Senior Housing Properties Trust (SNH)

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Senior Housing Properties Trust (SNH)

Q4 2009 Earnings Call

February 18, 2010 5:00 pm ET


Tim Bonang – Vice President Investor Relations

David Hegarty – President, Chief Executive Officer

Richard Doyle – Chief Financial Officer


Todd Stender – Wells Fargo Securities

Jerry Doctrow – Stifel Nicolaus

Kevin Ellich – RBC Capital Markets

Omotayo Okusanya – Jefferies & Co.

Andrew Yu – Bank of America/Merrill Lynch



Welcome to the Senior Housing Properties Trust fourth quarter 2009 conference call. This cal is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Tim Bonang.

Tim Bonang

Good afternoon everyone. Joining me on today’s call are David Hegarty, President and Chief Operating Officer and Rick Doyle, Chief Financial Officer.

Today’s call includes a presentation by management followed by a question and answer session. I’d also like to note that the recording and retransmission of today’s conference is strictly prohibited with prior written consent of SNH.

Before we begin today’s call I’d like to state that today’s conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Federal Securities laws. These forward-looking statements are based on Senior Housing’s present beliefs and expectations as of today, February 18, 2010. The company undertakes no obligation to revise or publicly release the results of any revision of the forward-looking statements made in today’s conference call other than through filings with the Securities and Exchange Commission regarding this reporting period.

In addition, this call may contain non-GAAP numbers including funds from Operations or FFO. A reconciliation of FFO to net income as well as components to calculate a, FFO, CAD or SAD are available on pages 11 and 14 in our Q4 supplemental operating and financial data package found on our website at

Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our 2009 Form 10-K to be filed with the SEC by end of the day tomorrow. Investors are cautioned to not place undue reliance on any forward-looking statements.

With that, I would like to turn the call over to Dave Hegarty.

David Hegarty

Good afternoon everyone and thank you for joining us. We are very pleased with the results of the quarter and the year as well as the strong financial position we’re in today. During 2009 SNH was added to the S&P mid cap 400 less than 1,000 indices.

In terms of liquidity and balance sheet strength, SNH compares very favorable with not only the rest of our health care REIT’s but the whole REIT universe. We are also pleased with the significant strategic diversification of revenues we achieved in 2009.

In July we raised our quarterly dividend by $0.01 per share or 2.9% to $0.36 per share or $1.44 per share year and over the past decade we have raised the dividend by an average of 2% per year. At the same time our stock price has appreciated on average 7.6% per year.

For the fourth quarter, we generated funds from operations of $0.41 per share which is consistent with consensus expectations. These results fully reflect the September equity offering but do not fully reflect the impact of the new investments made during the quarter with those proceeds.

For the year, FFO per share grew by 2% over 2008 results or from $1.67 per share to $1.70 per share which is significant given the negative arbitrage on earnings created by the timing delay in investing all the proceeds of the large Fannie Mae financing in August and the equity raised in September.

Our FFO in total increased 18% while our weighted average shares outstanding was actually 16% higher in 2009 than 2008. During the fourth quarter we invested approximately $125 million, most of which we discussed on our third quarter earnings call.

For the full year 2009 we made total new investments of approximately $537 million which consists of 20 medical office buildings, 11 predominantly private paid senior living communities and capital improvement funding for our existing senior housing assets.

These investments were funded using a $513 million ten year mortgage from Fannie Mae and the $7 million equity offering in February and a $127 million equity offering in September and cash from operations generated in excess of dividends.

Now I’d like to have Rick review the annual quarterly results with you, and then the properties acquired in more detail, then I’ll discuss operating trends, the acquisition environment and the outlook for SNH.

Richard Doyle

In comparing 2009 to 20808 we were able to grow cash flows, increase our dividend to $1.44 per annum and diversify our revenue stream from $236 million with 155 tenants for $298 million with 215 millions. This growth in revenues is due to investing approximately $537 million. We invested approximately $117 million in senior living properties, $383 million in medical office buildings and $37 million in capital improvements during 2009.

Also included in the revenues is percentage rent revenue from our senior living tenants which totaled $9.1 million in 2009 versus $8.4 million in 2008. The increase in the percentage rent revenue year over year was not as significant as it has been historically due to the decline in occupancy and lower rental increases.

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