[GRAPHIC OMITTED]
SENIOR HOUSING PROPERTIES TRUST
First Quarter 2005
Supplemental Operating and Financial Data
All amounts in this report are unaudited, except for the
December 31, 2004 Consolidated Balance Sheet.
TABLE OF CONTENTS
Page
CORPORATE INFORMATION
Company Profile 5
Investor Information 6
Research Coverage 7
FINANCIAL INFORMATION
Key Financial Data 9
Consolidated Balance Sheet 10
Consolidated Statement of Income 11
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
Acquisitions Information 18
Financing Activities 19
PORTFOLIO INFORMATION
Portfolio Summary by Facility Type and Tenant 21
Occupancy by Facility Type and Tenant 22
% Private Pay by Facility Type and Tenant 23
Rent Coverage by Tenant 24
Portfolio Lease Expiration Schedule 25
2
WARNING REGARDING FORWARD LOOKING STATEMENTS
CERTAIN STATEMENTS CONTAINED IN THIS SUPPLEMENTAL OPERATING AND FINANCIAL DATA
REPORT FOR THE QUARTER ENDED MARCH 31, 2005 ARE FORWARD LOOKING STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND
FEDERAL SECURITIES LAWS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR
PRESENT BELIEFS AND EXPECTATIONS, BUT THEY 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. SUCH
FACTORS INCLUDE, WITHOUT LIMITATION, CHANGES IN MEDICARE OR MEDICAID RATES WHICH
MAY AFFECT SOME OF OUR TENANTS' ABILITIES TO PAY RENTS DUE TO US. IN ADDITION,
WE ARE CURRENTLY INVOLVED IN LITIGATION WITH HEALTHSOUTH. WE HAVE SENT
HEALTHSOUTH A LEASE TERMINATION NOTICE AND HEALTHSOUTH HAS DISPUTED THE LEASE
TERMINATION AND CONTINUED TO PAY US MONTHLY AMOUNTS EQUAL TO THE DISPUTED
AMOUNTS DUE UNDER THE TERMINATED LEASE. WE CANNOT PREDICT HOW OR WHEN OUR
DISPUTES WITH HEALTHSOUTH WILL BE RESOLVED. DISCOVERY DURING LAWSUITS OR
DECISIONS BY COURTS MAY CREATE RESULTS THAT ARE DIFFERENT FROM ANY IMPLICATIONS
HEREIN. YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW, WE DO NOT INTEND TO IMPLY THAT WE
WILL RELEASE PUBLICLY THE RESULT OF ANY REVISION TO THE FORWARD LOOKING
STATEMENTS TO REFLECT THE FUTURE OCCURRENCE OF PRESENTLY UNANTICIPATED EVENTS.
CORPORATE INFORMATION
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
COMPANY PROFILE
- --------------------------------------------------------------------------------
The Company:
Senior Housing Properties Trust is a real estate investment trust, or REIT,
which owns independent and assisted living properties, continuing care
retirement communities and nursing homes located throughout the United States.
All of our properties are triple net leased, meaning that each tenant pays us
rent, but remains responsible to pay all operating costs, taxes, insurance and
maintenance costs that arise from the use of our property. Our 181 properties
are leased to eleven tenants under 12 leases. We are included in a number of
stock indices, including the Russell 2000(R), the Morgan Stanley REIT Index and
the S&P REIT Composite Index.
Management:
Senior Housing Properties Trust is managed by Reit Management & Research LLC
(RMR). RMR was founded in 1986 to manage public investments in real estate. As
of March 31, 2005, RMR oversaw one of the largest portfolios of public real
estate in the United States, including more than 850 properties, with
approximately 81 million square feet, located in 42 states, Washington, DC,
Puerto Rico and Ontario, Canada. RMR has almost 400 employees in its
headquarters and regional offices located throughout the country. In addition to
managing SNH, RMR and its affiliates also manage Hospitality Properties Trust
(HPT), a publicly traded REIT that owns hotels, HRPT Properties Trust (HRP), a
publicly traded REIT that primarily owns and leases office buildings and
industrial properties and three mutual funds which invest in unaffiliated real
estate companies. The three REITs managed by RMR had combined total market
capitalization of approximately $11 billion as of March 31, 2005. 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 SNH at costs that are lower than SNH would have to pay for similar
quality services.
Strategy:
Our present business plan is to maintain an investment portfolio of independent
living properties, assisted living properties and nursing homes and to acquire
additional senior living properties primary for income and secondarily for
appreciation potential. Our current growth strategy is generally focused on
making portfolio acquisitions of geographically diverse, primarily independent
and assisted senior living properties where the majority of the residents pay
for occupancy and services from private resources rather than through government
programs. 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. Our present
financial strategy is to maintain a conservative capital structure which limits
the amount of debt that we issue. We do not have any investments in joint
ventures or partnerships. Also, the majority of our debt is fixed rate, and we
have no significant debt maturities until 2012.
