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Section 1: 8-K (NEW SENIOR INVESTMENT GROUP INC. 8-K)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________

FORM 8-K
_______________________________

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): May 8, 2020
_______________________________
 
New Senior Investment Group Inc.
(Exact Name of Registrant as Specified in Charter)
_______________________________
     
Delaware
(State or other jurisdiction of incorporation)
001-36499
(Commission File Number)
80-0912734
(I.R.S. Employer Identification Number)

55 West 46th Street, Suite 2204
New YorkNew York 10036
(Address of principal executive offices)

646-822-3700
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)
_______________________________

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:
Trading Symbol:
Name of each exchange on which registered:
Common stock, $0.01 par value per share
SNR
New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 under the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 under the Securities Exchange Act of 1934 (17 CFR 240.12b-2).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02         Results of Operation and Financial Condition.
 
On May 8, 2020, New Senior Investment Group Inc. (the “Company”) issued a press release announcing the Company’s results for its fiscal quarter ended March 31, 2020. Copies of the Company’s press release and Company Presentation have been furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K (the “Current Report”) and are incorporated herein by reference solely for purposes of this Item 2.02 disclosure.
 
This Current Report, including the exhibits attached hereto, is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly set forth as being incorporated by reference into such filing.

 
Item 9.01         Financial Statements and Exhibits.
 
(d)           Exhibits
 
Exhibit Number
Description
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)



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.

 

NEW SENIOR INVESTMENT GROUP INC.
 
 
 
Date: May 8, 2020 By:
/s/ Lori B. Marino
 
 
Lori B. Marino
 
 
Executive Vice President, General Counsel & Secretary

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

New Senior Announces First Quarter 2020 Results

NEW YORK--(BUSINESS WIRE)--May 8, 2020--New Senior Investment Group Inc. (“New Senior” or the “Company”) (NYSE: SNR) announced today its results for the quarter ended March 31, 2020.

FIRST QUARTER 2020 FINANCIAL HIGHLIGHTS

  • Net income of $5.2 million, or $0.06 per diluted share
  • Total net operating income (“NOI”) from continuing operations of $35.5 million, which excludes the assets in the Assisted Living/Memory Care (“AL/MC”) portfolio sold in February 2020 (the “AL/MC Transaction”)
  • Total same store cash NOI increased 0.1% versus first quarter 2019
    • Excluding expenses related to COVID-19, total same store cash NOI increased 1.5% versus first quarter 2019
  • Normalized Funds from Operations (“Normalized FFO”) of $13.5 million, or $0.16 per diluted share
  • AFFO of $14.1 million, or $0.17 per diluted share
    • Excluding expenses related to COVID-19, AFFO of $14.6 million, or $0.17 per diluted share
  • Normalized Funds Available for Distribution (“Normalized FAD”) of $12.2 million, or $0.15 per diluted share
  • Ended the quarter with $135.1 million of cash and cash equivalents on hand with no significant debt maturities until 2024

FIRST QUARTER 2020 & RECENT BUSINESS HIGHLIGHTS

  • Delivered strong first quarter 2020 same store NOI and AFFO per share results, consistent with expectations at the start of the year
  • Completed the AL/MC Transaction in February 2020, for a gross sale price of $385 million
  • In conjunction with the AL/MC Transaction, significantly strengthened the balance sheet through the following activities:
    • Repaid approximately $360 million of debt with proceeds from the AL/MC Transaction
    • Completed nearly $400 million of debt refinancing activity, resulting in lower debt costs and an extension of the Company’s average debt maturity by two years
  • In light of uncertainty caused by the COVID-19 pandemic, the Company is withdrawing its previously issued 2020 guidance
  • The Company declared a dividend of $0.065 per common share for the quarter ended March 31, 2020, a 50% reduction from its prior dividend level, in light of the uncertainty
  • The Company is providing an update below on the impact of COVID-19

Susan Givens, Chief Executive Officer of the Company commented, “Following a very strong 2019, our solid results in the first quarter of 2020, which were consistent with our initial expectations at the start of the year, are clearly overshadowed by current events and the disruption from the COVID-19 pandemic. This crisis has severely impacted the world, with at-risk populations, including the seniors that our communities serve, being disproportionately affected. The health and safety of our residents and our operators' associates around the country remains our top priority. We and our operators continue to be intensely focused on protecting and supporting our communities and implementing enhanced protocols. Along those lines, we worked closely with our operators early on and made the decision to restrict community access in an effort to protect residents and associates. As a result, we had fewer move-ins in the second half of March and April and higher expenses as our operators have worked to limit the spread of the virus. We acknowledge these actions will have a near-term financial impact on the Company.


Ms. Givens continued, “Based upon how quickly the pandemic has evolved over the past couple of months, it is difficult to predict the length or shape of the recovery at this point. For that reason, we took the difficult, but prudent, step to reduce the quarterly dividend. We expect that the Company’s Board of Directors will continue to re-evaluate the dividend on a quarterly basis. Further, we have also decided to withdraw our previously provided 2020 guidance. We remain committed to transparency and intend to provide further updates regarding the impacts of COVID-19 on our financial results as we move forward. We strongly believe that the value of senior housing, and independent living in particular, remains intact. We continue to have confidence in the favorable demographic trends in the industry and the long-term value of our portfolio and our business, and we believe that the actions that we have taken will ultimately strengthen our position as we move forward.

“We would like to thank and commend all of our operators and the staff at our communities, who continue to serve our residents with exceptional care and purpose. These are extraordinary times to be serving seniors, and we appreciate all that they are doing on behalf of our New Senior communities,” Givens concluded.

FIRST QUARTER 2020 RESULTS

Dollars in thousands, except per share data









For the Quarter Ended March 31, 2020
For the Quarter Ended March 31, 2019


Amount
Per Basic
Share

Per Diluted
Share

Amount
Per Basic
Share

Per Diluted
Share
GAAP (Unaudited)











Net loss attributable to common stockholders

$

5,239


$

0.06


$

0.06


$

(11,791)


$

(0.14)


$

(0.14)













 
Non-GAAP(A)











NOI

$

35,525


 

N/A


 

N/A


$

40,272


 

N/A


 

N/A

FFO

 

2,783


 

0.03


 

0.03


 

8,996


 

0.11


 

0.11

Normalized FFO

 

13,535


 

0.16


 

0.16


 

11,553


 

0.14


 

0.14

AFFO

 

14,099


 

0.17


 

0.17


 

13,157


 

0.16


 

0.16

Normalized FAD (B)

 

12,234


 

0.15


 

0.15


 

11,290


 

0.14


 

0.14

(A) See end of press release for reconciliation of non-GAAP measures to net loss.

(B) Normalized FAD, which does not reflect debt principal payments and certain other expenses, does not represent cash available for distribution to shareholders.

