Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Tim Bonang – Vice President Investor Relations

David Hegarty – President, Chief Executive Officer

Richard Doyle – Chief Financial Officer

Analysts

Todd Stender – Wells Fargo Securities

Jerry Doctrow – Stifel Nicolaus

Kevin Ellich – RBC Capital Markets

Omotayo Okusanya – Jefferies & Co.

Andrew Yu – Bank of America/Merrill Lynch

Senior Housing Properties Trust (SNH) Q4 2009 Earnings Call February 18, 2010 5:00 PM ET

Operator

Welcome to the Senior Housing Properties Trust fourth quarter 2009 conference call. This cal is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Tim Bonang.

Tim Bonang

Good afternoon everyone. Joining me on today’s call are David Hegarty, President and Chief Operating Officer and Rick Doyle, Chief Financial Officer.

Today’s call includes a presentation by management followed by a question and answer session. I’d also like to note that the recording and retransmission of today’s conference is strictly prohibited with prior written consent of SNH.

Before we begin today’s call I’d like to state that today’s conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Federal Securities laws. These forward-looking statements are based on Senior Housing’s present beliefs and expectations as of today, February 18, 2010. The company undertakes no obligation to revise or publicly release the results of any revision of the forward-looking statements made in today’s conference call other than through filings with the Securities and Exchange Commission regarding this reporting period.

In addition, this call may contain non-GAAP numbers including funds from Operations or FFO. A reconciliation of FFO to net income as well as components to calculate a, FFO, CAD or SAD are available on pages 11 and 14 in our Q4 supplemental operating and financial data package found on our website at www.snhreit.com

Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our 2009 Form 10-K to be filed with the SEC by end of the day tomorrow. Investors are cautioned to not place undue reliance on any forward-looking statements.

With that, I would like to turn the call over to Dave Hegarty.

David Hegarty

Good afternoon everyone and thank you for joining us. We are very pleased with the results of the quarter and the year as well as the strong financial position we’re in today. During 2009 SNH was added to the S&P mid cap 400 less than 1,000 indices.

In terms of liquidity and balance sheet strength, SNH compares very favorable with not only the rest of our health care REIT’s but the whole REIT universe. We are also pleased with the significant strategic diversification of revenues we achieved in 2009.

In July we raised our quarterly dividend by $0.01 per share or 2.9% to $0.36 per share or $1.44 per share year and over the past decade we have raised the dividend by an average of 2% per year. At the same time our stock price has appreciated on average 7.6% per year.

For the fourth quarter, we generated funds from operations of $0.41 per share which is consistent with consensus expectations. These results fully reflect the September equity offering but do not fully reflect the impact of the new investments made during the quarter with those proceeds.

For the year, FFO per share grew by 2% over 2008 results or from $1.67 per share to $1.70 per share which is significant given the negative arbitrage on earnings created by the timing delay in investing all the proceeds of the large Fannie Mae financing in August and the equity raised in September.

Our FFO in total increased 18% while our weighted average shares outstanding was actually 16% higher in 2009 than 2008. During the fourth quarter we invested approximately $125 million, most of which we discussed on our third quarter earnings call.

For the full year 2009 we made total new investments of approximately $537 million which consists of 20 medical office buildings, 11 predominantly private paid senior living communities and capital improvement funding for our existing senior housing assets.

These investments were funded using a $513 million ten year mortgage from Fannie Mae and the $7 million equity offering in February and a $127 million equity offering in September and cash from operations generated in excess of dividends.

Now I’d like to have Rick review the annual quarterly results with you, and then the properties acquired in more detail, then I’ll discuss operating trends, the acquisition environment and the outlook for SNH.

Richard Doyle

In comparing 2009 to 20808 we were able to grow cash flows, increase our dividend to $1.44 per annum and diversify our revenue stream from $236 million with 155 tenants for $298 million with 215 millions. This growth in revenues is due to investing approximately $537 million. We invested approximately $117 million in senior living properties, $383 million in medical office buildings and $37 million in capital improvements during 2009.

