|
T
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Delaware
|
20-3068069
|
(State
or other jurisdiction
of
incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
330
North Wabash Avenue, Suite 1400, Chicago,
Illinois
|
60611
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer £
|
Accelerated
filer T
|
Non-accelerated
filer £
|
PAGE
|
||
PART
I. FINANCIAL
INFORMATION
|
||
Item
1. Financial Statements
|
||
Item
2.
|
||
Item
3.
|
||
Item
4.
|
||
PART
II.
|
OTHER
INFORMATION
|
|
Item
1.
|
||
Item
1A.
|
||
Item
6.
|
||
Signatures
|
September
30,
2007
|
December
31,
2006
|
|||||||
Assets
|
(Unaudited)
|
|||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ |
63,059
|
$ |
68,034
|
||||
Cash
and investments — restricted
|
93,337
|
61,116
|
||||||
Accounts
receivable, net
|
66,906
|
58,987
|
||||||
Deferred
tax asset
|
33,022
|
40,019
|
||||||
Prepaid
expenses and other current assets, net
|
38,587
|
42,076
|
||||||
Total
current assets
|
294,911
|
270,232
|
||||||
Property,
plant, equipment and leasehold intangibles, net
|
3,749,843
|
3,658,788
|
||||||
Cash
and investments — restricted
|
40,005
|
22,083
|
||||||
Goodwill
|
335,729
|
324,750
|
||||||
Other
intangible assets, net
|
265,972
|
292,448
|
||||||
Other
assets, net
|
159,293
|
174,154
|
||||||
Total
assets
|
$ |
4,845,753
|
$ |
4,742,455
|
||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Current
portion of long-term debt
|
$ |
25,933
|
$ |
20,869
|
||||
Trade
accounts payable
|
14,006
|
15,860
|
||||||
Accrued
expenses
|
166,017
|
155,577
|
||||||
Refundable
entrance fees
|
200,624
|
198,613
|
||||||
Tenant
security deposits
|
30,897
|
24,342
|
||||||
Deferred
revenue and entrance fee revenue
|
43,521
|
47,056
|
||||||
Dividends
payable
|
51,838
|
46,588
|
||||||
Total
current liabilities
|
532,836
|
508,905
|
||||||
Long-term
debt, less current portion
|
1,978,484
|
1,690,570
|
||||||
Line
of credit
|
231,000
|
163,500
|
||||||
Deferred
entrance fee revenue
|
73,733
|
70,479
|
||||||
Deferred
tax liability
|
316,928
|
399,134
|
||||||
Deferred
liabilities
|
114,189
|
98,673
|
||||||
Other
liabilities
|
68,594
|
42,581
|
||||||
Total
liabilities
|
3,315,764
|
2,973,842
|
||||||
Minority
interests
|
3,624
|
4,601
|
||||||
Commitments
and contingencies
|
||||||||
Stockholders’
Equity
|
||||||||
Preferred
stock, $.01 par value, 50,000,000 shares authorized at September
30, 2007
and December 31, 2006; no shares issued and outstanding
|
—
|
—
|
||||||
Common
stock, $.01 par value, 200,000,000 shares authorized at September
30, 2007
and December 31, 2006; 105,004,139 shares and 104,542,648 shares
issued
and outstanding (including 3,401,808 and 3,282,000 unvested restricted
shares), respectively
|
1,050
|
1,045
|
||||||
Additional
paid-in-capital
|
1,810,460
|
1,934,571
|
||||||
Accumulated
deficit
|
(283,455 | ) | (170,713 | ) | ||||
Accumulated
other comprehensive loss
|
(1,690 | ) | (891 | ) | ||||
Total
stockholders’ equity
|
1,526,365
|
1,764,012
|
||||||
Total
liabilities and stockholders’ equity
|
$ |
4,845,753
|
$ |
4,742,455
|
Three
Months Ended
September 30, |
Nine
Months Ended
September 30, |
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenue
|
||||||||||||||||
Resident
fees
|
$ |
463,101
|
$ |
385,617
|
$ |
1,365,061
|
$ |
874,495
|
||||||||
Management
fees
|
1,493
|
1,426
|
4,777
|
3,158
|
||||||||||||
Total
revenue
|
464,594
|
387,043
|
1,369,838
|
877,653
|
||||||||||||
Expense
|
||||||||||||||||
Facility
operating expense (excluding depreciation and amortization of $60,518,
$56,866, $187,959 and $109,888, respectively)
|
294,997
|
245,192
|
861,672
|
543,418
|
||||||||||||
General
