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
Quarter And Year Ended December 31, 2003
Newton, MA (February 10, 2004): Senior Housing Properties Trust (NYSE:
SNH) today announced its financial results for the quarter and year ended
December 31, 2003, as follows (in thousands, except per share data):
Quarter Ended December 31, Year Ended December 31,
-------------------------- -----------------------
2003 2002 2003 2002
---- ---- ---- ----
Total revenues $35,855 $32,835 $131,148 $122,297
Net income 13,565 14,826 45,874 50,184
Funds from operations (FFO) 20,520 20,232 82,762 78,264
Weighted average shares outstanding 58,453 58,437 58,445 56,416
Per share data:
Net income $0.23 $0.25 $0.78 $0.89
Funds from operations (FFO)
0.35 0.35 1.42 1.39
Senior Housing Properties Trust is a real estate investment trust
headquartered in Newton, MA that owns 150 senior living properties located in 31
states.
Senior Housing Properties Trust
Financial Information
(in thousands, except per share data)
Income Statement:
Quarter Ended December 31, Year Ended December 31,
------------------------------ -----------------------------
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Rental income $ 35,541 $ 32,520 $ 129,188 $ 115,560
FF&E reserve income(1) -- -- -- 5,345
Interest and other income 314 315 1,960 1,392
--------- --------- --------- ---------
Total revenues 35,855 32,835 131,148 122,297
--------- --------- --------- ---------
Expenses:
Interest 9,538 6,971 35,088 27,399
Depreciation 9,171 8,381 35,728 31,596
General and administrative(2) 2,879 2,617 10,487 8,478
--------- --------- --------- ---------
Total 21,588 17,969 81,303 67,473
--------- --------- --------- ---------
Income from continuing operations before
distributions on trust preferred securities 14,267 14,866 49,845 54,824
Distributions on trust preferred securities 702 702 2,811 2,811
--------- --------- --------- ---------
Income from continuing operations 13,565 14,164 47,034 52,013
Income (loss) from discontinued operations -- 662 -- (1,829)
Loss on sale of property -- -- (1,160) --
--------- --------- --------- ---------
Net income $ 13,565 $ 14,826 $ 45,874 $ 50,184
========= ========= ========= =========
Weighted average shares outstanding 58,453 58,437 58,445 56,416
========= ========= ========= =========
Per share data:
Income from continuing operations $ 0.23 $ 0.24 $ 0.80 $ 0.92
========= ========= ========= =========
Net income $ 0.23 $ 0.25 $ 0.78 $ 0.89
========= ========= ========= =========
Balance Sheet: At At
December 31, December 31,
2003 2002
-------------- --------------
Assets
Real estate properties $ 1,418,241 $ 1,238,487
Accumulated depreciation (160,426) (125,039)
----------- -----------
1,257,815 1,113,448
Cash and cash equivalents 3,172 8,654
Restricted cash 10,108 12,364
Deferred financing fees, net 11,311 9,512
Other assets 21,420 14,222
----------- -----------
Total assets $ 1,303,826 $ 1,158,200
=========== ===========
Liabilities and Shareholders' Equity
Unsecured revolving bank credit facility $ 102,000 $ 81,000
Senior unsecured notes, net of discounts 393,612 243,746
Secured debt and capital leases 31,817 32,618
----------- -----------
Total debt 527,429 357,364
Other liabilities 21,097 21,116
----------- -----------
Total liabilities 548,526 378,480
Trust preferred securities 27,394 27,394
Shareholders' equity 727,906 752,326
----------- -----------
Total liabilities and shareholders' equity $ 1,303,826 $ 1,158,200
=========== ===========
(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
Quality Care, Inc., and 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 litigation with Marriott
International, Inc. and with HEALTHSOUTH Corporation aggregating
$446,000 ($0.01 per share) during the three months ended December 31,
2003 and $1.2 million ($0.02 per share) during the year ended December
31, 2003. As previously announced, our litigation with Marriott was
settled on January 7, 2004. As part of the settlement, Marriott paid to
us $1.25 million, which we will recognize as income in the first
quarter of 2004.
