☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New Senior Investment Group Inc.
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Delaware
|
|
80-0912734
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(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
55 West 46th Street
|
New York
|
NY
|
10036
|
(Address of principal executive offices)
|
(Zip Code)
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(646)
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822-3700
|
N/A
|
(Former name, former address and former fiscal year, if changed since last report)
|
Securities registered pursuant to Section 12(b) of the Act:
|
||||
Title of each class:
|
|
Trading Symbol:
|
|
Name of each exchange on which registered:
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Common Stock, $0.01 par value per share
|
|
SNR
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
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Accelerated filer
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☐
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Smaller reporting company
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☐
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Non-accelerated filer
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☐
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Emerging growth company
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☐
|
•
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our ability to successfully manage the recent transition to self-management and its impact on our business and operations;
|
•
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our ability to comply with the terms of our financings, which depends in part on the performance of our operators;
|
•
|
any increase in our borrowing costs as a result of rising interest rates or other factors;
|
•
|
our ability to pay down, refinance, restructure or extend our indebtedness as it becomes due or as needed to comply with the terms of our covenants or to facilitate our ability to sell assets;
|
•
|
our ability to manage our liquidity and sustain distributions to our stockholders, particularly in light of the cash shortfall described in our risk factors under Item 1A. and under Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources”;
|
•
|
our dependence on our property managers and tenant to operate our properties successfully and in compliance with the terms of our agreements with them, applicable law and the terms of our financings;
|
•
|
factors affecting the performance of our properties, such as increases in costs (including, but not limited to, the costs of labor, supplies, insurance and property taxes);
|
•
|
concentration risk with respect to Holiday Retirement (“Holiday”), which, for the nine months ended September 30, 2019, accounted for 85.2% of net operating income (“NOI”) from our Managed Properties segments;
|
•
|
risks associated with a change of control in the ownership or senior management of Holiday;
|
•
|
our ability and the ability of our property managers and tenant to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers;
|
•
|
changes of federal, state and local laws and regulations relating to employment, fraud and abuse practices, Medicaid reimbursement and licensure, etc., including those affecting the healthcare industry that affect our costs of compliance or increase the costs, or otherwise affect the operations or our property managers or tenant;
|
•
|
the ability of our property managers and tenant to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to us and third parties;
|
•
|
the quality and size of our investment pipeline, our ability to execute investments at attractive risk-adjusted prices, our ability to finance our investments on favorable terms, and our ability to deploy investable cash in a timely manner;
|
•
|
our ability to sell properties on favorable terms and to realize the anticipated benefits from any such dispositions;
|
•
|
changes in economic conditions generally and the real estate, senior housing and bond markets specifically;
|
•
|
our stock price performance and any disruption or lack of access to the capital markets or other sources of financing;
|
•
|
the impact of any current or future legal proceedings and regulatory investigations and inquiries on us, FIG LLC (our “Former Manager”) or our operators;
|
•
|
our ability to complete the pending sale of 28 senior living facilities that comprise our Managed Assisted Living/Memory Care properties segment in a timely manner, or at all, and, if completed, to achieve the expected benefits of the transaction;
|
•
|
our ability to maintain effective internal control over financial reporting and our reliance on our operators for timely delivery of accurate property-level financial results; and
|
•
|
our ability to maintain our qualification as a Real Estate Investment Trust (“REIT”) for U.S. federal income tax purposes and the potentially onerous consequences that any failure to maintain such qualification would have on our business.
|
|
PAGE
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September 30, 2019
|
|
December 31, 2018
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Real estate investments:
|
|
|
|
|
|
||
Land
|
$
|
177,956
|
|
|
$
|
177,956
|
|
Buildings, improvements and other
|
2,360,548
|
|
|
2,335,813
|
|
||
Accumulated depreciation
|
(420,682
|
)
|
|
(358,368
|
)
|
||
Net real estate property
|
2,117,822
|
|
|
2,155,401
|
|
||
Acquired lease and other intangible assets
|
8,638
|
|
|
8,638
|
|
||
Accumulated amortization
|
(3,144
|
)
|
|
(2,877
|
)
|
||
Net real estate intangibles
|
5,494
|
|
|
5,761
|
|
||
Net real estate investments
|
2,123,316
|
|
|
2,161,162
|
|
||
|
|
|
|
||||
Cash and cash equivalents
|
35,399
|
|
|
72,422
|
|
||
Receivables and other assets, net
|
45,156
|
|
|
52,674
|
|
||
Total Assets
|
$
|
2,203,871
|
|
|
$
|
2,286,258
|
|
|
|
|
|
||||
Liabilities, Redeemable Preferred Stock and Equity
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
|
||
Debt, net
|
$
|
1,836,062
|
|
|
$
|
1,884,882
|
|
Due to affiliates
|
—
|
|
|
26,245
|
|
||
Accrued expenses and other liabilities
|
76,298
|
|
|
52,679
|
|
||
Total Liabilities
|
1,912,360
|
|
|
1,963,806
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 15)
|
|
|
|
|
|
||
|
|
|
|
||||
Redeemable preferred stock, $0.01 par value with $100 liquidation preference, 400,000 shares authorized, issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
|
40,506
|
|
|
40,000
|
|
||
|
|
|
|
||||
Equity
|
|
|
|
|
|
||
Preferred stock, $0.01 par value, 99,600,000 shares (excluding 400,000 shares of redeemable preferred stock) authorized, none issued or outstanding as of September 30, 2019 and December 31, 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 82,964,438 and 82,148,869 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
|
830
|
|
|
821
|
|
||
Additional paid-in capital
|
900,432
|
|
|
898,135
|
|
||
Accumulated deficit
|
(642,990
|
)
|
|
(616,504
|
)
|
||
Accumulated other comprehensive loss
|
(7,267
|
)
|
|
—
|
|
||
Total Equity
|
251,005
|
|
|
282,452
|
|
||
|
|
|
|
||||
Total Liabilities, Redeemable Preferred Stock and Equity
|
$
|
2,203,871
|
|
|
$
|
2,286,258
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||
Resident fees and services
|
$
|
114,003
|
|
|
$
|
116,178
|
|
|
$
|
344,477
|
|
|
$
|
288,005
|
|
Rental revenue
|
1,583
|
|
|
1,582
|
|
|
4,748
|
|
|
37,825
|
|
||||
Total revenues
|
115,586
|
|
|
117,760
|
|
|
349,225
|
|
|
325,830
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Expenses
|
|
|
|
|
|
|
|
|
|
||||||
Property operating expense
|
75,185
|
|
|
77,066
|
|
|
227,489
|
|
|
192,675
|
|
||||
Depreciation and amortization
|
21,041
|
|
|
22,373
|
|
|
62,583
|
|
|
73,619
|
|
||||
Interest expense
|
22,662
|
|
|
29,268
|
|
|
69,864
|
|
|
76,946
|
|
||||
General and administrative expense
|
5,417
|
|
|
3,219
|
|
|
15,773
|
|
|
10,111
|
|
||||
Acquisition, transaction and integration expense
|
616
|
|
|
1,559
|
|
|
1,677
|
|
|
13,130
|
|
||||
Management fees and incentive compensation to affiliate
|
—
|
|
|
3,688
|
|
|
—
|
|
|
11,127
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
335
|
|
|
58,544
|
|
||||
Other expense (income)
|
(2
|
)
|
|
782
|
|
|
1,350
|
|
|
2,194
|
|
||||
Total expenses
|
124,919
|
|
|
137,955
|
|
|
379,071
|
|
|
438,346
|
|
||||
Loss on sale of real estate
|
—
|
|
|
—
|
|
|
(122
|
)
|
|
—
|
|
||||
Gain on lease termination
|
—
|
|
|
—
|
|
|
—
|
|
|
40,090
|
|
||||
Litigation proceeds, net
|
38,226
|
|
|
—
|
|
|
38,226
|
|
|
—
|
|
||||
Income (Loss) before income taxes
|
28,893
|
|
|
(20,195
|
)
|
|
8,258
|
|
|
(72,426
|
)
|
||||
Income tax expense
|
44
|
|
|
104
|
|
|
188
|
|
|
303
|
|
||||
Net income (loss)
|
28,849
|
|
|
(20,299
|
)
|
|
8,070
|
|
|
(72,729
|
)
|
||||
Deemed dividend on redeemable preferred stock
|
(605
|
)
|
|
—
|
|
|
(1,802
|
)
|
|
—
|
|
||||
Net income (loss) attributable to common stockholders
|
$
|
28,244
|
|
|
$
|
(20,299
|
)
|
|
$
|
6,268
|
|
|
$
|
(72,729
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share of common stock
|
|
|
|
|
|
|
|
||||||||
Basic (A)
|
$
|
0.34
|
|
|
$
|
(0.25
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.89
|
)
|
Diluted
|
$
|
0.34
|
|
|
$
|
(0.25
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.89
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares of common stock outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
82,209,844
|
|
|
82,148,869
|
|
|
82,207,610
|
|
|
82,148,869
|
|
||||
Diluted (B)
|
83,964,231
|
|
|
82,148,869
|
|
|
83,588,648
|
|
|
82,148,869
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Dividends declared per share of common stock
|
$
|
0.13
|
|
|
$
|
0.13
|
|
|
$
|
0.39
|
|
|
$
|
0.65
|
|
(A)
|
Basic earnings per share (“EPS”) is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding. The outstanding shares used to calculate the weighted average basic shares excludes 754,594 restricted stock awards, net of forfeitures, as of September 30, 2019, as those shares were issued but were not vested and therefore, not considered outstanding for purposes of computing basic income (loss) per share. Diluted EPS is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding plus the additional dilutive effect, if any, of common stock equivalents during each period.
