SNR - Earnings call transcript Q3 2017 | New Senior Investment Group Inc

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Heidi. And I will be a conference operator today. At this time, I would like to welcome everyone to the New Senior Investment Group third quarter earnings call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator you. Instructions] Thank conference. may you Hernandez, begin Ivy your

Ivy Hernandez

Good and morning welcome.

Director. today CEO; CFO; Managing Bhairav us Patel; Joining are our and Susan David Givens, our Smith,

Susan, Before I that I statements may today forward-looking made call turn over certain would to remind the like you statements. be to

regarding expectations. current the with that differ may SEC. actual to describe statements I you events. review future forward-looking current to encourage statements statements risk quarterly Forward-looking in expectations, Please the the cautionary results annual materially company's our the regard reports factors bear mind and from in with filed contained and

addition, In call and over filed like with our will for non-GAAP the Please information. measures, that, to the which turn SEC. quarterly review reports With included non-GAAP I annual the the are would to statements our reconciliations speakers cautionary and also Susan. present in

Susan Givens

Great. earnings the Thanks, today I'll morning, Seniors joining good and sales. quarter recently New third discuss And I'll for you then the call. announced everyone. thank Heidi. for the And asset quarter quickly XXXX for results recap

will FFO by triple decline driven basis, in for David was $XX remarks, the the were more growth lease NOI was AFFO share. cash total net which offset results or million million was Rob same-store $X.XX for performance managed million. Total portfolio by financial X.X% share. per the portfolio. $X.XX quarter results year-over-year. my Following decreased in will review a $XX partially of our portfolio, detail. $XX This approximately On diluted portfolio our diluted the per quarter for NOI and the Normalized our review or approximately was approximately

on weakness NOI managed year-over-year, X.X% our portfolio. account portfolio, same-store AL was down For our of across cash primarily

growth quarter quarter. implemented Our IL RevPOR due note, basis portfolio points same-store of our operating pressure managed experienced the Holiday. over posted model to consistent X% occupancy portfolio pickup of and XX a in On by positive a change also

net year-over-year was triple same-store contractual portfolio cash NOI EBITDARM Our increase slightly coverage X.X% down the in to escalators. due quarter-over-quarter. posted a rent

we of portfolio $XXX leased nine which of million Now, to in on actually sales million managed Florida. was the November both assets the contract, asset sales, $XXX.X include turning X, AL Memory under recently sales closed managed sale and assets. which announced We asset Care for

portfolio overall The other portfolio is to we sale objective in expect assets million, of triple significantly our lease a stated our by our end under is $XXX quality the contract properties of six a for of net of year. pruning enhance number the close of This The advanced areas. exclude to managed illustrate, the assets occupancy key XX sale our Care third assets assets our To sold we XXX of and increases points, RevPOR margin NOI and basis the portfolio X.X% removed Memory points. AL improves the increases from portfolio. nine quarter basis managed non-core several results, which underperforming if

of Second, times. would times lowest sale will the net third-quarter six X.XX improve eliminate the EBITDARM from to leased portfolio and covering our X.XX coverage lease triple properties

for remaining once back closes. opportunities to it updating new buying and/or the other paying down could proceeds, and over you investments new in in investments, sales NOI for aggregate, will sales initiatives. three exposure sales me our are We the diversification actively look which the the to to redeployment powder significant with XX% XX%. our $XXX improve include that, our sale let of And us reducing will from lastly, the In expected further We're Third, the forward XX%. our will turn approximately dry XX% from geographic IL to proceeds concentration evaluating increase new stock. David. to generate by And debt states and give million top net

David Smith

everyone. And Susan. morning, Thanks, good

managed private triple of XXXX. properties pay quarter, NOI quarter compared For same-store net third third Same-store for the of the properties. totaled XXX X.X% portfolio XX and total to our housing decreased XX consisting portfolio the senior cash properties,

our our for X.X% portfolio third includes for million. Same-store living which accounts discuss year-over-year NOI. cash managed properties of First, decreased I'll the XX same-store portfolio, to quarter independent and NOI half assisted-living $XX.X roughly XX and

pressure As we but to second points XXX less XXXX, another portfolio, occupancy the our portfolio. same-store points XX roughly quarter to which experienced the points pronounced basis sign decreased we year-over-year Occupancy IL throughout our when improved have our portfolio. same-store AL last experienced more same-store second XX% In our than quarter. portfolio pool, our the decreased of is the improvement, continued quarter third quarter, slightly in XXX year-over-year. was IL compared basis of basis in decline outperform for year-over-year, pool to Similar

