New Senior Investment Group Inc. (“New Senior” or the “Company”)
(NYSE: SNR) announced today its results for the quarter ended June
30, 2020.
SECOND QUARTER 2020 FINANCIAL
HIGHLIGHTS
- Net loss of $3.3 million, or $(0.04) per diluted share
- Total net operating income (“NOI”) of $35.8 million
- Total same store cash NOI decreased 3.1% versus second quarter
2019
- Cash interest expense declined $3.3 million, or 18%, versus
first quarter 2020
- Normalized Funds from Operations (“Normalized FFO”) of $14.3
million, or $0.17 per diluted share
- Adjusted Funds from Operations (“AFFO”) of $16.1 million, or
$0.19 per diluted share
- Normalized Funds Available for Distribution (“Normalized FAD”)
of $15.3 million, or $0.18 per diluted share
- Ended the quarter with $102.3 million of cash and cash
equivalents on hand with no significant debt maturities until
2024
SECOND QUARTER 2020 & RECENT
BUSINESS HIGHLIGHTS
- Despite declining occupancy and additional operating expenses
related to COVID-19, the Company delivered solid second quarter
2020 cash NOI and AFFO per share results, which were above initial
expectations at the onset of the pandemic
- Continued to work closely with our operators to ensure the
safety and health of our residents and associates
- Operators began lifting restrictions across our portfolio in a
phased approach and implemented new sales and operating strategies
to minimize the impact of the ongoing pandemic
- Completed review of corporate G&A and put initiatives in
place to reduce expenses
- Repaid $40 million of debt on the Company’s revolving credit
facility during the second quarter 2020
- Provided revised expectations for full year 2020 based on first
half 2020 results and latest trends
- Declared a dividend of $0.065 per common share for the second
quarter 2020
Susan Givens, President & Chief Executive Officer of the
Company commented, “We continue to be deeply appreciative of all
the associates at our communities who have been working tirelessly
to ensure the health, safety and well-being of our residents since
the onset of COVID-19. Now more than ever, I am pleased by how our
team and our operators have shown flexibility and resiliency, and
how they have adapted to the challenges that have arisen. While the
pandemic continues to have a significant impact on our business, we
see features specific to our Independent Living properties which
have resulted in lower occupancy losses and have allowed us to
control expenses more tightly than we had originally expected.
Specifically, we have seen our occupancy declines moderate
following a rebound in lead and move-in trends in the last couple
of months, and we have been able to achieve significant expense
reductions which have more than offset the incremental costs
incurred due to COVID-19. At the same time, we have also benefited
significantly from the steep decline in LIBOR, which has lowered
the overall cost of our floating rate debt.”
Givens continued, “The path of the pandemic remains uncertain,
making it difficult for us to predict how the virus will continue
to impact our residents, associates and community operations.
Nonetheless, we continue to believe in the value that our
communities provide to the middle market demographic, as well as
the powerful long-term fundamentals of the overall senior housing
industry. We remain committed to being as transparent as we can
possibly be to our shareholders and we believe that we have enough
information at this time to provide revised expectations for 2020
based on first half results and recent trends.”
SECOND QUARTER 2020
RESULTS
Dollars in thousands, except per share data
For the Quarter Ended June 30,
2020
For the Quarter Ended June 30,
2019
Amount
Per Basic Share
Per Diluted Share
Amount
Per Basic Share
Per Diluted Share
GAAP (Unaudited) Net
loss attributable to common stockholders
$
(3,257)
$
(0.04)
$
(0.04)
$
(10,185)
$
(0.12)
$
(0.12)
Non-GAAP(A)
NOI
$
35,773
N/A
N/A
$
35,711
N/A
N/A
FFO
13,525
0.16
0.16
10,692
0.13
0.13
Normalized FFO
14,300
0.17
0.17
12,118
0.15
0.14
AFFO
16,060
0.19
0.19
13,553
0.16
0.16
Normalized FAD (B)
15,272
0.19
0.18
11,186
0.14
0.13
(A) See end of press release for
reconciliation of non-GAAP measures to net loss.