|
(B)
|
Dilutive share equivalents and options were excluded for the three and nine months ended September 30, 2018 as their inclusion would have been anti-dilutive given our loss position.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss)
|
$
|
28,849
|
|
|
$
|
(20,299
|
)
|
|
$
|
8,070
|
|
|
$
|
(72,729
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Unrealized loss on cash flow hedge
|
(1,003
|
)
|
|
—
|
|
|
(7,267
|
)
|
|
—
|
|
||||
Total other comprehensive loss
|
(1,003
|
)
|
|
—
|
|
|
(7,267
|
)
|
|
—
|
|
||||
Total comprehensive income (loss)
|
27,846
|
|
|
(20,299
|
)
|
|
803
|
|
|
(72,729
|
)
|
|
|
Three Months Ended September 30, 2019
|
|||||||||||||||||||||
|
|
Common Stock
|
|
Accumulated Deficit
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|||||||||||||||||
Balance at June 30, 2019
|
|
83,126,259
|
|
|
$
|
831
|
|
|
$
|
(660,078
|
)
|
|
$
|
899,386
|
|
|
$
|
(6,264
|
)
|
|
$
|
233,875
|
|
Amortization of equity-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,045
|
|
|
—
|
|
|
1,045
|
|
|||||
Restricted stock awards forfeited
|
|
(161,821
|
)
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||
Dividends declared - common stock ($0.13 per share)
|
|
—
|
|
|
—
|
|
|
(10,687
|
)
|
|
—
|
|
|
—
|
|
|
(10,687
|
)
|
|||||
Dividends declared - equity awards ($0.13 per share)
|
|
—
|
|
|
—
|
|
|
(469
|
)
|
|
—
|
|
|
—
|
|
|
(469
|
)
|
|||||
Deemed dividend on redeemable preferred stock
|
|
—
|
|
|
—
|
|
|
(506
|
)
|
|
—
|
|
|
—
|
|
|
(506
|
)
|
|||||
Dividends declared on redeemable preferred stock
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|
—
|
|
|
—
|
|
|
(99
|
)
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,003
|
)
|
|
(1,003
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
28,849
|
|
|
—
|
|
|
—
|
|
|
28,849
|
|
|||||
Balance at September 30, 2019
|
|
82,964,438
|
|
|
$
|
830
|
|
|
$
|
(642,990
|
)
|
|
$
|
900,432
|
|
|
$
|
(7,267
|
)
|
|
$
|
251,005
|
|
|
|
Nine Months Ended September 30, 2019
|
|||||||||||||||||||||
|
|
Common Stock
|
|
Accumulated Deficit
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|||||||||||||||||||
Balance at December 31, 2018
|
|
82,148,869
|
|
|
$
|
821
|
|
|
$
|
(616,504
|
)
|
|
$
|
898,135
|
|
|
$
|
—
|
|
|
$
|
282,452
|
|
Restricted stock awards issued
|
|
916,415
|
|
|
9
|
|
|
—
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|||||
Amortization of equity-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,031
|
|
|
—
|
|
|
2,031
|
|
|||||
Directors shares issued
|
|
60,975
|
|
|
1
|
|
|
—
|
|
|
274
|
|
|
—
|
|
|
275
|
|
|||||
Restricted stock awards forfeited
|
|
(161,821
|
)
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||
Dividends declared - common stock ($0.39 per share)
|
|
—
|
|
|
—
|
|
|
(32,062
|
)
|
|
—
|
|
|
—
|
|
|
(32,062
|
)
|
|||||
Dividends declared - equity awards ($0.13 - $0.39 per share)
|
|
—
|
|
|
—
|
|
|
(692
|
)
|
|
—
|
|
|
—
|
|
|
(692
|
)
|
|||||
Deemed dividend on redeemable preferred stock
|
|
—
|
|
|
—
|
|
|
(506
|
)
|
|
—
|
|
|
—
|
|
|
(506
|
)
|
|||||
Dividends declared on redeemable preferred stock
|
|
—
|
|
|
—
|
|
|
(1,296
|
)
|
|
—
|
|
|
—
|
|
|
(1,296
|
)
|
|||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,267
|
)
|
|
(7,267
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
8,070
|
|
|
—
|
|
|
—
|
|
|
8,070
|
|
|||||
Balance at September 30, 2019
|
|
82,964,438
|
|
|
$
|
830
|
|
|
$
|
(642,990
|
)
|
|
$
|
900,432
|
|
|
$
|
(7,267
|
)
|
|
$
|
251,005
|
|
|
|
Three Months Ended September 30, 2018
|
|||||||||||||||||||||
|
|
Common Stock
|
|
Accumulated Deficit
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|||||||||||||||||||
Balance at June 30, 2018
|
|
82,148,869
|
|
|
$
|
821
|
|
|
$
|
(488,214
|
)
|
|
$
|
898,135
|
|
|
$
|
—
|
|
|
$
|
410,742
|
|
Dividends declared - common stock ($0.13 per share)
|
|
—
|
|
|
—
|
|
|
(10,684
|
)
|
|
—
|
|
|
—
|
|
|
(10,684
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
(20,299
|
)
|
|
—
|
|
|
—
|
|
|
(20,299
|
)
|
|||||
Balance at September 30, 2018
|
|
82,148,869
|
|
|
$
|
821
|
|
|
$
|
(519,197
|
)
|
|
$
|
898,135
|
|
|
$
|
—
|
|
|
$
|
379,759
|
|
|
|
Nine Months Ended September 30, 2018
|
|||||||||||||||||||||
|
|
Common Stock
|
|
Accumulated Deficit
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Equity
|
|||||||||||||
|
|
Shares
|
|
Amount
|
|||||||||||||||||||
Balance at December 31, 2017
|
|
82,148,869
|
|
|
$
|
821
|
|
|
$
|
(393,068
|
)
|
|
$
|
898,132
|
|
|
$
|
—
|
|
|
$
|
505,885
|
|
Fair value of stock options issued
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Dividends declared - common stock ($0.65 per share)
|
|
—
|
|
|
—
|
|
|
(53,400
|
)
|
|
—
|
|
|
—
|
|
|
(53,400
|
)
|
|||||
Net loss
|
|
—
|
|
|
—
|
|
|
(72,729
|
)
|
|
—
|
|
|
—
|
|
|
(72,729
|
)
|
|||||
Balance at September 30, 2018
|
|
82,148,869
|
|
|
$
|
821
|
|
|
$
|
(519,197
|
)
|
|
$
|
898,135
|
|
|
$
|
—
|
|
|
$
|
379,759
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash Flows From Operating Activities
|
|
|
|
|
|
||
Net income (loss)
|
$
|
8,070
|
|
|
$
|
(72,729
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Depreciation of tangible assets and amortization of intangible assets
|
62,583
|
|
|
73,654
|
|
||
Amortization of deferred financing costs
|
3,228
|
|
|
9,396
|
|
||
Amortization of deferred revenue, net
|
1,588
|
|
|
2,346
|
|
||
Non-cash straight line rental revenue
|
(455
|
)
|
|
(5,192
|
)
|
||
Non-cash adjustment on lease termination (A)
|
—
|
|
|
29,910
|
|
||
Loss on extinguishment of debt
|
335
|
|
|
58,544
|
|
||
Provision for bad debt
|
—
|
|
|
1,630
|
|
||
Amortization of equity-based compensation
|
2,031
|
|
|
—
|
|
||
Loss on sale of real estate
|
122
|
|
|
—
|
|
||
Other non-cash expense
|
1,041
|
|
|
2,308
|
|
||
Changes in:
|
|
|
|
|
|
||
Receivables and other assets, net
|
(2,274
|
)
|
|
(5,046
|
)
|
||
Due to affiliates
|
(25,995
|
)
|
|
5,789
|
|
||
Accrued expenses and other liabilities
|
12,080
|
|
|
10,916
|
|
||
Net cash provided by operating activities
|
$
|
62,354
|
|
|
$
|
111,526
|
|
Cash Flows From Investing Activities
|
|
|
|
|
|
||
Proceeds from sale of real estate
|
$
|
13,086
|
|
|
$
|
—
|
|
Capital expenditures
|
(22,011
|
)
|
|
(15,349
|
)
|
||
Insurance proceeds
|
1,327
|
|
|
1,744
|
|
||
Net cash used in investing activities
|
$
|
(7,598
|
)
|
|
$
|
(13,605
|
)
|
Cash Flows From Financing Activities
|
|
|
|
|
|
||
Principal payments of mortgage notes payable and capital lease obligations
|
$
|
(7,675
|
)
|
|
$
|
(16,063
|
)
|
Proceeds from mortgage notes payable
|
—
|
|
|
720,000
|
|
||
Proceeds from borrowings on revolving credit facility
|
4,250
|
|
|
—
|
|
||
Repayments of borrowings on revolving credit facility
|
(34,500
|
)
|
|
—
|
|
||
Repayments of mortgage notes payable
|
(13,674
|
)
|
|
(663,788
|
)
|
||
Payment of exit fee on extinguishment of debt
|
(206
|
)
|
|
(51,886
|
)
|
||
Payment of deferred financing costs
|
(1,055
|
)
|
|
(13,663
|
)
|
||
Purchase of interest rate caps
|
(35
|
)
|
|
(341
|
)
|
||
Payment of common stock dividend
|
(32,062
|
)
|
|
(53,400
|
)
|
||
Payment of redeemable preferred stock dividend
|
(1,296
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
$
|
(86,253
|
)
|
|
$
|
(79,141
|
)
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(31,497
|
)
|
|
18,780
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
92,656
|
|
|
157,485
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
61,159
|
|
|
$
|
176,265
|
|
|
|
|
|
||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
||
Cash paid during the period for interest expense
|
$
|
67,151
|
|
|
$
|
67,323
|
|
Cash paid during the period for income taxes
|
349
|
|
|
326
|
|
||
|
|
|
|
||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities
|
|
|
|
||||
Issuance of common stock
|
$
|
275
|
|
|
$
|
—
|
|
Capital lease obligations
|
468
|
|
|
273
|
|
||
Furniture, fixtures, equipment and other improvements (B)
|
—
|
|
|
10,065
|
|
(A)
|
Primarily includes the non-cash write-offs of straight-line rent receivables and net above-market rent lease intangible assets, offset by the fair value of furniture, fixtures, equipment and other improvements received by us as a result of the Lease Termination (as defined in Note 1). Refer to Note 3 for additional details related to the Lease Termination.
