Price Graph
Price
Yield
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Maryland
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04-3445278
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(State or Other Jurisdiction of Incorporation or
Organization)
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(IRS Employer Identification No.)
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Large accelerated filer ☒
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Title Of Each Class
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Trading Symbols(s)
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Name Of Each Exchange On Which Registered
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Common Shares of Beneficial Interest
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SNH
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The Nasdaq Stock Market LLC
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5.625% Senior Notes due 2042
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SNHNI
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The Nasdaq Stock Market LLC
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6.25% Senior Notes due 2046
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SNHNL
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The Nasdaq Stock Market LLC
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March 31,
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December 31,
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2019
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2018
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ASSETS
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Real estate properties:
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Land
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$
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837,575
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$
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844,567
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Buildings and improvements
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7,022,101
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7,031,733
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Total real estate properties, gross
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7,859,676
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7,876,300
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Accumulated depreciation
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(1,560,690
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)
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(1,534,392
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)
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Total real estate properties, net
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6,298,986
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6,341,908
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Cash and cash equivalents
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39,875
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54,976
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Restricted cash
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14,877
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15,095
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Acquired real estate leases and other intangible assets, net
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401,209
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419,244
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Other assets, net
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390,953
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329,203
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Total assets
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$
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7,145,900
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$
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7,160,426
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LIABILITIES AND EQUITY
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Unsecured revolving credit facility
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$
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225,000
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$
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139,000
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Unsecured term loans, net
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548,493
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548,286
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Senior unsecured notes, net
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2,217,989
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2,216,945
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Secured debt and capital leases, net
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742,883
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744,186
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Accrued interest
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35,241
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26,182
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Assumed real estate lease obligations, net
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83,919
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86,304
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Other liabilities
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178,937
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219,653
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Total liabilities
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4,032,462
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3,980,556
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Commitments and contingencies
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Equity:
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Equity attributable to common shareholders:
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Common shares of beneficial interest, $.01 par value: 300,000,000 shares authorized, 237,729,900 shares issued and outstanding at March 31, 2019 and December 31, 2018
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2,377
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2,377
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Additional paid in capital
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4,611,634
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4,611,419
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Cumulative net income
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2,170,878
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2,140,796
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Cumulative other comprehensive loss
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(200
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)
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(266
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)
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Cumulative distributions
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(3,823,928
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)
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(3,731,214
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)
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Total equity attributable to common shareholders
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2,960,761
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3,023,112
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Noncontrolling interest:
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Total equity attributable to noncontrolling interest
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152,677
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156,758
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Total equity
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3,113,438
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3,179,870
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Total liabilities and equity
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$
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7,145,900
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$
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7,160,426
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Three Months Ended March 31,
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||||||
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2019
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2018
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Revenues:
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Rental income
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$
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158,241
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$
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173,728
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Residents fees and services
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108,045
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102,042
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Total revenues
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266,286
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275,770
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Expenses:
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Property operating expenses
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117,222
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108,098
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Depreciation and amortization
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72,230
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70,339
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General and administrative
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9,816
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25,118
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Acquisition and certain other transaction related costs
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7,814
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20
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Impairment of assets
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6,206
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—
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Total expenses
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213,288
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203,575
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(Loss) gain on sale of properties
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(122
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)
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181,154
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Dividend income
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923
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659
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Unrealized gains and losses on equity securities, net
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22,932
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27,241
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Interest and other income
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114
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54
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Interest expense (including net amortization of debt premiums, discounts and issuance costs of $1,652 and $1,411, respectively)
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(45,611
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)
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(43,552
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)
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Loss on early extinguishment of debt
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—
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(130
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)
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Income from continuing operations before income tax expense and equity in earnings of an investee
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31,234
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237,621
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Income tax expense
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(134
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)
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(260
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)
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Equity in earnings of an investee
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404
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44
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Net income
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31,504
