-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WwGzPtW+guESqYDz02t4ryWVQs2UC367q/ea0TQc7+okgwTwUMJkjY3YHdLeLHkg 3pY3qyiddyKTBjvlg94boA== 0000908737-06-000798.txt : 20061109 0000908737-06-000798.hdr.sgml : 20061109 20061109091525 ACCESSION NUMBER: 0000908737-06-000798 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20061109 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061109 DATE AS OF CHANGE: 20061109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SENIOR HOUSING PROPERTIES TRUST CENTRAL INDEX KEY: 0001075415 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 043445278 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15319 FILM NUMBER: 061199642 BUSINESS ADDRESS: STREET 1: 400 CENTRE STREET CITY: NEWTON STATE: MA ZIP: 02458 BUSINESS PHONE: 6173323990 8-K 1 snh_8k.htm SNH 8K SNH 8K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 9, 2006

SENIOR HOUSING PROPERTIES TRUST


Maryland
001-15319
04-3445278
(State of organization)
(Commission file number)
(I.R.S. Employer Identification Number)


400 Centre Street, Newton, Massachusetts 02458


617-796-8350




Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On November 9, 2006, Senior Housing Properties Trust, or the Company, issued a press release setting forth the Company’s results of operations and financial condition for the quarter and nine months ended September 30, 2006 and also provided certain supplemental operating and financial data for the quarter and nine months ended September 30, 2006. Copies of the Company’s press release and supplemental operating and financial data are furnished as Exhibits 99.1 and 99.2 hereto, respectively.

 
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits 

The Company hereby furnishes the following exhibits:

99.1 Press Release dated November 9, 2006.
 
99.2 Third Quarter 2006 Supplemental Operating and Financial Data.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
SENIOR HOUSING PROPERTIES TRUST
   
 
By: /s/ John R. Hoadley
 
John R. Hoadley
 
Treasurer and Chief Financial Officer


Date: November 9, 2006
 EX-99.1 2 ex99-1.htm EX99-1 ex99-1


400 Centre Street, Newton, MA 02458-2076
 
tel: (617) 796-8350 fax: (617) 796-8349

 
FOR IMMEDIATE RELEASE
 
 
Contact:
 
Timothy A. Bonang
 
Manager of Investor Relations
 
(617) 796-8149
 
www.snhreit.com

Senior Housing Properties Trust Results for the Periods Ended September 30, 2006 

Newton, MA (November 9, 2006): Senior Housing Properties Trust (NYSE: SNH) today announced its financial results for the quarter and nine months ended September 30, 2006.

Results for the quarter ended September 30, 2006:
 
Income from continuing operations and net income were $15.4 million, or $0.21 per share, for the quarter ended September 30, 2006, compared to $14.1 million, or $0.21 per share, for the quarter ended September 30, 2005. Income from continuing operations and net income for the quarter ended September 30, 2006 include $700,000 of costs related to SNH’s litigation with HealthSouth Corporation, or HealthSouth, compared to $350,000 of similar costs for the quarter ended September 30, 2005.

Funds from operations (FFO) for the quarter ended September 30, 2006, were $27.7 million, or $0.39 per share. This compares to FFO for the quarter ended September 30, 2005, of $25.9 million, or $0.38 per share. FFO for the quarters ended September 30, 2006 and 2005, include the HealthSouth litigation costs described above.

The weighted average numbers of common shares outstanding were 71.8 million and 68.5 million for the quarters ended September 30, 2006 and 2005, respectively.

Results for the nine months ended September 30, 2006:
 
Income from continuing operations was $43.8 million, or $0.61 per share, for the nine months ended September 30, 2006, compared to $42.3 million, or $0.62 per share, for the nine months ended September 30, 2005. Income from continuing operations for the nine months ended September 30, 2006 includes an impairment loss of $1.4 million, or $0.02 per share, relating to three nursing home properties that are held for sale. It also includes a loss on early extinguishment of debt of $1.3 million, or $0.02 per share, related to the redemption of all of SNH’s $28.2 million of 10.125% junior subordinated debentures in June 2006. In addition, income from continuing operations for the nine months ended September 30, 2006 includes $1.4 million of costs related to SNH’s litigation with HealthSouth, compared to $1.3 million of similar costs for the nine months ended September 30, 2005.

Net income was $43.8 million, or $0.61 per share, for the nine months ended September 30, 2006, compared to $43.0 million, or $0.63 per share for the nine months ended September 30, 2005. Net income for the nine months ended September 30, 2005 included a gain on sale of properties of $717,000, or $0.01 per share.

Funds from operations (FFO) for the nine months ended September 30, 2006 were $83.2 million, or $1.16 per share. This compares to FFO for the nine months ended September 30, 2005 of $77.1 million, or $1.13 per share. FFO for the nine months ended September 30, 2006 and 2005, include the HealthSouth litigation costs described above.

1 of 5

The weighted average numbers of common shares outstanding were 71.8 million and 68.5 million for the nine months ended September 30, 2006 and 2005, respectively.

Conference Call:
 
On Thursday, November 9, 2006, at 10:00 a.m. (EST), David J. Hegarty, president and chief operating officer, and John R. Hoadley, treasurer and chief financial officer, will host a conference call to discuss the results for the third quarter ended September 30, 2006. The conference call telephone number is (800) 811-8824. Participants calling from outside the United States and Canada should dial (913) 981-4903. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through Wednesday, November 15, 2006. To hear the replay, dial (719) 457-0820. The replay pass code is 2485801.

A live audio web cast of the conference call will also be available in listen only mode on the SNH web site. Participants wanting to access the webcast should visit the SNH web site at www.snhreit.com about five minutes before the call. The archived webcast will be available for replay on the SNH web site for about one week after the call.

Supplemental Data:
 
A copy of SNH’s Third Quarter 2006 Supplemental Operating and Financial Data is available for download from the SNH web site, www.snhreit.com.

Senior Housing Properties Trust is a real estate investment trust, or REIT, that owns 196 senior living properties located in 33 states. SNH is headquartered in Newton, Massachusetts.

2 of 5
Senior Housing Properties Trust
Financial Information
(in thousands, except per share data)
 
Income Statement:
 
Quarter Ended September 30,
  
Nine Months Ended September 30,
 
2006
  
2005
  
2006
  
2005
Revenues:
              
Rental income(1)
$41,983
  
$39,506
  
$123,727
  
$117,489
Interest and other income
334
  
738
  
1,034
  
1,588
Total revenues
42,317
  
40,244
  
124,761
  
119,077
Expenses:
              
Interest
11,833
  
11,911
  
34,751
  
34,585
Depreciation
10,978
  
10,923
  
32,631
  
32,428
General and administrative(2)
4,088
  
3,281
  
10,870
  
9,762
Impairment of assets
-
  
-
  
1,420
  
-
Loss on early extinguishment of debt(3)
-
  
-
  
1,319
  
-
Total expenses
26,899
  
26,115
  
80,991
  
76,775
Income from continuing operations
15,418
  
14,129
  
43,770
  
42,302
Gain on sale of properties
-
  
-
  
-
  
717
Net income
$15,418
  
$14,129
  
$43,770
  
$43,019
               
Weighted average shares outstanding
71,824
  
68,543
  
71,818
  
68,525
Per share data:
              
Income from continuing operations
$0.21
  
$0.21
  
$0.61
  
$0.62
Net income
$0.21
  
$0.21
  
$0.61
  
$0.63
 
Balance Sheet:
 