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Senior Housing Properties Trust
Other Data
(in thousands, except per share and ratio amounts)
Calculation of Funds From Operations (FFO)(1):
Quarter Ended December 31, Year Ended December 31,
-------------------------- -----------------------
2003 2002 2003 2002
---- ---- ---- ----
Income from continuing operations $ 13,565 $ 14,164 $ 47,034 $ 52,013
Add: Depreciation expense 9,171 8,381 35,728 31,596
Deferred percentage rent(2) (2,216) (2,313) -- --
Less: FF&E reserve income -- -- -- 5,345
-------- -------- -------- --------
FFO $ 20,520 $ 20,232 $ 82,762 $ 78,264
======== ======== ======== ========
Weighted average shares outstanding 58,453 58,437 58,445 56,416
======== ======== ======== ========
FFO per share $ 0.35 $ 0.35 $ 1.42 $ 1.39
======== ======== ======== ========
Distributions declared $ 0.31 $ 0.31 $ 1.24 $ 1.24
======== ======== ======== ========
Leverage Ratios(3):
At At
December 31, 2003 December 31, 2002
----------------- -----------------
Total debt / Total assets 40.5% 30.9%
Total debt / Real estate properties before 37.2% 28.9%
depreciation
Total debt / Total book capitalization 41.1% 31.4%
Secured debt / Total debt 6.0% 9.1%
Secured debt / Total assets 2.4% 2.8%
Variable rate debt / Total debt 21.1% 25.2%
Coverage Ratios(3):
Quarter Ended Year Ended
December 31, December 31,
---------------------- --------------------
2003 2002 2003 2002
--------- ---------- --------- ---------
Income from continuing operations $ 13,565 $ 14,164 $ 47,034 $ 52,013
Deferred percentage rent (2,216) (2,313) -- --
Interest expense 9,538 6,971 35,088 27,399
Trust preferred distributions 702 702 2,811 2,811
Depreciation expense 9,171 8,381 35,728 31,596
-------- -------- -------- --------
EBITDA(4) $ 30,760 $ 27,905 $120,661 $113,819
======== ======== ======== ========
EBITDA / Interest expense 3.2x 4.0x 3.4x 4.2x
======== ======== ======== ========
EBITDA / Interest expense + trust
preferred distributions 3.0x 3.6x 3.2x 3.8x
======== ======== ======== ========
(1) We compute FFO as shown in the calculation above. Our calculation of FFO
differs from the NAREIT definition of FFO because we include deferred
percentage rent as discussed in Note 2 below. Also, in order to facilitate
comparison of FFO with historical results, the historical FFO presentation
for the year ended December 31, 2002, eliminates FF&E reserve income (see
Note 1 on page 2). We consider FFO to be an appropriate measure of
performance for a REIT, along with net income and cash flow from operating,
investing and financing activities. We believe that FFO provides useful
information to investors because by excluding the effects of certain
historical costs, such as depreciation expense and gain or losses on sale
of properties, FFO can facilitate comparison of current operating
performance among REITs. FFO does not represent cash generated by operating
activities in accordance with generally accepted accounting principles, or
GAAP, and should not be considered an alternative to net income or cash
flow from operating activities as a measure of financial performance or
liquidity. FFO is one important factor considered by our board of trustees
in determining the amount of distributions to shareholders. Other important
factors include, but are not limited to, requirements to maintain our
status as a REIT, limitations in our revolving bank credit facility and
public debt covenants, the availability of debt and equity capital to us
and our expectation of our future performance.
(2) We recognize percentage rental income received during the first, second and
third quarters in the fourth quarter. Although recognition of revenue is
deferred until the fourth quarter for purposes of calculating net income,
the calculation of FFO for the first three quarters includes estimated
amounts with respect to those periods. The fourth quarter calculation
excludes the amounts recognized during the first three quarters.
(3) On January 23, 2004, we issued 5 million common shares in a public
offering. The net proceeds of $86.5 million were used to repay borrowings
outstanding on our unsecured revolving bank credit facility. The leverage
and coverage ratios presented do not include the effect of this issuance.
(4) We compute EBITDA as income from continuing operations plus interest
expense, distributions on trust preferred securities, depreciation expense
and deferred percentage rent. We consider EBITDA to be an appropriate
measure of performance for a REIT, along with net income and cash flow from
operating, investing and financing activities. EBITDA does not represent
cash generated by operating activities in accordance with GAAP and should
not be considered an alternative to net income or cash flow from operating
activities as a measure of financial performance or liquidity.
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Senior Housing Properties Trust
Other Data
The following additional data is intended to respond to frequently asked questions.