(B) Normalized FAD, which does not reflect
debt principal payments and certain other outflows, does not
represent cash available for distribution to shareholders.
SECOND QUARTER 2020 GAAP
RESULTS
New Senior recorded a GAAP net loss of $3.3 million, or $(0.04)
per diluted share, for the second quarter 2020, compared to a GAAP
net loss of $10.2 million, or $(0.12) per diluted share, for the
second quarter 2019. The year over year increase was primarily
driven by the disposition of the AL/MC portfolio in February
2020.
SECOND QUARTER 2020 PORTFOLIO
PERFORMANCE
Same Store Cash NOI
Properties
2Q 2019
2Q 2020
YoY
Managed Properties
102
$
34,936
$
33,758
(3.4%)
NNN Property
1
1,437
1,477
2.8%
Total Portfolio
103
$
36,373
$
35,234
(3.1%)
Total Portfolio
103
$
36,373
$
35,234
(3.1%)
COVID-19 Related Expenses
-
-
1,470
-
Total Portfolio Adjusted for COVID-19 Related Expenses
103
$
36,373
$
36,705
0.9%
SECOND QUARTER DIVIDEND
On August 3, 2020, the Company’s Board of Directors declared a
cash dividend of $0.065 per share for the quarter ended June 30,
2020. The dividend is payable on September 18, 2020 to shareholders
of record on September 4, 2020.
COVID-19 IMPACT ON THE
COMPANY
The second quarter 2020 was the first full quarter that COVID-19
affected our financial results. We have outlined our observations
of COVID-19’s impact on our results to date and potential future
impacts below:
Overview
As of June 30, 2020, we owned a portfolio of 102 independent
living (“IL”) communities and one continuing care retirement
community (“CCRC”). We have approximately 10,500 residents across
our 103 communities, which are managed by three different operators
and one tenant.
Status of Our
Communities
- All of our communities have remained open and operational since
the start of the COVID-19 pandemic
- Over the past few months, our operators at certain of our
communities began lifting some of the restrictions in a phased
approach, based on the status of state and local regulations that
affect the property as well as the status of any COVID-19 cases at
the property
- As of August 5, 2020, 80 communities (78% of our portfolio) are
in various recovery phases, which means that some of the
restrictions that were initially put into place are now being
relaxed or lifted. The recovery phases reintroduce group dining and
activities, allow for visitors by appointment and onsite sales
tours, etc.
Known Cases
- As of August 5, 2020, our operators reported 19 currently
active cases across 10 communities (13 residents and 6
associates)
- To date, 45 total communities (44% of our portfolio) have
reported at least one resident or associate case
- Of the 45 communities, only 14 have reported more than 3
cases
- 56% of the communities in our portfolio have not reported a
single resident or associate case to date
Occupancy
Feb-20 Mar-20 Apr-20
May-20 Jun-20 Jul-20
Commentary Ending Occupancy
88.7%
87.4%
86.2%
85.6%
84.9%
84.4%
2Q20 declined by 250bps from 1Q20; July trend improved,
declining by only 50bps from June Sequential Decline
-
(130bps)
(120bps)
(60bps)
(70bps)
(50bps)
- Leasing and lead volume trends in the second quarter 2020, and
early observations for July, include:
- Leads have now increased for three consecutive months after
hitting a low point in April; July increased 62% versus April and
increased 6% versus June, but remained 20% below July 2019
- Move-ins continued to trend upward after hitting a low point in
April; July increased 119% versus April and increased 29% versus
June, but remained 15% below July 2019
- Move-outs also continued to trend upward after hitting a low
point in April; July increased 28% versus April, increased 13%
versus June, and increased 12% versus July 2019
Expenses
- In the second quarter 2020, operating expenses decreased 4.5%
versus the first quarter 2020. Our operators were able to
effectively reduce expenses by flexing labor schedules and supply
costs as occupancy declined. Lower move-in volume reduced the
amount of fees paid to third-party referral sources, and our
operators efficiently managed marketing costs during periods with
visitor access restrictions
- Operating expenses associated with COVID-19 were approximately
$1.5 million in the second quarter 2020, or 3% of total expenses.
