EX-99.1 3 ex99-2.htm EX 99-2 ex99-2.htm
Exhibit 99.2
 
 
SENIOR HOUSING PROPERTIES TRUST
 
Third Quarter 2007
 
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
 
2007 Investments/Dispositions Information
17
 
2007 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, 2007
 
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, 2007, RMR managed one of the largest portfolios of publicly owned real estate in the United States, including over 1,270 properties, with 300 million square feet, located in 46 states, the District of Columbia, Puerto Rico and Ontario, Canada.  RMR has approximately 500 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 (HPT), a publicly traded REIT that owns hotels and travel centers, and HRPT Properties Trust (HRP), a publicly traded REIT that primarily owns office buildings. An affilitate of RMR, RMR Advisors, is also the investment manager of six publicly traded mutual funds (RMR Funds) which principally invest in securities of real estate companies (excluding securities of companies managed by RMR and its affiliates).  The public companies managed by RMR and its affiliates had a combined total market capitalization of nearly $16 billion as of September 30, 2007.  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 healthcare related properties primarily for income and secondarily for appreciation potential.  Our current growth strategy is generally focused on making acquisitions of geographically diverse, primarily independent and assisted senior living properties where the majority of the residents pay for occupancy and services with their 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 9/30/07):
 
Total properties
196
 
Total units / beds
23,981
 
Percent of rent from private pay properties
84.5%
(1)
 
Portfolio Concentration by Facility Type (as of 9/30/07):
                                
   
Number of
    
Number of
    
Carrying Value of
          
Annualized
        
   
Properties
    
Units/Beds
    
Investment (2)
    
Percent
    
Current Rent
    
Percent
  
 Independent Living (IL) (3)
    
41
      
11,213
     $
1,019,596
       55.2 %   $
98,816
       54.4 %
 Assisted Living (AL)
    
95
      
6,535
      
560,888
       30.4 %    
54,751
       30.1 %
 Nursing Homes
    
58
      
5,869
      
221,412
       12.0 %    
17,788
       9.8 %
 Rehabilitation Hospitals
    
2
      
364
      
45,296
       2.4 %    
10,264
       5.7 %
     Total
    
196
      
23,981
     $
1,847,192
       100.0 %   $
181,619
       100.0 %
 
 Operating Statistics by Tenant:
                    
Q2 2007       
   
Number of
    
Number of
    
Annualized
    
Rent
          
Percent
  
 Tenant
  
Properties
    
Units/Beds
    
Current Rent
    
Coverage (4)
    
Occupancy (4)
    
Private Pay (4)
  
Five Star (Lease No. 1)
    
114
      
9,344
     $
50,229
      
1.34x
      
89%
      
54%
  
Five Star (Lease No. 2)
    
30
      
7,275
      
66,068
      
1.61x
      
91%
      
80%
  
Five Star Rehabilitation Hospitals (5)
    
2
      
364
      
10,264
      
0.67x
      
60%
      
31%
  
Sunrise / Marriott (6)
    
14
      
4,091
      
30,815
    
NA
    
NA 
  
NA 
NewSeasons / IBC (7)
    
10
      
873
      
9,298
      
1.16x
      
83%
      
100%
  
Alterra / Brookdale (8)
    
18
      
894
      
7,827
      
2.06x
      
87%
      
98%
  
6 Private Companies (combined)
    
8
      
1,140
      
7,118
      
2.07x
      
89%
      
25%
  
     Total
    
196
      
23,981
     $
181,619
                          
 
(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 living 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.  Rent coverage is calculated as operating cash flow from our tenants’ facility operations, before subordinated charges and capital expenditure reserves, divided by the minimum rent payable to us. We have not independently verified our tenants’ operating data.
(5)
Occupancy percentage is based on a 342 available beds capacity.
(6)
Marriott International, Inc., or Marriott, guarantees this lease.  Sunrise Senior Living, Inc., or Sunrise, has not filed its Annual Reports on Form 10-K for 2005 and 2006, and Quarterly Reports on Form 10-Q for the three quarters of 2006 and the first two quarters of 2007 with the Securities and Exchange Commission due to accounting issues. Because we do not know what impact the resolution of these accounting issues 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)
Brookdale Senior Living, Inc., or Brookdale, guarantees this lease.
 
4
 
 
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2007

INVESTOR INFORMATION
   
   
Board of Trustees
   
Barry M. Portnoy
Adam D. Portnoy
Managing Trustee
Managing Trustee
   
   
Frank J. Bailey
Frederick N. Zeytoonjian
Independent Trustee
Independent Trustee
   
   
John L. Harrington
  
Independent Trustee
  
   
   
   
   
Senior Management
   
David J. Hegarty
Richard A. Doyle
President, Chief Operating Officer and Secretary
Treasurer and Chief Financial Officer
   
   
   
   
   
Contact Information
   
Investor Relations
Inquiries
Senior Housing Properties Trust
400 Centre Street
Newton, MA 02458
(t) (617) 796-8350
(f) (617) 796-8349
(email) info@snhreit.com
(website) www.snhreit.com
Financial inquiries should be directed to Richard A. Doyle,
Treasurer and Chief Financial Officer, at (617) 219-1405
or rdoyle@snhreit.com.
 