FIRST QUARTER 2020 GAAP RESULTS

New Senior recorded GAAP net income of $5.2 million, or $0.06 per diluted share, for the first quarter of 2020, compared to a GAAP net loss of $11.8 million, or $(0.14) per diluted share, for the first quarter of 2019. The year over year increase was primarily driven by the gain on sale of real estate of $20.0 million realized in connection with the AL/MC Transaction.

FIRST QUARTER 2020 PORTFOLIO PERFORMANCE


Same Store Cash NOI


Properties
1Q 2019
1Q 2020
YoY
Managed Properties

102


$

33,646


$

33,637


0.0

%

NNN Property

1


 

1,411


 

1,450


2.8

%

Total Portfolio

103


$

35,057


$

35,087


0.1

%








 
Total Portfolio

103


$

35,057


$

35,087


0.0

%

COVID-19 Related Expenses

-


 

-


 

501


-

 

Total Portfolio Adjusted for COVID-19 Related Expenses

103


$

35,057


$

35,588


1.5

%








 

2020 GUIDANCE

The Company’s full year 2020 guidance provided on February 27, 2020 did not factor in any disruption on the Company’s business from the COVID-19 pandemic. In light of the uncertainty caused by the COVID-19 pandemic, the Company is now withdrawing its previously provided 2020 guidance. The ultimate impact of the pandemic will depend on a variety of factors, and it remains too early to estimate the complete effects of COVID-19 on the Company’s future results. As those factors become clearer, the Company will provide further updates as appropriate.


FIRST QUARTER DIVIDEND

Due to the anticipated impact of the COVID-19 pandemic, on May 4, 2020, the Company’s Board of Directors declared a cash dividend of $0.065 per share for the quarter ended March 31, 2020. The dividend is payable on June 19, 2020 to shareholders of record on June 5, 2020.

COVID-19 IMPACT ON THE COMPANY

The Company’s top priority is the health and safety of our residents and associates around the country. We and our operators remain focused on protecting and supporting our communities and enforcing necessary protocols in accordance with applicable guidelines and directives from federal, state and local governments and health agencies. While COVID-19 did not materially affect our first quarter 2020 results, our Company has been, and will continue to be, impacted by COVID-19 in a number of ways as we move forward.

Overview

As of March 31, 2020, we owned a portfolio of 102 independent living (“IL”) communities and one continuing care retirement center (“CCRC”). We have over 10,800 residents across our 103 communities, which are managed by three different operators and one tenant, and are staffed by over 3,300 associates. The typical entry age of a resident into one of our communities is 81, and the average length of stay at one of our communities is 2.5 to 3 years.

Our experience since the onset of the pandemic includes the following observations:

  • All of our communities have remained open and operational since the start of the COVID-19 pandemic
  • Our three operators and one tenant have all put into place various restrictions and protocols to address the COVID-19 pandemic at our communities around the country, including restrictions on move-ins, restrictions on non-essential visitors, restrictions on communal dining and activities, enhanced cleaning protocols and requirements to wear personal protective equipment
  • As of May 6, 2020, our operators have reported a total of 141 positive cases (101 residents and 40 associates) across 16 communities; 58 of the 101 resident cases have been concentrated at our CCRC located in Philadelphia, Pennsylvania
  • Holiday Retirement (“Holiday”), our largest operating partner, manages 98 of our 103 communities, representing 94% of our total NOI as of the end of the first quarter. As of May 6, 2020, they have reported 33 positive resident cases, representing 0.3% of total residents
  • As we look forward to easing restrictions at our communities in the future, it is important to note that due to the at-risk population that the Company’s communities serve, we expect that many of the restrictions and protocols in place at our communities will continue for some time, even as federal, state and local stay-at-home, shelter-in-place and social distancing orders are relaxed

Occupancy

  • Due to, in large part, the restrictions on tours and move-ins at our communities in the second half of March 2020, total portfolio occupancy declined 130bps from 88.7% on February 29, 2020 to 87.4% on March 31, 2020
  • In April 2020, the first full month to be impacted by the pandemic, occupancy declined by another 120bps from 87.4% on March 31, 2020 to 86.2% on April 30, 2020. Additional information for the month of April is listed below:
    • Monthly move-ins decreased 55% versus January/February averages (largely as a result of enhanced protocols restricting move-ins and sales activities)
    • Monthly move-outs decreased 9% versus January/February averages (driven by lower voluntary move-outs throughout the portfolio)
    • Monthly leads decreased 42% versus January/February averages (as a result of a significant decline across all lead channels, including third-party referrals, online advertising and in-person outreach)
  • The Company expects to experience additional declines in occupancy going forward due to the various measures taken to stem the spread of COVID-19 within our communities

Expenses

  • Operating expenses have increased since the onset of the pandemic as a result of enhanced safety protocols, which include costs for the acquisition of personal protective equipment, supplies, enhanced cleaning and the need for additional labor
  • Operating expenses associated with COVID-19 have escalated following the end of the first quarter of 2020. Based on preliminary results, the Company expects to incur approximately $1 million of expenses in April 2020 related to the pandemic. These expenses represent an increase of approximately 5% versus our budgeted expenses for the month, which we expect will be offset by lower variable expenses as a result of reduced occupancy and move-in levels
  • The Company is not able to reasonably predict the total amount of costs it will incur related to the pandemic in the future, and such costs, which could include additional costs not listed above, could vary by community and could be impacted as the Company’s operating partners work to lift restrictions

Liquidity & Capital Structure

  • The Company has taken, and continues to take, actions to enhance and preserve liquidity in response to the COVID-19 pandemic
    • In March 2020, as a precautionary measure when the pandemic was just emerging, the Company drew $100 million on its revolving credit facility and had $135.1 million of cash and cash equivalents as of March 31, 2020. The Company currently expects to repay a portion of the revolver in the second or third quarter of 2020
    • The Company also temporarily suspended all discretionary capital expenditure projects
    • The Board reduced the quarterly dividend by 50% to $0.065 per share
  • As of March 31, 2020, 49% of the Company’s debt is comprised of floating rate debt. One-month LIBOR has declined from 1.7% at the beginning of 2020 to 0.2% as of May 6, 2020, and we expect the decrease in interest expense to offset some of the NOI decline resulting from the COVID-19 pandemic
  • As a result of several initiatives completed in 2019 and 2020, as well as the actions listed above, the Company has materially improved its free cash flow profile, has limited near-term debt maturities and believes it has sufficient liquidity

The discussion above includes forward-looking statements, which are not guarantees of future performance. This may be the result of a wide range of factors, including 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; and the overall demand for our communities in the recovery period following the pandemic.

ADDITIONAL INFORMATION

For additional information that management believes to be useful for investors, including more information regarding the COVID-19 pandemic and its impact on our business, please refer to the Company Presentation and to the Quarterly Supplement, each of which is posted in the Investor Relations section of New Senior’s website, www.newseniorinv.com.