These expenses were below our initial expectations as a result of
lower costs related to in-room meal delivery supplies and temporary
labor
NOI & AFFO
1Q 2020
2Q 2020
1H 2020
Total Same Store Cash NOI YoY
0.1%
(3.1%)
(1.6%)
AFFO Per Share
$0.17
$0.19
$0.36
- In the second quarter 2020, total same store cash NOI decreased
by 3.1% versus the second quarter 2019. Our operators were
effective in implementing expense reductions, and we saw an
improvement in occupancy trends as the quarter progressed
- AFFO for the second quarter 2020 was $0.19 per share, an
increase of $0.02 per share versus the first quarter 2020. The
sequential increase was mainly due to interest expense savings
driven by the steep decline in LIBOR and G&A reductions
- In the first half 2020, total same store cash NOI decreased by
1.6% versus first half 2019 and AFFO per share was $0.36. Results
were driven by the total same store cash NOI decrease in the second
quarter 2020 offset by interest expense savings from the LIBOR
decline
- As of June 30, 2020, 48% of the Company’s debt is floating rate
debt and subject to fluctuations in LIBOR. Average one-month LIBOR
declined from 165bps in the first quarter 2020 to 50bps in the
second quarter 2020, reducing our interest expense by $2 million.
As of August 5, 2020, the one-month LIBOR spot rate is 15bps, which
we expect will further reduce the Company’s interest expense in the
third and fourth quarters of 2020 and which will continue to offset
some of the same store cash NOI decline resulting from the COVID-19
pandemic
FULL YEAR 2020
EXPECTATIONS
Based on the Company’s financial results for the first half of
the year, as well as the observations and trends discussed above in
“COVID-19 Impact on the Company,” New Senior is providing full year
2020 expectations for total same store cash NOI and AFFO per share
as follows:
Full Year 2020
Expectations
Low
High
Total Same Store Cash NOI YoY (Includes NNN Lease)
(7.5%)
-
(4.5%)
AFFO Per Share
$0.67
-
$0.71
The estimates above are based on a number of assumptions that
are subject to change and many of which are outside of the
Company’s control. If actual results vary from these assumptions,
the Company’s expectations may change. There can be no assurance
that the Company will achieve these results. A reconciliation of
the Company’s expectations to its projected GAAP measures is
included in this press release.
LIQUIDITY & CAPITAL
STRUCTURE
- The Company has taken, and continues to take, actions to
enhance and preserve liquidity in response to COVID-19
- Shortly after the onset of the pandemic in March 2020, and
purely as a precaution, the Company drew $100 million on its
revolving credit facility. The Company repaid $40 million in the
quarter and had $102.3 million of cash and cash equivalents as of
the end of the second quarter 2020
- The Company suspended all discretionary capital expenditure
projects in the second quarter 2020, which significantly reduced
capital expenditure spend. The Company expects to begin investing
in discretionary capital expenditure projects in the third quarter
2020 where such projects can be completed safely.
- As a result of several initiatives completed in 2019 and 2020,
as well as the actions listed above, the Company has materially
improved its free cash flow profile and has limited near-term debt
maturities
ADDITIONAL INFORMATION
For additional information that management believes to be useful
for investors, including more information regarding the COVID-19
pandemic and its impact on our business, please refer to the
Company Presentation and to the Quarterly Supplement, each of which
is posted in the Investor Relations section of New Senior’s
website, www.newseniorinv.com.
EARNINGS CONFERENCE CALL
Management will host a conference call on August 7, 2020 at 9:00
A.M. Eastern Time. The conference call may be accessed by dialing
(888) 317-6003 (from within the U.S.) or (412) 317-6061 (from
outside of the U.S.) ten minutes prior to the scheduled start of
the call; please use entry number “9152288”. A simultaneous webcast
of the conference call will be available to the public on a
listen-only basis at www.newseniorinv.com. Please allow extra time
prior to the call to visit the website and download any necessary
software required to listen to the internet broadcast.
A telephonic replay of the conference call will also be
available approximately two hours following the call’s completion
through September 7, 2020 by dialing (877) 344-7529 (from within
the U.S.) or (412) 317-0088 (from outside the U.S.); please use
access code “10146648.”
