SENIOR HOUSING PROPERTIES TRUST
Fourth Quarter 2005
Supplemental Operating and Financial Data
Unless otherwise noted, all amounts in this report are unaudited.
TABLE OF CONTENTS
Page
CORPORATE INFORMATION
Company Profile 5
Investor Information 6
Research Coverage 7
FINANCIAL INFORMATION
Key Financial Data 9
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
2005 Investments/Dispositions Information 18
2005 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 IS TO
COOPERATE WITH US IN LICENSING A NEW TENANT AND HEALTHSOUTH IS TO PAY US
THE NET PATIENT REVENUES, LESS A MANAGEMENT FEE AND OPERATION COSTS, SINCE
OCTOBER 26, 2004. HEALTHSOUTH HAS FILED A NOTICE OF APPEAL OF THESE
DECISIONS AND HEALTHSOUTH'S APPEAL MAY BE SUCCESSFUL.
o THE COURT HAS ORDERED 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 IN A SECOND LITIGATION, WE ARE SEEKING TO COLLECT INCREASED RENT FROM
HEALTHSOUTH SINCE JANUARY 2002. THE FACT THAT WE HAVE RECEIVED A FAVORABLE
RULING IN A SEPARATE LITIGATION MAY IMPLY THAT WE WILL ALSO SUCCEED IN THIS
INCREASED RENT LITIGATION. HOWEVER, THE ISSUES IN THESE TWO LITIGATIONS ARE
SOMEWHAT DIFFERENT. ALSO, THESE TWO CASES ARE PENDING IN DIFFERENT COURTS.
WE BELIEVE ALL OF OUR CLAIMS ARE VALID. HOWEVER, NOT ALL OF OUR CLAIMS HAVE
BEEN FINALLY DETERMINED AND THE FACT THAT WE HAVE RECEIVED FAVORABLE
RULINGS IN ONE CASE DOES NOT MEAN WE WILL SUCCEED IN THE OTHER CASE.
o THE IMPLICATION OF THE FORWARD LOOKING STATEMENTS REGARDING OUR LITIGATIONS
WITH HEALTHSOUTH MAY BE THAT WE WILL EVENTUALLY RECEIVE MORE INCOME FROM
OUR OWNERSHIP OF THE TWO HOSPITALS THAN THE $8.7 MILLION PER YEAR PAID BY
HEALTHSOUTH SINCE JANUARY 2002 AND THE $4.6 MILLION WHICH HEALTHSOUTH PAID
TO US IN FEBRUARY 2006. HOWEVER, THIS IMPLICATION MAY NOT BE REALIZED FOR
MANY DIFFERENT REASONS: HEALTHSOUTH MAY BECOME UNABLE TO PAY THE INCREASED
AMOUNTS, IF ANY, DUE TO US. 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
OR OTHER AMOUNTS DUE TO US UNTIL A NEW TENANT IS INSTALLED AT THE
HOSPITALS.
o LITIGATION IS EXPENSIVE. SINCE THE CURRENT LITIGATIONS BETWEEN US AND
HEALTHSOUTH BEGAN IN APRIL 2003, WE HAVE SPENT APPROXIMATELY $2.3 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.
3
CORPORATE INFORMATION
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2005
COMPANY PROFILE
- -------------------------------------------------------------------------------
The Company:
Senior Housing Properties Trust, or SNH, is a real estate investment trust, or
REIT, which owns independent and assisted living properties, continuing care
retirement communities 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
December 31, 2005, RMR managed one of the largest portfolios of publicly owned
real estate in the United States, including approximately 950 properties, with
approximately 86.0 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
December 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 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 12/31/05):
Total properties 188
Total units / beds 23,282
Percent of rent from private pay properties 84.5% (1)
Portfolio Concentration by facility type (as of 12/31/05):
Carrying Value
Number of Number of of Annualized
Properties Units/Beds Investment (2) Percent Current Rent Percent
---------------------------------------------------------------------------------
Independent Living (IL) (3) 36 10,412 $ 907,527 53.8% $ 90,195 54.3%
Assisted Living (AL) 89 6,197 515,165 30.6% 50,261 30.2%
Nursing Homes 61 6,309 219,924 13.0% 17,106 10.3%
Hospitals 2 364 43,553 2.6% 8,700 5.2%
--------------------------------------------------------------------------------
Total 188 23,282 $ 1,686,169 100.0% $ 166,262 100.0%
=================================================================================
Operating Statistics by tenant (Q4 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) 30 7,307 $ 64,026 1.25x 93% 84%
Five Star 106 8,467 39,434 1.78x 91% 45%
Sunrise / Marriott (6) 14 4,091 31,087 1.25x 92% 80%
NewSeasons / IBC (7) 10 1,019 9,287 1.10x 80% 100%
HealthSouth (8) 2 364 8,700 NA NA NA
Alterra Healthcare Corporation 18 894 7,232 1.98x 90% 98%
Genesis HealthCare Corporation 1 156 1,535 2.16x 97% 17%
5 Private Companies (combined) 7 984 4,961 1.92x 88% 24%
--------------------------------------
188 23,282 $ 166,262
======================================
<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, and include purchase price allocations related
to FAS 141.