EARNINGS CONFERENCE CALL

Management will host a conference call on May 8, 2020 at 9:00 A.M. Eastern Time. The conference call may be accessed by dialing (888) 317-6003 (from within the U.S.) or (412) 317-6061 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please use entry number “1543788”. A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newseniorinv.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available approximately two hours following the call’s completion through June 8, 2020 by dialing (877) 344-7529 (from within the U.S.) or (412) 317-0088 (from outside the U.S.); please use access code “10143101.”

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 expectations with respect to the potential range of 2020 financial results, 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; and our expected occupancy rates and operating expenses. 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, our ability to successfully manage the asset management by third parties, and market conditions affecting demand and supply for senior housing. 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.


Consolidated Balance Sheets
(dollars in thousands, except share data)




 




 


March 31, 2020
December 31, 2019


(Unaudited)

Assets



Real estate investments:



Land

$ 134,643


$ 134,643

Buildings, improvements and other

1,972,758


1,970,036

Accumulated depreciation

(368,979)


(351,555)

Net real estate property

1,738,422


1,753,124

Acquired lease and other intangible assets

7,642


7,642

Accumulated amortization

(2,327)


(2,238)

Net real estate intangibles

5,315


5,404

Net real estate investments

1,743,737


1,758,528





 
Assets from discontinued operations

363,489

Cash and cash equivalents

135,103


39,614

Receivables and other assets, net

32,148


33,078

Total Assets

$ 1,910,988


$ 2,194,709





 
Liabilities, Redeemable Preferred Stock and Equity



Liabilities



Debt, net

$ 1,585,936


$ 1,590,632

Liabilities from discontinued operations

267,856

Accrued expenses and other liabilities

62,313


59,320

Total Liabilities

1,648,249


1,917,808





 
Redeemable preferred stock, $0.01 par value with $100 liquidation
preference, 400,000 shares authorized, issued and outstanding as of
March 31, 2020 and December 31, 2019

40,500


40,506





 
Equity



Preferred stock, $0.01 par value, 99,600,000 shares (excluding
400,000 shares of redeemable preferred stock) authorized, none
issued or outstanding as of March 31, 2020 and December 31, 2019






 
Common stock, $0.01 par value, 2,000,000,000 shares authorized,
82,880,222 and 82,964,438 shares issued and outstanding as of
March 31, 2020 and December 31, 2019, respectively

829


830

Additional paid-in capital

902,288


901,889

Accumulated deficit

(666,424)


(660,588)

Accumulated other comprehensive loss

(14,454)


(5,736)

Total Equity

222,239


236,395





 
Total Liabilities, Redeemable Preferred Stock and Equity

$ 1,910,988


$ 2,194,709





 

Consolidated Statements of Operations
(dollars in thousands, except share data)




 


Three Months Ended March 31,


2020


2019



(unaudited)

Revenues



Resident fees and services

$ 85,007


$ 85,749

Rental revenue

1,583


1,582

Total revenues

86,590


87,331





 
Expenses



Property operating expense

51,065


52,939

Interest expense

17,219


19,850

Depreciation and amortization

17,536


16,994

General and administrative expense

5,846


4,978

Acquisition, transaction and integration expense

133


492

Loss on extinguishment of debt

5,884


Other (income) expense

(105)


1,315

Total expenses

97,578


96,568

Loss before income taxes

(10,988)


(9,237)

Income tax expense

60


36

Loss from continuing operations

(11,048)


(9,273)

Discontinued Operations:



Gain on sale of real estate

19,992


Loss from discontinued operations

(3,107)


(1,920)

Discontinued operations, net

16,885


(1,920)

Net income (loss)

5,837


(11,193)

Deemed dividend on redeemable preferred stock

(598)


(598)

Net income (loss) attributable to common stockholders

$ 5,239


($ 11,791)





 
Basic earnings per common share: (A)



Loss from continuing operations attributable to common stockholders

($ 0.14)


($ 0.12)

Discontinued operations, net

0.20


(0.02)

Net income (loss) attributable to common stockholders

$ 0.06


($ 0.14)





 
Diluted earnings per common share:



Loss from continuing operations attributable to common stockholders

($ 0.14)


($ 0.12)

Discontinued operations, net

0.20


(0.02)

Net income (loss) attributable to common stockholders

$ 0.06


($ 0.14)





 
Weighted average number of shares of common stock outstanding



Basic

82,386,622


82,203,069

Diluted (B)

82,386,622


82,203,069





 
Dividends declared per share of common stock

$ 0.065


$ 0.13

(A) Basic earnings per common share (“EPS”) is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding. The outstanding shares used to calculate the weighted average basic shares exclude 493,599 and 800,381 restricted stock awards, net of forfeitures, as of March 31, 2020 and 2019 respectively, as those shares were issued but were not vested and therefore, not considered outstanding for purposes of computing basic income (loss) per share. Diluted EPS is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding plus the additional dilutive effect, if any, of common stock equivalents during each period.








 
(B) Dilutive share equivalents and options were excluded for the three months ended March 31, 2020 and 2019 as their inclusion would have been anti-dilutive given our loss position.

Reconciliation of NOI to Net Income
(dollars in thousands)


For the Quarter Ended


March 31, 2020
Total revenues

$

86,590

 

Property operating expense

 

(51,065

)

NOI

 

35,525

 



 
Interest expense

 

(17,219

)

Depreciation and amortization

 

(17,536

)

General and administrative expense

 

(5,846

)

Acquisition, transaction and integration expense

 

(133

)

Loss on extinguishment of debt

 

(5,884

)

Other income

 

105

 

Income tax expense

 

(60

)

Loss from continuing operations

 

(11,048

)

Discontinued Operations:

Gain on sale of real estate

 

19,992

 

Loss from discontinued operations

 

(3,107

)

Discontinued operations, net

 

16,885

 

Net income (loss)

 

5,837

 

Deemed dividend on redeemable preferred stock

 

(598

)

Net income attributable to common stockholders

$

5,239

 



 

Reconciliation of Net Income to FFO, Normalized FFO, AFFO and Normalized FAD (unaudited)
(dollars and shares in thousands, except per share data)


 


For the Quarter Ended


March 31, 2020
Net income attributable to common stockholders

$

5,239

 

Adjustments(1):

Gain on sale of real estate

 

(19,992

)

Depreciation and amortization

 

17,536

 

FFO

$

2,783

 

FFO per basic and diluted share

$

0.03

 

Acquisition, transaction and integration expense

 

1,170

 

Loss on extinguishment of debt

 

9,486

 

Compensation expense related to transition awards

 

390

 

Other income(2)

 

(294

)

Normalized FFO

$

13,535

 

Normalized FFO per basic and diluted share

$

0.16

 

Straight-line rent

 

(134

)

Amortization of deferred financing costs

 

906

 

Amortization of deferred community fees and other(3)

 

(1,314

)

Amortization of equity-based compensation

 

1,106

 

AFFO

$

14,099

 

AFFO per basic and diluted share

$

0.17

 

Routine capital expenditures

 

(1,865

)

Normalized FAD

$

12,234

 

Normalized FAD per basic and diluted share

$

0.15

 



 
Weighted average basic shares outstanding

 

82,387

 

Weighted average diluted shares outstanding

 

83,914

 



 
1) Includes amounts related to 28 AL/MC properties that were classified as discontinued operations as of December 31, 2019 and sold in February 2020.
2) Primarily includes insurance recoveries and casualty related charges.
3) Includes amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives.

