Item 1. Business
The Company. Senior Housing Properties Trust ("Senior Housing") is a Maryland real estate investment trust ("REIT") that invests in senior housing income producing real estate, including senior apartments and assisted living, congregate care and nursing home properties. Senior Housing was organized on December 16, 1998 as a 100% owned subsidiary of HRPT Properties Trust ("HRPT"), a REIT which invests principally in office buildings. On October 12, 1999, HRPT distributed 13.2 million common shares of Senior Housing to HRPT shareholders to create Senior Housing as a separate public REIT. Senior Housing's principal executive offices are located at 400 Centre Street, Newton, Massachusetts 02458, and its telephone number is (617) 796-8350.
As of December 31, 1999, we owned 81 properties for a total investment of $708.8 million and had mortgage investments in 12 properties aggregating $22.9 million, net of loan loss reserve, for total real estate investments of $731.7 million in 26 states. The properties are described in greater detail in "Item 2.
Item 2. Properties
At December 31, 1999, we had real estate investments totaling $731.7 million, at cost, after an impairment loss write-down and loan loss reserve, in 93 properties that were leased to or operated by nine tenants or mortgagors. We believe that the physical plant of the facilities in which we have invested is suitable and adequate for our present and any proposed uses. At December 31, 1999, 18 properties with an aggregate cost of $427.4 million were mortgaged to secure our bank credit facility.
The following table summarizes some information about our properties as of December 31, 1999. All dollar figures are in thousands. Certain tenants' obligations to pay the rents or interest stated below may be affected by bankruptcy proceedings affecting those tenants. See "Item 1. Business--Business Developments--Tenant Financial Condition."
Item 3.
Item 3. Legal Proceedings
Although in the ordinary course of business we are or may become involved in legal proceedings, we have a limited operating history and are not aware of any material pending legal proceedings affecting any of our properties for which we might become liable. However, as discussed above in "Item 1. Business--Business Developments--Tenant Financial Condition," several of our tenants have filed for bankruptcy, and we are pursuing claims and negotiations in those bankruptcy proceedings. The amounts at stake in these tenant bankruptcy proceedings are material.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of shareholders during the fourth quarter of the year covered by this Annual Report on Form 10-K.
PART II
Item 5.
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters
Our Shares began trading on the New York Stock Exchange (symbol: SNH) on October 12, 1999. The following table sets forth for the period indicated the high and low closing sale prices for the Shares as reported in the New York Stock Exchange Composite Transactions reports.
High Low ---- --- Fourth Quarter 1999 (since October 12, 1999) $16 5/16 $11 1/16
The closing price of the Shares on the New York Stock Exchange on March 27, 2000 was $9 7/8.
As of March 27, 2000, there were approximately 5,229 holders of record of the Shares, and we estimate that as of such date there were in excess of 100,000 beneficial owners of the Shares.
The following table sets forth the amount of distributions paid in 1999 and the respective annualized rates.
Distribution Annualized Per Share Distribution Rate --------- ----------------- November 22, 1999 $0.60 $2.40
All distributions have been paid and 100% of the 1999 distribution was classified as ordinary income and there was no return of capital. As previously discussed, two of our largest tenants, IHS and Mariner have experienced significant operating losses in 1999. Earlier this year they both filed for bankruptcy. These two tenants are responsible for approximately 48% of our revenues. We have reached a tentative agreement with Mariner, which is contingent upon third party approvals and we continue to negotiate with IHS regarding our future business relationships. A smaller tenant, Frontier Group, Inc., which represents 2% of our revenues filed for bankruptcy during 1999 and, in February 2000 we sold these three properties for $13.0 million. See "Item 1. Business--Business Developments--Tenant Financial Condition." The level of distributions to be made by us will depend, in part, on the final outcome of the negotiations with these tenants.
In order to qualify for the beneficial tax treatment accorded to REITs by Sections 856 through 860 of the Internal Revenue Code, we are required to make distributions to shareholders which annually will be at least 95% of our taxable income. All distributions will be made by us at the discretion of the Trustees and will depend on our earnings, our cash flow available for distribution, our financial condition and other factors that the Trustees deem relevant. We have in the past distributed, and intend to continue to distribute, substantially all of our real estate investment trust taxable income to our shareholders.
In October 1999, pursuant to our Incentive Share Award Plan, our two independent trustees at the time of our Spin-Off from HRPT each received a grant of 500 Shares valued at $16.50 per Share, the average price of the Shares on the NYSE on October 12, 1999 and our third independent trustee, who was subsequently elected to the fill the vacancy on our Board of Trustees, received a grant of 500 Shares valued at $12.75 per Share, the closing price of the Shares on the NYSE on October 21, 1999. The grants were made pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended.
Item 6.
Item 6. Selected Financial Data
Prior to October 12, 1999, we and our properties were owned by HRPT. The following data is presented as if we were a separate entity from HRPT. Set forth below is selected financial data for the periods and dates indicated. This financial data has been derived from HRPT's historical financial statements for periods prior to October 12, 1999. Per share data has been presented as if the shares were outstanding for all periods prior to October 12, 1999. The following table includes pro rata allocations of interest expense and general and administrative expenses for periods prior to October 12, 1999. In the opinion of our management, the methods used for allocating interest and general and administrative expenses are reasonable. However, it is impossible to estimate all operating costs that we would have incurred as a separate public company from HRPT. Accordingly, the net income and funds from operations shown are not necessarily indicative of results that we may realize as a separate company. Additionally, year to year comparisions are impacted by property acquisitions during historical periods. This data should be read in conjunction with, and is qualified in its entirety by reference to, the consolidated financial statements and accompanying notes included herein in Item 14 of this Annual Report on Form 10-K. Amounts are in thousands, except per share information.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following information is provided in connection with, and should be read in conjunction with, the Consolidated Financial Statements included herein as Item 14 of this Annual Report on Form 10-K.