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237,405
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Net income attributable to noncontrolling interest
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(1,422
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)
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(1,383
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)
|
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Net income attributable to common shareholders
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$
|
30,082
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$
|
236,022
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Other comprehensive income:
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Equity in unrealized gain (loss) of an investee
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66
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(93
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)
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Other comprehensive income (loss)
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66
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(93
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)
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Comprehensive income
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31,570
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237,312
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Comprehensive income attributable to noncontrolling interest
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(1,422
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)
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(1,383
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)
|
||
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Comprehensive income attributable to common shareholders
|
|
$
|
30,148
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$
|
235,929
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|
||||
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Weighted average common shares outstanding (basic)
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|
237,568
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|
237,478
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Weighted average common shares outstanding (diluted)
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237,600
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|
237,493
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|
||||
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Per common share amounts (basic and diluted):
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Net income attributable to common shareholders
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$
|
0.13
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$
|
0.99
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Number of
Shares
|
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Common
Shares
|
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Additional
Paid-in
Capital
|
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Cumulative
Net Income
|
|
Cumulative Other
Comprehensive Income (Loss) |
|
Cumulative Distributions
|
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Total Equity Attributable to Common Shareholders
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|
Total Equity Attributable to Noncontrolling
Interest
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Total Equity
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|||||||||||||||||
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Balance at December 31, 2018:
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237,729,900
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$
|
2,377
|
|
|
$
|
4,611,419
|
|
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$
|
2,140,796
|
|
|
$
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(266
|
)
|
|
$
|
(3,731,214
|
)
|
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$
|
3,023,112
|
|
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$
|
156,758
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$
|
3,179,870
|
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|
Comprehensive income (loss)
|
|
—
|
|
|
—
|
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|
—
|
|
|
30,082
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|
|
66
|
|
|
—
|
|
|
30,148
|
|
|
1,422
|
|
|
31,570
|
|
||||||||
|
Distributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(92,714
|
)
|
|
(92,714
|
)
|
|
—
|
|
|
(92,714
|
)
|
||||||||
|
Share grants
|
|
—
|
|
|
—
|
|
|
215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|
—
|
|
|
215
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|
||||||||
|
Distributions to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,503
|
)
|
|
(5,503
|
)
|
||||||||
|
Balance at March 31, 2019:
|
|
237,729,900
|
|
|
$
|
2,377
|
|
|
$
|
4,611,634
|
|
|
$
|
2,170,878
|
|
|
$
|
(200
|
)
|
|
$
|
(3,823,928
|
)
|
|
$
|
2,960,761
|
|
|
$
|
152,677
|
|
|
$
|
3,113,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
||||||||
|
Balance at December 31, 2017:
|
|
237,630,409
|
|
|
$
|
2,376
|
|
|
$
|
4,609,316
|
|
|
$
|
1,766,495
|
|
|
$
|
87,231
|
|
|
$
|
(3,360,468
|
)
|
|
$
|
3,104,950
|
|
|
$
|
172,238
|
|
|
$
|
3,277,188
|
|
|
Cumulative adjustment upon adoption of ASU No. 2016-01
|
|
—
|
|
|
—
|
|
|
—
|
|
|
87,429
|
|
|
(87,429
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
Balance at January 1, 2018:
|
|
237,630,409
|
|
|
2,376
|
|
|
4,609,316
|
|
|
1,853,924
|
|
|
(198
|
)
|
|
(3,360,468
|
)
|
|
3,104,950
|
|
|
172,238
|
|
|
3,277,188
|
|
||||||||
|
Comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
236,022
|
|
|
(93
|
)
|
|
—
|
|
|
235,929
|
|
|
1,383
|
|
|
237,312
|
|
||||||||
|
Distributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(92,674
|
)
|
|
(92,674
|
)
|
|
—
|
|
|
(92,674
|
)
|
||||||||
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Share grants
|
|
3,000
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
47
|
|
||||||||
|
Share repurchases
|
|
(4,628
|
)
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
(89
|
)
|
||||||||
|
Distributions to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,667
|
)
|
|
(5,667
|
)
|
||||||||
|
Balance at March 31, 2018:
|
|
237,628,781
|
|
|
$
|
2,376
|
|
|
$
|
4,609,274
|
|
|
$
|
2,089,946
|
|
|
$
|
(291
|
)
|
|
$
|
(3,453,142
|
)
|
|
$
|
3,248,163
|
|
|
$
|
167,954
|
|
|
$
|
3,416,117
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Cash flows from operating activities:
|
|
|
|
|
|
|
||
|
Net income
|
|
$
|
31,504
|
|
|
$
|
237,405
|
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
||
|
Depreciation and amortization
|
|
72,230
|
|
|
70,339
|
|
||
|
Amortization of debt issuance costs and debt discounts and premiums
|
|
1,652
|
|
|
1,411
|
|
||
|
Straight line rental income
|
|
(1,934
|
)
|
|
(2,993
|
)
|
||
|
Amortization of acquired real estate leases and other intangible assets
|
|
(1,525
|
)
|
|
(1,381
|
)
|
||
|
Loss on early extinguishment of debt
|
|
—
|
|
|
130
|
|
||
|
Impairment of assets
|
|
6,206
|
|
|
—
|
|
||
|
Loss (gain) on sale of properties
|
|
122
|
|
|
(181,154
|
)
|
||
|
Unrealized gains and losses on equity securities, net
|
|
(22,932
|
)
|
|
(27,241
|
)
|
||
|
Other non-cash adjustments
|
|
(943
|
)
|
|
(943
|
)
|
||
|
Equity in earnings of an investee
|
|
(404
|
)
|
|
(44
|
)
|
||
|
Change in assets and liabilities:
|
|
|
|
|
|
|
||
|
Other assets
|
|
(5,862
|
)
|
|
3,097
|
|
||
|
Accrued interest
|
|
9,059
|
|
|
17,088
|
|
||
|
Other liabilities
|
|
(45,658
|
)
|
|
(31,680
|
)
|
||
|
Net cash provided by operating activities
|
|
41,515
|
|
|
84,034
|
|
||
|
|
|
|
|
|
||||
|
Cash flows from investing activities:
|
|
|
|
|
|
|
||
|
Real estate acquisitions and deposits
|
|
—
|
|
|
(122,221
|
)
|
||
|
Real estate improvements
|
|
(46,237
|
)
|
|
(13,443
|
)
|
||
|
Proceeds from sale of properties
|
|
2,929
|
|
|
216,013
|
|
||
|
Net cash (used in) provided by investing activities
|
|
(43,308
|
)
|
|
80,349
|
|
||
|
|
|
|
|
|
||||
|
Cash flows from financing activities:
|
|
|
|
|
|
|
||
|
Proceeds from issuance of senior unsecured notes, net
|
|
—
|
|
|
491,560
|
|
||
|
Proceeds from borrowings on revolving credit facility
|
|
178,000
|
|
|
316,000
|
|
||
|
Repayments of borrowings on revolving credit facility
|
|
(92,000
|
)
|
|
(857,000
|
)
|
||
|
Repayment of other debt
|
|
(1,309
|
)
|
|
(6,166
|
)
|
||
|
Loss on early extinguishment of debt settled in cash
|
|
—
|
|
|
(130
|
)
|
||
|
Payment of debt issuance costs
|
|
—
|
|
|
(4,296
|
)
|
||
|
Repurchase of common shares
|
|
—
|
|
|
(90
|
)
|
||
|
Distributions to noncontrolling interest
|
|
(5,503
|
)
|
|
(5,667
|
)
|
||
|
Distributions to shareholders
|
|
(92,714
|
)
|
|
(92,674
|
)
|
||
|
Net cash used in financing activities
|
|
(13,526
|
)
|
|
(158,463
|
)
|
||
|
|
|
|
|
|
||||
|
(Decrease) increase in cash and cash equivalents and restricted cash
|
|
(15,319
|
)
|
|
5,920
|
|
||
|
Cash and cash equivalents and restricted cash at beginning of period
|
|
70,071
|
|
|
47,321
|
|
||
|
Cash and cash equivalents and restricted cash at end of period
|
|
$
|
54,752
|
|
|
$
|
53,241
|
|
|
|
|
|
|
|
||||
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Supplemental cash flows information:
|
|
|
|
|
||||
|
Interest paid
|
|
$
|
35,034
|
|
|
$
|
25,053
|
|
|
Income taxes paid
|
|
$
|
31
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||
|
Non-cash investing activities:
|
|
|
|
|
||||
|
Acquisitions funded by assumed debt
|
|
$
|
—
|
|
|
$
|
(27,798
|
)
|
|
|
|
|
|
|
||||
|
Non-cash financing activities:
|
|
|
|
|
||||
|
Assumption of mortgage notes payable
|
|
$
|
—
|
|
|
$
|
27,798
|
|
|
|
|
As of March 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Cash and cash equivalents
|
|
$
|
39,875
|
|
|
$
|
39,161
|
|
|
Restricted cash
(1)
|
|
14,877
|
|
|
14,080
|
|
||
|
Total cash and cash equivalents and restricted cash shown in the statements of cash flows
|
|
$
|
54,752
|
|
|
$
|
53,241
|
|
|
Year
|
|
Amount
|
||
|
2019
|
|
$
|
373,701
|
|
|
2020
|
|
347,718
|
|
|
|
2021
|
|
324,230
|
|
|
|
2022
|
|
302,712
|
|
|
|
2023
|
|
279,407
|
|
|
|
Thereafter
|
|
1,105,830
|
|
|
|
Total
|
|
$
|
2,733,598
|
|
|
Date of Sale
|
|
Location
|
|
Type of Property
|
|
Number of Properties
|
|
Gross Sales Price
(1)
|
||
|
February 2019
|
|
Florida
|
|
MOB
|
|
1
|
|
$
|
2,900
|
|
|
March 2019
|
|
Massachusetts
|
|
MOB
|
|
1
|
|
75
|
|
|
|
|
|
|
|
|
|
2
|
|
$
|
2,975
|
|
|
(1)
|
Gross sales price excludes closing costs.
|
|
|
|
|
|
Fair Value at Reporting Date Using
|
||||||||||||
|
|
|
|
|
Quoted Prices in
Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
||||||||
|
Description
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
|
Recurring Fair Value Measurements
|
|
|
|
|
|
|
|
|
||||||||
|
Assets:
|
|
|
|
|
|
|
|
|
||||||||
|
Investment in RMR Inc.
(1)
|
|
$
|
160,830
|
|
|
$
|
160,830
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Investment in Five Star
(2)
|
|
$
|
4,129
|
|
|
$
|
4,129
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(1)
|
Our
2,637,408
shares of class A common stock of The RMR Group Inc., or RMR Inc., which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is
$69,826
as of
March 31, 2019
. During the
three
months ended
March 31, 2019
, we recorded an unrealized gain of
$20,836
to adjust the carrying value of our investment in RMR Inc. class A common shares to their fair value.
|
|
(2)
|
Our
4,235,000
common shares of Five Star Senior Living Inc., or Five Star, which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our adjusted cost basis for these shares is
$6,353
as of
March 31, 2019
. During the
three
months ended
March 31, 2019
, we recorded an unrealized
gain
of
$2,096
to adjust the carrying value of our investment in Five Star common shares to their fair value.
|
|
|
|
|
|
Quoted Prices in
Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
||||||||
|
Description
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
|
Non-Recurring Fair Value Measurements
|
|
|
|
|
|
|
||||||||||
|
Real estate properties held for sale
|
|
$
|
7,489
|
|
|
$
|
—
|
|
|
$
|
7,489
|
|
|
$
|
—
|
|
|
|
|
As of March 31, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
Description
|
|
Carrying Amount
(1)
|
|
Estimated Fair Value
|
|
Carrying Amount
(1)
|
|
Estimated Fair Value
|
||||||||
|
Senior unsecured notes
|
|
$
|
2,217,989
|
|
|
$
|
2,225,390
|
|
|
$
|
2,216,945
|
|
|
$
|
2,138,202
|
|
|
Secured debts
(2)
|
|
742,883
|
|
|
720,339
|
|
|
744,186
|
|
|
723,003
|
|
||||
|
|
|
$
|
2,960,872
|
|
|
$
|
2,945,729
|
|
|
$
|
2,961,131
|
|
|
$
|
2,861,205
|
|
|
(1)
|
Includes unamortized debt issuance costs, premiums and discounts.
|
|
(2)
|
We assumed certain of these secured debts in connection with our acquisitions of certain properties. We recorded the assumed mortgage notes debts at estimated fair value on the date of acquisition and we are amortizing the fair value adjustments, if any, to interest expense over the respective terms of the mortgage notes to reduce interest expense to the estimated market interest rates as of the date of acquisition.
