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Senior Housing Properties (SNH) Message Board

  • COOLREIT COOLREIT Jan 18, 2000 7:34 PM Flag

    Mariner announced their bancruptcy

    today but they received $150 million in debtor
    financing. That means there will be money to pay the SNH
    rent or lose their $15 million deposit. If Chase
    Manhattan came up with some of that money, I think they did
    some rigorous due diligence. I think Mariner will be
    around for some time to pay their rent. If they back out
    of lease they will lose their deposit.
    SNH did
    not trade down big time on this news. I think we are
    near a bottom on SNH price.

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    • From your Feb 8th post:<<In all honesty,
      I'm really getting fed up with these multiple aliases
      and daily spamming that Yahoo allows. Maybe I'll just
      stop sharing the fruits of my hours spent on analysis
      of these REITs with others here and save a lot of
      time. I'm not sure its worth it any more. I'll let each
      person do their own DD or else they can listen to some
      others here that don't have a clue of the situation,
      don't do proper due diligence, yet always have these
      crystal balls to predict future share prices and I'll sit
      back lurking and just buy more when the price
      I'm glad you continued to post. I've just spent the
      last hour reviewing all your posts here after
      iating your old posts on LTC. For every loudmouth jerk
      who criticizes you I'll bet there are 10 people like
      myself who appreciate and benefit from your help.
      There's a town idiot on every board and I find it best to
      ignore them. Debating them is a lost cause.
      By the
      way, I own LTC preferreds and MT at about cuirrent
      prices. Would you avoid either of these at this time?
      Thanks, -Z

    • Looks like the person that called me stupid was

      I didn't deduct depreciation as an expense but then
      added it back in to get FFO.

      Guess my brain
      wasn't fully engaged when I posted originally and my
      mistake should have been apparent to me when you
      corrected me but it wasn't. Oh well... must be getting old.

      Thanks pzupich.

    • NHY,
      For expenses I used $19M interest, $5M
      G&A, and $22M depreciation subtracted from $44M
      revenue to calculate income (2M). $0 income was close
      enough. To find FFO, I added back $22M depr.

      We'll find that 19M yet.

      Thanks NHY.

    • Will agree with you IF you can show me $44

      I used $44M revenue, just like you. For expenses I
      used $20M interest and $5M G&A. With initial debt at
      $200M at LIBOR + 2%, my $20M yearly interest is on
      target. Where's the other $19M in expenses you show come

      I used $20M depr. vs. your $22M, so
      that's close enough for comparable results.

      $19M difference at 26M shares = $.73 additional FFO
      added to your $.85 = $1.58. Using your 86% payout,
      thats $1.36 dividend at 50% income!

      Who goofed
      by the $19M? :-)

    • NHY,
      Nice post. I agree with everything except
      your FFO of $1.50. If SNH loses 50% of revenue, it
      will be left with about $44 million revenue per annum.
      Since costs are also about $44 million, income will be
      $0. FFO = income + depreciation. Depreciation is
      about $22 million. Divided by 26 million shares = FFO
      of $.85 per share. Sticking with the same payout
      ratio of 86%, annual dividend = $.73.

      As you
      correctly pointed out, the probability of this is about 0.
      Present shareholders of Integrated, Mariner, etc will
      lose everything. Creditors will own the companies that
      emerge from bankruptcy. They will negotiate for lower

    • If you would like to know more about guarantees,
      leases, leases cross collateral issues, and third party
      guarantees read the August 1999 registration statement &
      exhibits to the registration statement (it's about 800
      pages in the entirety).This will be a fun one to watch
      unfold.It appears that the lawyers will have their hand

      You might focus on the financial statements and
      exhibits section that outlines cross collateral issues,
      guarantees and/or with third parties.

      Because many of
      the entities giving cross collateralization , and or
      guarantees have changed names through merger or aq. it's
      hard to follow and relate to current successors(and
      know who guarantees what), and identify which
      properties are involved without a rather complex spread
      sheet. HRP was/is an easy one to analyze compared to
      Finally, this is certainly not a rec to buy or sell SNH

      Obviously the market took a dim view of the future of SNH
      today and an even worse one of OHI. This is my last
      post on the SNH Board for a while as I need to spend
      more time doing analysis with a friend on property by
      property cash flow, and talking to lawyers with experience
      in BK, master lease issues,and guarantees and less
      time thinking out loud here. Good luck to you all.

    • real or does your daddy know you are playing with the computer again?

    • The initial debt after the split was $200 Million
      on properties that cost $770 Million, that's about
      26%. I'm sure the properties are worth less now, but
      $428 Million of that are Marriott's and Brookdale's.
      So, I can't see how the debt can be too bad

    • We can only hope things are not as bad as they
      seem but with the recent announcement by Meditrust,
      can we expect better here? The big question is what
      is the actual amount of debt that SNH is responsible
      for now that the separation is complete. If it is not
      enormous then this is not a bad bet once the sustainable
      dividend is announced. Until then, I trust none of them.

    • I'm certainly not going to answer for officejrb,
      but in checking my notes, I didn't see anything
      relating to HCN.

      Mariner does have a $15 Mill.,
      deposit and Genesis also has a $235,000 deposit. One of
      the private tenants (Frontier) that is in Chapter 11,
      does has its rents guaranteed by Sun Healthcare.
      Unfortunately, Sun Healthcare is also in Chapter 11 so I'm not
      sure if that is worth anything at all. But Frontier
      only accounts for less than 3% of revenues.

      Now, on the positive side, if SNH only collects 50% of
      its scheduled income (not even remotely likely), it
      will still have a cash flow (FFO) of over $1.50 per

      But that is NOT the case. Companies in
      Chapter 11 must pay their rent for the properties they
      continue to operate. Those they decide not to operate, in
      their reorganization, will be turned back to SNH to
      find a new tenant to operate the business. So, while
      things at first glance may appear rather bleak, that is
      really not the case. SNH gets 34% of its rent from
      Marriott. Marriott only receives 6% of revenues from the
      Gov't. and its properties with SNH are 93% occupied. SNH
      gets another 12% from Brookdale who has all private
      pay patients and gets virtually ZERO from Medicare
      and Medicaid and a 95% occupancy. That's 46% of the
      rent right there. That means to get even to 50%, they
      only need to take in 4% of the 54% balance of rents
      scheduled to be collected. That is simply a ludicrous

      Even at 50% of income, this would result
      in sufficient FFO that SNH would not even have to
      cut the dividend in half. A more likely scenario is
      that SNH will reduce the dividend by maybe as much as
      20%-30%, but at todays price, that's still a 17%-20%

      Just trying to present some of the facts about SNH as
      I see them. If this post is considered by some as
      hyping SNH, so be it!

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