RESULTS OF OPERATIONS
Year Ended December 31, 1999, Compared to 1998
For the year ended December 31, 1999, compared to the year ended December 31, 1998, total revenues increased by $2.5 million, total expenses increased by $33.9 million and net income decreased by $31.4 million. Total revenues increased due to the full year impact of the rent generated from five properties acquired during 1998. Total expenses increased primarily due to a $30.0 million charge to income consisting of a write-down for the impairment of assets and a loan loss reserve. In addition, depreciation expense increased by $4.0 million, due to a change in the estimated useful lives of some real estate properties and the full year impact of five properties acquired during 1998. Net income was $14.8 million, or $0.57 per share, for the period ending December 31, 1999. During the period ending December 31, 1998, net income was $46.2 million, and on a pro forma 26.0 million average shares outstanding net income was $1.78 per share.
As previously announced, three of our tenants, Frontier, Mariner and IHS have filed for protection under the bankruptcy laws. Frontier filed in July 1999, Mariner filed in January 2000 and IHS filed in February 2000. Bankruptcy laws may allow our tenants relief or discharge them from their financial obligations to us. For 1999, rental and mortgage interest income related to Frontier, Mariner and IHS was $2.2 million, $15.4 million and $26.6 million, respectively. At December 31, 1999 real estate investments, before impairment loss recognition and net of accumulated depreciation, for these three tenants were $10.0 million, $68.3 million and $136.9 million, respectively. We also had mortgage investments, before loss reserves, related to IHS of $36.6 million at December 31, 1999. Based on estimates of future cash flows from properties leased to Mariner and IHS, we recognized an impairment in the carrying value of properties totaling $30.0 million.
In February 2000, all of the properties that were leased to Frontier were sold for $13.0 million. In March 2000, we repaid $12.0 million on our bank credit facility.
In March 2000, we reached a conditional agreement with Mariner as follows:
o Mariner's lease obligations for all 26 properties which we own and lease to Mariner will be terminated.
o Approximately $24.0 million of cash and securities which we hold to secure Mariner's obligations will be retained by us.
o We will assume operating responsibilities for 17 of these 26 properties. Title to five of these properties will be transferred to Mariner which will continue the operations. The remaining four nursing homes are now subleased to two private companies and we expect to negotiate with these two subtenants for their continued operations of those properties.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - continued
Our agreement with Mariner is contingent upon approval by Mariner's creditors committee and the Delaware Bankruptcy Court before which Mariner's bankruptcy is pending and required regulatory approvals from various states where affected nursing homes are located.
The three Frontier properties which have been sold and the five Mariner properties which may be transferred for retention of the security deposits which we hold have been owned by us and our predecessor, HRPT since 1987 and 1990, respectively. Because of previously recorded depreciation and other accounting requirements we expect to realize accounting and tax gains as a result of these transactions during the first half of 2000. At the same time, future interest savings from the repayment of our bank credit facility with the proceeds from the sale of the Frontier properties and operating earnings from the former Mariner properties is expected to be less than the rent which we previously received from Mariner and Frontier, at least until the operations of the Mariner properties which are assumed by us are stabilized and those properties are sold or re-leased. Because we are still pursuing claims for breach of lease and rental arrearages for the former Frontier properties and because the Mariner agreement is contingent and subject to possible changes, the amount of gains or reduced cash flow which we will realize cannot be accurately estimated at this time.
We are currently in negotiations with IHS. The current negotiations include, but are not limited to, the possibilities that we will sell the properties now leased to IHS, that lease terms may be changed, that new tenants may begin operations of these properties, that properties may be operated by us for our own account or mortgage obligations due to us may be released for other compensation. No assurances can be made as to if, when and how these negotiations will be concluded. We may recognize additional gains or losses when these negotiations are completed.
Funds from operations for the year ended December 31, 1999, were $67.1 million, or $2.58 per share, compared to $64.5 million, or $2.48 per share, in 1998. The increase is due to the full year impact of income from five properties acquired during 1998. Non-recurring and non-cash losses excluded from the 1999 calculation of funds from operations aggregated $30.0 million. Distributions for the year ended December 31, 1999, were $15.6 million or $0.60 per share. Cash flow provided by operating activities and cash available for distribution may not necessarily equal funds from operations as cash flow is affected by other factors not included in the funds from operations calculation, such as changes in assets and liabilities.
Year Ended December 31, 1998, Compared to 1997
For the year ended December 31, 1998, compared to the year ended December 31, 1997, total revenues increased by $4.1 million, total expenses increased by $2.6 million and net income increased by $1.5 million. Total revenues increased due to rent generated from the acquisition of five properties during 1998 and the full year impact of the rent generated from five properties acquired during 1997. Total expenses increased primarily because of higher allocated interest expense of $2.3 million, which resulted from increased borrowings. Net income was $46.2 million and $44.7 million for the year ended December 31, 1998 and 1997, respectively. There were no shares outstanding during these periods. On a pro forma 26.0 million average shares outstanding, net income per share would have been $1.78 and $1.72 for the year ended December 31, 1998 and 1997, respectively.
