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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Page
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March 31,
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December 31,
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2017
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2016
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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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805,827
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$
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803,773
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Buildings and improvements
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6,961,929
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6,926,750
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7,767,756
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7,730,523
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Accumulated depreciation
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(1,376,898
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)
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(1,328,011
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)
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6,390,858
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6,402,512
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Cash and cash equivalents
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32,272
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31,749
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Restricted cash
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3,126
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3,829
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Acquired real estate leases and other intangible assets, net
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496,620
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514,446
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Other assets, net
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297,328
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275,218
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Total assets
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$
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7,220,204
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$
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7,227,754
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LIABILITIES AND EQUITY
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Unsecured revolving credit facility
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$
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97,000
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$
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327,000
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Unsecured term loans, net
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547,246
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547,058
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Senior unsecured notes, net
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1,723,484
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1,722,758
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Secured debt and capital leases, net
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1,114,796
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1,117,649
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Accrued interest
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33,522
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18,471
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Assumed real estate lease obligations, net
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103,521
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106,038
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Other liabilities
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181,611
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189,375
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Total liabilities
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3,801,180
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4,028,349
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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, 237,544,479 shares issued and outstanding at March 31, 2017 and December 31, 2016
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2,375
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2,375
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Additional paid in capital
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4,607,410
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4,533,456
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Cumulative net income
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1,651,040
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1,618,885
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Cumulative other comprehensive income
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58,716
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34,549
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Cumulative distributions
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(3,082,502
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)
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(2,989,860
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)
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Total equity attributable to common shareholders
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3,237,039
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3,199,405
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Noncontrolling interest:
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Total equity attributable to noncontrolling interest
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181,985
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—
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Total equity
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3,419,024
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3,199,405
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Total liabilities and equity
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$
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7,220,204
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$
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7,227,754
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Three Months Ended
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March 31,
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2017
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2016
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Revenues:
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Rental income
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$
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166,443
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$
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161,421
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Residents fees and services
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98,118
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96,954
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Total revenues
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264,561
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258,375
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Expenses:
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Property operating expenses
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101,057
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97,949
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Depreciation and amortization
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73,175
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71,223
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General and administrative
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15,083
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10,863
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Acquisition and certain other transaction related costs
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292
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439
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Impairment of assets
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—
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7,390
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Total expenses
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189,607
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187,864
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Operating income
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74,954
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70,511
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Dividend income
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659
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—
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Interest and other income
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120
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64
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Interest expense
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(43,488
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)
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(39,280
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)
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Loss on early extinguishment of debt
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—
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(6
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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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32,245
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31,289
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Income tax expense
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(92
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)
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(94
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)
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Equity in earnings of an investee
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128
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77
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Net income
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32,281
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31,272
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Net income attributable to noncontrolling interest
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(126
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)
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—
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Net income attributable to common shareholders
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$
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32,155
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$
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31,272
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Other comprehensive income:
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Unrealized gain on investments in available for sale securities
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24,045
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24,187
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Equity in unrealized gain of an investee
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122
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52
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Other comprehensive income
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24,167
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24,239
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Comprehensive income
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56,448
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55,511
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Comprehensive income attributable to noncontrolling interest
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(126
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)
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—
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Comprehensive income attributable to common shareholders
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$
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56,322
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$
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55,511
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Weighted average common shares outstanding (basic)
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237,391
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237,315
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Weighted average common shares outstanding (diluted)
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237,416
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237,329
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Per common share amounts (basic and diluted):
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Net income attributable to common shareholders
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$
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0.14
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$
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0.13
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Three Months Ended
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||||||
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March 31,
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2017
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2016
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Cash flows from operating activities:
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Net income
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$
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32,281
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$
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31,272
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Adjustments to reconcile net income to cash provided by operating activities:
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Depreciation and amortization
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73,175
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71,223
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Amortization of debt issuance costs and debt discounts and premiums
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1,459
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1,356
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Straight line rental income
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(3,429
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)
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(4,561
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)
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Amortization of acquired real estate leases and other intangible assets
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(1,291
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)
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(1,254
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)
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Loss on early extinguishment of debt
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—
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6
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Impairment of assets
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—
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7,390
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Other non-cash adjustments
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(943
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)
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(985
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)
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Equity in earnings of an investee
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(128
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)
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(77
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)
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Change in assets and liabilities:
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Restricted cash
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703
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(698
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)
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Other assets
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3,901
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|
664
|
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Accrued interest
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15,051
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16,654
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Other liabilities
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(6,001
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)
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1,821
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Net cash provided by operating activities
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114,778
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122,811
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Cash flows from investing activities:
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Real estate acquisitions and deposits
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(14,326
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)
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(23,651
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)
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Real estate improvements
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(30,171
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)
|
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(23,173
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)
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Proceeds from sale of properties
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—
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|
644
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|
||
Net cash used for investing activities
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(44,497
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)
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(46,180
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)
|
||
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Cash flows from financing activities:
|
|
|
|
|
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|
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Proceeds from issuance of senior unsecured notes
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—
|
|
|
250,000
|
|
||
Proceeds from borrowings on revolving credit facility
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|
94,000
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|
|
98,000
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|
||
Repayments of borrowings on revolving credit facility
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(324,000
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)
|
|
(312,000
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)
|
||
Repayment of other debt
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(2,929
|
)
|
|
(9,957
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)
|
||
Payment of debt issuance costs
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—
|
|
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(8,517
|
)
|
||
Proceeds from noncontrolling interest, net
|
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255,813
|
|
|
—
|
|
||
Distributions to shareholders
|
|
(92,642
|
)
|
|
(92,614
|
)
|
||
Net cash used for financing activities
|
|
(69,758
|
)
|
|
(75,088
|
)
|
||
|
|
|
|
|
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Increase in cash and cash equivalents
|
|
523
|
|
|
1,543
|
|
||
Cash and cash equivalents at beginning of period
|
|
31,749
|
|
|
37,656
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
32,272
|
|
|
$
|
39,199
|
|
|
|
|
|
|
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Supplemental cash flows information:
|
|
|
|
|
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Interest paid
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$
|
26,978
|
|
|
$
|
21,269
|
|
Date
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Location
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Number of Properties
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Number of Buildings
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Square Feet (000’s)
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Cash Paid plus Assumed Debt
(1)
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Land
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Building and Improvements
|
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Acquired Real Estate Leases
(2)
|
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Acquired Real Estate Lease Obligations
(2)
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Assumed Debt
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Premium on Assumed Debt
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Jan-17
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Kansas
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1
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|
1
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|
117
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|
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$
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15,106
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|
|
$
|
1,522
|
|
|
$
|
7,246
|
|
|
$
|
6,338
|
|
|
$
|
—
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$
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—
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|
$
|
—
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(1)
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Amount includes the cash we paid and various closing settlement adjustments, as well as closing costs.
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(2)
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The weighted average amortization periods for acquired real estate leases at the time of this acquisition was
10.3 years
.
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Significant
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Total as of
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Quoted Prices in Active
|
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Significant Other
|
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Unobservable
|
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March 31,
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Markets for Identical
|
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Observable Inputs
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Inputs
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||||||||
Description
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2017
|
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Assets (Level 1)
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(Level 2)
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(Level 3)
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Recurring Fair Value Measurements
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Assets:
|
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|
|
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|
||||||||
Investments in available for sale securities
(1)
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$
|
139,657
|
|
|
$
|
139,657
|
|
|
$
|
—
|
|
|
$
|
—
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(1)
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Our investments in available for sale securities include our
2,637,408
shares of RMR Inc. class A common stock and our
4,235,000
Five Star common shares. The fair values of these shares are based upon quoted prices at
March 31, 2017
in active markets (Level 1 inputs). See
Note 4
for further information on our investments in available for sale securities.
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As of March 31, 2017
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As of December 31, 2016
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Description
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Carrying Amount
(1)
|
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Estimated Fair Value
|
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Carrying Amount
(1)
|
|
Estimated Fair Value
|
||||||||
Senior unsecured notes
|
|
$
|
1,723,484
|
|
|
$
|
1,806,912
|
|
|
$
|
1,722,758
|
|
|
$
|
1,755,715
|
|
Secured debt
(2)
|
|
1,103,518
|
|
|
1,101,363
|
|
|
1,106,183
|
|
|
1,090,515
|
|
||||
|
|
$
|
2,827,002
|
|
|
$
|
2,908,275
|
|
|
$
|
2,828,941
|
|
|
$
|
2,846,230
|
|
(1)
|
Includes unamortized debt issuance costs, premiums and discounts.