|
|
|
|
For the Three Months Ended March 31, 2019
|
||||||||||||||||||
|
|
|
MOBs
|
|
Triple Net Leased Senior Living Communities
|
|
Managed Senior Living Communities
|
|
All Other Operations
|
|
Consolidated
|
||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Rental income
|
|
$
|
103,221
|
|
|
$
|
50,320
|
|
|
$
|
—
|
|
|
$
|
4,700
|
|
|
$
|
158,241
|
|
|
Residents fees and services
|
|
—
|
|
|
—
|
|
|
108,045
|
|
|
—
|
|
|
108,045
|
|
|||||
|
Total revenues
|
|
103,221
|
|
|
50,320
|
|
|
108,045
|
|
|
4,700
|
|
|
266,286
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Property operating expenses
|
|
32,177
|
|
|
—
|
|
|
85,045
|
|
|
—
|
|
|
117,222
|
|
|||||
|
Depreciation and amortization
|
|
36,101
|
|
|
19,422
|
|
|
15,760
|
|
|
947
|
|
|
72,230
|
|
|||||
|
General and administrative
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,816
|
|
|
9,816
|
|
|||||
|
Acquisition and certain other transaction related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,814
|
|
|
7,814
|
|
|||||
|
Impairment of assets
|
|
—
|
|
|
6,206
|
|
|
—
|
|
|
—
|
|
|
6,206
|
|
|||||
|
Total expenses
|
|
68,278
|
|
|
25,628
|
|
|
100,805
|
|
|
18,577
|
|
|
213,288
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Loss on sale of properties
|
|
(122
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(122
|
)
|
|||||
|
Dividend income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
923
|
|
|
923
|
|
|||||
|
Unrealized gains on equity securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,932
|
|
|
22,932
|
|
|||||
|
Interest and other income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
114
|
|
|
114
|
|
|||||
|
Interest expense
|
|
(6,030
|
)
|
|
(238
|
)
|
|
(820
|
)
|
|
(38,523
|
)
|
|
(45,611
|
)
|
|||||
|
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee
|
|
28,791
|
|
|
24,454
|
|
|
6,420
|
|
|
(28,431
|
)
|
|
31,234
|
|
|||||
|
Income tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(134
|
)
|
|
(134
|
)
|
|||||
|
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
404
|
|
|
404
|
|
|||||
|
Net income (loss)
|
|
28,791
|
|
|
24,454
|
|
|
6,420
|
|
|
(28,161
|
)
|
|
31,504
|
|
|||||
|
Net income attributable to noncontrolling interest
|
|
(1,422
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,422
|
)
|
|||||
|
Net income (loss) attributable to common shareholders
|
|
$
|
27,369
|
|
|
$
|
24,454
|
|
|
$
|
6,420
|
|
|
$
|
(28,161
|
)
|
|
$
|
30,082
|
|
|
|
|
As of March 31, 2019
|
||||||||||||||||||
|
|
|
MOBs
|
|
Triple Net Leased Senior Living Communities
|
|
Managed Senior Living Communities
|
|
All Other Operations
|
|
Consolidated
|
||||||||||
|
Total assets
|
|
$
|
3,325,184
|
|
|
$
|
2,030,946
|
|
|
$
|
1,388,949
|
|
|
$
|
400,821
|
|
|
$
|
7,145,900
|
|
|
|
|
For the Three Months Ended March 31, 2018
|
||||||||||||||||||
|
|
|
MOBs
|
|
Triple Net Leased Senior Living Communities
|
|
Managed Senior Living Communities
|
|
All Other Operations
|
|
Consolidated
|
||||||||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Rental income
|
|
$
|
101,151
|
|
|
$
|
67,975
|
|
|
$
|
—
|
|
|
$
|
4,602
|
|
|
$
|
173,728
|
|
|
Residents fees and services
|
|
—
|
|
|
—
|
|
|
102,042
|
|
|
—
|
|
|
102,042
|
|
|||||
|
Total revenues
|
|
101,151
|
|
|
67,975
|
|
|
102,042
|
|
|
4,602
|
|
|
275,770
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Property operating expenses
|
|
30,938
|
|
|
—
|
|
|
77,160
|
|
|
—
|
|
|
108,098
|
|
|||||
|
Depreciation and amortization
|
|
34,385
|
|
|
20,195
|
|
|
14,811
|
|
|
948
|
|
|
70,339
|
|
|||||
|
General and administrative
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,118
|
|
|
25,118
|
|
|||||
|
Acquisition and certain other transaction related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
|||||
|
Total expenses
|
|
65,323
|
|
|
20,195
|
|
|
91,971
|
|
|
26,086
|
|
|
203,575
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gain on sale of properties
|
|
—
|
|
|
181,154
|
|
|
—
|
|
|
—
|
|
|
181,154
|
|
|||||
|
Dividend income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
659
|
|
|
659
|
|
|||||
|
Unrealized gains and losses on equity securities, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,241
|
|
|
27,241
|
|
|||||
|
Interest and other income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
54
|
|
|||||
|
Interest expense
|
|
(5,909
|
)
|
|
(571
|
)
|
|
(1,327
|
)
|
|
(35,745
|
)
|
|
(43,552
|
)
|
|||||
|
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
(130
|
)
|
|
—
|
|
|
(130
|
)
|
|||||
|
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee
|
|
29,919
|
|
|
228,363
|
|
|
8,614
|
|
|
(29,275
|
)
|
|
237,621
|
|
|||||
|
Income tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(260
|
)
|
|
(260
|
)
|
|||||
|
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
44
|
|
|||||
|
Net income (loss)
|
|
29,919
|
|
|
228,363
|
|
|
8,614
|
|
|
(29,491
|
)
|
|
237,405
|
|
|||||
|
Net income attributable to noncontrolling interest
|
|
(1,383
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,383
|
)
|
|||||
|
Net income (loss) attributable to common shareholders
|
|
$
|
28,536
|
|
|
$
|
228,363
|
|
|
$
|
8,614
|
|
|
$
|
(29,491
|
)
|
|
$
|
236,022
|
|
|
|
As of December 31, 2018
|
||||||||||||||||||
|
|
MOBs
|
|
Triple Net Leased Senior Living Communities
|
|
Managed Senior Living Communities
|
|
All Other Operations
|
|
Consolidated
|
||||||||||
|
Total assets
|
$
|
3,344,581
|
|
|
$
|
2,044,939
|
|
|
$
|
1,395,657
|
|
|
$
|
375,249
|
|
|
$
|
7,160,426
|
|
|
Revenue from contracts with customers:
|
|
Three Months Ended March 31, 2019
|
||
|
Basic housing and support services
|
|
$
|
87,412
|
|
|
Medicare and Medicaid programs
|
|
8,745
|
|
|
|
Private pay and other third party payer SNF services
|
|
11,888
|
|
|
|
Total residents fees and services
|
|
$
|
108,045
|
|
|
|
|
Three Months Ended March 31,
|
||||
|
|
|
2019
|
|
2018
|
||
|
Weighted average common shares for basic earnings per share
|
|
237,568
|
|
|
237,478
|
|
|
Effect of dilutive securities: unvested share awards
|
|
32
|
|
|
15
|
|
|
Weighted average common shares for diluted earnings per share
|
|
237,600
|
|
|
237,493
|
|
|
•
|
our
five
existing master leases with Five Star for all of our senior living communities that are leased by Five Star, as well as our existing management agreements and pooling agreements with Five Star for our senior living communities that are operated by Five Star, will be terminated and replaced, or the Conversion, with new management agreements for all of these senior living communities, or collectively, the New Management Agreements;
|
|
•
|
Five Star will issue to us such number of Five Star common shares as is necessary to cause us to own, when considered together with our then owned Five Star common shares, approximately
34%
of the then outstanding Five Star common shares, and we will declare a pro rata distribution to holders of our common shares of beneficial interest
|
|
•
|
as consideration for the Five Star Share Issuances, we will provide to Five Star
$75,000
of additional consideration, or, collectively with the Conversion and the Five Star Share Issuances, the Five Star Restructuring Transactions.
|
|
(As of March 31, 2019)
|
|
Number
of Properties
|
|
Square Feet or Number of Units
|
|
|
|
Carrying Value of Investment
(1)
|
|
% of
Total Investment
|
|
Investment per Square Foot or Unit
(2)
|
|
Q1 2019 Revenues
(3)
|
|
% of
Q1 2019 Revenues
|
|
Q1 2019 NOI
(3)(4)
|
|
% of Q1 2019 NOI
|
|||||||||||||
|
Facility Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
MOBs
(5)
|
|
153
|
|
|
12,546,791
|
|
|
sq. ft.
|
|
$
|
3,746,171
|
|
|
44.6
|
%
|
|
$
|
299
|
|
|
$
|
103,098
|
|
|
38.7
|
%
|
|
$
|
71,024
|
|
|
47.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Independent living
(6)
|
|
68
|
|
|
15,090
|
|
|
|
|
2,281,288
|
|
|
27.1
|
%
|
|
$
|
151,179
|
|
|
85,151
|
|
|
32.0
|
%
|
|
35,991
|
|
|
24.1
|
%
|
|||
|
Assisted living
(6)
|
|
198
|
|
|
14,766
|
|
|
|
|
2,085,099
|
|
|
24.8
|
%
|
|
$
|
141,209
|
|
|
68,730
|
|
|
25.8
|
%
|
|
32,845
|
|
|
22.1
|
%
|
|||
|
Skilled nursing facilities
(6)
|
|
38
|
|
|
3,763
|
|
|
|
|
118,230
|
|
|
1.4
|
%
|
|
$
|
31,419
|
|
|
4,484
|
|
|
1.7
|
%
|
|
4,484
|
|
|
3.0
|
%
|
|||
|
Subtotal senior living communities
|
|
304
|
|
|
33,619
|
|
|
|
|
4,484,617
|
|
|
53.3
|
%
|
|
$
|
133,395
|
|
|
158,365
|
|
|
59.5
|
%
|
|
73,320
|
|
|
49.2
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Wellness centers
|
|
10
|
|
|
812,000
|
|
|
sq. ft.
|
|
178,109
|
|
|
2.1
|
%
|
|
$
|
219
|
|
|
4,700
|
|
|
1.8
|
%
|
|
4,700
|
|
|
3.2
|
%
|
|||
|
Total
|
|
467
|
|
|
|
|
|
|
$
|
8,408,897
|
|
|
100.0
|
%
|
|
|
|
|
$
|
266,163
|
|
|
100.0
|
%
|
|
$
|
149,044
|
|
|
100.0
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Tenant / Operator / Managed Properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
MOBs
(5)
|
|
153
|
|
|
12,546,791
|
|
|
sq. ft.
|
|
$
|
3,746,171
|
|
|
44.6
|
%
|
|
$
|
299
|
|
|
$
|
103,098
|
|
|
38.7
|
%
|
|
$
|
71,024
|
|
|
47.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Five Star (leased)
(7)
|
|
184
|
|
|
19,918
|
|
|
|
|
2,225,885
|
|
|
26.5
|
%
|
|
$
|
111,752
|
|
|
39,313
|
|
|
14.8
|
%
|
|
39,313
|
|
|
26.4
|
%
|
|||
|
Brookdale
|
|
18
|
|
|
940
|
|
|
|
|
65,912
|
|
|
0.8
|
%
|
|
$
|
70,119
|
|
|
2,015
|
|
|
0.7
|
%
|
|
2,015
|
|
|
1.4
|
%
|
|||
|
10 private senior living companies (combined)
|
|
26
|
|
|
2,995
|
|
|
|
|
464,525
|
|
|
5.5
|
%
|
|
$
|
155,100
|
|
|
8,992
|
|
|
3.4
|
%
|
|
8,992
|
|
|
6.0
|
%
|
|||
|
Subtotal triple net leased senior living communities
|
|
228
|
|
|
23,853
|
|
|
|
|
2,756,322
|
|
|
32.8
|
%
|
|
$
|
115,555
|
|
|
50,320
|
|
|
18.9
|
%
|
|
50,320
|
|
|
33.8
|
%
|
|||
|
Managed senior living communities
(8)
|
|
76
|
|
|
9,766
|
|
|
|
|
1,728,295
|
|
|
20.5
|
%
|
|
$
|
176,971
|
|
|
108,045
|
|
|
40.6
|
%
|
|
23,000
|
|
|
15.4
|
%
|
|||
|
Subtotal senior living communities
|
|
304
|
|
|
33,619
|
|
|
|
|
4,484,617
|
|
|
53.3
|
%
|
|
$
|
133,395
|
|
|
158,365
|
|
|
59.5
|
%
|
|
73,320
|
|
|
49.2
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Wellness centers
|
|
10
|
|
|
812,000
|
|
|
sq. ft.
