New Senior Investment Group Inc. (“New Senior” or the “Company”)
(NYSE: SNR) announced today its results for the quarter ended March
31, 2017.
1Q 2017 FINANCIAL
HIGHLIGHTS
- Declared cash dividend of $0.26 per
common share
- Net loss of $9.9 million, or $(0.12)
per basic and diluted share
- Total net operating income (“NOI”) of
$55.4 million, compared to $57.3 million for 1Q’16
- Normalized Funds from Operations
(“Normalized FFO”) of $24.3 million, or $0.30 per basic share and
$0.29 per diluted share
- AFFO of $22.3 million, or $0.27 per
basic and diluted share
- Normalized Funds Available for
Distribution (“Normalized FAD”) of $20.6 million, or $0.25 per
basic and diluted share
1Q 2017 BUSINESS
HIGHLIGHTS
- Total same store cash NOI decreased
1.5% vs. 1Q’16
- Managed same store cash NOI decreased
6.1% vs. 1Q’16
- Triple net same store cash NOI
increased 4.3% vs. 1Q’16
- In January, sold 2 AL/MC properties for
$15.5 million, realizing a gain on sale of $4.2 million
FIRST QUARTER 2017
RESULTS
Dollars in thousands, except per share data
For the
Quarter Ended March 31, 2017 For the Quarter Ended
March 31, 2016 Amount
Per BasicShare(B)
Per
DilutedShare(B)
Amount
Per BasicShare(C)
Per
DilutedShare(C)
GAAP
Net loss $(9,895) $(0.12) $(0.12) $(21,848) $(0.26) $(0.26)
Non-GAAP(A)
NOI $55,389 N/A N/A $57,320 N/A N/A FFO 23,424 $0.29 $0.28 25,519
$0.31 $0.31 Normalized FFO 24,282 $0.30 $0.29 26,460 $0.32 $0.32
AFFO 22,338 $0.27 $0.27 23,899 $0.29 $0.29 Normalized FAD 20,644
$0.25 $0.25 21,811 $0.26 $0.26 (A) See end of press release for
reconciliation of non-GAAP measures to net loss. (B) Non-GAAP
measures per basic share are based on 82.1 million shares
outstanding, and non-GAAP measures per diluted share are based on
82.8 million shares, representing the number of shares outstanding
plus the number of shares issuable upon the exercise of options.
GAAP net loss per basic share and per diluted share is based, in
each case, on 82.1 million shares outstanding, because the
inclusion of options in the calculation of GAAP net loss per
diluted share would be anti-dilutive. (C) Non-GAAP measures per
basic share are based on 83.1 million shares outstanding, and
non-GAAP measures per diluted share are based on 83.5 million
shares, representing the number of shares outstanding plus the
number of shares issuable upon the exercise of options. GAAP net
loss per basic share and per diluted share is based, in each case,
on 83.1 million shares outstanding, because the inclusion of
options in the calculation of GAAP net loss per diluted share would
be anti-dilutive.
FIRST QUARTER 2017 GAAP
RESULTS
New Senior recorded a GAAP net loss of $9.9 million, or $(0.12)
per basic and diluted share, for the first quarter of 2017,
compared to a GAAP net loss of $21.8 million, or $(0.26) per basic
and diluted share, for the first quarter of 2016. The
year-over-year decrease in the first quarter net loss was primarily
driven by a gain on sale of real estate of $4.2 million and a
decrease in expenses of $10.7 million.
FIRST QUARTER 2017 PORTFOLIO
PERFORMANCE
Total NOI decreased 3.4% to $55.4 million compared to $57.3
million for 1Q 2016. Total same store cash NOI decreased 1.5% to
$51.2 million compared to $52.0 million for 1Q 2016.
For the managed portfolio, same store average occupancy
decreased 220 basis points to 86.1% compared to 88.3% for 1Q 2016,
and same store cash NOI decreased 6.1% to $27.5 million compared to
$29.2 million for 1Q 2016.
