Exhibit 99.2
SENIOR HOUSING PROPERTIES TRUST
Third 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
Investments 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 CONCERNING 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 STATEMENTS REPRESENT
OUR PRESENT BELIEFS AND EXPECTATIONS, BUT THEY MAY NOT OCCUR FOR VARIOUS
REASONS. FOR EXAMPLE:
O A MASSACHUSETTS TRIAL COURT HAS DECIDED THAT OUR TERMINATION OF
HEALTHSOUTH'S LEASE OF TWO HOSPITALS WAS PROPER. HEALTHSOUTH MAY APPEAL
THIS DECISION AND HEALTHSOUTH'S APPEAL MAY BE SUCCESSFUL.
O THE LEASE REQUIRES HEALTHSOUTH TO CONTINUE OPERATIONS OF THE HOSPITALS
DURING THE PERIOD OF TRANSITION TO A NEW TENANT. HEALTHSOUTH MAY BE
UNWILLING OR UNABLE TO CONTINUE ITS OPERATIONS. IN SUCH CIRCUMSTANCES, WE
MAY SEEK DAMAGES FROM HEALTHSOUTH AND TO CONTINUE THE HOSPITALS' OPERATIONS
WITH APPROPRIATE REGULATORY APPROVALS, BUT WE MAY BE UNABLE TO COLLECT SUCH
DAMAGES FROM HEALTHSOUTH OR TO CONTINUE THE HOSPITALS' OPERATIONS.
O THE COURT GRANTED OUR REQUEST TO HAVE THE CASH FLOW FROM THE HOSPITALS
SEQUESTERED AND APPOINTED A RECEIVER TO CALCULATE AND HOLD THESE AMOUNTS.
ONE IMPLICATION OF THIS STATEMENT IS THAT SOME OF THIS CASH FLOW MAY BE
PAID TO US. HOWEVER, HEALTHSOUTH'S HISTORICAL STATEMENTS ABOUT ITS CASH
FLOW HAVE BEEN INACCURATE AND THE EXISTENCE AND AMOUNT OF CASH FLOW FROM
THE HOSPITALS WHICH WE OWN AND WHICH HEALTHSOUTH OPERATES MAY NOT BE
ACCURATELY STATED. HEALTHSOUTH DISPUTES THAT THE COURT ORDER REQUIRES THE
SEQUESTRATION OF CASH FLOW FROM THE DATE OF THE LEASE TERMINATION TO THE
PRESENT; AND WE INTEND TO SEEK CLARIFICATION FROM THE COURT ON THIS ISSUE.
O IN A SECOND LITIGATION, WE ARE SEEKING TO COLLECT INCREASED RENT FROM
HEALTHSOUTH BETWEEN JANUARY 2002 AND THE TERMINATION OF OUR LEASE WITH
HEALTHSOUTH. THE FACT THAT WE HAVE RECEIVED A FAVORABLE RULING IN A
SEPARATE LITIGATION ABOUT THE LEASE TERMINATION MAY IMPLY THAT WE WILL ALSO
SUCCEED IN THIS INCREASED RENT LITIGATION. HOWEVER, THE LEASE DEFAULTS IN
THE LEASE TERMINATION LITIGATION ARE SOMEWHAT DIFFERENT FROM THE FRAUDULENT
INDUCEMENT CLAIMS PENDING IN THE RENT INCREASE LITIGATION. ALSO, THESE
CASES ARE PENDING IN DIFFERENT COURTS. WE BELIEVE OUR RENT INCREASE CLAIMS
ARE VALID. HOWEVER, THOSE CLAIMS HAVE NOT BEEN DETERMINED AND THE FACT THAT
WE HAVE RECEIVED A FAVORABLE RULING REGARDING THE LEASE TERMINATION MAY NOT
MEAN WE WILL SUCCEED IN THIS SECOND CASE.
O THE IMPLICATION OF THESE FORWARD LOOKING STATEMENTS MAY BE THAT WE WILL
EVENTUALLY RECEIVE MORE INCOME FROM OUR OWNERSHIP OF THE TWO HOSPITALS THAN
THE $8.7 MILLION PER YEAR BEING PAID BY HEALTHSOUTH SINCE JANUARY 2002.
HOWEVER, THIS IMPLICATION MAY NOT BE REALIZED FOR MANY DIFFERENT REASONS:
THE COURTS MAY NEVER ORDER HEALTHSOUTH TO PAY ANY INCREASED AMOUNTS. EVEN
IF THE COURTS ORDER HEALTHSOUTH TO PAY AN INCREASED AMOUNT, HEALTHSOUTH MAY
BE UNABLE TO DO SO. WE MAY BE UNABLE TO IDENTIFY A NEW TENANT FOR THESE
HOSPITALS WHO OBTAINS APPROPRIATE LICENSES AND WHO IS WILLING OR ABLE TO
PAY INCREASED RENTS. THE FINANCIAL RESULTS OF THE HOSPITALS' OPERATIONS MAY
DECLINE AND THIS DECLINE MAY BE MATERIAL. IN FACT, HEALTHSOUTH MAY CEASE
PAYING THE $8.7 MILLION PER YEAR WHICH IT HAS HISTORICALLY PAID TO US UNTIL
A NEW OPERATOR ASSUMES THE OPERATIONS.
