NEW YORK--(BUSINESS WIRE)--New Senior Investment Group Inc. (“New Senior” or the “Company”) (NYSE:SNR) announced today its results for the quarter ended September 30, 2015.
3Q 2015 BUSINESS HIGHLIGHTS
- Total managed portfolio occupancy increased 290 basis points for 3Q’15 vs. 3Q’14
- Same store occupancy for the managed portfolio increased 210 basis points for 3Q’15 vs. 3Q’14
- Same store occupancy for the triple net portfolio increased 180 basis points for 3Q’15 vs. 3Q’14
- Same store net operating income (“NOI”) growth of 6.0% for the managed portfolio for 3Q’15 vs. 3Q’14
- Completed $640 million acquisition of 28 independent living (“IL”) properties
- Raised $465 million of secured debt with a term of 10 years at an attractive fixed rate of 4.25%
- Declared a third quarter dividend of $0.26 per share
3Q 2015 FINANCIAL HIGHLIGHTS
- Total NOI of $53.2 million compared to $38.4 million for 3Q 2014, a 39% increase
- Normalized Funds from Operations (“NFFO”) of $26.3 million, or $0.30 per basic and diluted share
- AFFO of $22.9 million, or $0.27 per basic share and $0.26 per diluted share
- Normalized Funds Available for Distribution (“Normalized FAD”) of $20.9 million, or $0.24 per basic and diluted share
- Net loss of ($18.0) million, or ($0.21) per basic and diluted share
3Q 2015 PRO FORMA HIGHLIGHTS
- Pro forma total NOI of $58.4 million
- Pro forma NFFO of $28.9 million, or $0.33 per diluted share
- Pro forma AFFO of $25.8 million, or $0.30 per diluted share
- Pro forma Normalized FAD of $23.2 million, or $0.27 per diluted share
See note below for an explanation of pro forma amounts.
“New Senior’s portfolio once again delivered strong results during the third quarter, with superior same store managed NOI growth of 6.0% and a same store occupancy increase of 210 basis points, exceeding our peers and the industry averages,” New Senior Chief Executive Officer Susan Givens said. “These results speak to the significant embedded growth potential we have in our portfolio as a result of our unique acquisition strategy. We closed on our largest acquisition year to date in August, which included 28 private pay independent living properties for $640 million, and the portfolio has realized strong increases in occupancy of over 300bps since May 2015 to finish September at 91.2% occupancy. We look forward to continuing to deliver strong organic growth from our existing portfolio, and we are committed to a disciplined approach to capital allocation decisions.”
THIRD QUARTER 2015 RESULTS
| Dollars in thousands, except per share data | For the Quarter Ended September 30, 2015 | ||||||
| Amount | Per Diluted Share(B) | ||||||
|
Non-GAAP(A) |
|||||||
| NOI | $53,225 | -- | |||||
| FFO | 22,853 | $0.26 | |||||
| Normalized FFO | 26,315 | $0.30 | |||||
| AFFO | 22,942 | $0.26 | |||||
| Normalized FAD | 20,891 | $0.24 | |||||
|
GAAP |
|||||||
| Net loss | ($17,959) | $0.21 | |||||
| (A) See end of press release for reconciliation of non-GAAP measures to net loss. |
| (B) Per share amounts are based on 87.1 million diluted shares outstanding for non-GAAP amounts and 86.5 million diluted shares outstanding for net loss. See the appendix in the third quarter presentation posted in the Investor Relations section of the Company's website for an explanation of the difference between basic and diluted shares. |
ACQUISITION ACTIVITY
Year to date, the Company has closed $1.3 billion of acquisitions, which includes 49 IL properties, 4 assisted living / memory care (“AL/MC”) properties and 1 rental continuing care retirement community (“CCRC”).
During the third quarter, the Company closed a $640 million acquisition of 28 private pay, IL properties from affiliates of Holiday Retirement (“Holiday”). The portfolio is 100% private pay, contains 3,296 IL units located across 21 states and is expected to generate an initial cash NOI yield of approximately 6.4%. Occupancy for the portfolio has increased 330bps from 87.9% in May 2015 to 91.2% in September 2015. The acquisition was integrated into the Company’s managed portfolio.
In October, the Company closed a $40 million acquisition of two AL/MC properties that were added to the Company’s managed portfolio.
PORTFOLIO PERFORMANCE
Total NOI increased 39% to $53.2 million compared to $38.4 million for 3Q 2014.