For the triple net portfolio, same store cash NOI increased 4.3%
to $23.7 million compared to $22.7 million for 1Q 2016. Same store
triple net average occupancy decreased 140 basis points to 87.5%
compared to 88.9% for 1Q 2016. EBITDARM coverage as of March 31,
2017 was 1.19x, down from 1.26x as of March 31, 2016. Triple net
average occupancy and EBITDARM are presented one quarter in arrears
on a trailing twelve month basis.
ASSET SALES
In January, the Company completed the sale of two assisted
living / memory care properties for $15.5 million, realizing a gain
on sale of $4.2 million. In connection with the sale, the Company
repaid $14.7 million of debt.
FIRST QUARTER DIVIDEND
On May 2, 2017, the Company’s Board of Directors declared a cash
dividend of $0.26 per share for the quarter ended March 31, 2017.
The dividend is payable on June 22, 2017 to shareholders of record
on June 8, 2017.
ADDITIONAL INFORMATION
For additional information that management believes to be useful
for investors, please refer to the presentation posted in the
Investor Relations section of the Company’s website,
www.newseniorinv.com.
EARNINGS CONFERENCE CALL
Management will host a conference call on May 4, 2017 at 9:00
A.M. Eastern Time. The conference call may be accessed by dialing
(877) 694-6694 (from within the U.S.) or (970) 315-0985 (from
outside of the U.S.) ten minutes prior to the scheduled start of
the call; please reference “New Senior First Quarter 2017 Earnings
Call.” 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 completion of the
call through 11:59 P.M. Eastern Time on June 5, 2017 by dialing
(855) 859-2056 (from within the U.S.) or (404) 537-3406 (from
outside the U.S.); please reference access code “6276567.”
ABOUT NEW SENIOR
New Senior is a real estate investment trust with a portfolio of
150 senior housing properties located across the United States. The
Company is the only pure play senior housing REIT and is one of the
largest owners of senior housing properties. New Senior is managed
by an affiliate of Fortress Investment Group LLC, a global
investment management firm. More information about New Senior can
be found at www.newseniorinv.com.
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain items in this press release may constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are not
historical facts. They represent management’s current expectations
regarding future events and are subject to a number of trends 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. Accordingly, you should not place
undue reliance on any forward-looking statements contained herein.
For a discussion of some of the 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
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 New Senior to predict or
assess the impact of every factor that may cause its actual results
to differ from those contained in any forward-looking statements.
Forward-looking statements contained herein speak only as of the
date of this press release, and New Senior expressly disclaims any
obligation to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in New Senior'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) March 31, 2017
Assets (Unaudited) December 31, 2016 Real
estate investments: Land $ 220,317 $ 220,317 Buildings,
improvements and other 2,557,814 2,552,862 Accumulated depreciation
(242,146 ) (218,968 ) Net real estate property
2,535,985 2,554,211 Acquired lease and other
intangible assets 319,929 319,929 Accumulated amortization
(269,784 ) (255,452 ) Net real estate intangibles
50,145 64,477 Net real estate investments
2,586,130 2,618,688 Cash and cash equivalents 50,338 58,048
Straight-line rent receivables 78,339 73,758 Receivables and other
assets, net 57,863 71,234
Total
Assets $ 2,772,670 $
2,821,728 Liabilities and Equity
Liabilities Mortgage notes payable, net $ 2,113,276 $
2,130,387 Due to affiliates 11,074 11,623 Accrued expenses and
other liabilities 100,538 100,823
Total Liabilities $ 2,224,888 $ 2,242,833
Commitments and contingencies
Equity
Preferred Stock $0.01 par value,
100,000,000 sharesauthorized and none issued or outstanding as of
both March31, 2017 and December 31, 2016
$ - $ -
Common stock $0.01 par value,
2,000,000,000 sharesauthorized, 82,141,216 and 82,127,247 shares
issued andoutstanding as of March 31, 2017 and December 31,
2016,respectively
821 821 Additional paid-in capital 898,057 897,918 Accumulated
deficit (351,096 ) (319,844 )
Total Equity $
547,782 $ 578,895
Total Liabilities
and Equity $ 2,772,670 $
2,821,728 Consolidated Statements of
Operations (unaudited) (dollars in thousands, except share
data) Three Months Ended March 31,
2017 2016 Revenues Resident fees and services
$ 86,726 $ 89,706 Rental revenue 28,247 28,239
Total revenues 114,973 117,945
Expenses Property operating expense 59,584 60,625