Funds from operations increased by $2.0 million for the year ended December 31, 1998, compared to the prior period due to income from five properties acquired during 1998 and the full year impact of income from five properties acquired during 1997.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - continued
LIQUIDITY AND CAPITAL RESOURCES
In September 1999, our registration statement on Form S-11, relating to the distribution of 13.2 million of our common shares to HRPT's shareholders (the "Spin-Off") was declared effective by the Securities and Exchange Commission. Prior to the Spin-Off, we had 26.0 million common shares outstanding, all of which were owned by HRPT. On October 12, 1999, HRPT distributed 13.2 million of our common shares to HRPT's shareholders of record on October 8, 1999.
At December 31, 1999, we had cash and cash equivalents of $17.1 million. For the years ended December 31, 1999 and 1998, cash flows from operating activities were $64.1 million and $60.2 million, respectively, cash flows from investing activities were $387,000 and $306,000, respectively, and cash used for financing activities was $47.5 million and $60.4 million, respectively. We expect that our current cash, cash equivalents, future cash flows from operating and financing activities will be sufficient to meet our short-term and long-term working capital requirements.
Total assets decreased by $32.3 million from $686.3 million as of December 31, 1998, to $654.0 million as of December 31, 1999. The decrease was primarily due to the write-down resulting from impairment of assets, a loan loss reserve provision and depreciation.
On September 1, 1999, we agreed to pay HRPT $200 million (the "Formation Debt") in connection with the transfer to us of HRPT's 100% ownership in one of the subsidiaries that own some of our properties. The Formation Debt bore interest at HRPT's weighted average cost of debt, (7.1%), and was paid to HRPT on October 13, 1999.
In September 1999, we entered into an agreement for a $350 million, three-year, interest only bank credit facility secured by first mortgages on 18 properties. The interest rate is LIBOR plus 2.0% per annum and will increase by 0.25% if our debt to total capital, as defined, exceeds 50%. The bank credit facility is available for acquisitions, working capital and for general business purposes. We have the ability to repay and redraw amounts under this bank credit facility until its maturity in 2002. Our bank credit facility documentation has customary representations, warranties, covenants and event of default provisions. The material restrictive financial covenants require us to:
o limit debt to no more than 60% of total capital, as defined;
o maintain a ratio of net income plus interest expense and depreciation to interest expense of at least 1.5; and
o maintain a tangible net worth, as defined, of $450 million, subject to increases based on equity issuances.
After the Spin-Off, we borrowed $200 million under this bank credit facility which we used to pay the Formation Debt to HRPT. At December 31, 1999, we had $150 million available under the bank credit facility. In March 2000, we used $12 million of proceeds from the sale of the three former Frontier properties to reduce amounts outstanding under the bank credit facility to $188 million, leaving $162 million available to be borrowed.
In the short-term, we expect to use the bank credit facility to fund our working capital needs for operations of the Mariner properties which we will assume if the Mariner agreement described above is approved.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - continued
In both the short-term and the long-term, we intend to acquire additional senior housing properties. These purchases will be initially funded with excess working capital, if any, and proceeds of borrowings under the bank credit facility. We expect to repay bank credit facility borrowings periodically with long-term debt or equity capital. We believe that we will have sufficient access to capital markets to meet our working capital needs, our growth objectives and refinance our debt as needed. However, access to capital will depend upon numerous factors, including some beyond our control. We can provide no assurance that we will be able to raise additional capital in sufficient amounts, or at appropriate costs, to meet our working capital needs, to fund growth or to repay debt in both the short-term and the long-term.
Impact of Inflation
Inflation might have both positive and negative impact upon our business. Inflation might cause the value of our real estate investments to increase. Similarly, in an inflationary environment, the percentage rents which we receive based upon CPI increases or as a percentage of our tenants' revenues should increase. Also, rent yields we could charge for new investments would likely increase. Offsetting these benefits, inflation might cause the costs of equity and debt capital to increase. To mitigate the adverse impact of increased costs of debt capital in the event of material inflation we may purchase interest rate cap agreements. The decision to enter into these agreements will be based on the amount of floating rate debt outstanding and our belief that material interest rate increases are likely to occur. We do not believe inflation in the U.S. economy during the next few years will have any material effect on our business.
Year 2000
We experienced no disruptions in our information and non-information technology systems and incurred no costs with respect to year 2000 issues. We are not aware of any material problems resulting from year 2000 issues by our systems or the systems of our tenants or their material vendors and our material vendors, but will continue to monitor these systems throughout the year to ensure that any late year 2000 issues that may arise are addressed promptly.
Certain Considerations
The discussion and analysis of our financial condition and results of operations requires us to make estimates and assumptions and contains statements of our beliefs, intent or expectation concerning projections, plans, future events and performance. The estimates, assumptions and statements, such as those relating to the approval of the Mariner agreement, our ability to operate and stabilize operations at the Mariner properties, our ability to successfully negotiate with Mariner's subtenants, our ability to successfully negotiate with IHS, our ability to expand our portfolio, performance of our assets, the ability to make distributions, our tax status as a "real estate investment trust," the ability to appropriately balance the use of debt and equity and to access capital markets, depend upon various factors over which we and/or our lessees have or may have limited or no control. Those factors include, without limitation, the status of the economy, status of the capital markets (including prevailing interest rates), compliance with the changes to regulations within the healthcare industry, competition, changes to federal, state, and local legislation and other factors. We cannot predict the impact of these factors, if any. However, these factors could cause our actual results for subsequent periods to be different from those stated, estimated or assumed in this discussion and analysis of our financial condition and results of operations. We believe that our estimates and assumptions are reasonable and prudent at this time.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market changes in interest rates. Because interest on all our outstanding debt is at a floating rate, changes in interest rates will not affect the value of our outstanding debt instruments. However, changes in interest rates will affect our operating results. For example, the interest rate payable on our outstanding indebtedness of $200 million at December 31, 1999, is 8.17% per annum. An immediate 10% change in that interest rate or 81.7 basis points, would increase or decrease our costs by $1.6 million, or $0.06 per share per year:
Impact of Changes in Interest Rates (dollars in thousands)
Total Interest Interest Rate Outstanding Expense Per Year Debt Per Year -------------- ----------- ----------- At December 31, 1999 8.17% $200,000 $ 16,340 10% reduction 7.35% 200,000 14,700 10% increase 8.99% 200,000 17,980
The foregoing table presents a so-called "shock" analysis, which assumes that the interest rate change by 10%, or 81.7 basis points, is in effect for a whole year. If interest rates were to change gradually over one year, the impact would be less.