Investor and media inquiries should be directed to
Timothy A. Bonang, Manager of Investor Relations, at
(617) 796-8234 or tbonang@snhreit.com.
 
 
 
5
 
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2007
 
RESEARCH COVERAGE
   
Equity Research Coverage
   
Cantor Fitzgerald
RBC
Philip Martin
Kevin Ellich
(312) 469-7485
(612) 313-1247
   
Merrill Lynch
Stifel, Nicolaus
Chris Pike
Jerry Doctrow
(212) 449-1153
(410) 454-5142
   
Raymond James
UBS
Paul Puryear
Omotayo Okusanya
(727) 573-3800
(212) 713-1864
   
 
  
   
Debt Research Coverage
   
UBS
 
Steven Valiquette
 
(203) 719-2347
 
   
   
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      
  
   
9/30/2007
    
6/30/2007
    
3/31/2007
    
12/31/2006
    
9/30/2006
  
                               
 Shares Outstanding:
                              
 Common shares outstanding (at end of period)
    
83,689
      
83,654
      
83,646
      
77,613
      
71,860
  
 Weighted average common shares outstanding - basic and diluted (1)
    
83,659
      
83,649
      
80,815
      
74,641
      
71,824
  
                                         
 Common Share Data:
                                        
 Price at end of period
   $
22.06
     $
20.35
     $
23.90
     $
24.48
     $
21.34
  
 High during period
   $
22.85
     $
24.83
     $
26.75
     $
24.60
     $
21.98
  
 Low during period
   $
16.22
     $
20.10
     $
21.79
     $
20.50
     $
17.61
  
 Annualized dividends paid per share
   $
1.40
     $
1.36
     $
1.36
     $
1.32
     $
1.32
  
 Annualized dividend yield (at end of period)
     6.3 %     6.7 %     5.7 %     5.4 %     6.2 %
                                         
 Market Capitalization:
                                        
 Total debt (book value)
   $
411,980
     $
412,360
     $
412,742
     $
545,085
     $
642,475
  
 Plus: market value of common shares (at end of period)
    
1,846,179
      
1,702,359
      
1,999,139
      
1,899,966
      
1,533,492
  
 Total market capitalization
   $
2,258,159
     $
2,114,719
     $
2,411,881
     $
2,445,051
     $
2,175,967
  
 Total debt / total market capitalization
     18.2 %     19.5 %     17.1 %     22.3 %     29.5 %
                                         
 Book Capitalization:
                                        
 Total debt
   $
411,980
     $
412,360
     $
412,742
     $
545,085
     $
642,475
  
 Plus:  total shareholders' equity
    
1,145,537
      
1,153,377
      
1,163,023
      
1,019,466
      
894,433
  
 Total book capitalization
   $
1,557,517
     $
1,565,737
     $
1,575,765
     $
1,564,551
     $
1,536,908
  
 Total debt / total book capitalization
     26.5 %     26.3 %     26.2 %     34.8 %     41.8 %
                                         
 Selected Balance Sheet Data:
                                        
 Total assets
   $
1,576,938
     $
1,584,631
     $
1,590,932
     $
1,584,774
     $
1,559,745
  
 Total liabilities
   $
431,401
     $
431,254
     $
427,909
     $
565,308
     $
665,312
  
 Gross book value of real estate assets (2)
   $
1,847,192
     $
1,831,525
     $
1,824,002
     $
1,814,358
     $
1,767,047
  
 Total debt / gross book value of real estate assets (2)
     22.3 %     22.5 %     22.6 %     30.0 %     36.4 %
                                         
 Selected Income Statement Data:
                                        
 Total revenues (3)
   $
45,224
     $
44,962
     $
44,752
     $
55,045
     $
42,317
  
 EBITDA (4)
   $
43,357
     $
43,174
     $
42,636
     $
47,254
     $
39,492
  
 Income from continuing operations
   $
20,613
     $
20,649
     $
17,522
     $
27,558
     $
15,418
  
 Net income
   $
20,613
     $
20,649
     $
17,522
     $
27,537
     $
15,418
  
 Funds from operations (FFO) (5)
   $
34,134
     $
34,014
     $
30,993
     $
34,985
     $
27,659
  
 Common distributions paid
   $
29,291
     $
28,442
     $
28,440
     $
26,388
     $
23,714
  
                                         
 Per Share Data:
                                        
 Income from continuing operations
   $
0.25
     $
0.25
     $
0.22
     $
0.37
     $
0.21
  
 Net income
   $
0.25
     $
0.25
     $
0.22
     $
0.37
     $
0.21
  
 FFO (5)
   $
0.41
     $
0.41
     $
0.38
     $
0.47
     $
0.39
  
 Common distributions paid
   $
0.35
     $
0.34
     $
0.34
     $
0.33
     $
0.33
  
 FFO payout ratio (5)
     85.8 %     83.6 %     88.7 %     70.2 %     84.6 %
                                         
 Coverage Ratios:
                                        
 EBITDA (3) / interest expense
    
4.7x
      
4.7x
      
4.3x
      
3.9x
      
3.3x
  
 
 
(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)
During the fourth quarter of 2006, we recognized $5.7 million of additional rent from HealthSouth Corporation, or HealthSouth, and $5.3 million of percentage rent as income for the year ended December 31, 2006.
(4)
See page 12 for calculation of EBITDA.
(5)
See page 13 for calculation of FFO.  As a result of a litigation settlement with HealthSouth, HealthSouth paid us additional rent of $5.7 million, or $0.08 per share, which we recognized as rental income in the fourth quarter of 2006.
 