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(2)
|
We assumed certain of these secured debts in connection with our acquisitions of certain properties. We recorded the assumed mortgage debts at estimated fair value on the date of acquisition and we are amortizing the fair value adjustments, if any, to interest expense over the respective terms of the mortgage debts to reduce interest expense to the estimated market interest rates as of the date of acquisition.
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|
|
For the Three Months Ended March 31, 2017
|
||||||||||||||||||
|
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Triple Net
|
|
|
|
|
|
|
|
|
||||||||||
|
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Leased
|
|
Managed
|
|
|
|
|
|
|
||||||||||
|
|
Senior Living
|
|
Senior Living
|
|
|
|
All Other
|
|
|
||||||||||
|
|
Communities
|
|
Communities
|
|
MOBs
|
|
Operations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Rental income
|
|
$
|
67,252
|
|
|
$
|
—
|
|
|
$
|
94,646
|
|
|
$
|
4,545
|
|
|
$
|
166,443
|
|
Residents fees and services
|
|
—
|
|
|
98,118
|
|
|
—
|
|
|
—
|
|
|
98,118
|
|
|||||
Total revenues
|
|
67,252
|
|
|
98,118
|
|
|
94,646
|
|
|
4,545
|
|
|
264,561
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property operating expenses
|
|
—
|
|
|
73,880
|
|
|
27,177
|
|
|
—
|
|
|
101,057
|
|
|||||
Depreciation and amortization
|
|
20,334
|
|
|
20,215
|
|
|
31,678
|
|
|
948
|
|
|
73,175
|
|
|||||
General and administrative
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,083
|
|
|
15,083
|
|
|||||
Acquisition and certain other transaction related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
292
|
|
|
292
|
|
|||||
Total expenses
|
|
20,334
|
|
|
94,095
|
|
|
58,855
|
|
|
16,323
|
|
|
189,607
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income (loss)
|
|
46,918
|
|
|
4,023
|
|
|
35,791
|
|
|
(11,778
|
)
|
|
74,954
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividend income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
659
|
|
|
659
|
|
|||||
Interest and other income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120
|
|
|
120
|
|
|||||
Interest expense
|
|
(5,339
|
)
|
|
(1,176
|
)
|
|
(6,321
|
)
|
|
(30,652
|
)
|
|
(43,488
|
)
|
|||||
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee
|
|
41,579
|
|
|
2,847
|
|
|
29,470
|
|
|
(41,651
|
)
|
|
32,245
|
|
|||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(92
|
)
|
|
(92
|
)
|
|||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128
|
|
|
128
|
|
|||||
Net income (loss)
|
|
$
|
41,579
|
|
|
$
|
2,847
|
|
|
$
|
29,470
|
|
|
$
|
(41,615
|
)
|
|
32,281
|
|
|
Net income attributable to noncontrolling interest
|
|
—
|
|
|
—
|
|
|
(126
|
)
|
|
—
|
|
|
(126
|
)
|
|||||
Net income attributable to common shareholders
|
|
$
|
41,579
|
|
|
$
|
2,847
|
|
|
$
|
29,344
|
|
|
$
|
(41,615
|
)
|
|
$
|
32,155
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of March 31, 2017
|
||||||||||||||||||
|
|
Triple Net
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Leased
|
|
Managed
|
|
|
|
|
|
|
||||||||||
|
|
Senior Living
|
|
Senior Living
|
|
|
|
All Other
|
|
|
||||||||||
|
|
Communities
|
|
Communities
|
|
MOBs
|
|
Operations
|
|
Consolidated
|
||||||||||
Total assets
|
|
$
|
2,279,923
|
|
|
$
|
1,245,955
|
|
|
$
|
3,323,735
|
|
|
$
|
370,591
|
|
|
$
|
7,220,204
|
|
|
|
For the Three Months Ended March 31, 2016
|
||||||||||||||||||
|
|
Triple Net
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Leased
|
|
Managed
|
|
|
|
|
|
|
||||||||||
|
|
Senior Living
|
|
Senior Living
|
|
|
|
All Other
|
|
|
||||||||||
|
|
Communities
|
|
Communities
|
|
MOBs
|
|
Operations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Rental income
|
|
$
|
65,308
|
|
|
$
|
—
|
|
|
$
|
91,582
|
|
|
$
|
4,531
|
|
|
$
|
161,421
|
|
Residents fees and services
|
|
—
|
|
|
96,954
|
|
|
—
|
|
|
—
|
|
|
96,954
|
|
|||||
Total revenues
|
|
65,308
|
|
|
96,954
|
|
|
91,582
|
|
|
4,531
|
|
|
258,375
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Property operating expenses
|
|
363
|
|
|
72,178
|
|
|
25,408
|
|
|
—
|
|
|
97,949
|
|
|||||
Depreciation and amortization
|
|
19,401
|
|
|
20,018
|
|
|
30,856
|
|
|
948
|
|
|
71,223
|
|
|||||
General and administrative
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,863
|
|
|
10,863
|
|
|||||
Acquisition and certain other transaction related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
439
|
|
|
439
|
|
|||||
Impairment of assets
|
|
4,391
|
|
|
—
|
|
|
2,999
|
|
|
—
|
|
|
7,390
|
|
|||||
Total expenses
|
|
24,155
|
|
|
92,196
|
|
|
59,263
|
|
|
12,250
|
|
|
187,864
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating income (loss)
|
|
41,153
|
|
|
4,758
|
|
|
32,319
|
|
|
(7,719
|
)
|
|
70,511
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest and other income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
64
|
|
|||||
Interest expense
|
|
(6,382
|
)
|
|
(2,564
|
)
|
|
(953
|
)
|
|
(29,381
|
)
|
|
(39,280
|
)
|
|||||
Loss on early extinguishment of debt
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Income (loss) from continuing operations before income tax expense and equity in earnings of an investee
|
|
34,771
|
|
|
2,188
|
|
|
31,366
|
|
|
(37,036
|
)
|
|
31,289
|
|
|||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
(94
|
)
|
|||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
77
|
|
|||||
Net income (loss)
|
|
$
|
34,771
|
|
|
$
|
2,188
|
|
|
$
|
31,366
|
|
|
$
|
(37,053
|
)
|
|
$
|
31,272
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
As of December 31, 2016
|
||||||||||||||||||
|
|
Triple Net
|
|
|
|
|
|
|
|
|
||||||||||
|
|
Leased
|
|
Managed
|
|
|
|
|
|
|
||||||||||
|
|
Senior Living
|
|
Senior Living
|
|
|
|
All Other
|
|
|
||||||||||
|
|
Communities
|
|
Communities
|
|
MOBs
|
|
Operations
|
|
Consolidated
|
||||||||||
Total assets
|
|
$
|
2,289,045
|
|
|
$
|
1,260,032
|
|
|
$
|
3,333,141
|
|
|
$
|
345,536
|
|
|
$
|
7,227,754
|
|
|
|
Three Months Ended
March 31, |
||||
|
|
2017
|
|
2016
|
||
Weighted average common shares for basic earnings per share
|
|
237,391
|
|
|
237,315
|
|
Effect of dilutive securities: unvested share awards
|
|
25
|
|
|
14
|
|
Weighted average common shares for diluted earnings per share
|
|
237,416
|
|
|
237,329
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
Investment per
|
|
|
|
% of
|
||||||||||
|
|
Number of
|
|
Units/Beds or
|
|
|
|
Investment
|
|
% of Total
|
|
Unit / Bed or
|
|
Q1 2017
|
|
Q1 2017
|
||||||||||
(As of March 31, 2017)
|
|
Properties
|
|
Square Feet
|
|
|
|
Carrying Value
(1)
|
|
Investment
|
|
Square Foot
(2)
|
|
NOI
(3)
|
|
NOI
(3)
|
||||||||||
Facility Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Independent living
(4)
|
|
68
|
|
|
16,452
|
|
|
|
|
$
|
2,298,962
|
|
|
29.6
|
%
|
|
$
|
139,738
|
|
|
$
|
46,754
|
|
|
28.5
|
%
|
Assisted living
(4)
|
|
197
|
|
|
14,435
|
|
|
|
|
2,007,693
|
|
|
25.8
|
%
|
|
$
|
139,085
|
|
|
40,503
|
|
|
24.8
|
%
|
||
Skilled nursing facilities
(4)
|
|
39
|
|
|
4,131
|
|
|
|
|
183,330
|
|
|
2.4
|
%
|
|
$
|
44,379
|
|
|
4,233
|
|
|
2.6
|
%
|
||
Subtotal senior living communities
|
|
304
|
|
|
35,018
|
|
|
|
|
4,489,985
|
|
|
57.8
|
%
|
|
$
|
128,219
|
|
|
91,490
|
|
|
55.9
|
%
|
||
MOBs
(5)
|
|
120
|
|
|
11,552,323
|
|
|
sq. ft.