(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 30 properties are leased to Five Star Quality Care, Inc., or Five Star, and 18 were managed by Sunrise
Senior Living, Inc., or Sunrise, on December 31, 2005. As of December 31, 2005, Five Star operated 12 of these 30
properties and intends to operate one additional property during the first quarter of 2006. Sunrise does not
guaranty Five Star's lease obligations. The rent that Five Star pays to us is subordinate to the management fees
paid by Five Star to Sunrise, but our rent is not subordinate to Five Star's internal management costs. The rent
coverage presented for this lease has been adjusted to exclude management fees paid to Sunrise during the fourth
quarter for the 13 properties that Five Star currently manages, and expects to manage, in the first quarter of
2006.
(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 the period ending December
31, 2003. In December 2005, HealthSouth late filed a Form 10K for the period ending December 31, 2004. The
financial and operating data included in HealthSouth's Form 10-K's 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 1 on page 11 regarding our litigation with HealthSouth.
</FN>
5
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 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
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
December 31, 2005
RESEARCH COVERAGE
- --------------------------------------------------------------------------------
Equity Research Coverage
- --------------------------------------------------------------------------------
Merrill Lynch Stifel, Nicolaus
David Tsoupros Jerry Doctrow
(212) 449-9697 (410) 454-5142
Raymond James UBS
Paul Puryear Christopher Pike
(727) 573-3800 (212) 713-2087
RBC Capital Markets Wachovia Securities
Jay Leupp Stephen Swett
(415) 633-8588 (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
-------------------------------------------------------------------
12/31/2005 9/30/2005 6/30/2005 3/31/2005 12/31/2004
------------ ------------ ------------ ------------ ------------
SHARES OUTSTANDING:
Common shares outstanding (at end of period) 71,812 68,562 68,538 68,496 68,496
Weighted average common shares outstanding - basic and diluted (1) 69,445 68,543 68,537 68,496 64,311
COMMON SHARE DATA:
Price at end of period $ 16.91 $ 19.00 $ 18.91 $ 16.68 $ 18.94
High during period $ 19.35 $ 20.00 $ 19.45 $ 19.10 $ 20.34
Low during period $ 16.84 $ 17.79 $ 16.40 $ 16.20 $ 17.85
Annualized dividends paid per share $ 1.28 $ 1.28 $ 1.28 $ 1.28 $ 1.28
Annualized dividend yield (at end of period) 7.6% 6.7% 6.8% 7.7% 6.8%
MARKET CAPITALIZATION:
Total debt (book value) $ 556,400 $ 551,757 $ 577,175 $ 535,748 $ 535,178
Plus: market value of common shares (at end of period) 1,214,341 1,302,678 1,296,054 1,142,513 1,297,314
------------ ------------ ------------ ------------ ------------
Total market capitalization $ 1,770,741 $ 1,854,435 $ 1,873,229 $ 1,678,261 $ 1,832,492
Total debt / total market capitalization 31.4% 29.8% 30.8% 31.9% 29.2%
BOOK CAPITALIZATION:
Total debt $ 556,400 $ 551,757 $ 577,175 $ 535,748 $ 535,178
Plus: total shareholders' equity 917,977 868,086 875,634 881,692 890,667
------------ ------------ ------------ ------------ ------------
Total book capitalization $ 1,474,377 $ 1,419,843 $ 1,452,809 $ 1,417,440 $ 1,425,845
Total debt / total book capitalization 37.7% 38.9% 39.7% 37.8% 37.5%
SELECTED BALANCE SHEET DATA:
Total assets $ 1,499,648 $ 1,440,403 $ 1,473,413 $ 1,436,848 $ 1,447,730
Total liabilities $ 581,671 $ 572,317 $ 597,779 $ 555,156 $ 557,063
Gross book value of real estate assets (2) $ 1,686,169 $ 1,632,013 $ 1,652,231 $ 1,604,693 $ 1,600,952
Total debt / gross book value of real estate assets (2) 33.0% 33.8% 34.9% 33.4% 33.4%
SELECTED INCOME STATEMENT DATA:
Total revenues $ 44,111 $ 40,244 $ 39,605 $ 39,227 $ 40,730
EBITDA (3) $ 38,353 $ 37,775 $ 37,293 $ 36,649 $ 35,316
Income from continuing operations $ 10,472 $ 14,129 $ 14,316 $ 13,865 $ 16,513
Net income $ 15,686 $ 14,129 $ 15,033 $ 13,865 $ 16,513
Funds from operations (FFO) (4) $ 22,171 $ 25,864 $ 25,850 $ 25,426 $ 24,390
Common distributions paid $ 22,980 $ 21,940 $ 21,932 $ 21,919 $ 21,919
PER SHARE DATA:
Income from continuting operations $ 0.15 $ 0.21 $ 0.21 $ 0.20 $ 0.26
Net income $ 0.23 $ 0.21 $ 0.22 $ 0.20 $ 0.26
FFO (4) $ 0.32 $ 0.38 $ 0.38 $ 0.37 $ 0.38
Common distributions paid $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.32
FFO payout ratio (4) 100.0% 84.2% 84.2% 86.5% 84.2%
COVERAGE RATIOS:
EBITDA (3) / interest expense 3.2x 3.2x 3.3x 3.3x 3.2x
<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) FFO for the quarter ended December 31, 2005, includes a $4.1 million, or $0.06 per share, loss on early extinguishment of debt
related to our redemption of $52.5 million of our 7 7/8% senior notes. See page 14 for calculation of FFO. See also Note 1 and
Note 3 on page 11 regarding our HealthSouth litigation.