Also included in the revenues is percentage rent revenue from our senior living tenants which totaled $9.1 million in 2009 versus $8.4 million in 2008. The increase in the percentage rent revenue year over year was not as significant as it has been historically due to the decline in occupancy and lower rental increases.

In 2010 senior living properties acquired in 2008 will begin to contribute to the percentage rent based on the 2009 revenues.

The annual interest expense for 2009 was $16.3 million higher versus 2008 due to the interest expense in the amortization of deferred financing fees relating to our new agency debt with Fannie Mae. In August we closed on $512.9 million of Fannie Mae debt secured by 28 senior living properties. This was a 10 year loan with an effective weighted average annual interest rate of 6.6% per annum as of December 31, 2009.

General and administrative expenses were $3.2 million higher year over year primarily due to the new investments. Our G&A costs remain competitive with other health care REIT’s at 6.9% of revenues for the year.

We recognized impairment charges of $15.5 million for the year on our 11 under performing assets. On a quarterly basis we evaluate our portfolio for impairments and performance. During the fourth quarter we sold two under performing skilled nursing facilities for $1.9 million and recognized a gain of $397,000.

We have two assets that are classified as held for sale in our financial statement as of year end. Upon the sale of these two assets, there will be no meaningful impact on our results.

For the fourth quarter of 2009 our FFO was $52.4 million or $0.41 per share compared to $48.9 million or $0.43 per share for the 2008 fourth quarter. The dividend paid with respect to the fourth quarter was $0.36 per share which is a payout ratio of 37.8% for the fourth quarter 2009 FFO.

FFO for the quarter was negatively impacted by reduced rent of $500,000 to Five Star related to the in-patient rehabilitation hospitals to compensate Five Star for the additional cost to comply to covenants by our Fannie Mae loan. Rent lost due to the bankruptcy of Epic Pharmaceuticals in the Biotech Lab building in the negative arbitrage of holding in excess of $50 million cash from the beginning of the quarter until they were invested mid-quarter.

During the fourth quarter we invested approximately $125 million which was comprised of 11 senior living communities for $117 million and $6.3 million of capital improvements on December 31. Results for the 2009 quarter do not reflect the full impact of these acquisitions.

Interest expense increased in the fourth quarter 2009 versus the same period in 2008 due to the Fannie Mae mortgage financing as discussed previously. General and administrative expenses were higher quarter over quarter primarily due to increased real estate investments.

There were $4 million of property operating expenses in the fourth quarter of 2009 compared to $1.7 million in the same period of 2008. These numbers are not fully comparable because we added 20 MOB since the fourth quarter 2008.

At year end we had $60 million outstanding on our revolving credit facility; two series of unsecured senior notes of $322 million and mortgage loans and capital leases totaling $660 million. Our total debt was approximately $1 billion and our equity was $1.9 billion for a ratio of debt to total book capital of 35%. On a market basis, our debt to total market capitalization was 27%.

Today we have $75 million outstanding on our credit facility and $475 million available to fund future investments. Our revolving credit facility expires on December 31, 2010; however at our option, we can extend the maturity date one year until December 31, 2011. We continue to monitor the banking market conditions and have not made a decision to either pursue a new or amended revolving facility or exercise our one year extension option.

Now I will turn it back to Dave for a discussion about the performance of the portfolio and the investment environment.

David Hegarty

As Rick described, we had a solid fourth quarter and 2009 and we enter the new year poised to take advantage of investment opportunities in 2010 and 2011. Our existing portfolio continues to perform comfortably in this difficult environment. Like most businesses today, everything takes twice the effort or more just to stay even.

In reporting our operating statistics in our supplemental package, we have decided to present all numbers on a trailing 12 month basis to be consistent with our peers and make the numbers more comparable.

As always, if there is a statistic that would be beneficial and we can provide it, please contact Tim and let him know.

