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Name | Symbol | Market | Type |
---|---|---|---|
Senior Housing Properties Trust | NASDAQ:SNHNI | NASDAQ | Bond |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 24.75 | 23.70 | 24.96 | 0 | 01:00:00 |
Maryland
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04-3445278
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(State or Other Jurisdiction of Incorporation or
Organization)
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(IRS Employer Identification No.)
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Title Of Each Class
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Trading Symbol(s)
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Name Of Each Exchange On Which Registered
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Common Shares of Beneficial Interest
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DHC
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The Nasdaq Stock Market LLC
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5.625% Senior Notes due 2042
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DHCNI
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The Nasdaq Stock Market LLC
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6.25% Senior Notes due 2046
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DHCNL
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The Nasdaq Stock Market LLC
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Large Accelerated Filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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March 31,
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December 31,
|
||||
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2020
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2019
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||||
Assets
|
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Real estate properties:
|
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Land
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$
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786,242
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$
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793,123
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Buildings and improvements
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6,648,430
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6,668,463
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Total real estate properties, gross
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7,434,672
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7,461,586
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Accumulated depreciation
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(1,612,328
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)
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(1,570,801
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)
|
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Total real estate properties, net
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5,822,344
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5,890,785
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Assets of properties held for sale
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244,881
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209,570
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Cash and cash equivalents
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69,545
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37,357
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Restricted cash
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15,691
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14,867
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Acquired real estate leases and other intangible assets, net
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323,134
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337,875
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Other assets, net
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228,128
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163,372
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Total assets
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$
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6,703,723
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$
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6,653,826
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Liabilities and Equity
|
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Unsecured revolving credit facility
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$
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585,000
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$
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537,500
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Unsecured term loans, net
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449,035
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448,741
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Senior unsecured notes, net
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1,821,560
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1,820,681
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Secured debt and capital leases, net
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693,961
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694,739
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Liabilities of properties held for sale
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8,218
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6,758
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Accrued interest
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29,236
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24,060
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|
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Assumed real estate lease obligations, net
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74,430
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76,705
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Other liabilities
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255,114
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167,592
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Total liabilities
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3,916,554
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3,776,776
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Commitments and contingencies
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Equity:
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Equity attributable to common shareholders:
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Common shares of beneficial interest, $.01 par value: 300,000,000 shares authorized, 237,893,725 and 237,897,163 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
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2,379
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2,379
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Additional paid in capital
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4,612,739
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4,612,511
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Cumulative net income
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2,062,297
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2,052,562
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Cumulative distributions
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(4,026,418
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)
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(3,930,933
|
)
|
||
Total equity attributable to common shareholders
|
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2,650,997
|
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2,736,519
|
|
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Noncontrolling interest:
|
|
|
|
|
||||
Total equity attributable to noncontrolling interest
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136,172
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140,531
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Total equity
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2,787,169
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2,877,050
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Total liabilities and equity
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$
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6,703,723
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$
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6,653,826
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Three Months Ended March 31,
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||||||
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2020
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2019
|
||||
Revenues:
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Rental income
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$
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110,498
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$
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158,241
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Residents fees and services
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331,969
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108,045
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Total revenues
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442,467
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266,286
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Expenses:
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Property operating expenses
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316,585
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117,222
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Depreciation and amortization
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68,430
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72,230
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General and administrative
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8,832
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9,816
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Acquisition and certain other transaction related costs
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663
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7,814
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Impairment of assets
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11,234
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6,206
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Total expenses
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405,744
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213,288
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Gain (loss) on sale of properties
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2,782
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(122
|
)
|
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Dividend income
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—
|
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923
|
|
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Gains and losses on equity securities, net
|
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(9,943
|
)
|
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22,932
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Interest and other income
|
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138
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|
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114
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|
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Interest expense (including net amortization of debt premiums, discounts and issuance costs of $1,509 and $1,652, respectively)
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(41,650
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)
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(45,611
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)
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Gain on lease termination
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22,896
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—
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Loss on early extinguishment of debt
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(246
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)
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—
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Income from continuing operations before income tax expense and equity in earnings of an investee
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10,700
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31,234
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Income tax expense
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443
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(134
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)
|
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Equity in earnings of an investee
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—
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404
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|
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Net income
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11,143
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31,504
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|
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Net income attributable to noncontrolling interest