 
8
Senior Housing Properties Trust    
  
Supplemental Operating and Financial Data    
  
September 30, 2007    
  
             
CONSOLIDATED BALANCE SHEET    
  
(in thousands, except share data)    
  
             
   
As of 
September 30, 
2007
    
As of 
December 31, 
2006
  
   
(unaudited)
        
 ASSETS
            
 Real estate properties, at cost:
            
          Land
   $
198,576
     $
198,887
  
          Buildings and improvements
    
1,648,616
      
1,615,471
  
     
1,847,192
      
1,814,358
  
          Less accumulated depreciation
    
311,627
      
276,507
  
     
1,535,565
      
1,537,851
  
                 
 Cash and cash equivalents
    
3,645
      
5,464
  
 Restricted cash
    
3,010
      
2,435
  
 Deferred financing fees, net
    
6,461
      
8,173
  
 Other assets
    
28,257
      
30,851
  
 Total assets
   $
1,576,938
     $
1,584,774
  
                 
 LIABILITIES AND SHAREHOLDERS' EQUITY
                
 Unsecured revolving credit facility
   $
-
     $
112,000
  
 Senior unsecured notes due 2012 and 2015, net of discount
    
321,837
      
341,673
  
 Secured debt and capital leases
    
90,143
      
91,412
  
 Accrued interest
    
8,156
      
11,694
  
 Other liabilities
    
11,265
      
8,529
  
 Total liabilities
    
431,401
      
565,308
  
                 
 Commitments and contingencies
                
                 
 Shareholders' equity:
                
 Common shares of beneficial interest, $0.01 par value:
                
 86,700,000 shares authorized; 83,688,712 and 77,613,127 shares issued
                
 and outstanding, respectively
    
837
      
776
  
 Additional paid-in capital
    
1,367,921
      
1,214,863
  
 Cumulative net income
    
397,288
      
338,504
  
 Cumulative distributions
     (623,933 )     (540,663 )
 Unrealized gain on investments
    
3,424
      
5,986
  
 Total shareholders' equity
    
1,145,537
      
1,019,466
  
 Total liabilities and shareholders' equity
   $
1,576,938
     $
1,584,774
  

 
 
9
 
 
Senior Housing Properties Trust          
  
Supplemental Operating and Financial Data          
  
September 30, 2007          
  
                         
 CONSOLIDATED STATEMENT OF INCOME           
  
 (in thousands, except per share data)           
  
                         
   
For the Three Months Ended
    
For the Nine Months Ended
  
   
9/30/2007
    
9/30/2006
    
9/30/2007
    
9/30/2006
  
 Revenues:
                        
 Rental income
   $
44,653
     $
41,983
     $
133,361
     $
123,727
  
 Interest and other income
    
571
      
334
      
1,577
      
1,034
  
 Total revenues
    
45,224
      
42,317
      
134,938
      
124,761
  
                                 
 Expenses:
                                
 Interest
    
9,223
      
11,833
      
28,276
      
34,751
  
 Depreciation
    
11,821
      
10,978
      
35,120
      
32,631
  
 General and administrative
    
3,567
      
4,088
      
10,732
      
10,870
  
 Impairment of assets (1)
    
-
      
-
      
-
      
1,420
  
 Loss on early extinguishment of debt (2)
    
-
      
-
      
2,026
      
6,526
  
 Total expenses
    
24,611
      
26,899
      
76,154
      
86,198
  
                                 
 Net income
   $
20,613
     $
15,418
     $
58,784
     $
38,563
  
                                 
 Weighted average common shares outstanding
    
83,659
      
71,824
      
82,718
      
71,818
  
                                 
 Basic and diluted earnings per share:
                                
 Net income
   $
0.25
     $
0.21
     $
0.71
     $
0.54
  
                                 
                                 
 Additional Data:
                                
 Straight-line rent included in rental income (3)
   $
100
     $
140
     $
348
     $
252
  
 Deferred percentage rent (4)
   $
1,700
     $
1,263
     $
4,961
     $
4,016
  
 
(1)
During the nine months ended September 30, 2006, we recognized an impairment of assets charge of $1.4 million related to three properties that were sold during the fourth quarter of 2006.
   
(2)
In January 2007, we purchased and retired $20.0 million of our 8 5/8% senior notes due 2012 and paid a premium of $1.8 million and wrote off $276,000 of deferred financing fees and unamortized discount related to these senior notes.  In June 2006, we redeemed all of our $28.2 million of 10.125% junior subordinated debentures; loss on early extinguishment of debt includes a $1.3 million write off of unamortized deferred financing fees related to these debentures.  In January 2006, we redeemed $52.5 million of our 7 7/8% senior unsecured notes due 2015 and paid a $4.1 million redemption premium and wrote off $1.1 million of deferred financing fees and unamortized discount related to these senior notes.
   
