SNR - Earnings call transcript Q2 2018 | New Senior Investment Group Inc

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

Operator

Good morning. My name is Cindy, and I will be your conference operator today. At this time, I would like to welcome everyone to the New Senior Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Instructions]. [Operator you. Thank Ms. may you conference. Ivy begin Hernandez, your

Ivy Hernandez

Cindy. call for morning welcome XXXX. and earnings Senior's New to the Thanks, Good second of quarter

Here Managing Givens; Patel; Susan today and are Bhairav CAO, Interim and Director. CFO Smith, David CEO,

statements Before by occur expected like or disclaimer, you factors our expected not certain SEC, to remind would XX-Q will review Susan, and quarterly to and in including many forward-looking encourage may maybe all. I the and the we and be these statements. as I events at disclosures filed annual today forward-looking are risk you most contingencies filing with about risks, subject the call to turn reports later statements made to recent I other over statements today. forward-looking events that described These the statements uncertainties

non-GAAP In I'd over which non-GAAP information. financial Please addition, review included our to SEC are And will in and speakers cautionary for the measures, call and to supplement turn filings. the reconciliations discuss Susan. statements the like our now

Susan Givens

intended performance context to company over value. call to describe Senior's some other Good this a Ivy. New the for more plan take joining opportunity and results I’ll to we to financial second quarter. turn the call David internalize portfolio for then XXXX. for thank I’d detail. discuss the announcement today’s and provide for to each like Bhairav the Afterwards, initiative the you Thanks, morning quarter in initiatives and announced shareholder and strategic of Great. to earnings maximize Today, and

as externally a a We spinoff our be peers. traded by housing company publicly Corp. late of New portfolio was a pay Newcastle, any from formed managed assets than $X of with billion pure-play Senior Investment Newcastle with and more senior exposure became following Like XXXX to REIT were organized Senior a private Fortress. New in

senior additional housing in strategy acquire source leverage to Fortress’ and housing was to assets. expertise initial senior Our

During XX and X this acquiring from we recent continued XXXX, strategy selected focus our than XXXX, executed to tighten, strategy. integrating to more of properties. properties rates billion In in sales of we asset portfolio pursuit to cap our shifted assets our XXX successfully growing acquisitions as

been in lower-than-expected portfolio. We completed view stock. our the an with the In disconnect reflected in our full in a along million price of for XX the stock multistep our a earlier the ways time, address we had operating requires share committed this of effort furtherance range alternatives. believe which XXXX, our solution. year, buyback value been also announced of strategic of strategic of maximize evaluating the review between Board was results has to our firmly had the of to of the to we price The value trading and experienced process and a of begun goal, Board Throughout shareholders. industry, multi-pronged rest that process In trading this that exploring the

them. As and alternative Board to address areas a the considered review, part identified of focus strategic number of several company each for of ways our the

initial Holiday announced step, leases we several net in which triple our May with an the As for back terminated benefits company. had we

portfolio. our the of As reduced coverage a structure to given previously the credit we risk declining conversion have managed the discussed,

including we management dividend issues company’s internalize These structure including plan initiatives, the to and growth termination portfolio to believe the we the structure, flexibility and a ability our addition, basis. results since In the simplified now The our transparency we termination the managed external address increased our operator initiatives, together intended to also strategic prospects three the lease termination, additional which operating on has a announced our of increased portfolio coverage. the relationships. prior with and company. are our the challenges diversify own hinders Today, enhances capital

process While maximize work have efforts of a the for today of strategic the as a we review that very shareholder part position value. measures the additional taken and of still to facilitate I’m us, will ahead optimistic lot company growth

each to bit more address a of initiatives the detail. in So

First, by the to end company plan the of we year. internalize the

internalization expect approximately to several year. We million XX benefits per savings have cost including of

expect the also the We our the simplify organizational internalization structure increase results. will and company’s of financial transparency

of to Special comparable the advisors payment and Committee Manager which legal investor we own stock Special is advised we Committee in The will addition, internally and of negotiated think Board base. space financial of in healthcare empowered a make evaluate which directors internalization, could negotiate Upon was the In the effectiveness our $XX remainder company the peers a internalization. as of bolster million we redeemable its Committee. The Special by managed our million cash. to payment and $XX to REIT is which expand preferred company, and X% the our become the expect negotiated by in interest a independent to more our

management into coming for definitive the internalization to months in of expected enter details go-forward announce We and intend the is which of Manager. include documentation to we members time team key that the at expect the the to several