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(1,408
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)
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(1,422
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)
|
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Net income attributable to common shareholders
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$
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9,735
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$
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30,082
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Other comprehensive income:
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Equity in unrealized gain of an investee
|
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—
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66
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|
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Other comprehensive income
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—
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66
|
|
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Comprehensive income
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11,143
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31,570
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|
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Comprehensive income attributable to noncontrolling interest
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(1,408
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)
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(1,422
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)
|
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Comprehensive income attributable to common shareholders
|
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$
|
9,735
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$
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30,148
|
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|
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|
||||
Weighted average common shares outstanding (basic)
|
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237,669
|
|
|
237,568
|
|
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Weighted average common shares outstanding (diluted)
|
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237,669
|
|
|
237,600
|
|
||
|
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|
|
||||
Per common share amounts (basic and diluted):
|
|
|
|
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|
||
Net income attributable to common shareholders
|
|
$
|
0.04
|
|
|
$
|
0.13
|
|
|
|
Number of
Shares
|
|
Common
Shares
|
|
Additional
Paid-in
Capital
|
|
Cumulative
Net Income
|
|
Cumulative Other
Comprehensive Income (Loss) |
|
Cumulative Distributions
|
|
Total Equity Attributable to Common Shareholders
|
|
Total Equity Attributable to Noncontrolling
Interest
|
|
Total Equity
|
|||||||||||||||||
Balance at December 31, 2019:
|
|
237,897,163
|
|
|
$
|
2,379
|
|
|
$
|
4,612,511
|
|
|
$
|
2,052,562
|
|
|
$
|
—
|
|
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$
|
(3,930,933
|
)
|
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$
|
2,736,519
|
|
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$
|
140,531
|
|
|
$
|
2,877,050
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
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|
9,735
|
|
|
—
|
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—
|
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9,735
|
|
|
1,408
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|
|
11,143
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|
||||||||
Distributions
|
|
—
|
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|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,684
|
)
|
|
(35,684
|
)
|
|
—
|
|
|
(35,684
|
)
|
||||||||
Distribution to common shareholders of the right to receive Five Star Senior Living Inc. common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59,801
|
)
|
|
(59,801
|
)
|
|
—
|
|
|
(59,801
|
)
|
||||||||
Share grants
|
|
—
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
249
|
|
||||||||
Share repurchases
|
|
(3,438
|
)
|
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
—
|
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|
(21
|
)
|
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—
|
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|
(21
|
)
|
||||||||
Distributions to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,767
|
)
|
|
(5,767
|
)
|
||||||||
Balance at March 31, 2020:
|
|
237,893,725
|
|
|
$
|
2,379
|
|
|
$
|
4,612,739
|
|
|
$
|
2,062,297
|
|
|
$
|
—
|
|
|
$
|
(4,026,418
|
)
|
|
$
|
2,650,997
|
|
|
$
|
136,172
|
|
|
$
|
2,787,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2018:
|
|
237,729,900
|
|
|
$
|
2,377
|
|
|
$
|
4,611,419
|
|
|
$
|
2,140,796
|
|
|
$
|
(266
|
)
|
|
$
|
(3,731,214
|
)
|
|
$
|
3,023,112
|
|
|
$
|
156,758
|
|
|
$
|
3,179,870
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,082
|
|
|
—
|
|
|
—
|
|
|
30,082
|
|
|
1,422
|
|
|
31,504
|
|
||||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
66
|
|
||||||||
Distributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(92,714
|
)
|
|
(92,714
|
)
|
|
—
|
|
|
(92,714
|
)
|
||||||||
Share grants
|
|
—
|
|
|
—
|
|
|
215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|
—
|
|
|
215
|
|
||||||||
Distributions to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,503
|
)
|
|
(5,503
|
)
|
||||||||
Balance at March 31, 2019:
|
|
237,729,900
|
|
|
$
|
2,377
|
|
|
$
|
4,611,634
|
|
|
$
|
2,170,878
|
|
|
$
|
(200
|
)
|
|
$
|
(3,823,928
|
)
|
|
$
|
2,960,761
|
|
|
$
|
152,677
|
|
|
$
|
3,113,438
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||
Net income
|
|
$
|
11,143
|
|
|
$
|
31,504
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
68,430
|
|
|
72,230
|
|
||
Amortization of debt issuance costs and debt discounts and premiums
|
|
1,509
|
|
|
1,652
|
|
||
Straight line rental income
|
|
(1,153
|
)
|
|
(1,934
|
)
|
||
Amortization of acquired real estate leases and other intangible assets
|
|
(1,873
|
)
|
|
(1,525
|
)
|
||
Loss on early extinguishment of debt
|
|
25
|
|
|
—
|
|
||
Gain on lease termination
|
|
(22,896
|
)
|
|
—
|
|
||
Impairment of assets
|
|
11,234
|
|
|
6,206
|
|
||
(Gain) loss on sale of properties
|
|
(2,782
|
)
|
|
122
|
|
||
Gains and losses on equity securities, net
|
|
9,943
|
|
|
(22,932
|
)
|
||
Other non-cash adjustments
|
|
(943
|
)
|
|
(943
|
)
|
||
Equity in earnings of an investee
|
|
—
|
|
|
(404
|
)
|
||
Change in assets and liabilities:
|
|
|
|
|
|
|
||
Other assets
|
|
(39,433
|
)
|
|
(5,862
|
)
|
||
Accrued interest
|
|
5,167
|
|
|
9,059
|
|
||
Other liabilities
|
|
17,941
|
|
|
(45,658
|
)
|
||
Net cash provided by operating activities
|
|
56,312
|
|
|
41,515
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Real estate acquisitions and deposits
|
|
(2,526
|
)
|
|
—
|
|
||
Real estate improvements
|
|
(41,045
|
)
|
|
(46,237
|
)
|
||
Proceeds from sale of properties, net
|
|
16,930
|
|
|
2,929
|
|
||
Net cash used in investing activities
|
|
(26,641
|
)
|
|
(43,308
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
||
Proceeds from borrowings on revolving credit facility
|
|
130,500
|
|
|
178,000
|
|
||
Repayments of borrowings on revolving credit facility
|
|
(83,000
|
)
|
|
(92,000
|
)
|
||
Repayment of other debt
|
|
(2,466
|
)
|
|
(1,309
|
)
|
||
Loss on early extinguishment of debt settled in cash
|
|
(221
|
)
|
|
—
|
|
||
Repurchase of common shares
|
|
(21
|
)
|
|
—
|
|
||
Distributions to noncontrolling interest
|
|
(5,767
|
)
|
|
(5,503
|
)
|
||
Distributions to shareholders
|
|
(35,684
|
)
|
|
(92,714
|
)
|
||
Net cash provided by (used in) financing activities
|
|
3,341
|
|
|
(13,526
|
)
|
||
|
|
|
|
|
||||
Increase (decrease) in cash and cash equivalents and restricted cash
|
|
33,012
|
|
|
(15,319
|
)
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
|
52,224
|
|
|
70,071
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
|
$
|
85,236
|
|
|
$
|
54,752
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Supplemental cash flow information:
|
|
|
|
|
||||
Interest paid
|
|
$
|
35,280
|
|
|
$
|
35,034
|
|
Income taxes paid
|
|
$
|
—
|
|
|
$
|
31
|
|
|
|
|
|
|
||||
Non-cash investing activities:
|
|
|
|
|
||||
Five Star Senior Living Inc. common stock
|
|
$
|
97,896
|
|
|
$
|
—
|
|
Transaction Agreement additional consideration
|
|
(75,000
|
)
|
|
—
|
|
||
Capitalized interest
|
|
$
|
306
|
|
|
$
|
134
|
|
|
|
|
|
|
||||
Non-cash financing activities:
|
|
|
|
|
||||
Distribution to common shareholders of the right to receive Five Star Senior Living Inc. common stock
|
|
$
|
(59,801
|
)
|
|
$
|
—
|
|
|
|
As of March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Cash and cash equivalents
|
|
$
|
69,545
|
|
|
$
|
39,875
|
|
Restricted cash (1)
|
|
15,691
|
|
|
14,877
|
|
||
Total cash and cash equivalents and restricted cash shown in our condensed consolidated statements of cash flows
|
|
$
|
85,236
|
|
|
$
|
54,752
|
|
Date of Sale
|
|
Location
|
|
Type of Property
|
|
Number of Properties
|
|
Square Feet
|
|
Sales Price (1)
|
|
Gain (loss) on Sale
|
|||||
January 2020
|
|
Louisiana
|
|
Medical Office
|
|
6
|
|
40,575
|
|
|
$
|
5,925
|
|
|
$
|
(81
|
)
|
February 2020
|
|
Pennsylvania
|
|
Medical Office
|
|
1
|
|
50,000
|
|
|
2,900
|
|
|
—
|
|
||
March 2020
|
|
Texas
|
|
Medical Office
|
|
1
|
|
70,229
|
|
|
8,779
|
|
|
2,863
|
|
||
|
|
|
|
|
|
8
|
|
|
|
$
|
17,604
|
|
|
$
|
2,782
|
|
(1)
|
Sales price excludes closing costs.
|
|
|
|
|
Fair Value at Reporting Date Using
|
||||||||||||
|
|
|
|
Quoted Prices in
Active Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
||||||||
Description
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Recurring Fair Value Measurements Assets:
|
|
|
|
|
|
|
|
|
||||||||
Investment in Five Star (1)
|
|
$
|
29,723
|
|
|
$
|
29,723
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-Recurring Fair Value Measurements Assets:
|
|
|
|
|
|
|
|
|
||||||||
Real estate properties held for sale (2)
|
|
$
|
98,927
|
|
|
$
|
—
|
|
|
$
|
98,927
|
|
|
$
|
—
|
|
(1)
|
Our 10,691,658 shares of common stock of Five Star Senior Living Inc., or Five Star, are included in other assets, net in our condensed consolidated balance sheets, and are reported at fair value, which is based upon quoted market prices on The Nasdaq Stock Market LLC, or Nasdaq, (Level 1 inputs). On April 1, 2019, we entered into a transaction agreement with Five Star, or the Transaction Agreement, to restructure our business arrangements with Five Star, or the Restructuring Transaction. Pursuant to the Transaction Agreement, on January 1, 2020, Five Star issued 10,268,158 Five Star common shares to us. The fair value and initial cost basis of the Five Star common shares issued to us on January 1, 2020 was $38,095. Our adjusted cost basis inclusive of the 423,500 Five Star common shares we owned as of December 31, 2019 and the 10,268,158 Five Star common shares issued to us on January 1, 2020 was $44,448 as of March 31, 2020. During the three months ended March 31, 2020, we recorded an unrealized loss of $9,943, which is included in gains and losses on equity securities, net in our condensed consolidated statements of comprehensive income, to adjust the carrying value of our investment in Five Star common shares to their fair value. See Note 12 for further information about our investment in Five Star.
|
(2)
|
We have assets in our condensed consolidated balance sheets that are measured at fair value on a nonrecurring basis. During the three months ended March 31, 2020, we recorded impairment charges of $6,544 to reduce the carrying value of six medical office properties that are classified as held for sale to their estimated sales price, less estimated costs to sell of $1,658, based on purchase and sale agreements that we have entered into with third party buyers for these medical office properties of $51,640. We also recorded impairment charges of $5,581 to reduce the carrying value of five senior living communities that are classified as held for sale to their estimated sales price, less estimated costs to sell of $655, based on purchase and sale agreements that we have entered into with third party buyers for these senior living communities of $49,600. See Note 3 for further information about impairment charges and these and other properties we have classified as held for sale.
|
|
|
As of March 31, 2020
|
|
As of December 31, 2019
|
||||||||||||
Description
|
|
Carrying Amount (1)
|
|
Estimated Fair Value
|
|
Carrying Amount (1)
|
|
Estimated Fair Value
|
||||||||
Senior unsecured notes
|
|
$
|
1,821,560
|
|
|
$
|
1,568,167
|
|
|
$
|
1,820,681
|
|
|
$
|
1,890,386
|
|
Secured debts(2)(3)
|
|
695,228
|
|
|
744,082
|
|
|
697,729
|
|
|
697,142
|
|
||||
|
|
$
|
2,516,788
|
|
|
$
|
2,312,249
|
|
|
$
|
2,518,410
|
|
|
$
|
2,587,528
|
|
(1)
|
Includes unamortized debt issuance costs, premiums and discounts.
|
(2)
|
We assumed certain of these secured debts in connection with our acquisition of certain properties. We recorded the assumed mortgage notes at estimated fair value on the date of acquisition and we are amortizing the fair value
|
(3)
|
Includes $1,267 of principal mortgage obligations for a property classified as held for sale as of March 31, 2020. This mortgage is included in liabilities of properties held for sale in our condensed consolidated balance sheet as of March 31, 2020.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Realized gains and losses on equity securities sold (1)
|
|
$
|
—
|
|
|
$
|
20,836
|
|
Unrealized gains and losses on equity securities held
|
|
(9,943
|
)
|
|
2,096
|
|
||
Gains and losses on equity securities, net
|
|
$
|
(9,943
|
)
|
|
$
|
22,932
|
|
(1)
|
For further information about our former investment in The RMR Group Inc., or RMR Inc., that we sold on July 1, 2019, see our Annual Report.