For the managed portfolio, total occupancy increased 290 basis points to 86.9% compared to 84.0% for 3Q 2014, and same store occupancy increased 210 basis points to 85.6% compared to 83.5% for 3Q 2014. Same store NOI increased 6.0% to $11.4 million compared to $10.8 million for 3Q 2014. Same store information excludes one property that, although owned during both comparison periods, was not fully operational and had units that were not available for rent during the third quarter of 2015. Including this property, same store occupancy growth was 150 basis points and same store NOI growth was 3.5%.
For the triple net portfolio, same store occupancy increased 180 basis points to 90.7% compared to 88.9% for 3Q 2014. Triple net occupancy is presented one quarter in arrears from the date reported on a trailing twelve month basis.
FINANCING ACTIVITY
In August, the Company completed a $465 million first mortgage loan secured by the 28 independent living properties acquired from Holiday with Freddie Mac. The loan bears interest at a fixed rate of 4.25% and has a maturity of ten years. Proceeds from the loan were used to finance the acquisition from Holiday and to pay down $15 million of existing floating rate debt.
DIVIDEND
On November 4, 2015, the Company’s Board of Directors declared a cash dividend of $0.26 per share for the quarter ended September 30, 2015. The dividend is payable on December 2, 2015 to shareholders of record on November 18, 2015.
EXPLANATION OF 3Q 2015 PRO FORMA HIGHLIGHTS
The pro forma financial information herein is calculated based on 3Q’15 actual results with adjustments to reflect a full quarter of income/expense (as estimated in the Company’s underwriting models) associated with the acquisitions described under “Acquisition Activity” above, as well as the related financings.
The pro forma information included herein are illustrative/hypothetical values and do not represent New Senior’s historical performance or management’s projections for any future reporting period.
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 November 5, 2015 at 9:00 A.M. Eastern Time. The conference call may be accessed by dialing (855) 734-8393 (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 Third Quarter 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 call’s completion through 11:59 P.M. Eastern Time on December 5, 2015 by dialing (855) 859-2056 (from within the U.S.) or (404) 537-3406 (from outside the U.S.); please reference access code “60708069.”
ABOUT NEW SENIOR
New Senior is a real estate investment trust focused on investing in senior housing properties 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. Currently, New Senior owns 154 properties located across 37 states. 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 constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements regarding management’s intention to continue to deliver strong organic growth and the expected initial cash NOI yield of the acquisition from Holiday, which represents the expected cash NOI for a full year period divided by the purchase price for the acquisition. 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) | ||||||
| September 30, 2015 | ||||||
| Assets | (Unaudited) | December 31, 2014 | ||||
| Real estate investments: | ||||||
| Land | $ | 218,816 | $ | 138,799 | ||
| Buildings, improvements and other | 2,547,131 | 1,500,130 | ||||
| Accumulated depreciation | (107,512) | (56,988) | ||||
| Net real estate property | 2,658,435 | 1,581,941 | ||||
| Acquired lease and other intangible assets | 290,274 | 178,615 | ||||
| Accumulated amortization | (139,095) | (79,021) | ||||
| Net real estate intangibles | 151,179 | 99,594 | ||||
| Net real estate investments | 2,809,614 | 1,681,535 | ||||
| Cash and cash equivalents | 156,926 | 226,377 | ||||
| Receivables and other assets, net | 88,712 | 58,247 | ||||
| Total Assets | $ | 3,055,252 | $ | 1,966,159 | ||
| Liabilities and Equity | ||||||
| Liabilities | ||||||
| Mortgage notes payable, net | $ | 2,127,184 | $ | 1,223,224 | ||
| Due to affiliates | 11,429 | 6,882 | ||||
| Dividends payable | - | 15,276 | ||||
| Accrued expenses and other liabilities | 94,520 | 72,241 | ||||
| Total Liabilities | $ | 2,233,133 | $ | 1,317,623 | ||
| Commitments and contingencies | ||||||
| Equity | ||||||
|
Preferred Stock $0.01 par value, 100,000,000 shares |
$ | - | $ | - | ||
|
Common stock $0.01 par value, 2,000,000,000 shares |
865 | 664 | ||||
| Additional paid-in capital | 938,916 | 672,587 | ||||