We be will ultimately internalization completed the by expect year-end.

we The second with the initiative termination. loan lease today to announced entered plan a into refinance in $XXX a million Holiday strategic is that bridge connection

million over equate XXX an more the interest which expense basis to points could new loan save expect We annually. $XX than to of

addition the to redeploy In we identify cost to to accretively. to we preserve designed opportunities our event recycle that capital in savings, capital refinancing flexibility this

the close fourth to expect We quarter. in the financing

our we $X.XX dividend Finally, quarterly adjusted per to share.

company’s dividend we’ve Board reviewing previously, the As discussed actively has been the policy.

strategic initiatives, with the growth, industry impact the as determined the Board as other been closely of sales, the to a had and Holiday the weakness lease more focus conversion across potential asset of industry. align for due payout ratios housing continued managed consideration coverage portfolio in our company’s dividend operating senior and results potential has organic careful declined announced peers. to well the as ongoing dividend the Our coverage investment to-date to After the alternatives an reset to has of

to we review. announced to a and but core portfolio optimize housing senior strategic our conclusion believe of this senior is and identifying ways of amount on draws All combined the our believe initiatives for focused initiatives of with year amounts attractive meantime, housing the transformational business done and portfolio. significant of the significantly to medium to have the In of compelling. the There uniquely previously us closer be the industry a company. pretty we a still We announced work our long-term fundamentals remain we a remain today assets

turn David to the over I’d review in portfolio to Now, to results call more like detail.

David Smith

resulted quarter. portfolio the recap to the given second that I’ll I’d second lease everyone. portfolio like the conversion performance in termination for properties. occurred But our assets XX first, leased morning, good and quarter Susan, managed Thanks, our composition of the in Holiday review during which the

across recently, a Our triple managed portfolio properties on we result of half the our owned states. of subject significantly as and beds of net balanced now consists in basis a Until We shifted termination leases. Holiday of XX,XXX one but about our the own properties than all XX with to This on a basis. more XXX portfolio managed May. half other lease

this with assisted living. acuity of XX managed managed predominately XXX XXX independent over our segment. properties, are from portfolio In Of NOI living coming are mix, XX% independent our now living of our terms is and

two to turn highlights key Now, to There quarter. portfolio note. would the for I’ll were I that like performance

total X%. portfolio our our both cash portfolio positive strong same-store First, quarter-over-quarter. as positive Beginning trends portfolio, results, living includes managed independent triple second, a And segments, year-over-year had experienced decreased for performance NOI our our and very and our quarter-over-quarter. year-over-year net whole managed and with which

managed improvement NOI For portfolio, from first decreased X.X% our same-store to XX.X quarter million, cash our results. an

portfolio, living including in benefitted occupancy key very portfolio was year-over-year a NOI independent strong stable due on living assisted increases our to and down performance all metrics. While trends weakness in from other basis our

properties of Sequentially, drove our up also posted our Specifically, cash with our increase results delivered same-store in managed of X.X%. on trends NOI same-store an year-over-year a living X.X%. cash in basis, Strong NOI these results independent NOI X.X%. portfolio IL with solid portfolio cash managed

operators which XX% Retirement, our performance the Our by largest independent of IL living of one the IL portfolio manages and most in experienced is and driven was the Holiday U.S.

decreased portfolio year-over-year, in AL our our These declines improvement whole in IL for an from occupancy stable offset managed which portfolio our occupancy. reflect portfolio. basis Turning quarter. results a the Same-store points to occupancy last by results as XXX is

portfolios. this will by reported IL the have We majority portfolio majority worth quarter. by in for the are nearly a in pleased quarter experienced impact the second years. three of encouraged see these that to our have majority On noting net in June it’s of the results positive who that potential AL we’re RevPOR, largest RevPOR so move-ins the occurred limits in our Notably, comparability peers gain the our third

because rates only many properties rates know, RevPOR lower living, independent component. the than of are is significantly managed peers. our XX Because XXX care our you higher than As necessarily of are of assisted of living that assisted our living