Reconciliation of Year-over-Year Cash NOI (unaudited)
(dollars in thousands)










 


1Q 2020
1Q 2019


Managed

Other
Properties



Managed

Other
Properties




IL Properties
Total
IL Properties
Total
Same Store Cash NOI (excluding COVID-19 related expenses)

$34,138

$1,450


$35,588


$33,646

$1,411


$35,057

COVID-19 related expenses

(501)

-


(501)


-

-


-

Same Store Cash NOI

33,637

1,450


35,087


33,646

1,411


35,057

Non-Same Store Cash NOI

-

-


-


-

(249)


(249)

Straight-line rental revenue

-

134


134


-

206


206

Amortization of deferred community fees and other(1)

305

(2)


303


(620)

(2)


(622)

Segment / Total NOI

$33,942

$1,582


$35,525


$33,026

$1,366


$34,392











 
Interest expense



(17,219)





(19,850)

Depreciation and amortization



(17,536)





(16,994)

General and administrative expense



(5,846)





(4,978)

Acquisition, transaction & integration expense



(133)





(492)

Loss on extinguishment of debt



(5,884)





-

Other income (expense)



105





(1,315)

Income tax expense



(60)





(36)

Loss from continuing operations



(11,048)





(9,273)

Gain on sale of real estate



19,992





-

Loss from discontinued operations



(3,107)





(1,920)

Discontinued operations, net



16,885





(1,920)

Net income (loss)



5,837





(11,193)

Deemed dividend on redeemable preferred stock



(598)





(598)

Net income (loss) attributable to common stockholders



$5,239





($11,791)











 
(1) Consists of amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives.
Reconciliation of Quarter-over-Quarter Cash NOI (unaudited)
(dollars in thousands)












 


1Q 2020
4Q 2019


Managed
Other
Properties



Managed
Other
Properties




IL Properties

Total
IL Properties

Total
Same Store Cash NOI (excluding COVID-19 related expenses)

$34,138


$1,450


$35,588


$34,502


$1,450


$35,953

COVID-19 related expenses

(501)


-


(501)


-


-


-

Same Store Cash NOI

33,637


1,450


35,087


34,502


1,450


35,953

Straight-line rental revenue

-


134


134


-


134


134

Amortization of deferred community fees and other(1)

305


(2)


303


(21)


(2)


(23)

Segment / Total NOI

$33,942


$1,582


$35,525


$34,481


$1,583


$36,063













 
Interest expense




(17,219)






(17,982)

Depreciation and amortization




(17,536)






(17,502)

General and administrative expense




(5,846)






(5,925)

Acquisition, transaction & integration expense




(133)






(332)

Loss on extinguishment of debt




(5,884)






-

Other income (expense)




105






(683)

Income tax expense




(60)






(22)

Litigation proceeds, net




-






82

Loss from continuing operations




(11,048)






(6,301)

Gain on sale of real estate




19,992






-

Loss (income) from discontinued operations




(3,107)






245

Discontinued operations, net




16,885






245

Net income (loss)




5,837






(6,056)

Deemed dividend on redeemable preferred stock




(598)






(605)

Net income (loss) attributable to common stockholders




$5,239






($6,661)













 
(1) Consists of amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives.

NON-GAAP FINANCIAL MEASURES

The tables above set forth reconciliations of non-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 comparable GAAP measure. We consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance. 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, nor are non-GAAP measures necessarily indicative of our ability to satisfy our funding 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, the capital structure of such companies or other factors.

Below is a description of the non-GAAP financial measures presented herein.

NOI and Cash NOI

The Company evaluates the performance of each of its three business segments based on NOI. The Company defines NOI as total revenues less property-level operating expenses, which include property management fees and travel cost reimbursements. The sum of the NOI for each segment is total NOI, which the Company uses to evaluate the aggregate performance of its segments. The Company defines Cash NOI as NOI excluding the effects of straight-line rent, amortization of above / below market lease intangibles and amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives. We believe that NOI and Cash NOI serve as useful supplemental measures to net income because they allow investors, analysts and management to measure unlevered 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.

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.

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 the 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 rents; (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.

Contacts

Jane Ryu
(646) 822-3700

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Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit 99.2

 Company Presentation  May 8, 2020  PinegateMacon, GA 
 

 Forward-Looking Statements, Non-GAAP and Other Information  1  IN GENERAL. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the “Presentation.”  Throughout this Presentation, New Senior Investment Group Inc. (NYSE: SNR) is referred to as “New Senior,” the “Company,” “SNR” or “we.”FORWARD-LOOKING STATEMENTS. Certain information in this Presentation may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding expectations with respect to the potential range of 2020 financial results, 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; and our expected occupancy rates and operating expenses. 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, our ability to successfully manage the asset management by third parties, and market conditions affecting demand and supply for senior housing. 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 Presentation, speak only as of the date of this Presentation, 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.NON-GAAP FINANCIAL INFORMATION. This Presentation includes information based on financial measures that are not recognized under generally accepted accounting principles (“GAAP”), such as NOI, cash NOI, adjusted same store cash NOI, Normalized FFO, AFFO and Normalized FAD. You should use non‐GAAP information in addition to, and not as an alternative to, financial information prepared in accordance with GAAP. See the end of this Presentation for reconciliations to the most comparable GAAP measures and an explanation of each of our non-GAAP measures. Our non-GAAP measures may not be identical or comparable to measures with the same name presented by other companies due to differences in calculation, capital structure or other factors. PAST PERFORMANCE. In all cases where historical results are presented or past performance is described, we note that past performance is not a reliable indicator of future results and performance.GLOSSARY. See the Glossary at the end of this Presentation for an explanation of various terms used herein. 
 