ABOUT NEW SENIOR
New Senior Investment Group Inc. (NYSE: SNR) is a
publicly-traded real estate investment trust with a diversified
portfolio of senior housing properties located across the United
States. New Senior is one of the largest owners of senior housing
properties, with 103 properties across 36 states. More information
about New Senior can be found at www.newseniorinv.com.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain information in this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, including without
limitation statements regarding expectations with respect to the
potential range of 2020 financial results, the expected impact of
the COVID-19 pandemic on our business, liquidity, properties,
operators and the health systems and populations that we serve; the
cost and effectiveness of measures we have taken to respond to the
COVID-19 pandemic, including health and safety protocols and system
capacity enhancements that are intended to limit the transmission
of COVID-19 at our properties; and our expected occupancy rates and
operating expenses. These statements are not historical facts. They
represent management’s current expectations regarding future events
and are subject to a number of risks and uncertainties, many of
which are beyond our control, that could cause actual results to
differ materially from those described in the forward-looking
statements. These risks and uncertainties include, but are not
limited to, risks and uncertainties relating to the continuing
impact of COVID-19 on our operations and the operation of our
facilities, including ongoing cases at certain of our facilities,
the speed, geographic reach and duration of the COVID-19 pandemic;
the legal, regulatory and administrative developments that occur at
the federal, state and local levels; the efficacy of our operators’
infectious disease protocols and prevention efforts; the broader
impact of the pandemic on local economies and labor markets; and
the overall demand for our communities in the recovery period
following the pandemic, our ability to successfully manage the
asset management by third parties, and market conditions generally
which affect demand and supply for senior housing. We believe that
the adverse impact that COVID-19 will have on the future operations
and financial results at our communities will depend upon many
factors, most of which are beyond our ability to control or
predict. Accordingly, you should not place undue reliance on any
forward-looking statements contained herein. For a discussion of
these and other risks and important factors that could affect such
forward-looking statements, see the sections entitled “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the Company’s most recent
annual and quarterly reports filed with the Securities and Exchange
Commission, which are available on the Company’s website
(www.newseniorinv.com). New risks and uncertainties emerge from
time to time, and it is not possible for us to predict or assess
the impact of every factor that may cause our results to differ
materially from those anticipated by any forward-looking
statements. Forward-looking statements contained herein, and all
statements made in this press release, speak only as of the date of
this press release, and the Company expressly disclaims any duty or
obligation to release publicly any updates or revisions to any
statements contained herein to reflect any change in the Company’s
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
Consolidated Balance Sheets (dollars in thousands, except
share data) June 30, 2020
December 31, 2019 (Unaudited) Assets Real
estate investments: Land
$
134,643
$
134,643
Buildings, improvements and other
1,973,699
1,970,036
Accumulated depreciation
(385,667
)
(351,555
)
Net real estate property
1,722,675
1,753,124
Acquired lease and other intangible assets
7,642
7,642
Accumulated amortization
(2,416
)
(2,238
)
Net real estate intangibles
5,226
5,404
Net real estate investments
1,727,901
1,758,528
Assets from discontinued operations
-
363,489
Cash and cash equivalents
102,325
39,614
Receivables and other assets, net
31,508
33,078
Total Assets
$
1,861,734
$