|
|
3,097,754
|
|
|
39.9
|
%
|
|
$
|
268
|
|
|
67,469
|
|
|
41.3
|
%
|
||
Wellness centers
|
|
10
|
|
|
812,000
|
|
|
sq. ft.
|
|
180,017
|
|
|
2.3
|
%
|
|
$
|
222
|
|
|
4,545
|
|
|
2.8
|
%
|
||
Total
|
|
434
|
|
|
|
|
|
|
|
$
|
7,767,756
|
|
|
100.0
|
%
|
|
|
|
|
$
|
163,504
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Tenant / Operator / Managed Properties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Five Star
|
|
185
|
|
|
20,187
|
|
|
|
|
$
|
2,301,253
|
|
|
29.6
|
%
|
|
$
|
113,997
|
|
|
$
|
50,985
|
|
|
31.2
|
%
|
Sunrise / Marriott
(6)
|
|
4
|
|
|
1,619
|
|
|
|
|
126,326
|
|
|
1.6
|
%
|
|
$
|
78,027
|
|
|
3,142
|
|
|
1.9
|
%
|
||
Brookdale
|
|
18
|
|
|
894
|
|
|
|
|
68,673
|
|
|
0.9
|
%
|
|
$
|
76,815
|
|
|
1,801
|
|
|
1.1
|
%
|
||
11 private senior living companies (combined)
|
|
29
|
|
|
3,520
|
|
|
|
|
508,448
|
|
|
6.5
|
%
|
|
$
|
144,445
|
|
|
11,324
|
|
|
6.9
|
%
|
||
Subtotal triple net leased senior living communities
|
|
236
|
|
|
26,220
|
|
|
|
|
3,004,700
|
|
|
38.6
|
%
|
|
$
|
114,596
|
|
|
67,252
|
|
|
41.1
|
%
|
||
Managed senior living communities
(7)
|
|
68
|
|
|
8,798
|
|
|
|
|
1,485,285
|
|
|
19.2
|
%
|
|
$
|
168,821
|
|
|
24,238
|
|
|
14.8
|
%
|
||
Subtotal senior living communities
|
|
304
|
|
|
35,018
|
|
|
|
|
4,489,985
|
|
|
57.8
|
%
|
|
$
|
128,219
|
|
|
91,490
|
|
|
55.9
|
%
|
||
MOBs
(5)
|
|
120
|
|
|
11,552,323
|
|
|
sq. ft.
|
|
3,097,754
|
|
|
39.9
|
%
|
|
$
|
268
|
|
|
67,469
|
|
|
41.3
|
%
|
||
Wellness centers
|
|
10
|
|
|
812,000
|
|
|
sq. ft.
|
|
180,017
|
|
|
2.3
|
%
|
|
$
|
222
|
|
|
4,545
|
|
|
2.8
|
%
|
||
Total
|
|
434
|
|
|
|
|
|
|
|
$
|
7,767,756
|
|
|
100.0
|
%
|
|
|
|
|
$
|
163,504
|
|
|
100.0
|
%
|
|
|
Rent Coverage
|
|
Occupancy
|
||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||
Five Star
|
|
1.19x
|
|
1.23x
|
|
83.6
|
%
|
|
84.5
|
%
|
Sunrise / Marriott
(6)
|
|
2.05x
|
|
1.94x
|
|
91.8
|
%
|
|
90.6
|
%
|
Brookdale
|
|
2.59x
|
|
2.81x
|
|
84.5
|
%
|
|
89.3
|
%
|
11 private senior living companies (combined)
|
|
1.28x
|
|
1.35x
|
|
90.1
|
%
|
|
87.6
|
%
|
Subtotal triple net leased senior living communities
|
|
1.30x
|
|
1.34x
|
|
85.0
|
%
|
|
85.4
|
%
|
Managed senior living communities
(7)
|
|
NA
|
|
NA
|
|
87.2
|
%
|
|
88.1
|
%
|
Subtotal senior living communities
|
|
1.30x
|
|
1.34x
|
|
85.5
|
%
|
|
86.1
|
%
|
MOBs
(5)
|
|
NA
|
|
NA
|
|
96.4
|
%
|
|
95.8
|
%
|
Wellness centers
|
|
1.91x
|
|
1.91x
|
|
100.0
|
%
|
|
100.0
|
%
|
Total
|
|
1.33x
|
|
1.38x
|
|
|
|
|
|
(1)
|
Amounts are at cost before depreciation, but after impairment write downs, if any.
|
(2)
|
Represents investment carrying value divided by the number of living units, beds or rentable square feet at
March 31, 2017
, as applicable.
|
(3)
|
NOI is defined and calculated by reportable segment. Our definition of NOI and our reconciliation of net income to consolidated NOI are included below under the heading “Non-GAAP Financial Measures”.
|
(4)
|
Senior living communities are categorized by the type of living units or beds which constitute a majority of the living units or beds at the community.
|
(5)
|
These 120 MOB properties are comprised of 146 buildings. Our MOB 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 MOB leases are so-called "full-service" leases where we receive fixed rent from our tenants and no reimbursement for our property operating costs.
|
(6)
|
Marriott International, Inc. guarantees the lessee’s obligations under these leases.
|
(7)
|
These senior living communities are managed by Five Star. The occupancy for the 12 month period ended, or, if shorter, from the date of acquisitions through,
March 31, 2017
was 86.6%.
|
(8)
|
Operating data for MOBs are presented as of
March 31, 2017
and
2016
and includes (i) space being fitted out for occupancy pursuant to existing leases and (ii) space which is leased but is not occupied or is being offered for sublease by tenants; operating data for other properties, tenants and managers are presented based upon the operating results provided by our tenants and managers for the 12 months ended December 31, 2016 and 2015, or the most recent prior period for which tenant operating results are made available to us. Rent coverage is calculated as operating cash flows from our tenants’ facility operations of our properties, before subordinated charges, if any, divided by rents payable to us. We have not independently verified tenant operating data. Excludes data for periods prior to our ownership of certain properties, as well as data for properties sold during the periods presented.
|
|
|
|
|
|
|
|
|
|
|
Percent of
|
|
Cumulative
|
||||||||||
|
|
Annualized Rental Income
(1) (2)
|
|
Total
|
|
Percentage of
|
||||||||||||||||
|
|
Triple Net Leased
|
|
|
|
|
|
|
|
Annualized
|
|
Annualized
|
||||||||||
|
|
Senior Living
|
|
|
|
Wellness
|
|
|
|
Rental Income
|
|
Rental Income
|
||||||||||
Year
|
|
Communities
|
|
MOBs
|
|
Centers
|
|
Total
|
|
Expiring
(2)
|
|
Expiring
(2)
|
||||||||||
2017
|
|
$
|
—
|
|
|
$
|
25,785
|
|
|
$
|
—
|
|
|
$
|
25,785
|
|
|
3.9
|
%
|
|
3.9
|
%
|
2018
|
|
—
|
|
|
24,867
|
|
|
—
|
|
|
24,867
|
|
|
3.7
|
%
|
|
7.6
|
%
|
||||
2019
|
|
590
|
|
|
39,991
|
|
|
—
|
|
|
40,581
|
|
|
6.1
|
%
|
|
13.7
|
%
|
||||
2020
|
|
—
|
|
|
31,751
|
|
|
—
|
|
|
31,751
|
|
|
4.8
|
%
|
|
18.5
|
%
|
||||
2021
|
|
1,424
|
|
|
17,095
|
|
|
—
|
|
|
18,519
|
|
|
2.8
|
%
|
|
21.3
|
%
|
||||
2022
|
|
—
|
|
|
17,616
|
|
|
—
|
|
|
17,616
|
|
|
2.6
|
%
|
|
23.9
|
%
|
||||
2023
|
|
28,234
|
|
|
11,842
|
|
|
7,546
|
|
|
47,622
|
|
|
7.1
|
%
|
|
31.0
|
%
|
||||
2024
|
|
68,801
|
|
|
38,166
|
|
|
—
|
|
|
106,967
|
|
|
16.0
|
%
|
|
47.0
|
%
|
||||
2025
|
|
—
|
|
|
12,735
|
|
|
—
|
|
|
12,735
|
|
|
1.9
|
%
|
|
48.9
|
%
|
||||
Thereafter
|
|
180,428
|
|
|
149,346
|
|
|
10,550
|
|
|
340,324
|
|
|
51.1
|
%
|
|
100.0
|
%
|
||||
Total
|
|
$
|
279,477
|
|
|
$
|
369,194
|
|
|
$
|
18,096
|
|
|
$
|
666,767
|
|
|
100.0
|
%
|
|
|
(1)
|
Annualized rental income is rents pursuant to existing leases as of
March 31, 2017
, including estimated percentage rents, straight line rent adjustments, estimated recurring expense reimbursements for certain net and modified gross leases and excluding lease value amortization at certain of our MOBs and wellness centers. Rental income amounts also include 100% of rental income as reported under GAAP from a property owned by a joint venture in which we own 55%.
