UNAUDITED PRO FORMA FINANCIAL INFORMATION
We prepared the following unaudited pro forma consolidated financial statements by applying certain pro forma adjustments to the historical consolidated financial statements of New Senior Investment Group Inc. (the "Company"). The pro forma adjustments give effect to the probable disposition of the Assisted Living and Memory Care ("AL/MC") segment (the "Disposition"). It is anticipated that these operations will qualify as discontinued operations and as a result would be reclassified from income (loss) from continuing operations to discontinued operations in accordance with Accounting Standards Codification 205-20, "Presentation of Financial Statements," in future filings.
These pro forma consolidated financial statements include adjustments for the AL/MC segment disposition because we believe the disposition is probable under the standards of Rule 11-01 of Regulation S-X.
The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2019, and the years ended December 31, 2018, 2017 and 2016 give effect to the reclassification of the results of the AL/MC segment from continuing operations as of the beginning of each respective period. The unaudited pro forma balance sheet as of September 30, 2019 assumes the Disposition occurred on September 30, 2019.
The unaudited pro forma consolidated financial statements are presented for illustrative purposes only to reflect the Disposition and do not represent what our results of operations or financial position would actually have been had the Disposition occurred on the dates noted above, or project our results of operations or financial position for any future periods. The unaudited pro forma consolidated financial statements are intended to provide information about the continuing impact of the Disposition as if it had been consummated earlier and do not represent any conclusions about whether such operations of the AL/MC will be reported as discontinued operations. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable and are expected to have a continuing impact on our results of operations. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma consolidated financial statements have been made. The actual results may differ materially from the estimatets and assumptions within the accompanying unaudited pro forma consolidated financial statements.
The unaudited pro forma consolidated financial statements and the accompanying notes are based upon and should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on Februarry 26, 2019, and the Quarterly Report on Form 10-Q for the period ended September 30, 2019, filed with the SEC on November 5, 2019.
NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA BALANCE SHEET (Unaudited)
(dollars in thousands, except share data)
|
| | | | | | | | | | | | | |
| | As of September 30, 2019 |
| | SNR - As Reported | | Disposition | | | | Pro forma |
| Assets | | | | | | | |
| Real estate investments: | | | | | | | |
| Land | $ | 177,956 |
| | $ | (43,313 | ) | | (A) | | $ | 134,643 |
|
| Buildings, improvements and other | 2,360,548 |
| | (395,695 | ) | | (A) | | 1,964,853 |
|
| Accumulated depreciation | (420,682 | ) | | 86,507 |
| | (A) | | (334,175 | ) |
| Net real estate property | 2,117,822 |
| | (352,501 | ) | | | | 1,765,321 |
|
| Acquired lease and other intangible assets | 8,638 |
| | (996 | ) | | (A) | | 7,642 |
|
| Accumulated amortization | (3,144 | ) | | 996 |
| | (A) | | (2,148 | ) |
| Net real estate intangibles | 5,494 |
| | — |
| | | | 5,494 |
|
| Net real estate investments | 2,123,316 |
| | (352,501 | ) | | | | 1,770,815 |
|
| | | | | | | | |
| Cash and cash equivalents | 35,399 |
| | 110,026 |
| | (B) | | 145,425 |
|
| Receivables and other assets, net | 45,156 |
| | (10,067 | ) | | (C) | | 35,089 |
|
| Total Assets | $ | 2,203,871 |
| | $ | (252,542 | ) | | | | $ | 1,951,329 |
|
| | | | | | | | |
| Liabilities, Redeemable Preferred Stock and Equity | |
| | | | | | |
| Liabilities | |
| | | | | | |
| Debt, net | $ | 1,836,062 |
| | $ | (245,647 | ) | | (D) | | $ | 1,590,415 |
|
| Accrued expenses and other liabilities | 76,298 |
| | (25,881 | ) | | (C) | | 50,417 |
|
| Total Liabilities | 1,912,360 |
| | (271,528 | ) | | | | 1,640,832 |
|
| | | | | | | | |
| Commitments and contingencies |
|
| | | | | | |
| | | | | | | | |
| Redeemable preferred stock, $0.01 par value with $100 liquidation preference, 400,000 shares authorized, issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 40,506 |
| | — |
| | | | 40,506 |
|
| | | | | | | | |
| Equity |
|
| | | | | | |
| Preferred stock, $0.01 par value, 99,600,000 shares (excluding 400,000 shares of redeemable preferred stock) authorized, none issued or outstanding as of September 30, 2019 and December 31, 2018 | — |
| | — |
| | | | — |
|
| Common stock, $0.01 par value, 2,000,000,000 shares authorized, 82,964,438 and 82,148,869 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 830 |
| | — |
| | | | 830 |
|
| Additional paid-in capital | 900,432 |
| | — |
| | | | 900,432 |
|
| Accumulated deficit | (642,990 | ) | | 18,986 |
| | (E) | | (624,004 | ) |
| Accumulated other comprehensive loss | (7,267 | ) | | — |
| | | | (7,267 | ) |
| Total Equity | 251,005 |
| | 18,986 |
| | | | 269,991 |
|
| | | | | | | | |
| Total Liabilities, Redeemable Preferred Stock and Equity | $ | 2,203,871 |
| | $ | (252,542 | ) | | | | $ | 1,951,329 |
|
See notes to consolidated pro forma financial statements (unaudited).
NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)
|
| | | | | | | | | | | | | |
| | For the Nine Months Ended September 30, 2019 |
| | SNR - As Reported | | Disposition | | | | Pro forma |
| Revenues | | | | | | | |
| Resident fees and services | $ | 344,477 |
| | $ | (89,534 | ) | | (F) | | $ | 254,943 |
|
| Rental revenue | 4,748 |
| | — |
| | | | 4,748 |
|
| Total revenues | 349,225 |
| | (89,534 | ) | | | | 259,691 |
|
| | | | | | | | |
| Expenses | | | | | | | |
| Property operating expense | 227,489 |
| | (73,281 | ) | | (F) | | 154,208 |
|
| Depreciation and amortization | 62,583 |
| | (11,279 | ) | | | | 51,304 |
|
| Interest expense | 69,864 |
| | (11,482 | ) | | (G) | | 58,382 |
|
| General and administrative expense | 15,773 |
| | (26 | ) | | (H) | | 15,747 |
|
| Acquisition, transaction and integration expense | 1,677 |
| | (508 | ) | | (I) | | 1,169 |
|
| Loss on extinguishment of debt | 335 |
| | — |
| | | | 335 |
|
| Other expense (income) | 1,350 |
| | 37 |
| | (J) | | 1,387 |
|
| Total expenses | 379,071 |
| | (96,539 | ) | | | | 282,532 |
|
| Loss on sale of real estate | (122 | ) | | | | | | (122 | ) |
| Litigation proceeds, net | 38,226 |
| | | | | | 38,226 |
|
| Income before income taxes | 8,258 |
| | 7,005 |
| | | | 15,263 |
|
| Income tax expense (benefit) | 188 |
| | (72 | ) | | (K) | | 116 |
|
| Net income | 8,070 |
| | 7,077 |
| | | | 15,147 |
|
| Deemed dividend on redeemable preferred stock | (1,802 | ) | | — |
| | | | (1,802 | ) |
| Net income (loss) attributable to common stockholders | $ | 6,268 |
| | $ | 7,077 |
| | | | $ | 13,345 |
|
| | | | | | | | |
| Net income (loss) per share of common stock | | | | | | | |
| Basic | $ | 0.08 |
| | $ | — |
| | | | $ | 0.16 |
|
| Diluted | $ | 0.07 |
| | $ | — |
| | | | $ | 0.16 |
|
| | | | | | | | |
| Weighted average number of shares of common stock outstanding | | | | | | | |
| Basic | 82,207,610 |
| | — |
| | | | 82,207,610 |
|
| Diluted | 83,588,648 |
| | — |
| | | | 83,588,648 |
|
| | | | | | | | |
| Dividends declared per share of common stock | $ | 0.39 |
| | $ | — |
| | | | $ | 0.39 |
|
See notes to consolidated pro forma financial statements (unaudited).
NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)
|
| | | | | | | | | | | | | |
| | Year Ended December 31, 2018 |
| | SNR - As Reported | | Disposition | | | | Pro forma |
| Revenues | | | | | | | |
| Resident fees and services | $ | 404,891 |
| | $ | (121,274 | ) | | (F) | | $ | 283,617 |
|
| Rental revenue | 39,407 |
| | — |
| | | | 39,407 |
|
| Total revenues | 444,298 |
| | (121,274 | ) | | | | 323,024 |
|
| | | | | | | | |
| Expenses | | | | | | | |
| Property operating expense | 267,785 |
| | (95,299 | ) | | (F) | | 172,486 |
|
| Depreciation and amortization | 95,950 |
| | (15,821 | ) | | | | 80,129 |
|
| Interest expense | 101,176 |
| | (15,533 | ) | | (G) | | 85,643 |
|
| Acquisition, transaction and integration expense | 15,919 |
| | (15 | ) | | | | 15,904 |
|
| Termination fee to affiliate | 50,000 |
| | — |
| | | | 50,000 |
|
| Management fees and incentive compensation to affiliate | 14,814 |
| | — |
| | | | 14,814 |
|
| General and administrative expense | 13,387 |
| | (6 | ) | | (H) | | 13,381 |
|
| Loss on extinguishment of debt | 66,219 |
| | (1,473 | ) | | (L) | | 64,746 |
|
| Impairment of real estate held for sale | 8,725 |
| | — |
| | | | 8,725 |
|
| Other expense (income) | 3,974 |
| | (189 | ) | | (J) | | 3,785 |
|
| Total expenses | 637,949 |
| | (128,336 | ) | | | | 509,613 |
|
| Gain on lease termination | 40,090 |
| | | | | | 40,090 |
|
| Income (Loss) before income taxes | (153,561 | ) | | 7,062 |
| | | | (146,499 | ) |
| Income tax expense | 5,794 |
| | 1,092 |
| | (M) | | 6,886 |
|
| Net income (loss) | (159,355 | ) | | 5,970 |
| | | | (153,385 | ) |
| | | | | | | | |
| Net income (loss) per share of common stock | | | | | | | |
| Basic and diluted | $ | (1.94 | ) | | $ | — |
| | | | $ | (1.87 | ) |
| | | | | | | | |
| Weighted average number of shares of common stock outstanding | | | | | | | |
| Basic and diluted | 82,148,869 |
| | — |
| | | | 82,148,869 |
|
| | | | | | | | |
| Dividends declared per share of common stock | $ | 0.78 |
| | $ | — |
| | | | $ | 0.78 |
|
See notes to consolidated pro forma financial statements (unaudited).
NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)
|
| | | | | | | | | | | | | |
| | Year Ended December 31, 2017 |
| | SNR - As Reported | | Disposition | | | | Pro forma |
| Revenues | | | | | | | |
| Resident fees and services | $ | 336,739 |
| | $ | (124,665 | ) | | (F) | | $ | 212,074 |
|
| Rental revenue | 112,391 |
| | — |
| | | | 112,391 |
|
| Total revenues | 449,130 |
| | (124,665 | ) | | | | 324,465 |
|
| | | | | | | | |
| Expenses | | | | | | | |
| Property operating expense | 230,045 |
| | (94,383 | ) | | (F) | | 135,662 |
|
| Depreciation and amortization | 139,942 |
| | (19,163 | ) | | | | 120,779 |
|
| Interest expense | 93,597 |
| | (13,969 | ) | | (G) | | 79,628 |
|
| Acquisition, transaction and integration expense | 2,453 |
| | (149 | ) | | (I) | | 2,304 |
|
| Management fees and incentive compensation to affiliate | 18,225 |
| | — |
| | | | 18,225 |
|
| General and administrative expense | 15,307 |
| | (7 | ) | | (H) | | 15,300 |
|
| Loss on extinguishment of debt | 3,902 |
| | (295 | ) | | (N) | | 3,607 |
|
| Other expense (income) | 1,702 |
| | (977 | ) | | (J) | | 725 |
|
| Total expenses | 505,173 |
| | (128,943 | ) | | | | 376,230 |
|
| Gain on sale of real estate | 71,763 |
| | — |
| | | | 71,763 |
|
| Income before income taxes | 15,720 |
| | 4,278 |
| | | | 19,998 |
|
| Income tax expense (benefit) | 3,512 |
| | (1,134 | ) | | (M) | | 2,378 |
|
| Net income | 12,208 |
| | 5,412 |
| | | | 17,620 |
|
| | | | | | | | |
| Net income per share of common stock | | | | | | | |
| Basic | $ | 0.15 |
| | $ | — |
| | | | $ | 0.21 |
|
| Diluted | $ | 0.15 |
| | $ | — |
| | | | $ | 0.21 |
|
| | | | | | | | |
| Weighted average number of shares of common stock outstanding | | | | | | | |
| Basic | 82,145,295 |
| | — |
| | | | 82,145,295 |
|
| Diluted | 82,741,322 |
| | — |
| | | | 82,741,322 |
|
| | | | | | | | |
| Dividends declared per share of common stock | $ | 1.04 |
| | $ | — |
| | | | $ | 1.04 |
|
See notes to consolidated pro forma financial statements (unaudited).
NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)
|
| | | | | | | | | | | | | |
| | Year Ended December 31, 2016 |
| | SNR - As Reported | | Disposition | | | | Pro forma |
| Revenues | | | | | | | |
| Resident fees and services | $ | 359,472 |
| | $ | (126,992 | ) | | (F) | | $ | 232,480 |
|
| Rental revenue | 112,966 |
| | — |
| | | | 112,966 |
|
| Total revenues | 472,438 |
| | (126,992 | ) | | | | 345,446 |
|
| | | | | | | | |
| Expenses | | | | | | | |
| Property operating expense | 243,027 |
| | (93,115 | ) | | (F) | | 149,912 |
|
| Depreciation and amortization | 184,546 |
| | (26,497 | ) | | | | 158,049 |
|
| Interest expense | 91,780 |
| | (12,647 | ) | | (G) | | 79,133 |
|
| Acquisition, transaction and integration expense | 3,942 |
| | 5 |
| | | | 3,947 |
|
| Management fees and incentive compensation to affiliate | 18,143 |
| | — |
| | | | 18,143 |
|
| General and administrative expense | 15,194 |
| | (2 | ) | | | | 15,192 |
|
| Loss on extinguishment of debt | 245 |
| | (245 | ) | | (N) | | — |
|
| Other expense (income) | 727 |
| | (207 | ) | | (J) | | 520 |
|
| Total expenses | 557,604 |
| | (132,708 | ) | | | | 424,896 |
|
| Gain on sale of real estate | 13,356 |
| | | | | | 13,356 |
|
| Income (Loss) before income taxes | (71,810 | ) | | 5,716 |
| | | | (66,094 | ) |
| Income tax expense (benefit) | 439 |
| | (1,300 | ) | | (M) | | (861 | ) |
| Net income (loss) | (72,249 | ) | | 7,016 |
| | | | (65,233 | ) |
| | | | | | | | |
| Net income (loss) per share of common stock | | | | | | | |
| Basic and diluted | $ | (0.88 | ) | | $ | — |
| | | | $ | (0.79 | ) |
| | | | | | | | |
| Weighted average number of shares of common stock outstanding | | | | | | | |
| Basic and diluted | 82,357,346 |
| | — |
| | | | 82,357,346 |
|
| | | | | | | | |
| Dividends declared per share of common stock | $ | 1.04 |
| | $ | — |
| | | | $ | 1.04 |
|
See notes to consolidated pro forma financial statements (unaudited).
NEW SENIOR INVESTMENT GROUP INC. AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONSOLIDATED BALANCE SHEET AND STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands, except share data)
(A) Reflects real estate assets directly attributable to the properties included in the potential Disposition.
(B)Net increase in cash of $110.0 million consists of the following:
|
| | | |
| Gross sale price | $ | 385,000 |
|
| Repayment of debt | (248,353 | ) |
| Capital adjustments/prorations | (20,815 | ) |
| Pre-payment penalty on debt | (5,806 | ) |
| Cash proceeds | $ | 110,026 |
|
(C)Current assets and liabilities directly attributable to the properties included in the potential Disposition, which are
expected to be settled at closing.
(D)Includes $248.4 million of debt specifically associated with the properties included in the probable Disposition, net of
deferred financing fees of $2.7 million associated with mortgage notes payable expected to be repaid or refinanced as a
result of the potential Disposition.
(E) Estimated increase in retained earnings is comprised of the following and and may be subject to change. It does not include
additional selling and transaction costs expected to be incurred prior to the potential Disposition.
|
| | | |
| Estimated gain on sale of real estate | 27,498 |
|
| Pre-payment penalty on debt | (5,806 | ) |
| Net deferred financing costs write off | (2,706 | ) |
| Total | $ | 18,986 |
|
(F) Resident fees and services revenue and Property Operating expense directly attributable to the properties included in the
potential Disposition.
(G) Interest expense on debt directly attributable to the properties included in the potential Disposition.
(H) Represents banks fees specifically attributable to the properties included in the potential Disposition.
(I) Represents costs related to transitioning properties included in the potential Disposition to new operators during the years
ended 2019 and 2017.
(J) Primarily represents casualty-related charges recorded with respect to properties included in the potential Disposition.
(K) Represents federal and state current income taxes attributable to the properties included in the potential Disposition for
the year ended 2019.
(L) Represents attributable portion of loss on early extinguishment of debt incurred with respect to the refinancing of
existing debt with the revolving credit facility during the year ended 2018.
(M) Represents federal and state income taxes attributable to the properties included in the potential Disposition for the
years ended 2018, 2017, and 2016, including the impact of a valuation allowance recorded against deferred tax assets
during the year ended 2018.
(N) Represents attributable portion of the loss on early extinguishment of debt incurred on additional repayments of debt
required as a result of property sales during the years ended 2017 and 2016.