|
|
178,109
|
|
|
2.1
|
%
|
|
$
|
219
|
|
|
4,700
|
|
|
1.8
|
%
|
|
4,700
|
|
|
3.2
|
%
|
|||
|
Total
|
|
467
|
|
|
|
|
|
|
$
|
8,408,897
|
|
|
100.0
|
%
|
|
|
|
$
|
266,163
|
|
|
100.0
|
%
|
|
$
|
149,044
|
|
|
100.0
|
%
|
|||
|
|
|
Rent Coverage
|
|
Occupancy
|
||||||||
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
|
MOBs
(5)
|
|
N/A
|
|
|
N/A
|
|
|
94.0
|
%
|
|
95.1
|
%
|
|
|
|
|
|
|
|
|
|
|
||||
|
Five Star
(10)
|
|
0.99
|
x
|
|
1.15
|
x
|
|
82.7
|
%
|
|
82.3
|
%
|
|
Brookdale
|
|
2.05
|
x
|
|
2.30
|
x
|
|
84.6
|
%
|
|
84.0
|
%
|
|
9 private senior living companies (combined)
(11)
|
|
1.25
|
x
|
|
1.27
|
x
|
|
86.0
|
%
|
|
87.9
|
%
|
|
Subtotal triple net leased senior living communities
|
|
1.06
|
x
|
|
1.21
|
x
|
|
83.2
|
%
|
|
83.1
|
%
|
|
Managed senior living communities
(8)
|
|
N/A
|
|
|
N/A
|
|
|
86.1
|
%
|
|
85.8
|
%
|
|
Subtotal senior living communities
|
|
1.06
|
x
|
|
1.21
|
x
|
|
84.0
|
%
|
|
83.9
|
%
|
|
|
|
|
|
|
|
|
|
|
||||
|
Wellness centers
|
|
1.99
|
x
|
|
1.78
|
x
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Total
|
|
1.12
|
x
|
|
1.24
|
x
|
|
|
|
|
|
|
|
(1)
|
Represents the gross book value of real estate assets before depreciation and purchase price allocations, less impairment write downs, if any. Amounts exclude investment carrying value of properties classified as held for sale as of March 31, 2019, which are included in other assets in our condensed consolidated balance sheet.
|
|
(2)
|
Represents carrying value of investment divided by number of rentable square feet or living units, as applicable, at
March 31, 2019
.
|
|
(3)
|
Excludes $123 of revenues and $20 of NOI from properties sold or for which there was a transfer of operations during the three months ended March 31, 2019.
|
|
(4)
|
NOI is defined and calculated by reportable segment. Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures.”
|
|
(5)
|
Our MOB leases include some triple net leases where, in addition to paying fixed rents, the tenants assume the obligation to operate and maintain the properties at their expense, and some net and modified gross leases where we are responsible for the operation and maintenance of the properties and we charge tenants for some or all of the property operating costs. A small percentage of our MOB leases are "full-service" leases where we receive fixed rent from our tenants and no reimbursement for our property operating costs.
|
|
(6)
|
Senior living communities are categorized by the type of living units which constitute a majority of the living units at the community.
|
|
(7)
|
See Notes 9 and 14 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information on our restructuring arrangements with Five Star pursuant to the Transaction Agreement.
|
|
(8)
|
These senior living communities are managed by Five Star. The occupancy for the 12 month period ended, or, if shorter, from the date of acquisitions through,
March 31, 2019
was
86.2%
.
|
|
(9)
|
Operating data for MOBs are presented as of
March 31, 2019
and
2018
and include (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease by tenants; operating data for other properties, tenants and managers are presented based upon the operating results provided by our tenants and manager for the 12 months ended
December 31, 2018
and
2017
, or the most recent prior period for which tenant operating results are made available to us. Rent coverage is calculated as operating cash flows from our tenants’ facility operations of our properties, before subordinated charges, if any, divided by rents payable to us. We have not independently verified tenant operating data. Excludes data for periods prior to our ownership of certain properties, as well as data for properties sold or classified as held for sale during the periods presented.
|
|
(10)
|
Rent coverage is calculated based on annualized rental income as of December 31, 2018. If the terms of the Transaction Agreement had been in effect as of December 31, 2018, based on the $132,000 of annualized rental
|
|
(11)
|
Excludes data for one senior living community for which we transferred the operations of the community to our TRS and entered into a management agreement with Five Star for Five Star to manage the community for our account in April 2019.
|
|
Year
|
|
Annualized Rental Income
(1)
|
|
Percent of Total Annualized Rental Income Expiring
|
|
Cumulative Percentage of Annualized Rental Income Expiring
|
||||
|
2019
(2)
|
|
$
|
34,707
|
|
|
8.6
|
%
|
|
8.6
|
%
|
|
2020
|
|
34,911
|
|
|
8.7
|
%
|
|
17.3
|
%
|
|
|
2021
|
|
28,490
|
|
|
7.1
|
%
|
|
24.4
|
%
|
|
|
2022
|
|
33,404
|
|
|
8.3
|
%
|
|
32.7
|
%
|
|
|
2023
|
|
21,995
|
|
|
5.5
|
%
|
|
38.2
|
%
|
|
|
2024
|
|
46,877
|
|
|
11.6
|
%
|
|
49.8
|
%
|
|
|
2025
|
|
18,174
|
|
|
4.5
|
%
|
|
54.3
|
%
|
|
|
2026
|
|
25,786
|
|
|
6.4
|
%
|
|
60.7
|
%
|
|
|
2027
|
|
10,359
|
|
|
2.6
|
%
|
|
63.3
|
%
|
|
|
2028 and thereafter
|
|
148,160
|
|
|
36.7
|
%
|
|
100.0
|
%
|
|
|
Total
|
|
$
|
402,863
|
|
|
100.0
|
%
|
|
|
|
|
(1)
|
Annualized rental income is based on rents pursuant to existing leases as of March 31, 2019, including straight line rent adjustments, estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our MOBs. Rental income amounts also include 100% of rental income as reported under GAAP from a property owned by a joint venture in which we own a 55% equity interest.
|
|
(2)
|
Includes two MOB tenants with aggregate annualized rental income of
$17,698
that we expect to vacate during the second quarter of 2019.
|
|
Year
|
|
Number of Tenants
|
|
Percent of Total Number of Tenancies Expiring
|
|
Cumulative Percentage of Number of Tenancies Expiring
|
|||
|
2019
(1)
|
|
114
|
|
|
16.9
|
%
|
|
16.9
|
%
|
|
2020
|
|
105
|
|
|
15.5
|
%
|
|
32.4
|
%
|
|
2021
|
|
94
|
|
|
13.9
|
%
|
|
46.3
|
%
|
|
2022
|
|
97
|
|
|
14.3
|
%
|
|
60.6
|
%
|
|
2023
|
|
59
|
|
|
8.7
|
%
|
|
69.3
|
%
|
|
2024
|
|
61
|
|
|
9.0
|
%
|
|
78.3
|
%
|
|
2025
|
|
40
|
|
|
5.9
|
%
|
|
84.2
|
%
|
|
2026
|
|
33
|
|
|
4.9
|
%
|
|
89.1
|
%
|
|
2027
|
|
23
|
|
|
3.4
|
%
|
|
92.5
|
%
|
|
2028 and thereafter
|
|
50
|
|
|
7.5
|
%
|
|
100.0
|
%
|
|
Total
|
|
676
|
|
|
100.0
|
%
|
|
|
|
|
(1)
|
Includes two MOB tenants that we expect to vacate during the second quarter of 2019.
|
|
Year
|
|
Square Feet
(1)
|
|
Percent of Total Square Feet Expiring
|
|
Cumulative Percent of Total Square Feet Expiring
|
|||
|
2019
(2)
|
|
964,146
|
|
|
8.2
|
%
|
|
8.2
|
%
|
|
2020
|
|
1,446,336
|
|
|
12.3
|
%
|
|
20.5
|
%
|
|
2021
|
|
867,206
|
|
|
7.4
|
%
|
|
27.9
|
%
|
|
2022
|
|
1,202,812
|
|
|
10.2
|
%
|
|
38.1
|
%
|
|
2023
|
|
1,075,104
|
|
|
9.1
|
%
|
|
47.2
|
%
|
|
2024
|
|
1,718,691
|
|
|
14.6
|
%
|
|
61.8
|
%
|
|
2025
|
|
779,948
|
|
|
6.6
|
%
|
|
68.4
|
%
|
|
2026
|
|
890,227
|
|
|
7.5
|
%
|
|
75.9
|
%
|
|
2027
|
|
412,573
|
|
|
3.5
|
%
|
|
79.4
|
%
|
|
2028 and thereafter
|
2,434,556
|
|
|
20.6
|
%
|
|
100.0
|
%
|
|
|
Total
|
|
11,791,599
|
|
|
100.0
|
%
|
|
|
|
|
(1)
|
Includes 100% of square feet from a property owned by a joint venture in which we own a 55% equity interest.
|
|
(2)
|
Includes two MOB tenants that we expect to vacate during the second quarter of 2019 the
522,118
of aggregate square feet leased to them.