|
Date Purchased
|
|
Number of Shares
|
|
Price per Share
|
|||
1/9/2020
|
|
1,938
|
|
|
$
|
8.10
|
|
3/13/2020
|
|
1,500
|
|
|
$
|
3.79
|
|
Record Date
|
|
Payment Date
|
|
Distribution Per Share
|
|
Total Distributions
|
||||
January 27, 2020
|
|
February 20, 2020
|
|
$
|
0.15
|
|
|
$
|
35,684
|
|
|
|
For the Three Months Ended March 31, 2020
|
||||||||||||||
|
|
Office Portfolio
|
|
SHOP
|
|
Non-Segment
|
|
Consolidated
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental income
|
|
$
|
98,770
|
|
|
$
|
—
|
|
|
$
|
11,728
|
|
|
$
|
110,498
|
|
Residents fees and services
|
|
—
|
|
|
331,969
|
|
|
—
|
|
|
331,969
|
|
||||
Total revenues
|
|
98,770
|
|
|
331,969
|
|
|
11,728
|
|
|
442,467
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses
|
|
32,706
|
|
|
283,879
|
|
|
—
|
|
|
316,585
|
|
||||
Depreciation and amortization
|
|
32,163
|
|
|
33,042
|
|
|
3,225
|
|
|
68,430
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
8,832
|
|
|
8,832
|
|
||||
Acquisition and certain other transaction related costs
|
|
—
|
|
|
—
|
|
|
663
|
|
|
663
|
|
||||
Impairment of assets
|
|
6,218
|
|
|
5,016
|
|
|
—
|
|
|
11,234
|
|
||||
Total expenses
|
|
71,087
|
|
|
321,937
|
|
|
12,720
|
|
|
405,744
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Gain on sale of properties
|
|
2,782
|
|
|
—
|
|
|
—
|
|
|
2,782
|
|
||||
Losses on equity securities, net
|
|
—
|
|
|
—
|
|
|
(9,943
|
)
|
|
(9,943
|
)
|
||||
Interest and other income
|
|
—
|
|
|
—
|
|
|
138
|
|
|
138
|
|
||||
Interest expense
|
|
(6,052
|
)
|
|
(564
|
)
|
|
(35,034
|
)
|
|
(41,650
|
)
|
||||
Gain on lease termination
|
|
—
|
|
|
—
|
|
|
22,896
|
|
|
22,896
|
|
||||
Loss on early extinguishment of debt
|
|
(246
|
)
|
|
—
|
|
|
—
|
|
|
(246
|
)
|
||||
Income (loss) from continuing operations before income tax expense
|
|
24,167
|
|
|
9,468
|
|
|
(22,935
|
)
|
|
10,700
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
443
|
|
|
443
|
|
||||
Net income (loss)
|
|
24,167
|
|
|
9,468
|
|
|
(22,492
|
)
|
|
11,143
|
|
||||
Net income attributable to noncontrolling interest
|
|
(1,408
|
)
|
|
—
|
|
|
—
|
|
|
(1,408
|
)
|
||||
Net income (loss) attributable to common shareholders
|
|
$
|
22,759
|
|
|
$
|
9,468
|
|
|
$
|
(22,492
|
)
|
|
$
|
9,735
|
|
|
|
As of March 31, 2020
|
||||||||||||||
|
|
Office Portfolio
|
|
SHOP
|
|
Non-Segment
|
|
Consolidated
|
||||||||
Total assets
|
|
$
|
3,133,881
|
|
|
$
|
3,080,002
|
|
|
$
|
489,840
|
|
|
$
|
6,703,723
|
|
|
|
For the Three Months Ended March 31, 2019
|
||||||||||||||
|
|
Office Portfolio
|
|
SHOP
|
|
Non-Segment
|
|
Consolidated
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Rental income
|
|
$
|
103,221
|
|
|
$
|
39,313
|
|
|
$
|
15,707
|
|
|
$
|
158,241
|
|
Residents fees and services
|
|
—
|
|
|
108,045
|
|
|
—
|
|
|
108,045
|
|
||||
Total revenues
|
|
103,221
|
|
|
147,358
|
|
|
15,707
|
|
|
266,286
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Property operating expenses
|
|
32,177
|
|
|
85,045
|
|
|
—
|
|
|
117,222
|
|
||||
Depreciation and amortization
|
|
36,101
|
|
|
30,953
|
|
|
5,176
|
|
|
72,230
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
9,816
|
|
|
9,816
|
|
||||
Acquisition and certain other transaction related costs
|
|
—
|
|
|
—
|
|
|
7,814
|
|
|
7,814
|
|
||||
Impairment of assets
|
|
—
|
|
|
6,206
|
|
|
—
|
|
|
6,206
|
|
||||
Total expenses
|
|
68,278
|
|
|
122,204
|
|
|
22,806
|
|
|
213,288
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Loss on sale of properties
|
|
(122
|
)
|
|
—
|
|
|
—
|
|
|
(122
|
)
|
||||
Dividend income
|
|
—
|
|
|
—
|
|
|
923
|
|
|
923
|
|
||||
Gains on equity securities, net
|
|
—
|
|
|
—
|
|
|
22,932
|
|
|
22,932
|
|
||||
Interest and other income
|
|
—
|
|
|
—
|
|
|
114
|
|
|
114
|
|
||||
Interest expense
|
|
(6,030
|
)
|
|
(994
|
)
|
|
(38,587
|
)
|
|
(45,611
|
)
|
||||
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee
|
|
28,791
|
|
|
24,160
|
|
|
(21,717
|
)
|
|
31,234
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(134
|
)
|
|
(134
|
)
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
404
|
|
|
404
|
|
||||
Net income (loss)
|
|
28,791
|
|
|
24,160
|
|
|
(21,447
|
)
|
|
31,504
|
|
||||
Net income attributable to noncontrolling interest
|
|
(1,422
|
)
|
|
—
|
|
|
—
|
|
|
(1,422
|
)
|
||||
Net income (loss) attributable to common shareholders
|
|
$
|
27,369
|
|
|
$
|
24,160
|
|
|
$
|
(21,447
|
)
|
|
$
|
30,082
|
|
|
As of December 31, 2019
|
||||||||||||||
|
Office Portfolio
|
|
SHOP
|
|
Non-Segment
|
|
Consolidated
|
||||||||
Total assets
|
$
|
3,165,577
|
|
|
$
|
3,044,989
|
|
|
$
|
443,260
|
|
|
$
|
6,653,826
|
|
•
|
our previously existing master leases with Five Star for all of our senior living communities that Five Star leased, as well as our previously existing management agreements and pooling agreements with Five Star for our senior living communities that Five Star managed, were terminated and replaced, or the Conversion, with the New Management Agreements;
|
•
|
Five Star issued to us 10,268,158 Five Star common shares and an aggregate of 16,118,849 Five Star common shares to our shareholders of record as of December 13, 2019; and
|
•
|
as consideration for these share issuances, we provided Five Star with $75,000 of additional consideration, primarily by assuming certain of Five Star's working capital liabilities, resulting in a gain on lease termination of $22,896 for the three months ended March 31, 2020 in our condensed consolidated statements of comprehensive income.
|
Revenue from contracts with customers:
|
|
Three Months Ended March 31, 2020
|
|
Three Months Ended March 31, 2019
|
||||
Basic housing and support services
|
|
$
|
231,516
|
|
|
$
|
87,412
|
|
Medicare and Medicaid programs
|
|
49,668
|
|
|
8,745
|
|
||
Private pay and other third party payer SNF services
|
|
50,785
|
|
|
11,888
|
|
||
Total residents fees and services
|
|
$
|
331,969
|
|
|
$
|
108,045
|
|
|
|
Three Months Ended March 31,
|
||||
|
|
2020
|
|
2019
|
||
Weighted average common shares for basic earnings per share
|
|
237,669
|
|
|
237,568
|
|
Effect of dilutive securities: unvested share awards
|
|
—
|
|
|
32
|
|
Weighted average common shares for diluted earnings per share (1)
|
|
237,669
|
|
|
237,600
|
|
•
|
our tenants and their ability to withstand the current economic conditions and continue to pay us rent;
|
•
|
our senior living community operators' ability to operate our communities, mitigate and contain the spread of the COVID-19 virus at our communities and to keep the residents and our operators' employees at our communities safe and healthy;
|
•
|
our operations, liquidity and capital needs and resources;
|
•
|
conducting financial modeling and sensitivity analyses;
|
•
|
actively communicating with our tenants, our operators and other key constituents and stakeholders in order to help assess market conditions, opportunities, best practices and mitigate risks and potential adverse impacts; and
|
•
|
monitoring, with the assistance of counsel and other specialists, possible government relief funding sources and other programs that may be available to us, our tenants, or our operators to enable us and them to operate through the current economic conditions and enhance our tenants’ ability to pay us rent or our operators' ability to operate our communities.
|
•
|
On April 2, 2020, we announced that we reduced our quarterly cash distribution rate on our common shares to $0.01 per share, conserving approximately $33.3 million of cash per calendar quarter;
|
•
|
We have deferred certain previously planned non-essential capital investments, which we expect to save up to $150.0 million in calendar year 2020;
|
•
|
As of May 6, 2020, we had $225.0 million of availability under our revolving credit facility; and
|
•
|
Our next debt maturity is our $250.0 million term loan that matures in June 2020, which can be extended for six-months at our option in exchange for paying a fee of 10 basis points and meeting certain other conditions, and the subsequent maturity of our debt does not occur until our $300.0 million senior notes mature in December 2021.
|
•
|
focusing on sanitizing high touch points in common areas and restrooms;
|
•
|
shutting down certain building amenities; and
|
•
|
prudently managing the execution or deferment of tenant work orders to limit RMR LLC staff and tenant interactions at our properties.
|
•
|
deferring non-emergency work;
|
•
|
implementing energy reduction protocols for lighting and HVAC systems;
|
•
|
reducing non-essential building services and staff; and
|
•
|
reducing the frequency of trash removal.
|
•
|
the duration and severity of the current economic downturn;
|
•
|
the strength and sustainability of any economic recovery; and
|
•
|
the timing and process for how the government and other market participants may oversee and conduct the return of economic activity when the COVID-19 pandemic abates, such as what continuing restrictions and protective measures may remain in place or be added and what restrictions and protective measures may be lifted or reduced in order to foster a return of increased economic activity in the United States.
|
(As of March 31, 2020)
|
|
Number
of Properties
|
|
Square Feet or Number of Units
|
|
|
|
Gross Book Value of Real Estate Assets(1)
|
|
% of Total Gross Book Value of Real Estate Assets
|
|
Investment per Square Foot or Unit(2)
|
|
Q1 2020 Revenues(3)
|
|
% of
Q1 2020 Revenues
|
|
Q1 2020 NOI (3)(4)
|
|
% of Q1 2020 NOI
|
|||||||||||||
Office Portfolio (5)
|
|
130
|
|
|
11,717,617
|
|
|
sq. ft.
