SNR - Earnings call transcript Q4 2018 | New Senior Investment Group Inc

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Operator

Good morning. And welcome to the New Senior Fourth Quarter and Year End 2018 Earnings Call. My name is Jennica, and I will be facilitating the audio portion of today’s interactive broadcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. time, Jane like Ryu, this show turn At to over Vice Instructions] I to would the [Operator President.

Jane Ryu

XXXX. Good Senior's morning, of Earnings New Call for and the Fourth welcome to Quarter

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

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

Susan Givens

in effective everyone I Senior. want of was New the Board at Jane. Good morning, Senior. many for as joining on call team The for internalization internally call earnings as and at first New which Thanks, fourth company an planned. exciting our to efforts January months me you is and for their and thank managed after quarter marks Xst Senior's year the New full completing an internalization for schedule earnings work everyone our event by and XXXX. our and Today Great. thank

and portfolio Today, and Smith, I then discuss I’ll start and EVP fresh a David all results. and call spend to Bhairav as the forward am CFO, performance minute move Accounting. a our I’ll Patel, over by joined Finance discussing strategic our we represents us. turn of to of our David internalization the priorities financial Importantly, for

of review concluded including intended address has we management announced Xst, structure, coverage. to external in and year. capital lease strategic in our certain issues initially Board coverage, last we completion prospects structure February was its the January that of the review internalization growth of the believe alternatives company’s challenges Following dividend formally which strategic low the hindered The

of company As several governance corporate There had initiatives a review flexibility, four alternatives, and of strategic structure part were comprehensive meaningfully XXXX completed which company’s the key the throughout enhanced initiatives. capital operating structure.

First, assets structure, operating transparency the in of triple our a increased living the terminated and managed and risk May, assets results. our leases which we on net to independent XX reduced converted credit

to more in set August, Board aligned company’s company we and internalized is the for closely which dividend Second, believes ratios. payout is peer a appropriate with level that the

million a on million. approximately Third, relocation headquarters. internalization X, completed corporate $XXX and lastly, loan Board Chairman the team, savings internalization in the resulting we in October, And bridge we a resulted expense management $XX of of dedicated of new the interest a of the of the our appointment company’s annual in The refinanced management January functions.

our simplifying expect better financial previously meaningful to and generating structure, our organizational have alignment transparency and the shareholders, savings, including we results. cost several discussed, we management internalization benefits between increasing As of the creating G&A

our in internally the our in more company, to are investor an our could which comparable managed interest we as we company bolster base. addition, In REIT now peers think healthcare expand space, and

will taken significant work company our we’ve that am we I of towards ahead for lot growth. help company. made for measures progress goals to-date us, very the of the position a While have still optimistic achieving the

which strategic we I’ll for Going forward, XXXX, priorities have identified committed value. we summarize. shareholder In maximize near-term, remain briefly to opportunities to several indentifying the

optimizing our portfolio. First,

positioned unique real industry. to senior we benefit trends believe incredibly one medium well longer housing we from of United the portfolio in As owners a housing and senior of largest have in States, that’s term the the estate

dragged assets performance management, of underperforming of majority through total has a industry combination CapEx our intensive down portfolio overall intend on transition, and portfolio the of the sales, certain outperformed While our results. operator selective our asset the quality focus asset We improving enhancements. have overall to and

have assets operators of is flexibility without significant can penalty. and to terminated on of be a generally We managed our agreements owned a that transition amount majority with basis the sell and given portfolio our

to intend evaluate begun across actively We the opportunities sell portfolio. have assets and certain to already underperforming transition continue and we to

Second, for of account operating XX% our and that manages assets currently We managing NOI. total total account Holiday of operator second partner approximately our that our Blue operating have is currently six concentration. NOI. largest our and largest XX% our for operator assets manages partners. Retirement Harbor is currently

While evaluate the both actively operating of partners continue Holiday growth. Harbor the we our the position operator to of a strongest new and for housing engaged and as To we relationships operators and senior diversified to the we view some all in as having portfolio performance recently company that we end, benefits Blue we two recognize of seek of space, improve operators.