2,194,709
Liabilities, Redeemable Preferred Stock and Equity
Liabilities Debt, net
$
1,546,764
$
1,590,632
Liabilities from discontinued operations
-
267,856
Accrued expenses and other liabilities
57,823
59,320
Total Liabilities
1,604,587
1,917,808
Redeemable preferred stock, $0.01 par value with $100
liquidation preference, 400,000 shares authorized, issued and
outstanding as of June 30, 2020 and December 31, 2019
40,500
40,506
Equity Preferred stock, $0.01 par value,
99,600,000 shares (excluding 400,000 shares of redeemable preferred
stock) authorized, none issued or outstanding as of June 30, 2020
and December 31, 2019
—
—
Common stock, $0.01 par value, 2,000,000,000 shares authorized,
83,023,396 and 82,964,438 shares issued and outstanding as of June
30, 2020 and December 31, 2019, respectively
830
830
Additional paid-in capital
904,135
901,889
Accumulated deficit
(674,626
)
(660,588
)
Accumulated other comprehensive loss
(13,692
)
(5,736
)
Total Equity
216,647
236,395
Total Liabilities, Redeemable Preferred Stock and
Equity
$
1,861,734
$
2,194,709
Consolidated Statements of Operations (dollars in
thousands, except share data)
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
(unaudited)
(unaudited)
Revenues Resident fees and services
$
82,951
$
84,821
$
167,958
$
170,570
Rental revenue
1,582
1,583
3,165
3,165
Total revenues
84,533
86,404
171,123
173,735
Expenses Property operating expense
48,760
50,693
99,825
103,632
Interest expense
15,281
19,570
32,500
39,420
Depreciation and amortization
16,782
16,987
34,318
33,981
General and administrative expense
5,894
5,359
11,740
10,337
Acquisition, transaction and integration expense
19
174
152
666
Loss on extinguishment of debt
-
335
5,884
335
Other expense
433
62
328
1,377
Total expenses
87,169
93,180
184,747
189,748
Loss on sale of real estate
-
(122
)
-
(122
)
Loss before income taxes
(2,636
)
(6,898
)
(13,624
)
(16,135
)
Income tax expense
22
37
82
73
Loss from continuing operations
(2,658
)
(6,935
)
(13,706
)
(16,208
)
Discontinued Operations: Gain on sale of real estate
-
-
19,992
-
Loss from discontinued operations
-
(2,651
)
(3,107
)
(4,571
)
Discontinued operations, net
-
(2,651
)
16,885
(4,571
)
Net income (loss)
(2,658
)
(9,586
)
3,179
(20,779
)
Deemed dividend on redeemable preferred stock
(599
)
(599
)
(1,197
)
(1,197
)
Net income (loss) attributable to common stockholders
($
3,257
)
($
10,185
)
$
1,982
($
21,976
)
Basic earnings per common share: (A)
Loss from continuing operations attributable to common stockholders
($
0.04
)
($
0.09
)
($
0.18
)
($
0.21
)
Discontinued operations, net
0.00
(0.03
)
0.20
(0.06
)
Net income (loss) attributable to common stockholders
(0.04
)
(0.12
)
0.02
(0.27
)
Diluted earnings per common share: Loss
from continuing operations attributable to common stockholders
($
0.04
)
($
0.09
)
($
0.18
)
($
0.21
)
Discontinued operations, net
0.00
(0.03
)
0.20
(0.06
)
Net income (loss) attributable to common stockholders
(0.04
)
(0.12
)
0.02
(0.27
)
Weighted average number of shares of common stock
outstanding Basic
82,459,741
82,209,844
82,423,182
82,206,475
Diluted (B)
82,459,741
82,209,844
82,423,182
82,206,475
Dividends declared per share of common stock
$
0.07
$
0.13
$
0.20
$
0.26
(A) Basic earnings per common share (“EPS”) is calculated by
dividing net income (loss) attributable to common stockholders by
the weighted average number of shares of common stock outstanding.
The outstanding shares used to calculate the weighted average basic
shares exclude 454,921 and 916,415 restricted stock awards, net of
forfeitures, as of June 30, 2020 and 2019 respectively, as those
shares were issued but were not vested and therefore, not
considered outstanding for purposes of computing basic EPS. Diluted
EPS is computed by dividing net income (loss) attributable to
common stockholders by the weighted average number of shares of
common stock outstanding plus the additional dilutive effect, if
any, of common stock equivalents during each period. (B)
Dilutive share equivalents and options were excluded for the three
and six months ended June 30, 2020 and 2019 as their inclusion
would have been anti-dilutive given our loss position.
