New Senior Announces Second Quarter 2021 Results
New Senior Investment Group Inc. ("New Senior" or the "Company") (NYSE: SNR) announced today its results for the quarter ended June 30, 2021.
SECOND QUARTER 2021 FINANCIAL HIGHLIGHTS
SECOND QUARTER 2021 & RECENT BUSINESS HIGHLIGHTS
SECOND QUARTER 2021 RESULTS
SECOND QUARTER 2021 GAAP RESULTS
New Senior recorded a GAAP net loss of $13.3 million, or $(0.16) per diluted share, for the second quarter 2021, compared to a GAAP net loss of $3.3 million, or $(0.04) per diluted share, for the second quarter 2020. The year-over-year decrease was primarily driven by acquisition, transaction and integration costs mainly related to the Ventas acquisition.
SECOND QUARTER 2021 PORTFOLIO PERFORMANCE
The Company paid its first quarter 2021 dividend of $0.065 per share on June 18, 2021 to stockholders of record on June 4, 2021.
As required by the merger agreement relating to the Ventas acquisition, the Company and Ventas agreed to synchronize the record and payment dates for their dividends to October 1, 2021 and October 14, 2021, respectively, which are the dates typically used by Ventas. The Company's dividend is expected to remain at $0.065 per share, subject to approval of our board of directors, and will be publicly announced at the time of declaration of such dividend.
SECOND QUARTER 2021 OVERVIEW
As of June 30, 2021, we owned a portfolio of 102 Independent Living properties and one Continuing Care Retirement Community. Approximately 10,000 residents live in our 103 properties, which were managed by four different operators and one tenant during the quarter.
While national COVID-19 case counts have increased recently, confirmed resident cases across our portfolio remain low. As of July 26, our operators reported four active resident cases across the entire portfolio.
Same Store Occupancy
Expenses & Margin
NOI & AFFO
For additional information that management believes is useful for investors, please refer to the presentation posted in the Investor Relations section of the Company's website, www.newseniorinv.com.
EARNINGS CONFERENCE CALL
In light of the Ventas acquisition, we do not intend to host a conference call or webcast in connection with our second quarter 2021 financial results.
ABOUT NEW SENIOR
New Senior Investment Group Inc. (NYSE: SNR) is a publicly-traded real estate investment trust with a diversified portfolio of senior housing properties located across the United States. New Senior is one of the largest owners of senior housing properties, with 103 properties across 36 states. More information about New Senior can be found at www.newseniorinv.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding New Senior's 2021 strategic priorities and expectations with respect to the potential range of 2021 financial results; risks and uncertainties associated with the ability of the Company and Ventas, Inc. to complete the proposed acquisition of the Company by Ventas, Inc. on the proposed terms or on the anticipated timeline, or at all; disruption from the proposed acquisition of the Company by Ventas, Inc., including diversions to the attention of management and the restrictive covenants agreed upon by and between the Company and Ventas, Inc., making it more difficult to conduct business as usual or maintain relationships with property managers, tenants, employees or other third parties; transaction costs and other expenses and liabilities, including from litigation, arising out of the proposed acquisition; the expected impact of the COVID-19 pandemic on our business, liquidity, properties, operators and the health systems and populations that we serve; the cost and effectiveness of measures we have taken to respond to the COVID-19 pandemic, including health and safety protocols and system capacity enhancements that are intended to limit the transmission of COVID-19 at our properties; our expected occupancy rates and operating expenses; and the declaration or amount of any future dividend. These statements are not historical facts. They represent management's current expectations regarding future events and are subject to a number of risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties relating to the continuing impact of COVID-19 on our operations and the operation of our facilities, including ongoing cases at certain of our facilities, the speed, geographic reach and duration of the COVID-19 pandemic; the legal, regulatory and administrative developments that occur at the federal, state and local levels; the efficacy of our operators' infectious disease protocols and prevention efforts; the broader impact of the pandemic on local economies and labor markets; the overall demand for our communities in the recovery period following the pandemic; our ability to successfully manage the asset management by third parties; and market conditions generally which affect demand and supply for senior housing. We believe that the adverse impact that COVID-19 will have on the future operations and financial results at our communities will depend upon many factors, most of which are beyond our ability to control or predict. Accordingly, you should not place undue reliance on any forward-looking statements contained herein. For a discussion of these and other risks and important factors that could affect such forward-looking statements, see the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's most recent annual and quarterly reports filed with the Securities and Exchange Commission, which are available on the Company's website (www.newseniorinv.com). New risks and uncertainties emerge from time to time, and it is not possible for us to predict or assess the impact of every factor that may cause our results to differ materially from those anticipated by any forward-looking statements. Forward-looking statements contained herein, and all statements made in this press release, speak only as of the date of this press release, and the Company expressly disclaims any duty or obligation to release publicly any updates or revisions to any statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
Throughout this press release, totals and subtotals of certain tables may not sum due to rounding.
NON-GAAP FINANCIAL MEASURES
The tables above set forth reconciliations of non-U.S. generally accepted accounting principles ("GAAP") measures to net income (loss), which is the most directly comparable GAAP financial measure.