 Table of Contents  SECTIONS      PAGES  I.   Company Overview    5 – 14  II.  COVID-19 Situation Update    16 – 18   III.   Financial Update    20 – 22   IV.   Reconciliations and Glossary    24 – 28  2 
 

 Executive Summary  3  New Senior Investment Group Inc. (NYSE: SNR) is the only U.S. pure play, publicly-traded senior living REITPortfolio comprised of 102 Independent Living (IL) properties and one NNN leased property across 36 statesFollowing a transformational 2019, we started 2020 with strong 1Q20 results which were in-line with expectationsTotal same store cash NOI increased +0.1% in 1Q20 versus 1Q19 (excluding COVID-19 expenses, increased +1.5%)The COVID-19 pandemic began to impact our results in the second half of March 2020The COVID-19 pandemic has had a disproportionate impact on seniors, the cohort our properties serveOur top priority since the crisis began has been the health and safety of our residents and our operators’ associates around the countryOur operators took early action to limit access at our properties and secure supplies, which resulted in lower move-ins and higher expenses We expect to continue to experience occupancy declines and higher expenses during the pandemicWe believe the long-term value of senior housing, and Independent Living in particular, remains intactThe necessary measures taken will have an impact on our near-term financial performance, but we believe they will also highlight the importance of senior housing and will strengthen our position as we move forward This presentation seeks to provide our stakeholders with the following:A review of our business and senior housing market fundamentalsAn update on the COVID-19 pandemic, our operator responses, and specific observations to date Our initial views on the potential financial impact of COVID-19  
 

 Company Overview  Rolling Hills RanchOmaha, NE 
 

 New Senior Overview  New Senior Investment Group Inc. (NYSE: SNR) is a publicly-traded REIT with a portfolio of 102 Independent Living (IL) properties and one NNN leased property                  Pure Play REIT  Uniquely Positioned  Geographic Diversification & Scale  Experienced Operator Mix  Uniquely positioned to capitalize on long-term industry fundamentals(1)96% of NOI from high-margin IL properties  The only pure play, publicly-traded senior housing REIT in the U.S.100% private pay senior housingAll properties wholly owned  Partnered with experienced senior housing operators4 operator relationships Holiday: 3rd largest senior housing operator  One of the largest owners of senior housing with a national footprint(2)10th largest owner of senior housingDiversified across 36 states   Percentages calculated based on 1Q20 NOI and excludes 28 AL/MC properties that were sold in February 2020.ASHA, “50 Largest U.S. Seniors Housing Owners as of June 1, 2019”.  103 Properties12,405 Units3,300 Associates  5 
 

 Geographically Diversified Portfolio  Portfolio of 103 properties located across 36 different statesNo more than 10% of NOI generated from any one stateProperties located in markets with favorable demographic trends Properties predominately located outside of major metropolitan areas65% of NOI generated from properties located in secondary and tertiary markets(1)  6  Top Markets and States  National Footprint  As defined by National Investment Center for Seniors Housing & Care (NIC); tertiary markets include Additional markets and markets not covered by NIC.Percentages calculated based on 1Q20 NOI, excluding properties sold during the quarter.                                                                                                                                                                                                                                                                                                                    Top 5 States  Properties  % of NOI(2)   California  9  10%   North Carolina  8  10%   Florida  9  10%   Pennsylvania  5  8%   Oregon  8  7%  Markets(1)  Properties  % of NOI(2)   Primary  32  35%   Secondary  32  32%   Tertiary  39  33%  Managed IL PropertiesNNN Lease     
 

             Overview of Senior Housing Acuity Spectrum(1)  7  Data per NIC Investment Guide, Fifth Edition.  Continuum Of Care  Senior Apartments (SA)  Independent Living (IL)  Assisted Living (AL)  Memory Care (MC)  Nursing Care (NC)  Product             Services  Housing & Activities  Sr. Apt. Services + Transportation,Meals & Housekeeping  IL Services + Care Services  AL Services + Memory Care Programming  AL/MC Services +ST Post-Acute or LT Chronic Care   Payor Type  Private  Private  Private  Private  Private & Public   Avg. Monthly Rent  < $3,000  ~$3,100  ~$4,600  ~$6,300  ~$6,000 - $15,000(Depending on Payor Type)  Resident Profile             Typical Entry Age  55+  75+  80+  80+  65 – 95    Length of Stay  3+ years  ~3 years  ~2 years  ~2 years  ST Post-Acute: ~30 daysLT Chronic Care: ~1 year  Supply in the U.S. By Community Type             Properties  --  2,800  7,200  1,400  10,300   Units  --  427,000  595,000  73,000  1,344,000    Lower Acuity  HigherAcuity  Broad range of services offered across the senior housing spectrum from senior apartments to nursing care New Senior is focused on the lower acuity end of the senior housing spectrum, specifically Independent Living96% of New Senior’s 1Q20 NOI is from Independent Living “IL” properties 
 

 Benefits of Independent Living  8  1Q  2Q  3Q  4Q    Baby Boomers (56 – 74)    Silent Generation (75 – 95)    Greatest Generation (>96)  New Senior Resident Ages at Move-in  New Senior Historical Operating Margins  100% private pay (no government reimbursement) and typically lower monthly rent versus AL/MCMore active resident population with longer average lengths of stay versus typical AL/MC residents~60% of our residents are under 85 years old at move-in; average length of stay of 2.5 – 3 years, versus 2 years for AL/MCTypically higher and more stable NOI margins than other acuity typesLess labor intensive staffing model (no healthcare provided by the operator)Lower levels of new supply over the past 5 years for IL versus AL/MC  
 

 Purpose Built, Uniform Independent Living Portfolio   Peninsula (Gig Harbor, WA)  Example of First Level Floorplan    Main atrium with adjacent sitting, activities and dining spaces  Resident Hallway  Resident Hallway  9  Typical Dining Room  Majority of New Senior’s properties have a uniform building layout consisting of: Two to three floors with 100 to 120 units Centrally-located atriums with adjacent sitting, activities and dining spaces Allows for standardized operations and simplified staffing modelOur average IL property is staffed with 30 employees versus the 2-5x more needed in a typical AL/MC property Also results in more effective asset management and capital expenditure planning  
 

 Senior Housing Industry is Large and Fragmented  Ownership of senior housing properties is highly fragmentedEstimated $300 billion of senior housing properties in the U.S.(1)Only 21% of properties are owned by public REITs and public operating companies(2)1.6mm total units in the industry(2)Independent Living (IL):  695k units, 44% of industryAssisted Living (AL):  659k units, 42% of industryMemory Care (MC):  215k units, 14% of industry  10  Highly Fragmented Ownership  Senior Housing Acuity Mix Breakdown By Care Type  Based on management estimates.Data per NIC Investment Guide, Fifth Edition.  Public Operating Companies 6%  Non-Public Owners79%   PublicREITs15%  IL695k units,44%  AL659k units, 42%   MC215k units, 14%   Senior Housing: 1.6mm Total Units 
 