</FN>
9
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2005
CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------------------------------------
(in thousands, except share data)
As of As of
December 31, December 31,
2005 2004
----------- -----------
(audited)
ASSETS
Real estate properties, at cost:
Land $185,819 $178,353
Buildings and improvements 1,500,350 1,422,599
----------- -----------
1,686,169 1,600,952
Less accumulated depreciation 239,031 199,232
----------- -----------
1,447,138 1,401,720
Cash and cash equivalents 14,642 3,409
Restricted cash 2,529 6,176
Deferred financing fees, net 9,968 9,367
Due from affiliates 8,845 --
Other assets 16,526 27,058
----------- -----------
Total assets $1,499,648 $1,447,730
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured revolving bank credit facility $64,000 $37,000
Senior unsecured notes due 2012 and 2015, net of discount 394,018 393,775
Junior subordinated debentures due 2041 28,241 28,241
Secured debt and capital leases 70,141 76,162
Accrued interest 13,089 12,519
Due to affiliates 786 1,516
Other liabilities 11,396 7,850
----------- -----------
Total liabilities 581,671 557,063
----------- -----------
Commitments and contingencies
Shareholders' equity:
Common shares of beneficial interest, $0.01 par value:
80,000,000 shares authorized; 71,812,227 and 68,495,908 shares issued
and outstanding, respectively 718 685
Additional paid-in capital 1,093,480 1,034,686
Cumulative net income 267,196 208,491
Cumulative distributions (447,289) (359,567)
Unrealized gain on investments 3,872 6,372
----------- -----------
Total shareholders' equity 917,977 890,667
----------- -----------
Total liabilities and shareholders' equity $1,499,648 $1,447,730
=========== ===========
10
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2005
CONSOLIDATED STATEMENT OF INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share data)
For the For the
Three Months Ended Twelve Months Ended
----------------------- ----------------------
12/31/2005 12/31/2004 12/31/2005 12/31/2004
---------- ---------- ---------- ----------
Revenues: (audited)
Rental income (1) $43,776 $40,286 $161,265 $145,731
Interest and other income (2) 335 444 1,922 2,792
-------- -------- -------- --------
Total revenues 44,111 40,730 163,187 148,523
-------- -------- -------- --------
Expenses:
Interest 12,048 10,926 46,633 41,836
Depreciation 11,266 10,286 43,694 39,301
General and administrative (3) 3,356 3,005 13,117 11,863
Impairment of assets 1,762 -- 1,762 --
Loss on early extinguishment of debt (4) 5,207 -- 5,207 --
-------- -------- -------- --------
Total expenses 33,639 24,217 110,413 93,000
-------- -------- -------- --------
Income from continuing operations 10,472 16,513 52,774 55,523
Gain on sale of property 5,214 -- 5,931 1,219
-------- -------- -------- --------
Net income $15,686 $16,513 $58,705 $56,742
======== ======== ======== ========
Weighted average common shares outstanding 69,445 64,311 68,757 63,406
======== ======== ======== ========
Basic and diluted earnings per share:
Income from continuing operations $0.15 $0.26 $0.77 $0.88
======== ======== ======== ========
Net income $0.23 $0.26 $0.85 $0.89
======== ======== ======== ========
Additional Data:
Corporate general and administrative expense $3,356 $3,005 $13,117 $11,863
Less: litigation / due diligence costs included in G&A (5) $600 $200 $1,850 $1,200
-------- -------- -------- --------
Adjusted general and administrative expenses $2,756 $2,805 $11,267 $10,663
Adjusted general and administrative expenses/ total revenues (6) 6.6% 7.3% 6.9% 7.2%
Adjusted general and administrative expenses/ total assets (at end of period) 0.18% 0.19% 0.75% 0.74%
Straight-line rent included in rental income (7) $107 $115 $429 $409
<FN>
(1) Rental income for the quarter and year ended December 31, 2005, includes $2.2 million and $8.7 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 second lawsuit against us seeking to prevent our termination of the amended lease. On
September 25, 2005, the court ruled that our termination was proper. On January 18, 2006, the court ordered HealthSouth to
cooperate with us in licensing a new tenant and pay us the net patient revenues, after a 5% management fee and payment of costs
and expenses of operation since October 26, 2004. We have begun working to identify and qualify a new tenant operator for the
hospitals. HealthSouth has filed a notice of appeal of the court's decisions; but HealthSouth's motions for a stay of the
court's decisions during the appeal have been denied by both the trial court and the appeals court. During the pendency of
these disputes, HealthSouth continued to pay us at the disputed rent amount of $725,000/month, and, on February 3, 2006,
HealthSouth paid us an additional $4.6 million which HealthSouth represented to be an amount due from November 1, 2004 to
December 31, 2005. We are currently in the process of reviewing HealthSouth's calculations of amounts due to us and we may
claim additional amounts. In June 2005, HealthSouth filed a restated Annual Report on Form 10-K for the period ending December
31, 2003. In December 2005, HealthSouth filed late an Annual Report on Form 10-K for the period ending December 31, 2004. The
financial and operating data included in HealthSouth's Form 10-Ks show 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 additional amounts which the
courts may determine to be owed to us by HealthSouth.