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 -- Ba2
Standard & Poor's -- BB+
Portfolio Data as of 3/31/05:
Total properties 181
Total units / beds 22,546
Percent of rent from private pay properties 83.7% (1)
Portfolio Concentration as of 3/31/05 (by facility type):
Number of Number of Carrying Value Annualized
Properties Units/Beds of Investment (2) Percent Current Rent Percent
----------------------------------------------------------------------------------------
Independent Living (IL) (3) 36 10,412 $ 902,306 56.2% $ 90,612 57.0%
Assisted Living (AL) 81 5,337 438,082 27.3% 42,452 26.7%
Nursing Homes 62 6,433 220,752 13.8% 17,119 10.8%
Hospitals 2 364 43,553 2.7% 8,700 5.5%
----------------------------------------------------------------------------------------
Total 181 22,546 $ 1,604,693 100.0% $ 158,883 100.0%
========================================================================================
Operating Statistics for Q1 2005 (by tenant):
Number of Number of Annualized Rent Percent
Tenant Properties Units/Beds Current Rent Coverage (4) Occupancy (4) Private Pay (4)
- -------------------------------------------------------------------------------------------------------------------------
Five Star / Sunrise (5) 31 7,307 $ 64,206 1.14x 92% 85%
Five Star 98 7,731 32,005 1.63x 87% 41%
Sunrise / Marriott (6) 14 4,091 31,197 1.25x 90% 80%
New Seasons / IBC (7) 10 1,019 9,287 1.11x 79% 100%
HealthSouth (8) 2 364 8,700 NA NA NA
Alterra Healthcare Corporation 18 894 7,136 1.63x 84% 98%
Genesis HealthCare Corporation 1 156 1,522 1.71x 96% 23%
5 Private Companies (combined) 7 984 4,830 1.87x 87% 24%
------------------------------------------
181 22,546 $ 158,883
==========================================
<FN>
(1) Represents the percentage of SNH's rental income that is derived from
properties where the underlying operating revenues are greater than 80%
private pay.
(2) Amounts are before depreciation, but after impairment write downs.
(3) Properties where the majority of units are independent living apartments
are classified as independent living communities.
(4) All tenant operating data presented are based upon the operating results
provided by our tenants for the indicated periods, or the most recent prior
period for which tenant operating results are 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.
(5) These 31 properties leased to Five Star Quality Care, Inc., or Five Star,
are managed by Sunrise Senior Living, Inc., or Sunrise. Sunrise does not
guaranty Five Star's lease obligations.
(6) Marriott International, Inc., or Marriott, guarantees the lease for these
14 properties leased to Sunrise.
(7) Independence Blue Cross, or IBC, a Pennsylvania health insurer, guarantees
the lease for the 10 properties leased to NewSeasons Assisted Living
Communities, Inc., or NewSeasons.
(8) During 2003, HealthSouth issued a press release stating that its historical
financial information should not be relied upon. Since that time and
through the date of this report, HealthSouth has not filed audited
financial information with the SEC. Because we have reason to doubt
whatever information we have from HealthSouth we do not disclose any
operating data for this tenant. See also Note 2 on page 21 regarding our
litigation with HealthSouth.
</FN>
5
Senior Housing Properties Trust
Supplemental Operating and Financial Data
Contact Information
March 31, 2005
INVESTOR INFORMATION
- --------------------------------------------------------------------------------
Board of Trustees
- --------------------------------------------------------------------------------
Barry M. Portnoy Gerard M. Martin
Managing Trustee Managing Trustee
Frank J. Bailey Frederick N. Zeytoonjian
Independent Trustee Independent Trustee
John L. Harrington
Independent Trustee
Senior Management
- --------------------------------------------------------------------------------
David J. Hegarty John R. Hoadley
President, Chief Operating Officer Treasurer and Chief Financial Officer
and Secretary
Contact Information
- --------------------------------------------------------------------------------
Investor Relations Inquiries
Senior Housing Properties Trust Financial inquiries should be directed to
400 Centre Street John R. Hoadley, Treasurer and Chief
Newton, MA 02458 Financial Officer, at (617) 796-8350 or
(t) (617) 796-8350 jhoadley@reitmr.com.
(f) (617) 796-8349
(email) info@snhreit.com Investor and media inquiries should be
(website) www.snhreit.com directed to Timothy A. Bonang, Manager of
Investor Relations, at (617) 796-8149 or
tbonang@reitmr.com.