At September 30, 2006
  
At December 31, 2005
Assets
      
Real estate properties
$1,767,047
  
$1,686,169
Less accumulated depreciation
265,065
  
239,031
 
1,501,982
  
1,447,138
Cash and cash equivalents
1,527
  
14,642
Restricted cash(4) 
21,860
  
2,529
Deferred financing fees, net
7,409
  
9,968
Other assets
26,967
  
25,371
Total assets
$1,559,745
  
$1,499,648
 
Liabilities and Shareholders’ Equity
      
Unsecured revolving bank credit facility
$222,000
  
$64,000
Senior unsecured notes, net of discount
341,634
  
394,018
Junior subordinated debentures(3)
-
  
28,241
Secured debt and capital leases
78,841
  
70,141
Total debt
642,475
  
556,400
Other liabilities
22,837
  
25,271
Total liabilities
665,312
  
581,671
Shareholders’ equity
894,433
  
917,977
Total liabilities and shareholders’ equity
$1,559,745
  
$1,499,648
 
(1)
Rental income for the quarter and nine months ended September 30, 2006, includes $2.2 million and $6.5 million, respectively, of rental income from two hospitals formerly leased and operated by HealthSouth Corporation, or HealthSouth. Since 2003, we have been in two separate litigations with HealthSouth seeking to increase the annual rent due under an amended lease with HealthSouth and to terminate the amended lease and repossess the hospitals. During the pendency of the litigations, we have recognized rental income at the $8.7 million annual rate set forth in the amended lease, which represents the minimum amount we would have been entitled to if HealthSouth prevailed in the litigations and we have deferred recognition in income of $2.2 million of cash payments received from HealthSouth that are in excess of the minimum rent required by the amended lease.  On November 8,

3 of 5

2006, we and HealthSouth agreed to settle our litigations, reinstate HealthSouth’s lease until September 30, 2006 and to increase the annual rent due under the lease from $8.7 million to $9.9 million for the period from January 2, 2002 to September 30, 2006. As a result of the settlement, HealthSouth owes us an additional rent of $3.5 million for that period. We collected that amount on November 8, 2006. We will recognize this $3.5 million and the $2.2 million of previously deferred income as rental income in the fourth quarter of 2006.
(2)
Expenses incurred related to the HealthSouth litigation were approximately $700,000 and $350,000 for the quarters ended September 30, 2006, and 2005, respectively, and $1.4 million and $1.3 million for the nine months ended September 30, 2006 and 2005, respectively, and are included in general and administrative expenses.
(3)
On June 15, 2006, we redeemed all of our $28.2 million of 10.125% junior subordinated debentures. The loss on early extinguishment of debt is the write off of unamortized deferred financing fees related to these debentures.
(4)
On October 1, 2006, we acquired three independent and assisted living properties for $31.5 million plus closing costs with proceeds of borrowings under our revolving bank credit facility and the assumption of $12.8 million of mortgage debt. As of September 30, 2006, $19.7 million of borrowing proceeds were included in restricted cash for these acquisitions.
 

4 of 5
Senior Housing Properties Trust
Funds From Operations
(in thousands, except per share data)
 
Calculation of Funds From Operations (FFO)(1):
 
 
Quarter Ended
September 30,
  
Nine Months Ended
September 30,
               
 
2006
  
2005
  
2006
  
2005
Income from continuing operations(2)
$15,418
  
$14,129
  
$43,770
  
$42,302
Add:  Depreciation expense
10,978
  
10,923
  
32,631
  
32,428
Deferred percentage rent(3)
1,263
  
812
  
4,016
  
2,402
Impairment of assets
-
  
-
  
1,420
  
-
Loss on early extinguishment of debt
-
  
-
  
1,319
  
-
FFO
$27,659
  
$25,864
  
$83,156
  
$77,132
               
Weighted average shares outstanding
71,824
  
68,543
  
71,818
  
68,525
               
FFO per share
$0.39
  
$0.38
  
$1.16
  
$1.13
Distributions declared
$0.33
  
$0.32
  
$0.98
  
$0.96

(1)
 
We compute FFO as shown in the calculation above. This calculation begins with income from continuing operations or, if such amount is the same as net income, with net income. Our calculation of FFO differs from the National Association of Real Estate Investment Trusts, or NAREIT, definition of FFO because we include deferred percentage rent as discussed in Note 3 below and exclude loss on early extinguishment of debt not settled in cash from FFO. We consider FFO to be an appropriate measure of performance for a REIT along with net income and cash flow from operating, investing and financing activities. We believe that FFO provides useful information to investors because by excluding the effects of certain historical costs, such as depreciation expense and gain or loss on sale of properties, FFO can facilitate comparison of current operating performances among REITs. FFO does not represent cash generated by operating activities in accordance with generally accepted accounting principles, or GAAP, and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity. FFO is one important factor considered by our board of trustees in determining the amount of distributions to shareholders. Other important factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving bank credit facility and public debt covenants, the availability of debt and equity capital to us and our expectation of our future performance.
(2)
 
Income from continuing operations includes expenses incurred related to the HealthSouth litigation of approximately $700,000 and $350,000 for the quarters ended September 30, 2006, and 2005, respectively, and $1.4 million and $1.3 million for the nine months ended September 30, 2006 and 2005, respectively.
(3)
 
We recognize percentage rental income received during the first, second and third quarters in the fourth quarter. Although recognition of revenue is deferred until the fourth quarter for purposes of calculating net income, the calculation of FFO for the first three quarters includes estimated amounts with respect to those periods. The fourth quarter FFO calculation excludes the amounts recognized during the first three quarters.
 
(END)
 
 
 
5 of 5
 EX-99.2 3 ex99-2.htm EX99-2 ex99-2
Exhibit 99.2







SENIOR HOUSING PROPERTIES TRUST

Third Quarter 2006

Supplemental Operating and Financial Data






Unless otherwise noted, all amounts in this report are unaudited.



TABLE OF CONTENTS


   
Page
     
     
CORPORATE INFORMATION
  
     
 
Company Profile
4
 
Investor Information
5
 
Research Coverage
6
     
FINANCIAL INFORMATION
  
     
 
Key Financial Data
8
 
Consolidated Balance Sheet
9
 
Consolidated Statement of Income
10
 
Consolidated Statement of Cash Flows
11
 
Calculation of EBITDA
12
 
Calculation of Funds from Operations (FFO)
13
 
Debt Summary
14
 
Debt Maturity Schedule
15
 
Leverage Ratios, Coverage Ratios and Public Debt Covenants
16
 
2006 Investments/Dispositions Information
17
 
2006 Financing Activities
18
     
PORTFOLIO INFORMATION
  
     
 
Portfolio Summary by Facility Type and Tenant
20
 
Occupancy by Facility Type and Tenant
21
 
% Private Pay by Facility Type and Tenant
22
 
Rent Coverage by Tenant
23
 
Portfolio Lease Expiration Schedule
24
     


2
 




 
 
 
 
 
 

 


CORPORATE INFORMATION

 
 
 
 
 
 
 
 
 
 
 

 



Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 
COMPANY PROFILE

The Company:
 
Senior Housing Properties Trust, or SNH, is a real estate investment trust, or REIT, which owns independent and assisted living properties, continuing care retirement communities, nursing homes and hospitals located throughout the United States. We are included in a number of stock indices, including the Russell 2000®, the MSCI US REIT Index, FTSE EPRA/NAREIT United States Index and the S&P REIT Composite Index.
 
Management:
 
Senior Housing Properties Trust is managed by Reit Management & Research LLC, or RMR. RMR is a large real estate management company which was founded in 1986 to manage public investments in real estate. As of September 30, 2006, RMR managed one of the largest portfolios of publicly owned real estate in the United States, including approximately 1,000 properties, with more than 91 million square feet, located in 43 states, Washington, DC, Puerto Rico and Ontario, Canada. RMR has over 450 employees in its headquarters and regional offices located throughout the country. In addition to managing SNH, RMR and its affiliates also manage Hospitality Properties Trust, a publicly traded REIT that owns hotels, HRPT Properties Trust, a publicly traded REIT that primarily owns office buildings, and five mutual funds which invest in unaffiliated real estate companies. The public companies managed by RMR and its affiliates had combined total market capitalization of approximately $13 billion as of September 30, 2006. We believe that being managed by RMR is a competitive advantage for SNH because RMR provides SNH with a depth of management and experience which may be unequaled in the real estate industry. We also believe RMR is able to provide management services to SNH at costs that are lower than SNH would have to pay for similar quality services.
  
