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The information appearing on SNH’s website includes statements which constitute forward looking statements. These forward looking statements are based upon SNH’s present intents, beliefs or expectations, but forward looking statements are not guaranteed to occur and may not occur. SNH’s actual results may differ materially from those contained in SNH’s forward looking statements. The information contained in SNH’s filings with the Securities and Exchange Commission, including under “Risk Factors" and “Warnings Concerning Forward Looking Statements” in SNH’s periodic reports and other filings, identifies important factors that could cause SNH’s actual results to differ materially from those stated in SNH’s forward looking statements. SNH’s filings with the SEC are available on the SEC’s website at www.sec.gov and are also accessible on SNH’s website at the following link: SEC Filings. You should not place undue reliance upon forward looking statements.

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SNH Announces Financial Results For The Periods Ended September 30, 2002

November 07, 2002

Newton, MA (November 7, 2002): Senior Housing Properties Trust (NYSE: SNH) today announced its financial results for the quarter and nine months ended September 30, 2002, as follows (in thousands, except per share data):

The character of revenues reported in the 2001 and 2002 periods displayed above are not comparable. In 2001, the three months and nine months period revenues include $56.3 million and $167.4 million, respectively, of operating revenues derived from nursing homes which were repossessed from former tenants. At year end 2001, SNH completed a spin off of its subsidiary which operated these properties and the 2002 period includes rental income received for the properties previously operated for SNH's account as well as rents from new investments made in 2002.

Senior Housing Properties Trust is a real estate investment trust headquartered in Newton, MA that owns 120 senior housing properties located in 28 states.

Senior Housing Properties Trust
Notes to Financial Information

  1. During 2001, SNH operated facilities for its own account through its wholly-owned subsidiary, Five Star Quality Care, Inc. On December 31, 2001, SNH spun off Five Star to SNH's shareholders and entered a lease with Five Star for these facilities. These operations had been repossessed from former tenants. As a result of these repossessions, SNH incurred certain non-recurring general and administrative expenses during 2001, which are separately identified on these financial statements.
  2. One of SNH's leases provides that a percentage of revenues be escrowed for future capital expenditures at the leased facilities. In October 2002 SNH entered into an agreement to amend the lease pursuant to which its tenant, Five Star, will retain title to the FF&E escrow accounts while SNH has security and remainder interests in the escrow accounts. Accordingly, effective October 1, 2002, revenues and net income recorded by SNH will no longer include FF&E reserve income.
  3. During the second quarter, one of SNH's tenants closed a facility. Under the terms of the lease, the rent payable to SNH allocated to this facility will be reallocated to the remaining operating facilities, resulting in no impact on SNH's rental income. However, when this property is sold, the annual rent will be reduced by 10% of the net proceeds from the sale. SNH has classified this real estate asset as held for sale and recorded a loss from discontinued operations related to this property in the second quarter, which included historical depreciation expense as well as an impairment loss write-down of $2.5 million based on SNH's estimate of fair value, net of selling costs, of the real estate associated with this property. For the 2001 periods, amounts were reclassified from depreciation expense and facilities' operations revenues and expenses to the loss from discontinued operations.
  4. SNH computes FFO as net income plus depreciation and amortization, non-recurring items and results from discontinued operations. SNH also adds percentage rents deferred pursuant to SAB 101 described in Note 5 below. SNH's method of computing FFO may not be comparable to FFO reported by other REITs that define the terms differently. SNH considers FFO to be an appropriate measure of performance for a REIT, along with cash flow from operating activities, financing activities and investing activities, because it provides investors with an indication of a REIT's operating performance and its ability to incur and service debt, make capital expenditures, pay distributions and fund other cash needs. FFO is an important factor considered by SNH's Board of Trustees in determining the amounts of distributions to shareholders. FFO does not represent cash generated by operating activities in accordance with generally accepted accounting principles, or GAAP, and should not be considered as an alternative to net income or cash flow from operating activities as measures of financial performance or liquidity.
  5. The Securities and Exchange Commission Staff Accounting Bulletin No. 101 generally requires SNH to defer recognition of percentage rental income for the first, second and third quarters to the fourth quarter. Although recognition of revenue is deferred for purposes of calculating net income, SNH's calculation of FFO includes estimated percentage rental amounts on a quarterly basis and these estimates are adjusted at year-end.

  1. IL communities means senior living properties where the majority of living units are independent living apartments. Stand alone SNF means skilled nursing facilities. Stand alone AL means assisted living facilities.
  2. Rent coverage is calculated as operating cash flow from facility operations, before subordinated charges and capex reserves, divided by rent payable to SNH. Coverage is calculated based upon the last twelve months ended August 31, 2002, operating results or the most recent tenant operating results available to SNH.
  3. The rent coverage for HEALTHSOUTH presented is the most recent data available to SNH from HEALTHSOUTH. In August 2002, HEALTHSOUTH announced that a new interpretation of Medicare billing requirements will result in a reduction of its income. SNH has requested that HEALTHSOUTH provide a calculation of the impact of the new Medicare billing requirements upon the income received at the two hospitals owned by SNH and leased by HEALTHSOUTH. Based upon statements made by HEALTHSOUTH, SNH does not believe that these new billing requirements will result in a material decline in rent coverage at the SNH owned hospitals; however, the requested calculations have not yet been provided by HEALTHSOUTH.

For periods after October 1, 2002, SNH will change its historical method of calculating FFO. Through the quarter ended September 30, 2002, SNH's FFO included FF&E reserve income which was historically paid to SNH, but escrowed for future capital expenditures at certain leased properties. In October 2002, SNH entered into an agreement to amend the lease pursuant to which, effective October 1, 2002, its tenant, Five Star, will retain title to the FF&E escrow accounts while SNH retains security and remainder interests in the escrow accounts and in property purchased with funding from those accounts. In order to facilitate comparison of future FFO with historical results, the historical FFO presentation in future periods will eliminate FF&E reserve income. If this change were implemented in the results presented in this press release, FFO for the three and nine months periods ended September 30, 2002, would have been as follows (amounts in thousands, except per share):

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