6
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
RESEARCH COVERAGE
- --------------------------------------------------------------------------------
Equity Research Coverage
- --------------------------------------------------------------------------------
A.G. Edwards & Sons RBC Capital Markets
John Sheehan Jay Leupp
(314) 955-5834 (415) 633-8588
Legg Mason Stifel, Nicolaus
Jerry Doctrow Phillip Martin
(410) 454-5142 (312) 832-2756
Merrill Lynch UBS
David Tsoupros Christopher Pike
(212) 449-9697 (212) 713-2087
Raymond James Wachovia Securities
Paul Puryear Stephen Swett
(727) 573-3800 (212) 909-0954
Debt Research Coverage
- --------------------------------------------------------------------------------
UBS Wachovia Securities
Ray Garson Dan Sullivan
(203) 719-6415 (704) 383-6441
Rating Agencies
- --------------------------------------------------------------------------------
Moody's Investor Service Standard and Poor's
Karen Nickerson George Skoufis
(212) 553-4924 (212) 438-2608
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
FINANCIAL INFORMATION
Senior Housing Properties Trust
Supplemental Operating and Financial Data
KEY FINANCIAL DATA
- --------------------------------------------------------------------------------
(share amounts and dollars in thousands, except per share data)
As of and For the Three Months Ended
-------------------------------------------------------------------
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
----------- ----------- ----------- ----------- -----------
Shares Outstanding:
Common shares outstanding (at end of period) 68,496 68,496 63,496 63,472 63,469
Weighted average common shares outstanding -
basic and diluted (1) 68,496 64,311 63,477 63,471 62,354
Common Share Data:
Price at end of period $ 16.68 $ 18.94 $ 17.82 $ 16.79 $ 19.50
High during period $ 19.10 $ 20.34 $ 18.24 $ 20.05 $ 19.55
Low during period 16.20 $ 17.85 $ 16.10 $ 13.50 $ 17.00
Annualized dividends paid per share 1.28 $ 1.28 $ 1.28 $ 1.24 $ 1.24
Annualized dividend yield (at end of period) 7.7% 6.8% 7.2% 7.4% 6.4%
Market Capitalization:
Total debt (book value) 535,748 $ 535,178 $ 478,274 $ 481,433 $ 487,518
Plus: market value of common shares
(at end of period) 1,142,513 1,297,314 1,131,499 1,065,695 1,237,646
----------- ----------- ----------- ----------- -----------
Total market capitalization $ 1,678,261 $ 1,832,492 $ 1,609,773 $ 1,547,128 $ 1,725,164
Total debt / total market capitalization 31.9% 29.2% 29.7% 31.1% 28.3%
Book Capitalization:
Total debt $ 535,748 $ 535,178 $ 478,274 $ 481,433 $ 487,518
Plus: total shareholders' equity 881,692 890,667 798,536 803,791 810,390
----------- ----------- ----------- ----------- -----------
Total book capitalization $ 1,417,440 $ 1,425,845 $ 1,276,810 $ 1,285,224 $ 1,297,908
Total debt / total book capitalization 37.8% 37.5% 37.5% 37.5% 37.6%
Selected Balance Sheet Data:
Total assets $ 1,436,848 $ 1,447,730 $ 1,300,173 $ 1,308,287 $ 1,318,804
Total liabilities $ 555,156 $ 557,063 $ 501,637 $ 504,496 $ 508,414
Gross book value of real estate assets (2) $ 1,604,693 $ 1,600,952 $ 1,447,874 $ 1,445,713 $ 1,442,707
Total debt / gross book value of real estate 33.4% 33.4% 33.0% 33.3% 33.8%
Selected Income Statement Data:
Total revenues $ 39,227 $ 40,730 $ 35,744 $ 35,506 $ 36,543
EBITDA (3) $ 36,649 $ 35,316 $ 33,722 $ 33,558 $ 34,064
Net income $ 13,865 $ 16,513 $ 12,919 $ 14,041 $ 13,269
Funds from operations (FFO) (4) $ 25,426 $ 24,390 $ 23,437 $ 23,303 $ 23,694
Common distributions paid $ 21,919 $ 21,919 $ 20,319 $ 19,676 $ 19,675
Per Share Data:
Net income $ 0.20 $ 0.26 $ 0.20 $ 0.22 $ 0.21
FFO $ 0.37 $ 0.38 $ 0.37 $ 0.37 $ 0.38
Common distributions paid $ 0.32 $ 0.32 $ 0.32 $ 0.31 $ 0.31
FFO payout ratio 86.2% 89.9% 86.7% 84.4% 83.0%
Coverage Ratios:
EBITDA (3) / interest expense 3.3x 3.2x 3.3x 3.3x 3.3x
<FN>
(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, including purchase price
allocations relating to FAS 141.
(3) See page 13 for calculation of EBITDA.
(4) See page 14 for calculation of FFO.