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Revenues:
|
|
|
|
|
||||
|
MOBs
|
|
$
|
103,221
|
|
|
$
|
101,151
|
|
|
Triple net leased senior living communities
|
|
50,320
|
|
|
67,975
|
|
||
|
Managed senior living communities
|
|
108,045
|
|
|
102,042
|
|
||
|
All other operations
|
|
4,700
|
|
|
4,602
|
|
||
|
Total revenues
|
|
$
|
266,286
|
|
|
$
|
275,770
|
|
|
|
|
|
|
|
||||
|
Net income (loss) attributable to common shareholders:
|
|
|
|
|
||||
|
MOBs
|
|
$
|
27,369
|
|
|
$
|
28,536
|
|
|
Triple net leased senior living communities
|
|
24,454
|
|
|
228,363
|
|
||
|
Managed senior living communities
|
|
6,420
|
|
|
8,614
|
|
||
|
All other operations
|
|
(28,161
|
)
|
|
(29,491
|
)
|
||
|
Net income attributable to common shareholders
|
|
$
|
30,082
|
|
|
$
|
236,022
|
|
|
|
|
All Properties
|
|
Comparable Properties
(1)
|
||||||||
|
|
|
As of and For the Three Months
|
|
As of and For the Three Months
|
||||||||
|
|
|
Ended March 31,
|
|
Ended March 31,
|
||||||||
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
|
Total buildings
|
|
153
|
|
|
155
|
|
|
139
|
|
|
139
|
|
|
Total square feet
(2)
|
|
12,547
|
|
|
12,602
|
|
|
11,741
|
|
|
11,732
|
|
|
Occupancy
(3)
|
|
94.0
|
%
|
|
95.1
|
%
|
|
93.8
|
%
|
|
95.1
|
%
|
|
(1)
|
Consists of MOBs we have owned continuously since
January 1, 2018
, including our MOB (two buildings) owned in a joint venture arrangement in which we own a 55% equity interest; excludes properties classified as held for sale.
|
|
(2)
|
Prior periods exclude space re-measurements made subsequent to those periods.
|
|
(3)
|
MOB occupancy includes (i) space being fitted out for occupancy and (ii) space which is leased but is not occupied or is being offered for sublease by tenants.
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
|
Rental income
|
|
$
|
103,221
|
|
|
$
|
101,151
|
|
|
$
|
2,070
|
|
|
2.0
|
%
|
|
Property operating expenses
|
|
(32,177
|
)
|
|
(30,938
|
)
|
|
1,239
|
|
|
4.0
|
%
|
|||
|
Net operating income (NOI)
|
|
71,044
|
|
|
70,213
|
|
|
831
|
|
|
1.2
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
|
Depreciation and amortization expense
|
|
(36,101
|
)
|
|
(34,385
|
)
|
|
1,716
|
|
|
5.0
|
%
|
|||
|
Loss on sale of properties
|
|
(122
|
)
|
|
—
|
|
|
122
|
|
|
100.0
|
%
|
|||
|
Interest expense
|
|
(6,030
|
)
|
|
(5,909
|
)
|
|
121
|
|
|
2.0
|
%
|
|||
|
Net income
|
|
28,791
|
|
|
29,919
|
|
|
(1,128
|
)
|
|
(3.8
|
)%
|
|||
|
Net income attributable to noncontrolling interest
|
|
(1,422
|
)
|
|
(1,383
|
)
|
|
39
|
|
|
2.8
|
%
|
|||
|
Net income attributable to common shareholders
|
|
$
|
27,369
|
|
|
$
|
28,536
|
|
|
$
|
(1,167
|
)
|
|
(4.1
|
)%
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
|
Rental income
|
|
$
|
98,080
|
|
|
$
|
96,858
|
|
|
$
|
1,222
|
|
|
1.3
|
%
|
|
Property operating expenses
|
|
(30,596
|
)
|
|
(29,637
|
)
|
|
959
|
|
|
3.2
|
%
|
|||
|
Net operating income (NOI)
|
|
67,484
|
|
|
67,221
|
|
|
263
|
|
|
0.4
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
|
Depreciation and amortization expense
|
|
(33,029
|
)
|
|
(32,842
|
)
|
|
187
|
|
|
0.6
|
%
|
|||
|
Interest expense
|
|
(5,909
|
)
|
|
(5,906
|
)
|
|
3
|
|
|
0.1
|
%
|
|||
|
Net income
|
|
28,546
|
|
|
28,473
|
|
|
73
|
|
|
0.3
|
%
|
|||
|
Net income attributable to noncontrolling interest
|
|
(1,422
|
)
|
|
(1,383
|
)
|
|
39
|
|
|
2.8
|
%
|
|||
|
Net income attributable to common shareholders
|
|
$
|
27,124
|
|
|
$
|
27,090
|
|
|
$
|
34
|
|
|
0.1
|
%
|
|
|
|
All Properties
|
|
Comparable Properties
(1)
|
||||||||
|
|
|
As of and For the Three Months
|
|
As of and For the Three Months
|
||||||||
|
|
|
Ended March 31,
|
|
Ended March 31,
|
||||||||
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
|
Total properties
|
|
228
|
|
|
233
|
|
|
208
|
|
|
208
|
|
|
# of units
|
|
23,853
|
|
|
24,947
|
|
|
22,302
|
|
|
22,302
|
|
|
Tenant operating data
(2)
|
|
|
|
|
|
|
|
|
||||
|
Occupancy
|
|
83.2
|
%
|
|
83.1
|
%
|
|
83.2
|
%
|
|
83.1
|
%
|
|
Rent coverage
|
|
1.06
|
x
|
|
1.21
|
x
|
|
1.06
|
x
|
|
1.21
|
x
|
|
(1)
|
Consists of triple net leased senior living communities we have owned and operated by the same operator continuously since
January 1, 2018
; excludes communities classified as held for sale, if any.
|
|
(2)
|
All tenant operating data presented are based upon the operating results provided by our tenants for the 12 months ended
December 31, 2018
and
2017
or the most recent prior period for which tenant operating results are available to us. Rent coverage is calculated as operating cash flows from our triple net lease tenants’ operations of our properties, before subordinated charges, if any, divided by triple net lease minimum rents payable to us. We have not independently verified tenant operating data. Excludes data for historical periods prior to our ownership of certain properties, as well as data for properties sold or classified as held for sale during the periods presented.
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
|
Rental Income
|
|
$
|
50,320
|
|
|
$
|
67,975
|
|
|
$
|
(17,655
|
)
|
|
(26.0
|
)%
|
|
Net operating income (NOI)
|
|
50,320
|
|
|
67,975
|
|
|
(17,655
|
)
|
|
(26.0
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
|
Depreciation and amortization expense
|
|
(19,422
|
)
|
|
(20,195
|
)
|
|
(773
|
)
|
|
(3.8
|
)%
|
|||
|
Impairment of assets
|
|
(6,206
|
)
|
|
—
|
|
|
6,206
|
|
|
100.0
|
%
|
|||
|
Gain on sale of properties
|
|
—
|
|
|
181,154
|
|
|
(181,154
|
)
|
|
(100.0
|
)%
|
|||
|
Interest expense
|
|
(238
|
)
|
|
(571
|
)
|
|
(333
|
)
|
|
(58.3
|
)%
|
|||
|
Net income
|
|
$
|
24,454
|
|
|
$
|
228,363
|
|
|
$
|
(203,909
|
)
|
|
(89.3
|
)%
|
|
|
|
All Properties
|
|
Comparable Properties
(1)
|
||||||||||||
|
|
|
As of and For the Three Months
|
|
As of and For the Three Months
|
||||||||||||
|
|
|
Ended March 31,
|
|
Ended March 31,
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
Total properties
|
|
76
|
|
|
72
|
|
|
70
|
|
|
70
|
|
||||
|
# of units
|
|
9,766
|
|
|
9,258
|
|
|
9,059
|
|
|
9,059
|
|
||||
|
Occupancy
|
|
86.3
|
%
|
|
85.8
|
%
|
|
86.4
|
%
|
|
85.9
|
%
|
||||
|
Average monthly rate
(2)
|
|
$
|
4,275
|
|
|
$
|
4,308
|
|
|
$
|
4,329
|
|
|
$
|
4,308
|
|
|
(1)
|
Consists of managed senior living communities we have owned and which have been managed by the same operator for our account continuously since
January 1, 2018
; excludes communities classified as held for sale, if any.
|
|
(2)
|
Average monthly rate is calculated by taking the average daily rate, which is defined as total residents fees and services divided by occupied units during the period, and multiplying it by 30 days.