A non-GAAP financial measure is a measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not excluded from or included in the most directly comparable GAAP measure. We consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance for management and investors. GAAP accounting for real estate assets assumes that the value of real estate assets diminishes predictably over time, even though real estate values historically have risen or fallen with market conditions. As a result, many industry investors look to non-GAAP financial measures for supplemental information about real estate companies.
You should not consider non-GAAP measures as alternatives to GAAP net (loss) income, which is an indicator of our financial performance, or as alternatives to GAAP cash flow from operating activities, which is a liquidity measure. Additionally, non-GAAP measures are not intended to be a measure of our ability to satisfy our debt and other cash requirements. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine our non-GAAP measures in conjunction with GAAP net (loss) income as presented in our Consolidated Financial Statements and other financial data included elsewhere in this press release. Moreover, the comparability of non-GAAP financial measures across companies may be limited as a result of differences in the manner in which real estate companies calculate such measures.
Below is a description of the non-GAAP financial measures presented herein.
NOI, Cash NOI and Cash Interest Expense
Net operating income ("NOI") and Cash NOI are non-GAAP financial measures used to evaluate the performance of our properties. We consider NOI and Cash NOI important supplemental measures used to evaluate the operating performance of our properties because they allow investors, analysts and our management to assess our unleveraged property-level operating results and to compare our operating results between periods and to the operating results of other real estate companies on a consistent basis. We define NOI as total revenues less property level operating expenses, which include property management fees and travel cost reimbursements. We define Cash NOI as NOI excluding the effects of straight-line rental revenue, amortization of above/ below market lease intangibles and the amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives.
Same store NOI and same store cash NOI include only properties owned for the entirety of comparable periods. Properties acquired, sold, transitioned to other operators or between segments, or classified as held for sale or discontinued operations during the comparable periods are excluded from the same store amounts. Please see the Company's most recent quarterly report filed with the Securities and Exchange Commission for more information.
Cash interest expense is defined as interest expense excluding the amortization of deferred financing costs and includes the interest expense on debt repaid upon the sale of the assisted living and memory care portfolio in February 2020 (classified as discontinued operations).
FFO and Other Non-GAAP Measures
We use Funds From Operations ("FFO") and Normalized FFO as supplemental measures of our operating performance. We use the National Association of Real Estate Investment Trusts ("NAREIT") definition of FFO. NAREIT defines FFO as GAAP net income (loss) attributable to common stockholders, which includes loss from discontinued operations, excluding gains (losses) from sales of depreciable real estate assets and impairment charges of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated entities and joint ventures to reflect FFO on the same basis. FFO does not account for debt principal payments and is not intended as a measure of a REIT's ability to satisfy such payments or any other cash requirements.
Normalized FFO, as defined below, measures the financial performance of our portfolio of assets excluding items that, although incidental to, are not reflective of the day-to-day operating performance of our portfolio of assets. We believe that Normalized FFO is useful because it facilitates the evaluation of our portfolio's operating performance (i) between periods on a consistent basis and (ii) to the operating performance of other real estate companies. However, comparability may be limited because our calculation of Normalized FFO may differ significantly from that of other companies or because of features of our business that are not present in other companies.
We define Normalized FFO as FFO excluding the following income and expense items, as applicable: (a) acquisition, transaction and integration related expenses; (b) the write off of unamortized discounts, premiums, deferred financing costs, or additional costs, make whole payments and penalties or premiums incurred as the result of early repayment of debt (collectively "Gain (Loss) on extinguishment of debt"); (c) incentive compensation to affiliate recognized as a result of sales of real estate; (d) the remeasurement of deferred tax assets; (e) valuation allowance on deferred tax assets, net; (f) termination fee to affiliate; (g) gain on lease termination; (h) compensation expense related to transition awards; (i) litigation proceeds; and (j) other items that we believe are not indicative of operating performance, generally reported as "Other expense (income)" in our Consolidated Statements of Operations.
We also use Adjusted FFO ("AFFO") and Normalized FAD as supplemental measures of our operating performance. We believe AFFO is useful because it facilitates the evaluation of (i) the current economic return on our portfolio of assets between periods on a consistent basis and (ii) our portfolio versus those of other real estate companies that report AFFO. However, comparability may be limited because our calculation of AFFO may differ significantly from that of other companies, or because of features of our business that are not present in other companies.
We define AFFO as Normalized FFO excluding the impact of the following: (a) straight-line rental revenue; (b) amortization of above / below market lease intangibles; (c) amortization of deferred financing costs; (d) amortization of premium or discount on mortgage notes payable; (e) amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives; and (f) amortization of equity-based compensation expense.
We define Normalized FAD as AFFO less routine capital expenditures, which we view as a cost associated with the current economic return. Normalized FAD, which does not reflect debt principal payments and certain other expenses, does not represent cash available for distribution to shareholders. We believe Normalized FAD is useful because it fully reflects the additional economic costs of maintaining the condition of the portfolio.
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