O LITIGATION IS EXPENSIVE. SINCE THE CURRENT LITIGATIONS BETWEEN US AND
HEALTHSOUTH BEGAN IN APRIL 2003, WE HAVE SPENT APPROXIMATELY $1.5 MILLION
IN LITIGATION COSTS. THE EXPENSE OF THESE LITIGATIONS HAS BEEN SOMEWHAT
CONCENTRATED DURING THE PAST 12 MONTHS. WE EXPECT THAT THESE EXPENSES WILL
CONTINUE AND MAY INCREASE SO LONG AS THE LITIGATIONS CONTINUE. MOREOVER, WE
ARE UNABLE TO PROVIDE ANY PROJECTIONS AS TO WHEN THESE LITIGATIONS MAY END
OR THE AMOUNTS OF FUTURE LITIGATION COSTS.
FOR ALL OF THE FOREGOING REASONS YOU ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON 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 CONTAINED IN THIS REPORT TO REFLECT
THE FUTURE OCCURRENCE OF PRESENTLY UNANTICIPATED EVENTS.
3
CORPORATE INFORMATION
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 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.
We are included in a number of stock indices, including the Russell 2000(R), the
MSCI US REIT Index, NAREIT Real Time Index and the S&P REIT Composite Index.
Management:
- -----------
Senior Housing Properties Trust is managed by Reit Management & Research LLC, or
RMR. RMR was founded in 1986 to manage public investments in real estate. As of
September 30, 2005, RMR managed one of the largest portfolios of publicly owned
real estate in the United States, including approximately 900 properties, with
approximately 85.0 million square feet, located in 42 states, Washington, DC,
Puerto Rico and Ontario, Canada. RMR has approximately 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, a
publicly traded REIT that owns hotels, HRPT Properties Trust, a publicly traded
REIT that primarily owns office buildings and four mutual funds which invest in
unaffiliated real estate companies. The public companies managed by RMR had
combined total market capitalization of approximately $12.0 billion as of
September 30, 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 primarily 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 9/30/05):
- -------------------------------
Total properties 184
Total units / beds 22,721
Percent of rent from private pay properties 84.0% (1)
Portfolio Concentration by facility type (as of 9/30/05):
- ---------------------------------------------------------
Number of Number of Carrying Value of Annualized
Properties Units/Beds Investment (2) Percent Current Rent Percent
---------------------------------------------------------------------------------
Independent Living (IL) (3) 36 10,412 $ 905,693 55.5% $ 90,824 56.3%
Assisted Living (AL) 85 5,636 463,717 28.4% 44,718 27.7%
Nursing Homes 61 6,309 219,050 13.4% 17,128 10.6%
Hospitals 2 364 43,553 2.7% 8,700 5.4%
---------------------------------------------------------------------------------
Total 184 22,721 $ 1,632,013 100.0% $ 161,370 100.0%
=================================================================================
Operating Statistics by tenant (Q3 2005):
- ---------------------------------------------
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 $ 64,478 1.11x 92% 84%
Five Star 101 7,906 34,207 1.77x 90% 44%
Sunrise / Marriott (6) 14 4,091 31,197 1.27x 90% 79%
NewSeasons / IBC (7) 10 1,019 9,287 1.17x 80% 100%
HealthSouth (8) 2 364 8,700 NA NA NA
Alterra Healthcare Corporation 18 894 7,136 1.87x 88% 98%
Genesis HealthCare Corporation 1 156 1,535 1.82x 94% 24%
5 Private Companies (combined) 7 984 4,830 1.86x 84% 24%
--------------------------------------
184 22,721 $ 161,370
======================================
<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 are leased to Five Star Quality Care, Inc., or Five Star, and 30 are currently managed by Sunrise
Senior Living, Inc., or Sunrise. Five Star intends to begin to directly operate 12 of these 31 properties during the
fourth quarter of 2005. 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. From that time until June 2005, HealthSouth had not filed audited financial information with the SEC. In June 2005,
HealthSouth filed a restated Annual Report on Form 10-K, or Form 10K, for periods ending December 31, 2003. The financial
and operating data included in HealthSouth's restated Form 10-K show a substantial negative net worth and a history of
substantial operating losses. Because we do not have reliable current information about the operations or financial
performance of HealthSouth or our hospitals, we do not show operating data for this operator. See also Note 3 on page 21
regarding our litigation with HealthSouth.