and administrative expense (including non-cash stock-based compensation
expense of $7,138, $5,852, $26,150 and $12,625,
respectively)
|
34,733
|
29,248
|
111,144
|
73,458
|
||||||||||||
Facility
lease expense
|
67,708
|
63,623
|
203,365
|
155,980
|
||||||||||||
Depreciation
and amortization
|
79,235
|
60,883
|
234,690
|
114,129
|
||||||||||||
Total
operating expense
|
476,673
|
398,946
|
1,410,871
|
886,985
|
||||||||||||
Loss
from operations
|
(12,079 | ) | (11,903 | ) | (41,033 | ) | (9,332 | ) | ||||||||
Interest
income
|
1,695
|
2,032
|
5,077
|
3,709
|
||||||||||||
Interest
expense
|
||||||||||||||||
Debt
|
(38,472 | ) | (29,287 | ) | (107,002 | ) | (68,521 | ) | ||||||||
Amortization
of deferred financing costs
|
(1,151 | ) | (1,141 | ) | (4,878 | ) | (3,179 | ) | ||||||||
Change
in fair value of derivatives and amortization
|
(43,731 | ) | (1,840 | ) | (30,893 | ) | (1,422 | ) | ||||||||
Loss
on extinguishment of debt
|
—
|
(1,414 | ) | (803 | ) | (2,748 | ) | |||||||||
Equity
in loss of unconsolidated ventures
|
(309 | ) | (1,649 | ) | (2,362 | ) | (2,286 | ) | ||||||||
Other
non-operating income
|
—
|
—
|
238
|
—
|
||||||||||||
Loss
before income taxes
|
(94,047 | ) | (45,202 | ) | (181,656 | ) | (83,779 | ) | ||||||||
Benefit
for income taxes
|
35,125
|
14,146
|
68,408
|
13,487
|
||||||||||||
Loss
before minority interest
|
(58,922 | ) | (31,056 | ) | (113,248 | ) | (70,292 | ) | ||||||||
Minority
interest
|
(5 | ) | (89 | ) |
506
|
(438 | ) | |||||||||
Net
loss
|
$ | (58,927 | ) | $ | (31,145 | ) | $ | (112,742 | ) | $ | (70,730 | ) | ||||
Basic
and diluted loss per share
|
$ | (0.58 | ) | $ | (0.34 | ) | $ | (1.11 | ) | $ | (0.96 | ) | ||||
Weighted
average shares used in computing basic and diluted loss per
share
|
101,564
|
91,640
|
101,463
|
73,999
|
||||||||||||
Dividends
declared per share
|
$ |
0.50
|
$ |
0.40
|
$ |
1.45
|
$ |
1.10
|
Nine
Months Ended
September 30, |
||||||||
2007
|
2006
|
|||||||
Cash
Flows from Operating Activities
|
||||||||
Net
loss
|
$ | (112,742 | ) | $ | (70,730 | ) | ||
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
||||||||
Non-cash
portion of loss on extinguishment of debt
|
—
|
2,748
|
||||||
Depreciation
and amortization
|
239,568
|
117,308
|
||||||
Minority
interest
|
(506 | ) |
438
|
|||||
(Gain)
loss on sale of assets
|
(457 | ) |
123
|
|||||
Equity
in loss of unconsolidated ventures
|
2,362
|
2,286
|
||||||
Change
in future service obligations
|
1,320
|
—
|
||||||
Distributions
from unconsolidated ventures from cumulative share of net
earnings
|
1,429
|
—
|
||||||
Amortization
of deferred gain
|
(3,255 | ) | (3,259 | ) | ||||
Amortization
of entrance fees
|
(14,222 | ) | (3,398 | ) | ||||
Proceeds
from deferred entrance fee revenue
|
14,315
|
4,329
|
||||||
Deferred
income tax benefit
|
(68,715 | ) | (14,457 | ) | ||||
Change
in deferred lease liability
|
18,815
|
16,622
|
||||||
Change
in fair value of derivatives and amortization
|
30,893
|
1,422
|
||||||
Stock-based
compensation
|
26,150
|
12,625
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable, net
|
(5,607 | ) | (24,131 | ) | ||||
Prepaid
expenses and other assets, net
|
(1,133 | ) |
1,419
|
|||||
Accounts
payable and accrued expenses
|
8,368
|
18,665
|
||||||
Tenant
refundable fees and security deposits
|
5,404
|
2,709
|
||||||
Other
|
(3,578 | ) | (11,042 | ) | ||||
Net
cash provided by operating activities
|
138,409
|
53,677
|
||||||
Cash
Flows from Investing Activities
|
||||||||
Decrease
in lease security deposits and lease acquisition deposits,
net
|
1,806
|
1,433
|
||||||
(Increase)
decrease in cash and investments — restricted
|
(53,393 | ) |
18,278
|
|||||
Additions
