begins with income before gain on sale of properties or, if that amount is the same as net income, with net income, which we believe is the closest measure of our performance based on GAAP. Our calculation of FFO differs from the National Association of Real Estate Investment Trusts, or NAREIT, definition of FFO because we include deferred percentage rent in FFO as discussed in Note 2 above, and we exclude loss on early extinguishment of debt not settled in cash from FFO. We consider FFO to be an appropriate measure of performance as 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 loss on sale of properties, FFO can facilitate a comparison of our current operating performance with our past operating performance and of operating performances among REITs. FFO 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. FFO is one important factor considered by our board of trustees in determining the amount of our distributions to shareholders. Other important factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving credit facility and public debt covenants, the availability of debt and equity capital to us and our expectation of our future performance. |
14
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
(dollars in thousands)
| | Coupon | | Interest | | Principal | | Maturity | | Due at | | Years to | |
| | Rate | | Rate | | Balance | | Date | | Maturity | | Maturity | |
| | | | | | | | | | | | | |
Secured Fixed Rate Debt: | | | | | | | | | | | | | |
Tax exempt bonds - secured by 1 property | | 5.875% | | 5.875% | | $ | 14,700 | | 12/1/2027 | | $ | 14,700 | | 19.2 | |
Mortgage - secured by 16 properties (1) | | 6.330% | | 6.970% | | 33,939 | | 6/2/2012 | | 30,069 | | 3.7 | |
Mortgage - secured by 4 properties (1) | | 6.420% | | 6.110% | | 11,727 | | 11/30/2013 | | 10,218 | | 5.2 | |
Mortgage - secured by 2 properties (1) | | 6.310% | | 6.910% | | 15,031 | | 12/1/2013 | | 13,404 | | 5.2 | |
Mortgage - secured by 1 property (2) | | 6.500% | | 6.500% | | 4,457 | | 1/11/2013 | | 4,137 | | 4.3 | |
Mortgage - secured by 8 properties (3) | | 6.540% | | 6.540% | | 50,156 | | 4/30/2017 | | 43,787 | | 8.6 | |
Mortgage - secured by 1 property (2) | | 7.310% | | 7.310% | | 4,151 | | 1/1/2022 | | 41 | | 13.3 | |
Mortgage - secured by 1 property (2) | | 7.850% | | 7.850% | | 2,025 | | 1/1/2022 | | 21 | | 13.3 | |
Capital leases - 2 properties | | 7.700% | | 7.700% | | 15,230 | | 4/30/2026 | | — | | 17.6 | |
Weighted average rate / total secured fixed rate debt | | 6.550% | | 6.729% | | $ | 151,416 | | | | $ | 116,377 | | 8.9 | |
| | | | | | | | | | | | | |
Unsecured Debt: | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Unsecured Floating Rate Debt: | | | | | | | | | | | | | |
Revolving credit facility (LIBOR + 80 b.p.) (4) | | 2.210% | | 2.210% | | $ | 257,000 | | 12/31/2010 | | $ | 257,000 | | 2.3 | |
| | | | | | | | | | | | | |
Unsecured Fixed Rate Debt: | | | | | | | | | | | | | |
Senior notes due 2012 | | 8.625% | | 8.625% | | $ | 225,000 | | 1/15/2012 | | $ | 225,000 | | 3.3 | |
Senior notes due 2015 | | 7.875% | | 7.875% | | 97,500 | | 4/15/2015 | | 97,500 | | 6.5 | |
Weighted average rate / total unsecured fixed rate debt | | 8.398% | | 8.398% | | $ | 322,500 | | | | $ | 322,500 | | 4.3 | |
| | | | | | | | | | | | | |
Weighted average rate / total unsecured debt | | 5.654% | | 5.654% | | $ | 579,500 | | | | $ | 579,500 | | 3.4 | |
| | | | | | | | | | | | | |
Summary Debt: | | | | | | | | | | | | | |