increase prior in to realized the total Holiday, beginning impact quarter of a the our second XXX every discussed from operating by model change over the IL due occupancy at XX% primarily and to of has in this September. quarters, of conversion points portfolio of we with XXXX. As in same-store affected month, completion April portfolio the which was was April, IL basis implemented of increases our completed Since

our to on to the XXXX. increases partially which consistent X% results. expense long-term. resident was X%. impact which offset growth our of model resident RevPOR new performance quarter new with increased pressure in each the in that versus cost continue X.X% labor operators discounts incentives along property rent use rate saw second our independent on We for existing believe that our Same-store on through assets continued labor pressures has X% down markets assisted-living our was realize over increased cost and over quarter roughly supply, stable quarter per Across In more by We the Total of particular, residents, encouraged strong this in with portfolio. growth change living positively a again year-over-year. remained continued RevPOR year-over-year. just X.X%, will We're were with rates, basis portfolio,

total XXXX new Since supply our of in when new supply began NOI continued our low quarter, levels to our to has exposure we this point new information, decrease. exposed elevated, providing this of of it third to supply. relates new still reached with a As quarter supply, markets while XX.X% the

senior elevated the the continues Despite the New to significantly quarter, but new of illustrates for elevated quarters, rates new environment, currently We levels are remain living strong occupancy stability evidenced openings housing, absorption four third housing NIC expect whereas in demand senior our approximately third in these decreased do as living. openings supply rates openings properties optimistic the XXXX. is XX% independent quarter. assisted by that which in early through as of the all-time predominately next over portfolio high we continued for project

includes million, net NOI. one half the and and Same-store to CCRC IL increase accounts X.X% due same-store third XX escalators for our for the triple portfolio, NOI rental quarter our contractual remaining rent of $XX.X an cash Finally, the leases. was which of our in

and was the ending same-store EBITDARM occupancy For XX.X% times. was same XX-month coverage store XX, June X.XX period trailing

life XXXX. Our in With to I'll have average our an our that, Bhairav years leases call also to lease turn of discuss over maturities remaining XX the financial in first scheduled results.

Bhairav Patel

our morning. everyone, performance Thank quarter. you, thanks, this David. the into for joining I'll financial dive right And for us

the for driven well managed the period was quarter to by of quarter the third since a same as for $XX.X segment. decline was year. last six the for properties NOI decrease The the last compared year same-store million sale NOI as of million $XX.X Our in

was the quarter sold, by of was decrease million last as discussed sales driven excludes in This earlier to held-for-sale NOI same-store labor our the $XX asset as Our higher held-for-sale. to September NOI third compared resulting million managed XX. increased or the expenses, The And Susan $XX.X from segment of for were pressures. other year. classified transition same-store operators as for assets classified cost operating

allowed offset compared for increase in $X.XX as operators' the to was million the prior-year. labor $X.XX Our $X.XX diluted ability strong occupancy. AFFO in quarter FFO rate us share partially to expenses for recognize as overall continue $XX.X per diluted share in was million per per $XX.X on or decline diluted existing share to year-over-year the to or the Normalized increases per fees slightly residents well $X.X FAD quarter share at came per XXXX. or adjusting to routine quarter, compared the share last million of the in million and $X.X year. management CapEx $X.XX year. $XX.X the quarter million normalized diluted for to After for third $X.X diluted per million $X.XX diluted compared G&A during of to compared increased AFFO last share approximately $X.XX

billion totaled account of compared quarter, X.X%. $XX.X rate million approximately for the the $XX.X of million an XXXX, debt to had a $X.X of total with interest floating-rate interest Our quarter the debt, to the we due maturity of our weighted rates in debt quarter outstanding. higher for XX% third of in effective interest average expense and five outstanding primarily of years end our total which At

quickly wanted I P&L. to moving last the on highlight Before sheet, the thing balance on to one

resulting which million impacted we For almost by Hurricane damage and entirely consists incremental own expenses, the $X.X of quarter, we costs Irma, the XX remediation from affected in properties areas recorded storm. which other in other

we to sheet, million Moving gross the on ended cash $X.X of the billion. $XX assets of quarter balance and with

subsequent AL/MC segment assets managed the the nine As property in Susan to of mentioned, completed we quarter, our for sale million. $XXX.X

and down approximately of of In received we approximately As proceeds the the paid after million. debt. fees $XX $XX of result conjunction net expenses sale, with a we sale, million

$X a connection During in fourth with to recognize the quarter, we gain million approximately of expect sale.

paid $X.XX ask per Directors of XX December will The to common X, And to on of on dividend open for the Lastly, will declared on operator line share. record cash our December the dividend I Board that, be with November X. please quarterly questions. of shareholders a

Operator

Instructions]. [Operator you. Thank

ahead. the line go Your comes Chad Stifel. first from Vanacore Please with question of

Seth Canetto

Good morning.