Strategy:
 
Our present business plan is to maintain an investment portfolio of independent and assisted living properties, continuing care retirement communities and nursing homes and to acquire additional senior living properties primarily for income and secondarily for appreciation potential. Our current growth strategy is generally focused on making portfolio acquisitions of geographically diverse, primarily independent and assisted senior living properties where the majority of the residents pay for occupancy and services from private resources rather than through government programs. We base our acquisition decisions on the historical and projected operating results of the target properties and the financial strength of the proposed tenants and their guarantors, among other considerations. We also sometimes consider investing in properties other than senior living properties. Our present financial strategy is to maintain a conservative capital structure which limits the amount of debt that we issue. We do not have any investments in joint ventures or partnerships. Also, the majority of our debt is fixed rate, and we have no significant debt maturities until 2012.
 
Stock Exchange Listing:
 
New York Stock Exchange
 
Corporate Headquarters:
 
400 Centre Street
Newton, MA 02458
(t) (617) 796-8350
(f) (617) 796-8349
 
Trading Symbol:
 
Common Shares -- SNH 
 
Senior Unsecured Debt Ratings:
 
Moody's -- Ba2
Standard & Poor's -- BB+
 
Portfolio Data (as of 9/30/06):
      
       
Total properties
   
193
 
Total units / beds
   
24,080
 
Percent of rent from private pay properties
   
85.0%
 (1)
         
Portfolio Concentration by facility type (as of 9/30/06):

   
Number of
 
Number of
 
Carrying Value of
     
Annualized
     
   
Properties
 
Units/Beds
 
Investment (2)
 
Percent
 
Current Rent
 
Percent
 
Independent Living (IL) (3)
   
40
   
11,019
 
$
978,758
    
55.4
%
$
95,721
    
55.2
%
Assisted Living (AL)
   
90
   
6,394
   
525,199
   
29.7
%
  
51,543
   
29.8
%
Nursing Homes
   
61
   
6,303
   
219,537
   
12.4
%
  
17,369
   
10.0
%
Hospitals
   
2
   
364
   
43,553
   
2.5
%
  
8,700
   
5.0
%
    Total
   
193
   
24,080
 
$
1,767,047
    
100.0
%
$
173,333
    
100.0
%
 
Operating Statistics by tenant:

 
              
Q2 2006
 
   
Number of
 
Number of
 
Annualized
 
Rent
     
Percent
 
Tenant
 
Properties
 
Units/Beds
 
Current Rent
 
Coverage (4)
 
Occupancy (4)
 
Private Pay (4)
 
Five Star / Sunrise (5)
    
30
   
7,275
 
$
64,729
    
1.33x
    
93
%
  
81
%
Five Star
    
111
   
9,297
   
45,554
   
1.35x
    
89
%
  
48
%
Sunrise / Marriott (6)
    
14
   
4,091
   
31,087
   
NA
   
NA
   
NA
 
NewSeasons / IBC (7)
    
10
   
1,019
   
9,287
   
1.21x
    
85
%
  
100
%
HealthSouth (8)
    
2
   
364
   
8,700
   
NA
   
NA
   
NA
 
Alterra / Brookdale (9)
    
18
   
894
   
7,355
   
1.97x
    
86
%
  
98
%
Genesis HealthCare Corporation
    
1
   
156
   
1,535
   
2.15x
    
97
%
  
19
%
5 Private Companies (combined)
    
7
   
984
   
5,086
   
1.64x
    
89
%
  
27
%
     
193
   
24,080
 
$
173,333
                    

(1)
Represents the percentage of SNH's rental income that is derived from properties where the underlying operating revenues are greater than 80% private pay.
(2)
Amounts are before depreciation, but after impairment write downs.
(3)
Properties where the majority of units are independent living apartments are classified as independent living communities.
(4)
All tenant operating data presented are based upon the operating results provided by our tenants for the indicated periods. ent coverage is calculated as operating cash flow from our tenants’ facility operations, before subordinated charges and capital expenditure reserves, divided by rent payable to us. We have not independently verified our tenants’ operating data.
(5)
These 30 properties are leased to Five Star Quality Care, Inc., or Five Star. Sunrise Senior Living, Inc., or Sunrise, currently operates seven of these properties. Sunrise does not guaranty Five Star's lease obligations. The rent that Five Star pays to us is subordinate to the management fees paid by Five Star to Sunrise, but is not subordinate to Five Star's internal management costs. The rent coverage presented for this lease is after management fees paid to Sunrise for the seven properties that Sunrise currently manages.
(6)
Marriott International, Inc., or Marriott, guarantees this lease. Sunrise has not filed its Form 10-Q's with the Securities and Exchange Commission in 2006 due to an accounting issue. Because we do not know what impact the resolution of this accounting issue may have on the reported performance of our properties, we do not report operating data for this tenant.
(7)
Independence Blue Cross, or IBC, a Pennsylvania health insurer, guarantees this lease.
(8)
On October 1, 2006, Five Star assumed the operations of two rehabilitation hospitals and began leasing them from us for annual rent of $10.25 million. These hospitals were formerly operated by HealthSouth Corporation, or HealthSouth. Because we do not have reliable information about the operations of the hospitals by HealthSouth, we do not report operating data for these hospitals before October 1, 2006. See also Note 1 on page 10 regarding our litigation with HealthSouth and the income we recognize with respect to these hospitals.
(9)
Brookdale Senior Living, Inc., or Brookdale, guarantees this lease.
 
 
4

Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
   
   
INVESTOR INFORMATION
   
   
Board of Trustees
   
Barry M. Portnoy
Gerard M. Martin
Managing Trustee
Managing Trustee
   
   
Frank J. Bailey
Frederick N. Zeytoonjian
Independent Trustee
Independent Trustee
   
   
John L. Harrington
  
Independent Trustee
  
   
   
   
   
Senior Management
   
David J. Hegarty
John R. Hoadley
President, Chief Operating Officer and Secretary
Treasurer and Chief Financial Officer
   
   
   
   
   
Contact Information
   
Investor Relations
Inquiries
Senior Housing Properties Trust
Financial inquiries should be directed to John R. Hoadley,
400 Centre Street
Treasurer and Chief Financial Officer, at (617) 796-8350
Newton, MA 02458
or jhoadley@snhreit.com.
(t) (617) 796-8350
  
(f) (617) 796-8349
Investor and media inquiries should be directed to
(email) info@snhreit.com
Timothy A. Bonang, Manager of Investor Relations, at
(website) www.snhreit.com
(617) 796-8149 or tbonang@snhreit.com.


5


Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
   
RESEARCH COVERAGE
   
Equity Research Coverage
   
Cantor Fitzgerald
Stifel, Nicolaus
Philip Martin
Jerry Doctrow
(312) 469-7485
(410) 454-5142
   
Merrill Lynch
UBS
David Tsoupros
Omotayo Okusanya
(212) 449-9697
(212) 713-1864
   
Raymond James
Wachovia Securities
Paul Puryear
Stephen Swett
(727) 573-3800
(212) 909-0954
   
RBC
  
Mike Salinsky
  
(216) 378-7627
  
   
Debt Research Coverage
   
UBS
Wachovia Securities
Ray Garson
Dan Sullivan
(203) 719-6415
(704) 383-6441
   
   
Rating Agencies
   
Moody’s Investor Service
Standard and Poor’s
Lori Marks
George Skoufis
(212) 553-1098
(212) 438-2608
   

SNH is followed by the analysts and its publicly held debt is rated by the rating agencies listed above. Please note that any opinions, estimates or forecasts regarding SNH's performance made by these analysts or agencies do not represent opinions, forecasts or predictions of SNH or its management. SNH does not by its reference above imply its endorsement of or concurrence with any information, conclusions or recommendations provided by any of these analysts or agencies.
 