(2) Included in interest and other income for the year ended December 31, 2004 is $1.25 million received in a settlement of
litigation with Marriott.
(3) Legal expenses incurred related to our HealthSouth litigation were approximately $600,000 and $1,850,000, respectively, for the
quarter and year ended December 31, 2005 and $200,000 and $285,000, respectively, for the quarter and year ended December 31,
2004, and are included in general and administrative expenses.
(4) In December 2005, we called for redemption $52.5 million of our 7 7/8% senior unsecured notes. The loss on early extinguishment
of debt includes a $4.1 million redemption premium and a $1.1 million write off of deferred finance fees and unamortized
discount related to these $52.5 million of senior notes. The redemption occurred on January 9, 2006.
(5) 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.
(6) 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 this calculation, total revenues for the first
three quarters included estimated amounts with respect to those periods. The fourth quarter calculation excludes the amounts
recognized during the first three quarters.
(7) 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
December 31, 2005
CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
For the Twelve Months Ended
------------------------------------------
12/31/2005 12/31/2004
------------------- ---------------
(audited)
Cash flows from operating activities:
Net income $58,705 $56,742
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation 43,694 39,301
Impairment of assets 1,762 --
Write off of deferred finance fees 1,073 --
Gain on sale of property (5,931) (1,219)
Amortization of deferred finance fees and debt discounts 2,212 2,107
Change in assets and liabilities:
Restricted cash (523) (998)
Due from affiliates (884) (1,899)
Other assets 71 377
Accrued interest 570 51
Due to affiliates (729) 885
Other liabilities 4,202 (159)
--------------- ---------------
Cash provided by operating activities 104,222 95,188
--------------- ---------------
Cash flows from investing activities:
Acquisitions (97,480) (137,748)
Mortgage financing provided (24,000) 133,849
Mortgage financing repaid 24,000 (133,849)
Proceeds from sale of real estate 12,537 5,900
--------------- ---------------
Cash used for investing activities (84,943) (131,848)
--------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of common shares, net 58,170 180,194
Proceeds from borrowings on revolving bank credit facility 143,000 184,000
Repayments of borrowings on revolving bank credit facility (116,000) (249,000)
Repayment of debt (1,851) (864)
Deferred financing fees (3,643) --
Distributions to shareholders (87,722) (77,791)
--------------- ---------------
Cash (used for) provided by financing activities (8,046) 36,539
--------------- ---------------
Decrease in cash and cash equivalents 11,233 (121)
Cash and cash equivalents at beginning of period 3,409 3,530
--------------- ---------------
Cash and cash equivalents at end of period $14,642 $3,409
=============== ===============
Supplemental cash flow information:
Interest paid $43,851 $39,678
Non cash investing and financing activities:
Issuance of common shares $657 $733
Release of restricted cash to us 4,170 4,930
Repayment of debt with cash previously restricted (4,170) (4,930)
12
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2005
CALCULATION OF EBITDA
- ---------------------------------------------------------------------------------------------------------------
(dollars in thousands)
For the Three Months Ended For the Twelve Months Ended
--------------------------- ---------------------------
12/31/2005 12/31/2004 12/31/2005 12/31/2004
---------- ---------- ---------- ----------
Income from continuing operations (1) $10,472 $16,513 $52,774 $55,523
Plus: interest expense 12,048 10,926 46,633 41,836
Plus: depreciation expense 11,266 10,286 43,694 39,301
Plus: impairment of assets 1,762 -- 1,762 --
Plus: loss on early extinguishment of debt 5,207 -- 5,207 --
Less: deferred percentage rent adjustment (2) (2,402) (2,409) -- --
-------- -------- -------- --------
EBITDA $38,353 $35,316 $150,070 $136,660
======== ======== ======== ========
<FN>
(1) Income from continuing operations includes legal expenses incurred related to our HealthSouth litigation
of approximately $600,000 and $1,850,000, respectively, for the quarter and year ended December 31, 2005
and $200,000 and $285,000, respectively, for the quarter and year ended December 31, 2004. See also Note 1
on page 11 regarding our HealthSouth litigation.
(2) We recognize percentage rental income received during the first, second and third quarters in the fourth
quarter. Although recognition of revenue is deferred until the fourth quarter, for purposes of calculating
this calculation, total revenues for the first three quarters included estimated amounts with respect to
those periods. The fourth quarter calculation excludes the amounts recognized during the first three
quarters.
