Senior Housing Properties Trust Reports Operating Results (10-Q)

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May 07, 2009
Senior Housing Properties Trust (SNH, Financial) filed Quarterly Report for the period ended 2009-03-31.

Senior Housing Properties Trust is a Maryland real estate investment trust that invests in senior housing income producing real estate including senior apartments and assisted living congregate care and nursing home properties. Senior apartments are marketed to residents who are generally capable of caring for themselves. Residence is generally restricted on the basis of age. Purpose built properties may have special function rooms concierge services high levels of security and centralized call buttons for emergency use. Senior Housing Properties Trust has a market cap of $1.93 billion; its shares were traded at around $16.05 with a P/E ratio of 9.7 and P/S ratio of 8.2. The dividend yield of Senior Housing Properties Trust stocks is 8.7%.

Highlight of Business Operations:

During the three months ended March 31, 2009, pursuant to the terms of our existing leases with Five Star, we purchased $12.7 million of improvements made to our properties leased to Five Star, and, as a result, the annual rent payable to us by Five Star was increased by approximately $1.0 million.

In February 2009 we invested $25,000 in an insurance company with RMR and other companies to which RMR provides management services, and in April 2009 we invested an additional $5.0 million in this insurance company. We currently own approximately 16.67% of this insurance company.

No principal payments are due under our unsecured notes or bonds until maturity. Our mortgages require principal and interest payments through maturity pursuant to amortization schedules. Because these debts bear interest at a fixed rate, changes in market interest rates during the term of these debts will not affect our operating results. If these debts are refinanced at interest rates which are 10% higher or lower than shown above, our per annum interest cost would increase or decrease by approximately $2.7 million. Changes in market interest rates also affect the fair value of our fixed rate debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at March 31, 2009, and discounted cash flow analysis through the maturity date of our fixed rate debt obligations, a hypothetical immediate 10% change in interest rates would change the fair value of those obligations by approximately $13.2 million.

Our unsecured revolving credit facility accrues interest at floating rates and matures in December 2010. Subject to certain conditions, at our option, this credit facilitys maturity date can be extended to December 31, upon payment of a fee. At March 31, 2009, we had $181.0 million outstanding and $369.0 million available for borrowing under our revolving credit facility. At May 6, 2009, we had $165.0 million outstanding and $385.0 million available for borrowing under our revolving credit facility. We may make repayments and drawings under our revolving credit facility at any time without penalty. We borrow in U.S. dollars and borrowings under our revolving credit facility accrue interest at LIBOR plus a premium. Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically LIBOR. A change in interest rates would not affect the value of this floating rate debt but would affect our operating results. For example, the weighted average interest rate payable on our outstanding revolving indebtedness of $181.0 million at March 31, 2009 was 1.31% per annum. The following table presents the impact a 10% change in interest rates would have on our floating rate interest expense at March 31, 2009 (dollars in thousands):

On February 24, 2009, pursuant to our incentive share award plan, we granted 2,000 common shares of beneficial interest, par value $0.01 per share, valued at $14.23 per share, the closing price of our common shares on the New York Stock Exchange on that day, as compensation to Jeffrey P. Somers, one of our Independent Trustees, who was appointed as a trustee effective January 30, 2009. We made this grant pursuant to an exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended.

Read the The complete ReportSNH is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC, Kenneth Fisher of Fisher Asset Management, LLC.