</FN>
5
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 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
400 Centre Street to John R. Hoadley, Treasurer and Chief
Newton, MA 02458 Financial Officer, at (617) 796-8350
(t) (617) 796-8350 or 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
September 30, 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) 454-3985
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
Lori Halpern George Skoufis
(212) 553-1098 (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
-----------------------------------------------------------------
9/30/2005 6/30/2005 3/31/2005 12/31/2004 9/30/2004
------------ ------------ ------------- ------------ ------------
SHARES OUTSTANDING:
Common shares outstanding (at end of period) 68,562 68,538 68,496 68,496 63,496
Weighted average common shares outstanding - basic and
diluted (1) 68,543 68,537 68,496 64,311 63,477
COMMON SHARE DATA:
Price at end of period $ 19.00 $ 18.91 $ 16.68 $ 18.94 $ 17.82
High during period $ 20.00 $ 19.45 $ 19.10 $ 20.34 $ 18.24
Low during period $ 17.79 $ 16.40 $ 16.20 $ 17.85 $ 16.10
Annualized dividends paid per share $ 1.28 $ 1.28 $ 1.28 $ 1.28 $ 1.28
Annualized dividend yield (at end of period) 6.7% 6.8% 7.7% 6.8% 7.2%
MARKET CAPITALIZATION:
Total debt (book value) $ 551,757 $ 577,175 $ 535,748 $ 535,178 $ 478,274
Plus: market value of common shares (at end of period) 1,302,678 1,296,054 1,142,513 1,297,314 1,131,499
------------ ------------ ------------- ------------ ------------
Total market capitalization $ 1,854,435 $ 1,873,229 $ 1,678,261 $ 1,832,492 $ 1,609,773
Total debt / total market capitalization 29.8% 30.8% 31.9% 29.2% 29.7%
BOOK CAPITALIZATION:
Total debt $ 551,757 $ 577,175 $ 535,748 $ 535,178 $ 478,274
Plus: total shareholders' equity 868,086 875,634 881,692 890,667 798,536
------------ ------------ ------------- ------------ ------------
Total book capitalization $ 1,419,843 $ 1,452,809 $ 1,417,440 $ 1,425,845 $ 1,276,810
Total debt / total book capitalization 38.9% 39.7% 37.8% 37.5% 37.5%
SELECTED BALANCE SHEET DATA:
Total assets $ 1,440,403 $ 1,473,413 $ 1,436,848 $ 1,447,730 $ 1,300,173
Total liabilities $ 572,317 $ 597,779 $ 555,156 $ 557,063 $ 501,637
Gross book value of real estate assets (2) $ 1,632,013 $ 1,652,231 $ 1,604,693 $ 1,600,952 $ 1,447,874
Total debt / gross book value of real estate assets (2) 33.8% 34.9% 33.4% 33.4% 33.0%
SELECTED INCOME STATEMENT DATA:
Total revenues $ 40,244 $ 39,605 $ 39,227 $ 40,730 $ 35,744
EBITDA (3) $ 37,775 $ 37,293 $ 36,649 $ 35,316 $ 33,722
Net income $ 14,129 $ 15,033 $ 13,865 $ 16,513 $ 12,919
Funds from operations (FFO) (4) $ 25,864 $ 25,850 $ 25,426 $ 24,390 $ 23,437
Common distributions paid $ 21,940 $ 21,932 $ 21,919 $ 21,919 $ 20,319
PER SHARE DATA:
Net income $ 0.21 $ 0.22 $ 0.20 $ 0.26 $ 0.20
FFO $ 0.38 $ 0.38 $ 0.37 $ 0.38 $ 0.37
Common distributions paid $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.32
FFO payout ratio 84.2% 84.2% 86.2% 89.9% 86.7%
COVERAGE RATIOS:
EBITDA (3) / interest expense 3.2x 3.3x 3.3x 3.2x 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
September 30, 2005
CONSOLIDATED BALANCE SHEET
- ----------------------------------------------------------------------------------------------------------------------------------
(in thousands, except share data)
As of As of
September 30, December 31,
2005 2005
----------------- -----------------
(audited)
ASSETS
Real estate properties, at cost:
Land $ 180,285 $ 178,353
Buildings and improvements 1,451,728 1,422,599
----------------- -----------------
1,632,013 1,600,952
Less accumulated depreciation 231,118 199,232
----------------- -----------------
1,400,895 1,401,720
Cash and cash equivalents 1,856 3,409
Restricted cash 2,501 6,176
Deferred financing fees, net 11,312 9,367
Other assets 23,839 27,058
----------------- -----------------
Total assets $ 1,440,403 $ 1,447,730
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured revolving bank credit facility $ 59,000 $ 37,000
Senior unsecured notes due 2012 and 2015, net of discount 393,898 393,775
Junior subordinated debentures due 2041 28,241 28,241
Secured debt and capital leases 70,618 76,162
Accrued interest 10,361 12,519
Other liabilities 10,199 9,366
----------------- -----------------
Total liabilities 572,317 557,063
----------------- -----------------
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $0.01 par value:
80,000,000 shares authorized; 68,562,227 and 68,495,908 shares issued
and outstanding, respectively 685 685
Additional paid-in capital 1,035,343 1,034,686
Cumulative net income 251,510 208,491
Cumulative distributions (425,349) (359,567)
Unrealized gain on investments 5,897 6,372
----------------- -----------------
Total shareholders' equity 868,086 890,667
----------------- -----------------
Total liabilities and shareholders' equity $ 1,440,403 $ 1,447,730
================= =================
10
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
CONSOLIDATED STATEMENT OF INCOME
- -----------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
For the Three Months Ended For the Nine Months Ended
--------------------------- ----------------------------
9/30/2005 9/30/2004 9/30/2005 9/30/2004
------------- ------------- -------------- -------------
Revenues:
Rental income (1) $ 39,506 $ 35,426 $ 117,489 $ 105,444
Interest and other income (2) 738 318 1,588 2,349
------------- ------------- -------------- -------------
Total revenues 40,244 35,744 119,077 107,793
------------- ------------- -------------- -------------
Expenses:
Interest 11,911 10,285 34,585 30,910
Depreciation 10,923 9,743 32,428 29,015
General and administrative (1) 3,281 2,797 9,762 8,858
------------- ------------- -------------- -------------
Total expenses 26,115 22,825 76,775 68,783
------------- ------------- -------------- -------------
Income from continuing operations 14,129 12,919 42,302 39,010
Gain on sale of property - - 717 1,219
------------- ------------- -------------- -------------
Net income $ 14,129 $ 12,919 $ 43,019 $ 40,229
============= ============= ============== =============
Weighted average common shares outstanding 68,543 63,477 68,525 63,102
============= ============= ============== =============