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
|
Residents fees and services
|
|
$
|
108,045
|
|
|
$
|
102,042
|
|
|
$
|
6,003
|
|
|
5.9
|
%
|
|
Property operating expenses
|
|
(85,045
|
)
|
|
(77,160
|
)
|
|
7,885
|
|
|
10.2
|
%
|
|||
|
Net operating income (NOI)
|
|
23,000
|
|
|
24,882
|
|
|
(1,882
|
)
|
|
(7.6
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
|
Depreciation and amortization expense
|
|
(15,760
|
)
|
|
(14,811
|
)
|
|
949
|
|
|
6.4
|
%
|
|||
|
Interest expense
|
|
(820
|
)
|
|
(1,327
|
)
|
|
(507
|
)
|
|
(38.2
|
)%
|
|||
|
Loss on early extinguishment of debt
|
|
—
|
|
|
(130
|
)
|
|
(130
|
)
|
|
(100.0
|
)%
|
|||
|
Net income
|
|
$
|
6,420
|
|
|
$
|
8,614
|
|
|
$
|
(2,194
|
)
|
|
(25.5
|
)%
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
|
Residents fees and services
|
|
$
|
101,612
|
|
|
$
|
100,358
|
|
|
$
|
1,254
|
|
|
1.2
|
%
|
|
Property operating expenses
|
|
(78,447
|
)
|
|
(75,804
|
)
|
|
2,643
|
|
|
3.5
|
%
|
|||
|
Net operating income (NOI)
|
|
23,165
|
|
|
24,554
|
|
|
(1,389
|
)
|
|
(5.7
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
|
Depreciation and amortization expense
|
|
(13,393
|
)
|
|
(14,010
|
)
|
|
(617
|
)
|
|
(4.4
|
)%
|
|||
|
Interest expense
|
|
(389
|
)
|
|
(1,179
|
)
|
|
(790
|
)
|
|
(67.0
|
)%
|
|||
|
Loss on early extinguishment of debt
|
|
—
|
|
|
(130
|
)
|
|
(130
|
)
|
|
100.0
|
%
|
|||
|
Net income
|
|
$
|
9,383
|
|
|
$
|
9,235
|
|
|
$
|
148
|
|
|
1.6
|
%
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
|
Rental income
|
|
$
|
4,700
|
|
|
$
|
4,602
|
|
|
$
|
98
|
|
|
2.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Expenses:
|
|
|
|
|
|
|
|
|
|||||||
|
Depreciation and amortization expense
|
|
(947
|
)
|
|
(948
|
)
|
|
(1
|
)
|
|
0.1%
|
|
|||
|
General and administrative
|
|
(9,816
|
)
|
|
(25,118
|
)
|
|
(15,302
|
)
|
|
(60.9
|
)%
|
|||
|
Acquisition and certain other transaction related costs
|
|
(7,814
|
)
|
|
(20
|
)
|
|
7,794
|
|
|
38,970.0
|
%
|
|||
|
Total expenses
|
|
(18,577
|
)
|
|
(26,086
|
)
|
|
(7,509
|
)
|
|
(28.8
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
|
Dividend income
|
|
923
|
|
|
659
|
|
|
264
|
|
|
(40.1
|
)%
|
|||
|
Unrealized gains and losses on equity securities, net
|
|
22,932
|
|
|
27,241
|
|
|
(4,309
|
)
|
|
(15.8
|
)%
|
|||
|
Interest and other income
|
|
114
|
|
|
54
|
|
|
60
|
|
|
111.1
|
%
|
|||
|
Interest expense
|
|
(38,523
|
)
|
|
(35,745
|
)
|
|
2,778
|
|
|
7.8
|
%
|
|||
|
Loss before income tax expense and equity in earnings of an investee
|
|
(28,431
|
)
|
|
(29,275
|
)
|
|
(844
|
)
|
|
(2.9
|
)%
|
|||
|
Income tax expense
|
|
(134
|
)
|
|
(260
|
)
|
|
(126
|
)
|
|
(48.5
|
)%
|
|||
|
Equity in earnings of an investee
|
|
404
|
|
|
44
|
|
|
360
|
|
|
818.2
|
%
|
|||
|
Net loss
|
|
$
|
(28,161
|
)
|
|
$
|
(29,491
|
)
|
|
$
|
(1,330
|
)
|
|
(4.5
|
)%
|
|
(1)
|
All other operations includes all of our other operations, including certain properties that offer wellness, fitness and spa services to members, which segment we do not consider to be sufficiently material to constitute a separate reporting segment, and any operating expenses that are not attributable to a specific reporting segment.
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Net income attributable to common shareholders
|
|
$
|
30,082
|
|
|
$
|
236,022
|
|
|
Depreciation and amortization expense
|
|
72,230
|
|
|
70,339
|
|
||
|
FFO attributable to noncontrolling interest
|
|
(5,297
|
)
|
|
(5,300
|
)
|
||
|
Loss (gain) on sale of properties
|
|
122
|
|
|
(181,154
|
)
|
||
|
Impairment of assets
|
|
6,206
|
|
|
—
|
|
||
|
Unrealized gains and losses on equity securities, net
|
|
(22,932
|
)
|
|
(27,241
|
)
|
||
|
FFO attributable to common shareholders
|
|
80,411
|
|
|
92,666
|
|
||
|
|
|
|
|
|
||||
|
Estimated business management incentive fees
(1)
|
|
—
|
|
|
14,347
|
|
||
|
Acquisition and certain other transaction related costs
|
|
7,814
|
|
|
20
|
|
||
|
Loss on early extinguishment of debt
|
|
—
|
|
|
130
|
|
||
|
Normalized FFO attributable to common shareholders
|
|
$
|
88,225
|
|
|
$
|
107,163
|
|
|
|
|
|
|
|
||||
|
Weighted average common shares outstanding (basic)
|
|
237,568
|
|
|
237,478
|
|
||
|
Weighted average common shares outstanding (diluted)
|
|
237,600
|
|
|
237,493
|
|
||
|
|
|
|
|
|
||||
|
Per common share data (basic and diluted):
|
|
|
|
|
||||
|
Net income attributable to common shareholders
|
|
$
|
0.13
|
|
|
$
|
0.99
|
|
|
FFO attributable to common shareholders
|
|
$
|
0.34
|
|
|
$
|
0.39
|
|
|
Normalized FFO attributable to common shareholders
|
|
$
|
0.37
|
|
|
$
|
0.45
|
|
|
Distributions declared
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
|
(1)
|
Incentive fees under our business management agreement are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our condensed consolidated statements of comprehensive income. In calculating net income attributable to common shareholders in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income attributable to common shareholders, we do not include these amounts in the calculation of
Normalized FFO attributable to common shareholders
until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined.
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Reconciliation of Net Income to NOI:
|
|
|
|
|
|
|
||
|
Net income
|
|
$
|
31,504
|
|
|
$
|
237,405
|
|
|
|
|
|
|
|
||||
|
Equity in earnings of an investee
|
|
(404
|
)
|
|
(44
|
)
|
||
|
Income tax expense
|
|
134
|
|
|
260
|
|
||
|
Income from continuing operations before income tax expense and equity in earnings of an investee
|
|
31,234
|
|
|
237,621
|
|
||
|
Loss on early extinguishment of debt
|
|
—
|
|
|
130
|
|
||
|
Interest expense
|
|
45,611
|
|
|
43,552
|
|
||
|
Interest and other income
|
|
(114
|
)
|
|
(54
|
)
|
||
|
Unrealized gains and losses on equity securities, net
|
|
(22,932
|
)
|
|
(27,241
|
)
|
||
|
Dividend income
|
|
(923
|
)
|
|
(659
|
)
|
||
|
Loss (gain) on sale of properties
|
|
122
|
|
|
(181,154
|
)
|
||
|
Impairment of assets
|
|
6,206
|
|
|
—
|
|
||
|
Acquisition and certain other transaction related costs
|
|
7,814
|
|
|
20
|
|
||
|
General and administrative expense
|
|
9,816
|
|
|
25,118
|
|
||
|
Depreciation and amortization expense
|
|
72,230
|
|
|
70,339
|
|
||
|
Total NOI
|
|
$
|
149,064
|
|
|
$
|
167,672
|
|
|
|
|
|
|
|
||||
|
MOB NOI
|
|
$
|
71,044
|
|
|
$
|
70,213
|
|
|
Triple net leased communities NOI
|
|
50,320
|
|
|
67,975
|
|
||
|
Managed communities NOI
|
|
23,000
|
|
|
24,882
|
|
||
|
All other operations NOI
|
|
4,700
|
|
|
4,602
|
|
||
|
Total NOI
|
|
$
|
149,064
|
|
|
$
|
167,672
|
|
|
•
|
our ability to maintain or increase the occupancy of, and the rental rates at, our properties;
|
|
•
|
our ability to control operating expenses and capital expenses at our properties;
|
|
•
|
our manager's ability to operate our managed senior living communities so as to maintain or increase our returns; and
|
|
•
|
our ability to purchase additional properties which produce cash flows in excess of our cost of acquisition capital and the related property operating expenses.