Our largest tenant, Five Star reported its earnings earlier today. As a company, they generated operating income and generated meaningful cash flow for 2009. They were in a solidly liquid position at year end and had zero outstanding on their $40 million revolving line of credit. Five Star owns several properties and leases properties from other landlords.

SNH focuses on the underlying performance of our own properties leased to Five Star in addition to overall monitoring Five Star as a company. For the 12 months ended September 30, cash flows for all the leased properties we own that Five Star operates covered our rental obligations by a comfortable 1.34 times or as a cushion of approximately $55 million.

Our coverage ratios are presented on an EBITDA basis. As a reminder, Five Start will be receiving a net cash increase of approximately $30 from the UBS on the auction rate securities in June of 2010.

Occupancies across all product lines in the Five Star leases ticked down for the 12 months ended September 30, but as Five Star reported today, occupancies appear to have been flat in the fourth quarter versus the third quarter and appear to be trending up in the new year.

By comparison, just this week the NIC released occupancy trends comparing the third quarter 2009 to the fourth quarter 2009 and all segments of senior living properties experienced a 20 to40 basis point decline.

The 14 properties we lease to Sunrise continue to perform satisfactorily. The rent coverage was 1.4 times and occupancies averaged 90%. As a reminder these leases are guaranteed by Marriott International and we continue to monitor Sunrise as a company but the facilities are being operated well and the occupancy and rent coverage are holding up well.

The Brookdale properties continue to be stable with 92% occupancy and over two times coverage. Private operators have experienced occupancy at two skilled nursing locations, but still the rent covers comfortably at almost two times in the aggregate.

The two longest tenants cover their rental obligations well over two times and have been surviving the economic downturn relatively well. The five trailing 12 months periods presented in our supplemental package reflects pretty consistent coverage for 2008 and 2009 at about 2.3 times coverage of the rent.

Lifetime Fitness, one of our tenants today reported an $18 million net income for Q4 ’09 and $72.4 million for the year ended 2009, up from $13 million and $71.8 million respectively for 2008 so they continue to perform well in this challenging environment.

Everyone knows we’re still in a very difficult economic times and all the operators in the senior living industry and wellness industry are under pressure, but we believe that the businesses are holding up well enough to pay their rental obligations due to us.

In addition, our portfolio is very geographically diversified providing further safety to our cash flow.

In the medical office building portfolio occupancy was 98% at September 30, 2009 for the 56 properties we own and 96% as of December 31. Most of these properties are long term leases with strong credits but even the multi-tenanted buildings are performing at or better than expected levels.

There has been little turnover in medical office suites, but renewals on new leases have approximated the existing rents. The one problem property we have is the 57,000 square foot Bio Tech lab building in a suburb of Boston that was occupied by Epic Pharmaceuticals until they filed bankruptcy. This vacancy is the primary reason for the decline in occupancies since September 30.

There are several parties interested in leasing this space so I expect we will re-let this property on terms comparable to the former rent sometime during 2010.

As with other sectors of real estate, we’re not seeing as many investment opportunities as we would have expected. We’re seeing several individual assets in small portfolios to consider in both the senior living and medical office properties but many have issues and are in our opinion not worth the debt on the property.

We’ve also seen a few very large nursing home opportunities to consider, but we’re not interested in pursuing these asset types. We have a handful of properties that I’m optimistic we’ll acquire in the 8.5% to 9% cap rate range, but we will continue to exercise discipline and not chase transactions for the sake of putting money to work.

Right now we are balancing risk adjusted returns versus safety. As stated in the past, our current business plan is to closely monitor the portfolio in these tough economic times, look for opportunities that are risk adjusted returns in today’s market, prudently manage our liquidity and look for opportunities to grow the cash flow in order to ultimately increase the dividend.

Thus at quarter end, our Board declared and paid a cash dividend of $0.36 per share which is a payout ratio of 87.8% of the fourth quarter’s FFO. Our Board evaluates dividend on a quarterly basis and the Board considers the dividend to be adequately funded.