</FN>
9
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
(in thousands, except share data)
As of As of
March 31, December 31,
2005 2004
----------- -----------
(audited)
ASSETS
Real estate properties, at cost:
Land $ 178,357 $ 178,353
Buildings and improvements 1,426,336 1,422,599
----------- -----------
1,604,693 1,600,952
Less accumulated depreciation 209,978 199,232
----------- -----------
1,394,715 1,401,720
Cash and cash equivalents 3,564 3,409
Restricted cash 6,527 6,176
Deferred financing fees, net 8,885 9,367
Other assets 23,157 27,058
----------- -----------
Total assets $ 1,436,848 $ 1,447,730
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured revolving bank credit facility $ 38,000 $ 37,000
Senior unsecured notes due 2012 and 2015,
net of discount 393,816 393,775
Junior subordinated debentures due 2041 28,241 28,241
Secured debt and capital leases 75,691 76,162
Accrued interest 10,582 12,519
Other liabilities 8,826 9,366
----------- -----------
Total liabilities 555,156 557,063
----------- -----------
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $0.01
par value:
80,000,000 shares authorized; 68,495,908
shares issued and outstanding 685 685
Additional paid-in capital 1,034,686 1,034,686
Cumulative net income 222,356 208,491
Cumulative distributions (381,486) (359,567)
Unrealized gain on investments 5,451 6,372
----------- -----------
Total shareholders' equity 881,692 890,667
----------- -----------
Total liabilities and shareholders' equity $ 1,436,848 $ 1,447,730
=========== ===========
10
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
CONSOLIDATED STATEMENT OF INCOME
- --------------------------------------------------------------------------------
(in thousands, except per share data)
For the Three Months Ended
-------------------------
3/31/2005 3/31/2004
----------- -----------
Revenues:
Rental income (1) $ 38,888 $ 34,829
Interest and other income (2) 339 1,714
----------- -----------
Total revenues 39,227 36,543
----------- -----------
Expenses:
Interest 11,223 10,370
Depreciation 10,746 9,585
General and administrative (1) 3,393 3,319
----------- -----------
Total expenses 25,362 23,274
----------- -----------
Net income $ 13,865 $ 13,269
=========== ===========
Weighted average common shares outstanding 68,496 62,354
=========== ===========
Basic and diluted net income per share $ 0.20 $ 0.21
=========== ===========
Additional Data:
General and administrative expenses (3)/
total revenues (4) 7.5% 6.5%
General and administrative expenses (3)/
total assets (at end of period) 0.21% 0.17%
Straight-line rent included in rental
income (5) $ 107 $ 89
(1) Rental income for the quarter ended March 31, 2005, includes $2.2 million
of income from two hospitals operated by HealthSouth Corporation, or
HealthSouth. Effective January 2, 2002, we entered an amended lease with
HealthSouth for two hospitals. In April 2003, we commenced a lawsuit
against HealthSouth seeking, among other matters, to reform the amended
lease based upon HealthSouth's fraud by increasing the rent payable to us
from the date of the amendment forward. This litigation is pending at this
time. On October 26, 2004, we terminated the amended lease for default
because HealthSouth failed to deliver to us accurate and timely financial
information as required by the amended lease. On November 2, 2004,
HealthSouth brought a new lawsuit against us seeking to prevent our
termination of the amended lease. On November 9, 2004, after a hearing, the
court denied HealthSouth's request for a preliminary injunction to prevent
the lease termination. We are currently seeking an expedited judicial
determination that the lease termination was valid and we are pursuing
damages against HealthSouth in the lawsuit which we brought in 2003. We
have also begun work to identify and qualify a new tenant operator for the
hospitals. Our lease with HealthSouth requires that, after termination,
HealthSouth manage the hospitals for our account for a management fee
during the period of the transition to a new tenant and remit the net cash
flow to us. During the pendency of these disputes, HealthSouth has
continued to pay us at the disputed rent amount and we have applied the
payments received against the net cash flow due, but we do not know how
long HealthSouth may continue to make payments. Legal expenses related to
this matter were approximately $400,000 and $50,000, respectively, in the
quarters ended March 31, 2005 and 2004, and are included in general and
administrative expenses.
(2) Included in Other Income for the quarter ended March 31, 2004 is $1.25
million received in a settlement of litigation with Marriott International,
Inc.
(3) Costs associated with our litigations with HealthSouth (on going) and
Marriott (settled in January 2004) and costs associated with a failed
acquisition written off in the first quarter of 2004 are excluded from
general and administrative expenses for purposes of these calculations.
(4) Includes deferred percentage rent (see Note 1 on pages 13 and 14).
(5) 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.
