Senior Housing Properties Trust (SNH) Q1 2012 Earnings Call April 30, 2012 01:00 PM ET Executives Tim Bonang - VP, IR Dave Hegarty - President, COO Rich Doyle - CFO Analysts Jana Galen - Bank of America Tayo Okusanya - Jefferies Daniel Bernstein - Stifel Nicolaus Todd Stender - Wells Fargo Securities James Milam - Sandler O'Neil Jarrell Golotti - Morgan Stanley Derek Bower - UBS Presentation Operator Good morning, and welcome to the Senior Housing Properties Trust First Quarter Conference Call. This call is being recorded.
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In addition, this call may contain non-GAAP numbers including funds from operations, normalized funds from operations or normalized FFO. A reconciliation of normalized FFO to net income and the components to calculate AFFO, CAD, or FAD are available in our Supplemental Operating and Financial Data package found on our website at www.snhreit.com.Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our filings with the SEC. Investors are cautioned not to place undue reliance upon any forward-looking statements. And with that, I would like to turn the call over to Dave Hegarty. Dave Hegarty Thank you, Tim, and thank you all for joining us on today's call, and good afternoon to you. For the first quarter of 2012, we reported normalized funds from operations or normalized FFO of $0.45 per share, and this compares with normalized FFO of $0.44 per share that we reported for the same period a year ago. Our first quarter results were in line with our expectations as we continued to absorb the new properties that we acquired at the end of last year. During the quarter, we saw above-average rental rate increases on new leases, executed at our medical office buildings and also experienced modest occupancy and rate growth in our private pay senior living communities. We still maintained the highest percentage of private pay assets in the industry, with 94% of our NOI derived from properties with the majority of revenues up in the residents or tenants private resources. Our dividend yield continues to be very attractive at about 7% and our balance sheet remained conservative and well managed. Recent data published by the National Investment Center for Seniors Housing & Care industry or NIC showed modest occupancy growth year-over-year and sequentially for both independent and assisted living properties during the first quarter. According to the recently quarterly NIC report, the seniors housing average occupancy rate has risen consistently during the past eight quarters and is 1.3 percentages points above its cyclical low in the first quarter 2010. They also note that construction of new senior housing inventory remained muted and construction of the share of existing inventory decline quarter-over-quarter.
All of these statistics continue to support our thesis of investing in private pay senior living communities with its potential for occupancy growth in continued merit supply. Our acquisition activity was modest during the quarter when we closed on the acquisition of nine two unit senior living community in Alabama for $11 million in February. We continue to work with several acquisitions on our agreement which we have discussed on previous earnings calls. As a recap we currently have $258 million of previously announced acquisitions on our agreement but if you close the assumption of $89 million of mortgage debt made up of four senior living commitments in South Carolina, New York and Missouri and three medical office buildings in Georgia and Hawaii.We expect to the acquire the majorities acquisition on agreement within the next three months but these would have minimal impact on the second quarter results. One senior living community in New York which was part of the V transaction for $99 million, but $32 million of assume debt is still expected to close sometime during the second half of this year. One medical office building acquisition for $70 million is under agreement in Hawaii and it's a property that we believe is a solid investment in long term growth opportunities. It's a 203,000 square foot building with a 500 car parking garage attached and it's located adjacent to the (inaudible) clinic and hospital which is part of an A rated Healthcare system in Hawaii. It's a 100% occupied with a waiting list of positions now the healthcare providers. Earlier this month we terminated new agreement which we announced last quarter to acquire one medical office building in Connecticut with a 171,000 square feet, a $31.5 million. We have $71 million if new acquisitions under our agreement including the assumption of $25 million of mortgage debt. During March and April we entered into an agreement to acquire four senior living communities and two medical office buildings. The four pay senior living communities will be triple net leased to a new private operator. Read the rest of this transcript for free on seekingalpha.com