Based on our current payout ratio, we’re generating about $35 million to $40 million of excess cash flow per year to provide a cushion for the dividend should any operator experience difficulties or any other unforeseen needs.

This surplus cash flow is currently used to fund improvement financing, make investments and prepay debt. Our liquidity position is very strong with no meaningful debt maturing until December 2011 when our revolver maturing carrying a one year extension option. As I said before, we’re among the top of all REIT’s for liquidity and strength of our balance sheet.

Now I’d like to open for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Todd Stender – Wells Fargo Securities.

Todd Stender – Wells Fargo Securities

The sniff you sold in the fourth quarter, they’re Five Star leases. What leases did those come out of?

Richard Doyle

There was one sniff that came out of lease number one and one that came out of lease number four.

Todd Stender – Wells Fargo Securities

You mentioned there were two assets held for sale. What types of facilities are they?

Richard Doyle

Those are assisted living assets.

Todd Stender – Wells Fargo Securities

Are they Five Star assets, Five Star leases?

Richard Doyle

They are leased to Five Star.

Todd Stender – Wells Fargo Securities

Looking at the lease expiration, they’re certainly minimal for the next three years. How long are the in place leases that are expiring this year and next, are they about the same, just looking at the remaining lease terms on average it looks about 12.7 years. Are these long term leases that are coming due now and maybe it won’t be an issue where the rent would potentially be flat or down?

David Hegarty

Most of them are leases like three to five years in the multi-tenant and medical office buildings. I will tell you there is one lease that is a long term lease on a nursing home that comes due at the end of this year and we are likely to sell that property or re-lease it probably at a bit lower rent than we currently lease it at.

I guess it’s too early to tell what kind of rental level that will be at but it probably will take a big of a step down.

Todd Stender – Wells Fargo Securities

The balance in the line was $60 million at the end of the fourth quarter. Rick I think you mentioned it’s at $27 million.

Richard Doyle

It’s $75 million today. A lot of that has to do with timing. We just paid the dividend this week, borrowed to pay that. We borrowed to pay that and we’ll have some rents coming out and we can pay down a little bit of that in the next few weeks.

Todd Stender – Wells Fargo Securities

Considering it’s costing about 1%, is there any real urgency to pay that down or what are some of your attractive options to turn that out?

David Hegarty

Certainly at this level it’s something we would probably leave in place and not do anything with. As you said, it’s very attractively priced and on December 31 we funded capital improvement financing and those we earn at least 8% on, so it’s very nice to be earning that money and we’re in no rush to refinance that.

So unless we had a meaningful acquisition, a property requirement for additional capital I’d say we have no need to really go to the markets debt or equity in the near term foreseeable future.

Operator

Your next question comes from Jerry Doctrow – Stifel Nicolaus.

Jerry Doctrow – Stifel Nicolaus

On the Epic biotech, how much rent did that affect in the fourth quarter and/or on an annual basis going forward.

Richard Doyle

For the fourth quarter we were paid one month so one-third of that rent so on an annual basis about $3.1 million.

Jerry Doctrow – Stifel Nicolaus

So it was $3.1 annually and you got a third.

Richard Doyle

One-third of that.

Jerry Doctrow – Stifel Nicolaus

You said your expectations are at some point to release. You’ve clearly got the right. They’re out. You’ve got the right to do it. It’s not hung up in bankruptcy or whatever so you expect releasing early this year.

David Hegarty

That’s correct. This was just a Chapter 7 liquidation so we are free to do with the property as we want. We have had quite a bit of interest from people who would like to buy it because they have interest parties and we also have a number of interested tenants. I do expect, it will take a little time, but we do expect to release it.