our sheet. balance strengthening Third,

a We over than and leverage publicly peers. is to flexibility. time of our are traded strengthening increasing committed We our recognize leverage higher balance goal sheet with our reducing

are financing balance the overnight. of first leverage, and revolving And This look of lastly, underperforming our by fixed increase to to our and to the increasing assets cash we debt event take sheet year. operators. it facility already new on our of will that to reborrow improved the sheet results. transitioned It to down enabled balance financial end measures the of on us into hand reduce pay entering we transparency in our time, we’ve we and use performance last for Our from sales focused won’t assets us to through taken credit flexibility the uses near-term, be identify In primarily but allows will cash. at

better financial along giving into increased earnings now shareholders time, will alignment believe this towards and of are internalization enable us our we management expanding potential. the the our a investor base. between investors With insight for with with guidance to work transparency, We financial goal complete, first providing that

are trends Today, all across of managed one our we a have basis. Now, composition but with I’ll portfolio. on portfolio seeing briefly discuss asset assets XXX owned a and our portfolio we

the the portfolio pay. U.S. any of XX% only NOI than derived largest in senior pure are peers. living, is attribute our our independent We Over private and the is being the REIT XXX% play is unique has which of housing more of a our from

enables limited are needed is affordable products, price generally housing much number market to senior a provide of pay senior which available housing independent in larger living that’s In than lower for option a the private addition, living there of much our and the options of viable seniors. point base us assisted

and assets Our the Living quarter had exception. our Memory Care fourth and Assisted independent living properties was no generally outperformed

assets were Independent Care Our up year-over-year down Living while Assisted on adjusted an assets same-store were significantly. basis, and Memory Living our

of portfolio underperformance Memory only represent XX% continues it’s assets. total impacted relatively of but to Care and be of Living so Assisted of assets a a subset by Our piece these our small company, NOI, that our

us We very and have as assets intentionally management make enable our with necessary. sell agreements to created changes operator flexibility to

on sell and have focused these to already certain plans underway We transition assets. and are have assets addressing

the optimistic space, had forward backdrop, With Living same the housing across Living a give our challenges significance our While many Independent given this of quarter NOI. senior to growth experienced we about quick positive in of that prospects I’ll overview guidance. assets our our impacted we as that going we’ve Independent remain the others have and of a XXXX

growth cash This expect NOI assumes per $X.XX to of negative range X%. share. between XXXX same-store range We AFFO managed $X.XX X% to and

we history important I managed is the providing we transition As which marks the as previously, mentioned time company’s think this us an are internally in guidance, for first an company.

and maximize is excited changes of next periodic with industry. company’s on our for a our we there the done, believe to In fundamentals feel peers We’ve an of of the in is as optimistic attractive of provide I We the and medium be but made to the future. about long-term repositioning we senior portfolio chapter industry and we company managed have forward, shareholders. value with of for to which company the a very are Going internally still to consistent objective remain lot significant work expect basis, lives we the conclusion, the housing housing continue senior compelling. uniquely believe guidance a the assets

to like to and call detail the over some color more provide to in results I’d financial to our turn Now, and guidance. David around review additional portfolio David?

David Smith

was Living accounts growth. another X%, slightly is was an Same-store pay X.X% XXX experienced New X.X% for of across takeaway financial Thanks, turn senior Assisted our we’ll cash our assets. our with that which quarter increase XXX of of Susan, and by an with for today growth diversified a total XXXX for comprised NOI reflects and Living the for states. NOI a Independent discuss increase portfolio and along improving and I’ll of key net which senior outlook. portfolio XX% XX then properties our single quarter start assets for positive results year-over-year, NOI minute. in RevPOR X.X% back over of review good fourth housing senior portfolio portfolio, our managed This same-store I’ll Senior’s the everyone. end portfolio At of increased housing which to triple with of softness offset performance quarter fourth in of morning, The our private our housing the of portfolio, the our

and hope our for one have and IL portfolios. that assets. One, segments, basis supplemental had of points. will our our of Managed we one fared made we IL shifted pricing Independent three I’d increases changes I now in X%. IL was AL consistent residents portfolio experienced our better different existing Now which perspective, performance owned our our Independent a residents one have and managed our than and is reorganized lastly, two AL RevPOR still to for We decline welcome IL by on also on IL we and two, all the and package. XX Managed positive with Triple releasing first we of corresponding NOI like triple quarter approximately lease since Assisted Living cash financial same-store but from have Net points, occupancy of included note the the this segments. discuss rate also increased your spreads our basis new basis trends, Previously, Lease. assets, properties segments XX declined but we is AL information industry Occupancy and slightly assets, properties useful to financial on also experienced and net Since managed performance X.X% Year-over-year X%. our reporting and Living up along feedback. Living, a of

challenged down NOI Our portfolio same-store with X.X%. cash Assisted remains Living