11
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
(in thousands)
For the Three Months Ended
-------------------------
3/31/2005 3/31/2004
----------- -----------
Cash flows from operating activities:
Net income $ 13,865 $ 13,269
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 10,746 9,585
Amortization of deferred finance fees and
debt discounts 531 526
Change in assets and liabilities:
Restricted cash (351) (2)
Other assets 2,998 2,001
Accrued interest (1,937) (2,095)
Other liabilities (559) 1,620
----------- -----------
Cash provided by operating activities 25,293 24,904
----------- -----------
Cash flows from investing activities:
Acquisitions (3,741) (24,466)
----------- -----------
Cash used for investing activities (3,741) (24,466)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common shares, net - 86,144
Proceeds from borrowings on revolving bank credit
facility 10,000 29,000
Repayments of borrowings on revolving bank credit
facility (9,000) (97,000)
Repayment of debt (471) (192)
Deferred financing fees (8) -
Distributions to shareholders (21,919) (18,121)
----------- -----------
Cash provided by financing activities (21,398) (169)
----------- -----------
Increase in cash and cash equivalents 155 269
Cash and cash equivalents at beginning of
period 3,409 3,530
----------- -----------
Cash and cash equivalents at end of period $ 3,564 $ 3,799
=========== ===========
Supplemental cash flow information:
Interest paid $ 12,629 $ 11,939
12
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
CALCULATION OF EBITDA
- --------------------------------------------------------------------------------
(dollars in thousands)
For the Three Months Ended
-------------------------
3/31/2005 3/31/2004
----------- -----------
Net income $ 13,865 $ 13,269
Plus: interest expense 11,223 10,370
Plus: depreciation expense 10,746 9,585
Plus: deferred percentage rent adjustment (1) 815 840
----------- -----------
EBITDA $ 36,649 $ 34,064
=========== ===========
(1) 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,
our calculation of EBITDA for the first three quarters includes estimated
amounts with respect to those periods. The fourth quarter EBITDA
calculation excludes the amounts recognized during the first three
quarters.
We compute EBITDA as net income plus interest expense, depreciation expense and
deferred percentage rent. We consider EBITDA to be an appropriate measure of
performance for a REIT, along with net income and cash flow from operating,
investing and financing activities. EBITDA does not represent cash generated by
operating activities in accordance with generally accepted accounting
principals, 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.
13
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
CALCULATION OF FUNDS FROM OPERATIONS (FFO)
- --------------------------------------------------------------------------------
(dollars in thousands)
For the Three Months Ended
-------------------------
3/31/2005 3/31/2004
----------- -----------
Net income $ 13,865 $ 13,269
Plus: depreciation expense 10,746 9,585
deferred percentage rent adjustment (1) 815 840
----------- -----------
FFO $ 25,426 $ 23,694
=========== ===========
Weighted average shares outstanding 68,496 62,354
Net income per share 0.20 0.21
FFO per share 0.37 0.38
(1) 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,
our calculation of FFO for the first three quarters includes estimated
amounts with respect to those periods. The fourth quarter FFO calculation
excludes the amounts recognized during the first three quarters.
We compute FFO as shown in the calculation above. 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 1 above. We consider FFO to be an appropriate measure of
performance for a real estate investment trust, or 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 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.
14
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
DEBT SUMMARY
- --------------------------------------------------------------------------------
(dollars in thousands)
Coupon Interest Principal Maturity Due at Years to
Rate Rate Balance Date Maturity Maturity
----------- ----------- ----------- ----------- ----------- -----------
Secured Debt:
Secured Floating Rate Debt:
Mortgage - secured by 1 property (Prime
less 200 bps) 3.250% 3.250% $ 4,170 7/3/05 $ 4,170 0.3
Secured Fixed Rate Debt:
Tax exempt bonds - secured by 1 property 5.875% 5.875% $ 14,700 12/1/27 $ 14,700 22.7
Mortgage - secured by 16 properties (1) 6.970% 6.330% 37,212 6/2/12 30,070 7.2
Mortgage - secured by 4 properties (1) 6.110% 6.420% 12,591 11/30/13 10,218 8.7
Capital leases - 2 properties 7.700% 7.700% 7,018 5/31/16 - 11.2
----------- ----------- ----------- -----------
Total / weighted average secured fixed
rate debt 6.665% $ 71,521 $ 54,988 11.0
=========== =========== =========== ===========
Total / weighted average secured debt 6.477% $ 75,691 $ 65,207 10.4
=========== =========== =========== ===========
Unsecured Debt:
Unsecured Floating Rate Debt:
Revolving credit facility (LIBOR + 145 bps) 4.050% 4.050% $ 38,000 11/30/05 $ 38,000 0.7
Unsecured Fixed Rate Debt:
Senior notes due 2012 8.625% 8.625% $ 245,000 1/15/12 $ 245,000 6.8
Senior notes due 2015 7.875% 7.875% 150,000 4/15/15 150,000 10.0
Junior subordinated debentures (2) 10.125% 10.125% 28,241 6/15/41 28,241 36.2
----------- ----------- ----------- -----------
Total / weighted average unsecured
fixed rate debt 7.784% $ 423,241 $ 423,241 7.5
=========== =========== =========== ===========
Total / weighted average unsecured debt 7.476% $ 461,241 $ 461,241 6.9
=========== =========== =========== ===========
Total / weighted average secured floating rate debt 3.250% $ 4,170 $ 4,170 0.3
Total / weighted average secured debt fixed rate debt 6.665% 71,521 54,988 11.0
Total / weighted average unsecured floating rate debt 4.050% 38,000 38,000 0.7
Total / weighted average unsecured fixed rate debt 7.784% 423,241 423,241 7.5
----------- ----------- ----------- -----------
Total / weighted average debt 7.335% $ 536,932 $ 520,399 7.4
=========== =========== =========== ===========
<FN>
(1) Includes the effect of mark-to-market accounting for certain assumed mortgages.