Jerry Doctrow – Stifel Nicolaus

On the market side, you’ve got room on the line but if you started stepping up, making $100 million to $200 million of acquisitions given that line is going to mature and that sort of thing, what would you see doing next? Would you terming out debt? Would you have a need for additional equity? How are you feeling about leverage overall and that kind of thing?

David Hegarty

We definitely have the capacity to take on more leverage and that would be an attractive option to us. I think the negating factor there would be we had discussion with the rating agency in the fall and they reaffirmed their positive outlook for us. They have some hesitation on the industry as a whole whether the occupancy levels and performance levels have bottomed out for health care operators.

So they’ve been hesitant to do anything, so I think we probably won’t talk to them again for another couple of quarters and see where we’re at and should there be an upgrade, there will be a very attractive option for us I believe.

Again the capital markets are fluid and today I think the debt is fairly attractive and I think that spreads and everything else are moving in our favor so there should be a little bit better in several months let’s say. But again it’s a decision at that time we would make and I can’t predict today which way we’d go but it’s all the market conditions at the time you have a real transaction.

Jerry Doctrow – Stifel Nicolaus

So to the extent that you’re doing, just to make sure I understand what you’re saying, to the extent that you’re doing $100 million to $200 million, you could easily just put it on the line and leave it there for awhile because you’ve got another year to do, wait and see how you go with the rating agency and see what you term out equity less like unless something really big comes along. Is that a fair assessment?

David Hegarty

Yes. I think the markets too; I don’t know exactly how much of a differential we would get being non investment grade versus investment grade. So that’s going to factor into the decision.

What’s interesting at least from the last several months, it’s been a case where non investment grade has been more attractive in some ways to buyers than investment grade so it would be a much easier deal to do a non investment grade deal.

Jerry Doctrow – Stifel Nicolaus

A couple of the other guys that have reported so far have been ramping up sort of CapEx. I think maybe it’s for TI improvements or just other CapEx. You’ve been adding a lot of MOB’s. Do you have some sense of what CapEx levels might be next year based on the portfolio in place today?

David Hegarty

It would be about $2 million a year is a good number to use. The medical office buildings that we acquired at the ended of September leased to Aurora do not require any CapEx.

The ones that we had acquired from HRP that are multi-tenanted would require traditional CapEx but nothing extraordinary.

Jerry Doctrow – Stifel Nicolaus

I think you were saying you didn’t have much roll over and rent rolled down so you weren’t really concerned about that.

David Hegarty

That is correct.

Jerry Doctrow – Stifel Nicolaus

Just curious if we could get any additional color on Five Star. It seemed like the properties as you were categorizing them are behaving more or less like industry. Some of the other parts of their business were maybe hitting the earnings and stuff. But any more color on your outlook for senior housing generally, your outlook for their portfolio, just any more color there would be helpful

David Hegarty

Five Star is a unique company in this space because they do have the rehab hospitals. They have pharmacies. They have skilled nursing, independent living, assisted living, the whole gambit, so it’s very difficult to match them up apples and apples with most of the other public companies out there.

It seems that just some of the sectors that you would think would be the best performing or most stable such as skilled nursing are actually experiencing some of the more difficult aspects. Certainly the rural properties are experiencing some occupancy issues or rate issues and I believe that anybody that has private resources today is going to find an assisted living facility that can handle their higher acuity and they’re not going to the nursing home.

So you’re not seeing the long term care resident who’s private pay being very common and so I’d say the nursing home properties have been under the most pressure of their portfolio. Assisted living continues to do very well and Alzheimer’s care also is in demand and keeps staying strong.

Independent living again is off a little bit but not significantly. And we have one of our leases has lower coverage and if you delve down into it, it’s basically three or four properties and most of them are nursing homes but one is a rental CCIC that had quite a bit of capital improvements going on, and as a result occupancy had dropped while the capital improvements are going on.

We’re funding the CapEx so rent is going up at 8% on the capital funding so they’re getting a double whammy. So that gives you a little bit of color on the portfolio.

Operator

Your next question comes from Kevin Ellich – RBC Capital Markets.