| Accumulated deficit | (117,662) | (24,715) | ||||
| Total Equity | $ | 822,119 | $ | 648,536 | ||
| Total Liabilities and Equity | $ | 3,055,252 | $ | 1,966,159 | ||
| Consolidated Statements of Operations (unaudited) | ||||||||||||
| (dollars in thousands, except share data) | ||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| Revenues | ||||||||||||
| Resident fees and services | $ | 76,726 | $ | 40,473 | $ | 187,384 | $ | 113,287 | ||||
| Rental revenue | 28,259 | 26,672 | 82,661 | 71,316 | ||||||||
| Total revenues | 104,985 | 67,145 | 270,045 | 184,603 | ||||||||
| Expenses | ||||||||||||
| Property operating expense | 51,760 | 28,776 | 128,855 | 80,531 | ||||||||
| Depreciation and amortization | 40,812 | 28,670 | 110,543 | 74,682 | ||||||||
| Interest expense | 20,051 | 14,130 | 52,346 | 41,532 | ||||||||
| Acquisition, transaction and integration expense | 2,373 | 4,087 | 11,490 | 12,323 | ||||||||
| Management fee to affiliate | 4,085 | 2,385 | 10,207 | 5,764 | ||||||||
| General and administrative expense | 3,152 | 1,398 | 10,691 | 3,053 | ||||||||
| Loss on extinguishment of debt | - | - | 5,091 | - | ||||||||
| Other expense (income) | 1,089 | (1,500) | 1,569 | (1,500) | ||||||||
| Total expenses | $ | 123,322 | $ | 77,946 | $ | 330,792 | $ | 216,385 | ||||
| Loss Before Income Taxes | (18,337) | (10,801) | (60,747) | (31,782) | ||||||||
| Income tax (benefit) expense | (378) | 350 | (344) | 1,337 | ||||||||
| Net Loss | $ | (17,959) | $ | (11,151) | $ | (60,403) | $ | (33,119) | ||||
| Loss Per Share of Common Stock | ||||||||||||
| Basic and diluted (A) | $ | (0.21) | $ | (0.17) | $ | (0.82) | $ | (0.50) | ||||
| Weighted Average Number of Shares of Common Stock Outstanding | ||||||||||||
| Basic and diluted (B) | 86,533,384 | 66,399,857 | 73,342,453 | 66,399,857 | ||||||||
| Dividends Declared Per Share of Common Stock | $ | - | $ | - | $ | 0.49 | $ | - | ||||
(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) For the purposes of computing income per share of common stock for periods prior to the spin-off on November 6, 2014, the Company treated the common shares issued in connection with the spin-off as if they had been outstanding for all periods presented, similar to a stock split. 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) | ||||||
| Nine Months Ended September 30, | ||||||
| 2015 | 2014 | |||||
| Cash Flows From Operating Activities | ||||||
| Net loss | $ | (60,403) | $ | (33,119) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
| Depreciation of tangible assets and amortization of intangible assets | 110,651 | 74,682 | ||||
| Amortization of deferred financing costs | 6,777 | 6,142 | ||||
| Amortization of deferred community fees | (1,886) | (984) | ||||
| Amortization of premium on mortgage notes payable | 228 | 635 | ||||
| Non-cash straight line rent | (18,885) | (19,034) | ||||
| Change in fair value of contingent consideration | - | (1,500) | ||||
| Loss on extinguishment of debt | 5,091 | - | ||||
| Equity-based compensation | 17 | - | ||||
| Provision for bad debt | 1,449 | 649 | ||||
| Unrealized loss on interest rate caps | 837 | - | ||||
| Changes in: | ||||||
| Receivables and other assets | (13,148) | (8,645) | ||||
| Due to affiliates | 4,547 | 6,334 | ||||
| Accrued expenses and other liabilities | 18,641 | 20,850 | ||||
| Net cash provided by operating activities | $ | 53,916 | $ | 46,010 | ||
| Cash Flows From Investing Activities | ||||||
| Cash paid for acquisitions, net of deposits | $ | (1,212,169) | $ | (299,244) | ||
| Capital expenditures | (7,788) | (5,826) | ||||
| Funds reserved for future capital expenditures | (2,003) | (1,018) | ||||
| Deposits paid for real estate investments | (11,355) | (155) | ||||
| Net cash used in investing activities | $ | (1,233,315) | $ | (306,243) | ||
| Cash Flows From Financing Activities | ||||||
| Proceeds from mortgage notes payable | $ | 1,222,252 | $ | 80,144 | ||
| Principal payments of mortgage notes payable | (11,683) | (9,942) | ||||
| Repayments of mortgage notes payable | (304,484) | - | ||||
| Payment of exit fee on extinguishment of debt | (1,499) | - | ||||
| Payment of deferred financing costs | (12,294) | (967) | ||||
| Payment of common stock dividend | (47,820) | - | ||||
| Purchase of interest rate caps | (1,037) | - | ||||
| Proceeds from issuance of common stock | 276,569 | - | ||||
| Costs related to issuance of common stock | (10,056) | - | ||||
| Contributions | - | 247,475 | ||||
| Distributions | - | (44,321) | ||||