Reconciliation of NOI to Net Income (dollars in
thousands) For the Quarter Ended
June 30, 2020 Total revenues
$
84,533
Property operating expense
(48,760
)
NOI
35,773
Interest expense
(15,281
)
Depreciation and amortization
(16,782
)
General and administrative expense
(5,894
)
Acquisition, transaction and integration expense
(19
)
Other expense
(433
)
Income tax expense
(22
)
Loss from continuing operations
(2,658
)
Net income (loss)
(2,658
)
Deemed dividend on redeemable preferred stock
(599
)
Net income attributable to common stockholders
$
(3,257
)
Reconciliation of Net Income to FFO, Normalized FFO, AFFO and
Normalized FAD (unaudited) (dollars and shares in thousands,
except per share data) For the Quarter Ended
June 30, 2020 Net income attributable to common
stockholders
$
(3,257
)
Adjustments: Gain on sale of real estate
-
Depreciation and amortization
16,782
FFO
$
13,525
FFO per basic and diluted share
$
0.16
Acquisition, transaction and integration expense
19
Loss on extinguishment of debt
-
Compensation expense related to transition awards
295
Other income(1)
461
Normalized FFO
$
14,300
Normalized FFO per basic and diluted share
$
0.17
Straight-line rent
(108
)
Amortization of deferred financing costs
872
Amortization of deferred community fees and other(2)
(432
)
Amortization of equity-based compensation
1,428
AFFO
$
16,060
AFFO per basic and diluted share
$
0.19
Routine capital expenditures
(788
)
Normalized FAD
$
15,272
Normalized FAD per basic share
$
0.19
Normalized FAD per diluted share
$
0.18
Weighted average basic shares outstanding
82,460
Weighted average diluted shares outstanding
82,752
1) Primarily includes insurance recoveries and casualty related
charges. 2) Includes amortization of deferred community fees and
other, which includes the net change in deferred community fees and
other rent discounts or incentives.
Reconciliation of
Year-over-Year Cash NOI (unaudited) (dollars in
thousands)
2Q 2020
2Q 2019
Managed Properties
Other Properties
Managed Properties
Other Properties
IL Properties
Total
IL Properties
Total
Same Store Cash NOI (excluding COVID-19 related expenses)
$
35,228
$
1,477
$
36,704
$
34,936
$
1,437
$
36,373
COVID-19 related expenses
(1,470
)
-
(1,470
)
-
-
-
Same Store Cash NOI
33,758
1,477
35,234
34,936
1,437
36,373
Non-Same Store Cash NOI
-
-
-
-
(378
)
(378
)
Straight-line rental revenue
-
108
108
-
147
147
Amortization of deferred community fees and other(1)
434
(2
)
432
(472
)
40
(433
)
Segment / Total NOI
$
34,191
$
1,582
$
35,773
$
34,464
$
1,247
$
35,711
Interest expense
(15,281
)
(19,570
)
Depreciation and amortization
(16,782
)
(16,987
)
General and administrative expense
(5,894
)
(5,359
)
Acquisition, transaction & integration expense
(19
)
(174
)
Loss on extinguishment of debt
—
(335
)
Other income (expense)
(433
)
(62
)
Income tax expense
(22
)
(37
)
Loss on sale of real estate
—
(122
)
Loss from continuing operations
(2,658
)
(6,935
)
Loss from discontinued operations
—
(2,651
)
Discontinued operations, net
—
(2,651
)
Net income (loss)
(2,658
)
(9,586
)
Deemed dividend on redeemable preferred stock
(599
)
(599
)
Net income (loss) attributable to common stockholders
($
3,257
)
($
10,185
)
(1) Consists of amortization of
deferred community fees and other, which includes the net change in
deferred community fees and other rent discounts or incentives.