Weighted average rate / total secured fixed rate debt | | 6.550% | | 6.729% | | $ | 151,416 | | | | $ | 116,377 | | 8.9 | |
Weighted average rate / total unsecured floating rate debt | | 2.210% | | 2.210% | | 257,000 | | | | 257,000 | | 2.3 | |
Weighted average rate / total unsecured fixed rate debt | | 8.398% | | 8.398% | | 322,500 | | | | 322,500 | | 4.3 | |
Weighted average rate / total debt | | 5.840% | | 5.877% | | $ | 730,916 | | | | $ | 695,877 | | 4.5 | |
(1) | | Includes the effect of mark to market accounting for certain assumed mortgages. |
(2) | | These mortgages are secured by two properties that were acquired on July 9, 2008. |
(3) | | Includes eight first mortgages at an interest rate of 6.555% and seven second mortgages at an interest rate of 6.5%. The weighted average interest rate on these mortgages is 6.54%. |
(4) | | Represents amounts outstanding on SNH’s $550 million revolving credit facility at December 31, 2008. Subject to certain conditions, at SNH’s option, this facility’s maturity date can be extended to December 31, 2011 with a payment of $825,000 (15 b.p.). |
15
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
(dollars in thousands)
| | Scheduled Principal Payments During Period | |
| | Secured | | | | | | | |
| | Fixed Rate | | Unsecured | | Unsecured | | | |
| | Debt and | | Floating | | Fixed | | | |
Year | | Capital Leases | | Rate Debt | | Rate Debt | | Total | |
2009 | | $ | 2,850 | | $ | — | | $ | — | | $ | 2,850 | |
2010 | | 3,044 | | 257,000 | | — | | 260,044 | |
2011 | | 3,251 | | — | | — | | 3,251 | |
2012 | | 32,930 | | — | | 225,000 | | 257,930 | |
2013 | | 30,090 | | — | | — | | 30,090 | |
2014 | | 1,789 | | — | | — | | 1,789 | |
2015 | | 1,948 | | — | | 97,500 | | 99,448 | |
2016 | | 2,118 | | — | | — | | 2,118 | |
2017 and thereafter | | 73,396 | | — | | — | | 73,396 | |
| | $ | 151,416 | | $ | 257,000 | | $ | 322,500 | | $ | 730,916 | |
16
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
| | As of and For the Three Months Ended |
| | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | | 12/31/2007 |
Leverage Ratios: | | | | | | | | | | |
| | | | | | | | | | |
Total debt / total assets | | 29.3% | | 24.1% | | 18.8% | | 27.9% | | 25.1% |
Total debt / gross book value of real estate assets (1) | | 26.0% | | 21.4% | | 17.9% | | 24.3% | | 22.0% |
Total debt / total market capitalization | | 26.2% | | 17.2% | | 15.6% | | 19.4% | | 17.5% |
Total debt / total book capitalization | | 29.7% | | 24.6% | | 19.1% | | 28.3% | | 25.5% |
Secured debt / total assets | | 6.1% | | 6.5% | | 4.2% | | 5.4% | | 6.2% |
Variable rate debt / total debt | | 35.2% | | 16.4% | | 0.0% | | 21.2% | | 0.0% |
| | | | | | | | | | |
Coverage Ratios: | | | | | | | | | | |
| | | | | | | | | | |
EBITDA (2) / interest expense | | 5.4x | | 5.9x | | 5.2x | | 5.0x | | 4.7x |
| | | | | | | | | | |
Public Debt Covenants (3): | | | | | | | | | | |
| | | | | | | | | | |
Total debt / adjusted total assets - allowable maximum 60.0% | | 25.2% | | 20.8% | | 16.1% | | 23.7% | | 21.0% |
Secured debt / adjusted total assets - allowable maximum 40.0% | | 5.2% | | 5.6% | | 3.6% | | 4.6% | | 5.2% |
Consolidated income available for debt service / debt service - required minimum 2.00x | | 5.63x | | 6.20x | | 5.49x | | 5.31x | | 4.99x |
Total unencumbered assets to unsecured debt - required minimum 1.50x | | 4.52x | | 5.91x | | 7.38x | | 4.76x | | 5.69x |
(1) Gross book value of real estate assets is real estate properties, at cost, less impairment write downs, if any.
(2) See page 13 for the calculation of EBITDA.