|
(2)
|
Excludes rent received from our managed senior living communities leased to our taxable REIT subsidiaries, or TRSs. If the NOI from our TRSs (three months ended
March 31, 2017
, annualized) were included in the foregoing table, the percent of total annualized rental income expiring in each of the following years would be:
2017
— 3.4%;
2018
— 3.3%;
2019
— 5.3%;
2020
— 4.2%;
2021
— 2.4%;
2022
— 2.3%;
2023
— 6.2%;
2024
— 14.0%;
2025
— 1.7%; and thereafter — 57.2%. In addition, if our leases to our TRSs using the terms of the management agreements for these communities were included in the foregoing table, the average remaining lease term for all properties (weighted by annualized rental income) would be 9.3 years.
|
|
|
|
|
|
|
|
|
|
|
Percent of
|
|
Cumulative
|
||||||
|
|
|
|
|
|
|
|
|
|
Total
|
|
Percentage of
|
||||||
|
|
Number of Tenants
(1)
|
|
Number of
|
|
Number of
|
||||||||||||
|
|
Senior Living
|
|
|
|
Wellness
|
|
|
|
Tenancies
|
|
Tenancies
|
||||||
Year
|
|
Communities
|
|
MOBs
|
|
Centers
|
|
Total
|
|
Expiring
(1)
|
|
Expiring
(1)
|
||||||
2017
|
|
—
|
|
|
117
|
|
|
—
|
|
|
117
|
|
|
17.3
|
%
|
|
17.3
|
%
|
2018
|
|
—
|
|
|
97
|
|
|
—
|
|
|
97
|
|
|
14.3
|
%
|
|
31.6
|
%
|
2019
|
|
1
|
|
|
89
|
|
|
—
|
|
|
90
|
|
|
13.3
|
%
|
|
44.9
|
%
|
2020
|
|
—
|
|
|
84
|
|
|
—
|
|
|
84
|
|
|
12.4
|
%
|
|
57.3
|
%
|
2021
|
|
1
|
|
|
68
|
|
|
—
|
|
|
69
|
|
|
10.2
|
%
|
|
67.5
|
%
|
2022
|
|
—
|
|
|
60
|
|
|
—
|
|
|
60
|
|
|
8.9
|
%
|
|
76.4
|
%
|
2023
|
|
2
|
|
|
27
|
|
|
1
|
|
|
30
|
|
|
4.4
|
%
|
|
80.8
|
%
|
2024
|
|
3
|
|
|
30
|
|
|
—
|
|
|
33
|
|
|
4.9
|
%
|
|
85.7
|
%
|
2025
|
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
|
3.7
|
%
|
|
89.4
|
%
|
Thereafter
|
|
11
|
|
|
60
|
|
|
1
|
|
|
72
|
|
|
10.6
|
%
|
|
100.0
|
%
|
Total
|
|
18
|
|
|
657
|
|
|
2
|
|
|
677
|
|
|
100.0
|
%
|
|
|
(1)
|
Excludes our managed senior living communities leased to our TRSs.
|
|
|
Number of Living Units / Beds or Square Feet with Leases Expiring
|
||||||||||||||||||||||
|
|
Living Units / Beds
(1)
|
|
Square Feet
(2)
|
||||||||||||||||||||
|
|
Triple Net
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Leased Senior
|
|
Percent of
|
|
Percentage of
|
|
|
|
Wellness
|
|
|
|
Percent of
|
|
Cumulative
|
||||||||
|
|
Living
|
|
Total Living
|
|
Living Units /
|
|
|
|
Centers
|
|
|
|
Total
|
|
Percent of
|
||||||||
|
|
Communities
|
|
Units / Beds
|
|
Beds
|
|
MOBs
|
|
(Square
|
|
Total Square
|
|
Square Feet
|
|
Total Square
|
||||||||
Year
|
|
(Units / Beds)
|
|
Expiring
|
|
Expiring
|
|
(Square Feet)
|
|
Feet)
|
|
Feet
|
|
Expiring
|
|
Feet Expiring
|
||||||||
2017
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
842,780
|
|
|
—
|
|
|
842,780
|
|
|
7.1
|
%
|
|
7.1
|
%
|
2018
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
829,409
|
|
|
—
|
|
|
829,409
|
|
|
6.9
|
%
|
|
14.0
|
%
|
2019
|
|
175
|
|
|
0.7
|
%
|
|
0.7
|
%
|
|
1,273,365
|
|
|
—
|
|
|
1,273,365
|
|
|
10.7
|
%
|
|
24.7
|
%
|
2020
|
|
—
|
|
|
—
|
%
|
|
0.7
|
%
|
|
1,441,246
|
|
|
—
|
|
|
1,441,246
|
|
|
12.1
|
%
|
|
36.8
|
%
|
2021
|
|
361
|
|
|
1.4
|
%
|
|
2.1
|
%
|
|
488,859
|
|
|
—
|
|
|
488,859
|
|
|
4.1
|
%
|
|
40.9
|
%
|
2022
|
|
—
|
|
|
—
|
%
|
|
2.1
|
%
|
|
709,410
|
|
|
—
|
|
|
709,410
|
|
|
5.9
|
%
|
|
46.8
|
%
|
2023
|
|
2,263
|
|
|
8.6
|
%
|
|
10.7
|
%
|
|
786,809
|
|
|
354,000
|
|
|
1,140,809
|
|
|
9.6
|
%
|
|
56.4
|
%
|
2024
|
|
6,561
|
|
|
25.0
|
%
|
|
35.7
|
%
|
|
1,444,844
|
|
|
—
|
|
|
1,444,844
|
|
|
12.1
|
%
|
|
68.5
|
%
|
2025
|
|
—
|
|
|
—
|
%
|
|
35.7
|
%
|
|
535,419
|
|
|
—
|
|
|
535,419
|
|
|
4.5
|
%
|
|
73.0
|
%
|
Thereafter
|
|
16,860
|
|
|
64.3
|
%
|
|
100.0
|
%
|
|
2,778,792
|
|
|
458,000
|
|
|
3,236,792
|
|
|
27.0
|
%
|
|
100.0
|
%
|
Total
|
|
26,220
|
|
|
100.0
|
%
|
|
|
|
11,130,933
|
|
|
812,000
|
|
|
11,942,933
|
|
|
100.0
|
%
|
|
|
(1)
|
Excludes 8,798 living units from our managed senior living communities leased to our TRSs. If the number of living units included in our TRS leases using the terms of the management agreements for these communities were included in the foregoing table, the percent of total living units / beds expiring in each of the following years would be:
2017
— 0.0%;
2018
— 0.0%;
2019
— 0.5%;
2020
— 0.0%;
2021
— 1.0%;
2022
— 0.0%;
2023
— 6.5%;
2024
— 18.7%;
2025
— 0.0%; and thereafter — 73.3%.