We borrow in U.S. dollars and all of our current borrowings are subject to interest at LIBOR plus a premium. Accordingly, we are vulnerable to changes in U.S. dollar based short-term rates, specifically LIBOR.
During the past few months, short-term U.S. dollar based interest rates have tended to rise. We are unable to predict the direction or amount of interest rate changes during the next year. We purchased an interest rate cap agreement on our current debt to protect against rate increases above 8%. However, we may incur additional debt at floating or fixed rates in the future, which would increase our exposure to market changes in interest rates.
We currently own real estate mortgages receivable inclusive of a loan loss reserve with a carrying value of $22.9 million. When comparable term market interest rates decline, the value of these receivables increases; when comparable term market interest rates rise, the value of these receivables declines. Using discounted cash flow analyses at a weighted average estimated per year market rate for December 31, 1999 of 10.75%, the estimated fair value of our mortgages receivable was $23.7 million.
An immediate 10% change in the market rate of interest, or 108 basis points, applicable to our real estate mortgages receivable at December 31,1999, would affect the fair value of those receivables as follows:
Carrying Value of Real Estate Interest Rate Mortgages Estimated Fair Per Year Receivable Value ------------- ----------------- -------------- (dollars in thousands) Estimated market 10.75% $22,939 $23,722 10% reduction 9.67% 22,939 25,256 10% increase 11.83% 22,939 22,328
Item 7A. Quantitative and Qualitative Disclosures About Market Risk - continued
If the market rate changes occurred gradually over time, the effect of these changes would be realized gradually. Because our real estate mortgages receivable are fixed rate instruments, changes in market interest rates will have no effect on our operating results unless these receivables are sold. At this time, we expect to hold our existing mortgages to their maturity and not to realize any profit or loss from trading these mortgages. Also, we do not presently expect to expand our mortgage investments.
The interest rate changes that affect the valuations of our mortgages are U.S. dollar long-term rates for corporate obligations of companies with ratings similar to our mortgagors.
Item 8.
Item 8. Financial Statements and Supplementary Data
The information required by this item is included herein in Item 14 of this Annual Report on Form 10-K.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable
PART III
The information in Part III (Items 10 11, 12 and 13) is incorporated by reference to our definitive Proxy Statement, which will be filed not later than 120 days after the end of our fiscal year.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Index to Financial Statements and Financial Statement Schedules
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, or are inapplicable, and therefore have been omitted.
(b) Reports on Form 8-K
During the fourth quarter of 1999, we filed the following Current Reports on Form 8-K:
(i) Current Report on Form 8-K dated October 21, 1999, relating to the election of a new trustee (Item 5).
(c) Exhibits
2.1 Transaction Agreement, dated September 21, 1999, between HRPT Properties Trust and the Company. (Incorporated by reference to the Current Report on Form 8-K filed on October 26, 1999 by HRPT Properties Trust.)
3.1 Amended and Restated Declaration of Trust. (Filed herewith.)
3.2 Amended and Restated Bylaws, as amended to date. (Filed herewith.)
4.1 Form of temporary common share certificate. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
8.1 Opinion of Sullivan & Worcester LLP as to certain tax matters. (Filed herewith.)
10.1 Advisory Agreement, dated as of October 12, 1999, between the Company and REIT Management & Research, Inc. (+) (Filed herewith.)
10.2 1999 Incentive Share Award Plan. (+) (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.3 Promissory Note, dated September 1, 1999, from the Company and SPTMRT Properties Trust, as makers, to HRPT Properties Trust, as holder. (Incorporated by reference to the Current Report on Form 8-K filed on October 26, 1999 by HRPT Properties Trust.)