 Compelling Demographic Tailwinds(1)  11  Seniors Represent Fastest Growing Demographic  YoY 75+ Population Growth  U.S. Census Bureau and NIC.  3-Year CAGR Per Age Cohort  3.9% 10-Year CAGR  U.S. 75+ population projected to double in next twenty years; 23 million in 2019  44 million in 2039 75+ population growing 8x faster than total population over next 20 years6% of U.S. 75+ population currently resides in senior housingDemand for 300,000 senior housing units over next 5 years, generated by growth of aging population Increase in industry penetration rate to 7% would produce 100% industry occupancy 
 

 Growing Need for Middle Income Housing for Seniors  NIC, “The Forgotten Middle”, published May 21, 2019.Affordability coverage calculated as average household value relative to annual rent. New Senior household value of $276k based on a radius of 5-miles and average rental rate of approximately $2,600. All Senior Housing represents 140 NIC MSAs with household value of $259k and average annual rental rate of approximately $4,100 (rental rate per NIC). Household value information per Nielsen.     20.0  33.6    New Senior Target Market,43% of Seniors  12  Large & Growing Middle Income Opportunity(1)  Affordable Senior Housing Price Point(2)  Middle income senior population expected to grow by 82% to 14 million by 2029, 43% of all seniorsMiddle income seniors expected to have annual financial resources of $41,000 ($52,000 including home equity)(1)New Senior’s IL portfolio is uniquely positioned to serve middle income seniorsAffordability coverage for New Senior’s properties of 8.8x compared to 5.2x for U.S. senior housing average(2)New Senior IL average rental rate of ~$2,600 or $31,200 per year (total cost assuming 3 year length of stay of $93,600) 
 

 Value Proposition of Senior Housing  Senior housing provides a practical and enriching alternative to aging at homeOpportunity for seniors to socialize and receive services, including dining, housekeeping and transportationIL residents can obtain healthcare services onsite from third-party providers as neededNew Senior’s average IL rental rate plus third-party healthcare is still below the cost of typical AL  13  Life Aspect  Home  Senior Housing   Social Activities  Need to proactively plan events for socialization  Diverse, enriching daily calendar of events  Meals & Dining  Responsible for groceries and preparing all meals  Chef-prepared meals shared with neighbors   Physical Fitness  May not prioritize/be able to keep up physical health  Daily activities focused on physical well-being  Maintenance & Housekeeping  Rely on self or 3rd parties for home maintenance and housekeeping  Maint. & housekeeping personnel onsite and regularly provide services  Transportation  Drive or arrange for transportation on own  Daily bus or van services available  Emergency Assistance  Not guaranteed to be able to get help in case of emergencies  Staff & neighbors onsite; e-call gadgets provided in case of any emergencies  Alternative for Seniors  Cost of New Senior IL Versus Typical Assisted Living      Illustrative cost of third-party healthcare  $500 to $1,000 
 

 14  Recent Company Updates  Since January 2019, the Company has evolved by internalizing management, selling its underperforming AL/MC portfolio and strengthening its balance sheet    Completed internalization of management  January 1, 2019  Reported earnings guidance for first timeCompleted relocation of headquarters  February 2019  Completed transitions of nine AL/MC properties to new operatorsClosed on the sale of one underperforming AL/MC propertyCompleted hires of General Counsel & Head of Corporate Strategy  March & April 2019  Closed on the sale of a second underperforming AL/MC propertyContinued corporate governance improvements including appointment of new independent directorExecuted interest rate swap to increase fixed rate debt exposure  May & June 2019  Signed agreement to sell entire AL/MC portfolio for a gross sale price of $385 million  October 2019  Closed sale of AL/MC portfolioRepaid ~$360 million of debtCompleted ~$400 million of refinancing activity, resulting in lower debt costs and an extension of debt maturities by two years Reported 2019 earnings & announced 2020 guidance  February 2020  Reported 1Q20 earnings consistent with initial 2020 guidance Withdrew 2020 guidance due to COVID-19 pandemic Reduced dividend by 50% to preserve liquidity in period of uncertainty  May 2020  January 21, 2020 First COVID-19 case in US  May 6, 2020 1.2 million COVID-19 cases in US  1Q 2019  2Q 2019  4Q 2019  1Q 2020  2Q 2020 
 

 COVID-19 Situation Update   Simi HillsSimi Valley, CA 
 

 16  Operator Response to COVID-19  Protocol / Action Taken  Operator A  Operator B  Operator C  Operator D  Restricted access to non-essential visitors  3/14  3/19  3/9  3/13  Implemented enhanced screening process at entrance, including PPE requirements          Closed dining rooms; in-room delivery only          Closed resident access to all common areas        Enhanced Protocols  Cancelled all group activities        Enhanced Protocols  Implemented quarantine for all residents        Enhanced Protocols  Daily temperature checks for residents / associates           Beginning early March, our operators took significant steps to stem the spread of the virus within our propertiesWhile protocols have been similar, experiences with the virus and local health agencies have varied significantlyCertain health departments have been extremely involved, including coming onsite to test all residents and associatesSpread and impact of cases has also been inconsistent and unpredictableOur operators are currently developing phased approaches to safely lift certain restrictions at our propertiesKey focus areas include: 1) physical tours & move-ins; 2) outside visitor access; 3) communal dining; and 4) activitiesExpect initiatives to incorporate additional testing (new move-ins and potentially all residents and associates) 
 

     Residents           Properties  Active  Recovered(3)  Deceased  Total  IL: Properties with active cases   11  21  9   8   38  IL: Properties with previously active cases  4   -  4  1  5  IL: Total properties with positive cases reported  15  21   13  9  43               CCRC: Property with active cases   1  38  9  11  58  Total Portfolio  16  59  22   20   101   Known COVID-19 Cases & Status(1)  Case data as of 5/6/20.National data per Johns Hopkins University. Residents and associates are deemed “recovered” when, per CDC guidelines, either (1) two negative COVID-19 test results received or (2) no fever for at least 72 hours (without use of fever-reducing medicine), other symptoms have improved, and at least 14 days have passed since the date of a positive test.  SNR Reported Positive COVID-19 Cases  As of May 6, 2020, our operators reported 141 positive cases across 16 properties (101 residents and 40 associates)Positive cases represent 0.9% of our 10,800 residents and 1.2% of our 3,300 associatesOf our total 101 resident cases, 58 have been concentrated at our one large CCRC located in Philadelphia, PAHoliday Retirement (“Holiday”) is our largest operator & manages 98 of our 103 properties (94% of 1Q20 NOI)As of May 6, 2020, Holiday has reported 33 positive cases across 12 properties, representing 0.3% of total residentsEarly observation is that our secondary/tertiary markets have seen fewer positive cases as compared to national data(2) Unclear how these case rates will change as the pandemic continues and testing becomes more readily availableWe expect the number of positive cases in our properties to increase as the virus continues to spread  17 
 