(2) The junior subordinated debentures become prepayable at par in June 2006.
</FN>
15
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
DEBT MATURITY SCHEDULE
- --------------------------------------------------------------------------------
(dollars in thousands)
Scheduled Principal Payments During Period
-------------------------------------------------------------------
Secured
Fixed Rate Secured Unsecured Unsecured
Debt and Floating Floating Fixed
Year Capital Leases Rate Debt Rate Debt Rate Debt Total
- ------------------------------------------------ ----------- ----------- ----------- ----------- -----------
2005 $ 1,381 $ 4,170 $ 38,000 $ - $ 43,551
2006 1,982 - - - 1,982
2007 2,123 - - - 2,123
2008 2,265 - - - 2,265
2009 2,435 - - - 2,435
2010 2,007 - - - 2,007
2011 1,703 - - - 1,703
2012 31,259 - - 245,000 276,259
2013 10,820 - - - 10,820
2014 and thereafter 15,546 - - 178,241 193,787
----------- ----------- ----------- ----------- -----------
$ 71,521 $ 4,170 $ 38,000 $ 423,241 $ 536,932
=========== =========== =========== =========== ===========
16
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
- --------------------------------------------------------------------------------
As Of And For The Three Months Ended
-------------------------------------------------------------------
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
----------- ----------- ----------- ----------- -----------
Leverage Ratios:
Total debt / total assets 37.3% 37.0% 36.8% 36.8% 37.0%
Total debt / gross book value of real estate
assets (1) 33.4% 33.4% 33.0% 33.3% 33.8%
Total debt / total market capitalization 31.9% 29.2% 29.7% 31.1% 28.3%
Total debt / total book capitalization 37.8% 37.5% 37.5% 37.5% 37.6%
Secured debt / total assets 5.3% 5.3% 2.0% 2.0% 2.4%
Variable rate debt / total debt 7.9% 7.7% 7.1% 7.7% 8.8%
Coverage Ratios:
EBITDA / interest expense 3.3x 3.2x 3.3x 3.3x 3.3x
Public Debt Covenants (2):
Total debt / adjusted total assets - allowable
maximum 60.0% 31.0% 30.9% 30.4% 30.6% 31.0%
Secured debt / adjusted total assets - allowable
maximum 40.0% 4.6% 4.7% 1.8% 1.8% 2.1%
Consolidated income available for debt service /
debt service - required minimum 2.00x 3.67x 3.65x 3.72x 3.45x 3.72x
Total unencumbered assets to unsecured debt -
required minimum 1.50x 3.48x 3.48x 3.37x 3.33x 3.33x
<FN>
(1) Gross book value of real estate assets is real estate properties, at cost,
less impairment write downs, including purchase price allocations relating
to FAS 141.
(2) 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.
</FN>
17
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
ACQUISITIONS INFORMATION
- --------------------------------------------------------------------------------
(dollars in thousands)
Number of Purchase Cap
Tenant Unit Type Properties Units Price (1) Rate (2)
--------------- --------------- --------------- --------------- --------------- ---------------
---------------------------------------------------------------------------------------------------------
Q1 2005 Total / Weighted Average - - $ - -
<FN>
(1) Represents the gross purchase price and excludes closing costs and purchase
price allocations relating to FAS 141.
(2) Represents annual GAAP rent divided by the purchase price.
</FN>
THERE WERE NO ACQUISITIONS DURING THE THREE MONTHS ENDED MARCH 31, 2005.
18
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
FINANCING ACTIVITIES
- --------------------------------------------------------------------------------
(share amounts and dollars in thousands)
For the Three
Months Ended
3/31/2005
-----------
Debt Transactions (1):
New debt raised $ -
New debt assumed as part of acquisitions -
-----------
Total new debt -
Debt retired -
-----------
Net debt $ -
===========
Equity Transactions:
New common shares issued -
New common equity raised, net $ -
(1) Exclude drawings and repayments on our revolving credit facility.