 
6
 
 
 
 
 
 
 
 
 
 
FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Housing Properties Trust
Supplemental Operating and Financial Data
 
KEY FINANCIAL DATA
(share amounts and dollars in thousands, except per share data)
 
                       
   
As of and For the Three Months Ended
 
   
9/30/2006
 
6/30/2006
 
3/31/2006
 
12/31/2005
 
9/30/2005
  
                       
Shares Outstanding:
                                
Common shares outstanding (at end of period)
   
71,860
   
71,820
   
71,812
   
71,812
   
68,562
 
Weighted average common shares outstanding - basic and diluted (1)
   
71,824
   
71,817
   
71,812
   
69,445
   
68,543
 
                                 
Common Share Data:
                                
Price at end of period
 
$
21.34
  
$
17.91
  
$
18.10
  
$
16.91
  
$
19.00
  
High during period
 
$
21.98
  
$
18.18
  
$
19.08
  
$
19.35
  
$
20.00
  
Low during period
 
$
17.61
  
$
16.56
  
$
16.75
  
$
16.84
  
$
17.79
  
Annualized dividends paid per share
 
$
1.32
  
$
1.32
  
$
1.28
  
$
1.28
  
$
1.28
  
Annualized dividend yield (at end of period)
   
6.2
%
  
7.4
%
  
7.1
%
  
7.6
%
  
6.7
%
                                 
Market Capitalization:
                                
Total debt (book value)
 
$
642,475
  
$
561,763
  
$
545,444
  
$
556,400
  
$
551,757
  
Plus: market value of common shares (at end of period)
   
1,533,492
   
1,286,296
   
1,299,797
   
1,214,341
   
1,302,678
 
Total market capitalization
 
$
2,175,967
  
$
1,848,059
  
$
1,845,241
  
$
1,770,741
  
$
1,854,435
  
Total debt / total market capitalization
   
29.5
%
  
30.4
%
  
29.6
%
  
31.4
%
  
29.8
%
                                 
Book Capitalization:
                                
Total debt
 
$
642,475
  
$
561,763
  
$
545,444
  
$
556,400
  
$
551,757
  
Plus: total shareholders' equity
   
894,433
   
901,824
   
912,159
   
917,977
   
868,086
 
Total book capitalization
 
$
1,536,908
  
$
1,463,587
  
$
1,457,603
  
$
1,474,377
  
$
1,419,843
  
Total debt / total book capitalization
   
41.8
%
  
38.4
%
  
37.4
%
  
37.7
%
  
38.9
%
                                 
Selected Balance Sheet Data:
                                
Total assets
 
$
1,559,745
  
$
1,490,557
  
$
1,480,557
  
$
1,499,648
  
$
1,440,403
  
Total liabilities
 
$
665,312
  
$
588,733
  
$
568,398
  
$
581,671
  
$
572,317
  
Gross book value of real estate assets (2)
 
$
1,767,047
  
$
1,699,202
  
$
1,691,499
  
$
1,686,169
  
$
1,632,013
  
Total debt / gross book value of real estate assets (2)
   
36.4
%
  
33.1
%
  
32.2
%
  
33.0
%
  
33.8
%
                                 
Selected Income Statement Data:
                                
Total revenues
 
$
42,317
  
$
41,276
  
$
41,169
  
$
44,111
  
$
40,244
  
EBITDA (3)
 
$
39,492
  
$
39,371
  
$
39,028
  
$
38,353
  
$
37,775
  
Income from continuing operations
 
$
15,418
  
$
12,686
  
$
15,667
  
$
10,472
  
$
14,129
  
Net income
 
$
15,418
  
$
12,686
  
$
15,667
  
$
15,686
  
$
14,129
  
Funds from operations (FFO) (4)
 
$
27,659
  
$
27,825
  
$
27,657
  
$
22,171
  
$
25,864
  
Common distributions paid
 
$
23,714
  
$
23,701
  
$
22,980
  
$
22,980
  
$
21,940
  
                                 
Per Share Data:
                                
Income from continuting operations
 
$
0.21
  
$
0.18
  
$
0.22
  
$
0.15
  
$
0.21
  
Net income
 
$
0.21
  
$
0.18
  
$
0.22
  
$
0.23
  
$
0.21
  
FFO (4)
 
$
0.39
  
$
0.39
  
$
0.39
  
$
0.32
  
$
0.38
  
Common distributions paid
 
$
0.33
  
$
0.33
  
$
0.32
  
$
0.32
  
$
0.32
  
FFO payout ratio (4)
   
84.6
%
  
84.6
%
  
82.1
%
  
100.0
%
  
84.2
%
                                 
Coverage Ratios:
                                
EBITDA (3) / interest expense
   
3.3x
    
3.4x
    
3.4x
    
3.2x
    
3.2x
  

(1)
SNH has no outstanding common share equivalents, such as units, convertible debt or stock options.
(2)
Gross book value of real estate assets is real estate properties, at cost, after impairment write downs.
(3)
See page 12 for calculation of EBITDA.
(4)
See page 13 for calculation of FFO.
 
8
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
           
   
As of
September 30, 2006
 
As of
December 31, 2005
 
       
(audited)
 
ASSETS
             
Real estate properties, at cost:
             
Land
 
$
198,828
  
$
185,819
  
Buildings and improvements
   
1,568,219
   
1,500,350
 
     
1,767,047
   
1,686,169
 
Less accumulated depreciation
   
265,065
   
239,031
 
     
1,501,982
   
1,447,138
 
               
Cash and cash equivalents
   
1,527
   
14,642
 
Restricted cash
   
21,860
   
2,529
 
Deferred financing fees, net
   
7,409
   
9,968
 
Other assets
   
26,967
   
25,371
 
Total assets
 
$
1,559,745
  
$
1,499,648
  
               
LIABILITIES AND SHAREHOLDERS' EQUITY
              
Unsecured revolving bank credit facility
 
$
222,000
  
$
64,000
  
Senior unsecured notes due 2012 and 2015, net of discount
   
341,634
   
394,018
 
Junior subordinated debentures due 2041
   
-
   
28,241
 
Secured debt and capital leases
   
78,841
   
70,141
 
Accrued interest
   
8,598
   
13,089
 
Other liabilities
   
14,239
   
12,182
 
Total liabilities
   
665,312
   
581,671
 
               
Commitments and contingencies
             
               
Shareholders' equity:
             
Common shares of beneficial interest, $0.01 par value:
             
80,000,000 shares authorized; 71,859,527 and 71,812,227 shares issued  
              
and outstanding, respectively  
    
718
   
718
 
Additional paid-in capital
   
1,094,125
   
1,093,480
 
Cumulative net income
   
310,966
   
267,196
 
Cumulative distributions
   
(516,949
)
  
(447,289
)
Unrealized gain on investments
   
5,573
   
3,872
 
Total shareholders' equity  
    
894,433
   
917,977
 
Total liabilities and shareholders' equity
 
$
1,559,745
  
$
1,499,648
  
 
9
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 

 CONSOLIDATED STATEMENT OF INCOME  
(in thousands, except per share data)   
  
                        
        
For the Three Months Ended
 
For the Nine Months Ended
 
        
9/30/2006
 
9/30/2005
 
9/30/2006
 
9/30/2005
  
Revenues:
                               
Rental income (1)
        
$
41,983
  
$
39,506
  
$
123,727
  
$
117,489
  
Interest and other income  
          
334
   
738
   
1,034
   
1,588
 
 Total revenues
         
42,317
   
40,244
   
124,761
   
119,077
 
                                 
Expenses:
                               