RevPOR the call. notably second we the last and with of was on on same-store was increases trends the the that for line positive quarter, was during achieved year-over-year. in spreads you residents existing that new residents, quarter approximately re-leasing we roughly remained at increase for which X.X% $X,XXX, So Rate quarter’s first the quarter an X% with second discussed quarter

Moving to supply. new on

new declining seventh by that data of show encouraged second the quarter senior construction. We’re of from housing NIC consecutive quarter levels

new with openings in from Our second a managed peak experienced portfolio trends down the XX% property realized approximately ago. year favorable also quarter levels

years trends expect exceeding and average population growth the five next increase supply expected approximately with over elevated, in of over be just positive X.X%, are demand is to the our markets still X%. annual and to While expected national

Holiday due operated triple The segment the portfolio our one in of Watermark. the this second cash now a lease. to our net X% to property, contractual NOI performance. rent generated rental X.X just is million our the during escalator CCRC Due quarter, increase termination, of Lastly, an property of by lease

Bhairav strong period XX, XX-month X.XXx. the at and call exceeded results. our financial was that, March coverage discuss occupancy turn to the XX% I’ll With For over trailing ending to EBITDARM

Bhairav Patel

of David, us for quick the morning. for thanks everyone and quarter. joining financial Thank results provide this a you, I’ll summary our

as XXX repaid the termination, In million to related Upon agreements Holiday operate in the entered on of gain with received termination to payment security into million review to discuss XX million the properties financial our rent the comprised on the XX of XXX termination deposits. XX receivables leases of We a and retained I Holiday. impact for assets termination adjusting certain of properties. the termination, with of the leases portfolio. I’ll result a straight-line we consideration termination, recorded management related total write-off million. cash of of lease the metrics, over approximately XX debt on and XX we After with and the conjunction property assume Before million terminated May secured we a leases of we

XX the As a which, approximately write-off which deferred debt penalties in of loss financing with financing fourth of early of million. one-year rate XXX costs with result, to we debt the along incurred long-term of included replace with mentioned in million The expect XX.X quarter. was a we million termination refinanced and Susan earlier, been prepayment during as floating secured loan have

Now XXXX. compared to of NOI of to the on of reduction of quarter for XX.X quarter million beginning by for last driven million metrics. key since XX.X total our sale second assets moving We’ve sold largely quarter the was of the assets. a year, second the a XX the

or our year. independent same-store previously for The and decrease by assets Our our although termination, living for of for to was compared included by higher revenues well in of per result as diluted segment as diluted share was per as compared in segment the second leased prior we year. high same-store a results segment the lower lease million Holiday diluted our following share stable the segment was In our have generated triple NOI CapEx. assets were million increased. AFFO consistent $X.XX was result as the sales $X.XX compared quarter year in X.X Normalized NOI diluted quarter rate metrics the to million Please in and managed independent the compared for per for the or share the NOI last note a expenses per from million last XX.X by quarter property XX XXXX And by managed XX.X quarter where been was slightly FAD last as net in The occupancy of the mainly lower increases. included the FFO share of the quarter asset living assets XX of managed property $X.XX for driven the normalized occupancy routine results by a second contrast, driven property the year. reduction that adjusting million NOI for excluded is living per or it of million assisted properties was quarter to interest second diluted XX.X were XXXX. $X.XX driven share decline the these NOI of the the of as second after $X.XX expense. during same-store

increased the quarter to XX.X interest million Holiday The interest in Our XXX expense loan higher one-year due from million. rate conjunction X.X second by largely of the with was to leases. XXXX repay on we obtained to the termination of debt increase million secured the

following lower increasing earlier, the As loan current to our a expect discussed we effective average to rate at refinancing. reducing with rate the weighted maturities I debt years floating over and significantly refinance long-term five rate our

X fees rate will be compared quarter XXX of $XX million XXX interest incentive The fee with fees incentive result the million expense. loan cash quarter first current X.X mainly annual compensation in the incurred over management reduction current of termination G&A, basis the to resulting in gross from quarter. Our the the for the ended of and was in by billion. financing declined below rate approximately for million expectation cash is points an received new the assets No quarter a approximately We were Holiday. the increase on X.X on the and that year-over-year. million

September Lastly, September our of shareholders quarter declared Directors on payable record the to $X.XX of a X. dividend on of Board XX for

has the ask operator dividend payout open line for reset the determined company’s with the with more And Board discussed peers. to please to industry earlier, align the Susan closely that, As ratio I’ll questions. the to