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
MOB tenant improvements
(1)
|
|
$
|
5,000
|
|
|
$
|
1,600
|
|
|
MOB leasing costs
(2)
|
|
4,132
|
|
|
422
|
|
||
|
MOB building improvements
(3)
|
|
995
|
|
|
2,779
|
|
||
|
Managed senior living communities capital improvements
|
|
3,312
|
|
|
2,407
|
|
||
|
Recurring capital expenditures
|
|
$
|
13,439
|
|
|
$
|
7,208
|
|
|
|
|
|
|
|
|
|||
|
Development, redevelopment and other activities - MOBs
(4)
|
|
6,059
|
|
|
397
|
|
||
|
Development, redevelopment and other activities - Managed senior living communities
(4)
|
|
9,079
|
|
|
2,824
|
|
||
|
Total development, redevelopment and other activities
|
|
$
|
15,138
|
|
|
$
|
3,221
|
|
|
(1)
|
MOB tenant improvements generally include capital expenditures to improve tenants’ space or amounts paid directly to tenants to improve their space.
|
|
(2)
|
MOB leasing costs generally include leasing related costs, such as brokerage commissions and tenant inducements.
|
|
(3)
|
MOB building improvements generally include capital expenditures to replace obsolete building components and capital expenditures that extend the useful life of existing assets.
|
|
(4)
|
Development, redevelopment and other activities generally include (i) capital expenditures that are identified at the time of acquisition of a property and incurred within a short period thereafter and (ii) capital expenditure projects that reposition a property or result in new sources of revenues.
|
|
|
|
New Leases
|
|
Renewals
|
|
Total
|
||||||
|
Square feet leased during the quarter
|
|
51
|
|
|
447
|
|
|
498
|
|
|||
|
Total leasing costs and concession commitments
(1)
|
|
$
|
1,857
|
|
|
$
|
12,518
|
|
|
$
|
14,375
|
|
|
Total leasing costs and concession commitments per square foot
(1)
|
|
$
|
36.28
|
|
|
$
|
28.01
|
|
|
$
|
28.86
|
|
|
Weighted average lease term (years)
(2)
|
|
5.0
|
|
|
8.9
|
|
|
8.5
|
|
|||
|
Total leasing costs and concession commitments per square foot per year
(1)
|
|
$
|
7.20
|
|
|
$
|
3.16
|
|
|
$
|
3.40
|
|
|
(1)
|
Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.
|
|
(2)
|
Weighted based on annualized rental income pursuant to existing leases as of
March 31, 2019
, including straight line rent adjustments and estimated recurring expense reimbursements, and excluding lease value amortization.
|
|
|
|
|
|
Annual
|
|
Annual
|
|
|
|
|
|||||
|
|
|
Principal
|
|
Interest
|
|
Interest
|
|
|
|
Interest
|
|||||
|
Debt
|
|
Balance
(1)
|
|
Rate
(1)
|
|
Expense
|
|
Maturity
|
|
Payments Due
|
|||||
|
Senior unsecured notes
(2)
|
|
$
|
400,000
|
|
|
3.25
|
%
|
|
$
|
13,000
|
|
|
2019
|
|
Semi-Annually
|
|
Senior unsecured notes
|
|
200,000
|
|
|
6.75
|
%
|
|
13,500
|
|
|
2020
|
|
Semi-Annually
|
||
|
Senior unsecured notes
|
|
300,000
|
|
|
6.75
|
%
|
|
20,250
|
|
|
2021
|
|
Semi-Annually
|
||
|
Senior unsecured notes
|
|
250,000
|
|
|
4.75
|
%
|
|
11,875
|
|
|
2024
|
|
Semi-Annually
|
||
|
Senior unsecured notes
|
|
500,000
|
|
|
4.75
|
%
|
|
23,750
|
|
|
2028
|
|
Semi-Annually
|
||
|
Senior unsecured notes
|
|
350,000
|
|
|
5.63
|
%
|
|
19,705
|
|
|
2042
|
|
Quarterly
|
||
|
Senior unsecured notes
|
|
250,000
|
|
|
6.25
|
%
|
|
15,625
|
|
|
2046
|
|
Quarterly
|
||
|
Mortgage note
(3)
|
|
42,372
|
|
|
3.79
|
%
|
|
1,606
|
|
|
2019
|
|
Monthly
|
||
|
Mortgage notes
|
|
1,889
|
|
|
7.49
|
%
|
|
141
|
|
|
2022
|
|
Monthly
|
||
|
Mortgage notes
|
|
12,992
|
|
|
6.28
|
%
|
|
816
|
|
|
2022
|
|
Monthly
|
||
|
Mortgage note
|
|
11,126
|
|
|
4.85
|
%
|
|
540
|
|
|
2022
|
|
Monthly
|
||
|
Mortgage notes
|
|
16,362
|
|
|
5.75
|
%
|
|
941
|
|
|
2022
|
|
Monthly
|
||
|
Mortgage note
|
|
16,344
|
|
|
6.64
|
%
|
|
1,085
|
|
|
2023
|
|
Monthly
|
||
|
Mortgage notes
(4)
|
|
620,000
|
|
|
3.53
|
%
|
|
21,886
|
|
|
2026
|
|
Monthly
|
||
|
Mortgage note
|
|
1,742
|
|
|
6.25
|
%
|
|
109
|
|
|
2033
|
|
Monthly
|
||
|
Mortgage note
|
|
10,845
|
|
|
4.44
|
%
|
|
482
|
|
|
2043
|
|
Monthly
|
||
|
|
|
$
|
2,983,672
|
|
|
|
|
$
|
145,311
|
|
|
|
|
|
|
|
(1)
|
The principal balances and interest rates are the amounts stated in the applicable contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we assumed these debts. This table does not include obligations under capital leases.
|
|
(2)
|
In May 2019, we redeemed these senior unsecured notes, at par plus accrued interest.
|
|
(3)
|
In April 2019, we gave notice of our intention to prepay, at par plus accrued interest, this mortgage note. We expect to make this prepayment in May 2019.
|
|
(4)
|
The properties encumbered by these mortgages are subject to a joint venture in which we own a 55% equity interest. The principal amounts listed in the table for these mortgage notes have not been adjusted to reflect the equity interests in the joint venture that we do not own.
|
|
|
|
Impact of Changes in Interest Rates
|
|||||||||||||
|
|
|
|
|
Outstanding
|
|
Total Interest
|
|
Annual Earnings
|
|||||||
|
|
|
Interest Rate
(1)
|
|
Floating Rate Debt
|
|
Expense Per Year
|
|
Per Share Impact
(2)
|
|||||||
|
At March 31, 2019
|
|
3.80
|
%
|
|
$
|
775,000
|
|
|
$
|
29,450
|
|
|
$
|
0.12
|
|
|
One percentage point increase
|
|
4.80
|
%
|
|
$
|
775,000
|
|
|
$
|
37,200
|
|
|
$
|
0.16
|
|
|
(1)
|
Weighted based on the respective interest rates and outstanding borrowings under our credit facility and term loans as of
March 31, 2019
.
|
|
(2)
|
Based on weighted average number of shares outstanding (basic and diluted) for the
three
months ended
March 31, 2019
.
|
|
|
|
Impact of Changes in Interest Rates
|
|||||||||||||
|
|
|
|
|
Outstanding
|
|
Total Interest
|
|
Annual Earnings
|
|||||||
|
|
|
Interest Rate
(1)
|
|
Floating Rate Debt
|
|
Expense Per Year
|
|
Per Share Impact
(2)
|
|||||||
|
At March 31, 2019
|
|
3.70
|
%
|
|
$
|
1,550,000
|
|
|
$
|
57,350
|
|
|
$
|
0.24
|
|
|
One percentage point increase
|
|
4.70
|
%
|
|
$
|
1,550,000
|
|
|
$
|
72,850
|
|
|
$
|
0.31
|
|
|
(1)
|
Weighted based on the respective interest rates and outstanding borrowings under our credit facility (assuming fully drawn) and term loans as of
March 31, 2019
.
|
|
(2)
|
Based on weighted average number of shares outstanding (basic and diluted) for the
three
months ended
March 31, 2019
.
|
|
•
|
Our ability to pay distributions to our shareholders and to sustain the amount of such distributions,
|
|
•
|
Our ability to retain our existing tenants, attract new tenants and maintain or increase current rental rates,
|
|
•
|
Five Star, our former subsidiary and largest tenant and the manager of our managed senior living communities, having adequate financial resources and liquidity and Five Star's ability to meet its obligations to us and to manage our senior living communities satisfactorily,
|
|
•
|
Whether the aging U.S. population and increasing life spans of seniors will increase the demand for senior living communities, wellness centers and other medical and healthcare related properties and healthcare services,
|
|
•
|
The credit qualities of our tenants,
|
|
•
|
Our ability to compete for tenancies and acquisitions effectively,
|
|
•
|
Our ability to maintain and increase occupancy, revenues and NOI at our senior living communities,
|
|
•
|
Our acquisitions and sales of properties,
|
|
•
|
Our ability to raise debt or equity capital,
|
|
•
|
The future availability of borrowings under our revolving credit facility,
|
|
•
|
Our policies and plans regarding investments, financings and dispositions,
|
|
•
|
Our ability to pay interest on and principal of our debt,
|
|
•
|
Our ability to appropriately balance our use of debt and equity capital,
|
|
•
|
Our credit ratings,
|
|
•
|
Our expectation that we benefit from our ownership interest in and other relationships with RMR Inc.,
|
|
•
|
Our expectation that we benefit from our ownership interest in and other relationships with AIC and from our participation in insurance programs arranged by AIC,
|
|
•
|
Our qualification for taxation as a REIT, and
|
|
•
|
Other matters.
|
|
•
|
The impact of conditions in the economy and the capital markets on us and our tenants and managers,
|
|
•
|
Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,
|
|
•
|
Limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify for taxation as a REIT for U.S. federal income tax purposes,
|
|
•
|
Competition within the healthcare and real estate industries, particularly in those markets in which our properties are located,
|
|
•
|
Actual and potential conflicts of interest with our related parties, including our Managing Trustees, Five Star, RMR LLC, RMR Inc., AIC and others affiliated with them,
|
|
•
|
Acts of terrorism, outbreaks of so called pandemics or other manmade or natural disasters beyond our control, and
|
|
•
|
The impact of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, or the possible future repeal, replacement or modification of the ACA and other existing or proposed legislation or regulations on us or our tenants and managers and their ability to pay their obligations to us.