10.4 Revolving Loan Agreement, dated as of September 15, 1999, among the Company, Dresdner Bank AG, the Other Lenders Party Thereto, SPTMRT Properties Trust and SPTBrook Properties Trust, together with Exhibits and Form of Mortgage, Form of Deed of Trust and Form of Pledge Agreement. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.5 Master Lease Agreement, dated as of December 27, 1996, between Health and Retirement Properties Trust and BLC Property, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.6 Guaranty Agreement, dated as of December 27, 1996, by Brookdale Living Communities, Inc., Brookdale Living Communities of Illinois, Inc., Brookdale Living Communities of New York, Inc., and Brookdale Living Communities of Arizona, Inc. in favor of Health and Retirement Properties Trust. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.7 First Amendment to Master Lease Agreement and Incidental Documents, dated as of May 7, 1997, by and among Health and Retirement Properties Trust, BLC Property, Inc., Brookdale Living Communities of Washington, Inc., Brookdale Living Communities of Arizona, Inc., Brookdale Living Communities of Illinois, Inc., Brookdale Living Communities of New York, Inc., Brookdale Living Communities, Inc, The Prime Group, Inc., Prime International, Inc., PGLP, Inc., Prime Group Limited Partnership, and Prime Group II, L.P. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.8 Representative Lease for properties leased to subsidiaries of Marriott International, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.9 Representative Guaranty of Tenant Obligations, dated as of October 8, 1993, by Marriott International, Inc. in favor of HMC Retirement Properties, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.10 Representative First Amendment to Lease for properties leased to subsidiaries of Marriott International, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.11 Representative Assignment and Assumption of Leases, Guarantees and Permits for properties leased to subsidiaries of Marriott International, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.12 Representative Second Amendment of Lease for properties leased to subsidiaries of Marriott International, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.13 Representative First Amendment of Guaranty by Marriott International, Inc., dated as of May 16, 1994, in favor of HMC Retirement Properties, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.14 Assignment of Lease, dated as of June 16, 1994, by HMC Retirement Properties, Inc. in favor of Health and Rehabilitation Properties Trust. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.15 Third Amendment to Facilities Lease, dated as of June 30, 1994, between HMC Retirement Properties, Inc. and Marriott Senior Living Services, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.16 Third Amendment to Facilities Lease, dated as of June 30, 1994, between HMC Retirement Properties, Inc. and Marriott Senior Living Services, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.17 Consent and Modification Agreement, dated as of October 10, 1997, between Marriott International, Inc., Marriott Senior Living Services, Inc., New Marriott MI, Inc., Health and Retirement Properties Trust, and Church Creek Corporation. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.18 Master Lease Document, General Terms and Conditions dated as of December 28, 1990, between Health and Rehabilitation Properties Trust and AMS Properties, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.19 Representative Lease for properties leased to Mariner Post-Acute Network, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.20 Lease dated as of March 27, 1992, between Health and Rehabilitation Properties Trust and AMS Properties, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.21 Amendment to Master Lease Document dated as of December 29, 1993 between Health and Rehabilitation Properties Trust and AMS Properties, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.22 Amendment to AMS Properties, Inc. Facility Leases dated as of October 1, 1994 between Health and Retirement Properties Trust and AMS Properties, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.23 Amendment to AMS Properties, Inc. Facility Leases dated October 31, 1997 between Health and Retirement Properties Trust and AMS Properties, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.24 Representative Lease for properties leased to Mariner Post-Acute Network, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.25 Master Lease Agreement dated as of June 30, 1992 by and between Health and Rehabilitation Properties Trust and GCI Health Care Centers, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.26 Amended and Restated HRP Shares Pledge Agreement, dated as of June 30, 1992, between Health and Retirement Properties Trust and AMS Properties, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.27 Amended and Restated Voting Trust Agreement, dated as of June 30, 1992 from AMS Properties, Inc. to HRPT Advisors, Inc., as voting trustee. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.28 Representative Lease for properties leased to Mariner Post-Acute Network, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.29 Representative Lease for properties leased to Mariner Post-Acute Network, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.30 Amendment to Master Lease Document dated as of December 29, 1993 between Health and Rehabilitation Properties Trust and GCI Health Care Centers, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.31 Amendment to GCI Health Care Centers, Inc., Master Lease Document and Facility Leases dated as of October 1, 1994 between Health and Retirement Properties Trust and GCI Health Care Centers, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.32 Amendment to GCI Health Care Centers, Inc. Facility Leases dated October 31, 1997 between Health and Retirement Properties Trust and GCI Health Care Centers, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.33 Guaranty, Cross Default and Cross Collateralization Agreement, dated as of June 30, 1992, by and among AMS Properties, Inc., CGI Health Care Centers, Inc. and Health and Rehabilitation Properties Trust. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.34 Guaranty, dated as of October 31, 1997, by Grancare Inc. in favor of Health and Retirement Properties Trust. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.35 Guaranty, dated as of October 31, 1997, by Paragon Health Network, Inc. in favor of Health and Retirement Properties Trust. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.36 Amended, Restated and Consolidated Master Lease Document, dated as of September 24, 1997, between Health and Retirement Properties Trust and ECA Holdings, Inc., Marietta/SCC, Inc., Glenwood/SCC, Inc., Dublin/SCC, Inc., and College Park/SCC, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.37 Guaranty By Integrated Health Services, Inc., dated as of September 24, 1997, by Integrated Health Services, Inc., in favor of Health and Retirement Properties Trust (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.38 Representative Lease Agreement for properties leased to Integrated Health Services, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.39 Representative Lease Agreement for properties leased to Integrated Health Services, Inc. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.40 Guaranty, dated as of February 11 1994, by Horizon Healthcare Corporation in favor of Health and Rehabilitation Properties Trust. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
10.41 Consent, Assumption and Guaranty Agreement, dated as of December 31, 1997, by and among Integrated Health Services, Inc., IHS Acquisition No. 108, Inc., IHS Acquisition No. 112, Inc., IHS Acquisition No. 113, Inc., IHS Acquisition No. 135, Inc., IHS Acquisition No. 148, Inc., IHS Acquisition No. 152, Inc., IHS Acquisition No. 153, Inc., IHS Acquisition No. 154, Inc., IHS Acquisition No. 155, Inc., IHS Acquisition No. 175, Inc., Healthsouth Corporation, Horizon Healthcare Corporation, Health and Retirement Properties Trust, and Indemnity Collection Corporation. (Incorporated by reference to the Company's Registration Statement on Form S-11, File No. 333-69703.)