|
(2)
|
Includes 100% of square feet from a property owned by a joint venture in which we own 55%.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Revenues:
|
|
|
|
|
|
|
||
Triple net leased senior living communities
|
|
$
|
67,252
|
|
|
$
|
65,308
|
|
Managed senior living communities
|
|
98,118
|
|
|
96,954
|
|
||
MOBs
|
|
94,646
|
|
|
91,582
|
|
||
All other operations
|
|
4,545
|
|
|
4,531
|
|
||
Total revenues
|
|
$
|
264,561
|
|
|
$
|
258,375
|
|
|
|
|
|
|
||||
Net income attributable to common shareholders:
|
|
|
|
|
|
|
||
Triple net leased senior living communities
|
|
$
|
41,579
|
|
|
$
|
34,771
|
|
Managed senior living communities
|
|
2,847
|
|
|
2,188
|
|
||
MOBs
|
|
29,344
|
|
|
31,366
|
|
||
All other operations
|
|
(41,615
|
)
|
|
(37,053
|
)
|
||
Net income attributable to common shareholders
|
|
$
|
32,155
|
|
|
$
|
31,272
|
|
|
|
All Properties
|
|
Comparable Properties
(1)
|
||||||||
|
|
As of and for the Three Months
|
|
As of and for the Three Months
|
||||||||
|
|
Ended March 31,
|
|
Ended March 31,
|
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Total properties
|
|
236
|
|
|
231
|
|
|
227
|
|
|
227
|
|
# of units / beds
|
|
26,220
|
|
|
26,114
|
|
|
25,549
|
|
|
25,549
|
|
Tenant operating data
(2)
|
|
|
|
|
|
|
|
|
||||
Occupancy
|
|
85.0
|
%
|
|
85.4
|
%
|
|
85.0
|
%
|
|
85.4
|
%
|
Rent coverage
|
|
1.30x
|
|
|
1.34x
|
|
|
1.30x
|
|
|
1.34x
|
|
(1)
|
Consists of triple net leased senior living communities we have owned continuously since January 1, 2016 and excludes communities held for sale, if any.
|
(2)
|
All tenant operating data presented are based upon the operating results provided by our tenants for the 12 months ended December 31, 2016 and 2015 or the most recent prior period for which tenant operating results are made available to us. Rent coverage is calculated as 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 for properties sold during the periods presented.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
% Change
|
|||||||
Rental income
|
|
$
|
67,252
|
|
|
$
|
65,308
|
|
|
$
|
1,944
|
|
|
3.0
|
%
|
Property operating expenses
|
|
—
|
|
|
(363
|
)
|
|
(363
|
)
|
|
(100.0
|
)%
|
|||
Net operating income (NOI)
|
|
67,252
|
|
|
64,945
|
|
|
2,307
|
|
|
3.6
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization expense
|
|
(20,334
|
)
|
|
(19,401
|
)
|
|
933
|
|
|
4.8
|
%
|
|||
Impairment of assets
|
|
—
|
|
|
(4,391
|
)
|
|
(4,391
|
)
|
|
(100.0
|
)%
|
|||
Operating income
|
|
46,918
|
|
|
41,153
|
|
|
5,765
|
|
|
14.0
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
|
(5,339
|
)
|
|
(6,382
|
)
|
|
(1,043
|
)
|
|
(16.3
|
)%
|
|||
Net income
|
|
$
|
41,579
|
|
|
$
|
34,771
|
|
|
$
|
6,808
|
|
|
19.6
|
%
|
(1)
|
Consists of managed senior living communities owned and managed by the same operator continuously since January 1, 2016 and 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,
|
|||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
% Change
|
|||||||
Residents fees and services
|
|
$
|
98,118
|
|
|
$
|
96,954
|
|
|
$
|
1,164
|
|
|
1.2
|
%
|
Property operating expenses
|
|
(73,880
|
)
|
|
(72,178
|
)
|
|
1,702
|
|
|
2.4
|
%
|
|||
Net operating income (NOI)
|
|
24,238
|
|
|
24,776
|
|
|
(538
|
)
|
|
(2.2
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization expense
|
|
(20,215
|
)
|
|
(20,018
|
)
|
|
197
|
|
|
1.0
|
%
|
|||
Operating income
|
|
4,023
|
|
|
4,758
|
|
|
(735
|
)
|
|
(15.4
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
|
(1,176
|
)
|
|
(2,564
|
)
|
|
(1,388
|
)
|
|
(54.1
|
)%
|
|||
Loss on early extinguishment of debt
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
(100.0
|
)%
|
|||
Net income
|
|
$
|
2,847
|
|
|
$
|
2,188
|
|
|
$
|
659
|
|
|
30.1
|
%
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
% Change
|
|||||||
Residents fees and services
|
|
$
|
91,086
|
|
|
$
|
92,021
|
|
|
$
|
(935
|
)
|
|
(1.0
|
)%
|
Property operating expenses
|
|
(68,110
|
)
|
|
(68,305
|
)
|
|
(195
|
)
|
|
(0.3
|
)%
|
|||
Net operating income (NOI)
|
|
22,976
|
|
|
23,716
|
|
|
(740
|
)
|
|
(3.1
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization expense
|
|
(16,154
|
)
|
|
(16,432
|
)
|
|
(278
|
)
|
|
(1.7
|
)%
|
|||
Operating income
|
|
6,822
|
|
|
7,284
|
|
|
(462
|
)
|
|
(6.3
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
|
(563
|
)
|
|
(2,084
|
)
|
|
(1,521
|
)
|
|
(73.0
|
)%
|
|||
Loss on early extinguishment of debt
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
(100.0
|
)%
|
|||
Net income
|
|
$
|
6,259
|
|
|
$
|
5,194
|
|
|
$
|
1,065
|
|
|
20.5
|
%
|
|
|
All Properties
|
|
Comparable Properties
(1)
|
||||||||
|
|
As of and for the Three Months
|
|
As of and for the Three Months
|
||||||||
|
|
Ended March 31,
|
|
Ended March 31,
|
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Total properties
|
|
120
|
|
|
122
|
|
|
116
|
|
|
116
|
|
Total buildings
|
|
146
|
|
|
148
|
|
|
140
|
|
|
140
|
|
Total square feet
(2)
|
|
11,552
|
|
|
11,444
|
|
|
11,046
|
|
|
11,040
|
|
Occupancy
(3)
|
|
96.4
|
%
|
|
95.8
|
%
|
|
96.2
|
%
|
|
96.3
|
%
|
(1)
|
Consists of MOBs we have owned continuously since January 1, 2016, includes our property subject to a joint venture arrangement and excludes properties classified as held for sale, if any.
|
(2)
|
Prior periods exclude space re-measurements made subsequent to those periods.
|
(3)
|
MOB occupancy includes (i) space being fitted out for occupancy pursuant to existing leases and (ii) space which is leased, but is not occupied or is being offered for sublease by tenants.
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
% Change
|
|||||||
Rental income
|
|
$
|
94,646
|
|
|
$
|
91,582
|
|
|
$
|
3,064
|
|
|
3.3
|
%
|
Property operating expenses
|
|
(27,177
|
)
|
|
(25,408
|
)
|
|
1,769
|
|
|
7.0
|
%
|
|||
Net operating income (NOI)
|
|
67,469
|
|
|
66,174
|
|
|
1,295
|
|
|
2.0
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization expense
|
|
(31,678
|
)
|
|
(30,856
|
)
|
|
822
|
|
|
2.7
|
%
|
|||
Impairment of assets
|
|
—
|
|
|
(2,999
|
)
|
|
(2,999
|
)
|
|
(100.0
|
)%
|
|||
Operating income
|
|
35,791
|
|
|
32,319
|
|
|
3,472
|
|
|
10.7
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
|
(6,321
|
)
|
|
(953
|
)
|
|
5,368
|
|
|
563.3
|
%
|
|||
Net income
|
|
29,470
|
|
|
$
|
31,366
|
|
|
(1,896
|
)
|
|
(6.0
|
)%
|
||
Net income attributable to noncontrolling interest
|
|
(126
|
)
|
|
—
|
|
|
126
|
|
|
100.0
|
%
|
|||
Net income attributable to common shareholders
|
|
$
|
29,344
|
|
|
$
|
31,366
|
|
|
$
|
(2,022
|
)
|
|
(6.4
|
)%
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
% Change
|
|||||||
Rental income
|
|
$
|
90,962
|
|
|
90,139
|
|
|
$
|
823
|
|
|
0.9
|
%
|
|
Property operating expenses
|
|
(26,457
|
)
|
|
(25,144
|
)
|
|
1,313
|
|
|
5.2
|
%
|
|||
Net operating income (NOI)
|
|