</FN>
We compute EBITDA as income from continuing operations plus interest expense,
depreciation expense, deferred percentage rent and non-recurring charges. 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
December 31, 2005
CALCULATION OF FUNDS FROM OPERATIONS (FFO)
- ------------------------------------------------------------------------------------------------------------------------------------
(amounts in thousands, except per share data)
For the Three Months Ended For the Twelve Months Ended
----------------------------- ----------------------------
12/31/2005 12/31/2004 12/31/2005 12/31/2004
----------- ------------ ---------- -----------
Income from continuing operations (1) $10,472 $16,513 $52,774 $55,523
Plus: depreciation expense 11,266 10,286 43,694 39,301
Plus: impairment of assets 1,762 -- 1,762 --
Plus: loss on early extinguishment of debt 5,207 -- 5,207 --
Less: deferred percentage rent adjustment (2) (2,402) (2,409) -- --
Less: loss on early extinguishment of debt settled in cash (3) (4,134) -- (4,134) --
-------- -------- -------- --------
FFO $22,171 $24,390 $99,303 $94,824
======== ======== ======== ========
Weighted average shares outstanding 69,445 64,311 68,757 63,406
Income from continuing operations per share $0.15 $0.26 $0.77 $0.88
FFO per share $0.32 $0.38 $1.44 $1.50
Supplemental data:
Straight-line rent included in rental income (4) $107 $115 $429 $409
Amortization of deferred financing fees and debt discounts $483 $526 $2,212 $2,107
<FN>
(1) Income from continuing operations includes legal expenses incurred related to our HealthSouth litigation of approximately
$600,000 and $1,850,000, respectively, for the quarter and year ended December 31, 2005 and $200,000 and $285,000,
respectively, for the quarter and year ended December 31, 2004. See also Note 1 on page 11 regarding our HealthSouth
litigation.
(2) We recognize percentage rental income received during the first, second and third quarters in the fourth quarter. Although
recognition of revenue is deferred until the fourth quarter for purposes of calculating 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.
(3) FFO for the quarter and year ended December 31, 2005, include a $4.1 million, or $0.06 per share, loss for the cash premium
paid for our redemption of $52.5 million of our 7 7/8% senior notes.
(4) We report rental income on a straight line basis over the terms of the respective leases. Rental income includes non-cash
straight line rent adjustments.
</FN>
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 2 above and we exclude loss on early extinguishment of debt
not settled in cash. We consider FFO to be an appropriate measure of performance
for a REIT along with net income and cash flow from operating, investing and
financing activities. We believe that FFO provides useful information to
investors because by excluding the effects of certain historical costs, such as
depreciation expense and gain or 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 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
December 31, 2005
DEBT SUMMARY
- ------------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
Coupon Interest Principal Maturity Due at Years to
Rate Rate Balance Date Maturity Maturity
-------------------------------------------------------------------
Secured Fixed Rate Debt:
Tax exempt bonds - secured by 1 property 5.875% 5.875% $14,700 12/1/27 $14,700 21.9
Mortgage - secured by 16 properties (1) 6.970% 6.330% 36,630 6/2/12 30,069 6.4
Mortgage - secured by 4 properties (1) 6.110% 6.420% 12,437 11/30/13 10,218 7.9
Capital leases - 2 properties 7.700% 7.700% 6,374 5/31/16 -- 10.4
------ ------ -------- -------- -----
Total / weighted average secured fixed rate debt 6.654% 6.375% $70,141 $54,987 10.3
====== ====== ======== ======== =====
Unsecured Debt:
Unsecured Floating Rate Debt:
Revolving credit facility (LIBOR + 100 b.p.) 5.310% 5.310% $64,000 11/30/09 $64,000 3.9
Unsecured Fixed Rate Debt:
Senior notes due 2012 8.625% 8.625% $245,000 1/15/12 $245,000 6.0
Senior notes due 2015 (2) 7.875% 7.875% 150,000 4/15/15 150,000 9.3
Junior subordinated debentures (3) 10.125% 10.125% 28,241 6/15/41 28,241 35.5
------ ------ -------- -------- -----
Total / weighted average unsecured fixed rate debt 7.784% 7.784% $423,241 $423,241 6.8
====== ====== ======== ======== =====
Total / weighted average unsecured debt 7.459% 7.459% $487,241 $487,241 6.4
====== ====== ======== ======== =====
Total / weighted average secured debt fixed rate debt 6.654% 6.375% $70,141 $54,987 10.3
Total / weighted average unsecured floating rate debt 5.310% 5.310% 64,000 64,000 3.9
Total / weighted average unsecured fixed rate debt 7.784% 7.784% 423,241 423,241 6.8
------ ------ -------- -------- -----
Total / weighted average debt 7.358% 7.322% $557,382 $542,228 6.9
====== ====== ======== ======== =====
<FN>
(1) Includes the effect of mark to market accounting for certain assumed mortgages.