Operator

[Operator Instructions].

from Stanley. Malhotra Your first Vikram question from Morgan comes

Vikram Malhotra

questions. Thanks for the taking

sort wanted decision the you a So this you to of there the made received comparison is can offer, talk decision? just now kind of you understand actually other -do and an changes, internalize/continue as you’ve was were other exploring about to that option the

Susan Givens

sure. Hi, Vikram,

to mentioned, process of a kind different really actions the that announced reviewed I value. pretty was think to-date really announced and said have put those outcomes. a multistep, and process can maximize as a shareholder value. we the a lot we’ve and it’s initiatives kind of significant Board we of of at, as a like very I and things So company the way process. were to multistep items things a evaluated really very multi-pronged grow lot of think looked steps A of strategic can a good we are number And go now in potential in review were evaluated maximizing which number long they kind What position of

Vikram Malhotra

I you not? but can’t you or guess an whether received Okay, say offer

Susan Givens

And Board and is was that at specifically management kind What for the and to the the different of things And debt key be the of what we’ve obviously the associated that was the lease that we’ve announced Holiday lots that Board pretty two best company. more the felt concerns is there second the looked impediments initiatives and I limiting. evaluated potential course the say were external the think I’d maximizing as value, structure, were the being to first like structure. surrounding determined

path Board in So that of to a along the concluded felt other those way two value. to facilitating items step a the shareholder go address was would key like right long things those kind items with really some and maximizing

Vikram Malhotra

Okay.

and from more G&A like So savings XX I quick management? ongoing is going wanted would is – that just or the this you questions; also have million, of away internalizing fee just management two above to one whatever saved the over is

Susan Givens

the and And other there’s because takes have we’ve obviously then disconnect both by company goes goes away. that the some ways, incurs. G&A items paid There fee the management as that is that company estimate puts up are of paid coming in the at Fortress obviously Fortress to Fortress. with from fee away, to would the be management kind other to are a fee and Well, there looked that

the of really kind the target there is out be So out what there about and higher, will put good as it think a put ongoing we estimate is we’re million thinking savings could G&A we as number that what we be. an but $XX

at think look basis we is forward. million our what going on you could If XX an be the annual G&A saved today,

Vikram Malhotra

Got it.

was the of So think you like fee, of additional – expense save it’s net any it’s kind million that XX XX roughly incur? annual million so you that you’ll net of

Susan Givens

That’s right.

Vikram Malhotra

Okay. cetera, of of walk the growth through magnitude can last And the cut, operating dividend kind then just in in maybe and environment you of the et that deciding or right on terms for why maybe adjustment? right amount you of some the the us portfolio, for thing made the assumptions is the

Susan Givens

And had last of a year the things the managed the industry, I’ve it not been Board in weakness XXX overall those flow senior were discussions focus while the coverage. for the been those across as the to of to it’s the of Sure. or The the dividend there then things, around that company now of so. kind of of of us really changes housing a for conversion the is dividend Board. dividend Holiday out three and and number has over the specific obviously cash but the a And of lease has contract profile including weighing a that’s the assets. remarks, then kind and on over kind fact on kind And of we’ve function million a my assets sold quite mentioned where landed

then business. looked growth the would was we Board strategic organic for into appropriate right to-date going at the been that the what thought and the what all when So we took be account consideration into initiatives and forward, the evaluated kind level announced of have

we now do on it’s – some the Holiday commenting other had what portfolio being and it portfolio there, as done specifically we changed things. vast and faced assets put terminated, are operating the where Holiday independent a with model a clean senior without have of that its challenges very, very think lease in has of housing kind I living majority some

that think changes those hopefully show us. I the feel to some behind show is this We growth. the Holiday paths good that good the model results and in of quarter on some path are getting

well some considerably are us. And industry I do expect we we’ll our is assets think kind now growth behind positioned we that so but the of living very see versus noise that think that don’t independent outsized of the specifically

consideration developing of and to of level kind taken kind look and dividend that would then and appropriate out. from And so when of that’s level the in how what at perspective. opportunities put some course kind was be that investment the came into realized things it and an were All those cash of be could dividend things

Vikram Malhotra

you. great. Okay, Thank

Operator

[Operator Instructions].