At December 31, 2003
(dollars in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
% of
Current Current
Annual Annual
# of # of % of Rent Rent
Properties Units/Beds Investment Investment Revenues Revenues
Facility Type
Independent living communities(1) 35 10,191 $868,593 61.2% $82,403 58.2%
Assisted living facilities 48 3,542 260,257 18.4% 29,826 21.1%
Skilled nursing facilities 65 6,868 245,838 17.3% 20,697 14.6%
Hospitals 2 364 43,553 3.1% 8,700 6.1%
------------ -------------- --------------- ------------- ------------ -----------
Total 150 20,965 $1,418,241 100.0% $141,626 100.0%
============ ============== =============== ============= ============ ===========
Tenant/Operator
Five Star/Sunrise (2) 31 7,491 $619,942 43.6% $63,674 45.0%
Marriott/Sunrise (2) 14 4,030 325,473 22.9% 30,975 21.8%
NewSeasons 10 1,019 87,656 6.2% 9,287 6.6%
HEALTHSOUTH 2 364 43,553 3.1% 8,700 6.1%
Five Star #2 13 1,054 83,471 5.9% 8,235 5.8%
Five Star #1 53 4,868 147,072 10.4% 7,646 5.4%
Alterra Healthcare 18 894 61,079 4.3% 7,015 5.0%
Genesis HealthCare Corporation 1 156 13,007 1.0% 1,509 1.1%
5 private companies (combined) 8 1,089 36,988 2.6% 4,585 3.2%
------------ -------------- --------------- ------------- ------------ -----------
Total 150 20,965 $1,418,241 100.0% $141,626 100.0%
============ ============== =============== ============= ============ ===========
Quarter Ended December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
Tenant Operating Statistics (3)
Percentage of Operating Revenue Sources
------------------------------------------------------
Rent Coverage Occupancy Private Pay Medicare Medicaid
------------- --------- ----------- -------- --------
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Five Star/Sunrise (2)(4) 1.0x 1.1x 90% 92% 86% 87% 11% 9% 3% 4%
Marriott/Sunrise (2) 1.4x 1.3x 87% 92% 83% 83% 12% 13% 5% 4%
NewSeasons(5)(6) 1.2x NA 80% NA 100% NA 0% NA 0% NA
HEALTHSOUTH(7) NA NA NA NA NA NA NA NA NA NA
Five Star #2(5) 0.9x 1.0x 88% 85% 100% 100% 0% 0% 0% 0%
Five Star #1 3.5x 3.1x 90% 91% 21% 22% 22% 19% 57% 59%
Alterra Healthcare(5) 1.6x 1.4x 85% 92% 98% 98% 0% 0% 2% 2%
Genesis HealthCare Corporation 2.4x 1.8x 96% 97% 25% 25% 34% 33% 41% 42%
5 private companies (combined) 2.5x 2.4x 89% 89% 24% 21% 21% 16% 55% 63%
Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
Tenant Operating Statistics (3)
Percentage of Operating Revenue Sources
-----------------------------------------------------
Rent Coverage Occupancy Private Pay Medicare Medicaid
------------- --------- ----------- -------- --------
2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Five Star/Sunrise (2)(4) 1.0x 1.1x 90% 90% 86% 87% 10% 10% 4% 3%
Marriott/Sunrise (2) 1.3x 1.4x 87% 89% 83% 84% 13% 13% 4% 3%
NewSeasons(5)(6) 1.1x NA 79% NA 100% NA 0% NA 0% NA
HEALTHSOUTH(7) NA NA NA NA NA NA NA NA NA NA
Five Star #2(5) 1.0x 1.1x 87% 88% 100% 100% 0% 0% 0% 0%
Five Star #1 2.9x 2.6x 90% 91% 21% 22% 21% 20% 58% 58%
Alterra Healthcare(5) 1.6x 1.5x 86% 89% 98% 98% 0% 0% 2% 2%
Genesis HealthCare Corporation 1.5x 1.8x 97% 96% 23% 26% 34% 38% 43% 36%
5 private companies (combined) 2.4x 2.1x 87% 88% 23% 21% 19% 20% 58% 59%
<FN>
(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., or
MSLS, to Sunrise Senior Living, Inc., or Sunrise. Effective on that date, Sunrise became the manager of the 31 properties
leased to Five Star Quality Care, Inc., or Five Star, and the tenant and manager of the 14 properties leased to MSLS. Marriott
International continues to guarantee the lease for the 14 properties.
(3) All tenant operating statistics presented are based upon the operating results provided by our tenants for the indicated
periods ending December 31 or the most recent prior period tenant operating results available to us from our tenants. Rent
coverage is calculated as operating cash flow from our tenants' facility operations, before subordinated charges and capital
expenditure reserves, divided by rent payable to us. We have not independently verified our tenants' operating data.
(4) Rent coverage is after non-subordinated management fees of $4.4 million and $4.4 million and $17.1 million and $17.4 million in
the quarter and year ended December 31, 2003 and 2002, respectively.
(5) Includes data for periods prior to our ownership of these properties.
(6) We acquired these properties on December 29, 2003.
(7) 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.
</FN>
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