|
(B)
|
Fair value of furniture, fixtures, equipment and other improvements received by us as a result of the Lease Termination. Refer to Note 3 for additional details related to the Lease Termination.
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Reconciliation of Cash, Cash Equivalents and Restricted Cash
|
|
|
|
||||
Cash and cash equivalents
|
$
|
72,422
|
|
|
$
|
137,327
|
|
Restricted cash (A)
|
20,234
|
|
|
20,158
|
|
||
Total, beginning of period
|
$
|
92,656
|
|
|
$
|
157,485
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
35,399
|
|
|
$
|
157,365
|
|
Restricted cash (A)
|
25,760
|
|
|
18,900
|
|
||
Total, end of period
|
$
|
61,159
|
|
|
$
|
176,265
|
|
(A)
|
Consists of (i) amounts held by lenders in tax, insurance, replacement reserve and other escrow accounts and (ii) security deposits, which are included in “Receivables and other assets, net” in our Consolidated Balance Sheets.
|
1.
|
ORGANIZATION
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
3.
|
LEASE TERMINATION
|
4.
|
DISPOSITIONS
|
|
Three Months Ended September 30, 2019
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||||||||||||
|
Triple Net Lease Properties
|
|
Managed Properties
|
|
Consolidated
|
|
Triple Net Lease Properties
|
|
Managed Properties
|
|
Consolidated
|
||||||||||||||||||||
|
|
IL
|
|
AL/MC
|
|
|
|
IL
|
|
AL/MC
|
|
||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Resident fees and services
|
$
|
—
|
|
|
$
|
84,475
|
|
|
$
|
29,528
|
|
|
$
|
114,003
|
|
|
$
|
—
|
|
|
$
|
83,449
|
|
|
$
|
32,729
|
|
|
$
|
116,178
|
|
Rental revenue
|
1,583
|
|
|
—
|
|
|
—
|
|
|
1,583
|
|
|
1,582
|
|
|
—
|
|
|
—
|
|
|
1,582
|
|
||||||||
Less: Property operating expense
|
—
|
|
|
50,678
|
|
|
24,507
|
|
|
75,185
|
|
|
—
|
|
|
50,457
|
|
|
26,609
|
|
|
77,066
|
|
||||||||
Segment NOI
|
$
|
1,583
|
|
|
$
|
33,797
|
|
|
$
|
5,021
|
|
|
$
|
40,401
|
|
|
$
|
1,582
|
|
|
$
|
32,992
|
|
|
$
|
6,120
|
|
|
$
|
40,694
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
21,041
|
|
|
|
|
|
|
|
|
22,373
|
|
||||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
22,662
|
|
|
|
|
|
|
|
|
29,268
|
|
||||||||||||
General and administrative expense
|
|
|
|
|
|
|
|
|
5,417
|
|
|
|
|
|
|
|
|
3,219
|
|
||||||||||||
Acquisition, transaction and integration expense
|
|
|
|
|
|
|
|
|
616
|
|
|
|
|
|
|
|
|
1,559
|
|
||||||||||||
Management fees and incentive compensation to affiliate
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
3,688
|
|
||||||||||||||
Other expense (income)
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
782
|
|
||||||||||||||
Total expenses
|
|
|
|
|
|
|
49,734
|
|
|
|
|
|
|
|
|
60,889
|
|
||||||||||||||
Litigation proceeds, net
|
|
|
|
|
|
|
38,226
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Income (Loss) before income taxes
|
|
|
|
|
|
|
28,893
|
|
|
|
|
|
|
|
|
(20,195
|
)
|
||||||||||||||
Income tax expense
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
104
|
|
||||||||||||
Net income (loss)
|
|
|
|
|
|
|
|
|
$
|
28,849
|
|
|
|
|
|
|
|
|
$
|
(20,299
|
)
|
|
Nine Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||||||||||
|
Triple Net Lease Properties
|
|
Managed Properties
|
|
Consolidated
|
|
Triple Net Lease Properties
|
|
Managed Properties
|
|
Consolidated
|
||||||||||||||||||||
|
|
IL
|
|
AL/MC
|
|
|
IL
|
|
AL/MC
|
|
|||||||||||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Resident fees and services
|
$
|
—
|
|
|
$
|
251,736
|
|
|
$
|
92,741
|
|
|
$
|
344,477
|
|
|
$
|
—
|
|
|
$
|
189,800
|
|
|
$
|
98,205
|
|
|
$
|
288,005
|
|
Rental revenue
|
4,748
|
|
|
|
|
|
—
|
|
|
4,748
|
|
|
37,825
|
|
|
|
|
—
|
|
|
37,825
|
|
|||||||||
Less: Property operating expense
|
—
|
|
|
150,450
|
|
|
77,039
|
|
|
227,489
|
|
|
—
|
|
|
114,264
|
|
|
78,411
|
|
|
192,675
|
|
||||||||
Segment NOI
|
$
|
4,748
|
|
|
$
|
101,286
|
|
|
$
|
15,702
|
|
|
$
|
121,736
|
|
|
$
|
37,825
|
|
|
$
|
75,536
|
|
|
$
|
19,794
|
|
|
$
|
133,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Depreciation and amortization
|
|
|
|
|
|
|
62,583
|
|
|
|
|
|
|
|
|
73,619
|
|
||||||||||||||
Interest expense
|
|
|
|
|
|
|
69,864
|
|
|
|
|
|
|
|
|
76,946
|
|
||||||||||||||
General and administrative expense
|
|
|
|
|
|
|
15,773
|
|
|
|
|
|
|
|
|
10,111
|
|
||||||||||||||
Acquisition, transaction and integration expense
|
|
|
|
|
|
|
1,677
|
|
|
|
|
|
|
|
|
13,130
|
|
||||||||||||||
Management fees and incentive compensation to affiliate
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
11,127
|
|
||||||||||||||
Loss on extinguishment of debt
|
|
|
|
|
|
|
335
|
|
|
|
|
|
|
|
|
58,544
|
|
||||||||||||||
Other expense
|
|
|
|
|
|
|
1,350
|
|
|
|
|
|
|
|
|
2,194
|
|
||||||||||||||
Total expenses
|
|
|
|
|
|
|
151,582
|
|
|
|
|
|
|
|
|
245,671
|
|
||||||||||||||
Loss on sale of real estate
|
|
|
|
|
|
|
(122
|
)
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Gain on lease termination
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
40,090
|
|
||||||||||||||
Litigation proceeds, net
|
|
|
|
|
|
|
38,226
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||||
Income (Loss) before income taxes
|
|
|
|
|
|
|
8,258
|
|
|
|
|
|
|
|
|
(72,426
|
)
|
||||||||||||||
Income tax expense
|
|
|
|
|
|
|
188
|
|
|
|
|
|
|
|
|
303
|
|
||||||||||||||
Net income (loss)
|
|
|
|
|
|
|
$
|
8,070
|
|
|
|
|
|
|
|
|
$
|
(72,729
|
)
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||
|
Amount
|
|
Percentage
|
|
Amount
|
|
Percentage
|
||||||
Managed IL Properties
|
$
|
1,756,511
|
|
|
79.7
|
%
|
|
$
|
1,792,746
|
|
|
78.4
|
%
|
Managed AL/MC Properties
|
380,988
|
|
|
17.3
|
%
|
|
399,393
|
|
|
17.5
|
%
|
||
Triple Net Lease Properties
|
57,170
|
|
|
2.6
|
%
|
|
58,270
|
|
|
2.5
|
%
|
||
All other assets (A)
|
9,202
|
|
|
0.4
|
%
|
|
35,849
|
|
|
1.6
|
%
|
||
Total assets
|
$
|
2,203,871
|
|
|
100.0
|
%
|
|
$
|
2,286,258
|
|
|
100.0
|
%
|
(A)
|
Primarily consists of right-of-use asset and corporate cash which is not directly attributable to our reportable business segments.