(3) Adjusted total assets and unencumbered assets include original cost of real estate assets less impairment write downs and exclude depreciation and amortization, accounts receivable and intangible assets. Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, taxes, gains and losses on sales of property and amortization of deferred charges.
17
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
2008 INVESTMENTS/DISPOSITIONS INFORMATION
(dollars and sq. ft. in thousands, except per sq. ft. amounts)
Senior Living Acquisitions: (1)
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Purchase | | Initial |
Date | | | | | | Number of | | | | Purchase | | Price | | Lease |
Acquired | | Tenant | | Type of Property | | Properties | | Units | | Price (2) | | Per Unit | | Rate |
| | | | | | | | | | | | | | |
1/1/2008 | | Five Star | | Assisted / Independent Living / Skilled Nursing | | 5 | | 568 | | $ | 66,650 | | $ | 117 | | 8.00% |
2/7/2008 | | Five Star | | Assisted Living | | 2 | | 98 | | 10,250 | | 105 | | 8.00% |
2/17/2008 | | Five Star | | Assisted / Independent Living / Skilled Nursing | | 1 | | 138 | | 9,250 | | 67 | | 8.00% |
3/1/2008 | | Five Star | | Assisted Living | | 1 | | 228 | | 48,500 | | 213 | | 8.00% |
3/31/2008 | | Five Star | | Assisted Living | | 10 | | 660 | | 135,000 | | 205 | | 8.00% |
| | | | | | | | | | | | | | |
| | Total for Q1 2008 | | | | 19 | | 1,692 | | $ | 269,650 | | $ | 159 | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
There were no acquisitions of senior living properties during the three months ended June 30, 2008. |
8/1/2008 | | Five Star | | Assisted Living | | 2 | | 112 | | $ | 14,110 | | $ | 126 | | 8.00% |
9/1/2008 | | Five Star | | Assisted Living | | 8 | | 451 | | 62,075 | | 138 | | 8.00% |
| | | | | | | | | | | | | | |
| | Total for Q3 2008 | | | | 10 | | 563 | | $ | 76,185 | | $ | 135 | | |
| | | | | | | | | | | | | | |
11/1/2008 | | Five Star | | Independent Living / Skilled Nursing | | 1 | | 252 | | $ | 29,000 | | $ | 115 | | 8.00% |
| | | | | | | | | | | | | | |
| | Total for Q4 2008 | | | | 1 | | 252 | | $ | 29,000 | | $ | 115 | | |
| | | | | | | | | | | | | | |
| | Total YTD 2008 Senior Living Acquisitions | | | | 30 | | 2,507 | | $ | 374,835 | | $ | 150 | | |
MOB and Other Acquisitions:
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Weighted | | | | | |
| | | | | | | | | | | | Purchase | | | | Average | | | | | |
Date | | | | | | Number of | | | | Purchase | | Price | | Cap | | Remaining | | Percent | | | |
Acquired | | Location | | Type of Property | | Properties | | Sq. Ft. | | Price (2) | | per Sq. Ft. | | Rate (3) | | Lease Term (4) | | Leased (5) | | Major Tenant | |
| | | | | | | | | | | | | | | | | | | | | |
There were no acquisitions of MOBs and Other buildings during the three months ended March 31, 2008. | |
| | | | | | | | | | | | | | | | | | | | | |
6/11/2008 | | Pittsburgh, PA | | Medical Office | | 1 | | 76 | | $ | 15,002 | | $ | 197 | | 6.9 | % | 3.5 | | 93.3% | | UPMC Health System | |