12.1 Statement regarding computation of ratio of earnings to fixed charges. (Filed herewith.)
21.1 List of Subsidiaries. (Filed herewith.)
23.1 Consent of Sullivan & Worcester LLP. (Contained In Exhibit 8.1.)
27.1 Financial Data Schedule. (Filed herewith.)
---------------------- (+) Management contract or compensatory plan or arrangement.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees and Shareholders of Senior Housing Properties Trust
We have audited the accompanying consolidated balance sheets of Senior Housing Properties Trust as of December 31, 1999 and 1998, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included the financial statements and schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Senior Housing Properties Trust and subsidiaries as of December 31, 1999 and 1998 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP Boston, Massachusetts March 17, 2000
See accompanying notes
See accompanying notes
See accompanying notes
See accompanying notes
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization
The consolidated financial statements of Senior Housing Properties Trust include the accounts of 81 properties and 12 mortgages receivable (the "Properties") and of Senior Housing Properties Trust ("Senior Housing Trust"). The Properties and Senior Housing Trust are collectively referred to as "Senior Housing". These consolidated financial statements are presented as if Senior Housing was a legal entity separate from HRPT Properties Trust ("HRPT"); although no such entity existed until October 12, 1999. Senior Housing operates in a single segment.
HRPT organized Senior Housing Trust, a 100% owned subsidiary through October 11, 1999, as a Maryland real estate investment trust on December 16, 1998. At the time of its organization, Senior Housing Trust issued 26.4 million shares to HRPT for consideration of $263,748. Subsequently, 0.4 million shares were cancelled and 26.0 million shares are currently issued and outstanding.
For a substantial part of the periods presented, the Properties were owned by HRPT. On or about June 30, 1999, the Properties were transferred by HRPT to several of its 100% owned subsidiaries. Effective as of September 1, 1999, HRPT transferred 100% ownership of the several subsidiaries, which own the Properties, to Senior Housing Trust. On October 12, 1999, HRPT distributed 13.2 million shares of its 26.0 million Senior Housing Trust shares to HRPT shareholders (the "Spin-Off").
Note 2. Summary of Significant Accounting Policies
BASIS OF PRESENTATION. Prior to the Spin-Off, all of Senior Housing was owned by HRPT, and transactions have been presented at HRPT's historical basis. Prior to the Spin-Off substantially all the rental income and mortgage interest income received by HRPT from the tenants and mortgagors of Senior Housing was deposited in and commingled with HRPT's general funds. Funds for capital investments and other cash required by Senior Housing was provided by HRPT. Prior to September 1, 1999, interest expense was allocated based on HRPT's historical interest expense as a percentage of HRPT's average historical costs of real estate investments. General and administrative costs of HRPT for the periods prior to the Spin-Off were allocated to Senior Housing based on HRPT's investment advisory agreement formula and other costs were allocated based on historical costs as a percentage of HRPT's average historical costs of real estate investments. In the opinion of management, the methods for allocating interest and general and administrative expenses were reasonable. It was not practicable to estimate additional costs that would have been incurred by Senior Housing as a separate entity.
REAL ESTATE PROPERTIES AND MORTGAGE INVESTMENTS. Depreciation on real estate properties is expensed on a straight-line basis over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property. During 1999, the estimated useful lives of certain real estate properties were changed. The effect reduced net income and earnings per share, for the period ending December 31, 1999, $3.8 million and $0.15 per share, respectively. Impairment losses on properties are recognized when indicators of impairment are present and the estimated, undiscounted cash flows to be generated by the properties are less than the carrying amount of concerned properties.
CASH AND CASH EQUIVALENTS. Cash and cash equivalents consisting of overnight repurchase agreements and short-term investments with original maturities of three months or less at the date of purchase are carried at cost plus accrued interest which approximates market.
INTEREST RATE CAP AGREEMENTS. Senior Housing has entered into an interest rate cap agreement to limit exposure to the risk of rising interest rates. This arrangement, which expires in December 2001, has a notional amount of $200 million. Senior Housing will be entitled to receive payments by a counterparty should LIBOR increase above a threshold amount.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REVENUE RECOGNITION. Rental income from operating leases is recognized on a straight-line basis over the life of the lease agreements. Interest income is recognized as earned over the terms of the real estate mortgages. Percentage rent and supplemental mortgage interest income are recognized as earned. For interim periods, percentage rent and supplemental mortgage interest income are accrued prior to achievement of specified targets when the achievement of the targets is probable. For the years ended December 31, 1999, 1998 and 1997, percentage rent and supplemental mortgage interest income aggregated $4.0 million, $2.9 million and $2.9 million, respectively.
EARNINGS PER COMMON SHARE. Because Senior Housing's operations were included in the consolidated financial statements of HRPT prior to the Spin-Off, there are no shareholder equity accounts for Senior Housing prior to 1999. Common shares outstanding of 26.0 million at October 12, 1999 have been included in the earnings per share calculation as if the shares were outstanding for all periods prior to October 12, 1999. Earnings per common share are computed using the weighted average number of shares outstanding during the period. Senior Housing has no common share equivalents, instruments convertible into common shares or other dilutive instruments.
USE OF ESTIMATES. Preparation of these financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that may affect the amounts reported in these financial statements and related notes. The actual results could differ from these estimates.
INCOME TAXES. Prior to the Spin-Off, Senior Housing's operations were included in HRPT's income tax returns. Senior Housing and HRPT qualify as real estate investment trusts under the Internal Revenue Code of 1986, as amended. Accordingly, they are not expected to be subject to federal income taxes provided they distribute their taxable income and continue to meet the other requirements for qualifying as a real estate investment trust. However, they are subject to state and local taxes on their income and property.