| Net cash provided by financing activities | $ | 1,109,948 | $ | 272,389 | ||
| Net Increase in Cash and Cash Equivalents | (69,451) | 12,156 | ||||
| Cash and Cash Equivalents, Beginning of Period | 226,377 | 30,393 | ||||
| Cash and Cash Equivalents, End of Period | $ | 156,926 | $ | 42,549 | ||
| Supplemental Disclosure of Cash Flow Information | ||||||
| Cash paid during the period for interest expense | $ | 42,886 | $ | 32,120 | ||
| Cash paid during the period for income taxes | 190 | 1,350 | ||||
| Supplemental Schedule of Non-Cash Investing and Financing Activities | ||||||
| Option exercise | $ | 62 | $ | - | ||
| Other liabilities assumed with acquisitions | 651 | - | ||||
| Issuance of contingent consideration at fair value | - | 50 | ||||
| Reconciliation of NOI to Net Loss | |||||
| (dollars in thousands) | |||||
| For the Quarter Ended | |||||
| September 30, 2015 | |||||
| Total revenues | $ | 104,985 | |||
| Property operating expense | (51,760) | ||||
| NOI | 53,225 | ||||
| Depreciation and amortization | (40,812) | ||||
| Interest expense | (20,051) | ||||
| Acquisition, transaction and integration expense | (2,373) | ||||
| Management fee to affiliate | (4,085) | ||||
| General and administrative expense | (3,152) | ||||
| Other expense | (1,089) | ||||
| Income tax benefit | 378 | ||||
| Net Loss | $ | (17,959) | |||
| 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 | |||
| September 30, 2015 | |||
| Net loss | $ | (17,959) | |
| Adjustments: | |||
| Depreciation and amortization | 40,812 | ||
| FFO | $ | 22,853 | |
| FFO per diluted share | $ | 0.26 | |
| Acquisition, transaction and integration expense | 2,373 | ||
| Other expense | 1,089 | ||
| Normalized FFO | $ | 26,315 | |
| Normalized FFO per diluted share | $ | 0.30 | |
| Straight-line rent | (6,346) | ||
| Amortization of deferred financing costs | 2,304 | ||
| Amortization of deferred community fees and other(1) |
669 |
||
| AFFO | $ | 22,942 | |
| AFFO per diluted share | $ | 0.26 | |
| Maintenance capital expenditures | (2,051) | ||
| Normalized FAD | $ | 20,891 | |
| Normalized FAD per diluted share | $ | 0.24 | |
| Weighted average basic shares outstanding | 86,533 | ||
| Weighted average diluted shares outstanding(2) | 87,128 | ||
| (1) Includes net change in deferred community fees, premium on mortgage notes payable, above/below market lease amortization and other non-cash GAAP adjustments. | |
| (2) Includes dilutive effect of options. | |
| Reconciliation of Same-Store NOI (unaudited)(1) | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||
| 3Q 2014 | 3Q 2015 | |||||||||||||||||||||||
|
NNN |
Same Store |
Non-Same |
Total |
NNN |
Same Store |
Non-Same |
Total | |||||||||||||||||
| NOI | $ | 26,672 | $ | 11,222 | $ | 475 | $ | 38,369 | $ | 28,259 | $ | 11,612 | $ | 13,354 | $ | 53,225 | ||||||||
| Depreciation and amortization | (28,670) | (40,812) | ||||||||||||||||||||||
| Interest expense | (14,130) | (20,051) | ||||||||||||||||||||||
| Acquisition, transaction and integration expense | (4,087) | (2,373) | ||||||||||||||||||||||
| Management fee to affiliate | (2,385) | (4,085) | ||||||||||||||||||||||
| General and administrative expense | (1,398) | (3,152) | ||||||||||||||||||||||
| Other income (expense) | 1,500 | (1,089) | ||||||||||||||||||||||
| Income tax benefit (expense) | (350) | 378 | ||||||||||||||||||||||
| Net Loss | ($11,151) | ($17,959) | ||||||||||||||||||||||
(1) Includes all properties owned during both comparison periods presented.
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 believe that net income (loss), as defined by GAAP, is the most appropriate earnings measurement. However, we consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance.
We believe that Normalized Funds from Operations, or Normalized FFO, is useful because it allows investors, analysts and our management to compare our operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by period specific items and events such as transaction costs. In addition, we believe Adjusted Funds from Operations, or AFFO, and normalized FAD are useful as supplemental measures of our ability to fund dividend payments.
The non-GAAP financial measures we present may not be identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. You should not consider these measures as alternatives to net income (determined in accordance with GAAP) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine these measures in conjunction with net income as presented in our Consolidated Financial Statements.