 Observations on March & April Results(1)  18  Leads: Down 42% compared to January / February averagesMove-ins: Down 55% compared to January / February averages Move-outs: Down 9% compared to January / February averagesEnding occupancy: Declined an additional 120bps from 87.4% on March 31, 2020 to 86.2% on April 30, 2020  Occupancy  Estimating NOI for the month of April to be down approximately 8 – 10% versus April 2019Temporarily suspended discretionary capital expenditure projects starting in mid-March  Cash Flows   Expect approximately $1 million of COVID-19 related expenses, which represents an increase of +5% versus budgetThese incremental expenses were offset by lower variable costs primarily due to reduced occupancy levels As a result, total operating expenses were approximately $17 million, or in line with budget  Operating Expenses  April 2020 is based on preliminary results, which are subject to change.   Began to see the impact of COVID-19 on our financial results in the second half of MarchEnding occupancy declined 130bps from 88.7% on February 29, 2020 to 87.4% on March 31, 2020Incurred approximately $0.5 million of COVID-19 related expenses, including PPE costs and additional suppliesApril was first full month that included the impact of COVID-19, observations on the month are included belowCarefully monitoring key metrics to assess the short and long-term impacts of COVID-19 on our business 
 

 Financial Update  The Chateau at HarvestonTemecula, CA 
 

 20  Same Store Results – 1Q 2020  1Q20 same store results were in line with expectations at the start of the yearSame store cash NOI increased +0.1% year-over-year (excluding COVID-19 expenses, increased +1.5%)IL occupancy increased 10bps YoY / RevPOR increased 0.9% YoY / Margin decreased -40bps YoYBegan to see the impact of COVID-19 in second half of March 2020, resulting in $0.5 million of expenses  ($ in thousands)  Quarterly YoY        1Q19  1Q20  Δ   Occupancy  87.0%  87.1%  10bps  RevPOR  $2,683   $2,706   0.9%  Margin  40.1%  39.7%  (40bps)   IL NOI (102 Properties)  $33,646   $33,637  -   Excluding COVID-19 Expenses  $33,646   $34,138  1.5%   Watermark (1 Property)  1,411   1,450   2.8%  Total Same Store (103 Properties)  $35,057   $35,087  0.1%  Excluding COVID-19 Expenses  $35,057   $35,588   1.5%       
 

 Potential Future Impact of COVID-19   21  Withdrawing 2020 full year guidance as a result of the uncertainty surrounding the impact of COVID-19Based on estimated April results, the following is our view of the potential monthly impact from COVID-19:Occupancy: Monthly declines of 100 – 150bps (restrictions in place resulting in lower move-ins)Expenses: Incremental COVID-19 expenses of 5 – 10% (partially offset by lower variable expenses) Assuming similar trends continue, 2Q20 could see occupancy down 320 – 420bps with NOI down 10 – 15% YoYUltimate impact of the COVID-19 pandemic will depend on a variety of factors, and it remains too early to estimate the complete effects of the pandemic on the Company’s future results         Potential Future COVID-19 Impact        Actual March 2020   Estimated April 2020  Illustrative Monthly Impact  Illustrative 2Q20 Impact  Notes  Sequential Occupancy Decline  (130bps)  (120bps)  (100bps) – (150bps)   (320bps) – (420bps)   Lower move-in volume partially offset by fewer move-outs  End of Period Occupancy  87.4%  86.2%  -  83% – 84%     Incremental COVID-19 Expenses  3%   5%   5% - 10%  -  Expect COVID-19 related expenses to be partially offset by lower variable costs  IL YoY NOI Growth  (1.5%)  (8%) – (10%)  -  (10%) – (15%)    
 

 Capital Structure, Debt Maturities & Liquidity(1)  All information is presented as of 3/31/2020. Pro forma information is included for illustrative purposes only. 2022 maturity (secured loan) has two, 1-year extension options with the payment of a 12.5bps extension fee.  22     Amounts  % of Total  W.A. Maturity in Years  1Q20 Rate   Pro Forma Rate atLIBOR Spot  Fixed  $815   51%  5.3 years  4.4%  4.4%  Floating  790  49%  6.2 years  3.7%  2.5%  Total Debt  $1,604  100%  6.0 years  4.0%  3.4%    As of March 31, 2020, 49% of total debt is comprised of floating rate debtOne-month LIBOR has declined from 1.7% at the beginning of 2020 to 0.2% as of May 6, 2020Floating rate debt coupon of 3.7% in 1Q20 would decline to 2.5% at current one-month LIBOR spot rateAt current one-month LIBOR spot rate, interest expense would be $9 million lower on an annualized basisAs of March 31, 2020, the Company had $135.1 million of cash and cash equivalentsDrew $100 million on revolver in early March as pandemic was emerging – expect to repay portion in 2Q20 or 3Q20No significant debt maturities until 2024  Capital Structure  Debt Maturity Schedule  ($ in millions)  ($ in millions)  (2) 
 

 Reconciliations & Glossary  Marion WoodsOcala, FL 
 

 NOI Reconciliation – 1Q 2020 Year-over-Year(1)  ($ in thousands)  24  Totals may not sum due to rounding.Includes amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives.    1Q20        1Q19        Managed IL Properties  Other Properties  Total    Managed IL Properties  Other Properties  Total                  Same Store Cash NOI (excluding COVID-19 related expenses)  $ 34,138  $ 1,450   $ 35,588    $ 33,646  $ 1,411  $ 35,057  COVID-19 related expenses  (501)  -  (501)    -  -  -  Same Store Cash NOI  33,637  1,450   35,087    33,646  1,411  35,057  Non-Same Store Cash NOI  -  -  -    -  (249)  (249)  Straight-line rental revenue   -    134    134      -   206  206  Amortization of deferred community fees and other(2)  305   (2)  303     (620)    (2)    (622)                   Segment / Total NOI  $ 33,942  $ 1,582  $ 35,525    $ 33,026  $ 1,366   $ 34,392                  Interest expense       (17,219)         (19,850)  Depreciation and amortization       (17,536)         (16,994)  General and administrative expense       (5,846)         (4,978)  Acquisition, transaction & integration expense       (133)         (492)  Loss on extinguishment of debt      (5,884)        -  Other income (expense)       105         (1,315)  Income tax expense       (60)         (36)  Loss from continuing operations      (11,048)        (9,273)  Gain on sale of real estate      19,992        -  Loss from discontinued operations        (3,107)         (1,920)  Discontinued operations, net       16,885         (1,920)                  Net income (loss)      $ 5,837        $ (11,193)  Deemed dividend on redeemable preferred stock       (598)         (598)   Net income (loss) attributable to common stockholders      $ 5,239        $ (11,791) 
 