Susan Givens

there. Hi

Seth Canetto

dispositions to guys going are then the in acquisitions? and price stock or assuming remains the proceeds First kind today more and question, you the given around use proceeds level, stock new this of deploy just is where on likely it repurchase of forward,

Susan Givens

have I the we're at decision. think that in that will to making we time point evaluate

our today, you where pretty if stock look given of think just kind it's how it's attractive trading. a at obviously investment, I been is

along right stock good our now. our evaluate opportunities. But with a will it's investment we represents fair So, think say pretty that I stock to other

Seth Canetto

and an can of acquisition terms out on like? update then at where the rates of give there, And just the looking Okay. environment cap pipeline just the your us you what looks and opportunities in the outlook sort and pipeline

Susan Givens

Yeah, sure.

in smaller view there's out – like a the market. deals portfolios few and larger our lot It a there that large, capital are that smaller deals lot the at there rates of of And I we're kind they're to what is of want in we think the it by broadly. also of still make a are or around there. seeing low. looking things, I think more in are like as and estate seems kind that what that But kind the extent, space deals we're pretty trading of seems is solid be that, And prospects. we're is trying good sure looking pretty we at has we're at real think disciplined are to cap do. what And opportunities, we looking we're to world

competitive So, a, it I pretty is environment. think,

think there's housing of pretty rates I that equity lot probably low. that's been continuing around and to cap private is assets. look And at keeping senior has capital

we So, looking as have and I really that investment consider of think at evaluate to we're opportunities. kind that

it had to we why think around sign I as assets. that's our And a selling relates that's stuff. selling some good success I think

So, I does given if But to to cap new disciplined pretty are it at have about mean I be too hard think investments, that. we're low. be it's looking rates think [ph] pretty upset we

Seth Canetto

should gain managed into there? fourth managed for then, are in occupancy that the what given think And the portfolio, got about we nice I portfolio? occupancy right. How going the dispositions, the sequential basis XX the quarter expectations And quarter. All really points

Susan Givens

that Sure. fact the pretty by quarter-over-quarter we're, obviously, the was Look, trend up. encouraged

think about of I last And the my model We and points that haven't Holiday of couple transition. both seen Dave quarters. kind the

the a included IL chart hit occupancy month we've then. our nice, we year. steady quarter its of really And that that in of lows showed this since each second think I kind gains on the here portfolio

to going. get that we was kind as really think into of sell, And a of kind it momentum of hope we rid year, should say. keeps of good And that I or so, obviously I the move thing the balance

Memory think, I down that, our assets portfolio. Care dragged AL our of Some have

the I NOI side. the we think like So, whole, don't of but good I overly occupancy as do sort movement industry sort is time, next of think that the the seeing a feel the pick and can some to same have of rate want into we're be over the will At keep And kind gains. of we on about that hope optimistic those our really translate increases couple kind we quarters. of ups

we're headed we the QX, up. giving about sort of of the into obviously, very visibility kind that occupancy sort about and, of without fact feel So, direct where good was quarter-over-quarter encouraged

Seth Canetto

I just industry the how on then expected into terms of the openings the look last question quick, and of AL I do the kind XXXX, you elevated that new at decreased missed. me, from of in levels new of openings percent the XXXX? new openings think And real the Okay. and in going industry What's and guys

Bhairav Patel

Sure, Yes. Seth.

So, we portfolio, that. of look of at itself assisted-living the the now the if data business is which the in and versus markets, openings good you living. independent XX% side NIC XX% had feel our over our over about We are

saw I consistent trailed think with where our on off. the is we the the data, new this quarter, markets what industry openings

component just portfolio, but IL the got over pushed some good it. the those of the and later I projects next uniqueness think again, early we to majority feel our to year, about long-term, given year, this

Seth Canetto

question. All right, for my taking great. Thanks

Operator

comes question Malhotra of ahead. Vikram line go Morgan from with the Please Your Stanley.