Interest  
          
11,833
   
11,911
   
34,751
   
34,585
 
Depreciation  
          
10,978
   
10,923
   
32,631
   
32,428
 
General and administrative  
          
4,088
   
3,281
   
10,870
   
9,762
 
Impairment of assets  
          
-
   
-
   
1,420
   
-
 
Loss on early extinguishment of debt (2)  
          
-
   
-
   
1,319
   
-
 
 Total expenses
         
26,899
   
26,115
   
80,991
   
76,775
 
                                 
Income from continuing operations
         
15,418
   
14,129
   
43,770
   
42,302
 
Gain on sale of property
         
-
   
-
   
-
   
717
 
Net income
       
$
15,418
  
$
14,129
  
$
43,770
  
$
43,019
  
                                 
Weighted average common shares outstanding
         
71,824
   
68,543
   
71,818
   
68,525
 
                                 
Basic and diluted earnings per share:
                               
Income from continuing operations  
        
$
0.21
  
$
0.21
  
$
0.61
  
$
0.62
  
Gain on sale of property  
          
-
   
-
   
-
   
0.01
 
Net income  
        
$
0.21
  
$
0.21
  
$
0.61
  
$
0.63
  
                                 
                                 
Additional Data:
                                
Straight-line rent included in rental income (3)  
        
$
140
  
$
107
  
$
252
  
$
322
  
Deferred percentage rent (4)  
        
$
1,263
  
$
812
  
$
4,016
  
$
2,402
  
Litigation expenses included in general and administrative expenses (5)  
        
$
700
  
$
350
  
$
1,410
  
$
1,250
  

(1)
Rental income for the quarter and nine months ended September 30, 2006, includes $2.2 million and $6.5 million, respectively, of rental income from two hospitals formerly leased and operated by HealthSouth Corporation, or HealthSouth. Since 2003, we have been in two separate litigations with HealthSouth seeking to increase the annual rent due under an amended lease with HealthSouth and to terminate the amended lease and repossess the hospitals. During the pendency of the litigations, we have recognized rental income at the $8.7 million annual rate set forth in the amended lease, which represents the minimum amount we would have been entitled to if HealthSouth prevailed in the litigations and we have deferred recognition in income of $2.2 million of cash payments received from HealthSouth that are in excess of the minimum rent required by the amended lease.  On November 8, 2006, we and HealthSouth agreed to settle our litigations, reinstate HealthSouth’s lease until September 30, 2006 and to increase the annual rent due under the lease from $8.7 million to $9.9 million for the period from January 2, 2002 to September 30, 2006. As a result of the settlement, HealthSouth owes us an additional rent of $3.5 million for that period. We collected that amount on November 8, 2006. We will recognize this $3.5 million and the $2.2 million of previously deferred income as rental income in the fourth quarter of 2006.
(2)
On June 15, 2006, we redeemed all of our $28.2 million of 10.125% junior subordinated debentures. The loss on early extinguishment of debt is the write off of unamortized deferred financing fees related to these debentures.
(3)
We report rental income on a straight line basis over the terms of the respective leases. Rental income includes non-cash straight line rent adjustments.
(4)
This amount represents percentage rent with respect to the third quarter that is not included in rental income for the third quarter. We recognize percentage rental income received during the first, second and third quarters in the fourth quarter.
(5)
These expenses relate to our HealthSouth litigation described in footnote 1 above.
 
 
10
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
           
   
For the Nine Months Ended
 
   
9/30/2006
  
9/30/2005
  
Cash flows from operating activities:
             
Net income
 
$
43,770
  
$
43,019
  
Adjustments to reconcile net income to cash provided by operating activities:
             
Depreciation
   
32,631
   
32,428
 
Impairment of assets
   
1,420
   
-
 
Loss on early extinguishment of debt
   
1,319
   
-
 
Gain on sale of property
   
-
   
(717
)
Amortization of deferred financing fees and debt discounts
   
1,355
   
1,728
 
Change in assets and liabilities:
             
Restricted cash  
    
369
   
3,675
 
Other assets  
    
107
 
  
2,975
 
Accrued interest  
    
(4,491
)
  
(2,158
)
Other liabilities  
    
2,702
   
1,259
 
Cash provided by operating activities
   
79,182
   
82,209
 
               
Cash flows from investing activities:
             
Acquisitions
   
(78,921
)
  
(35,486
)
Mortgage financing provided
   
-
   
(24,000
)
Mortgage financing repaid
   
-
   
24,000
 
Proceeds from sale of real estate
   
-
   
4,600
 
Cash used for investing activities
   
(78,921
)
  
(30,886
)
               
Cash flows from financing activities:
             
Proceeds from borrowings on revolving bank credit facility
   
179,300
   
79,000
 
Repayments of borrowings on revolving bank credit facility
   
(41,000
)
  
(57,000
)
Redemption of senior notes
   
(52,500
)
  
-
 
Redemption of junior subordinated debentures
   
(28,241
)
  
-
 
Repayment of other debt
   
(1,275
)
  
(5,544
)
Deferred financing fees
   
-
   
(3,550
)
Distributions to shareholders
   
(69,660
)
  
(65,782
)
Cash provided by (used for) financing activities
   
(13,376
)
  
(52,876
)
               
Decrease in cash and cash equivalents
   
(13,115
)
  
(1,553
)
Cash and cash equivalents at beginning of period
   
14,642
   
3,409
 
Cash and cash equivalents at end of period
 
$
1,527
  
$
1,856
  
               
Supplemental cash flow information:
             
Interest paid
 
$
37,890
  
$
35,015
  
               
Non cash investing activity:
             
Increase in capital lease assets
 
$
(9,975
)
$
-
  
               
Non cash financing activities:
             
Increase in capital lease obligations
 
$
9,975
  
$
-
  
Issuance of common shares
   
645
   
657
 
Borrowing under revolving credit facility to fund restricted cash for an acquisition
   
19,700
   
-
 

11
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 
 CALCULATION OF EBITDA
 
 (dollars in thousands)
  
                   
   
For the Three Months Ended
 
For the Nine Months Ended
 
   
9/30/2006
 
9/30/2005
  
9/30/2006
 
9/30/2005
  
                   
Income from continuing operations (1)
 
$
15,418
  
$
14,129
  
$
43,770
  
$
42,302
  
Plus: interest expnese
    
11,833
   
11,911
   
34,751
   
34,585
 
     depreciation expense
   
10,978
   
10,923
   
32,631
   
32,428
 
    deferred percentage rent adjustment (2)
   
1,263
   
812
   
4,016
   
2,402
 
    impairment of assets
   
-
   
-
   
1,420
   
-
 
    loss on early extinguishment of debt
   
-
   
-
   
1,319
   
-
 
EBITDA
 
$
39,492
  
$
37,775
  
$
117,907
  
$
111,717
  

 
(1)
Income from continuing operations includes expenses incurred related to our HealthSouth litigation of approximately $700,000 and $350,000 for the quarters ended September 30, 2006, and 2005, respectively, and $1.4 million and $1.3 million for the nine months ended September 30, 2006 and 2005, respectively. See Note 1 on page 10 regarding our HealthSouth litigation.
(2)
We recognize percentage rental income received during the first, second and third quarters in the fourth quarter. Although recognition of revenue is deferred until the fourth quarter, for purposes of this calculation total revenues for the first three quarters includes estimated amounts with respect to those periods. The fourth quarter calculation excludes the amounts recognized during the first three quarters.
 
 

We compute EBITDA as shown in the calculation above. Such calculation begins with income from continuing operations or, if such amount is the same as net income, with net income. We consider EBITDA to be an appropriate measure of performance for a REIT, along with net income and cash flow from operating, investing and financing activities. EBITDA does not represent cash generated by operating activities in accordance with generally accepted accounting principals, or GAAP, and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity.
 