Kevin Ellich – RBC Capital Markets

Following up on the CapEx and the purchase of improvements that you make for some of your tenants, it’s fluctuated a little bit the last few quarters. I’m just wondering if you have any sense or visibility on what a good rate for purchase of improvements is.

Richard Doyle

We funded CapEx in the fourth quarter and last quarter it was $6.9 million. If you look over time it would probably be around $10 million. 2008 was a little higher than the prior years and it was higher than 2009 but I would give it around $10 million to $12 million per quarter.

That fluctuates. It’s what the plans have been doing with tenants especially at Five Star and see what they’re going to do the next year.

Kevin Ellich – RBC Capital Markets

Going back to Five Star, and on the conference call this morning Bruce indicated they’ve seen decent demand in independent and assisted living but they saw some weakness out of Alzheimer’s and skilled nursing. I’m wondering if you’re seeing that from any of your other operators or any other properties.

David Hegarty

Some of the private operators I mentioned had a little bit of slippage in occupancy levels and coverage so depending on what state they’re in, it’s definitely a softness in the skilled nursing side of things.

Brookdale, they’ve been very steady at 90%, 91% to 92 occupancy levels and they just seem to be humming along. All of our properties that we have with Brookdale are all in that 50 to 70 unit per building size property and they have a very efficient model and run it well.

The Sunrise assets, it depends on which market. Some like the Florida ones are under more pressure than the other ones, but they have been doing a fair amount of discounting with some of them on a case by case basis, so we’ve seen the occupancy hold up very well but the coverage went down a bit and that’s probably the main reason.

I think in general everybody, I do believe and feel that things have bottomed out and people are holding on right now and just waiting for the whole economy to pick up along with it.

Kevin Ellich – RBC Capital Markets

I guess that makes sense. After the tour we did last fall I think that’s what we saw and heard from the operators. Going to the wellness centers, have you been able to, are there annual rent increases on the wellness centers?

David Hegarty

Yes, we have annual increases, 2% on the lifetime.

Richard Doyle

When we book it’s a straight line so we have them on a straight line basis but there are annual increases.

David Hegarty

We have annual increases on the Walbridge facilities also.

Kevin Ellich – RBC Capital Markets

On the acquisition and development pipeline, I’m just wondering where your appetite is now and what you’ve seen. I know you provided a little bit of detail, but are you more focused on continued expansion on MOB’s or wellness or senior living and what are your Cap rates looking like?

David Hegarty

We are evaluating all those different areas for opportunities to invest in, but I’d say medical office building is the area we’re seeing the most opportunities to consider and I envision pretty much all of the deals I’m optimistic about closing on are in the medical office building space.

The initial cash cap rate is pretty much in the mid eight and on a GAAP basis they would be around nine, maybe low nine. On the senior living space, we would expect to do transactions in the lower nine. As far as the cap rate for the property it would be low nine to mid nine percent but our rental rate is still going to be 8 ¾ percent that we would charge the operator.

Like I say, if you look at the past year we were about $550 million of transactions and the bulk of that was still medical office so I would see us continuing to invest in the medical office more than senior living.

Kevin Ellich – RBC Capital Markets

Ultimately where would you like to get your portfolio mix to? Do you have a set amount in mind?

David Hegarty

We’re not a hard fast allocation of resources of funds but we definitely want to have Five Star come under 50% of our portfolio and we would like to continue to diversify in the medical office. Other areas we’ve considered but have just not had the right opportunities to invest in, say hospitals or multi-located clinics.

Kevin Ellich – RBC Capital Markets

Is that something you would consider, the hospitals and the multi-location clinics?

David Hegarty

Definitely clinics. Hospitals would have to be the right circumstance. [Elpacs] we’re not particularly interested in but more of an acute care situation would be something we would have an interest in.

Operator

Your next question comes from Omotayo Okusanya – Jefferies & Co.