Vikram Malhotra

the morning. this the in occupancy the portfolio gave Good growth. opening I the Maybe be those in sales, you if same-store assets. I for missed asset remarks, would know Thanks managed the questions. NOI and excluded taking Ex RevPOR you adjusted the what

Susan Givens

put don't that we actually Yeah. think there. I out

XXX of the the NOI the it up of that thinking think is kind assets. we're is pretty those significantly. margin with way I points, up exclusion of sort basis about It's

And so –

Vikram Malhotra

is estimate assume and then growth If impact well similar a can Because there – the expenses occupancy? we more on unique about just assume the or we the and was expense it. something as revenue

Susan Givens

assets. Yeah. These Care Memory AL are

on that and margins living revenue but independent assets, tend than kind assets your nothing higher funky sort of to Memory of was our Care assets. side. kind of there more was these lower expenses the they AL had have typical than about occupancy So, It

Vikram Malhotra

Okay. expenses was can labor sense what the a and And within growth expenses? expense related the you non-labor in growth, comp of give versus us

Bhairav Patel

supply? that Are Vikram? you're just what you asking new with in saying, Is markets

Vikram Malhotra

in Just what component was overall of the expense the the saw, versus – kind non-labor? growth growth overall that you labor

Bhairav Patel

Yes.

So, labor resident, per as on X.X% second results. costs we mentioned which consistent growth was I side, had labor the my in our in with quarter remarks,

Vikram Malhotra

guess, just then, the got your And dividend. prune Okay, it. on it. thinking last continue the you I as understand, dividend? and just what are of leverage. given where I'm capital the the sheet how is of and portfolio, now comments from the now on just just dividend, on trying balance FAD to just views allocation Got you versus your about sort here, – question, prioritizing the just kind are you to

Susan Givens

of basis, didn't this on our we going-forward this on something quarter, obviously dividend the previously. that with ongoing Yeah. we Obviously, it's change basis. kind quarter. an was been can't And But on have a what And on and basis. discussed a conversation comment it it it we board we it's it's – consistent was with a going-forward

Vikram Malhotra

you there's as obviously are going to you you Are of sort a – here impact where you, in FAD from well. as because of given dilutive is, up be sort disposing keep pick a modeling modeling – in assets,

Susan Givens

guidance give do. don't the We dividend. on We never

It's saying with this some It's fashion. not said, can't. going Like not we an other we could just something said in what generates be to in had ongoing we board. that assets conversation and quarter. Obviously, investments, reinvest have that past. reviewed comment the we we're hope different things, board we're but a either we that selling stock, so, proceeds we And conversation to than the

Vikram Malhotra

some be? do just that goal give can to sense want leverage is, XX the you target of your leverage proceeds, then, months, what And next goal you given to et the Okay. where – over on clarify cetera, us

Susan Givens

leverage like come down. to We'd

funds low. is is the pretty face challenge think that that our cost of I we

And to right the so, when using we not repay just about think debt, proceeds best use that's of think proceeds I now.

Our part is of some leverage because coming assets. selling down, we're in

We have that's been paid off.

as – investments of what's here of sit just at we've look kind to will And will use is our lot debt. come you when of modestly. other that these so, of There sales, think make are But if think we where leverage view asset when those sense we it it to the doesn't whole got be in accretive. cost that I are funds kind about of pay X-ish-percent, use our our debt of actually capital, a off kind proceeds best down more the post

Vikram Malhotra

great. Okay, Thanks, guys.

Susan Givens

Thanks, Vikram.

Operator

line next Lee question go the And comes Please Cooperman from of your Omega with Advisors. ahead.

Lee Cooperman

I have not growing. a series of We're questions.

So, it's to the obvious that security. income the is key investors in

You guys people. are intelligent

forma measure is I making in these a do here. Second, targeted are the is a return the you guys accretive you bunch pro that dilutive a the You've the you assumptions given into And series equity? which you that a And view of normalized company. are to you a FFO, of transactions or normalized company? FFO, to most AFFO, FFO, transactions What response? NAV on have fourth, have And arriving have of number plans, determine of the measures the Third, is of dividend, entered look do one? NAV at FAD. question of income, measure? the of what have important at guys your view

help think because stock the a to you NAV price returning substantially below liquidating below selling me, money appreciate the company about if it. NAV. the these of you. company? shareholders four the think ever I is I substantially questions, Have I at So, thought we're and the would you guys can Thank