|
|
As of and for the nine months ended
September 30, 2019
|
|
As of and for the nine months ended
September 30, 2018
|
||||||||
|
Number of Communities
|
|
% of Total Revenue
|
|
Number of Communities
|
|
% of Total Revenue
|
||||
Florida
|
15
|
|
|
11.8
|
%
|
|
15
|
|
|
12.3
|
%
|
California
|
11
|
|
|
10.9
|
%
|
|
11
|
|
|
11.2
|
%
|
Texas
|
13
|
|
|
9.8
|
%
|
|
13
|
|
|
9.6
|
%
|
North Carolina
|
9
|
|
|
7.4
|
%
|
|
9
|
|
|
7.2
|
%
|
Pennsylvania
|
6
|
|
|
6.1
|
%
|
|
7
|
|
|
6.9
|
%
|
Oregon
|
9
|
|
|
7.0
|
%
|
|
9
|
|
|
6.4
|
%
|
Other
|
68
|
|
|
47.0
|
%
|
|
69
|
|
|
46.4
|
%
|
Total
|
131
|
|
|
100.0
|
%
|
|
133
|
|
|
100.0
|
%
|
6.
|
REAL ESTATE INVESTMENTS
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Depreciation
|
|
Net Carrying Value
|
|
Gross Carrying Amount
|
|
Accumulated Depreciation
|
|
Net Carrying Value
|
||||||||||||
Land
|
$
|
177,956
|
|
|
$
|
—
|
|
|
$
|
177,956
|
|
|
$
|
177,956
|
|
|
$
|
—
|
|
|
$
|
177,956
|
|
Building and improvements
|
2,225,305
|
|
|
(317,795
|
)
|
|
1,907,510
|
|
|
2,211,318
|
|
|
(269,137
|
)
|
|
1,942,181
|
|
||||||
Furniture, fixtures and equipment
|
135,243
|
|
|
(102,887
|
)
|
|
32,356
|
|
|
124,495
|
|
|
(89,231
|
)
|
|
35,264
|
|
||||||
Total real estate investments
|
$
|
2,538,504
|
|
|
$
|
(420,682
|
)
|
|
$
|
2,117,822
|
|
|
$
|
2,513,769
|
|
|
$
|
(358,368
|
)
|
|
$
|
2,155,401
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
|
Weighted Average Remaining Amortization Period
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
|
Weighted Average Remaining Amortization Period
|
||||||||||||
Intangible lease assets
|
$
|
8,638
|
|
|
$
|
(3,144
|
)
|
|
$
|
5,494
|
|
|
42.7 years
|
|
$
|
8,638
|
|
|
$
|
(2,877
|
)
|
|
$
|
5,761
|
|
|
42.1 years
|
7.
|
RECEIVABLES AND OTHER ASSETS, NET
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Escrows held by lenders (A)
|
$
|
22,909
|
|
|
$
|
17,268
|
|
Prepaid expenses
|
6,895
|
|
|
5,451
|
|
||
Resident receivables, net
|
3,178
|
|
|
3,200
|
|
||
Security deposits
|
2,851
|
|
|
2,966
|
|
||
Income tax receivable
|
944
|
|
|
782
|
|
||
Assets held for sale (B)
|
—
|
|
|
13,223
|
|
||
Straight-line rent receivable
|
3,949
|
|
|
3,494
|
|
||
Other assets and receivables
|
4,430
|
|
|
6,290
|
|
||
Total receivables and other assets
|
$
|
45,156
|
|
|
$
|
52,674
|
|
(A)
|
Represents amounts held by lenders in tax, insurance, replacement reserve and other escrow accounts that are related to mortgage notes collateralized by New Senior’s properties.
|
(B)
|
Represents two properties in the Managed AL/MC Properties segment and primarily consists of the carrying value of buildings and land.
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Balance, beginning of period
|
$
|
1,512
|
|
|
$
|
938
|
|
Provision for uncollectible receivables (A)
|
—
|
|
|
1,630
|
|
||
Write-offs, net of recoveries
|
(1,512
|
)
|
|
(1,281
|
)
|
||
Balance, end of period
|
$
|
—
|
|
|
$
|
1,287
|
|
(A)
|
In accordance with ASC 842 effective January 1, 2019, collectability of receivables is assessed and incorporated in lease revenue.
|
2019 (three months)
|
$
|
1,449
|
|
2020
|
5,904
|
|
|
2021
|
6,066
|
|
|
2022
|
6,233
|
|
|
2023
|
6,405
|
|
|
Thereafter
|
45,469
|
|
|
Total future minimum lease payments
|
$
|
71,526
|
|
8.
|
DEBT, NET
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||
|
Outstanding Face Amount
|
|
Carrying Value (A)
|
|
Maturity Date
|
|
Stated Interest Rate
|
|
Weighted Average Maturity (Years)
|
|
Outstanding Face Amount
|
|
Carrying Value (A)
|
||||||||
Floating Rate (B)(C)(D)
|
$
|
1,389,459
|
|
|
$
|
1,373,629
|
|
|
Dec 2021 - Nov 2025
|
|
1M LIBOR +2.29% to 1M LIBOR +2.75%
|
|
4.3
|
|
$
|
1,440,842
|
|
|
$
|
1,422,743
|
|
Fixed Rate
|
464,680
|
|
|
462,433
|
|
|
Sep 2025
|
|
4.25%
|
|
5.8
|
|
464,680
|
|
|
462,139
|
|
||||
Total
|
$
|
1,854,139
|
|
|
$
|
1,836,062
|
|
|
|
|
|
|
4.7
|
|
$
|
1,905,522
|
|
|
$
|
1,884,882
|
|
(A)
|
The totals are reported net of deferred financing costs of $18.1 million and $20.6 million as of September 30, 2019 and December 31, 2018, respectively.
|
(B)
|
Substantially all of these loans have LIBOR caps that range between 3.66% and 3.75% as of September 30, 2019.
|
(C)
|
Includes $38.8 million and $69.0 million of borrowings outstanding under our revolving credit facility secured by certain properties as of September 30, 2019 and December 31, 2018, respectively.
|
(D)
|
As of September 30, 2019, $350.0 million of total floating rate debt that has been hedged using an interest rate swap, which is carried at fair value. See Note 9 for more information.
|
9.
|
DERIVATIVE INSTRUMENTS
|
10.
|
ACCRUED EXPENSES AND OTHER LIABILITIES
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Security deposits payable
|
$
|
2,572
|
|
|
$
|
2,766
|
|
Accounts payable
|
13,709
|
|
|
13,232
|
|
||
Due to property managers(A)
|
10,232
|
|
|
—
|
|
||
Mortgage interest payable
|
6,883
|
|
|
7,441
|
|
||
Deferred community fees, net
|
7,291
|
|
|
6,454
|
|
||
Rent collected in advance
|
3,647
|
|
|
3,843
|
|
||
Property tax payable
|
10,747
|
|
|
4,880
|
|
||
Operating lease liability
|
2,274
|
|
|
—
|
|
||
Derivative liability
|
7,308
|
|
|
—
|
|
||
Other liabilities
|
11,635
|
|
|
14,063
|
|
||
Total accrued expenses and other liabilities
|
$
|
76,298
|
|
|
$
|
52,679
|
|
(A)
|
Prior to the Internalization, the due to property managers balances were primarily recorded in Due to Affiliates on the Consolidated Balance Sheets.
|
11.