Reconciliation of Quarter-over-Quarter Cash NOI (unaudited)
(dollars in thousands)
2Q 2020
1Q 2020
Managed
Other Properties
Managed Properties
Other Properties
IL Properties
Total
IL Properties
Total
Same Store Cash NOI (excluding COVID-19 related expenses)
$
35,228
$
1,450
$
36,678
$
34,138
$
1,450
$
35,588
COVID-19 related expenses
(501
)
-
(501
)
(501
)
-
(501
)
Same Store Cash NOI
33,637
1,450
35,087
33,637
1,450
35,087
Straight-line rental revenue
-
108
108
-
134
134
Amortization of deferred community fees and other(1)
434
(2
)
432
305
(2
)
303
Segment / Total NOI
$
34,191
$
1,582
$
35,773
$
33,942
$
1,583
$
35,525
Interest expense
(15,281
)
(17,219
)
Depreciation and amortization
(16,782
)
(17,536
)
General and administrative expense
(5,894
)
(5,846
)
Acquisition, transaction & integration expense
(19
)
(133
)
Loss on extinguishment of debt
—
(5,884
)
Other income (expense)
(433
)
105
Income tax expense
(22
)
(60
)
Loss from continuing operations
(2,658
)
(11,048
)
Gain on sale of real estate
—
19,992
Loss (income) from discontinued operations
—
(3,107
)
Discontinued operations, net
—
16,885
Net income (loss)
(2,658
)
5,837
Deemed dividend on redeemable preferred stock
(599
)
(598
)
Net income (loss) attributable to common stockholders
($
3,257
)
$
5,239
(1) Consists of amortization of
deferred community fees and other, which includes the net change in
deferred community fees and other rent discounts or incentives.
Interest Expense Reconciliation (dollars in
thousands)
2Q 2020
1Q 2020
Interest expense
$ 15,281
$ 17,219
Amortization of deferred financing costs
(872)
(906)
Interest expense for discontinued operations
-
1,361
Cash interest expense
$ 14,409
$ 17,674
2020 Expectations Reconciliation Reconciliation of Net
Loss to FFO, Normalized FFO and AFFO (unaudited)
Full Year 2020
Guidance
Per Share
Low
High
Net loss attributable to common stockholders
$(0.11)
-
$(0.07)
Gain on sale of assets
(0.24)
-
(0.24)
Depreciation & amortization
0.79
-
0.79
FFO
$0.44
-
$0.48
Compensation expense related to transition awards
0.02
-
0.02
Loss on extinguishment of debt
0.11
-
0.11
Acquisition, transaction & integration expense
0.02
-
0.02
Normalized FFO
$0.59
-
$0.63
Amortization of deferred financing costs
0.04
-
0.04
Amortization of deferred community fees & other
(0.02)
-
(0.02)
Amortization of equity-based compensation
0.06
-
0.06
AFFO
$0.67
-
$0.71
NON-GAAP FINANCIAL
MEASURES
The tables above set forth reconciliations of non-GAAP measures
to net income (loss), which is the most directly comparable GAAP
financial measure.
A non-GAAP financial measure is a measure of historical or
future financial performance, financial position or cash flows that
excludes or includes amounts that are not excluded from or included
in the most comparable GAAP measure. We consider certain non-GAAP
financial measures to be useful supplemental measures of our
operating performance. GAAP accounting for real estate assets
assumes that the value of real estate assets diminishes predictably
over time, even though real estate values historically have risen
or fallen with market conditions. As a result, many industry
investors look to non-GAAP financial measures for supplemental
information about real estate companies.
You should not consider non-GAAP measures as alternatives to
GAAP net (loss) income, which is an indicator of our financial
performance, or as alternatives to GAAP cash flow from operating
activities, which is a liquidity measure, nor are non-GAAP measures
necessarily indicative of our ability to satisfy our funding
requirements. In order to facilitate a clear understanding of our
consolidated historical operating results, you should examine our
non-GAAP measures in conjunction with GAAP net (loss) income as
presented in our Consolidated Financial Statements and other
financial data included elsewhere in this press release. Moreover,
the comparability of non-GAAP financial measures across companies
may be limited as a result of differences in the manner in which
real estate companies calculate such measures, the capital
structure of such companies or other factors.
Below is a description of the non-GAAP financial measures
presented herein.
NOI, Cash NOI and Cash Interest Expense
The Company evaluates the performance of each of its three
business segments based on NOI. The Company defines NOI as total
revenues less property-level operating expenses, which include
property management fees and travel cost reimbursements. The sum of
the NOI for each segment is total NOI, which the Company uses to
evaluate the aggregate performance of its segments. The Company
defines Cash NOI as NOI excluding the effects of straight-line
rent, amortization of above / below market lease intangibles and
amortization of deferred community fees and other, which includes
the net change in deferred community fees and other rent discounts
or incentives. We believe that NOI and Cash NOI serve as useful
supplemental measures to net income because they allow investors,
analysts and management to measure unlevered property-level
operating results and to compare our operating results between
periods and to the operating results of other real estate companies
on a consistent basis.