 
12
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 
CALCULATION OF FUNDS FROM OPERATIONS (FFO)
(amounts in thousands, except per share data)
                   
   
For the Three Months Ended
 
For the Nine Months Ended
 
 
 
9/30/2006
 
9/30/2005
 
9/30/2006
 
9/30/2005
  
                   
Income from continuing operations (1)
 
$
15,418
  
$
14,129
  
$
43,770
  
$
42,302
  
Plus: depreciation expense
    
10,978
   
10,923
   
32,631
   
32,428
 
      deferred percentage rent adjustment (2)
   
1,263
   
812
   
4,016
   
2,402
 
      impairment of assets
   
-
   
-
   
1,420
   
-
 
  loss on early extinguishment of debt
   
-
   
-
   
1,319
   
-
 
FFO
 
$
27,659
  
$
25,864
  
$
83,156
  
$
77,132
  
                           
Weighted average shares outstanding
   
71,824
   
68,543
   
71,818
   
68,525
 
                           
Income from continuing operations per share
 
$
0.21
  
$
0.21
  
$
0.61
  
$
0.62
  
FFO per share
 
$
0.39
  
$
0.38
  
$
1.16
  
$
1.13
  
                           
Supplemental data:
                         
Straight-line rent included in rental income (3)
 
$
140
  
$
107
  
$
252
  
$
322
  
Amortization of deferred financing fees and debt discounts
 
$
446
  
$
665
  
$
1,355
  
$
1,726
  
 
(1)
Income from continuing operations includes expenses incurred related to our HealthSouth litigation of approximately $700,000 and $350,000 for the quarters ended September 30, 2006, and 2005, respectively, and $1.4 million and $1.3 for the nine months ended September 30, 2006 and 2005, respectively. See Note 1 on page 10 regarding our HealthSouth litigation.
(2)
We recognize percentage rental income received during the first, second and third quarters in the fourth quarter. Although recognition of revenue is deferred until the fourth quarter, for purposes of this calculation total revenues for the first three quarters includes estimated amounts with respect to those periods. The fourth quarter calculation excludes the amounts recognized during the first three quarters.
(3)
We report rental income on a straight line basis over the terms of the respective leases. Rental income includes non-cash straight line rent adjustments.
 
We compute FFO as shown in the calculation above. Such calculation begins with income from continuing operations or, if such amount is the same as net income, with net income. Our calculation of FFO differs from the National Association of Real Estate Investment Trusts, or NAREIT, definition of FFO because we include deferred percentage rent as discussed in Note 2 above, and exclude loss on early extinguishment of debt not settled in cash. We consider FFO to be an appropriate measure of performance for a REIT along with net income and cash flow from operating, investing and financing activities. We believe that FFO provides useful information to investors because by excluding the effects of certain historical costs, such as depreciation expense and gain or loss on sale of properties, FFO can facilitate a comparison of our current operating performance with our past operating performance and of operating performances among REITs. FFO does not represent cash generated by operating activities in accordance with GAAP and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity. FFO is one important factor considered by our board of trustees in determining the amount of distributions to shareholders. Other important factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving bank credit facility and public debt covenants, the availability of debt and equity capital to us and our expectation of our future performance.
 
13
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006

DEBT SUMMARY
(dollars in thousands)
                             
   
Coupon
 
Interest
 
  
Principal
 
Maturity
 
Due at
 
Years to
 
 
 
Rate
 
Rate
 
  
Balance
 
Date
 
Maturity
 
Maturity
 
                             
Secured Fixed Rate Debt:
                                      
Tax exempt bonds - secured by 1 property
   
5.875
%
  
5.875
%
  
$
14,700
  
12/1/27
  
$
14,700
    
21.2
 
Mortgage - secured by 16 properties (1)
   
6.970
%
  
6.330
%
    
36,005
 
6/2/12
    
30,069
   
5.7
 
Mortgage - secured by 4 properties (1)
   
6.110
%
  
6.420
%
    
12,271
 
11/30/13
    
10,218
   
7.2
 
Capital leases - 2 properties
   
7.700
%
  
7.700
%
    
15,865
 
4/30/26
    
-
   
19.6
 
Total / weighted average secured fixed rate debt
   
6.779
%
  
6.535
%
  
$
78,841
      
$
54,987
    
11.6
 
                                       
                                       
Unsecured Debt:
                                      
                                       
Unsecured Floating Rate Debt:
                                      
Revolving credit facility (LIBOR + 100 b.p.)
   
6.320
%
  
6.320
%
  
$
222,000
  
11/30/09
  
$
222,000
    
3.2
 
                                       
Unsecured Fixed Rate Debt:
                                      
Senior notes due 2012
   
8.625
%
  
8.625
%
  
$
245,000
  
1/15/12
  
$
245,000
    
5.3
 
Senior notes due 2015
   
7.875
%
  
7.875
%
    
97,500
 
4/15/15
    
97,500
   
8.5
 
Total / weighted average unsecured fixed rate debt
   
8.411
%
  
8.411
%
  
$
342,500
      
$
342,500
    
6.2
 
                                       
Total / weighted average unsecured debt
   
7.589
%
  
7.589
%
  
$
564,500
      
$
564,500
    
5.0
 
                                       
                                       
                                       
                                       
Total / weighted average secured debt fixed rate debt
   
6.779
%
  
6.535
%
  
$
78,841
      
$
54,987
    
11.6
 
Total / weighted average unsecured floating rate debt
   
6.320
%
  
6.320
%
    
222,000
       
222,000
   
3.2
 
Total / weighted average unsecured fixed rate debt
   
8.411
%
  
8.411
%
    
342,500
       
342,500
   
6.2
 
Total / weighted average debt
   
7.490
%
  
7.460
%
  
$
643,341
      
$
619,487
    
5.8
 
 
 
(1)
Includes the effect of mark to market accounting for certain assumed mortgages.
 
14
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 

DEBT MATURITY SCHEDULE
(dollars in thousands)
                   
                   
   
Scheduled Principal Payments During Period
   
Secured
 
 
 
 
 
 
 
 
 
Fixed Rate
 
Unsecured
 
Unsecured
 
 
 
 
 
Debt and
 
Floating
 
Fixed
 
 
 
Year
 
Capital Leases
 
Rate Debt
 
Rate Debt
 
Total
 
2006
  
$
340
  
$
-
  
$
-
  
$
340
  
2007
    
1,410
   
-
   
-
   
1,410
 
2008
    
1,496
   
-
   
-
   
1,496
 
2009
    
1,605
   
222,000
   
-
   
223,605
 
2010
    
1,714
   
-
   
-
   
1,714
 
2011
    
1,829
   
-
   
-
   
1,829
 
2012
    
31,418
   
-
   
245,000
   
276,418
 
2013
    
11,016
   
-
   
-
   
11,016
 
2014
    
544
   
-
   
-
   
544
 
2015
    
614
   
-
   
97,500
   
98,114
 
2016 and thereafter
    
26,855
   
-
   
-
   
26,855
 
   
$
78,841
  
$
222,000
  
$
342,500
  
$
643,341
  
 
 
15
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 

LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
                       
   
As Of And For The Three Months Ended
   
9/30/2006
 
6/30/2006
 
3/31/2006
 
12/31/2005
 
9/30/2005
  
Leverage Ratios:
                                
                                 
Total debt / total assets  
    
41.2
%
  
37.7
%
  
36.8
%
  
37.1
%
  
38.3
%
Total debt / gross book value of real estate assets (1)  
    
36.4
%
  
33.1
%
  
32.2
%
  
33.0
%
  
33.8
%
Total debt / total market capitalization  
    
29.5
%
  
30.4
%
  
29.6
%
  
31.4
%
  
29.8
%
Total debt / total book capitalization  
    
41.8
%
  
38.4
%
  
37.4
%
  
37.7
%
  
38.9
%
Secured debt / total assets  
    
5.1
%
  
5.3
%
  
4.7
%
  
4.7
%
  
4.9
%
Variable rate debt / total debt  
    
34.6
%
  
25.1
%
  
19.4
%
  
11.5
%
  
10.7
%
                                 
                                 
Coverage Ratios:
                                