|
FAIR VALUE MEASUREMENTS
|
|
Fair Value Hierarchy
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|||||||||
Financial Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents (A)
|
1
|
|
$
|
35,399
|
|
|
$
|
35,399
|
|
|
$
|
72,422
|
|
|
$
|
72,422
|
|
Restricted cash (A)
|
1
|
|
25,760
|
|
|
25,760
|
|
|
20,234
|
|
|
20,234
|
|
||||
Interest rate caps (B)
|
2
|
|
22
|
|
|
22
|
|
|
618
|
|
|
618
|
|
||||
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Mortgage debt (C)
|
3
|
|
$
|
1,799,794
|
|
|
$
|
1,794,193
|
|
|
$
|
1,818,917
|
|
|
$
|
1,820,772
|
|
Revolving credit facility (C)
|
3
|
|
36,268
|
|
|
38,485
|
|
|
65,965
|
|
|
68,470
|
|
||||
Interest rate swap (B)
|
2
|
|
7,308
|
|
|
7,308
|
|
|
—
|
|
|
—
|
|
(A)
|
The carrying amount approximates fair value.
|
(B)
|
Fair value based on pricing models that consider inputs including forward yield curves, cap strike rates, cap volatility and discount rates.
|
(C)
|
Fair value based on a discounted cash flow valuation model. Significant inputs in the model include amounts and timing of expected future cash flows and market yields which are constructed based on inputs implied from similar debt offerings. Our mortgage debt and revolving credit facility are not measured at fair value in our Consolidated Balance Sheets.
|
12.
|
TRANSACTIONS WITH AFFILIATES
|
13.
|
INCOME TAXES
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Current
|
|
|
|
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(42
|
)
|
State and local
|
44
|
|
|
100
|
|
|
188
|
|
|
254
|
|
||||
Total current provision
|
44
|
|
|
100
|
|
|
188
|
|
|
212
|
|
||||
Deferred
|
|
|
|
|
|
|
|
|
|
||||||
Federal
|
—
|
|
|
(94
|
)
|
|
—
|
|
|
(15
|
)
|
||||
State and local
|
—
|
|
|
98
|
|
|
—
|
|
|
106
|
|
||||
Total deferred provision
|
—
|
|
|
4
|
|
|
—
|
|
|
91
|
|
||||
Total provision for income taxes
|
$
|
44
|
|
|
$
|
104
|
|
|
$
|
188
|
|
|
$
|
303
|
|
14.
|
REDEEMABLE PREFERRED STOCK, EQUITY AND EARNINGS PER SHARE
|
Balance as of December 31, 2018
|
$
|
40,000
|
|
Accrued dividend on Redeemable Preferred Stock
|
506
|
|
|
Balance as of September 30, 2019
|
$
|
40,506
|
|
|
Range
|
|
Weighted Average
|
||
Expected volatility (mix of historical and implied)
|
32.0% - 34.0%
|
|
33.7
|
%
|
|
Expected dividend yield
|
9.3%-9.6%
|
|
9.3
|
%
|
|
Expected remaining term
|
6.0 years
|
|
6.0 years
|
|
|
Risk free rate
|
2.4%-2.7%
|
|
2.7
|
%
|
|
Fair value per option at valuation date
|
$0.50 - $0.64
|
|
$
|
0.52
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
28,849
|
|
|
$
|
(20,299
|
)
|
|
$
|
8,070
|
|
|
$
|
(72,729
|
)
|
Deemed dividend on redeemable preferred stock
|
(605
|
)
|
|
—
|
|
|
(1,802
|
)
|
|
—
|
|
||||
Net income (loss) attributable to common stockholders
|
$
|
28,244
|
|
|
$
|
(20,299
|
)
|
|
$
|
6,268
|
|
|
$
|
(72,729
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator
|
|
|
|
|
|
|
|
||||||||
Basic weighted average common shares outstanding (A)
|
82,209,844
|
|
|
82,148,869
|
|
|
82,207,610
|
|
|
82,148,869
|
|
||||
Dilutive common shares - equity awards and option (B)
|
1,754,387
|
|
|
—
|
|
|
1,381,038
|
|
|
—
|
|
||||
Diluted weighted average common shares outstanding
|
83,964,231
|
|
|
82,148,869
|
|
|
83,588,648
|
|
|
82,148,869
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss per share of common stock
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.34
|
|
|
$
|
(0.25
|
)
|
|
$
|
0.08
|
|
|
$
|
(0.89
|
)
|
Diluted
|
$
|
0.34
|
|
|
$
|
(0.25
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.89
|
)
|
(A)
|
The outstanding shares used to calculate the weighted average basic shares excludes 754,594 restricted stock awards as of September 30, 2019, net of forfeitures, as those shares were issued but were not vested and therefore, not considered outstanding for purposes of computing basic loss per share for the three and nine months ended September 30, 2019.
|
(B)
|
During the three and nine months ended September 30, 2018, 467,384 and 563,929 dilutive share equivalents and options, respectively, were excluded as their inclusion would have been anti-dilutive given our loss position.
|
15.
|
COMMITMENTS AND CONTINGENCIES
|
Year
|
Operating Leases
|
||
2019 (three months)
|
$
|
162
|
|
2020
|
608
|
|
|
2021
|
555
|
|
|
2022
|
489
|
|
|
2023
|
466
|
|
|
Thereafter
|
545
|
|
|
Total future minimum lease payments
|
$
|
2,825
|
|
Less imputed interest
|
(551
|
)
|
|
Total operating lease liability
|
$
|
2,274
|
|
16.
|
SUBSEQUENT EVENTS
|
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Increase (Decrease)
|
|||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Amount
|
|
Percentage
|
|||||||
Segment NOI for Managed Properties
|
|
|
|
|
|
|
|
|
|
|||||
IL Properties
|
$
|
33,797
|
|
|
$
|
32,992
|
|
|
$
|
805
|
|
|
2.4
|
%
|
AL/MC Properties
|
5,021
|
|
|
6,120
|
|
|
(1,099
|
)
|
|
(18.0
|
)%
|
|||
Segment NOI for Triple Net Lease Properties
|
1,583
|
|
|
1,582
|
|
|
1
|
|
|
0.1
|
%
|
|||
Total segment NOI
|
40,401
|
|
|
40,694
|
|
|
(293
|
)
|
|
(0.7
|
)%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization
|
21,041
|
|
|
22,373
|
|
|
(1,332
|
)
|
|
(6.0
|
)%
|
|||
Interest expense
|
22,662
|
|
|
29,268
|
|
|
(6,606
|
)
|
|
(22.6
|
)%
|
|||
General and administrative expense
|
5,417
|
|
|
3,219
|
|
|
2,198
|
|
|
68.3
|
%
|
|||
Acquisition, transaction and integration expense
|
616
|
|
|
1,559
|
|
|
(943
|
)
|
|
(60.5
|
)%
|
|||
Management fees and incentive compensation to affiliate
|
—
|
|
|
3,688
|
|
|
(3,688
|
)
|
|
NM
|
|
|||
Other (income) expense
|
(2
|
)
|
|
782
|
|
|
(784
|
)
|
|
(100.3
|
)%
|
|||
Total expenses
|
49,734
|
|
|
60,889
|
|
|
(11,155
|
)
|
|
(18.3
|
)%
|
|||
Litigation proceeds, net
|
38,226
|
|
|
—
|
|
|
38,226
|
|
|
|
||||
Income (Loss) before income taxes
|
28,893
|
|
|
(20,195
|
)
|
|
49,088
|
|
|
(243.1
|
)%
|
|||
Income tax expense
|
44
|
|
|
104
|
|
|
(60
|
)
|
|
(57.7
|
)%
|
|||
Net income (loss)
|
$
|
28,849
|
|
|
$
|
(20,299
|
)
|
|
$
|
49,148
|
|
|
(242.1
|
)%
|
|
Same Store & Total Portfolio
|
|||||||||||||
(dollars in thousands, except per bed data)
|
2019
|
|
2018
|
|
Change
|
|
%
|
|||||||
Resident fees and services
|
$
|
84,475
|
|
|
$
|
83,449
|
|
|
$
|
1,026
|
|
|
1.2
|
%
|
Less: Property operating expense
|
50,678
|
|
|
50,457
|
|
|
221
|
|
|
0.4
|
%
|
|||
NOI
|
$
|
33,797
|
|
|
$
|
32,992
|
|
|
$
|
805
|
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|||||||
Total properties
|
102
|
|
|
102
|
|
|
|
|
|
|||||
Average available beds
|
11,975
|
|
|
11,974
|
|
|
|
|
|
|||||
Average occupancy (%)
|
87.3
|
|
|
88.1
|
|
|
|
|
|
|||||
Average monthly revenue per occupied bed (A)
|
$
|
2,693
|
|
|
$
|
2,624
|
|
|
|
|
|
(A)
|
In accordance with ASC 842 effective January 1, 2019, collectability of receivables is assessed and incorporated in lease revenue. In order to facilitate a comparison between periods, the average monthly revenue per occupied bed for the period ended September 30, 2018 incorporates a similar adjustment of $0.4 million.