to property, plant, equipment and leasehold intangibles, net of related
payables
|
(113,557 | ) | (39,580 | ) | ||||
Acquisition
of assets, net of related payables and cash received
|
(167,621 | ) | (1,799,115 | ) | ||||
Issuance
of notes receivable, net
|
(13,714 | ) | (2,331 | ) | ||||
Investment
in unconsolidated ventures
|
(1,617 | ) | (637 | ) | ||||
Distributions
received from unconsolidated ventures
|
1,819
|
1,355
|
||||||
Net
cash used in investing activities
|
(346,277 | ) | (1,820,597 | ) | ||||
Cash
Flows from Financing Activities
|
||||||||
Proceeds
from debt
|
395,276
|
739,221
|
||||||
Repayment
of debt and capital lease obligation
|
(54,246 | ) | (221,616 | ) | ||||
Buyout
of capital lease obligation
|
(51,114 | ) |
—
|
|||||
Proceeds
from line of credit
|
451,500
|
215,000
|
||||||
Repayment
of line of credit
|
(384,000 | ) | (215,000 | ) | ||||
Payment
of dividends
|
(144,990 | ) | (62,881 | ) | ||||
Payment
of financing costs, net of related payables
|
(10,248 | ) | (19,014 | ) | ||||
Other
|
(815 | ) |
—
|
|||||
Refundable
entrance fees:
|
||||||||
Proceeds
from refundable entrance fees
|
17,018
|
6,900
|
||||||
Refunds
of entrance fees
|
(15,488 | ) | (4,540 | ) | ||||
Proceeds
from issuance of common stock, net
|
—
|
1,353,863
|
||||||
Costs
incurred related to follow-on equity offering
|
—
|
(2,435 | ) | |||||
Net
cash provided by financing activities
|
202,893
|
1,789,498
|
||||||
Net
(decrease) increase in cash and cash equivalents
|
(4,975 | ) |
22,578
|
|||||
Cash
and cash equivalents at beginning of period
|
68,034
|
77,682
|
||||||
Cash
and cash equivalents at end of period
|
$ |
63,059
|
$ |
100,260
|
Grants
|
Value
Per Share
|
Total
Value
|
||||||||||
Three
months ended March 31, 2007
|
53,000
|
$ |
45.02
|
$ |
2,399
|
|||||||
Three
months ended June 30, 2007
|
544,000
|
45.02
- 46.06
|
25,023
|
|||||||||
Three
months ended September 30, 2007
|
32,000
|
38.96
|
1,250
|
Independent
Living
|
Assisted
Living
|
Retirement
Centers/CCRCs
|
Total
|
|||||||||||||
Balance
at December 31, 2006
|
$ |
8,118
|
$ |
101,921
|
$ |
214,711
|
$ |
324,750
|
||||||||
Additions
|
—
|
—
|
9,000
|
9,000
|
||||||||||||
Adjustments
|
—
|
862
|
1,117
|
1,979
|
||||||||||||
Balance
at September 30, 2007
|
$ |
8,118
|
$ |
102,783
|
$ |
224,828
|
$ |
335,729
|
September
30, 2007
|
December
31, 2006
|
|||||||||||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
|
|||||||||||||||||||
Facility
purchase options
|
$ |
147,682
|
$ | (1,844 | ) | $ |
145,838
|
$ |
147,682
|
$ |
—
|
$ |
147,682
|
|||||||||||
Other
intangible assets, net
|
158,041
|
(37,907 | ) |
120,134
|
158,849
|
(14,083 | ) |
144,766
|
||||||||||||||||
Total
|
$ |
305,723
|
$ | (39,751 | ) | $ |
265,972
|
$ |
306,531
|
$ | (14,083 | ) | $ |
292,448
|
September
30,
2007
|
December
31,
2006
|
|||||||
Land
|
$ |
264,679
|
$ |
236,945
|
||||
Buildings
and improvements
|
2,635,889
|
2,301,841
|
||||||
Furniture
and equipment
|
189,050
|
137,583
|
||||||
Resident
and operating lease intangibles
|
583,532
|
577,547
|
||||||
Assets
under capital and financing leases
|
511,924
|
654,337
|
||||||
4,185,074
|
3,908,253
|
|||||||
Accumulated
depreciation and amortization
|
(435,231 | ) | (249,465 | ) | ||||
Property,
plant, equipment and leasehold intangibles, net
|
$ |
3,749,843
|
$ |
3,658,788
|
Seller
|
Closing
Date
|
Purchase
Price,
Excluding Fees, Expenses and Assumption
of Debt
($
in millions)
|
Segment
|
|||
McClaren
Medical Management, Inc. and FP Flint, LLC
|
January
24, 2007
|
$ |
3.9
|
Assisted
Living
|
||
American
Senior Living of Jacksonville-SNF, LLC
|
February
1, 2007
|
6.8
|
Retirement
Centers/CCRCs
|
|||
1st
Choice Home
Health, Inc.