                                 
EBITDA (2) / interest expense  
    
3.3x
    
3.4x
    
3.4x
    
3.2x
    
3.2x
  
                                 
                                 
Public Debt Covenants (3):
                                
                                 
Total debt / adjusted total assets - allowable maximum 60.0%  
    
35.4
%
  
32.4
%
  
30.0
%
  
30.5
%
  
34.5
%
Secured debt / adjusted total assets - allowable maximum 40.0%  
    
4.3
%
  
4.6
%
  
4.1
%
  
4.1
%
  
4.3
%
Consolidated income available for debt service / debt service - required minimum 2.00x  
    
3.47x
    
3.75x
    
3.83x
    
3.53x
    
3.59x
  
Total unencumbered assets to unsecured debt - required minimum 1.50x  
    
2.97x
    
3.30x
    
3.55x
    
3.49x
    
3.38x
  

(1)
Gross book value of real estate assets is real estate properties, at cost, less impairment write downs.
(2)
See page 12 for the calculation of EBITDA.
(3)
Adjusted total assets and unencumbered assets include original cost of real estate assets less impairment write downs and exclude depreciation and  amortization, accounts receivable and intangible assets. Consolidated income available for debt service is earnings from operations excluding interest expense, depreciation and amortization, taxes, gains and losses on sales of property and amortization of deferred charges.
 
 
 
 
 
 
16
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 

2006 INVESTMENTS/DISPOSITIONS INFORMATION  
(dollars in thousands)

                               
Acquisitions (1):
                              
                       
 
      
 
          
 
                  
Date Acquired
 
Tenant
 
Type of Property
 
Number of Properties
 
Units
 
Purchase Price
 
Purchase Price Per Unit
  
Cap Rate
 
                               
8/31/06
    
Five Star
   
IL/AL/CCRC
   
5
   
783
 
$
61,500
  
$
78.5
    
8.25
%
 

Dispositions:
                              
                       
 
      
                               
Date Sold
 
Location
 
Type of Property
 
Number of Properties
 
Sale Price
 
Original Allocated Purchase Price
 
Sale Price
Multiple of Original Purchase Price
  
Book Gain on Sale
 
                               
There were no dispositions during the nine months ended September 30, 2006.
 

(1)
Excludes investments in existing properties.

On October 1, 2006, we purchased 3 IL/AL properties with 304 units for $31.5 million. The purchase price per unit was $104,000 and the cap rate was 8.40%.
 
 
17
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 

2006 FINANCING ACTIVITIES
(share amounts and dollars in thousands)
               
               
   
For the Three Months Ended
   
9/30/2006
 
6/30/2006
 
3/31/2006
 
               
Debt Transactions:
                    
New debt raised
 
$
-
  
$
-
  
$
-
  
New debt assumed as part of acquisitions
   
-
   
-
   
-
 
Total new debt
   
-
   
-
   
-
 
                     
Debt retired
   
-
   
28,241
   
52,500
 
Net debt
 
$
-
  
$
(28,241
)
$
(52,500
)
                     
Equity Transactions:
                    
New common shares issued
 
$
-
  
$
-
  
$
-
  
New common equity raised, net
 
$
-
  
$
-
  
$
-
  
                     
Revolving Credit Facility Transactions:
                    
Balance oustanding at beginning of period
 
$
141,000
  
$
106,000
  
$
64,000
  
Drawings during period
   
109,000
   
43,000
   
47,000
 
Repayments during period
   
(28,000
)
  
(8,000
)
  
(5,000
)
Balance oustanding at end of period
 
$
222,000
  
$
141,000
  
$
106,000
  
                     
Balance available for drawing
 
$
328,000
  
$
409,000
  
$
444,000
  
 
 
18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PORTFOLIO INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 


PORTFOLIO SUMMARY BY FACILITY TYPE AND TENANT
(dollars in thousands)
                               
                   
 
          
   
Number of Properties
 
Number of Units/Beds
 
Carrying Value of Investment (1)
 
Percent
 
Investment per unit
 
Annualized Current Rent
 
Percent
 
Facility Type:
                                           
Independent Living (IL) (2)
    
40
   
11,019
 
$
978,758
    
55.4
%
$
88.8
  
$
95,721
    
55.2
%
Assisted Living (AL)
    
90
   
6,394
   
525,199
   
29.7
%
  
82.1
   
51,543
   
29.8
%
Nursing Homes
    
61
   
6,303
   
219,537
   
12.4
%
  
34.8
   
17,369
   
10.0
%
Hospitals (3)
    
2
   
364
   
43,553
   
2.5
%
  
119.7
   
8,700
   
5.0
%
 Total
   
193
   
24,080
 
$
1,767,047
    
100.0
%
$
73.4
  
$
173,333
    
100.0
%
                                             
Tenant:
                                            
Five Star / Sunrise (4)
    
30
   
7,275
 
$
649,033
    
36.7
%
$
89.2
  
$
64,729
    
37.3
%
Five Star
    
111
   
9,297
   
551,127
   
31.2
%
  
59.3
   
45,554
   
26.3
%
Sunrise / Marriott (5)
    
14
   
4,091
   
325,473
   
18.4
%
  
79.6
   
31,087
   
17.9
%
NewSeasons / IBC (6)
    
10
   
1,019
   
87,641
   
5.0
%
  
86.0
   
9,287
   
5.4
%
HealthSouth (3)
    
2
   
364
   
43,553
   
2.5
%
  
119.7
   
8,700
   
5.1
%
Alterra / Brookdale (7)
    
18
   
894
   
61,126
   
3.5
%
  
68.4
   
7,355
   
4.2
%
Genesis HealthCare Corporation
    
1
   
156
   
13,007
   
0.7
%
  
83.4
   
1,535
   
0.9
%
5 Private Companies (combined)
    
7
   
984
   
36,087
   
2.0
%
  
36.7
   
5,086
   
2.9
%
Total
   
193
   
24,080
 
$
1,767,047
    
100.0
%
$
73.4
  
$
173,333
    
100.0
%
 

(1)
Amounts are before depreciation, but after impairment write downs.
(2)
Properties where the majority of units are independent living apartments are classified as independent living communities.
(3)
See Note 1 on page 10.
(4)
These 30 properties are leased to Five Star. As of September 30, 2006, Sunrise operated 7 of these properties. Sunrise does not guaranty Five Star's lease obligations.
(5)
Marriott guarantees this lease.
(6)
IBC guarantees this lease.
(7)
Brookdale guarantees this lease.
 
 
20
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 


OCCUPANCY BY FACILITY TYPE AND TENANT
 
                       
   
For the Three Months Ended
  
   
6/30/2006
 
3/31/2006
 
12/31/2005
 
9/30/2005
 
6/30/2005
  
Facility Type:
                                
Independent Living (IL)
    
92
%
  
93
%
  
92
%
  
91
%
  
91
%
Assisted Living (AL)
    
90
%
  
91
%
  
91
%
  
90
%
  
84
%
Nursing Homes
    
89
%
  
92
%
  
90
%
  
90
%
  
91
%
Hospitals (1)
    
NA
    
NA
    
NA
    
NA
    
NA
  
                                 
                                 
Tenant:
                                
Five Star / Sunrise
    
93
%
  
93
%
  
93
%
  
92
%
  
92
%
Five Star (2)
    
89
%
  
91
%
  
91
%
  
90
%
  
87
%
Sunrise / Marriott (3)
    
NA
    
NA
    
NA
    
NA
    
NA
  
NewSeasons / IBC
    
85
%
  
85
%
  
80
%
  
80
%
  
81
%
HealthSouth (1)
    
NA
    
NA
    
NA
    
NA
    
NA
  
Alterra / Brookdale
    
86
%
  
90
%
  
90
%
  
88
%
  
84
%
Genesis HealthCare Corporation
    
97
%
  
97
%
  
97
%
  
94
%
  
96
%
5 Private Companies (combined)
    
89
%
  
90
%
  
88
%
  
84
%
  
84
%
 

(1)
The financial and operating data included in HealthSouth's Annual Report on Form 10-K for the year ended December 31, 2005, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, show a substantial negative net worth and a history of substantial operating losses. Also, HealthSouth's management identified several material weaknesses in its internal control over financial reporting and stated that it did not maintain effective internal control over financial reporting as of December 31, 2005 and June 30, 2006. Because we do not have reliable information about HealthSouth's operations, we do not disclose any operating or financial data for these hospitals or this operator. See also Note 1 on page 10 regarding our litigation with HealthSouth. On October 1, 2006, Five Star assumed the operations of the two hospitals and began leasing them from us.
(2)
Includes data for periods prior to our ownership of certain properties included in this lease.
(3)
Sunrise has not filed its Form 10-Q's with the Securities and Exchange Comission in 2006 due to an accounting issue. Because we do not know what impact the resolution of this accounting issue may have on the reported performance of our properties, we do not report operating data for this tenant.
 