|
|
•
|
Five Star, our largest tenant and the manager of our managed senior living communities, has been experiencing significant operating and financial challenges and determined that a substantial doubt existed as to whether it would be able to continue as a going concern. Five Star's operating and financial difficulties result from a number of factors, some of which are beyond Five Star's control, including, but not limited to:
|
|
•
|
Five Star's high operating leverage,
|
|
•
|
Increases in Five Star’s labor costs or in costs Five Star pays for goods and services,
|
|
•
|
Competition within the senior living industry,
|
|
•
|
Seniors delaying or forgoing moving into senior living communities or purchasing healthcare services,
|
|
•
|
The impact of changes in the economy and the capital markets on Five Star and its residents and other customers,
|
|
•
|
Changes in Medicare or Medicaid policies and regulations, including those that may result from the ACA or the possible future repeal, replacement or modification of the ACA and other existing or proposed legislation or regulations,
|
|
•
|
Increases in compliance costs,
|
|
•
|
Continued efforts by third party payers to reduce healthcare costs, and
|
|
•
|
Increases in tort and insurance liability costs.
|
|
•
|
If Five Star’s operations continue to be unprofitable, it could become insolvent and default on its rent obligations to us,
|
|
•
|
If Five Star fails to provide quality services at our senior living communities, the NOI generated by these communities may be adversely affected,
|
|
•
|
We entered into the Transaction Agreement to modify our existing business arrangements with Five Star, and certain of the transactions contemplated by the Transaction Agreement are expected to be effective January 1, 2020. These transactions are subject to conditions, including, among others, the receipt of approval by Five Star’s stockholders and certain licensing and other regulatory approvals. We cannot be sure that any or all of such conditions will be satisfied. Accordingly, these transactions may not become effective as of January 1, 2020 or at all, or the terms of such transactions may change,
|
|
•
|
The issuance of Five Star common shares will require approval by Five Star’s stockholders, and the effectiveness of a registration statement on Form S-1 to be filed by Five Star with the SEC to register the Five Star common shares to be
|
|
•
|
If Five Star's stockholders fail to approve the Five Star Share Issuances by December 31, 2019, the Transaction Agreement will terminate, including the current rent reductions, and our existing master leases and management agreements and pooling agreements with Five Star will remain in effect. If that occurs, Five Star does not expect to be able to fund its operating and capital expenses or debt service obligations, and Five Star may not then be able to continue as a going concern,
|
|
•
|
If the transactions contemplated by the Transaction Agreement are completed, we expect to retain approximately 34% of ownership of Five Star for the foreseeable future. However, we may sell some or all of our Five Star common shares. Our ownership of Five Star may also be diluted in the future,
|
|
•
|
We plan to pay distributions at an annual rate of $0.60 per common share going forward, based on a target distribution payout ratio of approximately 80% of projected cash available for distribution in the future. Our distribution will be set and reset from time to time by our Board of Trustees. The Board of Trustees will consider many factors when setting the distribution, including our historical and projected net income, Normalized FFO, the then current and expected needs and availability of cash to pay our obligations, distributions which we may be required to pay to maintain our qualification for taxation as a REIT and other factors deemed relevant by our Board of Trustees in its discretion. Further, our projected cash available for distribution in the future may change and may vary from our expectations. Accordingly, future distributions may be increased or decreased and we cannot be sure as to the rate at which future distributions will be paid,
|
|
•
|
Our ability to make future distributions to our shareholders and to make payments of principal and interest on our indebtedness depends upon a number of factors, including our future earnings, the capital costs we incur to lease and operate our properties and our working capital requirements. We may be unable to pay our debt obligations or to maintain our current rate of distributions on our common shares and future distributions may be reduced or eliminated,
|
|
•
|
We expect to sell up to $900.0 million of properties to reduce our leverage to stated targets. However, we may not be able to successfully sell properties in the future. Also, we may sell properties at prices that are less than their carrying values and we may incur future losses,
|
|
•
|
Contingencies in our acquisition and sale agreements may not be satisfied and our pending acquisitions and sales and any related management or lease arrangements we expect to enter may not occur, may be delayed or the terms of such transactions or arrangements may change,
|
|
•
|
The capital investments we are making at our senior living communities in response to competitive pressures resulting from ongoing new supply of senior living communities may not achieve expected results and our senior living communities may not be competitive, despite these capital investments,
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•
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We may spend more for capital expenditures than we currently expect,
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•
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Any joint venture arrangements that we may enter may not be successful,
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•
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Our tenants may experience losses and default on their rent obligations to us,
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•
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Some of our tenants may not renew expiring leases, and we may be unable to obtain new tenants to maintain or increase the historical occupancy rates of, or rents from, our properties,
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•
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Our ability to grow our business and maintain or increase our distributions depends in large part upon our ability to buy properties and arrange for their profitable operation or lease them for rents, less their property operating expenses, that exceed our capital costs. We may be unable to identify properties that we want to acquire and we may fail to reach agreement with the sellers and complete the purchase of any properties we do want to acquire. In addition, any properties we may acquire may not provide us with rents or revenues less property operating costs that exceed our capital costs or achieve our expected returns. If our cash flows are reduced and our leverage increases, we may need to sell, rather than buy, properties,
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•
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Rents that we can charge at our properties may decline upon renewals or expirations because of changing market conditions or otherwise,
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•
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We expect to enter into additional management arrangements with Five Star for additional senior living communities that we own or may acquire in the future. However, we cannot be sure that we will enter into any additional management arrangements or other transactions with Five Star,
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•
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Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions that we may be unable to satisfy,
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•
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Actual costs under our revolving credit facility or other floating rate debt will be higher than LIBOR plus a premium because of fees and expenses associated with such debt,
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•
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The maximum borrowing availability under our revolving credit facility and term loans may be increased to up to $3.1 billion on a combined basis in certain circumstances. However, increasing the maximum borrowing availability under our revolving credit facility and term loans is subject to our obtaining additional commitments from lenders, which may not occur,
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•
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We have the option to extend the maturity date of our revolving credit facility upon payment of a fee and meeting other conditions; however, the applicable conditions may not be met,
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•
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The premiums used to determine the interest rate payable on our revolving credit facility and term loans and the facility fee payable on our revolving credit facility are based on our credit ratings. Changes in our credit ratings may cause the interest and fees we pay to increase,
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•
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We may be unable to repay our debt obligations when they become due,
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•
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We intend to conduct our business activities in a manner that will afford us reasonable access to capital for investment and financing activities. However, we may not succeed in this regard and we may not have reasonable access to capital,
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•
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For the three months ended
March 31, 2019
, approximately 97% of our NOI was generated from properties where a majority of the revenues are derived from our tenants’ and residents’ private resources. This may imply that we will maintain or increase the percentage of our NOI generated from private resources at our senior living communities. However, our residents and patients may become unable to fund our charges with private resources and we may be required or may elect for business reasons to accept or pursue revenues from government sources, which could result in an increased part of our NOI and revenue being generated from government payments and our becoming more dependent on government payments,
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•
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Circumstances that adversely affect the ability of seniors or their families to pay for our tenants' and manager's services, such as economic downturns, weak housing market conditions, higher levels of unemployment among our residents' family members, lower levels of consumer confidence, stock market volatility and/or changes in demographics generally could affect the profitability of our senior living communities,
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•
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As of
March 31, 2019
, we had estimated unspent leasing related obligations of
$24.3
million. It is difficult to accurately estimate tenant space preparation costs. Our unspent leasing related obligations may cost more or less and may take longer to complete than we currently expect, and we may incur increasing amounts for these and similar purposes in the future,
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•
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We may not be able to sell properties that we may determine to offer for sale on terms acceptable to us or otherwise, and we may incur losses on any such sales or in connection with decisions to pursue selling our properties,
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•
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Our senior living communities are subject to extensive government regulation, licensure and oversight. We sometimes experience deficiencies in the operation of our senior living communities and some of our communities may be prohibited from admitting new residents or our license to continue operations at a community may be revoked. Also, operating deficiencies or a license revocation at one or more of our senior living communities may have an adverse impact on our ability to obtain licenses for or attract residents to our other communities,
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•
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We believe that our relationships with our related parties, including Five Star, RMR LLC, RMR Inc., ABP Trust, AIC and others affiliated with them may benefit us and provide us with competitive advantages in operating and growing our business. However, the advantages we believe we may realize from these relationships may not materialize,
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•
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RMR Inc. may reduce the amount of its distributions to its shareholders, including us, or we may sell some or all of our RMR Inc. common shares. In addition, we may not receive the proceeds we may hope from any sale of some or all of the shares of RMR Inc. common stock that we own, if we elect to sell any of those shares and
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•
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The business and property management agreements between us and RMR LLC have continuing 20 year terms. However, those agreements permit early termination in certain circumstances. Accordingly, we cannot be sure that these agreements will remain in effect for continuing 20 year terms.
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Exhibit
Number |
|
Description
|
|
3.1
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|
3.2
|
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|
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3.3
|
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|
3.4
|
|
|
|
3.5
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
4.5
|
|
|
|
4.6
|
|
|
|
4.7
|
|
|
|
4.8
|
|
|
|
4.9
|
|
|
|
4.10
|
|
|
|
4.11
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
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31.3
|
|
|
|
31.4
|
|
|
|
32.1
|
|
|
|
101.1
|
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Shareholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows and (v) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.)
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|
|
SENIOR HOUSING PROPERTIES TRUST
|
|
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|
|
|
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|
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|
|
By:
|
/s/ Jennifer F. (Francis) Mintzer
|
|
|
|
Jennifer F. (Francis) Mintzer
|
|
|
|
President and Chief Operating Officer
|
|
|
|
|
|
Dated: May 9, 2019
|
|
|
|
|
|
|
|
|
|
|
|
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By:
|
/s/ Richard W. Siedel, Jr.
|
|
|
|
Richard W. Siedel, Jr.
|
|
|
|
Chief Financial Officer and Treasurer
|
|
|
|
(principal financial and accounting officer)
|
|
|
|
|
|
Dated: May 9, 2019
|
|
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|