|
|
Same Store Portfolio
|
|
Total Portfolio
|
||||||||||||||||||||||||||
(dollars in thousands, except per bed data)
|
2019
|
|
2018
|
|
Change
|
|
%
|
|
2019
|
|
2018
|
|
Change
|
|
%
|
||||||||||||||
Resident fees and services
|
$
|
23,108
|
|
|
$
|
23,346
|
|
|
$
|
(238
|
)
|
|
(1.0
|
)%
|
|
$
|
29,528
|
|
|
$
|
32,729
|
|
|
$
|
(3,201
|
)
|
|
(9.8
|
)%
|
Less: Property operating expense
|
18,147
|
|
|
17,849
|
|
|
298
|
|
|
1.7
|
%
|
|
24,507
|
|
|
26,609
|
|
|
(2,102
|
)
|
|
(7.9
|
)%
|
||||||
NOI
|
$
|
4,961
|
|
|
$
|
5,497
|
|
|
$
|
(536
|
)
|
|
(9.8
|
)%
|
|
$
|
5,021
|
|
|
$
|
6,120
|
|
|
$
|
(1,099
|
)
|
|
(18.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total properties
|
19
|
|
|
19
|
|
|
|
|
|
|
28
|
|
|
30
|
|
|
|
|
|
||||||||||
Average available beds
|
2,295
|
|
|
2,300
|
|
|
|
|
|
|
3,139
|
|
|
3,421
|
|
|
|
|
|
||||||||||
Average occupancy (%)
|
81.3
|
|
|
81.9
|
|
|
|
|
|
|
78.0
|
|
|
79.4
|
|
|
|
|
|
||||||||||
Average monthly revenue per occupied bed (A)
|
$
|
4,127
|
|
|
$
|
4,117
|
|
|
|
|
|
|
$
|
4,022
|
|
|
$
|
3,993
|
|
|
|
|
|
(A)
|
In accordance with ASC 842 effective January 1, 2019, collectability of receivables is assessed and incorporated in lease revenue. In order to facilitate a comparison between periods, the average monthly revenue per occupied bed for the period ended September 30, 2018 incorporates a similar adjustment of $0.1 million.
|
|
Same Store Portfolio
|
|
Total Portfolio
|
||||||||||||||||||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|
%
|
|
2019
|
|
2018
|
|
Change
|
|
%
|
||||||||||||||
Rental revenue
|
$
|
1,583
|
|
|
$
|
1,582
|
|
|
$
|
1
|
|
|
0.1
|
%
|
|
$
|
1,583
|
|
|
$
|
1,582
|
|
|
$
|
1
|
|
|
0.1
|
%
|
NOI
|
$
|
1,583
|
|
|
$
|
1,582
|
|
|
$
|
1
|
|
|
0.1
|
%
|
|
$
|
1,583
|
|
|
$
|
1,582
|
|
|
$
|
1
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total properties
|
1
|
|
|
1
|
|
|
|
|
|
|
1
|
|
|
1
|
|
|
|
|
|
||||||||||
Average available beds
|
463
|
|
|
463
|
|
|
|
|
|
|
463
|
|
|
463
|
|
|
|
|
|
||||||||||
Average occupancy (%)
|
85.4
|
|
|
87.3
|
|
|
|
|
|
|
85.4
|
|
|
86.0
|
|
|
|
|
|
|
||||||||||||||
|
Nine Months Ended September 30,
|
|
Increase (Decrease)
|
|||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Amount
|
|
Percentage
|
|||||||
Segment NOI for Managed Properties
|
|
|
|
|
|
|
|
|
|
|||||
IL Properties
|
$
|
101,286
|
|
|
$
|
75,536
|
|
|
$
|
25,750
|
|
|
34.1
|
%
|
AL/MC Properties
|
15,702
|
|
|
19,794
|
|
|
(4,092
|
)
|
|
(20.7
|
)%
|
|||
Segment NOI for Triple Net Lease Properties
|
4,748
|
|
|
37,825
|
|
|
(33,077
|
)
|
|
(87.4
|
)%
|
|||
Total segment NOI
|
121,736
|
|
|
133,155
|
|
|
(11,419
|
)
|
|
(8.6
|
)%
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Depreciation and amortization
|
62,583
|
|
|
73,619
|
|
|
(11,036
|
)
|
|
(15.0
|
)%
|
|||
Interest expense
|
69,864
|
|
|
76,946
|
|
|
(7,082
|
)
|
|
(9.2
|
)%
|
|||
General and administrative expense
|
15,773
|
|
|
10,111
|
|
|
5,662
|
|
|
56.0
|
%
|
|||
Acquisition, transaction and integration expense
|
1,677
|
|
|
13,130
|
|
|
(11,453
|
)
|
|
(87.2
|
)%
|
|||
Management fees and incentive compensation to affiliate
|
—
|
|
|
11,127
|
|
|
(11,127
|
)
|
|
NM
|
|
|||
Loss on extinguishment of debt
|
335
|
|
|
58,544
|
|
|
(58,209
|
)
|
|
(99.4
|
)%
|
|||
Other expense
|
1,350
|
|
|
2,194
|
|
|
(844
|
)
|
|
(38.5
|
)%
|
|||
Total expenses
|
151,582
|
|
|
245,671
|
|
|
(94,089
|
)
|
|
(38.3
|
)%
|
|||
Loss on sale of real estate
|
(122
|
)
|
|
—
|
|
|
(122
|
)
|
|
NM
|
|
|||
Gain on lease termination
|
—
|
|
|
40,090
|
|
|
(40,090
|
)
|
|
NM
|
|
|||
Litigation proceeds, net
|
38,226
|
|
|
—
|
|
|
38,226
|
|
|
NM
|
|
|||
Income (Loss) before income taxes
|
8,258
|
|
|
(72,426
|
)
|
|
80,684
|
|
|
(111.4
|
)%
|
|||
Income tax expense
|
188
|
|
|
303
|
|
|
(115
|
)
|
|
(38.0
|
)%
|
|||
Net income (loss)
|
$
|
8,070
|
|
|
$
|
(72,729
|
)
|
|
$
|
80,799
|
|
|
(111.1
|
)%
|
|
Same Store Portfolio
|
|
Total Portfolio
|
||||||||||||||||||||||||||
(dollars in thousands, except per bed data)
|
2019
|
|
2018
|
|
Change
|
|
%
|
|
2019
|
|
2018
|
|
Change
|
|
%
|
||||||||||||||
Resident fees and services
|
$
|
129,432
|
|
|
$
|
128,812
|
|
|
$
|
620
|
|
|
0.5
|
%
|
|
$
|
251,736
|
|
|
$
|
189,800
|
|
|
$
|
61,936
|
|
|
32.6
|
%
|
Less: Property operating expense
|
76,993
|
|
|
77,304
|
|
|
(311
|
)
|
|
(0.4
|
)%
|
|
150,450
|
|
|
114,264
|
|
|
36,186
|
|
|
31.7
|
%
|
||||||
NOI
|
$
|
52,439
|
|
|
$
|
51,508
|
|
|
$
|
931
|
|
|
1.8
|
%
|
|
$
|
101,286
|
|
|
$
|
75,536
|
|
|
$
|
25,750
|
|
|
34.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total properties
|
51
|
|
|
51
|
|
|
|
|
|
|
102
|
|
|
51
|
|
|
|
|
|
||||||||||
Average available beds
|
6,127
|
|
|
6,127
|
|
|
|
|
|
|
11,974
|
|
|
8,725
|
|
|
|
|
|
||||||||||
Average occupancy (%)
|
86.2
|
|
|
87.8
|
|
|
|
|
|
|
87.1
|
|
|
88.1
|
|
|
|
|
|
||||||||||
Average monthly revenue per occupied bed (A)
|
$
|
2,722
|
|
|
$
|
2,654
|
|
|
|
|
|
|
$
|
2,680
|
|
|
$
|
2,740
|
|
|
|
|
|
(A)
|
In accordance with ASC 842 effective January 1, 2019, collectability of receivables is assessed and incorporated in lease revenue. In order to facilitate a comparison between periods, the average monthly revenue per occupied bed for the period ended September 30, 2018 incorporates a similar adjustment of $0.7 million.
