Good morning. And welcome to the Senior Housing Properties Trust Fourth Quarter Financial Results Conference Call. All participants will be listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Brad Shepherd, Director of Investor Relations. Please go ahead.

Thank you. Welcome to the Senior Housing Properties Trust call covering the fourth quarter 2016 results. Joining me today on today's call are David Hegarty, President and Chief Operating Officer; and Rick Siedel, Chief Financial Officer and Treasurer. Today's call includes a presentation by management, followed by a question-and-answer session. I would like to note that transcription, recording and retransmission of today's conference call are strictly prohibited without the prior written consent of Senior Housing. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based upon Senior Housing's present beliefs and expectations as of today, Monday, February 27th, 2017. The Company undertakes no obligation to revise or publicly release the results of any revisions to forward-looking statements made in today's conference call, other than through filings with the Securities and Exchange Commission or SEC. In addition, this call may contain non-GAAP numbers, including normalized funds from operation or normalized FFO and cash-based net operating income or cash NOI. A reconciliation of these non-GAAP figures to net income and the components to calculate AFFO, CAD, or FAD are available in our supplemental operating and financial data package found in 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 filings with the SEC. Investors are cautioned not to place undue reliance upon any forward-looking statements. Now I'd like the turn the call over to Dave.

Thank you, Brad, and good morning everyone and thank you for joining us today on our fourth quarter earnings call. Earlier this morning, we reported normalized funds from operations or normalized FFO of $0.50 per share for the fourth quarter compared to $0.51 per share for the same quarter in 2015. For the full year 2016, we reported normalized FFO per share of $1.88, an increase of $0.04 per share or 2.2% over the prior year. We are pleased with the solid operating performance for the fourth quarter as we benefited from excellent operations as well as investments in our existing portfolio. SNH continues to offer investors a safe and secured dividend yield of almost 8% per annum while continuing to invest surplus cash flows and to enhancing our existing portfolio for future growth. Specific highlights for the fourth quarter whether we grew consolidated NOI by 4.2% compared to the fourth quarter of 2015 grew consolidated same property NOI by 1.4% compared to the fourth quarter of 2015. Prepaid $48 million of high cost mortgage notes encumbering nine properties, acquired two senior living communities and one medical office building for $37 million bringing our growth acquisition volume for 2016 to $226 million with an average cap rate of 9.3%. Sold one medical office building and one former memory care building for $5 million and subsequent to quarter end, we acquired one MOB for $15.5 million. And finally increased our MOB occupancy to 96.5%, the highest since 2011. Our portfolio is comprised of well diversified private pay focused, healthcare real estate, which is designed to benefit from the ageing demographic and related healthcare life science trends. For the year, SNHs total return was an impressive 43% and we believe there is more potential for growth. In the fourth quarter, approximately 45%…

Thank you, Dave and good morning everyone. Our normalised FFO was $118.6 million for the fourth quarter or $0.50 per share. We declared a $0.39 per share dividend in the first quarter of 2017 resulting in a full-year normalized FFO payout ratio of 83%, which is down almost 2% from last year. Rental income for the quarter increased $4.6 million or 2.7% from the fourth quarter of last year to $175.3 million. This increase is primarily due to our acquisitions of three medical office buildings and nine triple net leased senior living communities since the beginning of 2016. On a same-store basis, rental income increased $1.8 million or 1.1%. This increase was primarily attributable to rent increases as a result of our funding of capital improvements at certain of our triple net leased senior living communities and leasing activity in our MOB portfolio, partially offset by decreased escalation income largely related to decreased real estate tax. As we remind you every quarter, we recognized all of the percentage rent related to our triple net leased senior living communities in the fourth quarter for both our GAAP and non-GAAP performance measures. Percentage rent recognized for the year totaled $10.2 million or 1.1% increase over last year despite occupancies that were down 50 basis points on average across our triple net leased portfolio. Resident fees and services revenue totaled $99 million for the quarter. This represents an increase of $2.2 million or 2.3% over last year largely attributable to the three communities added to the managed portfolio during 2016. On a same-store basis revenue at our managed senior living communities increased 28 basis points versus last year to $91.8 million for the quarter. Average monthly rates increase 1.6% year-over-year while occupancy for the quarter decreased to 87.1% from 87.7% last year. Property…

Yes, thanks. Can you guys provide some color on the Five Star coverage ratios? Do you think that coverage ratio will stabilize at this current level or do you expect it will drop modestly over the next few quarters?