 

All tenant operating data presented are based upon the operating results provided by our tenants for the indicated quarterly periods. We have not independently verified our tenants’ operating data.
 
 
21
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 

% PRIVATE PAY BY FACILITY TYPE AND TENANT
                       
   
For the Three Months Ended
   
6/30/2006
 
3/31/2006
 
12/31/2005
 
9/30/2005
 
6/30/2005
  
Facility Type:
                                
Independent Living (IL)
    
83
%
  
84
%
  
87
%
  
84
%
  
84
%
Assisted Living (AL)
    
94
%
  
93
%
  
92
%
  
94
%
  
93
%
Nursing Homes
    
28
%
  
30
%
  
27
%
  
29
%
  
26
%
Hospitals (1)
    
NA
    
NA
    
NA
    
NA
    
NA
  
                                 
                                 
Tenant:
                                
Five Star / Sunrise
    
81
%
  
82
%
  
84
%
  
84
%
  
84
%
Five Star (2)
    
48
%
  
48
%
  
45
%
  
44
%
  
42
%
Sunrise / Marriott (3)
    
NA
    
NA
    
NA
    
NA
    
NA
  
NewSeasons / IBC
    
100
%
  
100
%
  
100
%
  
100
%
  
100
%
HealthSouth (1)
    
NA
    
NA
    
NA
    
NA
    
NA
  
Alterra / Brookdale
    
98
%
  
98
%
  
98
%
  
98
%
  
98
%
Genesis HealthCare Corporation
    
19
%
  
17
%
  
17
%
  
20
%
  
23
%
5 Private Companies (combined)
    
27
%
  
26
%
  
24
%
  
24
%
  
27
%

(1)
The financial and operating data included in HealthSouth's Annual Report on Form 10-K for the year ended December 31, 2005, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, show a substantial negative net worth and a history of substantial operating losses. Also, HealthSouth's management identified several material weaknesses in its internal control over financial reporting and stated that it did not maintain effective internal control over financial reporting as of December 31, 2005 and June 30, 2006. Because we do not have reliable information about HealthSouth's operations, we do not disclose any operating or financial data for these hospitals or this operator. See also Note 1 on page 10 regarding our litigation with HealthSouth. On October 1, 2006, Five Star assumed the operations of the two hospitals and began leasing them from us.
(2)
Includes data for periods prior to our ownership of certain properties included in this lease.
(3)
Sunrise has not filed its Form 10-Q's with the Securities and Exchange Commission in 2006 due to an accounting issue. Because we do not know what impact the resolution of this accounting issue may have on the reported performance of our properties, we do not report operating data for this tenant.
 
 
All tenant operating data presented are based upon the operating results provided by our tenants for the indicated quarterly periods. We have not independently verified our tenants’ operating data.
 
 
22
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 

RENT COVERAGE
                       
   
For the Three Months Ended
Tenant
 
6/30/2006
 
3/31/2006
 
12/31/2005
 
9/30/2005
 
6/30/2005
  
Five Star / Sunrise (1)
    
1.33x
    
1.33x
    
1.27x
    
1.37x
    
1.43x
  
Five Star (2)
    
1.35x
    
1.49x
    
1.78x
    
1.77x
    
1.68x
  
Sunrise / Marriott (3)
    
NA
    
NA
    
NA
    
NA
    
NA
  
NewSeasons / IBC
    
1.21x
    
1.16x
    
1.10x
    
1.17x
    
1.10x
  
HealthSouth (4)
    
NA
    
NA
    
NA
    
NA
    
NA
  
Alterra / Brookdale
    
1.97x
    
2.04x
    
1.98x
    
1.87x
    
1.80x
  
Genesis HealthCare Corporation
    
2.15x
    
1.77x
    
2.16x
    
1.82x
    
2.03x
  
5 Private companies (combined)
    
1.64x
    
1.56x
    
1.92x
    
1.86x
    
1.65x
  

(1)
These 30 properties are leased to Five Star. As of September 30, 2006, Sunrise operated 7 of these properties. Sunrise does not guaranty Five Star's lease obligations. The rent that Five Star pays to us is subordinate to the management fees that Five Star pays to Sunrise, but is not subordinate to Five Star’s internal management costs. The rent coverage presented for this lease has been adjusted to exclude management fees paid to Sunrise during the periods presented for the 23 properties that Five Star currently manages.
(2)
Includes data for periods prior to our ownership of certain properties included in this lease.
(3)
Sunrise has not filed its Form 10-Q's with the Securities and Exchange Commission in 2006 due to an accounting issue. Because we do not know what impact the resolution of this accounting issue may have on the reported performance of our properties, we do not report operating data for this tenant.
(4)
The financial and operating data included in HealthSouth's Annual Report on Form 10-K for the year ended December 31, 2005, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, show a substantial negative net worth and a history of substantial operating losses. Also, HealthSouth's management identified several material weaknesses in its internal control over financial reporting and stated that it did not maintain effective internal control over financial reporting as of December 31, 2005 and June 30, 2006. Because we do not have reliable information about HealthSouth's operations, we do not disclose any operating or financial data for these hospitals or this operator. See also Note 1 on page 10 regarding our litigation with HealthSouth. On October 1, 2006, Five Star assumed the operations of the two hospitals and began leasing them from us.
 

All tenant operating data presented are based upon the operating results provided by our tenants for the indicated periods. Rent coverage is calculated as operating cash flow from our tenants’ facility operations, before subordinated charges and capital expenditure reserves, if any, divided by rent payable to us. We have not independently verified our tenants’ operating data.
23
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2006
 
 

PORTFOLIO LEASE EXPIRATION SCHEDULE (1)
(dollars in thousands)
               
               
   
Annualized
Current Rent
 
% of Annualized Current Rent
 
Cumulative % of Annualized
Current Rent
  
2006
  
$
-
    
-
   
0.0
%
2007
    
-
   
-
   
0.0
%
2008
    
-
   
-
   
0.0
%
2009
    
-
   
-
   
0.0
%
2010
    
1,269
   
0.8
%
  
0.8
%
2011
    
-
   
-
   
0.8
%
2012
    
-
   
-
   
0.8
%
2013
    
31,087
   
19.0
%
  
19.8
%
2014
    
-
   
-
   
19.8
%
2015
    
2,006
   
1.2
%
  
21.0
%
2016 and thereafter
    
129,457
   
79.0
%
  
100.0
%
        Total
  
$
163,819
    
100.0
%
      
                     
Weighted average remaining
                    
lease term (in years)
    
11.2
             

 
(1)
Excludes the two hospitals operated by HealthSouth until September 30, 2006. On October 1, 2006, Five Star began leasing these two hospitals for annual rent of $10.25 million and an initial lease term expiring in 2026. See Note 1 on page 10.
 
24
 
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