THERE WERE NO NEW FINANCING ACTIVITIES DURING THE THREE MONTHS ENDED
MARCH 31, 2005.
19
PORTFOLIO INFORMATION
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
PORTFOLIO SUMMARY BY FACILITY TYPE AND TENANT
- --------------------------------------------------------------------------------
(dollars in thousands)
Number of Number of Carrying Value Investment Annualized
Properties Units/Beds of Investment (1) Percent per unit Current Rent Percent
-----------------------------------------------------------------------------------------------
Facility Type:
Independent Living (IL) (2) 36 10,412 $ 902,306 56.2% $ 86.7 $ 90,612 57.0%
Assisted Living (AL) 81 5,337 438,082 27.3% 82.1 42,452 26.7%
Nursing Homes 62 6,433 220,752 13.8% 34.3 17,119 10.8%
Hospitals (3) 2 364 43,553 2.7% 119.7 8,700 5.5%
-----------------------------------------------------------------------------------------------
Total 181 22,546 $ 1,604,693 100.0% $ 71.2 $ 158,883 100.0%
===============================================================================================
Tenant:
Five Star / Sunrise (4) 31 7,307 $ 628,892 39.2% $ 86.1 $ 64,206 40.4%
Five Star 98 7,731 408,914 25.4% 52.9 32,005 20.1%
Sunrise / Marriott (5) 14 4,091 325,473 20.3% 79.6 31,197 19.6%
New Seasons / IBC (6) 10 1,019 87,641 5.5% 86.0 9,287 5.9%
HealthSouth (3) 2 364 43,553 2.7% 119.7 8,700 5.5%
Alterra Healthcare Corporation 18 894 61,126 3.8% 68.4 7,136 4.5%
Genesis HealthCare Corporation 1 156 13,007 0.8% 83.4 1,522 1.0%
5 Private Companies (combined) 7 984 36,087 2.3% 36.7 4,830 3.0%
-----------------------------------------------------------------------------------------------
Total 181 22,546 $ 1,604,693 100.0% $ 71.2 $ 158,883 100.0%
===============================================================================================
<FN>
(1) Amounts are before depreciation, but after impairment write downs.
(2) Properties where the majority of units are independent living apartments
are classified as independent living communities.
(3) Effective January 2, 2002, we entered an amended lease with HealthSouth for
two hospitals. In April 2003, we commenced a lawsuit against HealthSouth
seeking, among other matters, to reform the amended lease based upon
HealthSouth's fraud by increasing the rent payable to us from the date of
the amendment forward. This litigation is pending at this time. On October
26, 2004, we terminated the amended lease for default because HealthSouth
failed to deliver to us accurate and timely financial information as
required by the amended lease. On November 2, 2004, HealthSouth brought a
new lawsuit against us seeking to prevent our termination of the amended
lease. On November 9, 2004, after a hearing, the court denied HealthSouth's
request for a preliminary injunction to prevent the lease termination. We
are currently seeking an expedited judicial determination that the lease
termination was valid and we are pursuing damages against HealthSouth in
the lawsuit which we brought in 2003. We have also begun work to identify
and qualify a new tenant operator for the hospitals. Our lease with
HealthSouth requires that, after termination, HealthSouth manage the
hospitals for our account for a management fee during the period of the
transition to a new tenant and remit the net cash flow to us. During the
pendency of these disputes, HealthSouth has continued to pay us at the
disputed rent amount and we have applied the payments received against the
net cash flow due, but we do not know how long HealthSouth may continue to
make payments.
(4) These 31 properties leased to Five Star Quality Care, Inc., or Five Star,
are managed by Sunrise Senior Living, Inc., or Sunrise. Sunrise does not
guaranty Five Star's lease obligations.
(5) Marriott International, Inc., or Marriott, guarantees the lease for the 14
properties leased to Sunrise.
(6) Independence Blue Cross, or IBC, a Pennsylvania health insurer, guarantees
the lease for the 10 properties leased to NewSeasons Assisted Living
Communities, Inc., or NewSeasons.
</FN>
21
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
OCCUPANCY BY FACILITY TYPE AND TENANT
- --------------------------------------------------------------------------------
For the Three Months Ended
-------------------------------------------------------------------
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
----------- ----------- ----------- ----------- -----------
Facility Type:
Independent Living (IL) 91% 92% 88% 89% 89%
Assisted Living (AL) 84% 82% 89% 83% 83%
Nursing Homes 88% 89% 89% 89% 89%
Hospitals (1) NA NA NA NA NA
Tenant:
Five Star / Sunrise 92% 90% 90% 90% 90%
Five Star (2) 87% 88% 89% 87% 89%
Sunrise / Marriott 90% 91% 91% 89% 88%
New Seasons / IBC 79% 79% 80% 78% 79%
HealthSouth (1) NA NA NA NA NA
Alterra Healthcare Corporation 84% 85% 82% 81% 83%
Genesis HealthCare Corporation 96% 96% 97% 97% 96%
5 Private Companies (combined) 87% 88% 85% 86% 87%
<FN>
(1) During 2003, HealthSouth issued a press release stating that its historical
financial information should not be relied upon. Since that time and
through the date of this report, HealthSouth has not filed audited
financial information with the SEC. Because we have reason to doubt
whatever information we have from HealthSouth we do not disclose any
operating data for this tenant.