Basic and diluted earnings per share:
Income from continuing operations $ 0.21 $ 0.20 $ 0.62 $ 0.62
============= ============= ============== =============
Net income $ 0.21 $ 0.20 $ 0.63 $ 0.64
============= ============= ============== =============
Additional Data:
Corporate general and administrative expense $ 3,281 $ 2,797 $ 9,762 $ 8,858
Less: litigation / due diligence costs included in G&A (3) $ 350 $ 75 $ 1,250 $ 950
------------- ------------- -------------- -------------
Adjusted general and administrative expenses $ 2,931 $ 2,722 $ 8,512 $ 7,908
Adjusted general and administrative expenses / total
revenues (4) 7.1% 7.5% 7.0% 7.2%
Adjusted general and administrative expenses / total
assets (at end of period) 0.20% 0.21% 0.59% 0.60%
Straight-line rent included in rental income (5) $ 107 $ 115 $ 322 $ 294
<FN>
(1) Rental income for the quarter and nine months ended September 30, 2005, includes $2.2 million and $6.6 million, respectively,
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 January
2, 2002 until the termination or expiration of the amended lease. 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 September 25, 2005, the court ruled that our termination was proper and we
have begun work to identify and qualify a new tenant operator for the hospitals. HealthSouth will likely appeal the court's
decision that our lease termination was proper. We believe 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. According to affidavits submitted during this litigation by HealthSouth, the leased hospitals
produced cash flow in prior periods of approximately $14 million per year in excess of amounts paid by HealthSouth to us. We do
not know the cash flow currently being produced by these hospitals. The court has also granted our request to sequester the net
cash proceeds of the hospitals and appointed a receiver to calculate and hold these amounts until the litigation is concluded.
HealthSouth disputes that the court order requires the sequestration of cash flow from the date of the lease termination to the
present. On June 27, 2005, HealthSouth filed with the SEC a restated Annual Report on Form 10-K for periods ending December 31,
2003. HealthSouth's restated Form 10-K includes financial data which shows HealthSouth to have a substantial negative net worth
and a history of substantial operating losses. To date we have been unable to obtain reliable current financial information
about the operations of HealthSouth or our hospitals. Accordingly, we do not know if we will be able to collect any amounts
which the courts may determine to be owed to us by HealthSouth. Legal expenses incurred related to this matter were
approximately $350,000 and $1,240,000, respectively, for the quarter and nine months ended September 30, 2005 and $75,000 and
$125,000, respectively, for the quarter and nine months ended September 30, 2004, and are included in general and
administrative expenses.
(2) Included in interest and other Income for the nine months ended September 30, 2004 is $1.25 million received in a
settlement of litigation with Marriott International, Inc.
(3) Includes 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.
(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.
</FN>
11
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
CONSOLIDATED STATEMENT OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------
(in thousands)
For the Nine Months Ended
------------------------------
9/30/2005 9/30/2004
-------------- --------------
Cash flows from operating activities:
Net income $ 43,019 $ 40,229
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation 32,428 29,015
Gain on sale of property (717) (1,219)
Amortization of deferred finance fees and debt discounts 1,728 1,579
Change in assets and liabilities:
Restricted cash 3,675 (5)
Other assets 2,975 335
Accrued interest (2,158) (1,886)
Other liabilities 1,259 4,141
-------------- --------------
Cash provided by operating activities 82,209 72,189
-------------- --------------
Cash flows from investing activities:
Acquisitions (35,486) (34,809)
Mortgage financing provided (24,000) -
Mortgage financing repaid 24,000 -
Proceeds from sale of real estate 4,600 5,900
-------------- --------------
Cash used for investing activities (30,886) (28,909)
-------------- --------------
Cash flows from financing activities:
Proceeds from issuance of common shares, net - 86,144
Proceeds from borrowings on revolving bank credit facility 79,000 53,000
Repayments of borrowings on revolving bank credit facility (57,000) (125,000)
Repayment of debt (5,544) (588)
Deferred financing fees (3,550) -
Distributions to shareholders (65,782) (57,472)
-------------- --------------
Cash used for financing activities (52,876) (43,916)
-------------- --------------
Decrease in cash and cash equivalents (1,553) (636)
Cash and cash equivalents at beginning of period 3,409 3,530
-------------- --------------
Cash and cash equivalents at end of period $ 1,856 $ 2,894
============== ==============
Supplemental cash flow information:
Interest paid $ 35,015 $ 31,217
Non cash investing and financing activities:
Issuance of common shares $ 657 $ 733
12
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
CALCULATION OF EBITDA
- ----------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
For the Three Months Ended For the Nine Months Ended
--------------------------------- ---------------------------------
9/30/2005 9/30/2004 9/30/2005 9/30/2004
---------------- ---------------- ---------------- ----------------
Income from continuing operations $ 14,129 $ 12,919 $ 42,302 $ 39,010
Plus: interest expense 11,911 10,285 34,585 30,910
Plus: depreciation expense 10,923 9,743 32,428 29,015
Plus: deferred percentage rent adjustment (1) 812 775 2,402 2,409
---------------- ---------------- ---------------- ----------------
EBITDA $ 37,775 $ 33,722 $ 111,717 $ 101,344
================ ================ ================ ================
<FN>
(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 income from
continuing operations, 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 income from continuing operations 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.