6/25/2008 | | Fort Washington, PA | | Biotech Laboratory | | 1 | | 124 | | 9,594 | | 77 | | 8.9 | % | 3.1 | | 100.0% | | OmniCare, Inc. | |
6/25/2008 | | Lincoln, RI | | Biotech Laboratory | | 1 | | 62 | | 12,336 | | 199 | | 9.4 | % | 4.5 | | 100.0% | | StemCells, Inc. | |
6/25/2008 | | Austin, TX | | Clinic | | 1 | | 70 | | 28,134 | | 402 | | 7.8 | % | 9.3 | | 97.7% | | HCA Inc. | |
6/25/2008 | | Irving, TX | | Biotech Laboratory | | 1 | | 117 | | 18,713 | | 160 | | 7.6 | % | 7.0 | | 100.0% | | Quest Diagnostics | |
| | | | | | | | | | | | | | | | | | | | | |
| | Total for Q2 2008 | | | | 5 | | 449 | | $ | 83,779 | | $ | 187 | | 8.1 | % | 5.5 | | 98.2% | | | |
| | | | | | | | | | | | | | | | | | | | | |
7/9/2008 | | Decatur, GA | | Medical Office | | 1 | | 52 | | $ | 8,208 | | $ | 158 | | 9.8 | % | 5.0 | | 100.0% | | Atlanta Center for Medicine | |
7/9/2008 | | Anaheim, CA | | Clinic | | 1 | | 34 | | 10,540 | | 310 | | 8.4 | % | 1.7 | | 100.0% | | Primary & Multi Specialty Clinics | |
7/9/2008 | | Syracuse, NY | | Clinic | | 1 | | 66 | | 20,304 | | 308 | | 8.1 | % | 14.5 | | 100.0% | | Hematology-Oncology Associate | |
8/8/2008 | | Various, MA | | Clinic | | 18 | | 419 | | 91,949 | | 219 | | 8.3 | % | 10.4 | | 100.0% | | Fallon Health Clinics | |
8/8/2008 | | Brooklyn, NY | | Clinic | | 1 | | 72 | | 11,907 | | 165 | | 11.1 | % | 25.5 | | 100.0% | | Health Insurance Plan of New York | |
8/8/2008 | | King of Prussia, PA | | Clinic | | 1 | | 29 | | 6,055 | | 209 | | 8.4 | % | 4.2 | | 100.0% | | Children’s Hospital of PA | |
8/21/2008 | | Life Time Fitness | | Wellness Centers | | 4 | | 458 | | 100,000 | | 218 | | 10.6 | % | 19.8 | | 100.0% | | Life Time Fitness | |
9/30/2008 | | Syracuse, NY | | Medical Office | | 1 | | 89 | | 18,550 | | 208 | | 9.2 | % | 6.3 | | 100.0% | | CNY Family Care | |
| | | | | | | | | | | | | | | | | | | | | |
| | Total for Q3 2008 | | | | 28 | | 1,219 | | $ | 267,513 | | $ | 219 | | 9.2 | % | 10.9 | | 100.0% | | | |
| | | | | | | | | | | | | | | | | | | | | |
10/31/2008 | | Austin, TX | | Medical Office | | 1 | | 79 | | $ | 29,829 | | $ | 378 | | 5.1 | % | 5.6 | | 100.0% | | Austin Center for Outpatient Surgery | |
12/22/2008 | | Orlando, FL | | Clinic | | 1 | | 2 | | 587 | | 294 | | 7.7 | % | — | | 0.0% | | Vacant | |
12/22/2008 | | Orlando, FL | | Clinic | | 1 | | 9 | | 3,239 | | 360 | | 7.6 | % | 3.7 | | 100.0% | | AFO Imaging, Inc. | |
12/22/2008 | | Orlando, FL | | Clinic | | 1 | | 35 | | 8,911 | | 255 | | 7.6 | % | 3.7 | | 100.0% | | Central Florida Eye Surgery | |
12/22/2008 | | Pikesville, MD | | Medical Office | | 1 | | 42 | | 6,933 | | 165 | | 9.3 | % | 3.4 | | 87.2% | | Wister, Kaplan, Rothschild | |
12/22/2008 | | Lexington, MA | | Biotech Laboratory | | 1 | | 57 | | 19,474 | | 342 | | 8.7 | % | 5.9 | | 100.0% | | EPIX Pharmaceuticals, Inc. | |
12/22/2008 | | Washington, DC | | Medical Office | | 1 | | 82 | | 23,578 | | 288 | | 8.6 | % | 5.3 | | 95.0% | | MRI Washington, Inc. | |