(2) On January 9, 2006, we redeemed $52.5 million of these notes. In connection with the redemption, we paid a premium of $4.1
million and wrote off $1.1 million of deferred finance fees and unamortized discount. The remaining $97.5 million can be repaid
at par, plus a premium, beginning in April 2008.
(3) Our junior subordinated debentures will become prepayable, at par, in June 2006.
</FN>
15
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 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
- -------------------- ---------------- ----------- ----------- ----------
2006 $ 1,982 $ - $ - $ 1,982
2007 2,123 - - 2,123
2008 2,265 - - 2,265
2009 2,435 64,000 - 66,435
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 338 - 150,000(1) 150,338
2016 and thereafter 14,899 - 28,241 43,140
--------------- ----------- ---------- ----------
$ 70,141 $ 64,000 $ 423,241 $ 557,382
=============== =========== ========== ==========
<FN>
(1) $52.5 million of this was repaid in January 2006. See Note 2 on page 15.
</FN>
16
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2005
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
- ------------------------------------------------------------------------------------------------------------------------------------
As Of And For The Three Months Ended
----------------------------------------------------------
12/31/2005 9/30/2005 6/30/2005 3/31/2005 12/31/2004
----------- ---------- ---------- ---------- ----------
Leverage Ratios:
Total debt / total assets 37.1% 38.3% 39.2% 37.3% 37.0%
Total debt / gross book value of real estate assets (1) 33.0% 33.8% 34.9% 33.4% 33.4%
Total debt / total market capitalization 31.4% 29.8% 30.8% 31.9% 29.2%
Total debt / total book capitalization 37.7% 38.9% 39.7% 37.8% 37.5%
Secured debt / total assets 4.7% 4.9% 4.8% 5.3% 5.3%
Variable rate debt / total debt 11.5% 10.7% 14.6% 7.9% 7.7%
Coverage Ratios:
EBITDA (2) / interest expense 3.2x 3.2x 3.3x 3.3x 3.2x
Public Debt Covenants (3):
Total debt / adjusted total assets - allowable maximum 60.0% 30.5% 34.5% 32.6% 31.0% 30.9%
Secured debt / adjusted total assets - allowable maximum 40.0% 4.1% 4.3% 4.2% 4.6% 4.7%
Consolidated income available for debt service /
debt service - required minimum 2.00x 3.53x 3.59x 3.66x 3.67x 3.65x
Total unencumbered assets to unsecured debt - required minimum 1.50x 3.49x 3.38x 3.25x 3.48x 3.48x
<FN>
(1) Gross book value of real estate assets is real estate properties, at cost, less impairment write downs and including purchase
price allocations relating to FAS 141.
(2) See page 13 for the calculation of EBITDA.
(3) Adjusted total assets and unencumbered assets include original cost of real estate assets less impairment write downs and
exclude depreciation and amortization, accounts receivable and intangible assets. Consolidated income available for debt
service is earnings from operations excluding interest expense, depreciation and amortization, taxes, gains and losses on sales
of property and amortization of deferred charges.
</FN>
17
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2005
2005 INVESTMENTS/DISPOSITIONS 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)
- ------------ ---------- ------------------ ---------- ---------- ----------- ---------- ----------
6/3/05 Five Star Assisted Living 4 299 $ 24,000 $ 80 9.0%
10/31/05 Five Star Assisted Living 6 654 $ 58,000 $ 89 9.0%
--------------------------------------------------------------------------------------------
2005 total / weighted average 10 953 $ 82,000 $ 86 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
- ------------ ---------- ----------- ----------------- ----------- ------ ---------- ------------
6/3/05 Five Star $ 24,000(1) Assisted Living 6 654 $ 37 9.0%
-----------------------------------------------------------------------------------------------
2005 total $ 24,000 6 654 $ 37 9.0%
===============================================================================================
<FN>
(1) This mortgage investment was 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 purchased
the six properties that secured this line of credit on October 31, 2005 (See Acquisitions above) and,
simultaneously, terminated the line of credit.
</FN>
DISPOSITIONS: Original Sale Price
Allocated Multiple of
Date Number of Purchase Original Book Gain
Sold Location Type of Property Properties Sale Price Price Purchase Price on Sale
- --------- --------------------- ------------------ ------------ ------------ ---------- ---------------- -----------
5/18/05 Farmington, MI Nursing Home 1 4,600 4,156 1.1x 717
12/29/05 Ft. Lauderdale, FL Assisted Living 1 5,700 150 38.0x 5,001
12/30/05 Arleta, CA Assisted Living 1 2,750 2,300 1.2x 213
----------------------------------------------------------------------------------------------------------------------
2005 total 3 $ 13,050 $ 6,606 2.0x $ 5,931
=================================================================================================================---==
18
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2005
2005 FINANCING ACTIVITIES
- ------------------------------------------------------------------------------------------------------------------------------------
(share amounts and dollars in thousands)
For the Three Months Ended
-------------------------------------------------------------------------
12/31/2005 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 3,250 - - -
New common equity raised, net $ 58,170 $ - $ - $ -
<FN>
(1) Exclude drawings and repayments on our revolving credit facility.