</FN>
13
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
CALCULATION OF FUNDS FROM OPERATIONS (FFO)
- --------------------------------------------------------------------------------------------------------------------------------
(amounts in thousands, except per share data)
For the Three Months Ended For the Nine Months Ended
-------------------------------- ---------------------------------
9/30/2005 9/30/2004 9/30/2005 9/30/2004
--------------- --------------- --------------- ----------------
Income from continuing operations $ 14,129 $ 12,919 $ 42,302 $ 39,010
Plus: depreciation expense 10,923 9,743 32,428 29,015
Plus: deferred percentage rent adjustment (1) 812 775 2,402 2,409
--------------- --------------- --------------- ----------------
FFO $ 25,864 $ 23,437 $ 77,132 $ 70,434
=============== =============== =============== ================
Weighted average shares outstanding 68,543 63,477 68,525 63,102
Income from continuing operations per share $ 0.21 $ 0.20 $ 0.62 $ 0.62
FFO per share $ 0.38 $ 0.37 $ 1.13 $ 1.12
Supplemental data:
Straight-line rent included in rental income (2) $ 107 $ 115 $ 322 $ 294
Amortization of deferred financing fees and debt discounts $ 665 $ 526 $ 1,726 $ 1,579
<FN>
(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 income from continuing operations,
the 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.
(2) 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.
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 a comparison of our current operating performance with our past operating performance
and of 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.
</FN>
14
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
DEBT SUMMARY
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
Coupon Interest Principal Maturity Due at Years to
Rate Rate Balance Date Maturity Maturity
------------- -------------- ------------ ---------- ---------- ----------
Secured Debt:
Secured Fixed Rate Debt:
Tax exempt bonds - secured by 1 property 5.875% 5.875% $ 14,700 12/1/27 $ 14,700 22.2
Mortgage - secured by 16 properties (1) 6.970% 6.330% 36,835 6/2/12 30,069 6.7
Mortgage - secured by 4 properties (1) 6.110% 6.420% 12,490 11/30/13 10,218 8.2
Capital leases - 2 properties 7.700% 7.700% 6,593 5/31/16 - 10.7
------------- -------------- ------------ ---------- ----------
Total / weighted average secured fixed rate debt 6.658% 6.379% $ 70,618 $ 54,987 10.5
============= ============== ============ ========== ==========
Total / weighted average secured debt 6.658% 6.379% $ 70,618 $ 54,987 10.5
============= ============== ============ ========== ==========
Unsecured Debt:
Unsecured Floating Rate Debt:
Revolving credit facility (LIBOR + 100 b.p.) 4.840% 4.840% $ 59,000 11/30/09 $ 59,000 4.2
Unsecured Fixed Rate Debt:
Senior notes due 2012 8.625% 8.625% $ 245,000 1/15/12 $245,000 6.3
Senior notes due 2015 7.875% 7.875% 150,000 4/15/15 150,000 9.5
Junior subordinated debentures (2) 10.125% 10.125% 28,241 6/15/41 28,241 35.7
------------- -------------- ------------ ---------- ----------
Total / weighted average unsecured fixed rate debt 7.784% 7.784% $ 423,241 $423,241 7.0
============= ============== ============ ========== ==========
Total / weighted average unsecured debt 7.424% 7.424% $ 482,241 $482,241 6.7
============= ============== ============ ========== ==========
Total / weighted average secured debt fixed rate debt 6.658% 6.379% $ 70,618 $ 54,987 10.5
Total / weighted average unsecured floating rate debt 4.840% 4.840% 59,000 59,000 4.2
Total / weighted average unsecured fixed rate debt 7.784% 7.784% 423,241 423,241 7.0
------------- -------------- ------------ ---------- ----------
Total / weighted average debt 7.326% 7.290% $ 552,859 $537,228 7.2
============= ============== ============ ========== ==========
<FN>
(1) Includes the effect of mark to market accounting for certain assumed mortgages.
(2) Our junior subordinated debentures will become prepayable at par in June 2006.