(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)
Our percentage rents are generally calculated on an annual basis. We recognize percentage rental income received during the first, second and third quarters in the fourth quarter when all contingencies related to percentage rents are satisfied.  Although recognition of revenue is deferred until the fourth quarter, deferred percentage rent 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.
.
 
 
10
 
 
 Senior Housing Properties Trust     
  
 Supplemental Operating and Financial Data     
  
 September 30, 2007     
  
             
 CONSOLIDATED STATEMENT OF CASH FLOWS     
  
 (in thousands)     
  
             
   
For the Nine Months Ended
  
   
9/30/2007
    
9/30/2006
  
 Cash flows from operating activities:
            
      Net income
   $
58,784
     $
38,563
  
 Adjustments to reconcile net income to cash provided by operating activities:
                
 Depreciation
    
35,120
      
32,631
  
 Impairment of assets
    
-
      
1,420
  
 Loss on early extinguishment of debt
    
2,026
      
6,526
  
 Amortization of deferred financing fees and debt discounts
    
1,601
      
1,355
  
 Change in assets and liabilities:
                
 Restricted cash
     (575 )    
369
  
 Other assets
    
31
      
107
  
 Accrued interest
     (3,538 )     (4,491 )
 Other liabilities
    
4,185
      
6,836
  
 Cash provided by operating activities
    
97,634
      
83,316
  
                 
 Cash flows used for investing activities:
                
      Acquisitions
     (32,834 )     (78,921 )
 Cash used for investing activities, net
     (32,834 )     (78,921 )
                 
 Cash flows from financing activities:
                
 Proceeds from issuance of common shares, net
    
151,670
      
-
  
 Proceeds from borrowings on revolving credit facility
    
22,000
      
179,300
  
 Repayments of borrowings on revolving credit facility
     (134,000 )     (41,000 )
 Redemption of senior notes
     (21,750 )     (56,634 )
 Repayment of junior subordinated debentures
    
-
       (28,241 )
 Repayment of other debt
     (1,269 )     (1,275 )
 Distributions to shareholders
     (83,270 )     (69,660 )
 Cash used for financing activities
     (66,619 )     (17,510 )
                 
 Decrease in cash and cash equivalents
     (1,819 )     (13,115 )
 Cash and cash equivalents at beginning of period
    
5,464
      
14,642
  
 Cash and cash equivalents at end of period
   $
3,645
     $
1,527
  
                 
 Supplemental cash flow information:
                
      Interest paid
   $
30,213
     $
37,890
  
                 
 Non-cash financing activities:
                
 Increase in capital lease assets
   $
-
     $ (9,975 )
                 
 Non-cash financing activities:
                
 Increase in capital lease obligations
   $
-
     $
9,975
  
 Issuance of common shares pursuant to our incentive share award plan
   $
1,450
     $
645
  
 Borrowings 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, 2007           
  
                           
CALCULATION OF EBITDA         
  
(dollars in thousands)           
  
                           
     
For the Three Months Ended
    
For the Nine Months Ended
  
     
9/30/2007
    
9/30/2006
    
9/30/2007
    
9/30/2006
  
                           
Net Income
   $
20,613
     $
15,418
     $
58,784
     $
38,563
  
Plus:
interest expense
    
9,223
      
11,833
      
28,276
      
34,751
  
 
depreciation expense
    
11,821
      
10,978
      
35,120
      
32,631
  
 
impairment of assets
    
-
      
-
      
-
      
1,420
  
 
loss on early extinguishment of debt (1)
    
-
      
-
      
2,026
      
6,526
  
 
deferred percentage rent adjustment (2)
    
1,700
      
1,263
      
4,961
      
4,016
  
EBITDA
   $
43,357
     $
39,492
     $
129,167
     $
117,907
  
                                   
 
 
(1)
In January 2007, we purchased and retired $20.0 million of our 8 5/8% senior notes due 2012 and paid a premium of $1.8 million and wrote off $276,000 of deferred financing fees and unamortized discount related to these senior notes.  In June 2006, we redeemed all of our $28.2 million of 10.125% junior subordinated debentures; loss on early extinguishment of debt includes a $1.3 million write off of unamortized deferred financing fees related to these debentures.  In January 2006, we redeemed $52.5 million of our 7 7/8% senior unsecured notes due 2015 and paid a $4.1 million redemption premium and wrote off $1.1 million of deferred financing fees and unamortized discount related to these senior notes.
   