|
February
15, 2007
|
3.0
|
Retirement
Centers/CCRCs, Assisted Living and Independent Living
|
|||
Health
Care Property Investors, Inc.
|
February
28, 2007
|
9.5
|
Assisted
Living
|
|||
Chancellor
Health Care of California L.L.C.
|
April
1, 2007
|
10.8
|
Independent
Living
|
|||
Seminole
Nursing Pavilion and Seminole Properties
|
April
4, 2007
|
51.1
|
Retirement
Centers/CCRCs
|
|||
Cleveland
Retirement Properties, LLC and Countryside ALF, LLC
|
April
18, 2007
|
102.0
|
Retirement
Centers/CCRCs
|
|||
Paradise
Retirement Center, L.P.
|
May
31, 2007
|
15.3
|
Independent
Living
|
|||
Darby
Square Property, Ltd and Darby Square Services, LLC
|
July
1, 2007
|
7.5
|
Retirement
Centers/CCRCs
|
|||
Health
Care REIT, Inc.
|
August
31, 2007
|
9.8
|
Assisted
Living
|
|||
Total
|
$ |
219.7
|
September
30,
2007
|
December
31,
2006
|
|||||||
Mortgage
notes payable due 2008 through 2039; weighted average interest rate
of
6.85% in 2007 (weighted average interest rate of 6.98% in
2006)
|
$ |
709,810
|
$ |
490,997
|
||||
Mortgages
payable due 2009 through 2038; weighted average interest rate of
7.12% in
2007 (weighted average interest rate of 6.57% in 2006)
|
74,555
|
74,571
|
$150,000
Series A notes payable, secured by five facilities, bearing interest
at
LIBOR plus 0.88% effective August 2006 (3.05% prior to that date),
payable
in monthly installments of interest only until August 2011 and payable
in
monthly installments of principal and interest through maturity in
August
2013, and secured by a $3.0 million letter of credit
|
150,000
|
150,000
|
||||||
Mortgages
payable due 2012, weighted average interest rate of 5.64% and 5.37%
in
2007 and 2006, respectively, payable interest only through July 2010
and
payable in monthly installments of principal and interest through
maturity
in July 2012, secured by the FIT REN portfolio(1)
|
212,407
|
171,000
|
||||||
Mortgages
payable due 2010, bearing interest at LIBOR plus 2.25% effective
May 1,
2006 (3.0% prior to that date), payable in monthly installments of
interest only until April 2009 and payable in monthly installments
of
principal and interest through maturity in April 2010, secured by
the
Fortress CCRC Portfolio(1)
|
105,756
|
105,756
|
||||||
Variable
rate tax-exempt bonds credit-enhanced by Fannie Mae (weighted average
interest rates of 5.04% and 4.91% in 2007 and 2006, respectively),
due
2032, payable interest only until maturity, secured by the Chambrel
portfolio(1)
|
100,841
|
100,841
|
||||||
Capital
and financing lease obligations payable through 2020; weighted average
interest rate of 9.18% in 2007 (weighted average interest rate of
8.91% in
2006)
|
302,318
|
371,346
|
||||||
Mortgage
note, bearing interest at a variable rate of LIBOR plus 0.70%, payable
interest only through maturity in August 2012; the note is secured
by 16
of the Company’s facilities and an $11.5 million guaranty by the
Company
|
333,500
|
225,000
|
||||||
Mezzanine
loan payable to Brookdale Senior Housing, LLC joint venture with
respect
to The Heritage at Gaines Ranch facility, payable to the extent of
all
available cash flow (as defined)
|
12,739
|
12,739
|
||||||
Mortgages
payable due 2010; interest rate of 7.20%, secured by the limited
partnerships consolidated pursuant to EITF 04-5 (weighted average
interest
rate of 6.81% in 2006)
|
2,491
|
9,189
|
||||||
Total
debt
|
2,004,417
|
1,711,439
|
||||||
Less
current portion of long-term debt
|
25,933
|
20,869
|
||||||
Total
long-term debt
|
$ |
1,978,484
|
$ |
1,690,570
|
(1)
|
See
the Company’s Annual Report on Form 10-K for the year ended December 31,
2006 for a description of the referenced
portfolios.