|
|
$
|
3,724,019
|
|
|
44.3
|
%
|
|
$
|
318
|
|
|
$
|
98,770
|
|
|
22.3
|
%
|
|
$
|
66,064
|
|
|
52.5
|
%
|
SHOP
|
|
244
|
|
|
28,960
|
|
|
units
|
|
4,210,867
|
|
|
50.1
|
%
|
|
$
|
145,403
|
|
|
331,969
|
|
|
75.0
|
%
|
|
48,090
|
|
|
38.2
|
%
|
|||
Other triple net leased senior living communities
|
|
32
|
|
|
2,605
|
|
|
units
|
|
295,794
|
|
|
3.5
|
%
|
|
$
|
113,549
|
|
|
7,074
|
|
|
1.6
|
%
|
|
7,074
|
|
|
5.6
|
%
|
|||
Wellness centers
|
|
10
|
|
|
812,000
|
|
|
sq. ft.
|
|
178,110
|
|
|
2.1
|
%
|
|
$
|
219
|
|
|
4,654
|
|
|
1.1
|
%
|
|
4,654
|
|
|
3.7
|
%
|
|||
Total
|
|
416
|
|
|
|
|
|
|
$
|
8,408,790
|
|
|
100.0
|
%
|
|
|
|
$
|
442,467
|
|
|
100.0
|
%
|
|
$
|
125,882
|
|
|
100.0
|
%
|
|
|
Occupancy
|
||||
|
|
As of and For the Twelve Months Ended March 31,
|
||||
|
|
2020
|
|
2019
|
||
Office Portfolio (6)
|
|
92.6
|
%
|
|
94.0
|
%
|
SHOP
|
|
84.1
|
%
|
|
83.7
|
%
|
Other triple net leased senior living communities (7)(8)
|
|
87.3
|
%
|
|
87.9
|
%
|
Wellness centers
|
|
100.0
|
%
|
|
100.0
|
%
|
(1)
|
Represents gross book value of real estate assets at cost plus certain acquisition costs, before depreciation and purchase price allocations and less impairment write downs, if any. Amounts include $287,397 of gross book value of 24 properties classified as held for sale as of March 31, 2020, which amounts are included in assets of properties held for sale in our condensed consolidated balance sheet.
|
(2)
|
Represents gross book value of real estate assets divided by number of rentable square feet or living units, as applicable, at March 31, 2020.
|
(3)
|
Includes $333 of revenues and $168 of NOI from properties sold during the three months ended March 31, 2020 and $25,190 of revenues and $4,801 of NOI from properties classified as held for sale in our condensed consolidated balance sheet as of March 31, 2020.
|
(4)
|
NOI is defined and calculated by reportable segment. Our definition of NOI and our reconciliation of net income to NOI are included below under the heading “Non-GAAP Financial Measures.”
|
(5)
|
Our medical office and life science property leases include some triple net leases where, in addition to paying fixed rents, the tenants assume the obligation to operate and maintain the properties at their expense, and some net and modified gross leases where we are responsible for the operation and maintenance of the properties and we charge tenants for some or all of the property operating costs. A small percentage of our medical office and life science property leases are full-service leases where we receive fixed rent from our tenants and no reimbursement for our property operating costs.
|
(6)
|
Medical office and life science property occupancy data is as of March 31, 2020 and 2019 and includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants and (iii) space being fitted out for occupancy.
|
(7)
|
Excludes data for periods prior to our ownership of certain properties, data for properties sold or classified as held for sale and data for which there was a transfer of operations during the periods presented.
|
(8)
|
Operating data for other triple net leased senior living communities leased to third party operators other than Five Star and wellness centers are presented based upon the operating results provided by our tenants for the 12 months ended December 31, 2019 and 2018, or the most recent prior period for which tenant operating results are made available to us. We have not independently verified tenant operating data.
|
Year
|
|
Number of Tenants
|
|
Square Feet(1)
|
|
Percent of Total
|
|
Cumulative Percent of Total
|
|
Annualized Rental Income(2)
|
|
Percent of Total
|
|
Cumulative Percent of Total
|
|||||||
2020
|
|
111
|
|
750,508
|
|
|
6.9
|
%
|
|
6.9
|
%
|
|
$
|
26,661
|
|
|
7.0
|
%
|
|
7.0
|
%
|
2021
|
|
100
|
|
891,590
|
|
|
8.2
|
%
|
|
15.1
|
%
|
|
30,141
|
|
|
7.9
|
%
|
|
14.9
|
%
|
|
2022
|
|
105
|
|
1,176,892
|
|
|
10.8
|
%
|
|
25.9
|
%
|
|
34,950
|
|
|
9.1
|
%
|
|
24.0
|
%
|
|
2023
|
|
60
|
|
1,040,848
|
|
|
9.6
|
%
|
|
35.5
|
%
|
|
20,922
|
|
|
5.5
|
%
|
|
29.5
|
%
|
|
2024
|
|
79
|
|
1,838,297
|
|
|
16.9
|
%
|
|
52.4
|
%
|
|
50,762
|
|
|
13.3
|
%
|
|
42.8
|
%
|
|
2025
|
|
64
|
|
1,133,953
|
|
|
10.4
|
%
|
|
62.8
|
%
|
|
23,958
|
|
|
6.3
|
%
|
|
49.1
|
%
|
|
2026
|
|
40
|
|
717,723
|
|
|
6.6
|
%
|
|
69.4
|
%
|
|
21,647
|
|
|
5.7
|
%
|
|
54.8
|
%
|
|
2027
|
|
27
|
|
466,423
|
|
|
4.3
|
%
|
|
73.7
|
%
|
|
11,343
|
|
|
3.0
|
%
|
|
57.8
|
%
|
|
2028
|
|
17
|
|
1,440,951
|
|
|
13.3
|
%
|
|
87.0
|
%
|
|
115,197
|
|
|
30.1
|
%
|
|
87.9
|
%
|
|
2029 and thereafter
|
|
58
|
|
1,394,235
|
|
|
13.0
|
%
|
|
100.0
|
%
|
|
47,005
|
|
|
12.1
|
%
|
|
100.0
|
%
|
|
Total
|
|
661
|
|
10,851,420
|
|
|
100.0
|
%
|
|
|
|
$
|
382,586
|
|
|
100.0
|
%
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average remaining lease term (in years)
|
|
5.5
|
|
|
|
|
|
|
6.2
|
|
|
|
|
|
(1)
|
Includes 100% of square feet from our life science property owned in a joint venture arrangement in which we own a 55% equity interest.
|
(2)
|
Annualized rental income is based on rents pursuant to existing leases as of March 31, 2020, including straight line rent adjustments, estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our medical office and life science properties. Annualized rental income also includes 100% of rental income as reported under GAAP from our life science property owned in a joint venture arrangement in which we own a 55% equity interest.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Revenues:
|
|
|
|
|
||||
Office Portfolio
|
|
$
|
98,770
|
|
|
$
|
103,221
|
|
SHOP
|
|
331,969
|
|
|
147,358
|
|
||
Non-Segment
|
|
11,728
|
|
|
15,707
|
|
||
Total revenues
|
|
$
|
442,467
|
|
|
$
|
266,286
|
|
|
|
|
|
|
||||
Net income (loss) attributable to common shareholders:
|
|
|
|
|
||||
Office Portfolio
|
|
$
|
22,759
|
|
|
$
|
27,369
|
|
SHOP
|
|
9,468
|
|
|
24,160
|
|
||
Non-Segment
|
|
(22,492
|
)
|
|
(21,447
|
)
|
||
Net (loss) income attributable to common shareholders
|
|
$
|
9,735
|
|
|
$
|
30,082
|
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2020
|
|
2019
|
|
$ Change
|
|
% Change
|
|||||||
NOI by segment:
|
|
|
|
|
|
|
|
|
|||||||
Office Portfolio
|
|
$
|
66,064
|
|
|
$
|
71,044
|
|
|
$
|
(4,980
|
)
|
|
(7.0
|
)%
|
SHOP
|
|
48,090
|
|
|
62,313
|
|
|
(14,223
|
)
|
|
(22.8
|
)%
|
|||
Non-Segment
|
|
11,728
|
|
|
15,707
|
|
|
(3,979
|
)
|
|
(25.3
|
)%
|
|||
Total NOI
|
|
125,882
|
|
|
149,064
|
|
|
(23,182
|
)
|
|
(15.6
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization
|
|
68,430
|
|
|
72,230
|
|
|
(3,800
|
)
|
|
(5.3
|
)%
|
|||
General and administrative
|
|
8,832
|
|
|
9,816
|
|
|
(984
|
)
|
|
(10.0
|
)%
|
|||
Acquisition and certain other transaction related costs
|
|
663
|
|
|
7,814
|
|
|
(7,151
|
)
|
|
(91.5
|
)%
|
|||
Impairment of assets
|
|
11,234
|
|
|
6,206
|
|
|
5,028
|
|
|
81.0
|
%
|
|||
Gain (loss) on sale of properties
|
|
2,782
|
|
|
(122
|
)
|
|
2,904
|
|
|
nm
|
|
|||
Dividend income
|
|
—
|
|
|
923
|
|
|
(923
|
)
|
|
(100.0
|
)%
|
|||
Gains and losses on equity securities, net
|
|
(9,943
|
)
|
|
22,932
|
|
|
32,875
|
|
|
143.4
|
%
|
|||
Interest and other income
|
|
138
|
|
|
114
|
|
|
24
|
|
|
21.1
|
%
|
|||
Interest expense
|
|
(41,650
|
)
|
|
(45,611
|
)
|
|
(3,961
|
)
|
|
(8.7
|
)%
|
|||
Gain on lease termination
|
|
22,896
|
|
|
—
|
|
|
22,896
|
|
|
nm
|
|
|||
Loss on early extinguishment of debt
|
|
(246
|
)
|
|
—
|
|
|
246
|
|
|
nm
|
|
|||
Income from continuing operations before income tax expense and equity in earnings of an investee
|
|
10,700
|
|
|
31,234
|
|
|
(20,534
|
)
|
|
(65.7
|
)%
|
|||
Income tax expense
|
|
443
|
|
|
(134
|
)
|
|
(577
|
)
|
|
(430.6
|
)%
|
|||
Equity in earnings of an investee
|
|
—
|
|
|
404
|
|
|
(404
|
)
|
|
(100.0
|
)%
|
|||
Net income
|
|
11,143
|
|
|
31,504
|
|
|
(20,361
|
)
|
|
(64.6
|
)%
|
|||
Net income attributable to noncontrolling interest
|
|
(1,408
|
)
|
|
(1,422
|
)
|
|
(14
|
)
|
|
(1.0
|
)%
|
|||
Net income attributable to common shareholders
|
|
$
|
9,735
|
|
|
$
|
30,082
|
|
|
$
|
(20,347
|
)
|
|
(67.6
|
)%
|
|
|
Comparable Properties (1)
|
|
All Properties
|
||||||||
|
|
As of March 31,
|
|
As of March 31,
|
||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Total buildings
|
|
117
|
|
|
117
|
|
|
130
|
|
|
153
|
|
Total square feet (2)
|
|
10,933
|
|
|
10,933
|
|
|
11,718
|
|
|
12,547
|
|
Occupancy (3)
|
|
95.0
|
%
|
|
95.0
|
%
|
|
92.6
|
%
|
|
94.0
|
%
|
(1)
|
Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2019, including our life science property owned in a joint venture arrangement in which we own a 55% equity interest; excluding properties classified as held for sale or in redevelopment, if any.