|
|
Same Store Portfolio
|
|
Total Portfolio
|
||||||||||||||||||||||||||
(dollars in thousands, except per bed data)
|
2019
|
|
2018
|
|
Change
|
|
%
|
|
2019
|
|
2018
|
|
Change
|
|
%
|
||||||||||||||
Resident fees and services
|
$
|
69,499
|
|
|
$
|
69,737
|
|
|
$
|
(238
|
)
|
|
(0.3
|
)%
|
|
$
|
92,741
|
|
|
$
|
98,205
|
|
|
$
|
(5,464
|
)
|
|
(5.6
|
)%
|
Less: Property operating expense
|
54,428
|
|
|
52,818
|
|
|
1,610
|
|
|
3.0
|
%
|
|
77,039
|
|
|
78,411
|
|
|
(1,372
|
)
|
|
(1.7
|
)%
|
||||||
NOI
|
$
|
15,071
|
|
|
$
|
16,919
|
|
|
$
|
(1,848
|
)
|
|
(10.9
|
)%
|
|
$
|
15,702
|
|
|
$
|
19,794
|
|
|
$
|
(4,092
|
)
|
|
(20.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total properties
|
19
|
|
|
19
|
|
|
|
|
|
|
28
|
|
|
30
|
|
|
|
|
|
||||||||||
Average available beds
|
2,296
|
|
|
2,297
|
|
|
|
|
|
|
3,281
|
|
|
3,418
|
|
|
|
|
|
||||||||||
Average occupancy (%)
|
81.5
|
|
|
81.9
|
|
|
|
|
|
|
77.8
|
|
|
79.4
|
|
|
|
|
|
||||||||||
Average monthly revenue per occupied bed (A)
|
$
|
4,130
|
|
|
$
|
4,102
|
|
|
|
|
|
|
$
|
4,036
|
|
|
3,994
|
|
|
|
|
|
(A)
|
In accordance with ASC 842 effective January 1, 2019, collectability of receivables is assessed and incorporated in lease revenue. In order to facilitate a comparison between periods, the average monthly revenue per occupied bed for the period ended September 30, 2018 incorporates a similar adjustment of $0.3 million.
|
|
Same Store Portfolio
|
|
Total Portfolio
|
||||||||||||||||||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Change
|
|
%
|
|
2019
|
|
2018
|
|
Change
|
|
%
|
||||||||||||||
Rental revenue
|
$
|
4,748
|
|
|
$
|
4,745
|
|
|
$
|
3
|
|
|
0.1
|
%
|
|
$
|
4,748
|
|
|
$
|
37,825
|
|
|
$
|
(33,077
|
)
|
|
(87.4
|
)%
|
NOI
|
$
|
4,748
|
|
|
$
|
4,745
|
|
|
$
|
3
|
|
|
0.1
|
%
|
|
$
|
4,748
|
|
|
$
|
37,825
|
|
|
$
|
(33,077
|
)
|
|
(87.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Total properties
|
1
|
|
|
1
|
|
|
|
|
|
|
1
|
|
|
1
|
|
|
|
|
|
||||||||||
Average available beds
|
463
|
|
|
463
|
|
|
|
|
|
|
463
|
|
|
3,061
|
|
|
|
|
|
||||||||||
Average occupancy (%)
|
85.4
|
|
|
87.3
|
|
|
|
|
|
|
85.4
|
|
|
86.0
|
|
|
|
|
|
•
|
Access to Financing: Decisions by investors, counterparties and lenders to enter into transactions with us will depend upon a number of factors, such as our historical and projected financial performance, compliance with covenant terms, industry and market trends, the availability of capital and our investors’, counterparties’ and lenders’ policies and rates applicable thereto and the relative attractiveness of alternative investment or lending opportunities.
|
•
|
Impact of Expected Additional Borrowings or Sales of Assets on Cash Flows: The availability and timing of and proceeds from additional borrowings or refinancing of existing debt may be different than expected or may not occur as expected. The timing of any sale of assets, and the proceeds from any such sales, are unpredictable and may vary materially from an asset’s estimated fair value and carrying value.
|
•
|
Compliance with Debt Obligations: Our financings subject us and our operators to a number of obligations, and a failure to satisfy certain obligations, including (without limitation) a failure by the guarantors of our leases to satisfy certain financial covenants that depend in part on the performance of our leased assets, which is outside of our control, could give rise to a requirement to prepay outstanding debt or result in an event of default and the acceleration of the maturity date for repayment. We may also seek amendments to these debt covenants, and there can be no assurance that we will be able to obtain any such amendment on commercially reasonable terms, if at all.
|
|
Nine Months Ended September 30,
|
|
Increase (Decrease)
|
||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
Amount
|
||||||
Net cash provided by (used in)
|
|
|
|
|
|
||||||
Operating activities
|
$
|
62,354
|
|
|
$
|
111,526
|
|
|
$
|
(49,172
|
)
|
Investing activities
|
(7,598
|
)
|
|
(13,605
|
)
|
|
6,007
|
|
|||
Financing activities
|
(86,253
|
)
|
|
(79,141
|
)
|
|
(7,112
|
)
|
|||
Net decrease in cash, cash equivalents and restricted cash
|
(31,497
|
)
|
|
18,780
|
|
|
(50,277
|
)
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
92,656
|
|
|
157,485
|
|
|
(64,829
|
)
|
|||
Cash, cash equivalents and restricted cash, end of period
|
$
|
61,159
|
|
|
$
|
176,265
|
|
|
$
|
(115,106
|
)
|
|
Period from
October 1, 2019 to December 31, 2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
||||||||||||||
Principal payments
|
$
|
2,629
|
|
|
$
|
12,993
|
|
|
$
|
20,516
|
|
|
$
|
22,117
|
|
|
$
|
19,817
|
|
|
$
|
37,179
|
|
|
$
|
115,251
|
|
Balloon payments
|
—
|
|
|
—
|
|
|
38,750
|
|
|
601,784
|
|
|
—
|
|
|
1,098,354
|
|
|
1,738,888
|
|
|||||||
Redeemable preferred stock
|
—
|
|
|
20,000
|
|
|
20,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,000
|
|
|||||||
Subtotal
|
2,629
|
|
|
32,993
|
|
|
79,266
|
|
|
623,901
|
|
|
19,817
|
|
|
1,135,533
|
|
|
1,894,139
|
|
|||||||
Interest & redeemable preferred stock dividend (A)(B)
|
21,214
|
|
|
84,803
|
|
|
82,689
|
|
|
60,133
|
|
|
50,527
|
|
|
91,471
|
|
|
390,837
|
|
|||||||
Leases
|
162
|
|
|
608
|
|
|
555
|
|
|
489
|
|
|
466
|
|
|
545
|
|
|
2,825
|
|
|||||||
Total obligations (C)
|
$
|
24,005
|
|
|
$
|
118,404
|
|
|
$
|
162,510
|
|
|
$
|
684,523
|
|
|
$
|
70,810
|
|
|
$
|
1,227,549
|
|
|
$
|
2,287,801
|
|
(A)
|
Estimated interest payments on floating rate debt are calculated using LIBOR rates in effect at September 30, 2019 and may not be indicative of actual payments. Actual payments may vary significantly due to LIBOR fluctuations. See Note 9 to the consolidated financial statements for further information about interest rates.
|
(B)
|
Includes obligations to pay dividends of $0.6 million in 2019, $2.4 million in 2020, and $1.2 million in 2021 on the Series A redeemable preferred stock.