(2)
Our percentage rents are generally calculated on an annual basis. We recognize percentage rental income received during the first, second and third quarters in the fourth quarter when all contingencies related to percentage rents are satisfied. Although recognition of revenue is deferred until the fourth quarter, our EBITDA calculation for the first three quarters includes estimated amounts of deferred percentage rents 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, 2007
 
 CALCULATION OF FUNDS FROM OPERATIONS (FFO)
  
(amounts in thousands, except per share data)
  
                           
     
For the Three Months Ended
    
For the Nine Months Ended
  
     
9/30/2007
    
9/30/2006
    
9/30/2007
    
9/30/2006
  
                           
Net Income
   $
20,613
     $
15,418
     $
58,784
     $
38,563
  
Plus:
depreciation expense
    
11,821
      
10,978
      
35,120
      
32,631
  
 
impairment of assets
    
-
      
-
      
-
      
1,420
  
 
loss on early extinguishment of debt
    
-
      
-
      
2,026
      
6,526
  
 
deferred percentage rent adjustment (1)
    
1,700
      
1,263
      
4,961
      
4,016
  
Less:
loss on early extinguishment of debt settled in cash (2)
    
-
      
-
       (1,750 )     (4,134 )
FFO
   $
34,134
     $
27,659
     $
99,141
     $
79,022
  
                                   
Weighted average shares outstanding
    
83,659
      
71,824
      
82,718
      
71,818
  
                                   
Net Income per share
   $
0.25
     $
0.21
     $
0.71
     $
0.54
  
FFO per share
   $
0.41
     $
0.39
     $
1.20
     $
1.10
  
                                   
Supplemental data:
                                
Straight-line rent included in rental income (3)
   $
100
     $
140
     $
348
     $
252
  
Amortization of deferred financing fees and debt discounts
   $
523
     $
446
     $
1,605
     $
1,355
  

 
 (1) Our percentage rents are generally calculated on an annual basis. We recognize percentage rental income received during the first, second and third quarters in the fourth quarter when all contingencies related to percentage rents are satisfied. Although recognition of revenue is deferred until the fourth quarter, our FFO calculation for the first three quarters includes estimated amounts of deferred percentage rents with respect to those periods. The fourth quarter calculation of FFO excludes the amounts recognized during the first three quarters.
   
 (2) FFO for the nine months ended September 30, 2007 includes a $1.8 million premium paid in cash related to the purchase and retirement of $20 million of our 8 5/8% senior notes due 2012. FFO for the nine months ended September 30, 2006, includes a $4.1 million premium paid in cash for our redemption of $52.5 million of our 7 7/8% senior notes due 2015.
   
 (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. This calculation begins with income from continuing operations or, if that 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 1 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 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, 2007

DEBT SUMMARY
  
(dollars in thousands)
  
                                 
   
Coupon
 
  
Interest
    
Principal
  
Maturity
  
Due at
    
Years to
  
   
Rate
    
Rate
    
Balance
  
Date
  
Maturity
    
Maturity
  
                                 
Secured Fixed Rate Debt:
                                
 Secured Floating Rate Debt:
                                
 None
                                
                                 
                                 
 Tax exempt bonds - secured by 1 property
     5.875 %     5.875 %   $
14,700
  
12/1/27
   $
14,700
      
20.2
  
 Mortgage - secured by 16 properties (1)
     6.970 %     6.330 %    
35,120
  
6/2/12
    
30,069
      
4.7
  
 Mortgage - secured by 4 properties (1)
     6.110 %     6.420 %    
12,039
  
11/30/13
    
10,218
      
6.2
  
 Mortgage - secured by 1 properties (1)
     7.150 %     6.440 %    
12,689
  
6/30/08
    
11,877
      
0.8
  
 Capital leases - 2 properties
     7.700 %     7.700 %    
15,595
  
4/30/26
    
-
      
18.6
  
     Total / weighted average secured fixed rate debt
     6.828 %     6.520 %   $
90,143
       $
66,864
      
9.3
  
                                           
     Total / weighted average secured debt
     6.828 %     6.520 %   $
90,143
       $
66,864
      
9.3
  
                                           
Unsecured Debt:
                                          
                                           
 Unsecured Floating Rate Debt:
                                          
  Revolving credit facility (LIBOR + 80 b.p.)
     5.92 %     5.92 %   $
-
  
12/31/10
   $
-
      
3.3
  
                                           
 Unsecured Fixed Rate Debt:
                                          
  Senior notes due 2012
     8.625 %     8.625 %   $
225,000
  
1/15/12
   $
225,000
      
4.3
  
  Senior notes due 2015
     7.875 %     7.875 %    
97,500
  
4/15/15
    
97,500
      
7.5
  
     Total / weighted average unsecured fixed rate debt
     8.398 %     8.398 %   $
322,500
       $
322,500
      
5.3
  
                                           
     Total / weighted average unsecured debt
     8.398 %     8.398 %   $
322,500
       $
322,500
      
5.3
  
                                           
     Total / weighted average debt
     8.055 %     7.985 %   $
412,643
       $
389,364
      
6.1
  
                                           
                                           
Summary Debt:
                                          
 Total / weighted average secured debt fixed rate debt
     6.828 %     6.520 %   $
90,143
       $
66,864
      
9.3
  
 Total / weighted average unsecured floating rate debt
     5.920 %     5.920 %    
-
        
-
      
3.3
  
 Total / weighted average unsecured fixed rate debt
     8.398 %     8.398 %    
322,500
        
322,500
      
5.3
  
  Total / weighted average debt
     8.055 %     7.988 %   $
412,643
       $
389,364
      
6.1
  
 
 