Your Lee Advisors. Omega from comes next from question Cooperman

Leon Cooperman

Thank million per external and down at you. this in to manager the I That’s should June really in the XX%. What $XX results the that The We question buyout. The morning $X.X, XX.XX. be compensation public sold to stock closed of are shares theory approximately million manager external XX this performance tied XXXX $X.XX share. delivered?

alleged duty I think been the now market’s have what’s up sold seem certified. prices manager, been the and included properties which XX%. has is would which The at in principles this of inappropriate fiduciary company suit, yourself the to to

stock. sum referring arrived value. So how It’s $XX XX% is, And maximizing go significant That’s number paid pretty shareholder the one. at? is second a should the the manager And away, value the of money. keep of be million question one? the to number to number you question to It’s two,

designed before prospective enhance what any Because changes the process prepared today’s told have do would to all ongoing? of that been would So have is buyer salability these company? the I to announcement. the be to you announced Are thought

to affect and couldn’t thought So what prepared attractive. get was you didn’t a their you you do price that thinking

a do I’m by So It’s value. ongoing maximizing what just nice understand you review strategic trying to mean maximize to phrase, value?

in any in help So two been the direction. you far in questions opposite hearing. could those be everything But I’d has interested be going

Susan Givens

the Thanks for questions. Lee. Hi, Sure.

Board Committee First, payment was Board there I, myself, was I included and formed they on negotiated of negotiations. that those mentioned Fortress. the it members, I’ll a not Fortress, that with was Special to emphasize in independent member, again

I that So negotiation on around comment was that. that, kind level how the determined ongoing unfortunately can’t and of

Leon Cooperman

that about with putting me how Well, in the committee? that touch headed person

Susan Givens

Absolutely.

Leon Cooperman

I’d XX at have shareholder Because I to they arrived think that know the as million like produced. been a how for results

Susan Givens

maximizing them. I in a that. comment other shareholder put on unfortunately these not kind On and to What part the was pretty and how we options, announcements two limiting. of up at things. relate second pretty those the with full things to said was Happy and question with the I notable, I previous your looked lease in that on as question that were a touch you negotiations. – of can’t lease of was really comment, value range was came one shareholder Holiday of kind and that associated that debt

company The external not The the A Board the into. Board’s the is entered the management view second structure. considered documents been sheet the way been agreement really and by And a actually long Definitive term getting have goes in was has lots complete. things, agreed two internalization and right definitive a those that has but upon fixing on isn’t things entered been my into. path. of not view

saying we’re of feedback addressed it’s as thought are as really address our received forward two needed we like was and that not. them things to worked about and whole when another felt that and ongoing focused. kind better I’d could as things It best whole all a elements and way lead those it path with point results. advisors, you be were the really these to a to ongoing to company not the think the which about whether or But why Board is you one So or and

Leon Cooperman

So optimal. of as they’re they’re is something not less will done reduced all when – resolution that effective are now they them that done as and the and what be today into price saying thing is are therefore a rushing nearly the waiting Is the have saying? basically which than done, than for than values promise what better rather you’re getting this all getting you’re their shareholders doing would greater

Susan Givens

is certainty path. think I always a better much

items, by for not them on the we I I shareholders. lead just then are which to coming them addressing to are and these conclusion actually two So them. can about think talking outcomes we’re think a We better addressing

the yes, really So about It’s just always that’s certainty thing. we’re is path. giving people them same I saying – versus think talking right hypothetical the as

Leon Cooperman

Terrific.

the if you I’d the me in my make of the to So business. because investors love with Fortress could and of Committee, chat them paid money introduce make if to money that for head I I’m Special business money. make I – if get I is don’t kind I don’t in And

thus for million delivered the $XX as far me been that inappropriate. get results strikes So have

your Now anything where it then for could were is we sold payment approaching what from and to far. Fortress they one you’ll remotely But the people. the person’s public, for view get been I’m if we results is company you shouldn’t but thus for sold hear get the sure have delivered what a XX maybe That’s do responses. ultimately to other thank million then,

Susan Givens

you, I appreciate it. Thank Lee.

Operator

are this time, questions. further [Operator Instructions]. At no there

Susan Givens

for will Okay. to Thank and soon. everyone you joining you talking we be us

Operator

This today’s conference. concludes

You may disconnect. now

New Senior Investment (SNR) 9 Aug 182018 Q2 Earnings call transcript