|
(2)
|
Prior periods exclude space remeasurements made subsequent to those periods.
|
(3)
|
Medical office and life science property occupancy includes (i) out of service assets undergoing redevelopment, (ii) space which is leased but is not occupied or is being offered for sublease by tenants, and (iii) space being fitted out for occupancy. Comparable property occupancy excludes out of service assets undergoing redevelopment.
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||||||||
|
|
Comparable (1)
|
|
Non-Comparable
|
|
|
||||||||||||||||||||||||||||||||
|
|
Properties Results
|
|
Properties Results
|
|
Consolidated Properties Results
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
$
|
|
%
|
||||||||||||||||||
|
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Change
|
|
Change
|
||||||||||||||||||
Rental income
|
|
$
|
95,276
|
|
|
$
|
93,234
|
|
|
$
|
2,042
|
|
|
2.2
|
%
|
|
$
|
3,494
|
|
|
$
|
9,987
|
|
|
$
|
98,770
|
|
|
$
|
103,221
|
|
|
$
|
(4,451
|
)
|
|
(4.3
|
)%
|
Property operating expenses
|
|
(30,901
|
)
|
|
(29,382
|
)
|
|
1,519
|
|
|
5.2
|
%
|
|
(1,805
|
)
|
|
(2,795
|
)
|
|
(32,706
|
)
|
|
(32,177
|
)
|
|
529
|
|
|
1.6
|
%
|
||||||||
NOI
|
|
$
|
64,375
|
|
|
$
|
63,852
|
|
|
$
|
523
|
|
|
0.8
|
%
|
|
$
|
1,689
|
|
|
$
|
7,192
|
|
|
$
|
66,064
|
|
|
$
|
71,044
|
|
|
$
|
(4,980
|
)
|
|
(7.0
|
)%
|
(1)
|
Consists of medical office and life science properties that we have owned and which have been in service continuously since January 1, 2019, including our life science property owned in a joint venture arrangement in which we own a 55% equity interest; excluding properties classified as held for sale or in redevelopment, if any.
|
|
|
Comparable Properties (1)
|
|
All Properties
|
||||||||||||
|
|
As of and For the Three Months
|
|
As of and For the Three Months
|
||||||||||||
|
|
Ended March 31,
|
|
Ended March 31,
|
||||||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
Total properties
|
|
231
|
|
|
231
|
|
|
244
|
|
|
260
|
|
||||
# of units
|
|
26,771
|
|
|
26,771
|
|
|
28,960
|
|
|
29,684
|
|
||||
Occupancy
|
|
83.3
|
%
|
|
85.0
|
%
|
|
82.7
|
%
|
|
84.2
|
%
|
||||
Average monthly rate (2)
|
|
$
|
4,547
|
|
|
$
|
4,583
|
|
|
$
|
4,571
|
|
|
$
|
4,725
|
|
(1)
|
Consists of senior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2019; excludes communities classified as held for sale, if any.
|
(2)
|
Average monthly rate is calculated by taking the average daily rate, which is defined as total residents fees and services divided by occupied units during the period, and multiplying it by 30 days.
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||||||||
|
|
Comparable (1)
|
|
Non-Comparable
|
|
|
||||||||||||||||||||||||||||||||
|
|
Properties Results
|
|
Properties Results
|
|
Consolidated Properties Results
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
$
|
|
%
|
||||||||||||||||||
|
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Change
|
|
Change
|
||||||||||||||||||
Rental income
|
|
$
|
—
|
|
|
$
|
36,451
|
|
|
$
|
(36,451
|
)
|
|
(100.0
|
)%
|
|
$
|
—
|
|
|
$
|
2,862
|
|
|
$
|
—
|
|
|
$
|
39,313
|
|
|
$
|
(39,313
|
)
|
|
(100.0
|
)%
|
Residents fees and services
|
|
307,639
|
|
|
102,556
|
|
|
205,083
|
|
|
200.0
|
%
|
|
24,330
|
|
|
5,489
|
|
|
331,969
|
|
|
108,045
|
|
|
223,924
|
|
|
207.3
|
%
|
||||||||
Property operating expenses
|
|
(261,609
|
)
|
|
(80,332
|
)
|
|
181,277
|
|
|
225.7
|
%
|
|
(22,270
|
)
|
|
(4,713
|
)
|
|
(283,879
|
)
|
|
(85,045
|
)
|
|
198,834
|
|
|
233.8
|
%
|
||||||||
NOI
|
|
$
|
46,030
|
|
|
$
|
58,675
|
|
|
$
|
(12,645
|
)
|
|
(21.6
|
)%
|
|
$
|
2,060
|
|
|
$
|
3,638
|
|
|
$
|
48,090
|
|
|
$
|
62,313
|
|
|
$
|
(14,223
|
)
|
|
(22.8
|
)%
|
(1)
|
Consists of senior living communities that we have owned and which have been operated by the same operator continuously since January 1, 2019; excludes communities classified as held for sale, if any.
|
|
|
Comparable Properties(2)
|
|
All Properties
|
||||||||
|
|
As of and For the Three Months Ended March 31,
|
|
As of and For the Three Months Ended March 31,
|
||||||||
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||
Total properties:
|
|
|
|
|
|
|
|
|
||||
Other triple net leased senior living communities
|
|
29
|
|
|
29
|
|
|
32
|
|
|
44
|
|
Wellness centers
|
|
10
|
|
|
10
|
|
|
10
|
|
|
10
|
|
Rent coverage:
|
|
|
|
|
|
|
|
|
||||
Other triple net leased senior living communities (3)
|
|
1.69
|
x
|
|
1.80
|
x
|
|
1.69
|
x
|
|
1.80
|
x
|
Wellness centers (3)
|
|
1.82
|
x
|
|
1.99
|
x
|
|
1.82
|
x
|
|
1.99
|
x
|
(1)
|
Non-segment operations consists of all of our other operations, including certain senior living communities leased to third party operators other than Five Star and wellness centers, which segment we do not consider to be sufficiently material to constitute a separate reporting segment, and any other income or expenses that are not attributable to a specific reporting segment.
|
(2)
|
Comparable properties consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2019; excludes properties classified as held for sale, if any.
|
(3)
|
All tenant operating data presented is based upon the operating results provided by our tenants for the 12 months ended December 30, 2019 and 2018 or the most recent prior period for which tenant operating results are available to us. Rent coverage is calculated using the operating cash flows from our triple net lease tenants' operations of our properties, before subordinated charges, if any, divided by triple net lease minimum rents payable to us. We have not independently verified tenant operating data. Excludes data for historical periods prior to our ownership of certain properties, as well as data for properties sold or classified as held for sale during the periods presented.