However, the quarter. decline we reported less pronounced double-digit decline in the than was the fourth last quarter

points basis While a was offset due and XXX X.X% points this an RevPOR growth cost basis year-over-year, of decline remains stable labor occupancy primarily at to pressures. positive margin decline by of XXX

As focused our last we been issues have discussed on highly Assisted quarter’s mentioned, this Susan portfolio. on addressing as we Living in been we have initiative. in And on XXXX active performance call, the

several net our key proceeds identified we sale assets sell assets metrics. portfolio AL in of XXXX from have these debt. pay these we expect the the We our of down portfolio intend The and use quality will to that also to improve to sales and

have addition, and the nine transitions either identified Integral first new by Harbor. Living Management. result with transition Blue operators Senior relationship Living expect quarter, are we existing assets our to of the relationships, Phoenix These in two Grace five that expand Holiday of to or we with Senior will also and operator In which end new

forward teams evaluate we our of total to Phoenix. at quality working And are the new diversification. are Integral as We portfolio our improve look portfolio relationships to establish for and mentioned, continuing and and operator its increase Susan excited to to opportunities the

for discuss our Now I’ll outlook and financial XXXX. results balance sheet,

approximately scheduled of debt our debt debt to During maturity next of points nearly we by over debt maturities resulted our X% of average basis three over five to in XX three mature the only that years. debt Furthermore, improving we our years and years lowered million $XXX from fourth refinancings the average near-term quarter, to X.X%. cost the the total completed of with have minimal

of a of XXX $XX quarter basis approximately during an the seven early or December, has credit the interest LIBOR with December LIBOR were to approximately capital financing. with $XXX on of fourth us of a Inaugural of into that debt plus in refinanced with hand we our XXXX. bears Freddie to term loan million versus pricing received and revolving Group a with existing consisted used Proceeds and mature in at support with refinancing loan The XXX look million $XXX was forward points. total XXXX and prior capacity along our and million the credit facility manage in to Then, to October, option. the basis one XXX facility credit facility appreciate improvement efficiently XXXX allowing relationship basis from entered of facility pay-off $XXX matures by first year cash extension adds Mac. the in credit The million We structure points, facility, Bank flexibility to years we from cash. for we the activity secured more our a Our growing has annually of them. our following: this plus points The scheduled

versus quarter annualized primarily our along for per of quarter quarter expenses refinancing, by decrease to an NOI result basis fourth the our million and million management million, bridge $X quarter. from comp, related from the Results results, share for roughly as and quarter. IL to of third included XX third was the AFFO of expense compared million as financial AFFO in totaled lower which the our line by to versus in decrease bridge third quarter a fourth reversals well as as average third items the previously from share. utility XX% for improvement $XXX third costs. the $XX benefit improved one-time X.X% compared resulted $XX.X the coupon refinancing fees with per $X.XX to was in an Turning managed due property of the of points the workers’ performance for million, debt Interest to a with or lower loan our $X.XX $XX.X increase mentioned. interest in million our the taxes were $X.XX quarter, savings NOI of our quarter driven as for increase portfolios, quarter. one-time a the and total of the accruals fourth to of was expense loan G&A the savings well quarter, per AL of improvement a driven share, the $XX.X XX% The operating of in X% fourth

total G&A as meaningfully first which in in quarter company a the XXXX internalization of result on decrease Xst. We the will we beginning expect January the completed of

due as facility, cash refinanced total December as to debt On down sheet, to new of from $XX debt the pay balance our XX, use decreased cash the well million was with $XXX million credit refinancing as of primarily to revolving that costs.

is outlook finish we Now guidance first I time will with the with our our which transparency for XXXX. This providing and analysts. commitment improving is result investors communication of the to are in

IL have our for AL per portfolio that per we following LIBOR to same-store assume debt, managed assumptions. We we and the million XX for minus XX% spot which the to range and NOI December $X.XX experienced $XX between continuing floating our trends we line AFFO to estimates. assume range with $X.XX housing is four of our general, in Three, G&A expect of senior that continue rate reflects is between Two, $XX to rate, portfolio we portfolio In share, pressures. will One, we forward is our approximately X% our portfolio million. at outperform X%. XXst to expect with in X.X%, curve share assume continuing which which to experience –

and $X.XX my weighted shares the changes we point With share. operator the diluted for please sensitivity, XX conclude to of line ask million the four, remarks terms every approximately In change per outstanding. to that, in basis equates $XX questions. average approximately LIBOR, I’ll assume And open of