64,505
|
|
|
64,995
|
|
|
(490
|
)
|
|
(0.8
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization expense
|
|
(30,758
|
)
|
|
(30,300
|
)
|
|
458
|
|
|
1.5
|
%
|
|||
Operating income
|
|
33,747
|
|
|
34,695
|
|
|
(948
|
)
|
|
(2.7
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
|
(6,321
|
)
|
|
(953
|
)
|
|
5,368
|
|
|
563.3
|
%
|
|||
Net income
|
|
27,426
|
|
|
33,742
|
|
|
(6,316
|
)
|
|
(18.7
|
)%
|
|||
Net income attributable to noncontrolling interest
|
|
(126
|
)
|
|
—
|
|
|
(126
|
)
|
|
(100.0
|
)%
|
|||
Net income attributable to common shareholders
|
|
$
|
27,300
|
|
|
$
|
33,742
|
|
|
$
|
(6,442
|
)
|
|
(19.1
|
)%
|
|
|
Three Months Ended March 31,
|
|||||||||||||
|
|
2017
|
|
2016
|
|
Change
|
|
% Change
|
|||||||
Rental income
|
|
$
|
4,545
|
|
|
$
|
4,531
|
|
|
$
|
14
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
(948
|
)
|
|
(948
|
)
|
|
—
|
|
|
—
|
|
|||
General and administrative
|
|
(15,083
|
)
|
|
(10,863
|
)
|
|
4,220
|
|
|
38.8
|
%
|
|||
Acquisition and certain other transaction related costs
|
|
(292
|
)
|
|
(439
|
)
|
|
(147
|
)
|
|
(33.5
|
)%
|
|||
Total expenses
|
|
(16,323
|
)
|
|
(12,250
|
)
|
|
4,073
|
|
|
33.2
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Operating loss
|
|
(11,778
|
)
|
|
(7,719
|
)
|
|
4,059
|
|
|
52.6
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Dividend income
|
|
659
|
|
|
—
|
|
|
659
|
|
|
100.0
|
%
|
|||
Interest and other income
|
|
120
|
|
|
64
|
|
|
56
|
|
|
87.5
|
%
|
|||
Interest expense
|
|
(30,652
|
)
|
|
(29,381
|
)
|
|
1,271
|
|
|
4.3
|
%
|
|||
Loss before income tax expense and equity in earnings of an investee
|
|
(41,651
|
)
|
|
(37,036
|
)
|
|
4,615
|
|
|
12.5
|
%
|
|||
Income tax expense
|
|
(92
|
)
|
|
(94
|
)
|
|
(2
|
)
|
|
(2.1
|
)%
|
|||
Equity in earnings of an investee
|
|
128
|
|
|
77
|
|
|
51
|
|
|
(66.2
|
)%
|
|||
Net loss
|
|
$
|
(41,615
|
)
|
|
$
|
(37,053
|
)
|
|
$
|
4,562
|
|
|
12.3
|
%
|
(1)
|
All other operations includes all of our other operations, including certain properties that offer wellness, fitness and spa services to members, which segment we do not consider to be sufficiently material to constitute a separate reporting segment, and any operating expenses that are not attributable to a specific reporting segment.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Net income attributable to common shareholders
|
|
$
|
32,155
|
|
|
$
|
31,272
|
|
Depreciation and amortization expense
|
|
73,175
|
|
|
71,223
|
|
||
Noncontrolling interest's share of net FFO adjustments
|
|
(456
|
)
|
|
—
|
|
||
Impairment of assets
|
|
—
|
|
|
7,390
|
|
||
FFO
|
|
104,874
|
|
|
109,885
|
|
||
|
|
|
|
|
||||
Estimated business management incentive fees
(1)
|
|
3,266
|
|
|
—
|
|
||
Acquisition and certain other transaction related costs
|
|
292
|
|
|
439
|
|
||
Loss on early extinguishment of debt
|
|
—
|
|
|
6
|
|
||
Normalized FFO
|
|
$
|
108,432
|
|
|
$
|
110,330
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding (basic)
|
|
237,391
|
|
|
237,315
|
|
||
Weighted average common shares outstanding (diluted)
|
|
237,416
|
|
|
237,329
|
|
||
|
|
|
|
|
||||
Per common share data (basic and diluted):
|
|
|
|
|
||||
Net income attributable to common shareholders
|
|
$
|
0.14
|
|
|
$
|
0.13
|
|
FFO
|
|
$
|
0.44
|
|
|
$
|
0.46
|
|
Normalized FFO
|
|
$
|
0.46
|
|
|
$
|
0.46
|
|
Distributions declared per common share
|
|
$
|
0.39
|
|
|
$
|
0.39
|
|
(1)
|
Incentive fees under our business management agreement are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our condensed consolidated statements of comprehensive income. In calculating net income attributable to common shareholders in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income attributable to common shareholders, we do not include these amounts in the calculation of Normalized FFO until the fourth quarter, when the amount of the business management incentive fee expense for the calendar year, if any, is determined.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Reconciliation of Net Income to NOI:
|
|
|
|
|
|
|
||
Net income
|
|
$
|
32,281
|
|
|
$
|
31,272
|
|
Equity in earnings of an investee
|
|
(128
|
)
|
|
(77
|
)
|
||
Income tax expense
|
|
92
|
|
|
94
|
|
||
Income from continuing operations before income tax expense and equity in earnings of an investee
|
|
32,245
|
|
|
31,289
|
|
||
Loss on early extinguishment of debt
|
|
—
|
|
|
6
|
|
||
Interest expense
|
|
43,488
|
|
|
39,280
|
|
||
Interest and other income
|
|
(120
|
)
|
|
(64
|
)
|
||
Dividend income
|
|
(659
|
)
|
|
—
|
|
||
|
|
|
|
|
||||
Operating income
|
|
74,954
|
|
|
70,511
|
|
||
|
|
|
|
|
||||
Impairment of assets
|
|
—
|
|
|
7,390
|
|
||
Acquisition and certain other transaction related costs
|
|
292
|
|
|
439
|
|
||
General and administrative expense
|
|
15,083
|
|
|
10,863
|
|
||
Depreciation and amortization expense
|
|
73,175
|
|
|
71,223
|
|
||
Total NOI
|
|
$
|
163,504
|
|
|
$
|
160,426
|
|
|
|
|
|
|
||||
Triple net leased communities NOI
|
|
$
|
67,252
|
|
|
$
|
64,945
|
|
Managed communities NOI
|
|
24,238
|
|
|
24,776
|
|
||
MOB NOI
|
|
67,469
|
|
|
66,174
|
|
||
All other operations NOI
|
|
4,545
|
|
|
4,531
|
|
||
Total NOI
|
|
163,504
|
|
|
160,426
|
|
||
|
|
|
|
|
•
|
our ability to maintain or increase the occupancy of, and the rental rates at, our properties;
|
•
|
our ability to control operating expenses at our properties;
|
•
|
our manager's ability to operate our managed senior living communities 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 property operating expenses.
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2017
|
|
2016
|
||||
MOB tenant improvements
(1)
|
|
$
|
2,265
|
|
|
$
|
389
|
|
MOB leasing costs
(2)
|
|
1,108
|
|
|
857
|
|
||
MOB building improvements
(3)
|
|
1,580
|
|
|
1,977
|
|
||
Managed senior living communities capital improvements
|
|
3,786
|
|
|
3,620
|
|
||
Development, redevelopment and other activities
(4)
|
|
9,492
|
|
|
6,459
|
|
||
Total capital expenditures
|
|
$
|
18,231
|
|
|
$
|
13,302
|
|
(1)
|
MOB tenant improvements generally include capital expenditures to improve tenants’ space or amounts paid directly to tenants to improve their space.
|
(2)
|
MOB leasing costs generally include leasing related costs, such as brokerage commissions and other tenant inducements.
|
(3)
|
MOB building improvements generally include capital expenditures to replace obsolete building components and capital expenditures that extend the useful life of existing assets.
|
(4)
|
Development, redevelopment and other activities generally include (i) capital expenditures that are identified at the time of acquisition of a property and incurred within a short period thereafter; and (ii) capital expenditure projects that reposition a property or result in new sources of revenues.