</FN>
15
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
DEBT MATURITY SCHEDULE
- ------------------------------------------------------------------------------------------------------------------
(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
- -------------------------- ------------------ ------------------- ------------------ ------------------
2005 $ 477 $ - $ - $ 477
2006 1,982 - - 1,982
2007 2,123 - - 2,123
2008 2,265 - - 2,265
2009 2,435 59,000 - 61,435
2010 2,007 - - 2,007
2011 1,703 - - 1,703
2012 31,259 - 245,000 276,259
2013 10,820 - - 10,820
2014 310 310
2015 and thereafter 15,237 - 178,241 193,478
------------------ ------------------- ------------------ ------------------
$ 70,618 $ 59,000 $ 423,241 $ 552,859
================== =================== ================== ==================
16
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
- ------------------------------------------------------------------------------------------------------------------------------------
As Of And For The Three Months Ended
------------------------------------------------------------
9/30/2005 6/30/2005 3/31/2005 12/31/2004 9/30/2004
---------- ---------- ----------- ---------- ----------
Leverage Ratios:
Total debt / total assets 38.3% 39.2% 37.3% 37.0% 36.8%
Total debt / gross book value of real estate assets (1) 33.8% 34.9% 33.4% 33.4% 33.0%
Total debt / total market capitalization 29.8% 30.8% 31.9% 29.2% 29.7%
Total debt / total book capitalization 38.9% 39.7% 37.8% 37.5% 37.5%
Secured debt / total assets 4.9% 4.8% 5.3% 5.3% 2.0%
Variable rate debt / total debt 10.7% 14.6% 7.9% 7.7% 7.1%
Coverage Ratios:
EBITDA / interest expense 3.2x 3.3x 3.3x 3.2x 3.3x
Public Debt Covenants (2):
Total debt / adjusted total assets - allowable maximum 60.0% 34.5% 32.6% 31.0% 30.9% 30.4%
Secured debt / adjusted total assets - allowable maximum 40.0% 4.3% 4.2% 4.6% 4.7% 1.8%
Consolidated income available for debt service / debt service
- required minimum 2.00x 3.59x 3.66x 3.67x 3.65x 3.72x
Total unencumbered assets to unsecured debt - required
minimum 1.50x 3.38x 3.25x 3.48x 3.48x 3.37x
<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
September 30, 2005
INVESTMENTS INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
ACQUISITIONS:
Purchase
Date Number of Purchase Price Cap
Acquired Tenant Type of Property Properties Units Price (1) Per Unit Rate (2)
- ----------------- ---------------------- ---------------- ----------------- -------------- --------------- ------------ ------------
There were no acquisitions during the three months ended March 31, 2005.
------------------------------------------------------------------------------------------------------------------
Q1 2005 Totals - - $ - $ - -
6/3/05 Five Star Assisted Living 4 299 $ 24,000 $ 80 9.0%
------------------------------------------------------------------------------------------------------------------
Q2 2005 Totals 4 299 $ 24,000 $ 80 9.0%
There were no acquisitions during the three months ended September 30, 2005.
------------------------------------------------------------------------------------------------------------------
Q3 2005 Totals - - $ - $ - -
------------------------------------------------------------------------------------------------------------------
Total 4 299 $ 24,000 $ 80 9.0%
==================================================================================================================
<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>
MORTGAGES:
Transaction Number of Investment Interest
Date Borrower Amount Type of Property Properties Units Per Unit Rate
- ----------------- ---------------------- ---------------- ----------------- -------------- --------------- ------------ ------------
There were no mortgage investments during the three months ended March 31, 2005.
------------------------------------------------------------------------------------------------------------------
Q1 2005 Totals $ - - - - $ - -
6/3/05 Five Star $ 24,000 (1) Assisted Living 6 654 $ 37 9.0%
------------------------------------------------------------------------------------------------------------------
Q2 2005 Totals $ 24,000 6 654 $ 37 9.0%
There were no mortgage investments during the three months ended September 30, 2005.
------------------------------------------------------------------------------------------------------------------
Total $ 24,000 6 654 $ 37 9.0%
==================================================================================================================
<FN>
(1) This mortgage investment is a line of credit. The initial availability under this line of credit was for up to $43.5 million.
At closing, $24.0 million was drawn and availability under the line of credit was reduced to $19.5 million. In August 2005, the
$24.0 million was repaid by the borrower. We expect to purchase the six properties that secure this line of credit on October
31, 2005 and, simultaneously, terminate the line of credit.
</FN>
18
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
FINANCING ACTIVITIES
- --------------------------------------------------------------------------------------------------
(share amounts and dollars in thousands)
For the Three Months Ended
--------------------------------------------------
9/30/2005 6/30/2005 3/31/2005
--------------------------------------------------
DEBT TRANSACTIONS (1):
New debt raised $-- $ -- $--
New debt assumed as part of acquisitions -- -- --
--------------------------------------------------
Total new debt -- -- --
Debt retired -- (4,170) --
--------------------------------------------------
Net debt $-- $(4,170) $--
==================================================
EQUITY TRANSACTIONS:
New common shares issued -- -- --
New common equity raised, net $-- $ -- $--
<FN>
(1) Exclude drawings and repayments on our revolving credit facility.