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||||||||
|
|
Comparable (1)
|
|
Non-Comparable
|
|
|
||||||||||||||||||||||||||||||||
|
|
Properties Results
|
|
Properties Results
|
|
Consolidated Properties Results
|
||||||||||||||||||||||||||||||||
|
|
|
|
|
|
$
|
|
%
|
|
|
|
|
|
|
|
|
|
$
|
|
%
|
||||||||||||||||||
|
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Change
|
|
Change
|
||||||||||||||||||
Rental income
|
|
$
|
10,768
|
|
|
$
|
10,807
|
|
|
$
|
(39
|
)
|
|
(0.4
|
)%
|
|
$
|
960
|
|
|
$
|
4,900
|
|
|
$
|
11,728
|
|
|
$
|
15,707
|
|
|
$
|
(3,979
|
)
|
|
(25.3
|
)%
|
NOI
|
|
$
|
10,768
|
|
|
$
|
10,807
|
|
|
$
|
(39
|
)
|
|
(0.4
|
)%
|
|
$
|
960
|
|
|
$
|
4,900
|
|
|
$
|
11,728
|
|
|
$
|
15,707
|
|
|
$
|
(3,979
|
)
|
|
(25.3
|
)%
|
(1)
|
Consists of properties that we have owned and which have been leased to the same operator continuously since January 1, 2019; excludes properties classified as held for sale, if any.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Net income attributable to common shareholders
|
|
$
|
9,735
|
|
|
$
|
30,082
|
|
Depreciation and amortization
|
|
68,430
|
|
|
72,230
|
|
||
(Gain) loss on sale of properties
|
|
(2,782
|
)
|
|
122
|
|
||
Impairment of assets
|
|
11,234
|
|
|
6,206
|
|
||
Gains and losses on equity securities, net
|
|
9,943
|
|
|
(22,932
|
)
|
||
FFO adjustments attributable to noncontrolling interest
|
|
(5,275
|
)
|
|
(5,297
|
)
|
||
FFO attributable to common shareholders
|
|
91,285
|
|
|
80,411
|
|
||
|
|
|
|
|
||||
Acquisition and certain other transaction related costs
|
|
663
|
|
|
7,814
|
|
||
Gain on lease termination
|
|
(22,896
|
)
|
|
—
|
|
||
Loss on early extinguishment of debt
|
|
246
|
|
|
—
|
|
||
Normalized FFO attributable to common shareholders
|
|
$
|
69,298
|
|
|
$
|
88,225
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding (basic)
|
|
237,669
|
|
|
237,568
|
|
||
Weighted average common shares outstanding (diluted)
|
|
237,669
|
|
|
237,600
|
|
||
|
|
|
|
|
||||
Per common share data (basic and diluted):
|
|
|
|
|
||||
Net income attributable to common shareholders
|
|
$
|
0.04
|
|
|
$
|
0.13
|
|
FFO attributable to common shareholders
|
|
$
|
0.38
|
|
|
$
|
0.34
|
|
Normalized FFO attributable to common shareholders
|
|
$
|
0.29
|
|
|
$
|
0.37
|
|
Distributions declared
|
|
$
|
0.15
|
|
|
$
|
0.39
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Reconciliation of Net Income to NOI:
|
|
|
|
|
|
|
||
Net income
|
|
$
|
11,143
|
|
|
$
|
31,504
|
|
|
|
|
|
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
(404
|
)
|
||
Income tax expense
|
|
(443
|
)
|
|
134
|
|
||
Income from continuing operations before income tax expense and equity in earnings of an investee
|
|
10,700
|
|
|
31,234
|
|
||
Loss on early extinguishment of debt
|
|
246
|
|
|
—
|
|
||
Gain on lease termination
|
|
(22,896
|
)
|
|
—
|
|
||
Interest expense
|
|
41,650
|
|
|
45,611
|
|
||
Interest and other income
|
|
(138
|
)
|
|
(114
|
)
|
||
Losses (gains) on equity securities, net
|
|
9,943
|
|
|
(22,932
|
)
|
||
Dividend income
|
|
—
|
|
|
(923
|
)
|
||
(Gain) loss on sale of properties
|
|
(2,782
|
)
|
|
122
|
|
||
Impairment of assets
|
|
11,234
|
|
|
6,206
|
|
||
Acquisition and certain other transaction related costs
|
|
663
|
|
|
7,814
|
|
||
General and administrative
|
|
8,832
|
|
|
9,816
|
|
||
Depreciation and amortization
|
|
68,430
|
|
|
72,230
|
|
||
Total NOI
|
|
$
|
125,882
|
|
|
$
|
149,064
|
|
|
|
|
|
|
||||
Office Portfolio NOI
|
|
$
|
66,064
|
|
|
$
|
71,044
|
|
SHOP NOI
|
|
48,090
|
|
|
62,313
|
|
||
Non-Segment NOI
|
|
11,728
|
|
|
15,707
|
|
||
Total NOI
|
|
$
|
125,882
|
|
|
$
|
149,064
|
|
•
|
our ability to receive rents from our tenants in light of the COVID-19 pandemic and generally;
|
•
|
our ability to maintain or increase the occupancy of, and the rental rates at, our properties;
|
•
|
our ability to control operating expenses and capital expenses at our properties;
|
•
|
our manager's ability to operate our managed senior living communities during the COVID-19 pandemic and generally so as to maintain or increase our returns; and
|
•
|
our ability to purchase additional properties which produce cash flows in excess of our cost of acquisition capital and the related property operating expenses.
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Cash and cash equivalents and restricted cash at beginning of period
|
|
$
|
52,224
|
|
|
$
|
70,071
|
|
Net cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
56,312
|
|
|
41,515
|
|
||
Investing activities
|
|
(26,641
|
)
|
|
(43,308
|
)
|
||
Financing activities
|
|
3,341
|
|
|
(13,526
|
)
|
||
Cash and cash equivalents and restricted cash at end of period
|
|
$
|
85,236
|
|
|
$
|
54,752
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Office Portfolio segment capital expenditures:
|
|
|
|
|
||||
Lease related costs (1)
|
|
$
|
4,964
|
|
|
$
|
9,132
|
|
Building improvements (2)
|
|
2,665
|
|
|
995
|
|
||
SHOP segment fixed assets and capital improvements
|
|
12,918
|
|
|
3,312
|
|
||
Recurring capital expenditures
|
|
$
|
20,547
|
|
|
$
|
13,439
|
|
|
|
|
|
|
||||
Development, redevelopment and other activities - Office Portfolio segment (3)
|
|
8,214
|
|
|
6,059
|
|
||
Development, redevelopment and other activities - SHOP segment (3)(4)
|
|
8,429
|
|
|
31,658
|
|
||
Total development, redevelopment and other activities
|
|
$
|
16,643
|
|
|
$
|
37,717
|
|
(1)
|
Office Portfolio segment lease related costs generally include capital expenditures to improve tenants' space or amounts paid directly to tenants to improve their space and other leasing related costs, such as brokerage commissions and tenant inducements.
|
(2)
|
Office Portfolio segment building improvements generally include expenditures to replace obsolete building components that extend the useful life of existing assets or cosmetic improvements to increase the marketability of the property.
|
(3)
|
Development, redevelopment and other activities generally include capital expenditures that reposition a property or result in new sources of revenue.
|
(4)
|
Prior period includes capital improvements for communities that were previously leased to Five Star.
|
|
|
New Leases
|
|
Renewals
|
|
Total
|
||||||
Square feet leased during the quarter
|
|
73
|
|
|
229
|
|
|
302
|
|
|||
Total leasing costs and concession commitments (1)
|
|
$
|
5,805
|
|
|
$
|
1,380
|
|
|
$
|
7,185
|
|
Total leasing costs and concession commitments per square foot (1)
|
|
$
|
79.33
|
|
|
$
|
6.02
|
|
|
$
|
23.77
|
|
Weighted average lease term (years) (2)
|
|
9.4
|
|
|
5.7
|
|
|
7.7
|
|
|||
Total leasing costs and concession commitments per square foot per year (1)
|
|
$
|
8.48
|
|
|
$
|
1.05
|
|
|
$
|
3.07
|
|
(1)
|
Includes commitments made for leasing expenditures and concessions, such as tenant improvements, leasing commissions, tenant reimbursements and free rent.
|
(2)
|
Weighted based on annualized rental income pursuant to existing leases as of March 31, 2020, including straight line rent adjustments and estimated recurring expense reimbursements, and excluding lease value amortization.
|
|
|
|
|
Annual
|
|
Annual
|
|
|
|
|
|||||
|
|
Principal
|
|
Interest
|
|
Interest
|
|
|
|
Interest
|
|||||
Debt
|
|
Balance (1)
|
|
Rate (1)
|
|
Expense
|
|
Maturity
|
|
Payments Due
|
|||||
Senior unsecured notes (2)
|
|
$
|
200,000
|
|
|
6.75
|
%
|
|
$
|
13,500
|
|
|
2020
|
|
Semi-Annually
|
Senior unsecured notes
|
|
300,000
|
|
|
6.75
|
%
|
|
20,250
|
|
|
2021
|
|
Semi-Annually
|
||
Senior unsecured notes
|
|
250,000
|
|
|
4.75
|
%
|
|
11,875
|
|
|
2024
|
|
Semi-Annually
|
||
Senior unsecured notes
|
|
500,000
|
|
|
4.75
|
%
|
|
23,750
|
|
|
2028
|
|
Semi-Annually
|
||
Senior unsecured notes
|
|
350,000
|
|
|
5.63
|
%
|
|
19,705
|
|
|
2042
|
|
Quarterly
|
||
Senior unsecured notes
|
|
250,000
|
|
|
6.25
|
%
|
|
15,625
|
|
|
2046
|
|
Quarterly
|
||
Mortgage note (3)
|
|
1,267
|
|
|
7.49
|
%
|
|
95
|
|
|
2022
|
|
Monthly
|
||
Mortgage note
|
|
12,348
|
|
|
6.28
|
%
|
|
775
|
|
|
2022
|
|
Monthly
|
||
Mortgage note
|
|
10,901
|
|
|
4.85
|
%
|
|
529
|
|
|
2022
|
|
Monthly
|
||
Mortgage note
|
|
16,050
|
|
|
5.75
|
%
|
|
923
|
|
|
2022
|
|
Monthly
|
||
Mortgage note
|
|
15,954
|
|
|
6.64
|
%
|
|
1,059
|
|
|
2023
|
|
Monthly
|
||
Mortgage notes (4)
|
|
620,000
|
|
|
3.53
|
%
|
|
21,886
|
|
|
2026
|
|
Monthly
|
||
Mortgage note
|
|
10,634
|
|
|
4.44
|
%
|
|
472
|
|
|
2043
|
|
Monthly
|
||
|
|
$
|
2,537,154
|
|
|
|
|
$
|
130,444
|
|
|
|
|
|
(1)
|
The principal balances and interest rates are the amounts stated in the applicable contracts. In accordance with GAAP, our carrying values and recorded interest expense may differ from these amounts because of market conditions at the time we assumed certain of these debts. This table does not include obligations under capital leases.
|
(2)
|
In April 2020, we redeemed at par plus accrued interest these senior unsecured notes, using cash on hand and borrowings under our revolving credit facility.