(2) Includes data for periods prior to our ownership of certain properties
included in this lease.
</FN>
All tenant operating data presented are based upon the operating results
provided by our tenants for the indicated quarterly periods, or 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
March 31, 2005
% PRIVATE PAY BY FACILITY TYPE AND TENANT
- --------------------------------------------------------------------------------
For the Three Months Ended
-------------------------------------------------------------------
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
----------- ----------- ----------- ----------- -----------
Facility Type:
Independent Living (IL) 84% 85% 85% 86% 86%
Assisted Living (AL) 92% 92% 92% 92% 94%
Nursing Homes 18% 22% 20% 20% 20%
Hospitals (1) NA NA NA NA NA
Tenant:
Five Star / Sunrise 85% 85% 85% 85% 85%
Five Star (2) 41% 43% 35% 34% 35%
Sunrise / Marriott 80% 81% 82% 81% 82%
New Seasons / IBC 100% 100% 100% 100% 100%
HealthSouth (1) NA NA NA NA NA
Alterra Healthcare Corporation 98% 98% 98% 98% 98%
Genesis HealthCare Corporation 23% 23% 21% 24% 22%
5 Private Companies (combined) 24% 24% 25% 25% 24%
<FN>
(1) During 2003, HealthSouth issued a press release stating that its historical
financial information should not be relied upon. Since that time and
through the date of this report, HealthSouth has not filed audited
financial information with the SEC. Because we have reason to doubt
whatever information we have from HealthSouth we do not disclose any
operating data for this tenant.
(2) Includes data for periods prior to our ownership of certain properties
included in this lease.
</FN>
All tenant operating data presented are based upon the operating results
provided by our tenants for the indicated quarterly periods, or 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
March 31, 2005
RENT COVERAGE BY TENANT
- --------------------------------------------------------------------------------
For the Three Months Ended
-------------------------------------------------------------------
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
----------- ----------- ----------- ----------- -----------
Five Star / Sunrise (1) 1.14x 1.10x 1.06x 1.12x 1.12x
Five Star (2) 1.63x 1.77x 1.78x 1.65x 1.62x
Sunrise / Marriott 1.25x 1.32x 1.26x 1.35x 1.31x
New Seasons / IBC 1.11x 1.13x 1.19x 1.12x 0.96x
HealthSouth (3) NA NA NA NA NA
Alterra Healthcare Corporation 1.63x 1.63x 1.58x 1.64x 1.63x
Genesis HealthCare Corporation 1.71x 1.85x 1.92x 2.13x 1.56x
5 Private companies (combined) 1.87x 2.11x 1.87x 1.89x 1.95x
<FN>
(1) Rent coverage is after non-subordinated management fees.
(2) Includes data for periods prior to our ownership of certain properties
included in this lease.
(3) During 2003, HealthSouth issued a press release stating that its historical
financial information should not be upon. Since that time and through the
date of this report, HealthSouth has not filed audited financial
information the SEC. Because we have reason to doubt whatever information
we have from HealthSouth we do not disclose operating data for this tenant.
</FN>
All tenant operating data presented are based upon the operating results
provided by our tenants for the indicated periods, or the most recent prior
period for which tenant operating results are available to us from our tenants.
coverage is calculated as operating cash flow from our tenants' facility
operations, before subordinated charges capital expenditure reserves, if any,
divided by rent payable to us. We have not independently verified our tenants'
operating data.
24
Senior Housing Properties Trust
Supplemental Operating and Financial Data
March 31, 2005
PORTFOLIO LEASE EXPIRATION SCHEDULE
- --------------------------------------------------------------------------------
(dollars in thousands)
Annualized % of Annualized
Current Rent Current Rent
----------- -----------
2005 $ - 0.0%
2006 1,522 1.0%
2007 - 0.0%
2008 - 0.0%
2009 - 0.0%
2010 1,244 0.8%
2011 8,700 5.5%
2012 - 0.0%
2013 32,272 20.3%
2014 - 0.0%
2015 1,914 1.2%
2016 - 0.0%
2017 80,629 50.7%
2018 - 0.0%
2019 597 0.4%
2020 and thereafter 32,005 20.1%
----------- -----------
Total $ 158,883 100.0%
=========== ===========
Weighted average remaining lease term (in years) 12.0
25