Well, with the Five Star coverage ratios, I think those are the numbers just as they reported, there are a couple instances. I think these two properties alone that would return the numbers back to the same level of last quarter. So, I would expect that that we probably continue at about this level. I don’t expect any noticeable decline at all. And in fact as you saw probably this morning they also announced the new $100 million line – working capital line of credit, so they are in great shape as far as we’re concerned.

And do you what’s their plans are for those challenged assets within that portfolio? Did they plan on starting those anytime soon, or do they think they can turn those around and is that something you guys support?

That will be a decision that they have to make. We will work with them if they choose these assets are ones that they do not intend to keep, but at the moment I can't speak to what their intention is.

And then, David, can you talk a little bit about the weakness you highlighted related sniff within that portfolio. Now did that also impact the triple net portfolio or is that only the managed portfolio?

It has affected both the managed portfolio as well as the triple net portfolio. Wherever we have a number of CCRCs, that are rental CCRCs that have a name that is particularly is skilled nursing and just the way healthcare is being advanced today, they are really encouraging people to go directly from the hospital to home or to certain network skilled nursing facilities or units that are within the market area of the healthcare system. And what they have found is that converting a number of the units to rehab the home programs and implementing significant electronic medical records systems that become very attractive to the healthcare systems and wherever they’ve implemented a new program like that it has tremendously benefited them. So they are going through a process of converting a number of facilities to rehap the home unit. So I expect that trend to -- in fact, like in our case, we’ve reported third quarter down we were down about a $1 million in skilled nursing revenue and this quarter we’re down about 578,000. So they’ve made a significant dent in that and we expect things to continue to improve actually.

Great. Thank you.

You’re welcome.

The next question comes from Bryan Maher with FBR & Company. Please go ahead.

Good morning, guys. Couple of quick questions. You talked that you're seeing a lot of deal flow, but can you tell us if that's been increasing let’s say in the fourth quarter and the first quarter, kind of flattish or down?

I think it’s been a pretty steady flow more so in the medical office building area. We do see a number of assisted living facilities available in the market, but I would say, we’ll see this somewhat of an uptick in medical office and probably flat on senior living.

And do you think you'll see more deal activity in the medical office building in 2017 over the senior living facilities?

More than likely that will be the case. Within the senior living particularly we’re focus on trying to add wings, units and our refurbishments that will significantly allow us to raise rates. So, it will be more of an internal story for the senior living portfolio and for external it will be mostly looking for acquisition opportunities.

Great. And then lastly, the House Republicans had their kind of draft of the Affordable Care Act to repeal and replace for the last couple of days. Did you guys have a chance to look at that? Do you any thoughts on what the initial shot across the bow is and how that might impact you?

Well, obviously it’s till too early to tell. I think we’ll probably do fine within our portfolio, and we’re expected to have meaningful impact. Obviously, there’s a lot of debate to go on about how funds are allocated by states and how each state will handle that. But I think that there’s going to be a lot of debate about this before they finally come up with what the final plan is.

Okay, great. Thank you.

[Operator Instructions]. The next question comes from Nick Yulico with UBS. Please go ahead.

Hi. Good morning everyone. This is [Indiscernible] here for Nick. So looking at the results for senior’s housing, it seems like occupancy has decline, and rents are positive but relatively muted. And since you don't provide explicit guidance can you talk a little bit more about your expectations and how you see these trends playing out in 2017 in particular how you manage the portfolio during a challenging environment?

Sure. It’s pretty obviously difficult to predict what’s going to happened for the rest of 2017, you know we are in February. But I think we’re seeing that a lot of different pricing methodology has been put in place to try to maximise what they can in different states, but at different facilities. But I know – and one thing I’d like to comment about the rates is that, with the portfolio of independent living, assisted living and skilled nursing, what we find is that on the independent living the rates are much lower yet it's the most profitable piece of healthcare in our portfolio, while skilled nursing will probably actually generate the highest rate on a monthly basis, but the lowest margin. So I won’t read too much into the rate increases. That’s based upon a calculation of overall revenues for our portfolio and they’re not a published room rates or specific rates that we’re pushing through at each facility. I think we determined that our rates actually have gone up in certain phase like Florida they are typically 3% or so, while we’re not able to raise rates at all in Texas and Arizona very much. So, as far as I can see, I think things seem to be plateauing as far as new construction affecting occupancy at units. And so I think I would expect maybe the same or possibly slightly down a bit, but not a major change.

Okay. Thank you very much.

You’re welcome.

And this conclude our our question-and-answer session. I’d now like to turn the conference back over to Mr. David Hegarty for any closing remarks.

I just like to thank you all for joining us this morning. We’re obviously very pleased with this quarter and look forward to moving on for the next. Thank you. Have good day.

And this concludes our conference for today. Thank you for attending today's presentation and you may now disconnect.