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.
not trade down big time on this news. I think we are
near a bottom on SNH price.
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.
way, I own LTC preferreds and MT at about cuirrent
prices. Would you avoid either of these at this time?
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.
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.
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!
by the $19M? :-)
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.
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.
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!