NEW ACCOUNTING PRONOUNCEMENTS. The Financial Accounting Standards Board issued Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133") in 1998, which was further amended by Statement No. 137 "Accounting for Derivative Instruments and Hedging Activities - Deferral of Effective Date of FASB Statement No. 133" in 1999. FAS 133 must be adopted for the 2001 financial statements. Senior Housing believes adoption of FAS 133 is not expected to have a significant impact on its reported financial condition or results of operations.
Note 3. Report of Tenants' Financial Condition
Three of Senior Housing's tenants, The Frontier Group, Inc. ("Frontier"), Mariner Post-Acute Network, Inc. ("Mariner") and Integrated Health Services, Inc. ("IHS") have filed for protection under bankruptcy laws. Frontier filed in July 1999, Mariner filed in January 2000 and IHS filed in February 2000. For 1999, rental income and mortgage interest related to Frontier, Mariner and IHS was $2.2 million, $15.4 million and $26.6 million, respectively. At December 31, 1999 real estate investments, before impairment loss recognition and net of accumulated depreciation, for these three tenants were $10.0 million, $68.3 million and $136.9 million, respectively. Senior Housing also had mortgage investments, before loss reserves, related to IHS of $36.6 million at December 31, 1999.
Senior Housing has concluded that impairment indicators are present with respect to properties operated by these tenants and has prepared undiscounted cash flow projections for each of the properties. For purposes of these projections, Senior Housing has assumed that rents on some properties may be modified and that some of the leases may be terminated after which Senior Housing will operate the properties for a period of time and, ultimately, sell them. In addition, a third party not in bankruptcy has guaranteed the lease obligations of some of the properties operated by one of the tenants. Senior Housing has assumed that the guarantor will honor the lease obligations. The undiscounted cash flow projections reflect the expected rents to be earned over the lease term and the expected cash flows earned from operating the properties for a period of time plus the proceeds
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
from assumed future sales of the properties. Cash flows during the period in which Senior Housing may operate the properties are estimated based on the historical performance of each property, excluding rent paid to Senior Housing. Projected sale prices are based on an estimated per bed value consistent with industry practice and reflect prices that Senior Housing has observed in recent transactions. Based on these undiscounted cash flow projections, Senior Housing has concluded that certain of its real estate and mortgage investments are impaired as of December 31, 1999. Based on its estimates of fair values net of selling costs, Senior Housing has written down the carrying value of these real estate investments, including investments leased to an affiliate, Advisors Healthcare Group, Inc. ("Advisors Health"), as of December 31, 1999 by recording an impairment loss write-down in the accompanying consolidated statement of income of $15.5 million. In addition, Senior Housing has recorded a loan loss reserve of $14.5 million related to the mortgage investment it considered impaired. It is reasonably possible that estimates of future cash flows could be reduced significantly depending on the outcome of the bankruptcy proceedings or if the third party should fail to honor its guarantee. As a result, additional losses could be recognized in future periods and the amounts could be material.
In February 2000, Senior Housing sold all of the properties that were leased to Frontier for $13.0 million. Senior Housing is continuing to pursue claims against Frontier and other parties for breach of its leases and for rental arrearages. The amount of net gain, if any, which may be realized from the sale of the Frontier properties will depend upon the outcome of these claims. The amount of gain or loss to be realized as a result of this transaction is not expected to be material. Because these properties have been sold, Senior Housing will no longer receive rental income from these properties.
In March 2000, Senior Housing reached an agreement in principle with Mariner whereby Mariner may be released from its lease obligations, certain security deposits held by Senior Housing may be retained by Senior Housing, certain properties now operated by Mariner will in the future be operated by Senior Housing, and other properties now owned by Senior Housing will be conveyed to Mariner. If this agreement is approved Senior Housing expects that it may realize gains and that its future earnings and cash flows may be less than the rent previously earned from the Mariner leases, at least on a short term basis. This agreement is contingent upon third party approvals beyond Senior Housing's control. If and when this agreement is implemented it may result in additional material gains or losses.
Senior Housing is currently in negotiations with IHS. The current negotiations include, but are not limited to, the possibilities that Senior Housing will sell some of the properties, that lease or mortgage terms may be changed, that new tenants may begin operations of properties, that properties may be operated by Senior Housing for its own account or that mortgage obligations due to Senior Housing may be released for other compensation. Senior Housing may recognize additional gains or losses when these negotiations are completed and the additional gains or losses may be material.
Note 4. Real Estate Properties
The owned Properties are generally leased on a triple net basis, pursuant to noncancellable, fixed term operating leases expiring between 2001 to 2019. Generally, the leases to a single tenant or group of affiliated tenants are cross-defaulted and cross-guaranteed, and provide for all or none tenant renewal options at existing rates followed by several market rate renewal terms. These triple net leases generally require the lessee to pay all property operating costs.
The future minimum lease payments to be received during the current terms of the leases, as of December 31, 1999, were approximately $78.3 million in 2000, $78.0 million in 2001, $79.4 million in 2002, $79.6 million in 2003, $79.4 million in 2004 and $602.7 million thereafter. These future payments include minimum lease payments from IHS and Mariner of $36.3 million in 2000, $36.5 million in 2001, $36.6 million in 2002, $36.8 million in 2003, $36.9 million in 2004, and $179.9 million thereafter.
