Senior Housing Properties (SNH) 3rd Quarter Shows Strong Results & Activity

Last week, Senior Housing Properties Trust announced its third quarter earnings showing that net income was $29.1 million, or $0.25 per share, for the quarter ended September 30, 2008, compared to net income of $20.6 million, or $0.25 per share, for the quarter ended September 30, 2007. The results include the gain on sale of three properties in its portfolio along with an impairment charge on a facility that the company intends to sell in the 4th quarter. The third quarter included a large number of acquisitions and sale/lease back arrangements adding a significant number of new units to the company’s inventory.


The SNH’s conference call discussed that their independent living and nursing facilities were showing decreases in occupancy rates while the assisted living facilities showed an increase in occupancy. Management discussed its acquisition pipeline for the 4th quarter and noted that opportunities are slowing as many operators have tried to get their sales pipelines closed before the end of the year.


Dave Hegarty, the President of SNH, shared his thoughts about the current economic environment and its affects on their company. “What it’s really doing is it’s affecting the confidence level of seniors who are typically private pay and whether they’re willing to make the decision to move into these retirement communities knowing that either they haven’t sold their house or that they’re looking at their investment portfolio and seeing it decreasing in value and wondering if it’s going to keep going that way. So it’s shaken their confidence and that has pretty much, the brunt of that has been felt on the independent living side of things. Like I say assisted living seems to be holding up very well and the skilled nursing, I think to some degree, is probably a flawed business model anybody with private pay resources is not going to skilled nursing if they can avoid it.”