Omotayo Okusanya – Jefferies & Co.

The participating rent that some of your leases have, could you walk me through how much of your leases have that aspect to them and a better sense of where you expect some of that participating rent to potentially start to hit your bottom line? That’s one thing I’ve never been very clear on.

David Hegarty

Almost every single senior living asset we have has some formula for rental increases, be it CPI or fixed or percentage rent. But all of the Sunrise properties and almost all of the Five Star properties have a percentage of rent formula and the way it works is the yearly required rate, it takes a little while for the operator to change over to the way they run the business and so on.

So we have the next full year be their base year and so for instance we have 30 properties we bought in 2008. They are going to have 2009 as their base year. And then beginning in the first quarter of 2010 we will get 4% of the growth in revenues at those properties in excess of what their revenues were in 2009 at those properties.

So hopefully as the economy picks up and I can see they can start to push rates, we see more participation and that helps us at the bottom line level. I think you can see if you look back over the trends for the last couple of years, we were adding $2 million per year of percentage rent that really dropped to the bottom line.

This past year it only went up by $600,000 and its obviously because 2009 you could not raise rates and occupancy was under pressure.

Omotayo Okusanya – Jefferies & Co.

So what you get for ’09 will remain the base year for the life of the lease and if you compare that base year versus what revenues were up for any particular year we are in.

David Hegarty

That’s correct.

Omotayo Okusanya – Jefferies & Co.

So literally if they keep improving over the course of the next ten years you just keep getting much more.

David Hegarty

Correct. And the better they do, the better we do.

Omotayo Okusanya – Jefferies & Co.

I know you didn’t give any sense of guidance but would you say given your overall outlook for acquisitions whatever that may be you expect your typical growth pattern again in 2010 or do you think it’s a year where you may show incremental growth because you’re seeing a better than expected acquisition outlook?

David Hegarty

It’s so hard to tell. At the beginning of this year just the activity was a lot quieter and I think that’s true across all the real estate sectors not just senior housing and I think a lot of that has to do with the debt markets and the fact that nobody wants to come to market with a property right now. They’re probably not going to get the best pricing that they could get so everybody is extending and trying to find ways to not come to market with properties.

At the present time, the terribly robust investment opportunity pipeline, I see a lot more singles than doubles type transactions and we don’t give guidance but if you looked at us last quarter we indicated that at $0.41 we had a negative arbitrage for $50 million of cash for half the quarter and those investments went to work during the middle to late part of the quarter so they will contribute more in Q1 2010 and the denominator for shares is six for the whole quarter so you have that number. I think you could pretty much come up with some ball park figures.

Operator

Your next question comes from Andrew Yu – Bank of America/Merrill Lynch.

Andrew Yu – Bank of America/Merrill Lynch

I had a follow up question regarding the capital markets. Are you looking at the unsecured debt market at all and if you were to tap the unsecured debt market what rate do you think you can get a 10 year unsecured for?

David Hegarty

We’re always monitoring the market both on a debt and equity side and so on but we frankly don’t have capital needs that would warrant us to go to the market at the present time. So if we just took a casual look, I think if you had a live deal, real deal, you’re going to get more accurate pricing.

And again, it depends on what the rating agencies would rate it. So it’s very tough to tell. I think we probably I’d say it would probably be around 300 or something over Treasuries. Again it would be tough to tell how that might translate into the cost of debt.

Andrew Yu – Bank of America/Merrill Lynch

What about in terms of GSE financing? Where is that if you were to get an apples to apples comparison like a 10 year GSE financing?

David Hegarty

It’s pretty much hanging steady at around 6.5% range.

Operator

There are no further questions. Mr. Hegarty I’ll turn the conference back over to you.

David Hegarty

Thank you all very much for joining us today. I know it’s been a long busy day and we look forward to catching up with you on our first conference call in early May.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Senior Housing Properties Trust Q4 2009 Earnings Call Transcript
This Transcript
All Transcripts