12/22/2008 | | Fairfax, VA | | Medical Office | | 1 | | 47 | | 10,327 | | 220 | | 8.9 | % | 3.5 | | 98.0% | | Virginia Surgery Assoc. | |
12/22/2008 | | Norfolk, VA | | Medical Office | | 1 | | 70 | | 11,138 | | 159 | | 7.5 | % | 3.7 | | 92.8% | | Parsons Brinkerhoff | |
| | | | | | | | | | | | | | | | | | | | | |
| | Total for Q4 2008 | | | | 9 | | 423 | | $ | 114,016 | | $ | 270 | | 7.9 | % | 3.9 | | 85.9% | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | Total YTD MOB and Other Acquisitions | | | | 42 | | 2,091 | | $ | 465,308 | | $ | 223 | | 8.4 | % | 8.0 | | 93.8% | | | |
Dispositions:
| | | | | | | | | | | | | | |
There were no dispositions during the three months ended March 31, 2008 and June 30, 2008. |
Date | | | | | | Number of | | | | | | Book Gain |
Sold | | Location | | Type of Property | | Properties | | Sale Price | | NBV | | on Sale (6) |
| | | | | | | | | | | | |
7/1/2008 | | Vorhees, NJ | | Assisted Living | | 1 | | $ | 8,350 | | $ | 8,250 | | $ | 100 |
7/1/2008 | | Washington Twp., NJ | | Assisted Living | | 1 | | 8,350 | | 8,250 | | 100 |
7/1/2008 | | Devon, PA | | Assisted Living | | 1 | | 4,650 | | 4,571 | | 79 |
| | | | | | | | | | | | |
| | Total for Q3 2008 | | | | 3 | | $ | 21,350 | | $ | 21,071 | | $ | 279 |
There were no dispositions during the three months ended December 31, 2008.
(1) During the three months and year ended December 31, 2008, pursuant to the terms of our leases with Five Star, we purchased from Five Star, at cost, $27.5 million and $69.4 million, respectively, of improvements made to our properties leased by Five Star, and, as a result, Five Star’s annual rent payable to us increased approximately $2.2 million and $5.8 million, respectively.
(2) Purchase price excludes closing costs and intangible assets and liabilities.
(3) Represents the ratio of the estimated current GAAP based annual rental income less property operating expenses, if any, to the Purchase Price on the date of acquisition.
(4) Weighted average remaining lease term based on rental income at December 31, 2008.
(5) Percent leased as of December 31, 2008.
(6) Book gain on sale does not include closing costs. Actual total gain recognized was $266.
18
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
2008 FINANCING ACTIVITIES
(share amounts and dollars in thousands)
| | For the Three Months Ended | |
| | 12/31/2008 | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | |
| | | | | | | | | |
Debt Transactions (1): | | | | | | | | | |
New debt raised | | $ | — | | $ | — | | $ | — | | $ | — | |
New debt assumed as part of acquisitions | | — | | 61,282 | | — | | — | |
Total new debt | | — | | 61,282 | | — | | — | |
| | | | | | | | | |
Debt retired | | — | | — | | 12,609 | | — | |
Net debt | | $ | — | | $ | 61,282 | | $ | (12,609 | ) | $ | — | |
| | | | | | | | | |
Equity Transactions: | | | | | | | | | |
New common shares issued | | — | | — | | 19,550 | | 6,209 | |
New common equity raised, net | | $ | — | | $ | — | | $ | 393,720 | | $ | 129,418 | |
(1) Excludes drawings and repayments on our revolving credit facility.