Operator

comes Vikram Stanley. Morgan the from Your Malhotra of first line Instructions] question of [Operator

Kevin Egan

Vikram. for everybody. This is on Hi, Kevin

questions definitely of Just guidance. and thank for couple the you a here

But of you top-line to had one any positive negative seems color in around can are for quarter. operating in very that give the terms one-time expense perhaps some in in couple positive it utilities expense mentioned think you But trend accrual of of you like managed in operating performance. the of I helpful. growth? I that��s the of thinking the question same-store terms ascribed the versus was I X%, terms lower what of X% understand And guidance, pretty a fourth was

Susan Givens

Sure, picking trend. are think sort up look, Kevin. right I the of Yes, you on

some did quarter, the particularly on fourth seeing trend. the continued are favorable We in IL side. trends see favorable We

some think XXXX Obviously, assets. I with really kind guidance addressing are still them. around AL around a you in the be what are is we And portfolio. less of can bit done weakness seeing kind in the of optimism those little what

transitioning are IL came of comparable and those pretty consistent assuming we the assets to pretty looked couple over pressure are kind really years seen pretty the guidance, of the comes trends closely But portfolio when We to certain kind with last and and side. guidance really selling it on what assets. at providing AL when of with we’ve it

look benefits if of XXXX, pretty in too expecting much at we of you performance be XXXX comparable a on and positive did so we conclusions seasonality some got we So, QX XXXX. side have versus kind year in kind to wanted what IL of full QX. drawing about the just of on are based cautious sort

color a totally question, that So, bit not there. sure of am your I but that hopefully answers little

Kevin Egan

definitely. helpful. just question. one And Yes, Very then,

a in MSA. in I as I In trends your picked noticed of inventory, color range. supply terms like percentage what overall you to the up trends five – it just a construction just has of around XQ areas? seems in mile any the within terms that XQ terms little comparing provide down bit are seeing that of of Can you pressure the But a construction guess, it within gone

David Smith

David. is this Yes, sure. Kevin,

in saw, decreasing our throughout we had look XXXX – – back portfolio openings XXXX. our you second like overall quarter new again we openings peak new of going at the if think I portfolio

are what levels has like versus our supply in you that in XXXX. to and tick are portfolio significantly we down continued industry, the seeing with consistent of XXXX overall during down So, new time

look starts at out data has based are supply NIC XXXX, fairly on still the levels come we again elevated. As remain is to expected the data current looking down think I from new which encouraging. But

the independent you new in and the we trends of again, the living product and to are radius, I think assisted which at five is look portfolio our where XX% mile remain majority the those portfolio openings – our ten living. if as comparable as same

encouraged by we I well. are So, trend think that as

will So, XXXX overall, trends say, positive how remain plays to out. I’d continue and see like, we

Kevin Egan

the for we should actually Is of inventory, it’s XXX% you are inventory that community that versus taking construction So in versus terms a construction assume if what’s is that just types, AL. comparable AL, right? meaning for just

David Smith

No, that acuity types. includes both

disclosure So, markets. in types our versus our in acuity number that inventory construction of is both

Kevin Egan

then, And Okay. more just question. one

process terms review went? concluded color your kind give you consider, just strategic that you it, In now how of of you the terms of can what any in

Susan Givens

mean, saw that all some say, alternatives I in a can in really I can think, at in were the of what of I limited company kind Obviously, the Sure. we little were in that say we took the what of the things. terms when the position. looked initiatives I items impediments a to bit you good putting biggest

was May management then Holiday we – the then, most structure issues. the and had notably, in the lease dividend that those So, that course, external and of terminated all are back with

good very place. impediment were real company putting we so, kind in approach thought a we what addressing proactive I of to took a think, to And the

we the more good a we’ve are we done number of and to and a - think I company like in in to said focused a lot a certainly be as of made those progress drive is of I kind think so, place. But there company initiatives. think steps value put that still my on taken huge can comments, that we that I And

Kevin Egan

Okay. for lot Thanks congratulations quarter. on That’s and the it me. a

Susan Givens

Thanks, Kevin.

Operator

are [Operator there no call. in Instructions] And at questions This queue. this time, further today’s concludes conference

disconnect. now may You

Jane Ryu	Vice President
Susan Givens	Chief Executive Officer
David Smith	Chief Financial Officer
Bhairav Patel	EVP of Finance and Accounting
Kevin Egan	Morgan Stanley

New Senior Investment (SNR) 22 Feb 192018 Q4 Earnings call transcript