|
|
|
New
|
|
|
|
|
||||||
|
|
Leases
|
|
Renewals
|
|
Total
|
||||||
Square feet leased during the quarter
|
|
51
|
|
|
186
|
|
|
237
|
|
|||
Total leasing costs and concession commitments
(1)
|
|
$
|
1,567
|
|
|
$
|
2,801
|
|
|
$
|
4,368
|
|
Total leasing costs and concession commitments per square foot
(1)
|
|
$
|
30.72
|
|
|
$
|
15.03
|
|
|
$
|
18.40
|
|
Weighted average lease term (years)
(2)
|
|
5.4
|
|
|
5.6
|
|
|
5.6
|
|
|||
Total leasing costs and concession commitments per square foot per year
(1)
|
|
$
|
5.66
|
|
|
$
|
2.66
|
|
|
$
|
3.28
|
|
(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, 2017
, 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
|
|
$
|
400,000
|
|
|
3.25
|
%
|
|
$
|
13,000
|
|
|
2019
|
|
Semi-Annually
|
Senior unsecured notes
|
|
350,000
|
|
|
5.63
|
%
|
|
19,705
|
|
|
2042
|
|
Quarterly
|
||
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
|
|
250,000
|
|
|
6.25
|
%
|
|
15,625
|
|
|
2046
|
|
Quarterly
|
||
Senior unsecured notes
|
|
200,000
|
|
|
6.75
|
%
|
|
13,500
|
|
|
2020
|
|
Semi-Annually
|
||
Mortgage notes
(2)
|
|
620,000
|
|
|
3.53
|
%
|
|
21,886
|
|
|
2026
|
|
Monthly
|
||
Mortgage note
(3)
|
|
278,219
|
|
|
6.71
|
%
|
|
18,668
|
|
|
2019
|
|
Monthly
|
||
Mortgage notes
|
|
69,411
|
|
|
4.47
|
%
|
|
3,103
|
|
|
2018
|
|
Monthly
|
||
Mortgage notes
|
|
44,233
|
|
|
3.79
|
%
|
|
1,676
|
|
|
2019
|
|
Monthly
|
||
Mortgage note
|
|
14,164
|
|
|
6.28
|
%
|
|
889
|
|
|
2022
|
|
Monthly
|
||
Mortgage notes
|
|
12,716
|
|
|
6.31
|
%
|
|
802
|
|
|
2018
|
|
Monthly
|
||
Mortgage notes
|
|
12,009
|
|
|
6.24
|
%
|
|
749
|
|
|
2018
|
|
Monthly
|
||
Mortgage note
|
|
11,545
|
|
|
4.85
|
%
|
|
560
|
|
|
2022
|
|
Monthly
|
||
Mortgage note
(4)
|
|
10,596
|
|
|
6.15
|
%
|
|
652
|
|
|
2017
|
|
Monthly
|
||
Mortgage note
(5)
|
|
8,836
|
|
|
5.95
|
%
|
|
526
|
|
|
2037
|
|
Monthly
|
||
Mortgage note
|
|
8,615
|
|
|
6.73
|
%
|
|
580
|
|
|
2018
|
|
Monthly
|
||
Mortgage note
|
|
6,531
|
|
|
4.69
|
%
|
|
306
|
|
|
2019
|
|
Monthly
|
||
Mortgage note
|
|
4,405
|
|
|
4.38
|
%
|
|
193
|
|
|
2043
|
|
Monthly
|
||
Mortgage notes
|
|
3,001
|
|
|
7.49
|
%
|
|
225
|
|
|
2022
|
|
Monthly
|
||
Mortgage note
|
|
2,786
|
|
|
6.25
|
%
|
|
174
|
|
|
2033
|
|
Monthly
|
||
|
|
$
|
2,857,067
|
|
|
|
|
$
|
144,944
|
|
|
|
|
|
(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 these debts. This table does not include obligations under capital leases.
|
(2)
|
The property encumbered by these mortgages is subject to a joint venture arrangement.
|
(3)
|
We prepaid this mortgage in April 2017.
|
(4)
|
We prepaid this mortgage in May 2017.
|
(5)
|
In May 2017, we gave notice of our intention to prepay this mortgage; we expect to make this prepayment in June 2017.
|
|
|
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, 2017
|
|
2.38
|
%
|
|
$
|
647,000
|
|
|
$
|
15,399
|
|
|
$
|
(0.06
|
)
|
100 basis point increase
|
|
3.38
|
%
|
|
$
|
647,000
|
|
|
$
|
21,869
|
|
|
$
|
(0.09
|
)
|
(1)
|
Weighted based on the respective interest rates and outstanding borrowings under our credit facility and term loans as of
March 31, 2017
.
|
(2)
|
Based on weighted average number of shares outstanding (diluted) for the three months ended
March 31, 2017
.
|
|
|
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, 2017
|
|
2.30
|
%
|
|
$
|
1,550,000
|
|
|
$
|
35,650
|
|
|
$
|
(0.15
|
)
|
100 basis point increase
|
|
3.30
|
%
|
|
$
|
1,550,000
|
|
|
$
|
51,150
|
|
|
$
|
(0.22
|
)
|
(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, 2017
.
|
(2)
|
Based on weighted average number of shares outstanding (diluted) for the three months ended
March 31, 2017
.
|
•
|
OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS,
|
•
|
OUR ABILITY TO RETAIN OUR EXISTING TENANTS, ATTRACT NEW TENANTS AND MAINTAIN OR INCREASE CURRENT RENTAL RATES,
|
•
|
THE CREDIT QUALITIES OF OUR TENANTS,
|
•
|
OUR ABILITY TO COMPETE FOR ACQUISITIONS AND TENANCIES EFFECTIVELY,
|
•
|
OUR ACQUISITIONS AND SALES OF PROPERTIES,
|
•
|
THE ABILITY OF THE MANAGER OF OUR MANAGED SENIOR LIVING COMMUNITIES TO MAINTAIN AND INCREASE OCCUPANCY AND RATES AT THOSE COMMUNITIES,
|
•
|
OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND THE AMOUNT OF SUCH DISTRIBUTIONS,
|
•
|
OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL,
|
•
|
THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY,
|
•
|
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 OWNERSHIP OF RMR INC.,
|
•
|
OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF AIC AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC,
|
•
|
OUR QUALIFICATION FOR TAXATION AS A REIT,
|
•
|
OUR BELIEF THAT THE AGING U.S. POPULATION AND INCREASING LIFE SPANS OF SENIORS WILL INCREASE THE DEMAND FOR SENIOR LIVING SERVICES,
|
•
|
OUR BELIEF THAT FIVE STAR, OUR FORMER SUBSIDIARY AND LARGEST TENANT AND THE MANAGER OF OUR MANAGED SENIOR LIVING COMMUNITIES, HAS ADEQUATE FINANCIAL RESOURCES AND LIQUIDITY AND THE ABILITY TO MEET ITS OBLIGATIONS TO US AND TO MANAGE OUR SENIOR LIVING COMMUNITIES SUCCESSFULLY, AND
|
•
|
OTHER MATTERS.
|
•
|
THE IMPACT OF CONDITIONS AND CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR TENANTS AND MANAGERS,
|
•
|
THE IMPACT OF THE ACA, INCLUDING CURRENT PROPOSALS TO REPEAL AND REPLACE THE ACA, AND OTHER EXISTING OR PROPOSED LEGISLATION OR REGULATIONS ON US, ON OUR TENANTS AND MANAGER AND ON THEIR ABILITY TO PAY OUR RENTS AND RETURNS,
|
•
|
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEES, FIVE STAR, RMR LLC, RMR INC., AIC AND OTHERS AFFILIATED WITH THEM,
|
•
|
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, AND
|
•
|
ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL.
|
•
|
FIVE STAR IS OUR LARGEST TENANT AND THE MANAGER OF OUR MANAGED SENIOR LIVING COMMUNITIES AND IT MAY EXPERIENCE FINANCIAL DIFFICULTIES AS A RESULT OF A NUMBER OF FACTORS, INCLUDING, BUT NOT LIMITED TO:
|
•
|
CHANGES IN MEDICARE OR MEDICAID POLICIES, INCLUDING THOSE THAT MAY RESULT FROM THE ACA, INCLUDING CURRENT PROPOSALS TO REPEAL AND REPLACE THE ACA, AND OTHER EXISTING OR PROPOSED LEGISLATION OR REGULATIONS, WHICH COULD RESULT IN REDUCED MEDICARE OR MEDICAID RATES OR A FAILURE OF SUCH RATES TO COVER FIVE STAR’S COSTS OR LIMIT THE SCOPE OR FUNDING OF EITHER OR BOTH PROGRAMS,
|
•
|
THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON FIVE STAR AND ITS RESIDENTS AND OTHER CUSTOMERS,
|
•
|
COMPETITION WITHIN THE SENIOR LIVING SERVICES BUSINESS,
|
•
|
INCREASES IN INSURANCE AND TORT LIABILITY COSTS, AND
|
•
|
INCREASES IN FIVE STAR'S LABOR COSTS OR IN COSTS FIVE STAR PAYS FOR GOODS AND SERVICES.