|
(3)
|
The property encumbered by this mortgage is classified as held for sale as of March 31, 2020. We prepaid this mortgage in May 2020.
|
(4)
|
The life science property encumbered by these mortgages is owned in a joint venture arrangement in which we own a 55% equity interest. The principal amounts listed in the table for these debts have not been adjusted to reflect the equity interest in the joint venture that we do not own.
|
|
|
Impact of Changes in Interest Rates
|
|||||||||||||
|
|
|
|
Outstanding
|
|
Total Interest
|
|
Annual Earnings
|
|||||||
|
|
Interest Rate (1)
|
|
Floating Rate Debt
|
|
Expense Per Year
|
|
Per Share Impact (2)
|
|||||||
At March 31, 2020
|
|
1.94
|
%
|
|
$
|
1,035,000
|
|
|
$
|
20,079
|
|
|
$
|
0.08
|
|
One percentage point increase
|
|
2.94
|
%
|
|
$
|
1,035,000
|
|
|
$
|
30,429
|
|
|
$
|
0.13
|
|
(1)
|
Weighted based on the respective interest rates and outstanding borrowings under our credit facility and term loans as of March 31, 2020.
|
(2)
|
Based on weighted average number of shares outstanding (basic and diluted) for the three months ended March 31, 2020.
|
|
|
Impact of Changes in Interest Rates
|
|||||||||||||
|
|
|
|
Outstanding
|
|
Total Interest
|
|
Annual Earnings
|
|||||||
|
|
Interest Rate (1)
|
|
Floating Rate Debt
|
|
Expense Per Year
|
|
Per Share Impact (2)
|
|||||||
At March 31, 2020
|
|
1.91
|
%
|
|
$
|
1,450,000
|
|
|
$
|
27,695
|
|
|
$
|
0.12
|
|
One percentage point increase
|
|
2.91
|
%
|
|
$
|
1,450,000
|
|
|
$
|
42,195
|
|
|
$
|
0.18
|
|
(1)
|
Weighted based on the respective interest rates and outstanding borrowings under our credit facility (assuming fully drawn) and term loans as of March 31, 2020.
|
(2)
|
Based on weighted average number of shares outstanding (basic and diluted) for the three months ended March 31, 2020.
|
•
|
The duration and severity of the economic downturn resulting from the COVID-19 pandemic and its impact on us, our tenants and our residents,
|
•
|
The likelihood and extent to which our tenants and residents will be negatively impacted by the COVID-19 pandemic and its aftermath and their ability to pay rent,
|
•
|
Our ability to pay distributions to our shareholders and to sustain the amount of such distributions,
|
•
|
The ability of Five Star, the manager of our managed senior living communities, to manage our senior living communities during the COVID-19 pandemic and to manage them profitably and maintain or increase our returns from our managed senior living communities,
|
•
|
Whether the aging U.S. population and increasing life spans of seniors will increase the demand for senior living communities, wellness centers and other medical and healthcare related properties and healthcare services,
|
•
|
Our ability to retain our existing tenants, attract new tenants and maintain or increase current rental rates on terms as favorable to us as our prior leases,
|
•
|
The credit qualities of our tenants,
|
•
|
Our ability to compete for tenancies and acquisitions effectively,
|
•
|
Our ability to maintain and increase occupancy, revenues and NOI at our properties,
|
•
|
Our expectations regarding the impact of the COVID-19 pandemic on our tenants, the healthcare sector and our financial condition,
|
•
|
The expectation that, as a result of the COVID-19 pandemic, overall tenant retention levels may increase,
|
•
|
Our acquisitions and sales of properties,
|
•
|
Our ability to raise debt or equity capital,
|
•
|
Our ability to complete our target dispositions in accordance with our stated plan,
|
•
|
The future availability of borrowings under our revolving credit facility,
|
•
|
Our policies and plans regarding investments, financings and dispositions,
|
•
|
Our ability to pay interest on and principal of our debt,
|
•
|
Our ability to appropriately balance our use of debt and equity capital,
|
•
|
Our credit ratings,
|
•
|
Our expectation that we benefit from our relationships with RMR Inc.,
|
•
|
Our qualification for taxation as a REIT, and
|
•
|
Other matters.
|
•
|
The impact of the COVID-19 pandemic and its aftermath on us and our tenants and managers,
|
•
|
The impact of conditions in the economy and the capital markets on us and our tenants and managers,
|
•
|
Compliance with, and changes to, federal, state and local laws and regulations, accounting rules, tax laws and similar matters,
|
•
|
Limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify for taxation as a REIT for U.S. federal income tax purposes,
|
•
|
Competition within the healthcare and real estate industries, particularly in those markets in which our properties are located,
|
•
|
Actual and potential conflicts of interest with our related parties, including our Managing Trustees, Five Star, RMR LLC, RMR Inc. and others affiliated with them, and
|
•
|
Acts of terrorism, outbreaks of pandemics, including the COVID-19 pandemic, or other manmade or natural disasters beyond our control.
|
•
|
If the severity of the COVID-19 pandemic continues for an extended period or if business activity and the economy fail to sufficiently improve if and when the negative impacts of the COVID-19 pandemic abate, we may realize sustained losses and liquidity challenges. Further, we may incur increased operating expenses, particularly at our senior living communities, for supplies and personnel to address the current COVID-19 pandemic and we may be prevented from accepting additional residents at certain of our senior living communities if we become restricted from doing so due to the COVID-19 pandemic. In addition, recent and upcoming debt maturities, including our $200.0 million unsecured senior notes that we redeemed on April 15, 2020 and our $250.0 million aggregate principal term loan that matures on June 12, 2020, but is subject to a possible six-month extension, will reduce our available liquidity to fund our operations and would challenge our belief that our liquidity and capital resources will be sufficient to meet our operating and capital expenses, pay debt service obligations and make distributions to our shareholders for the next 12 months and for the foreseeable future thereafter. In addition, under the current economic conditions, our tenants and managers may not be able to profitably operate their businesses at our properties, our tenants may become unable or unwilling to pay rent owed to us, or the managers of our senior living communities may be unable to generate our minimum returns for sustained periods. Additionally, our ability to borrow under our credit facility is subject to us satisfying financial and other covenants, and if we default under our credit facility or other debt obligations due to the impact of the COVID-19 pandemic or otherwise, we may be required to repay our outstanding borrowings and other debt. Further, although we have taken steps to enhance our ability to maintain sufficient liquidity, unanticipated events, such as emergencies in addition to, or as an expansion of, the current impact of the COVID-19 pandemic, may require us to expend amounts not currently planned,
|
•
|
The Conversion was a significant change in our business arrangements with Five Star and has resulted, and will likely continue to result in the future, in our realizing significantly different operating results from our senior living communities operated by Five Star, including increased variability in such results,
|
•
|
If Five Star fails to provide quality services at our senior living communities, the NOI generated by these communities may be adversely affected,
|
•
|
Five Star, the manager of our managed senior living communities, has experienced significant operating and financial challenges, resulting from a number of factors, some of which are beyond Five Star's control, and which challenges directly impact our operating results from our managed senior living communities, including, but not limited to:
|
•
|
The impact of the COVID-19 pandemic,
|
•
|
Increases in Five Star’s labor costs or in costs Five Star pays for goods and services,
|
•
|
Competition within the senior living industry,
|
•
|
Seniors delaying or forgoing moving into senior living communities or purchasing healthcare services,
|
•
|
The impact of changes in the economy and the capital markets on Five Star and its residents and other customers,
|
•
|
Changes in Medicare or Medicaid policies and regulations or the possible future repeal, replacement or modification of these or other existing or proposed legislation or regulations,
|
•
|
Increases in compliance costs,
|
•
|
Continued efforts by third party payers to reduce healthcare costs,
|
•
|
Increases in tort and insurance liability costs, and
|
•
|
Five Star’s exposure to litigation and regulatory and government proceedings due to the nature of its business.