</FN>
19
PORTFOLIO INFORMATION
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 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 $907,527 53.8% $87.2 $90,195 54.3%
Assisted Living (AL) 89 6,197 515,165 30.6% 83.1 50,261 30.2%
Nursing Homes 61 6,309 219,924 13.0% 34.9 17,106 10.3%
Hospitals (3) 2 364 43,553 2.6% 119.7 8,700 5.2%
---------------------------------------------------------------------------------------------
Total 188 23,282 $1,686,169 100.0% $72.4 $166,262 100.0%
=============================================================================================
TENANT:
Five Star / Sunrise (4) 30 7,307 $632,465 37.5% $86.6 $64,026 38.5%
Five Star 106 8,467 486,817 28.9% 57.5 39,434 23.7%
Sunrise / Marriott (5) 14 4,091 325,473 19.3% 79.6 31,087 18.7%
NewSeasons / IBC (6) 10 1,019 87,641 5.2% 86.0 9,287 5.6%
HealthSouth (3) 2 364 43,553 2.6% 119.7 8,700 5.2%
Alterra Healthcare Corporation 18 894 61,126 3.6% 68.4 7,232 4.3%
Genesis HealthCare Corporation 1 156 13,007 0.8% 83.4 1,535 1.0%
5 Private Companies (combined) 7 984 36,087 2.1% 36.7 4,961 3.0%
---------------------------------------------------------------------------------------------
Total 188 23,282 $1,686,169 100.0% $72.4 $166,262 100.0%
=============================================================================================
<FN>
(1) Amounts are before depreciation, but after impairment write downs, and include purchase price allocations related to FAS 141.
(2) Properties where the majority of units are independent living apartments are classified as independent living communities.
(3) Rental income for the quarter and year ended December 31, 2005, includes $2.2 million and $8.7 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 second lawsuit against us seeking to prevent our termination of the amended lease. On
September 25, 2005, the court ruled that our termination was proper. On January 18, 2006, the court ordered HealthSouth to
cooperate with us in licensing a new tenant and pay us the net patient revenues, after a 5% management fee and payment of costs
and expenses of operation since October 26, 2004. We have begun working to identify and qualify a new tenant operator for the
hospitals. HealthSouth has filed a notice of appeal of the court's decisions; but HealthSouth's motions for a stay of the
court's decisions during the appeal have been denied by both the trial court and the appeals court. During the pendency of
these disputes, HealthSouth continued to pay us at the disputed rent amount of $725,000/month, and, on February 3, 2006,
HealthSouth paid us an additional $4.6 million which HealthSouth represented to be an amount due from November 1, 2004 to
December 31, 2005. We are currently in the process of reviewing HealthSouth's calculations of amounts due to us and we may
claim additional amounts. In June 2005, HealthSouth filed a restated Annual Report on Form 10-K for the period ending December
31, 2003. In December 2005, HealthSouth filed late an Annual Report on Form 10-K for the period ending December 31, 2004. The
financial and operating data included in HealthSouth's Form 10-Ks show 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 additional amounts which the
courts may determine to be owed to us by HealthSouth.
(4) These 30 properties are leased to Five Star and 18 are were managed by Sunrise on December 31, 2005. As of December 31, 2005,
Five Star operated 12 of these 30 properties and intends to operate one additional property during the first quarter of 2006.
Sunrise does not guaranty Five Star's lease obligations.
(5) Marriott guarantees the lease for the 14 properties leased to Sunrise.
(6) IBC guarantees the lease for the 10 properties leased to NewSeasons.
</FN>
21
Senior Housing Properties Trust
Supplemental Operating and Financial Data
December 31, 2005
OCCUPANCY BY FACILITY TYPE AND TENANT
- ---------------------------------------------------------------------------------------------------------------------
For the Three Months Ended
------------------------------------------------------------------------
12/31/2005 9/30/2005 6/30/2005 3/31/2005 12/31/2004
------------ ----------- ----------- ------------ ------------
FACILITY TYPE:
Independent Living (IL) 92% 91% 91% 91% 92%
Assisted Living (AL) 91% 90% 84% 84% 82%
Nursing Homes 90% 90% 91% 88% 89%
Hospitals (1) NA NA NA NA NA
TENANT:
Five Star / Sunrise 93% 92% 92% 92% 90%
Five Star (2) 91% 90% 87% 87% 88%
Sunrise / Marriott 92% 90% 89% 90% 91%
NewSeasons / IBC 80% 80% 81% 79% 79%
HealthSouth (1) NA NA NA NA NA
Alterra Healthcare Corporation 90% 88% 84% 84% 85%
Genesis HealthCare Corporation 97% 94% 96% 96% 96%
5 Private Companies (combined) 88% 84% 84% 87% 88%
<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 Annual Report on Form 10-K for the period ending December 31,
2003. In December 2005, HealthSouth filed a Form 10-K for the period ending December 31, 2004. The financial and
operating data included in HealthSouth's Form 10-K's 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.