(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, 2007

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
  
2007
   $
749
     $
-
     $
-
     $
749
  
2008
    
13,595
      
-
      
-
      
13,595
  
2009
    
1,605
      
-
      
-
      
1,605
  
2010
    
1,714
      
-
      
-
      
1,714
  
2011
    
1,829
      
-
      
-
      
1,829
  
2012
    
31,418
      
-
      
225,000
      
256,418
  
2013
    
11,016
      
-
      
-
      
11,016
  
2014
    
544
      
-
      
-
      
544
  
2015
    
614
      
-
      
97,500
      
98,114
  
2016 and thereafter
    
27,059
      
-
      
-
      
27,059
  
    $
90,143
     $
-
     $
322,500
     $
412,643
  
 
 
 
15

Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2007
 
LEVERAGE RATIOS, COVERAGE RATIOS AND PUBLIC DEBT COVENANTS
  
                               
   
As Of And For The Three Months Ended      
  
   
9/30/2007
    
6/30/2007
    
3/31/2007
    
12/31/2006
    
9/30/2006
  
 Leverage Ratios:
                              
                               
 Total debt / total assets
     26.1%       26.0%       25.9%       34.4%       41.2%  
 Total debt / gross book value of real estate assets (1)
     22.3%       22.5%       22.6%       30.0%       36.4%  
 Total debt / total market capitalization
     18.2%       19.5%       17.1%       22.3%       29.5%  
 Total debt / total book capitalization
     26.5%       26.3%       26.2%       34.8%       41.8%  
 Secured debt / total assets
     5.7%       5.7%       5.7%       5.8%       5.1%  
 Variable rate debt / total debt
     0.0%       0.0%       0.0%       20.5%       34.6%  
                                         
                                         
 Coverage Ratios:
                                        
                                         
 EBITDA (2)(3) / interest expense
    
4.7x
      
4.7x
      
4.3x
      
3.4x
      
3.3x
  
                                         
                                         
 Public Debt Covenants (3) (4):
                                        
                                         
 Total debt / adjusted total assets - allowable maximum 60.0%
     21.7%       21.8%       22.5%       29.4%       35.4%  
 Secured debt / adjusted total assets - allowable maximum 40.0%
     4.8%       4.8%       4.8%       4.9%       4.3%  
 Consolidated income available for debt service / debt service - required minimum 2.00x
    
4.98x
      
5.01x
      
6.06x
      
4.00x
      
3.47x
  
 Total unencumbered assets to unsecured debt - required minimum 1.50x
    
5.32x
      
5.31x
      
5.74x
      
3.75x
      
2.97x
  

 
(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)
The quarter ended December 31, 2006 includes $5.7 million of additional rental income related to our settlement of litigation with HealthSouth.
   
(4)
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, 2007
 
 

 2007 INVESTMENTS/DISPOSITIONS INFORMATION
  
 (dollars in thousands)
  
                           
                           
                           
                           
 Acquisitions:(1)
                          
                       
Purchase
  
 Date
          
 Number of
      
 Purchase
  
Price
  
 Acquired
  
 Tenant
  
 Type of Property
  
 Properties
  
 Units
  
 Price
  
Per Unit
  
                           
 
 There were no acquisitions during the nine months ended September 30, 2007.      
  
                           
                           
                           
                           
                           
                           
                           
                           
                           
 Dispositions:
                        
                           
 Date
          
 Number of
          
 Book Gain (Loss)
  
 Sold
  
 Location
  
 Type of Property
  
 Properties
  
 Sale Price
  
 NBV
  
 on Sale
  
                           
 
 There were no dispositions during the nine months ended September 30, 2007.      
  
 
 
(1)
During the three and nine months ended September 30, 2007, as permitted by our leases with Five Star Quality Care, Inc., or Five Star, we purchased from Five Star, at cost, $15,966 and $33,077, respectively, of improvements made to our properties leased by Five Star, and, as a result, the annual rent payable to us by Five Star increased by approximately $1.5 million and $3.2 million, respectively.
 
 
 
 
17
 

 
 Senior Housing Properties Trust
  
 Supplemental Operating and Financial Data
  
 September 30, 2007
  
   
   
2007 FINANCING ACTIVITIES
  
(share amounts and dollars in thousands)
  
                   
                   
   
For the Three Months Ended   
  
   
9/30/2007
    
6/30/2007
    
3/31/2007
  
                   
 Debt Transactions:
                  
 New debt raised
   $
-
     $
-
     $
-
  
 New debt assumed as part of acquisitions
    
-
      
-
      
-
  
 Total new debt
    
-
      
-
      
-
  
                         
 Debt retired
    
-
      
-
      
-
  
 Net debt
   $
-
     $
-
     $
-
  
                         
 Equity Transactions:
                        
 New common shares issued
   $
-
     $
-
     $
6,000
  
 New common equity raised, net
    
-
      
-
      
151,670
  
                         
 Revolving Credit Facility Transactions:
                        
 Balance oustanding at beginning of period
   $
-
     $
-
     $
112,000
  
 Drawings during period
    
-
      
-
      
22,000
  
 Repayments during period
    
-
      
-
       (134,000 )
 Balance oustanding at end of period
   $
-
     $
-
     $
-
  