|
Current
notional balance
|
$ |
1,729,120
|
||
Highest
possible notional
|
$ |
1,729,120
|
||
Lowest
interest rate
|
3.62 | % | ||
Highest
interest rate
|
5.51 | % | ||
Average
fixed rate
|
5.05 | % | ||
Earliest
maturity date
|
2008
|
|||
Latest
maturity date
|
2014
|
|||
Weighted
average original maturity
|
5.6
years
|
|||
Estimated
asset fair value (included in other assets, net at September 30,
2007)
|
$ |
973
|
||
Estimated
liability fair value (included in other liabilities at September
30,
2007)
|
$ | (31,172 | ) |
Nine
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||
Interest
paid
|
$ |
105,759
|
$ |
64,968
|
||||
Income
taxes paid
|
$ |
637
|
$ |
335
|
||||
Write-off
of deferred costs
|
$ |
—
|
$ |
5,001
|
||||
Supplemental
Schedule of Non-cash Operating, Investing and Financing
Activities:
|
||||||||
Consolidation
of limited partnerships pursuant to EITF 04-5 on January 1,
2006:
|
||||||||
Property,
plant, equipment and leasehold intangibles, net
|
$ |
—
|
$ |
31,645
|
||||
Accounts
receivable and other
|
—
|
1,410
|
||||||
Cash
and investments-restricted
|
—
|
1,204
|
||||||
Accrued
expenses and other
|
—
|
(2,245 | ) | |||||
Tenant
refundable fees and security deposits
|
—
|
(177 | ) | |||||
Debt
|
—
|
(19,723 | ) | |||||
Minority
interest
|
—
|
(12,114 | ) | |||||
Net
|
$ |
—
|
$ |
—
|
||||
De-consolidation
of leased development property:
|
||||||||
Property,
plant, equipment and leasehold intangibles, net
|
$ | (2,978 | ) | $ |
—
|
|||
Debt
|
2,978
|
—
|
||||||
Net
|
$ |
—
|
$ |
—
|
||||
Acquisition
of assets, net of related payables and cash received, net:
|
||||||||
Cash
and investments-restricted
|
$ |
387
|
$ |
50,059
|
||||
Accounts
receivable
|
64
|
25,302
|
||||||
Property,
plant, equipment and leasehold intangibles, net
|
173,609
|
2,362,413
|
||||||
Investment
in unconsolidated ventures
|
(1,342 | ) |
—
|
|||||
Goodwill
|
3,395
|
272,422
|
||||||
Other
intangible assets, net
|
(668 | ) |
306,531
|
|||||
Trade
accounts payable, accrued expenses and other
|
(1,458 | ) |
—
|
|||||
Debt
obligations
|
(5,273 | ) | (291,264 | ) | ||||
Capital
and financing lease obligations
|
—
|
(308,855 | ) | |||||
Deferred
tax liability
|
—
|
(420,925 | ) | |||||
Minority
interest
|
650
|
—
|
||||||
Other,
net
|
(1,743 | ) | (196,568 | ) | ||||
Acquisition
of assets, net of related payables and cash received
|
$ |
167,621
|
$ |
1,799,115
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Cash
basis payment
|
$ |
62,342
|
$ |
58,585
|
$ |
187,805
|
$ |
142,617
|
||||||||
Straight-line
expense
|
6,451
|
6,124
|
18,815
|
16,622
|
||||||||||||
Amortization
of deferred gain
|
(1,085 | ) | (1,086 | ) | (3,255 | ) | (3,259 | ) | ||||||||
Facility
lease expense
|
$ |
67,708
|
$ |
63,623
|
$ |
203,365
|
$ |
155,980
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Net
loss
|
$ | (58,927 | ) | $ | (31,145 | ) | $ | (112,742 | ) | $ | (70,730 | ) | ||||
Unrealized
gain on derivatives
|
—
|
(13,261 | ) |
—
|
(4,070 | ) | ||||||||||
Reclassification
of net gains on derivatives into earnings
|
(393 | ) |
—
|
(1,179 | ) |
—
|
||||||||||
Amortization
of payments from settlement of forward interest swaps
|
94
|
94
|
282
|
282
|
||||||||||||
Other
|
(134 | ) |
—
|
98
|
—
|
|||||||||||
Total
comprehensive loss
|
$ | (59,360 | ) | $ | (44,312 | ) | $ | (113,541 | ) | $ | (74,518 | ) |
§
|
Independent
Living. The Company’s independent living facilities
are primarily designed for middle to upper income senior citizens
age 70
and older who desire an upscale residential environment providing
the
highest quality of service. The majority of the Company’s independent
living facilities consist of both independent living and assisted
living
units in a single facility, which allows residents to “age-in-place” by
providing them with a continuum of senior independent and assisted
living
services.