|
•
|
IF FIVE STAR’S OPERATIONS CONTINUE TO BE UNPROFITABLE, IT MAY DEFAULT ON ITS RENT OBLIGATIONS TO US,
|
•
|
IF FIVE STAR FAILS TO PROVIDE QUALITY SERVICES AT SENIOR LIVING COMMUNITIES THAT WE OWN, OUR INCOME FROM THESE COMMUNITIES MAY BE ADVERSELY AFFECTED,
|
•
|
IN RESPONSE TO COMPETITIVE PRESSURES RESULTING FROM RECENT AND EXPECTED NEW SUPPLY OF SENIOR LIVING COMMUNITIES, WE HAVE BEEN INVESTING CAPITAL IN OUR EXISTING SENIOR LIVING COMMUNITIES. OUR COMMUNITIES MAY FAIL TO BE COMPETITIVE AND THEY MAY FAIL TO ATTRACT RESIDENTS, DESPITE OUR CAPITAL INVESTMENTS,
|
•
|
OUR OTHER 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 MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS DEPENDS UPON A NUMBER OF FACTORS,
|
•
|
OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES AND ARRANGE FOR THEIR PROFITABLE OPERATION OR LEASE THEM FOR RENTS, LESS OUR PROPERTY OPERATING EXPENSES, THAT EXCEED OUR CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING, MANAGEMENT AGREEMENTS OR LEASE TERMS FOR NEW PROPERTIES,
|
•
|
RENTS THAT WE CAN CHARGE AT OUR PROPERTIES MAY DECLINE BECAUSE OF CHANGING MARKET CONDITIONS OR OTHERWISE,
|
•
|
CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING ACQUISITIONS AND SALES AND ANY RELATED LEASES OR MANAGEMENT ARRANGEMENTS WE MAY EXPECT TO ENTER INTO MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS OR ARRANGEMENTS MAY CHANGE,
|
•
|
WE EXPECT TO ENTER INTO ADDITIONAL LEASE OR 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 LEASES, MANAGEMENT ARRANGEMENTS OR OTHER 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 CREDIT FACILITIES WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH SUCH FACILITIES,
|
•
|
THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS MAY BE INCREASED TO UP TO $2.6 BILLION ON A COMBINED BASIS IN CERTAIN CIRCUMSTANCES. HOWEVER, INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOANS 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 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. FUTURE CHANGES IN OUR CREDIT RATINGS MAY CAUSE THE INTEREST AND FEES WE PAY TO INCREASE,
|
•
|
WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE,
|
•
|
FOR THE THREE MONTHS ENDED
MARCH 31, 2017
, APPROXIMATELY 97% 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 MANAGER'S 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,
|
•
|
WE MAY NOT BE ABLE TO SELL PROPERTIES THAT WE DETERMINE TO OFFER FOR SALE ON TERMS ACCEPTABLE TO US OR OTHERWISE,
|
•
|
WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING FIVE STAR, RMR LLC, RMR INC., ABP TRUST, AIC 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,
|
•
|
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, 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.
|
Exhibit
Number
|
|
Description
|
3.1
|
|
Composite Copy of Articles of Amendment and Restatement, dated September 20, 1999, as amended to date. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.)
|
3.2
|
|
Articles Supplementary, dated May 11, 2000. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, File No. 001-15319.)
|
3.3
|
|
Articles Supplementary, dated April 17, 2014. (Incorporated by reference to the Company’s Current Report on Form 8-K dated April 17, 2014.)
|
3.4
|
|
Amended and Restated Bylaws of the Company, adopted September 7, 2016. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 7, 2016.)
|
4.1
|
|
Form of Common Share Certificate. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.)
|
4.2
|
|
Indenture, dated as of December 20, 2001, between the Company and State Street Bank and Trust Company. (Incorporated by reference to the Company’s Registration Statement on Form S-3, File No. 333-76588.)
|
4.3
|
|
Supplemental Indenture No. 4, dated as of April 9, 2010, between the Company and U.S. Bank National Association, related to 6.75% Senior Notes due 2020, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, File No. 001-15319.)
|
4.4
|
|
Supplemental Indenture No. 6, dated as of December 8, 2011, between the Company and U.S. Bank National Association, related to 6.75% Senior Notes due 2021, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, File No. 001-15319.)
|
4.5
|
|
Supplemental Indenture No. 7, dated as of July 20, 2012, between the Company and U.S. Bank National Association, related to 5.625% Senior Notes due 2042, including form thereof (Incorporated by reference to the Company’s Registration Statement on Form 8-A dated July 20, 2012.)
|
4.6
|
|
Supplemental Indenture No. 8, dated as of April 28, 2014, between the Company and U.S. Bank National Association, related to 3.25% Senior Notes due 2019, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.)
|
4.7
|
|
Supplemental Indenture No. 9, dated as of April 28, 2014, between the Company and U.S. Bank National Association, related to 4.75% Senior Notes due 2024, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.)
|
4.8
|
|
Indenture, dated as of February 18, 2016, between the Company and U.S. Bank National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 18, 2016.)
|
4.9
|
|
First Supplemental Indenture, dated as of February 18, 2016, between the Company and U.S. Bank National Association, related to 6.25% Senior Notes due 2046, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 18, 2016.)
|
4.10
|
|
Registration Rights and Lock-Up Agreement, dated as of June 5, 2015, among the Company, ABP Trust (f/k/a Reit Management & Research Trust), Barry M. Portnoy and Adam D. Portnoy. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
|
12.1
|
|
Computation of Ratio of Earnings to Fixed Charges. (Filed herewith.)
|
31.1
|
|
Rule 13a-14(a) Certification. (Filed herewith.)
|
31.2
|
|
Rule 13a-14(a) Certification. (Filed herewith.)
|
31.3
|
|
Rule 13a-14(a) Certification. (Filed herewith.)
|
31.4
|
|
Rule 13a-14(a) Certification. (Filed herewith.)
|
32.1
|
|
Section 1350 Certification. (Furnished herewith.)
|
99.1
|
|
Letter dated March 24, 2017, between the Company and The RMR Group LLC, regarding Second Amended and Restated Business Management Agreement. (Filed herewith.)
|
101.1
|
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.)
|
|
SENIOR HOUSING PROPERTIES TRUST
|
|
|
|
|
|
|
|
|
By:
|
/s/ David J. Hegarty
|
|
|
David J. Hegarty
|
|
|
President and Chief Operating Officer
|
|
|
|
Dated: May 5, 2017
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Richard W. Siedel, Jr.
|
|
|
Richard W. Siedel, Jr.
|
|
|
Chief Financial Officer and Treasurer
|
|
|
(principal financial and accounting officer)
|
|
|
|
Dated: May 5, 2017
|
|
|
|
Three Months Ended March 31,
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income from continuing operations (including gains on sales of properties, if any) before income tax expense and equity in earnings of an investee
|
|
$
|
32,245
|
|
|
$
|
141,582
|
|
|
$
|
125,474
|
|
|
$
|
162,141
|
|
|
$
|
183,997
|
|
|
$
|
131,882
|
|
Fixed charges
|
|
43,487
|
|
|
167,574
|
|
|
150,881
|
|
|
135,114
|
|
|
117,819
|
|
|
117,240
|
|
||||||
Adjusted earnings
|
|
$
|
75,732
|
|
|
$
|
309,156
|
|
|
$
|
276,355
|
|
|
$
|
297,255
|
|
|
$
|
301,816
|
|
|
$
|
249,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest expense (including net amortization of debt premiums and discounts and debt issuance costs)
|
|
$
|
43,487
|
|
|
$
|
167,574
|
|
|
$
|
150,881
|
|
|
$
|
135,114
|
|
|
$
|
117,819
|
|
|
$
|
117,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of Earnings to Fixed Charges
|
|
1.7x
|
|
|
1.8x
|
|
|
1.8x
|
|
|
2.2x
|
|
|
2.6x
|
|
|
2.1x
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Senior Housing Properties Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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|
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Date: May 5, 2017
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/s/ Barry M. Portnoy
|
|
Barry M. Portnoy
|
|
Managing Trustee
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Senior Housing Properties Trust;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: May 5, 2017
|
/s/ Adam D. Portnoy
|
|
Adam D. Portnoy
|
|
Managing Trustee
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Senior Housing Properties Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: May 5, 2017
|
/s/ David J. Hegarty
|
|
David J. Hegarty
|
|
President and Chief Operating Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Senior Housing Properties Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: May 5, 2017
|
/s/ Richard W. Siedel, Jr.
|
|
Richard W. Siedel, Jr.
|
|
Chief Financial Officer and Treasurer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
/s/ Barry M. Portnoy
|
|
/s/ David J. Hegarty
|
Barry M. Portnoy
|
|
David J. Hegarty
|
Managing Trustee
|
|
President and Chief Operating Officer
|
|
|
|
|
|
|
/s/ Adam D. Portnoy
|
|
/s/ Richard W. Siedel, Jr.
|
Adam D. Portnoy
|
|
Richard W. Siedel, Jr.
|
Managing Trustee
|
|
Chief Financial Officer and Treasurer
|
Date: May 5, 2017
|