</FN>
19
PORTFOLIO INFORMATION
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
PORTFOLIO SUMMARY BY FACILITY 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
---------------------------------------------------------------------------------------------
Facility Type:
Independent Living (IL) (2) 36 10,412 $905,693 55.5% $87.0 $90,824 56.3%
Assisted Living (AL) 85 5,636 463,717 28.4% 82.3 44,718 27.7%
Nursing Homes 61 6,309 219,050 13.4% 34.7 17,128 10.6%
Hospitals (3) 2 364 43,553 2.7% 119.7 8,700 5.4%
---------------------------------------------------------------------------------------------
Total 184 22,721 $1,632,013 100.0% $71.8 $161,370 100.0%
=============================================================================================
Tenant:
Five Star / Sunrise (4) 31 7,307 $631,605 38.7% $86.4 $64,478 40.0%
Five Star 101 7,906 433,521 26.6% 54.8 34,207 21.2%
Sunrise / Marriott (5) 14 4,091 325,473 19.9% 79.6 31,197 19.3%
NewSeasons / IBC (6) 10 1,019 87,641 5.4% 86.0 9,287 5.7%
HealthSouth (3) 2 364 43,553 2.7% 119.7 8,700 5.4%
Alterra Healthcare Corporation 18 894 61,126 3.7% 68.4 7,136 4.4%
Genesis HealthCare Corporation 1 156 13,007 0.8% 83.4 1,535 1.0%
5 Private Companies (combined) 7 984 36,087 2.2% 36.7 4,830 3.0%
---------------------------------------------------------------------------------------------
Total 184 22,721 1,632,013 100.0% $71.8 $161,370 100.0%
=============================================================================================
<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) Rental income for the quarter and nine months ended September 30, 2005, includes $2.2 million and $6.6 million, respectively,
of income from two hospitals operated by 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 January 2, 2002 until the termination
or expiration of the amended lease. 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 September 25, 2005, the court ruled that our termination was proper and we have begun work to identify and
qualify a new tenant operator for the hospitals. HealthSouth will likely appeal the court's decision that our lease termination
was proper. We believe 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. According to
affidavits submitted during this litigation by HealthSouth, the leased hospitals produced cash flow in prior periods of
approximately $14 million per year in excess of amounts paid by HealthSouth to us. The court has also granted our request to
sequester the net cash proceeds of the hospitals and appointed a receiver to calculate and hold these amounts until the
litigation is concluded. HealthSouth disputes that the court order requires the sequestration of cash flow from the date of the
lease termination to the present. On June 27, 2005, HealthSouth filed with the SEC a restated Annual Report on Form 10-K for
periods ending December 31, 2003. HealthSouth's restated Form 10-K includes financial data which shows HealthSouth to have a
substantial negative net worth and a history of substantial operating losses. To date we have been unable to obtain reliable
current financial information about the operations of HealthSouth or our hospitals. Accordingly, we do not know if we will be
able to collect any amounts which the courts may determine to be owed to us by HealthSouth.
(4) These 31 properties are leased to Five Star Quality Care, Inc., or Five Star, and 30 are currently managed by Sunrise Senior
Living, Inc., or Sunrise. Five Star intends to begin to directly operate 12 of these 31 properties during the fourth quarter of
2005. 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
September 30, 2005
OCCUPANCY BY FACILITY TYPE AND TENANT
- -----------------------------------------------------------------------------------------------------------
For the Three Months Ended
-----------------------------------------------------------------------------
9/30/2005 6/30/2005 3/31/2005 12/31/2004 9/30/2004
-----------------------------------------------------------------------------
FACILITY TYPE:
Independent Living (IL) 91% 91% 91% 92% 88%
Assisted Living (AL) 90% 84% 84% 82% 89%
Nursing Homes 90% 91% 88% 89% 89%
Hospitals (1) NA NA NA NA NA
TENANT:
Five Star / Sunrise 92% 92% 92% 90% 90%
Five Star (2) 90% 87% 87% 88% 89%
Sunrise / Marriott 90% 89% 90% 91% 91%
NewSeasons / IBC 80% 81% 79% 79% 80%
HealthSouth (1) NA NA NA NA NA
Alterra Healthcare Corporation 88% 84% 84% 85% 82%
Genesis HealthCare Corporation 94% 96% 96% 96% 97%
5 Private Companies (combined) 84% 84% 87% 88% 85%
<FN>
(1) During 2003, HealthSouth issued a press release stating that its historical financial information should not be relied upon.
From that time until June 2005, HealthSouth had not filed audited financial information with the SEC. In June 2005, HealthSouth
filed a restated Form 10-K for periods ending December 31, 2003. The financial and operating data included in HealthSouth's
restated Form 10-K show a substantial negative net worth and a history of substantial operating losses. Because we do not have
reliable current information about the operations or financial performance of HealthSouth or our hospitals, we do not show
operating data for this operator. See also Note 3 on page 21 regarding our litigation with HealthSouth.
(2) Includes data for periods prior to our ownership of certain properties included in this lease.
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.