19
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
PORTFOLIO SUMMARY BY PROPERTY TYPE AND TENANT
(dollars in thousands)
| | Number of | | Number of | | Carrying Value of | | | | Investment | | Annualized | | | |
| | Properties | | Units/Beds | | Investment (1) | | Percent | | per unit | | Current Rent | | Percent | |
Property Type: | | | | | | | | | | | | | | | |
Independent living (2) | | 42 | | 11,465 | | $1,094,131 | | 39.0% | | $95.4 | | $107,467 | | 38.4% | |
Assisted living | | 121 | | 8,531 | | 905,905 | | 32.3% | | 106.2 | | 84,943 | | 30.3% | |
Nursing homes | | 58 | | 5,844 | | 229,126 | | 8.2% | | 39.2 | | 19,874 | | 7.1% | |
Rehabilitation hospitals | | 2 | | 364 | | 54,714 | | 1.9% | | 150.3 | | 11,143 | | 4.0% | |
Wellness centers (3) | | 10 | | — | | 180,017 | | 6.4% | | NA | | 16,097 | | 5.8% | |
Medical office buildings (MOBs) (4) | | 38 | | — | | 343,363 | | 12.2% | | NA | | 40,419 | | 14.4% | |
Total | | 271 | | 26,204 | | $2,807,256 | | 100.0% | | $87.2 | | $279,943 | | 100.0% | |
| | | | | | | | | | | | | | | |
Tenant: | | | | | | | | | | | | | | | |
Five Star (Lease No. 1) (5) | | 100 | | 8,600 | | $711,557 | | 25.3% | | $82.7 | | $63,197 | | 22.6% | |
Five Star (Lease No. 2) (5) | | 32 | | 7,639 | | 759,412 | | 27.1% | | 99.4 | | 81,489 | | 29.1% | |
Five Star (Lease No. 3) (5) | | 44 | | 3,251 | | 310,918 | | 11.1% | | 95.6 | | 23,727 | | 8.5% | |
Five Star (Lease No. 4) (6) | | 7 | | 614 | | 66,608 | | 2.4% | | 108.5 | | 7,596 | | 2.7% | |
Sunrise / Marriott (7) | | 14 | | 4,091 | | 325,165 | | 11.6% | | 79.5 | | 32,547 | | 11.6% | |
Brookdale Senior Living, Inc. | | 18 | | 894 | | 61,122 | | 2.2% | | 68.4 | | 8,000 | | 2.9% | |
6 private companies (combined) | | 8 | | 1,115 | | 49,094 | | 1.6% | | 44.0 | | 6,872 | | 2.5% | |
Starmark (3) | | 6 | | — | | 80,008 | | 2.9% | | NA | | 6,519 | | 2.3% | |
Life Time Fitness (3) | | 4 | | — | | 100,009 | | 3.6% | | NA | | 9,577 | | 3.4% | |
Multi-tenant MOBs (4) | | 38 | | — | | 343,363 | | 12.2% | | NA | | 40,419 | | 14.4% | |
Total | | 271 | | 26,204 | | $2,807,256 | | 100.0% | | $87.2 | | $279,943 | | 100.0% | |
(1) Amounts are before depreciation, but after impairment write downs, if any.
(2) Properties where the majority of units are independent living apartments are classified as independent living communities.
(3) In August 2008, we acquired four wellness centers that are leased to a subsidiary of Life Time Fitness. These wellness centers have 458,000 square feet of total floor space and an investment value of $218 per square foot. In October and November 2007, we acquired six wellness centers that are leased to subsidiaries of Starmark. These wellness centers have 354,000 square feet of total floor space and an investment value of $226 per square foot.
(4) From June 2008 through December 2008, we acquired a total of 38 MOBs. These MOBs have a total of approximately 1.6 million square feet and an investment value of $210 per square foot.
(5) In June 2008, we realigned three of our leases with Five Star. The rent payable by Five Star to us is unchanged as a result of this lease realignment. The increased rent payable, if and as we purchase improvements to the leased properties, will be the greater of 8.0% per annum or the 10 year Treasury rate plus 300 basis points, but may not exceed 11.5%.
(6) In July 2008, we sold three assisted living properties with 259 living units, which were formerly operated by NewSeasons, to Five Star for $21.4 million. Five Star also assumed the NewSeasons / IBC lease obligations to us for the remaining seven properties that were formerly operated by NewSeasons and these properties are now under Five Star lease no. 4. The data provided above represents the seven properties we continue to own.
(7) Marriott guarantees this lease.