Susan Givens

final I try I'm one as Can wrote will the – three. first be got think take I to quickly? I to – not I you of them sure kind you Surely, down the the

Lee Cooperman

one growing. not we're is, The first

key the you've to a the into entered dividend. And shareholder of is return obviously, transactions. the So, series element

pro project Will money. to are all can do these to and distribution, the to dividend, directionally? what want don't close is say, impact what the with to but transactions on dilutive this I when likely accretive Now, given your distribution, you why just your the know forma, AFFO you you

Susan Givens

don't assets the longer assets that hurdles time. of have it So, for that think are period they shift that we targeted really on we portfolio we the actually our to a over sale, want

can proceeds we much portfolio things, can our because assets those other chose think generate the themselves these overall asset and assets we today. generate accretive to what more so, we can sales using be And in it the than we reinvesting from

so overall As that to divest actually an reason of a kind not example, contributing cash to flow, we cash of and portfolio. really portfolios, why flow our basis, part on one chose was of the net significantly the that's

depends to it we we return opportunity course, us, use we these can that to Of set what for reinvest in given on we assets the do But why the proceeds of the them that. proceeds buy. will us. made That's in better think take front generate and decision

Lee Cooperman

would frankly. That's assume what I

So, the is, to answer accretive. be to it ought my question

Susan Givens

right. That's

the Assuming – reinvestment

Lee Cooperman

okay. Okay,

you I what most us? pay to Second question normalized look was, should guys at do AFFO? determine What it you to carefully want FFO measures you look what distribution? the Is at or determine when

Susan Givens

of I Yes. at look capital a kind look that the look of everything. sort metric we that an industry at at And well. that. other of as People the on is at well. of as FAD, people which to at But to to metrics at other a kind funds of think distribution, other practice business, think look of structure look as look kind We items and a available kind people it's particular be look at we depending whole, tends that and industry But for tends I – focus on.

Lee Cooperman

conclusion is, FAD the above since dividend is improve? my that FAD, you're So, optimistic will

Susan Givens

say Look, that. to it's hard

Of but to that's that FAD course, hard we're improves, – our hopeful

Lee Cooperman

having FAD. by dividend what Well, that making that in said of excess a you're

Susan Givens

yeah. Sure,

Lee Cooperman

a you for equity, basically, way business? the the reasonable business, XX%? are Okay. running Return assumption on what's XX%? this

Susan Givens

sort how And, our it, mid-teens of always targeted themselves. We've of have kind of thought profile. that assets to assets excess leverage in been low we given on of happily, most generated returns. always our That's about Yeah. actually the

we're an out mid-teens has when But – there And asset company we as are by targeting of look coming midteens deal at return. on course, level, then, basis, deal assets, for look look when of something really the we return. that a So, a we're whole. underwriting kind some are you expenses that

wavered targeted that We threshold. have on never

so, looking at And percent kind as consistently at when equity, a of you're XX environment looking yield, return on look I plus think, now. right decent at our that we're return rate we which you the interest generated is,

Lee Cooperman

the about more And have but the may to at is share, own struggling XX, to is, big highly stay to you are and maybe a assets final close discount, unlikely your them that giving this in $X. the is worth question outcome? back way it, think they shareholders to and have least thought you per want or With view, stock I money reinvested let invest that the ever guys the

Susan Givens

NAV. your I view stock trading Look, below we share that is think the

with think I our things here lots we of board. of lots look at discuss and things and

so size that So, believe I we would to comment right the really if is we I that, of and any at to to NAV the we're part we're a trying steps didn't don't trying tape want time say trading of is course, reason bridge because but stock is much do gap. on discount specifically, portfolio all spending of our that to right to

Lee Cooperman

you Thank very thank Work much right. hard. And commitment. you very for much. your All

Susan Givens

Lee. Thanks,

Operator

no are further there questions the in queue. And

Susan Givens

to forward soon. everyone. we look Thanks, you And Appreciate your time. to Great. will talking

Operator

concludes call. conference This today's

disconnect. now may You

Ivy Hernandez	Investor Relations
Susan Givens	Chief Executive Officer
David Smith	Managing Director
Bhairav Patel	Interim Chief Financial Officer, Treasurer, and Chief Accounting Officer
Seth Canetto	Stifel Nicolaus
Vikram Malhotra	Morgan Stanley
Lee Cooperman	Omega Advisors

New Senior Investment (SNR) 3 Nov 172017 Q3 Earnings call transcript