 NOI Reconciliation – 1Q 2020 Quarter-over-Quarter(1)  25  Totals may not sum due to rounding.Includes amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives.    1Q20        4Q19        Managed IL Properties  Other Properties  Total    Managed IL Properties  Other Properties  Total                  Same Store Cash NOI (excluding COVID-19 related expenses)  $ 34,138  $ 1,450   $ 35,588    $ 34,502  $ 1,450  $ 35,952  COVID-19 related expenses  (501)  -  (501)    -  -  -  Same Store Cash NOI  33,637  1,450   35,087    34,502  1,450  35,952  Straight-line rental revenue   -    134    134      -    134    134   Amortization of deferred community fees and other(2)  305   (2)  303     (21)    (2)    (23)                   Segment / Total NOI  $ 33,942  $ 1,582  $ 35,525    $ 34,481  $ 1,583   $ 36,063                  Interest expense       (17,219)        (17,982)  Depreciation and amortization       (17,536)        (17,502)  General and administrative expense       (5,846)        (5,925)  Acquisition, transaction & integration expense       (133)        (332)  Loss on extinguishment of debt      (5,884)        -  Other income (expense)       105        (683)  Litigation proceeds, net      -        82   Income tax expense       (60)        (22)  Loss from continuing operations      (11,048)        (6,301)  Gain on sale of real estate      19,992        -  Loss (income) from discontinued operations        (3,107)        245  Discontinued operations, net       16,885         245                  Net income (loss)      $ 5,837        $ (6,056)  Deemed dividend on redeemable preferred stock       (598)         (605)   Net income (loss) attributable to common stockholders      $ 5,239        $ (6,661)  ($ in thousands) 
 

 GAAP Reconciliation of FFO, Normalized FFO, AFFO and Normalized FAD  26  Includes amounts related to 28 AL/MC properties that were classified as discontinued operations as of 12/31/2019 and sold in February 2020. Primarily includes insurance recoveries and casualty related charges.Includes amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives.    1Q20  Net income  $ 5,239      Add (Deduct)(1):     Gain on sale of real estate  (19,992)   Depreciation and amortization   17,536  FFO  $ 2,783  FFO per Diluted Share  $ 0.03       Acquisition, transaction and integration expense  1,170   Loss on extinguishment of debt  9,486   Compensation expense related to transition awards  390   Other income(2)   (294)      Normalized FFO  $ 13,535  Normalized FFO per Diluted Share  $ 0.16        Straight-line rent  (134)   Amortization of deferred financing costs  906   Amortization of deferred community fees and other(3)  (1,314)   Amortization of equity-based compensation  1,106      AFFO  $ 14,099  AFFO per Diluted Share  $ 0.17       Routine capital expenditures  (1,865)      Normalized FAD  $ 12,234  Normalized FAD per Diluted Share  $ 0.15  ($ and shares in thousands, except per share data)  AFFO  $14,099   COVID-19 related expenses  501  AFFO Excluding COVID-19 related expenses  $ 14,600  AFFO Excluding COVID-19 related expenses per Diluted Share  $ 0.17  Weighted average diluted shares outstanding  83,914 
 

 Glossary  Cash NOI MarginCash NOI margin is equal to Cash NOI divided by Cash Revenue.Discontinued OperationsDiscontinued operations consists of 28 AL/MC properties that represented the entire Managed AL/MC Properties segment prior to the fourth quarter of 2019 and were classified as discontinued operations as of December 31, 2019. The properties were subsequently sold in February 2020. EBITDARMEBITDARM is a non-GAAP measure that represents earnings before interest, taxes, depreciation, amortization, rent and management fees for the period stated unless otherwise noted. We use EBITDARM in determining coverage and as a supplemental measure of the ability of the property to generate sufficient liquidity to meet related obligations to us. For our triple net lease portfolio, all facility financial performance data was derived solely from information provided by operators/tenants without independent verification by us. EBITDARM does not represent net income or cash flow from operations and should not be considered an alternative to those indications. EBITDARM CoverageFacility EBITDARM divided by the aggregate of base rent and any additional rent due to us for the same period. EBITDARM coverage is a supplemental measure of a property’s ability to generate cash flows for the operator/tenant (not for us) to meet the operator’s/tenant’s related rent and other obligations to us. Enterprise ValueEnterprise value is equal to market capitalization plus carrying value of mortgage notes payable, minus cash. FFO, Normalized FFO, AFFO and Normalized FADWe 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.  FFO, Normalized FFO, AFFO and Normalized FAD (continued)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 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 Former 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 (income) expense” in the Consolidated Statements of Operations. We also use 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 rents; (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.  27 
 

 Glossary  FFO, Normalized FFO, AFFO and Normalized FAD (continued)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 stockholders. We believe Normalized FAD is useful because it fully reflects the additional economic costs of maintaining the condition of the portfolio.Gross Assets The carrying amount of total assets, after adding back accumulated depreciation and amortization, as reported in our consolidated financial statements. Investment Represents the carrying amount of real estate assets, including intangibles, after adding back accumulated depreciation and amortization, for all assets owned as of the end of the respective reporting period. Net Operating Income (“NOI”) and Cash NOINOI and cash NOI are non-GAAP measures. We define NOI as total revenue less property operating expenses, which include property management fees and travel cost reimbursements. Cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies. We define cash NOI as NOI excluding the effects of straight-line rental revenue, amortization of above / below market lease intangibles and amortization of deferred community fees and other, which includes the net change in deferred community fees and other rent discounts or incentives. We believe that NOI and cash NOI serve as useful supplemental measures to net income because they allow investors, analysts and management to measure unlevered 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.  28  Occupancy For the managed portfolio, occupancy represents the facilities’ average operating occupancy for the applicable period. For the triple net lease portfolio, occupancy is based on the period reported unless otherwise noted. The percentages are calculated based on available beds. All occupancy data was derived solely from information provided by operators/tenants without independent verification by us. RevPORRepresents average cash revenues per occupied bed per month. We use RevPOR to evaluate the revenue generating potential of our senior housing portfolio independent of fluctuating occupancy rates.Same Store and Adjusted Same StoreSame store data presented herein excludes properties acquired, sold, transitioned to other operators or between segments, or classified as held for sale or discontinued operations during the comparable periods. Same store data is intended to enable management to evaluate the performance of a consistent portfolio of real estate in a manner that eliminates variances attributable to changes in the composition of our portfolio over time, due to sales and various other factors. Upon implementation of ASC 842 on 1/1/2019, bad debt expense is required to offset revenue as opposed to being included in operating expense under previous guidance. Accordingly, we have reclassified bad debt expense for prior years to offset revenue in order to facilitate a historical comparison. The change has no impact on the Company’s NOI or Cash NOI.Adjusted same store cash NOI adjusts same store cash NOI to include properties transitioned from the Company’s triple net lease segment to the managed segment during the comparative periods. For the period during which the properties were owned on a triple net basis, cash NOI reflects the unaudited operating results provided by the operator, as opposed to the rent recorded by the Company, and excludes ancillary service revenue attributable to a business that ceased operations over the course of 2018. 
 

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