|
(C)
|
Total obligations include an estimate of interest payments on floating rate debt, see Note A above.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss) attributable to common stockholders
|
$
|
28,244
|
|
|
$
|
(20,299
|
)
|
|
$
|
6,268
|
|
|
$
|
(72,729
|
)
|
Loss on sale of assets
|
—
|
|
|
—
|
|
|
122
|
|
|
—
|
|
||||
Depreciation and amortization
|
21,041
|
|
|
22,373
|
|
|
62,583
|
|
|
73,619
|
|
||||
FFO
|
49,285
|
|
|
2,074
|
|
|
68,973
|
|
|
890
|
|
||||
Acquisition, transaction and integration expense
|
616
|
|
|
1,559
|
|
|
1,677
|
|
|
13,130
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
335
|
|
|
58,544
|
|
||||
Compensation expense related to transition awards
|
291
|
|
|
—
|
|
|
1,432
|
|
|
—
|
|
||||
Gain on lease termination
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,090
|
)
|
||||
Litigation proceeds, net
|
(38,226
|
)
|
|
—
|
|
|
(38,226
|
)
|
|
—
|
|
||||
Other expense
|
23
|
|
|
1,095
|
|
|
1,468
|
|
|
2,507
|
|
||||
Normalized FFO
|
11,989
|
|
|
4,728
|
|
|
35,659
|
|
|
34,981
|
|
||||
Straight line rental revenue
|
(134
|
)
|
|
(173
|
)
|
|
(455
|
)
|
|
(5,192
|
)
|
||||
Amortization of equity-based compensation expense
|
844
|
|
|
—
|
|
|
932
|
|
|
—
|
|
||||
Amortization of deferred financing costs
|
923
|
|
|
4,102
|
|
|
3,228
|
|
|
9,396
|
|
||||
Amortization of deferred community fees and other
|
396
|
|
|
1,146
|
|
|
1,363
|
|
|
2,411
|
|
||||
Adjusted FFO
|
$
|
14,018
|
|
|
$
|
9,803
|
|
|
$
|
40,727
|
|
|
$
|
41,596
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(dollars in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income (loss) attributable to common stockholders
|
$
|
28,244
|
|
|
$
|
(20,299
|
)
|
|
$
|
6,268
|
|
|
$
|
(72,729
|
)
|
Loss on sale of assets
|
—
|
|
|
—
|
|
|
122
|
|
|
—
|
|
||||
Depreciation and amortization
|
21,041
|
|
|
22,373
|
|
|
62,583
|
|
|
73,619
|
|
||||
FFO
|
49,285
|
|
|
2,074
|
|
|
68,973
|
|
|
890
|
|
||||
Acquisition, transaction and integration expense
|
616
|
|
|
1,559
|
|
|
1,677
|
|
|
13,130
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
335
|
|
|
58,544
|
|
||||
Compensation expense related to transition awards
|
291
|
|
|
—
|
|
|
1,432
|
|
|
—
|
|
||||
Gain on lease termination
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,090
|
)
|
||||
Litigation proceeds, net
|
(38,226
|
)
|
|
—
|
|
|
(38,226
|
)
|
|
—
|
|
||||
Other expense
|
23
|
|
|
1,095
|
|
|
1,468
|
|
|
2,507
|
|
||||
Amortization of equity-based compensation expense
|
844
|
|
|
—
|
|
|
932
|
|
|
—
|
|
||||
Interest expense
|
22,662
|
|
|
29,268
|
|
|
69,864
|
|
|
76,946
|
|
||||
Income tax expense
|
44
|
|
|
104
|
|
|
188
|
|
|
303
|
|
||||
Adjusted EBITDA
|
$
|
35,539
|
|
|
$
|
34,100
|
|
|
$
|
106,643
|
|
|
$
|
112,230
|
|
|
September 30, 2019
|
|
December 31, 2018
|
|||||
|
Outstanding Face Amount
|
|
Outstanding Face Amount
|
|
||||
Floating Rate (B)(C)(D)
|
$
|
1,039,459
|
|
|
$
|
1,440,842
|
|
|
Fixed Rate
|
814,680
|
|
|
464,680
|
|
|
||
Total
|
$
|
1,854,139
|
|
|
$
|
1,905,522
|
|
|
•
|
Our stock price performance could impair our ability to access the capital markets, and any disruption to the capital markets or other sources of financing generally could also negatively affect our liquidity.
|
•
|
Our failure to comply with the terms of our financings or a default by our lease counterparty (including a failure by the lease guarantor to satisfy certain financial covenants that depend on the performance of our leased assets, which are outside of our control) could result in the acceleration of the requirement to repay our indebtedness or require us to seek amendments to such agreements, which we may not be able to obtain on commercially reasonable terms, if at all.
|
•
|
Our ability to obtain financing or refinancing on favorable terms, if at all.
|
•
|
Real estate investments are relatively illiquid, and our ability to quickly sell or exchange our properties in response to changes in economic or other conditions is limited. In the event we desire or need to sell any of our properties, the value of those properties and our ability to sell at a price or on terms acceptable to us could be adversely affected by a downturn in the real estate industry generally, weakness in the senior housing and healthcare industries or other factors.
|
•
|
Because we derive substantially all of our revenues from operations conducted by third parties, any inability or unwillingness by these operators to satisfy their respective obligations to us or to renew their leases with us upon expiration of the terms thereof could have a material adverse effect on our liquidity, financial condition, our ability to service our indebtedness and to make distributions to our stockholders.
|
•
|
To comply with the 90% distribution requirement applicable to REITs and to avoid income and excise taxes, we must make distributions to our stockholders. Our actual distributions to stockholders have historically been higher than the REIT distribution requirement. Distributions will limit our ability to finance investments and may limit our ability to engage in transactions that are otherwise in the best interests of our stockholders. Although we do not anticipate any inability to satisfy the REIT distribution requirement, from time to time, we may not have sufficient cash or other liquid assets to do so. For example, timing differences between the actual receipt of income and actual payment of deductible expenses, on the one hand, and the inclusion of that income and deduction of those expenses in arriving at our taxable income, on the other hand, or non-deductible expenses such as principal amortization or repayments or capital expenditures in excess of non-cash deductions may cause us to fail to have sufficient cash or liquid assets to enable us to satisfy the 90% distribution requirement. In the event that timing differences occur or we decide to retain cash or to distribute such greater amount as may be necessary to avoid income and excise taxation, we may seek to borrow funds, issue additional equity securities, pay taxable stock dividends, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements. Any of these actions may require us to raise additional capital to meet our obligations; however, limitations on our ability to access capital, as described above, could have an adverse effect on our ability to make required payments on our debt obligations, make distributions to our stockholders or make future investments necessary to implement our business strategy. The terms of the instruments governing our existing indebtedness restrict our ability to engage in certain types of these transactions.
|
(a)
|
Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information is recorded, processed, summarized and reported accurately and on a timely basis. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.
|
(b)
|
Changes in Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d- 15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
•
|
general availability of credit and market conditions, including rising interest rates and increasing borrowing costs;
|
•
|
the market price of the shares of our equity securities;
|
•
|
the market’s perception of our growth potential, compliance with applicable laws and our historic and potential future earnings and cash distributions;
|
•
|
our degree of financial leverage and operational flexibility;
|
•
|
the financing integrity of our lenders, which might impair their ability to meet their commitments to us or their willingness to make additional loans to us, and our inability to replace the financing commitment of any such lender on favorable terms, or at all;
|
•
|
the stability in the market value of our properties;
|
•
|
the financial performance and general market perception of our property managers and tenants;
|
•
|
changes in the credit ratings on United States government debt securities or default or delay in payment by the United States of its obligations; and
|
•
|
issues facing the healthcare industry, including, but not limited to, healthcare reform and changes in government reimbursement policies.
|
•
|
part of the income and gain recognized by certain qualified employee pension trusts with respect to our stock may be treated as unrelated business taxable income if shares of our stock are predominantly held by qualified employee pension trusts, and we are required to rely on a special look-through rule for purposes of meeting one of the REIT ownership tests, and we are not operated in a manner to avoid treatment of such income or gain as unrelated business taxable income; and
|
•
|
part of the income and gain recognized by a tax-exempt investor with respect to our stock would constitute unrelated business taxable income if the investor incurs debt in order to acquire the stock.
|
•
|
a shift in our investor base;
|
•
|
our quarterly or annual earnings, or those of other comparable companies;
|
•
|
actual or anticipated fluctuations in our operating results;
|
•
|
changes in accounting standards, policies, guidance, interpretations or principles;
|
•
|
announcements by us or our competitors of significant investments, acquisitions or dispositions;
|
•
|
the failure of securities analysts to cover our common stock;
|
•
|
changes in earnings estimates by securities analysts or our ability to meet those estimates;
|
•
|
the operating and stock price performance of other comparable companies;
|
•
|
overall market fluctuations; and
|
•
|
general economic conditions.
|
•
|
a classified board of directors with staggered three-year terms;
|
•
|
amendment of provisions in our certificate of incorporation and bylaws regarding the election of directors, classes of directors, the term of office of directors, the filling of director vacancies and the resignation and removal of directors only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon;
|
•
|
amendment of provisions in our certificate of incorporation regarding corporate opportunity only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon;
|
•
|
removal of directors only for cause and only with the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote in the election of directors;
|
•
|
our board of directors to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval;
|
•
|
advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings; and
|
•
|
a prohibition, in our certificate of incorporation, stating that no holder of shares of our common stock will have cumulative voting rights in the election of directors, which means that the holders of a majority of the issued and outstanding shares of common stock can elect all the directors standing for election.
|
|
|
|
NEW SENIOR INVESTMENT GROUP INC.
|
|
|
|
|
|
By:
|
/s/ Susan Givens
|
|
Susan Givens
|
|
|
Director and Chief Executive Officer
|
|
|
|
|
|
November 5, 2019
|
|
|
|
|
|
|
|
|
By:
|
/s/ Bhairav Patel
|
|
Bhairav Patel
|
|
|
Executive Vice President of Finance and Accounting and Interim Chief Financial Officer
|
|
|
|
|
|
November 5, 2019
|
1.
|
I have reviewed this quarterly report on Form 10-Q of New Senior Investment Group Inc.;
|
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 officers 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 officers 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 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.
|
November 5, 2019
|
/s/ Susan Givens
|
|
Susan Givens
|
|
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of New Senior Investment Group Inc.;
|
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 officers 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 officers 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 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.
|
November 5, 2019
|
/s/ Bhairav Patel
|
|
Bhairav Patel
|
|
Executive Vice President of Finance and Accounting and Interim Chief Financial Officer
|
(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.
|
November 5, 2019
|
/s/ Susan Givens
|
|
Susan Givens
|
|
Chief Executive Officer
|
(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.
|
November 5, 2019
|
/s/ Bhairav Patel
|
|
Bhairav Patel
|
|
Executive Vice President of Finance and Accounting and Interim Chief Financial Officer
|