Same store NOI and same store cash NOI include only properties
owned for the entirety of comparable periods. Properties acquired,
sold, transitioned to other operators or between segments, or
classified as held for sale or discontinued operations during the
comparable periods are excluded from the same store amounts. Please
see the Company’s most recent quarterly report filed with the
Securities and Exchange Commission for more information.
Cash interest expense is defined as interest expense excluding
the amortization of deferred financing costs and includes the
interest expense on debt repaid upon the sale of the AL/MC
portfolio (classified as discontinued operations).
FFO and Other Non-GAAP Measures
We use Funds From Operations ("FFO") and Normalized FFO as
supplemental measures of our operating performance. We use the
National Association of Real Estate Investment Trusts ("NAREIT")
definition of FFO. NAREIT defines FFO as GAAP net income (loss)
attributable to common stockholders, which includes loss from
discontinued operations, excluding gains (losses) from sales of
depreciable real estate assets and impairment charges of
depreciable real estate, plus real estate depreciation and
amortization, and after adjustments for unconsolidated entities and
joint ventures to reflect FFO on the same basis. FFO does not
account for debt principal payments and is not intended as a
measure of a REIT’s ability to satisfy such payments or any other
cash requirements.
Normalized FFO, as defined below, measures the financial
performance of our portfolio of assets excluding items that,
although incidental to, are not reflective of the day-to-day
operating performance of our portfolio of assets. We believe that
Normalized FFO is useful because it facilitates the evaluation of
our portfolio’s operating performance (i) between periods on a
consistent basis and (ii) to the operating performance of other
real estate companies. However, comparability may be limited
because our calculation of Normalized FFO may differ significantly
from that of other companies or because of features of our business
that are not present in other companies.
We define Normalized FFO as FFO excluding the following income
and expense items, as applicable: (a) acquisition, transaction and
integration related expenses; (b) the write off of unamortized
discounts, premiums, deferred financing costs, or additional costs,
make whole payments and penalties or premiums incurred as the
result of early repayment of debt (collectively “Gain (Loss) on
extinguishment of debt”); (c) incentive compensation to affiliate
recognized as a result of sales of real estate; (d) the
remeasurement of deferred tax assets; (e) valuation allowance on
deferred tax assets, net; (f) termination fee to the affiliate; (g)
gain on lease termination; (h) compensation expense related to
transition awards; (i) litigation proceeds; and (j) other items
that we believe are not indicative of operating performance,
generally reported as “Other expense (income)” in our Consolidated
Statements of Operations.
We also use Adjusted FFO (“AFFO”) and Normalized FAD as
supplemental measures of our operating performance. We believe AFFO
is useful because it facilitates the evaluation of (i) the current
economic return on our portfolio of assets between periods on a
consistent basis and (ii) our portfolio versus those of other real
estate companies that report AFFO. However, comparability may be
limited because our calculation of AFFO may differ significantly
from that of other companies, or because of features of our
business that are not present in other companies.
We define AFFO as Normalized FFO excluding the impact of the
following: (a) straight-line rents; (b) amortization of above /
below market lease intangibles; (c) amortization of deferred
financing costs; (d) amortization of premium or discount on
mortgage notes payable; (e) amortization of deferred community fees
and other, which includes the net change in deferred community fees
and other rent discounts or incentives, and (f) amortization of
equity-based compensation expense.
We define Normalized FAD as AFFO less routine capital
expenditures, which we view as a cost associated with the current
economic return. Normalized FAD, which does not reflect debt
principal payments and certain other expenses, does not represent
cash available for distribution to shareholders. We believe
Normalized FAD is useful because it fully reflects the additional
economic costs of maintaining the condition of the portfolio.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200807005089/en/
Jane Ryu (646) 822-3700
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