21
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
OCCUPANCY BY PROPERTY TYPE AND TENANT
| | For the Three Months Ended |
| | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | | 12/31/2007 | | 9/30/2007 |
Property Type: | | | | | | | | | | |
Independent living | | 90% | | 89% | | 91% | | 91% | | 91% |
Assisted living | | 90% | | 90% | | 87% | | 90% | | 91% |
Nursing homes | | 86% | | 85% | | 87% | | 89% | | 88% |
Rehabilitation hospitals | | 66% | | 61% | | 66% | | 62% | | 60% |
Wellness centers (1) | | 100% | | 100% | | 100% | | 100% | | — |
MOBs (2) | | 99% | | 99% | | — | | — | | — |
| | | | | | | | | | |
Tenant: | | | | | | | | | | |
Five Star (Lease No. 1) (3) (4) | | 91% | | 89% | | 87% | | 90% | | 91% |
Five Star (Lease No. 2) (3) | | 88% | | 88% | | 89% | | 90% | | 90% |
Five Star (Lease No. 3) (3) (4) | | 84% | | 86% | | 84% | | 85% | | 86% |
Five Star (Lease No. 4) (5) | | 86% | | 81% | | 82% | | 81% | | 82% |
Sunrise / Marriott | | 91% | | 90% | | 91% | | 90% | | 89% |
Brookdale Senior Living, Inc. | | 93% | | 91% | | 91% | | 91% | | 91% |
6 private senior living companies (combined) | | 82% | | 83% | | 87% | | 88% | | 88% |
Starmark (1) | | 100% | | 100% | | 100% | | 100% | | — |
Life Time Fitness (1) | | 100% | | — | | — | | — | | — |
Multi-tenant MOBs (2) | | 99% | | 99% | | — | | — | | — |
(1) In August 2008, we acquired four wellness centers that are leased to a subsidiary of Life Time Fitness. In October and November 2007, we acquired six wellness centers that are leased to subsidiaries of Starmark. Excludes historical data for periods prior to our ownership of these wellness centers.
(2) From June 2008 through December 2008, we acquired a total of 38 MOBs. The carrying value of these investments is before depreciation. We do not report historical results for these MOBs before we purchased them.
(3) In June 2008, we realigned three of our leases with Five Star. These statistics represent the historical occupancy rates with the new lease realignment.
(4) Excludes historical data for periods prior to our ownership of certain properties included in this lease.
(5) In July 2008, we sold three assisted living properties with 259 living units, which were formerly operated by NewSeasons, to Five Star for $21.4 million. Five Star also assumed the NewSeasons / IBC lease obligations to us for the remaining seven properties that were formerly operated by NewSeasons and these properties are now under Five Star lease no. 4. These statistics represent the historical occupancy rates of the seven properties that are now operated by Five Star.
All tenant operating data presented are based upon the operating results provided by our tenants for the indicated quarterly periods. We report our operating data one quarter in arrears as this is the most recent prior period for which tenant operating results are available to us from our tenants. We have not independently verified our tenants’ operating data.
22
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
% PRIVATE PAY BY SENIOR LIVING PROPERTY TYPE AND TENANT
| | For the Three Months Ended |
| | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | | 12/31/2007 | | 9/30/2007 |
Property Type: | | | | | | | | | | |
Independent living | | 82% | | 83% | | 82% | | 81% | | 82% |
Assisted living | | 94% | | 95% | | 93% | | 96% | | 96% |
Nursing homes | | 28% | | 28% | | 28% | | 28% | | 29% |
Rehabilitation hospitals | | 36% | | 34% | | 30% | | 33% | | 32% |
| | | | | | | | | | |
Tenant: | | | | | | | | | | |
Five Star (Lease No. 1) (1) (2) | | 65% | | 65% | | 64% | | 63% | | 63% |
Five Star (Lease No. 2) (1) | | 70% | | 70% | | 68% | | 69% | | 69% |
Five Star (Lease No. 3) (1) (2) | | 49% | | 46% | | 25% | | 23% | | 25% |
Five Star (Lease No. 4) (3) | | 98% | | 100% | | 100% | | 100% | | 100% |
Sunrise / Marriott | | 80% | | 81% | | 79% | | 79% | | 80% |
Brookdale Senior Living, Inc. | | 99% | | 99% | | 99% | | 98% | | 98% |
6 private senior living companies (combined) | | 25% | | 26% | | 27% | | 24% | | 24% |
(1) In June 2008, we realigned three of our leases with Five Star. These statistics represent the historical private pay percentages with the new lease realignment.
(2) Excludes historical data for periods prior to our ownership of certain properties included in this lease.