|
•
|
If Five Star’s other operations are not profitable or if it does not operate our managed senior living communities successfully, it could become insolvent,
|
•
|
We own a significant number of Five Star common shares and we expect to own these shares for the foreseeable future. However, we may sell some or all of our Five Star common shares, or our ownership interest in Five Star may otherwise be diluted in the future,
|
•
|
On April 2, 2020, we reduced our regular quarterly distribution rate to $0.01 per common share ($0.04 per common share annually) due to the operating challenges and uncertain economic challenges as a result of the COVID-19 pandemic. Our distribution rate may be set and reset from time to time by our Board of Trustees. Our Board of Trustees will consider many factors when setting or resetting our distribution rate, including our historical and projected net income, Normalized FFO, our then current and expected needs and availability of cash to pay our obligations, distributions which we may be required to pay to maintain our qualification for taxation as a REIT and other factors deemed relevant by our Board of Trustees in its discretion. Further, our projected cash available for distribution may change and may vary from our expectations. Accordingly, future distributions to our shareholders may be increased or decreased and we cannot be sure as to the rate at which future distributions will be paid,
|
•
|
Our ability to make future distributions to our shareholders and to make payments of principal and interest on our indebtedness depends upon a number of factors, including our future earnings, the capital costs we incur to lease and operate our properties and our working capital requirements. We may be unable to pay our debt obligations or to maintain our current rate of distributions on our common shares and future distributions may be reduced or eliminated,
|
•
|
We plan to selectively sell certain properties from time to time to fund future acquisitions and to strategically update, rebalance and reposition our investment portfolio, which we refer to as our capital recycling program. In addition, to reduce our leverage, we have sold properties and other assets and have identified additional properties to sell. We expect that the pace of our future asset sales will slow considerably because of current market conditions related to the COVID-19 pandemic. We cannot be sure we will sell any of these properties or what the terms or timing of any such sales may be. In addition, in the case of our capital recycling program, we cannot be sure that we will acquire replacement properties that improve the quality of our portfolio or our ability to increase our distributions to shareholders, and, we may sell properties at prices that are less than expected and less than their carrying values and therefore incur losses,
|
•
|
Contingencies in our acquisition and sale agreements may not be satisfied and our pending acquisitions and sales and any related management arrangements we expect to enter may not occur, may be delayed or the terms of such transactions or arrangements may change,
|
•
|
We plan to conserve capital by deferring certain previously planned non-essential capital investments in order to maintain sufficient liquidity during the COVID-19 pandemic. We cannot be sure we will realize sufficient liquidity from this practice,
|
•
|
The essential capital investments we are making at our senior living communities and our plan to invest additional capital into our senior living communities to better position them in their respective markets in order to increase our future returns may not be successful and may not achieve our expected results. Our senior living communities may not be competitive, despite these capital investments,
|
•
|
Our redevelopment projects may not be successful and may cost more or take longer to complete than we currently expect. In addition, we may not realize the returns we expect from these projects and we may incur losses from these projects,
|
•
|
We may spend more for capital expenditures than we currently expect,
|
•
|
Our existing joint venture and any other joint ventures that we may enter may not be successful,
|
•
|
Our tenants may experience losses and default on their rent obligations to us,
|
•
|
Some of our tenants may not renew expiring leases, and we may be unable to obtain new tenants to maintain or increase the historical occupancy rates of, or rents from, our properties,
|
•
|
Our ability to grow our business and maintain or increase our distributions to shareholders depends in large part upon our ability to buy properties and arrange for their profitable operation or lease them for rents, less their property operating expenses, that exceed our capital costs. We may be unable to identify properties that we want to acquire and we may fail to reach agreement with the sellers and complete the purchase of any properties we do want to acquire. In addition, any properties we may acquire may not provide us with rents or revenues less property operating costs that exceed our capital costs or achieve our expected returns. If our cash flows are reduced and our leverage increases, we may need to sell additional properties,
|
•
|
Rents that we can charge at our properties may decline upon renewals or expirations because of changing market conditions or otherwise,
|
•
|
We expect to enter into additional management arrangements with Five Star for additional senior living communities that we own or may acquire in the future. However, we cannot be sure that we will enter into any additional management or other arrangements or transactions with Five Star,
|
•
|
Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions that we may be unable to satisfy,
|
•
|
Actual costs under our revolving credit facility or other floating rate debt will be higher than LIBOR plus a premium because of fees and expenses associated with such debt,
|
•
|
The maximum borrowing availability under our revolving credit facility and our $200.0 million term loan may be increased to up to $2.4 billion on a combined basis in certain circumstances. However, increasing the maximum borrowing availability under our revolving credit facility and this term loan is subject to our obtaining additional commitments from lenders, which may not occur,
|
•
|
We have the option to extend the maturity date of our revolving credit facility or our $250.0 million term loan upon payment of a fee and meeting other conditions; however, the applicable conditions may not be met,
|
•
|
The premiums used to determine the interest rate payable on our revolving credit facility and term loans and the facility fee payable on our revolving credit facility are based on our credit ratings. In March 2020, our issuer credit rating was downgraded as a result of which our revolving credit facility premium and facility fee increased,
|
•
|
We may be unable to repay our debt obligations when they become due,
|
•
|
We intend to conduct our business activities in a manner that will afford us reasonable access to capital for investment and financing activities. However, we may not succeed in this regard and we may not have reasonable access to capital,
|
•
|
For the three months ended March 31, 2020, approximately 99% of our NOI was generated from properties where a majority of the revenues are derived from our tenants’ and residents’ private resources. This may imply that we will maintain or increase the percentage of our NOI generated from private resources at our senior living communities. However, our residents and patients may become unable to fund our charges with private resources and we may be required or may elect for business reasons to accept or pursue revenues from government sources, which could result in an increased part of our NOI and revenue being generated from government payments and our becoming more dependent on government payments,
|
•
|
Circumstances that adversely affect the ability of seniors or their families to pay for our tenants' and managers' services, such as economic downturns, weak housing market conditions, higher levels of unemployment among our residents' family members, lower levels of consumer confidence, stock market volatility and/or changes in demographics generally could affect the profitability of our senior living communities,
|
•
|
It is difficult to accurately estimate tenant space preparation costs. Our unspent leasing related obligations may cost more or less and may take longer to complete than we currently expect, and we may incur increasing amounts for these and similar purposes in the future,
|
•
|
Our senior living communities are subject to extensive government regulation, licensure and oversight. We sometimes experience deficiencies in the operation of our senior living communities and some of our communities may be prohibited from admitting new residents or our license to continue operations at a community may be revoked. Also, operating deficiencies or a license revocation at one or more of our senior living communities may have an adverse impact on our ability to obtain licenses for or attract residents to our other communities,
|
•
|
We believe that our relationships with our related parties, including Five Star, RMR LLC, RMR Inc., ABP Trust and others affiliated with them may benefit us and provide us with competitive advantages in operating and growing our business. However, the advantages we believe we may realize from these relationships may not materialize, and
|
•
|
The business and property management agreements between us and RMR LLC have continuing 20 year terms. However, those agreements permit early termination in certain circumstances. Accordingly, we cannot be sure that these agreements will remain in effect for continuing 20 year terms.
|
•
|
our tenants’ and manager’s inability to operate their businesses and our properties if the health of their and our respective management personnel and other employees is affected, particularly if a significant number of individuals are impacted;
|
•
|
reduced economic demand resulting from mass employee layoffs or furloughs in response to governmental action taken to slow the spread of the COVID-19 virus, which could impact the continued viability of our tenants and managers;
|
•
|
increased risk of our tenants and manager being unable to weather an extended cessation of normal economic activity and thereby impairing their ability to continue functioning as a going concern and to pay rent and returns to us;
|
•
|
increased risk of default or bankruptcy of our tenants and manager;
|
•
|
our inability to execute improvements to our properties due to a construction moratorium or decrease in available construction workers or construction activity, including required inspectors and governmental personnel for permitting and other requirements, and due to our need to maintain our liquidity;
|
•
|
possible significant declines in the value of our properties;
|
•
|
our inability to accurately or reliably value our portfolio;
|
•
|
our inability to comply with financial covenants that could result in our defaulting under our debt agreements;
|
•
|
our failure to pay interest and principal when due under our outstanding debt, which may result in the acceleration of payment for our outstanding debt and our possible loss of our revolving credit facility;
|
•
|
our maintaining the current reduced rate of distributions on our common shares for an extended period of time or suspending our payment of distributions entirely;
|
•
|
the current low market price of our common shares may continue for an indefinite period and could decline further;
|
•
|
further downgrades of our credit ratings by nationally recognized credit rating agencies;
|
•
|
our inability to access debt and equity capital on attractive terms, or at all; and
|
•
|
our inability to sell properties we may identify for sale due to a general decline in business activity and demand for real estate transactions and, as a result, our inability to reduce our leverage.
|
•
|
we reduced our quarterly distribution rate to $0.01 per share payable to our common shareholders;
|
•
|
we deferred what we expect will be up to $150 million of capital projects to conserve cash and liquidity;
|
•
|
we have been in regular, frequent contact with our senior living communities' manager to adopt measures to minimize losses, preserve liquidity and maintain operations; and
|
•
|
we have communicated with many of our medical office, life science and other tenants regarding their operation of or at our properties in the current challenging economic conditions, and we have agreed to provide deferrals of approximately $4.8 million of rent owed to us that are generally required to be repaid in installments beginning later this year.
|
•
|
our ability to make or sustain the rate of distributions may continue to be adversely affected by the negative impact of the COVID-19 pandemic and its aftermath on our business, results of operations and liquidity;
|
•
|
our making of distributions is subject to restrictions contained in our credit agreement and may be subject to restrictions in future debt obligations we may incur; during the continuance of any event of default under our credit agreement, we may be limited or in some cases prohibited from making distributions to our shareholders; and
|
•
|
the timing and amount of any distributions will be determined at the discretion of our Board of Trustees and will depend on various factors that our Board of Trustees deems relevant, including our historical and projected net income, Normalized FFO, our then current and expected needs and availability of cash to pay our obligations, distributions which we may be required to pay to maintain our qualification for taxation as a REIT and other factors deemed relevant by our Board of Trustees in its discretion.
|
Calendar Month
|
|
Number of Shares Purchased(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
January 2020
|
|
1,938
|
|
|
$
|
8.10
|
|
|
—
|
|
|
$
|
—
|
|
March 2020
|
|
1,500
|
|
|
3.79
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
3,438
|
|
|
$
|
6.22
|
|
|
—
|
|
|
$
|
—
|
|
Exhibit
Number |
|
Description
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
|
4.10
|
|
|
31.1
|
|
|
31.2
|
|
|
31.3
|
|
|
31.4
|
|
|
32.1
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document. (Filed herewith.)
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
|
104
|
|
Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)
|
|
DIVERSIFIED HEALTHCARE TRUST
|
|
|
|
|
|
|
|
|
By:
|
/s/ Jennifer F. (Francis) Mintzer
|
|
|
Jennifer F. (Francis) Mintzer
|
|
|
President and Chief Operating Officer
|
|
|
|
Dated: May 7, 2020
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Richard W. Siedel, Jr.
|
|
|
Richard W. Siedel, Jr.
|
|
|
Chief Financial Officer and Treasurer
|
|
|
(principal financial and accounting officer)
|
|
|
|
Dated: May 7, 2020
|
|
1 Year Senior Housing Properties Chart |
1 Month Senior Housing Properties Chart |
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