</FN>
22
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
% PRIVATE PAY BY FACILITY TYPE AND TENANT
- -------------------------------------------------------------------------------------------------------------
For the Three Months Ended
-------------------------------------------------------------------------
9/30/2005 6/30/2005 3/31/2005 12/31/2004 9/30/2004
-------------------------------------------------------------------------
Facility Type:
Independent Living (IL) 84% 84% 84% 85% 85%
Assisted Living (AL) 94% 93% 92% 92% 92%
Nursing Homes 29% 26% 18% 22% 20%
Hospitals (1) NA NA NA NA NA
Tenant:
Five Star / Sunrise 84% 84% 85% 85% 85%
Five Star (2) 44% 42% 41% 43% 35%
Sunrise / Marriott 79% 81% 80% 81% 82%
NewSeasons / IBC 100% 100% 100% 100% 100%
HealthSouth (1) NA NA NA NA NA
Alterra Healthcare Corporation 98% 98% 98% 98% 98%
Genesis HealthCare Corporation 24% 23% 23% 23% 22%
5 Private Companies (combined) 24% 27% 24% 24% 25%
<FN>
(1) During 2003, HealthSouth issued a press release stating that its historical financial information should not be relied upon.
From that time until June 2005, HealthSouth had not filed audited financial information with the SEC. In June 2005, HealthSouth
filed a restated Form 10-K for periods ending December 31, 2003. The financial and operating data included in HealthSouth's
restated Form 10-K show a substantial negative net worth and a history of substantial operating losses. Because we do not have
reliable current information about the operations or financial performance of HealthSouth or our hospitals, we do not show
operating data for this operator. See also Note 3 on page 21 regarding our litigation with HealthSouth.
(2) Includes data for periods prior to our ownership of certain properties included in this lease.
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.
</FN>
23
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
RENT COVERAGE BY TENANT
- ---------------------------------------------------------------------------------------------------------------------
For the Three Months Ended
-------------------------------------------------------------------------------
Tenant 9/30/2005 6/30/2005 3/31/2005 12/31/2004 9/30/2004
- ---------------------------------------------------------------------------------------------------------------------
Five Star / Sunrise (1) 1.11x 1.17x 1.14x 1.10x 1.06x
Five Star (2) 1.77x 1.68x 1.63x 1.77x 1.78x
Sunrise / Marriott 1.27x 1.25x 1.25x 1.32x 1.26x
NewSeasons / IBC 1.17x 1.10x 1.11x 1.13x 1.19x
HealthSouth (3) NA NA NA NA NA
Alterra Healthcare Corporation 1.87x 1.80x 1.63x 1.63x 1.58x
Genesis HealthCare Corporation 1.82x 2.03x 1.71x 1.85x 1.92x
5 Private companies (combined) 1.86x 1.65x 1.87x 2.11x 1.87x
<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 relied upon.
From that time until June 2005, HealthSouth had not filed audited financial information with the SEC. In June 2005, HealthSouth
filed a restated Form 10-K for periods ending December 31, 2003. The financial and operating data included in HealthSouth's
restated Form 10-K show a substantial negative net worth and a history of substantial operating losses. Because we do not have
reliable current information about the operations or financial performance of HealthSouth or our hospitals, we do not show
operating data for this operator. See also Note 3 on page 21 regarding our litigation with HealthSouth.
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, if any,
divided by rent payable to us. We have not independently verified our tenants' operating data.
</FN>
24
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2005
PORTFOLIO LEASE EXPIRATION SCHEDULE (1)
- --------------------------------------------------------------------------------
(dollars in thousands)
Cumulative %
Annualized % of Annualized of Annuliazed
Current Rent Current Rent Current Rent
---------------- --------------- ----------------
2005 $ - - -
2006 1,535 1.0% 1.0%
2007 - - 1.0%
2008 - - 1.0%
2009 - - 1.0%
2010 1,244 0.8% 1.8%
2011 - - 1.8%
2012 - - 1.8%
2013 32,272 20.0% 21.8%
2014 - - 21.8%
2015 and thereafter 117,619 78.2% 100.0%
--------------- -----------
Total $ 152,670 100.0%
=============== ===========
Weighted average remaining
lease term (in years) 11.9
(1) Excludes the two hospitals operated by 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 January 2, 2002 until the
termination or expiration of the amended lease. 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 September 25, 2005, the court ruled
that our termination was proper and we have begun work to identify and
qualify a new tenant operator for the hospitals. HealthSouth will likely
appeal the court's decision that our lease termination was proper. We
believe 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. According to affidavits
submitted during this litigation by HealthSouth, the leased hospitals
produced cash flow in prior periods of approximately $14 million per year
in excess of amounts paid by HealthSouth to us. We do not know the cash
flow currently being produced by these hospitals. The court has also
granted our request to sequester the net cash proceeds of the hospitals and
appointed a receiver to calculate and hold these amounts until the
litigation is concluded. HealthSouth disputes that the court order requires
the sequestration of cash flow from the date of the lease termination to
the present. On June 27, 2005, HealthSouth filed with the SEC a restated
Annual Report on Form 10-K for periods ending December 31, 2003.
HealthSouth's restated Form 10-K includes financial data which shows
HealthSouth to have a substantial negative net worth and a history of
substantial operating losses. To date we have been unable to obtain
reliable current financial information about the operations of HealthSouth
or our hospitals. Accordingly, we do not know if we will be able to collect
any amounts which the courts may determine to be owed to us by HealthSouth.
25