</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
December 31, 2005
% PRIVATE PAY BY FACILITY TYPE AND TENANT
- ------------------------------------------------------------------------------------------------------------
For the Three Months Ended
----------------------------------------------------------------------
12/31/2005 9/30/2005 6/30/2005 3/31/2005 12/31/2004
-------------- ------------ ----------- ----------- ------------
FACILITY TYPE:
Independent Living (IL) 87% 84% 84% 84% 85%
Assisted Living (AL) 92% 94% 93% 92% 92%
Nursing Homes 27% 29% 26% 18% 22%
Hospitals (1) NA NA NA NA NA
TENANT:
Five Star / Sunrise 84% 84% 84% 85% 85%
Five Star (2) 45% 44% 42% 41% 43%
Sunrise / Marriott 80% 79% 81% 80% 81%
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 17% 20% 23% 23% 23%
5 Private Companies (combined) 24% 24% 27% 24% 24%
<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 Annual Report on Form 10-K for the
period ending December 31, 2003. In December 2005, HealthSouth filed a Form 10-K for the period ending
December 31, 2004. The financial and operating data included in HealthSouth's Form 10-K's 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.
</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
December 31, 2005
RENT COVERAGE BY TENANT
- ----------------------------------------------------------------------------------------------------
For the Three Months Ended
----------------------------------------------------------------
Tenant 12/31/2005 9/30/2005 6/30/2005 3/31/2005 12/31/2004
- -------------------------------- ---------- ----------- ----------- ----------- -----------
Five Star / Sunrise (1) 1.25x 1.24x 1.31x 1.27x 1.23x
Five Star (2) 1.78x 1.77x 1.68x 1.63x 1.77x
Sunrise / Marriott 1.25x 1.27x 1.25x 1.25x 1.32x
NewSeasons / IBC 1.10x 1.17x 1.10x 1.11x 1.13x
HealthSouth (3) NA NA NA NA NA
Alterra Healthcare Corporation 1.98x 1.87x 1.80x 1.63x 1.63x
Genesis HealthCare Corporation 2.16x 1.82x 2.03x 1.71x 1.85x
5 Private companies (combined) 1.92x 1.86x 1.65x 1.87x 2.11x
<FN>
(1) This lease includes 30 properties leased to Five Star. Eighteen of these properties were managed by
Sunrise on December 31, 2005. Beginning in November 2005, Five Star operated 12 of these 30 properties
and intends to begin to operate one additional property during the first quarter of 2006. The rent that
Five Star pays to us is subordinate to the management fees paid by Five Star to Sunrise, but our rent is
not subordinate to Five Star's internal management costs. The rent coverages presented for this lease
have been adjusted to exclude management fees paid to Sunrise during the respective period for the 13
properties that Five Star currently manages and expects to manage in the first quarter of 2006.
(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 Annual Report on Form 10-K for the
period ending December 31, 2003. In December 2005, HealthSouth filed a Form 10-K for the period ending
December 31, 2004. The financial and operating data included in HealthSouth's Form 10-K's 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
Supplemental Operating and Financial Data
December 31, 2005
PORTFOLIO LEASE EXPIRATION SCHEDULE (1)
- --------------------------------------------------------------------------------
(dollars in thousands)
Cumulative % of
Annualized % of Annualized Annualized
Current Rent Current Rent Current Rent
----------------------------------------------------------
2006 $ -- $ -- 0.0%
2007 -- -- 0.0%
2008 -- -- 0.0%
2009 -- -- 0.0%
2010 1,269 0.8% 0.8%
2011 -- -- 0.8%
2012 -- -- 0.8%
2013 32,162 20.4% 21.2%
2014 -- -- 21.2%
2015 2,006 1.3% 22.5%
2016 and thereafter 122,125 77.5% 100.0%
-----------------------------------
Total $157,562 100.0%
===================================
Weighted average remaining
lease term (in years) 11.7
(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 second lawsuit against us seeking to prevent
our termination of the amended lease. On September 25, 2005, the court
ruled that our termination was proper. On January 18, 2006, the court
ordered HealthSouth to cooperate with us in licensing a new tenant and pay
us the net patient revenues, after a 5% management fee and payment of costs
and expenses of operation, since October 26, 2004. We have begun working to
identify and qualify a new tenant operator for the hospitals. HealthSouth
has filed a notice of appeal of the court's decisions; but HealthSouth's
motions for a stay of the court's decisions during the appeal have been
denied by both the trial court and the appeals court. During the pendency
of these disputes, HealthSouth has continued to pay us at the disputed rent
amount of $725,000/month, and, on February 3, 2006, HealthSouth paid us an
additional $4.6 million which HealthSouth represented to be an amount due
from November 1, 2004 to December 31, 2005. We are currently in the process
of reviewing HealthSouth's calculations of amounts due to us and we may
claim additional amounts. In June 2005, HealthSouth filed a restated Annual
Report on Form 10-K for period ending December 31, 2003. In December 2005,
HealthSouth filed late an Annual Report on Form 10-K for the period ending
December 31, 2004. The financial and operating data included in
HealthSouth's Form 10-K's show 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 additional amounts which the courts may determine to be
owed to us by HealthSouth.
25