Depreciation and amortization 37,518 47,367 Interest expense 23,066
22,788 Acquisition, transaction and integration expense 348 754
Management fees and incentive compensation to affiliate 3,824 3,928
General and administrative expense 4,011 4,370 Loss on
extinguishment of debt 375 - Other expense 135
187 Total expenses $ 128,861 $ 140,019 Gain on sale of real
estate 4,199 -
Loss Before
Income Taxes (9,689 ) (22,074 ) Income tax expense (benefit)
206 (226 )
Net Loss $ (9,895 ) $
(21,848 )
Loss Per Share of Common Stock Basic and
diluted (A) $ (0.12 ) $ (0.26 )
Weighted Average Number
of Shares of Common Stock Outstanding Basic and diluted (B)
82,140,750 83,066,599
Dividends Declared Per Share of Common Stock $ 0.26 $
0.26 (A) Basic earnings per share (“EPS”) is
calculated by dividing net income by the weighted average number of
shares of common stock outstanding. Diluted EPS is computed by
dividing net income 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) All
outstanding options were excluded from the diluted share
calculation as their effect would have been anti-dilutive.
Consolidated Statements of Cash Flows (unaudited)
(dollars in thousands) Three Months Ended March
31, 2017 2016 Cash Flows From Operating
Activities Net loss $ (9,895 ) $ (21,848 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation of tangible assets and amortization of intangible
assets 37,555 47,403 Amortization of deferred financing costs 2,465
2,428 Amortization of deferred community fees (292 ) (372 )
Amortization of premium on mortgage notes payable (144 ) (146 )
Non-cash straight line rent (4,581 ) (5,553 ) Gain on sale of real
estate (4,199 ) - Loss on extinguishment of debt 375 - Equity-based
compensation - 5 Provision for uncollectible receivables 645 523
Other non-cash expense 87 187 Changes in: Receivables and other
assets, net 179 317 Due to affiliates (549 ) 949 Accrued expenses
and other liabilities 185 (193 )
Net cash
provided by operating activities $ 21,831
$ 23,700 Cash Flows From Investing
Activities Proceeds from the sale of real estate $ 14,956 $ -
Capital expenditures, net of insurance proceeds (4,386 ) (3,967 )
Reimbursements (escrows) for capital expenditures, net 1,054 (1,182
) Deposits refunded for real estate investments -
584
Net cash provided by (used in) investing
activities $ 11,624 $ (4,565
) Cash Flows From Financing Activities
Principal payments of mortgage notes payable $ (4,900 ) $ (3,955 )
Repayments of mortgage notes payable (14,730 ) - Payment of exit
fee on extinguishment of debt (178 ) - Payment of common stock
dividend (21,357 ) (21,356 ) Repurchase of common stock -
(30,840 )
Net cash used in financing
activities $ (41,165 ) $
(56,151 ) Net Decrease in Cash and Cash Equivalents
(7,710 ) (37,016 ) Cash and Cash Equivalents, Beginning of Period
58,048 116,881
Cash and Cash
Equivalents, End of Period $ 50,338
$ 79,865 Supplemental Disclosure of
Cash Flow Information Cash paid during the period for interest
expense $ 20,679 $ 20,365
Supplemental Disclosure of
Non-Cash Investing and Financing Activities Issuance of common
stock $ 139 $ -
Reconciliation of NOI to Net Loss
(dollars in thousands) For the Quarter
Ended March 31, 2017 Total revenues $ 114,973 Property
operating expense (59,584 )
NOI 55,389
Depreciation and amortization (37,518 ) Interest expense (23,066 )
Acquisition, transaction and integration expense (348 ) Management
fees and incentive compensation to affiliate (3,824 ) General and
administrative expense (4,011 ) Loss on extinguishment of debt (375
) Other expense (135 ) Gain on sale of real estate 4,199 Income tax
expense (206 )
Net Loss $ (9,895
) Reconciliation of Net Loss to FFO, Normalized FFO, AFFO
and Normalized FAD (dollars and shares in thousands, except
per share data) For the Quarter Ended March
31, 2017 Net loss $ (9,895 )
Adjustments: Gain on sale of real estate (4,199 ) Depreciation and
amortization 37,518
FFO $
23,424 FFO per diluted share $
0.28 Acquisition, transaction and integration expense
348 Loss on extinguishment of debt 375 Other expense
135
Normalized FFO $ 24,282
Normalized FFO per diluted share $ 0.29
Straight-line rent (4,581 ) Amortization of deferred
financing costs 2,465 Amortization of deferred community fees and
other(1) 172
AFFO $
22,338 AFFO per diluted share $
0.27 Routine capital expenditures
(1,694 )
Normalized FAD $ 20,644 Normalized
FAD per diluted share $ 0.25
Weighted average basic shares outstanding 82,141 Weighted average
diluted shares outstanding(2) 82,785 (1) Includes amortization of
above / below market lease intangibles, amortization of premium on
mortgage notes payable and amortization of deferred community fees
and other, which includes the net change in deferred community fees
and other rent discounts or incentives. (2) Includes dilutive
effect of options.