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Real Estate Mortgages Receivable
December 31, ------------------------------------ 1999 1998 ----------------- --------------- (dollars in thousands) Mortgage notes receivable due December 2016 $8,693 $8,769 Mortgage note receivable due January 2013 883 883 Mortgage note receivable due December 2010 18,777 18,992 Mortgage note receivable due January 2006 9,086 9,182 ----------------- --------------- 37,439 37,826 Loan loss reserve (14,500) -- ----------------- --------------- $22,939 $37,826 ================= ===============
At December 31, 1999, the interest rates on these notes receivable ranged from 10.3% to 13.75% per annum. In 1999 Senior Housing established an allowance of $14.5 million for the impairment of a real estate mortgage loan with a face value of $18.8 million.
Note 6. Shareholders' Equity
Senior Housing has reserved 1,300,000 shares of Senior Housing's common shares under the terms of the 1999 Incentive Share Award Plan (the "Award Plan"). During 1999, the three Independent Trustees, as part of their annual fee, were each granted 500 common shares from this plan. The shares granted to the Trustees vest immediately. At December 31, 1999, 1,298,500 of Senior Housing's common shares remain reserved for issuance under the Award Plan.
In January 2000, Senior Housing declared a distribution of $0.60 per share which was distributed on February 24, 2000. Distributions per share paid by Senior Housing for 1999 were $0.60 per share, or approximately $15.6 million.
Note 7. Commitments and Contingencies
At December 31, 1999 and 1998, Senior Housing had total commitments aggregating $3.7 million to fund or finance improvements to the Properties.
Note 8. Transactions with Affiliates
Senior Housing has entered into an agreement with REIT Management & Research, Inc. ("REIT Management") to provide investment, management and administrative services. Gerard M. Martin and Barry M. Portnoy, who serve as managing trustees of Senior Housing and HRPT, own REIT Management. REIT Management is paid by Senior Housing based on a formula amount of gross invested assets in the properties. Investment advisory fees for 1999, 1998 and 1997 with respect to Senior Housing's invested assets were $3.9 million, $3.8 million and $3.7 million, respectively. Beginning with the year ending December 31, 2000, REIT Management will also be entitled to an incentive fee, paid in restricted shares, based on a formula.
Messrs. Martin and Portnoy are principal shareholders of Advisors Health (formerly known as Connecticut Subacute Corporation II), which is a lessee of Senior Housing. The lease with Advisors Health is based on market terms and is generally similar to Senior Housing's leases with unaffiliated companies. These properties are managed by IHS. Senior Housing recorded rental income of $4.5 million as a result of this lease during each of the years ending December 31, 1999, 1998 and 1997.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9. Indebtedness
In September 1999, Senior Housing entered into an agreement for a $350 million, three-year, interest only, bank credit facility. The bank credit facility is secured by 18 properties, with a net book value of $380.2 million at December 31, 1999, and matures in 2002. The interest rate is LIBOR plus a premium (8.17% at December 31, 1999) and will increase if Senior Housing's debt to total capital, as defined, meets or exceeds 50%. The bank credit facility is available for acquisitions, working capital and for general business purposes. On October 13, 1999, $200 million, used to pay the formation debt due to HRPT, was outstanding under the bank credit facility.
Note 10. Fair Value of Financial Instruments and Commitments
The financial statements presented include mortgage investments, rents receivable, other liabilities and security deposits. Except as follows, the fair values of the financial instruments and commitments to fund improvements were not materially different from their carrying values at December 31, 1999 and 1998:
The fair values of the real estate mortgages and interest rate cap agreement are based on estimates using discounted cash flow analyses and currently prevailing market rates. The fair value of the commitments represent the actual amounts committed.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Concentration of Credit Risk
The assets included in these financial statements are primarily income producing senior housing real estate located throughout the United States. The following is a summary of the significant lessees and mortgagors as of and for the years ended December 31, 1999 and 1998:
SENIOR HOUSING PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Selected Quarterly Financial Data (unaudited)
The following is a summary of the quarterly results of operations of Senior Housing for 1999 and 1998. The dollars are in thousands except per share amounts.
------------------------------------------------------ First Second Third Fourth Quarter Quarter Quarter Quarter ------------ ------------ --------------- ------------ Revenues $22,668 $22,622 $22,621 $22,879 Net income (loss) (1) 10,971 10,861 11,176 (18,174) Per share data: Net income (loss) 0.42 0.42 0.43 (0.70)
------------------------------------------------------ First Second Third Fourth Quarter Quarter Quarter Quarter ------------ ------------ --------------- ------------ Revenues $21,496 $21,714 $21,711 $23,385 Net income 11,134 11,537 11,012 12,553 Per share data: Net income 0.43 0.44 0.42 0.48
(1) Reflects an impairment loss, as described in note 3, during the Fourth Quarter
S-4
S-5
SENIOR HOUSING PROPERTIES TRUST SCHEDULE IV-continued MORTGAGE LOANS ON REAL ESTATE December 31, 1999 (Dollars in thousands)
Reconciliation of the carrying amount of mortgage loans at the beginning of the period:
Balance at January 1, 1997 $38,270 New mortgage loans 124 Collections of principal (260) ---------------- Balance at December 31, 1997 38,134 Collections of principal (308) ---------------- Balance at December 31, 1998 37,826 Collections of principal (387) Loan loss reserve (14,500) ---------------- Balance at December 31, 1999 $22,939 ================
S-6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SENIOR HOUSING PROPERTIES TRUST
By: /s/ David J. Hegarty David J. Hegarty President and Chief Operating Officer Dated: March 30, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, or by their attorney-in-fact, in the capacities and on the dates indicated.