|
§
|
Assisted
Living. The Company’s assisted living facilities
offer housing and 24-hour assistance with activities of daily life
to
mid-acuity frail and elderly residents. The Company’s assisted living
facilities include both freestanding, multi-story facilities and
freestanding, single-story facilities. The Company also operates
memory
care facilities, which are freestanding assisted living facilities
specially designed for residents with Alzheimer's disease and other
dementias.
|
§
|
Retirement
Centers/CCRCs. The Company’s retirement
centers/CCRCs are large communities that offer a variety of living
arrangements and services to accommodate all levels of physical ability
and health. Most of the Company’s retirement centers/CCRCs have
independent living, assisted living and skilled nursing available
on one
campus, and some also include memory care and Alzheimer's
units.
|
§
|
Management
Services. The Company’s management services segment
includes facilities owned by others and operated by the Company pursuant
to management agreements. Under the Company’s management agreements for
these facilities, the Company receives management fees as well as
reimbursed expenses, which represent the reimbursement of certain
expenses
the Company incurs on behalf of the
owners.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenue(1)
|
||||||||||||||||
Independent
Living
|
$ |
114,251
|
$ |
101,816
|
$ |
333,558
|
$ |
288,220
|
||||||||
Assisted
Living
|
197,975
|
175,937
|
588,289
|
434,034
|
||||||||||||
Retirement
Centers/CCRCs
|
150,875
|
107,864
|
443,214
|
152,241
|
||||||||||||
Management
Services
|
1,493
|
1,426
|
4,777
|
3,158
|
||||||||||||
$ |
464,594
|
$ |
387,043
|
$ |
1,369,838
|
$ |
877,653
|
|||||||||
Segment
operating income(2)
|
||||||||||||||||
Independent
Living
|
$ |
48,595
|
$ |
40,939
|
$ |
145,594
|
$ |
123,768
|
||||||||
Assisted
Living
|
68,274
|
65,211
|
212,134
|
164,474
|
||||||||||||
Retirement
Centers/CCRCs
|
51,235
|
34,275
|
145,661
|
42,835
|
||||||||||||
Management
Services
|
1,045
|
998
|
3,344
|
2,211
|
||||||||||||
$ |
169,149
|
$ |
141,423
|
$ |
506,733
|
$ |
333,288
|
|||||||||
General
and administrative (including non-cash stock-based compensation
expense)(3)
|
$ |
34,285
|
$ |
28,820
|
$ |
109,711
|
$ |
72,511
|
||||||||
Facility
lease expense
|
67,708
|
63,623
|
203,365
|
155,980
|
||||||||||||
Deprecation
and amortization
|
79,235
|
60,883
|
234,690
|
114,129
|
||||||||||||
Loss
from operations
|
$ | (12,079 | ) | $ | (11,903 | ) | $ | (41,033 | ) | $ | (9,332 | ) | ||||
Total
Assets
|
||||||||||||||||
Independent
living
|
$ |
1,149,070
|
$ |
1,177,943
|
||||||||||||
Assisted
living
|
1,300,754
|
1,198,495
|
||||||||||||||
Retirement
Centers/CCRCs
|
2,092,058
|
1,951,078
|
||||||||||||||
Corporate
and Management Services
|
303,871
|
328,140
|
||||||||||||||
$ |
4,845,753
|
$ |
4,655,656
|
(1)
|
All
revenue is earned from external third parties in the United
States.