                         
 Balance available for drawing
   $
550,000
     $
550,000
     $
550,000
  
 
 
 
 
18
 
 
 
 
 
 
PORTFOLIO INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Housing Properties Trust
Supplemental Operating and Financial Data
September 30, 2007
 
PORTFOLIO SUMMARY BY FACILITY TYPE AND TENANT
  
(dollars in thousands)
  
                                           
   
Number of
    
Number of
    
Carrying Value of
      
Investment
    
Annualized 
   
   
Properties
    
Units/Beds
    
Investment (1)
    
Percent
    
per unit
    
Current Rent
    
Percent
  
Facility Type:
                                          
Independent Living (IL) (2)
    
41
      
11,213
     $
1,019,596
       55.2%     $
90.9
     $
98,816
       54.4%  
Assisted Living (AL)
    
95
      
6,535
      
560,888
       30.4%      
85.8
      
54,751
       30.1%  
Nursing Homes
    
58
      
5,869
      
221,412
       12.0%      
37.7
      
17,788
       9.8%  
Rehabilitation Hospitals
    
2
      
364
      
45,296
       2.4%      
124.4
      
10,264
       5.7%  
 Total
    
196
      
23,981
     $
1,847,192
       100.0%     $
77.0
     $
181,619
       100.0%  
                                                         
Tenant:
                                                        
Five Star (Lease No. 1)
    
114
      
9,344
     $
616,655
       33.4%     $
66.0
     $
50,229
       27.7%  
Five Star (Lease No. 2)
    
30
      
7,275
      
662,219
       35.9%      
91.0
      
66,068
       36.4%  
Five Star Rehabilitation Hospitals
    
2
      
364
      
45,296
       2.4%      
124.4
      
10,264
       5.7%  
Sunrise / Marriott (3)
    
14
      
4,091
      
325,165
       17.6%      
79.5
      
30,815
       17.0%  
NewSeasons / IBC (4)
    
10
      
873
      
87,641
       4.7%      
100.4
      
9,298
       5.1%  
Alterra / Brookdale (5)
    
18
      
894
      
61,122
       3.3%      
68.4
      
7,827
       4.3%  
6 Private Companies (combined)
    
8
      
1,140
      
49,094
       2.7%      
43.1
      
7,118
       3.8%  
 Total
    
196
      
23,981
     $
1,847,192
       100.0%     $
77.0
     $
181,619
       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)
Marriott guarantees this lease.
   
(4)
IBC guarantees this lease.
   
(5) Brookdale guarantees this lease.
 
 
 
20
 
 
Senior Housing Properties Trust            
  
Supplemental Operating and Financial Data         
  
 September 30, 2007              
  
                               
OCCUPANCY BY FACILITY TYPE AND TENANT          
                               
   
For the Three Months Ended       
   
6/30/2007 
  
3/31/2007 
  
12/31/2006 
  
9/30/2006 
  
6/30/2006 
Facility Type:
                              
Independent Living (IL) (1)
     90 %     91 %     91 %     93 %     92 %
Assisted Living (AL) (1)
     89 %     88 %     88 %     91 %     89 %
Nursing Homes
     89 %     89 %     89 %     88 %     89 %
Rehabilitation Hospitals (2)
     60 %     61 %     60 %  
NA
    
NA
  
                                         
                                         
Tenant:
                                        
Five Star (Lease No. 1) (3)
     89 %     88 %     88 %     88 %     89 %
Five Star (Lease No. 2) (1)
     91 %     92 %     92 %     92 %     93 %
Five Star Rehabilitation Hospitals (2)
     60 %     61 %     60 %  
NA
    
NA
  
Sunrise / Marriott (4)
  
NA
    
NA
    
NA
    
NA
    
NA
  
NewSeasons / IBC
     83 %     83 %     84 %     85 %     85 %
Alterra / Brookdale
     87 %     87 %     88 %     89 %     86 %
6 Private Companies (combined)
     89 %     88 %     89 %     89 %     90 %
 
 
(1)
Includes operating data provided by Sunrise that may not be accurate due to accounting issues at Sunrise.  See footnote (4) below.  However, the data provided by Sunrise does not materially affect the cumulative occupancy percentages for these two facility type leases.
   
(2)
On October 1, 2006, Five Star assumed the operations of these rehabilitation hospitals. These hospitals were formerly operated by HealthSouth.  Because we do not have reliable information about the operations for the hospitals by HealthSouth, we do not report operating data for these hospitals before October 1, 2006.  The occupancy percentage is based on a 342 available beds capacity.
   
(3)
Includes data for periods prior to our ownership of certain properties included in this lease.
   