Reconciliation of Year-over-Year Cash NOI
(unaudited) (dollars in thousands)
1Q 2016
1Q 2017
Same
StoreNNNProperties
Non-SameStore
NNNProperties
Same
StoreManagedProperties
Non-SameStoreManagedProperties
Total
Same
StoreNNNProperties
Non-SameStore
NNNProperties
Same
StoreManagedProperties
Non-SameStoreManagedProperties
Total
Cash NOI $22,725 - $29,226 $526 $52,477 $23,707 - $27,450 ($35 )
$51,122 Straight-line rent 5,553 - - - 5,553 4,581 - - - 4,581
Amortization of deferred community fees and other(1) (39 ) - (697 )
26 (710 ) (41 ) - (358 ) 85 (314 )
Segment / Total NOI
$28,239 - $28,529
$552 $57,320 $28,247
- $27,092 $50
$55,389 Depreciation and amortization (47,367 )
(37,518 ) Interest expense (22,788 ) (23,066 ) Acquisition,
transaction & integration expense (754 ) (348 )
Management fees and incentive
compensationto affiliate
(3,928 ) (3,824 ) General and administrative expense (4,370 )
(4,011 ) Loss on extinguishment of debt - (375 ) Other expense (187
) (135 ) Gain on sale of real estate - 4,199 Income tax benefit
(expense) 226 (206 )
Net loss ($21,848
) ($9,895 ) (1) Includes 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.
NON-GAAP FINANCIAL
MEASURES
The tables above set forth reconciliations of non-GAAP measures
to net 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 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 income as presented
in our Consolidated Financial Statements and other financial data
included elsewhere in this report. 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 AND CASH NOI
The Company evaluates the performance of each of its two
business segments based on NOI. The Company defines NOI as total
revenues less property-level operating expenses, which include
property management fees, payroll expense and travel cost
reimbursements to affiliates. The sum of the NOI for each segment
is total NOI, which the Company uses to evaluate the aggregate
performance of its segments. Management believes that NOI serves as
a useful supplement to net income because it allows investors,
analysts and management to measure unlevered property-level
operating results and to compare the Company’s operating results
between periods and to the operating results of other real estate
companies on a consistent basis.
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 cash NOI
include only properties owned for the entirety of comparable
periods and exclude assets classified as held for sale.
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 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 costs and 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 recognized as a result of sales of property and (d)
other items that we believe are not indicative of operating
performance, generally reported as “Other (income) expense” in the
Consolidated Statements of Operations.
Management also uses AFFO and Normalized FAD as supplemental
measures of the Company’s operating performance.
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 on mortgage notes
payable and (e) amortization of deferred community fees and other,
which includes the net change in deferred community fees and other
rent discounts or incentives. 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 Normalized FAD as AFFO less routine capital
expenditures, which we view as a cost associated with the current
economic return. Normalized FAD does not represent cash available
for distribution to shareholders.
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New Senior Investment Group Inc.David Smith, 212-515-7783
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