|
(2)
|
Segment
operating income is defined as segment revenues less segment operating
expenses (excluding depreciation and
amortization).
|
(3)
|
Net
of general and administrative costs allocated to management services
reporting segment.
|
Three
Months Ended
September
30,
|
||||||||||||||||
2007
|
2006
|
Increase
(Decrease)
|
%
Increase
(Decrease)
|
|||||||||||||
Statement
of Operations Data:
|
||||||||||||||||
Revenue
|
||||||||||||||||
Resident
fees
|
||||||||||||||||
Independent
Living
|
$ |
114,251
|
$ |
101,816
|
$ |
12,435
|
12.2 | % | ||||||||
Assisted
Living
|
197,975
|
175,937
|
22,038
|
12.5 | % | |||||||||||
Retirement
Centers/CCRCs
|
150,875
|
107,864
|
43,011
|
39.9 | % | |||||||||||
Total
resident fees
|
463,101
|
385,617
|
77,484
|
20.1 | % | |||||||||||
Management
fees
|
1,493
|
1,426
|
67
|
4.7 | % | |||||||||||
Total
revenue
|
464,594
|
387,043
|
77,551
|
20.0 | % |
Expense | ||||||||||||||||
Facility operating expense | ||||||||||||||||
Independent
Living
|
65,656
|
60,877
|
4,779
|
7.9 | % | |||||||||||
Assisted
Living
|
129,701
|
110,726
|
18,975
|
17.1 | % | |||||||||||
Retirement
Centers/CCRCs
|
99,640
|
73,589
|
26,051
|
35.4 | % | |||||||||||
Total
facility operating expense
|
294,997
|
245,192
|
49,805
|
20.3 | % | |||||||||||
General
and administrative expense
|
34,733
|
29,248
|
5,485
|
18.8 | % | |||||||||||
Facility
lease expense
|
67,708
|
63,623
|
4,085
|
6.4 | % | |||||||||||
Depreciation
and amortization
|
79,235
|
60,883
|
18,352
|
30.1 | % | |||||||||||
Total
operating expense
|
476,673
|
398,946
|
77,727
|
19.5 | % | |||||||||||
Loss
from operations
|
(12,079 | ) | (11,903 | ) | (176 | ) | (1.5 | %) | ||||||||
Interest
income
|
1,695
|
2,032
|
(337 | ) | (16.6 | %) | ||||||||||
Interest
expense
|
||||||||||||||||
Debt
|
(38,472 | ) | (29,287 | ) | (9,185 | ) | (31.4 | %) | ||||||||
Amortization
of deferred financing costs
|
(1,151 | ) | (1,141 | ) | (10 | ) | (0.9 | %) | ||||||||
Change
in fair value of derivatives and amortization
|
(43,731 | ) | (1,840 | ) | (41,891 | ) | (2,276.7 | %) | ||||||||
Loss
on extinguishment of debt
|
—
|
(1,414 | ) |
1,414
|
100.0 | % | ||||||||||
Equity
in loss of unconsolidated ventures
|
(309 | ) | (1,649 | ) |
1,340
|
81.3 | % | |||||||||
Loss
before income taxes
|
(94,047 | ) | (45,202 | ) | (48,845 | ) | (108.1 | %) | ||||||||
Benefit
for income taxes
|
35,125
|
14,146
|
20,979
|
148.3 | % | |||||||||||
Loss
before minority interest
|
(58,922 | ) | (31,056 | ) | (27,866 | ) | (89.7 | %) | ||||||||
Minority
interest
|
(5 | ) | (89 | ) |
84
|
94.4 | % | |||||||||
Net
loss
|
$ | (58,927 | ) | $ | (31,145 | ) | $ | (27,782 | ) | (89.2 | %) | |||||
Selected
Operating and Other Data:
|
||||||||||||||||
Total
number of facilities (at end of period)
|
550
|
545
|
5
|
0.9 | % | |||||||||||
Total
units/beds operated(1)
|
52,082
|
51,090
|
992
|
1.9 | % | |||||||||||
Owned/leased
facilities units/beds
|
47,553
|
46,566
|
987
|
2.1 | % | |||||||||||
Owned/leased
facilities occupancy rate:
|
||||||||||||||||
Period
end
|
91.0 | % | 91.1 | % | (0.1 | %) | (0.1 | %) | ||||||||
Weighted
average
|
90.8 | % | 91.1 | % | (0.3 | %) | (0.3 | %) | ||||||||