(4)
Sunrise has not filed its Annual Reports on Form 10-K for 2005 and 2006, and Quarterly Reports on Form 10-Q for the three quarters of 2006 and the first two quarters of 2007 with the Securities and Exchange Comission due to accounting issues.  Because we do not know what impact the resolution of these accounting issues 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, 2007              
  
                               
% PRIVATE PAY BY FACILITY TYPE AND TENANT       
                               
   
For the Three Months Ended    
   
6/30/2007 
  
3/31/2007 
  
12/31/2006 
  
9/30/2006 
  
6/30/2006 
Facility Type:
                              
Independent Living (IL) (1)
     81 %     82 %     81 %     81 %     83 %
Assisted Living (AL) (1)
     96 %     95 %     95 %     95 %     94 %
Nursing Homes
     29 %     29 %     28 %     28 %     28 %
Rehabilitation Hospitals (2)
     31 %     32 %     28 %  
NA
    
NA
  
                                         
                                         
Tenant:
                                        
Five Star (Lease No. 1)  (3)
     54 %     54 %     53 %     51 %     50 %
Five Star (Lease No. 2) (1)
     80 %     80 %     80 %     80 %     81 %
Five Star Rehabilitation Hospitals (2)
     31 %     32 %     28 %  
NA
    
NA
  
Sunrise / Marriott (4)
  
NA
    
NA
    
NA
    
NA
    
NA
  
NewSeasons / IBC
     100 %     100 %     100 %     100 %     100 %
Alterra / Brookdale
     98 %     98 %     98 %     98 %     98 %
6 Private Companies (combined)
     25 %     25 %     26 %     26 %     26 %
 
 
(1)
Includes operating data provided by Sunrise that may not be accurate due to accounting issues at Sunrise.  See footnote (4) below.  However, the data provided by Sunrise does not materially affect the cumulative private pay percentages for these two facility type leases.
   
(2)
On October 1, 2006, Five Star assumed the operations of these rehabilitation hospitals. These hospitals were formerly operated by HealthSouth.  Because we do not have reliable information about the operations for the hospitals by HealthSouth, we do not report operating data for these hospitals before October 1, 2006.
   
(3)
Includes data for periods prior to our ownership of certain properties included in this lease.
   
(4)
Sunrise has not filed its Annual Reports on Form 10-K for 2005 and 2006, and Quarterly Reports on Form 10-Q for the three quarters of 2006 and the first two quarters of 2007 with the Securities and Exchange Comission due to accounting issues.  Because we do not know what impact the resolution of these accounting issues 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, 2007              
  
                               
 RENT COVERAGE              
  
   
For the Three Months Ended      
  
Tenant
  
6/30/2007
    
3/31/2007
    
12/31/2006
    
9/30/2006
    
6/30/2006
  
Five Star (Lease No. 1) (1)
      1.34x
      
1.29x
      
1.46x
      
1.53x
      
1.45x
  
Five Star (Lease No. 2) (1) (2)
    
1.61x
      
1.45x
      
1.58x
      
1.50x
      
1.50x
  
Five Star Rehabilitation Hospitals (3)
    
0.67x
      
0.98x
      
1.52x
    
NA
    
NA
  
Sunrise / Marriott (4)
  
NA
    
NA
    
NA
    
NA
    
NA
  
NewSeasons / IBC
    
1.16x
      
1.06x
      
0.66x
      
1.14x
      
1.21x
  
Alterra / Brookdale
    
2.06x
      
2.03x
      
2.01x
      
2.21x
      
1.97x
  
6 Private companies (combined)
    
2.07x
      
1.72x
      
1.98x
      
1.96x
      
2.00x
  
 
 
(1)
Includes data for periods prior to our ownership of certain properties included in this lease.
   
(2)
Historically, some of these properties were managed by Sunrise until November 30, 2006. The rent coverage presented for this lease has been adjusted to exclude management fees paid to Sunrise during the periods presented.  Some of the data provided by Sunrise may not be accurate.  See footnote (4) below.  We believe, however, that the data provided by Sunrise does not materially affect the amounts presented.
   
(3)
On October 1, 2006, Five Star assumed the operations of these rehabilitation hospitals. These hospitals were formerly operated by HealthSouth.  Because we do not have reliable information about the operations for the hospitals by HealthSouth, we do not report operating data for these hospitals before October 1, 2006.
   
(4)
Sunrise has not filed its Annual Reports on Form 10-K for 2005 and 2006, and Quarterly Reports on Form 10-Q for the three quarters of 2006 and the first two quarters of 2007 with the Securities and Exchange Comission due to accounting issues.  Because we do not know what impact the resolution of these accounting issues 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 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, 2007         
                   
PORTFOLIO LEASE EXPIRATION SCHEDULE    
(dollars in thousands)       
                   
                   
   
Annualized 
Current Rent
    
% of Annualized Current Rent
    
Cumulative % of Annualized
Current Rent 
2007
   $
-
      
-
       0.0 %
2008
    
-
      
-
       0.0 %
2009
    
-
      
-
       0.0 %
2010
    
1,091
       0.6 %     0.6 %
2011
    
-
      
-
       0.6 %
2012
    
-
      
-
       0.6 %
2013
    
30,815
       17.0 %     17.6 %
2014
    
-
      
-
       17.6 %
2015
    
2,243
       1.2 %     18.8 %
2016 and thereafter
    
147,470
       81.2 %     100.0 %
    Total
   $
181,619
       100.0 %        
                         
Weighted average remaining
                        
lease term (in years)
    
10.8
                  
 
 
 
 
 
 
 
 
 
24