(3) In July 2008, we sold three assisted living properties with 259 living units, which were formerly operated by NewSeasons, to Five Star for $21.4 million. Five Star also assumed the NewSeasons / IBC lease obligations to us for the remaining seven properties that were formerly operated by NewSeasons and these properties are now under Five Star lease no. 4. These statistics represent the historical private pay percentages of the seven properties that are now operated by Five Star.
All tenant operating data presented are based upon the operating results provided by our tenants for the indicated quarterly periods. We report our operating data one quarter in arrears as this is the most recent prior period for which tenant operating results are available to us from our tenants. We have not independently verified our tenants’ operating data.
23
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
RENT COVERAGE BY TENANT (EXCLUDING MOBs)
| | For the Three Months Ended | |
Tenant | | 9/30/2008 | | 6/30/2008 | | 3/31/2008 | | 12/31/2007 | | 9/30/2007 | |
Five Star (Lease No. 1) (1) (2) | | 1.30x | | 1.31x | | 1.27x | | 1.37x | | 1.48x | |
Five Star (Lease No. 2) (1) | | 1.40x | | 1.47x | | 1.59x | | 1.56x | | 1.61x | |
Five Star (Lease No. 3) (1) (2) | | 1.37x | | 1.53x | | 2.67x | | 2.07x | | 3.89x | |
Five Star (Lease No. 4) (3) | | 1.04x | | 1.08x | | 1.28x | | 1.36x | | 1.32x | |
Sunrise / Marriott | | 1.52x | | 1.43x | | 1.61x | | 1.90x | | 1.31x | |
Brookdale Senior Living, Inc. | | 2.01x | | 2.19x | | 2.23x | | 1.85x | | 2.05x | |
6 private senior living companies (combined) | | 1.69x | | 1.92x | | 2.25x | | 2.09x | | 1.92x | |
Starmark (4) | | 2.12x | | 2.07x | | 1.91x | | 1.93x | | NA | |
Life Time Fitness (4) | | 2.75x | | NA | | NA | | NA | | NA | |
(1) In June 2008, we realigned our three leases with Five Star. These statistics represent the historical rent coverage with the new lease realignment.
(2) Excludes historical data for periods prior to our ownership of certain properties included in this lease.
(3) In July 2008, we sold three assisted living properties with 259 living units, which were formerly operated by NewSeasons, to Five Star for $21.4 million. Five Star also assumed the NewSeasons / IBC lease obligations to us for the remaining seven properties that were formerly operated by NewSeasons and these properties are now under Five Star lease no. 4. These statistics represent the historical rent coverage of the seven properties that are now operated by Five Star.
(4) In August 2008, we acquired four wellness centers that are leased to a subsidiary of Life Time Fitness. In October and November 2007, we acquired six wellness centers that are leased to subsidiaries of Starmark. Excludes historical data for periods prior to our ownership of these wellness centers.
All tenant operating data presented are based upon the operating results provided by our tenants for the indicated quarterly periods. We report our operating data one quarter in arrears as this is the most recent prior period for which tenant operating results are available to us from our tenants. We have not independently verified our tenants’ operating data. Rent coverage is calculated as operating cash flow from our tenants’ facility operations, before subordinated charges and capital expenditure reserves, if any, divided by rent payable to us.
24
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2008
PORTFOLIO LEASE EXPIRATION SCHEDULE
(dollars in thousands)
| | Annualized
Current Rent | | % of Annualized
Current Rent | | Cumulative % of
Annualized
Current Rent |
2009 | | $ | 1,807 | | 0.6% | | 0.6% |
2010 | | 3,900 | | 1.4% | | 2.0% |
2011 | | 1,659 | | 0.6% | | 2.6% |
2012 | | 4,824 | | 1.7% | | 4.3% |
2013 | | 35,231 | | 12.6% | | 16.9% |
2014 | | 3,432 | | 1.2% | | 18.1% |
2015 | | 5,725 | | 2.0% | | 20.1% |
2016 | | 5,980 | | 2.1% | | 22.2% |
2017 and thereafter | | 217,385 | | 77.8% | | 100.0% |
Total | | $ | 279,943 | | 100.0% | | |
| | | | | | |
Weighted average remaining lease term (in years) | | 13.0 | | | | |
25