Average
monthly revenue per unit/bed(2)
|
$ |
3,600
|
$ |
3,319
|
$ |
281
|
8.5 | % | ||||||||
Selected
Segment Operating and Other Data:
|
||||||||||||||||
Independent
Living
|
||||||||||||||||
Number
of facilities (period end)
|
70
|
65
|
5
|
7.7 | % | |||||||||||
Total
units/beds(1)
|
12,331
|
11,824
|
507
|
4.3 | % | |||||||||||
Occupancy
rate:
|
||||||||||||||||
Period
end
|
92.2 | % | 92.8 | % | (0.6 | %) | (0.6 | %) | ||||||||
Weighted
average
|
92.5 | % | 92.7 | % | (0.2 | %) | (0.2 | %) | ||||||||
Average
monthly revenue per unit/bed(2)
|
$ |
3,297
|
$ |
3,050
|
$ |
247
|
8.1 | % | ||||||||
Assisted
Living
|
||||||||||||||||
Number
of facilities (period end)
|
409
|
408
|
1
|
0.2 | % | |||||||||||
Total
units/beds(1)
|
21,086
|
20,974
|
112
|
0.5 | % | |||||||||||
Occupancy
rate:
|
||||||||||||||||
Period
end
|
90.1 | % | 90.4 | % | (0.3 | %) | (0.3 | %) | ||||||||
Weighted
average
|
90.0 | % | 90.3 | % | (0.3 | %) | (0.3 | %) | ||||||||
Average
monthly revenue per unit/bed(2)
|
$ |
3,465
|
$ |
3,259
|
$ |
206
|
6.3 | % | ||||||||
Retirement
Centers/CCRCs
|
||||||||||||||||
Number
of facilities (period end)
|
48
|
48
|
—
|
—
|
||||||||||||
Total
units/beds(1)
|
14,136
|
13,768
|
368
|
2.7 | % | |||||||||||
Occupancy
rate:
|
||||||||||||||||
Period
end
|
91.4 | % | 91.4 | % |
—
|
—
|
||||||||||
Weighted
average
|
90.7 | % | 90.8 | % | (0.1 | %) | (0.1 | %) | ||||||||
Average
monthly revenue per unit/bed(2)
|
$ |
4,102
|
$
|
3,867 | $ | 235 | 6.1 | % |
Management
Services
|
||||||||||||||||
Number
of facilities (period end)
|
23
|
24
|
(1 | ) | (4.2 | )% | ||||||||||
Total
units/beds(1)
|
4,529
|
4,524
|
5
|
0.1 | % | |||||||||||
Occupancy
rate:
|
||||||||||||||||
Period
end
|
83.2 | % | 92.0 | % | (8.8 | %) | (9.6 | %) | ||||||||
Weighted
average
|
82.9 | % | 92.1 | % | (9.2 | %) | (10.0 | %) |
Selected
Entrance Fee Data:
|
||||||||||||||||
Non-refundable
entrance fees sales
|
$ |
5,673
|
$ |
3,716
|
$ |
1,957
|
52.66 | % | ||||||||
Refundable
entrance fees sales
|
8,696
|
4,144
|
4,552
|
109.85 | % | |||||||||||
Total
entrance fee receipts
|
14,369
|
7,860
|
6,509
|
82.81 | % | |||||||||||
Refunds
|
(5,084 | ) | (3,529 | ) | (1,555 | ) | (44.06 | )% | ||||||||
Net
entrance fees
|
$ |
9,285
|
$ |
4,331
|
$ |
4,954
|
114.38 | % |
(1)
|
Total
units/beds operated represent the total units/beds operated as of
the end
of the period.
|
(2)
|
Average
monthly revenue per unit/bed represents the average of the total
monthly
revenues, excluding amortization of entrance fees, divided by average
occupied units/beds. Including as revenue community fee
receipts deferred under generally accepted accounting principles
and
excluding amortization of community fees and entrance fees, the average
monthly revenue per unit for the three months ended was $3,639 and
$3,331,
$3,347 and $3,050, $3,525 and $3,259, and $4,099 and $3,916 for Total
Units/Beds, Independent Living, Assisted Living and Retirement
Centers/CCRCs, respectively.
|
Three
Months Ended
September
30,
|
||||||||
2007
|
2006
|
|||||||
Resident
fee revenues
|
$ |
463,101
|
$ |
385,617
|
||||
Resident
fee revenues under management
|