Good day, and welcome to the Senior Housing Properties Trust Third Quarter 2017 Financial Results Conference Call. [Operator Instructions] Please also note that today’s event is being recorded. I would now like to turn the conference over to Mr. Brad Shepherd, Director of Investor Relations. Sir you may begin.

Thank you. Welcome to Senior Housing Properties Trust call covering the third quarter 2017 results. Joining me 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 the 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 and 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, Thursday, November 9, 2017. The company undertakes no do obligation to revise or publicly release the results of any revision to the 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 operations or normalized FFO and cash-based net operating income or cash NOI. Reconciliations of net income attributable to common shareholders to these non-GAAP figures and the components to calculate AFFO, CAD or FAD are available on our 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 filings with the SEC. Investors are cautioned not to place undue reliance upon any forward-looking statements. I'd now like to turn the call over to Dave.

Thank you, Brad. And good afternoon to our shareholders, analysts and other interested parties joining this call. We’re pleased to report and discuss our third quarter 2017 results, today we reported normalized funds from operations or normalized FFO per share of $0.44 per share which was $0.01 shy of the third quarter 2016 normalized FFO. We’ve noted previously that on a temporary basis the joint venture we completed in the first quarter of 2017 would reduce our quarterly FFO by up to $0.03 per share per quarter until we can accretively reinvest the proceeds. We were able to partially mitigate some of this dilution by refinancing a large amount of expensive mortgage debt prior to the third quarter. Additionally, our cash same store operations stabilized sequentially and produced year-over-year growth despite the challenges presented by hurricanes Harvey and Irma. In regards to the hurricanes, we were fortunate that we experience very minimal damage to our properties. In fact, we incurred less than a $1 million of hurricane related cost at our managed senior living communities and medical office buildings. Now specific highlights for the third quarter, where we grew consolidated cash NOI by 1.2%, a consolidated same store cash NOI by 50 basis points, achieved MOB occupancy greater than 95% for the 40th consecutive quarter, continued to generate over 97% of our revenues by private pay properties, amended our $1 billion revolving credit facility extending its maturity to 2022, and lowering the interest rate, amended our $200 million unsecured term loan due 2022 lowering the interest rate, invested $40.7 million of CapEx in our Triple Net senior living portfolio that will generate of $1.2 million of additional rent under the terms of our lease agreements, acquired one life science MOB located in Maryland to $16.2 million, received BOMA 360 Award…

Thank you, Dave and good afternoon, everyone. Our normalized FFO was $104 million for the third quarter, $0.44 per share and we declared a $0.39 per share dividend subsequent to quarter end. Rental income for the quarter increased $2.8 million or 1.7% from the third quarter of last year to $168.3 million. This increase is primarily due to rents from the two-triple net lease senior living communities and three medical office buildings we acquired since the end of the second quarter 2016. Resident fees and services revenues from our managed senior living communities totaled $98.3 million for the quarter which was a modest decline compared to the same quarter last year as increases in average monthly rates were offset by decreases in occupancy and changes in acquity mix. Property operating expenses from our MOBs and managed senior living communities increased 1.3% in the third quarter to $104.7 million compared to the same period last year. Within our managed senior living portfolio, the $650,000 of hurricane related cost and $500,000 of real estate tax increase at one property as Dave mentioned earlier explains the majority of the consolidated year-over-year property operating expense increase. Our MOB portfolio’s property operating expense remained well controlled with the year-over-year increase primarily attributable to the acquisition of the three properties since last year. Our MOB portfolio faired very well through the hurricanes this quarter with less than $100,000 of repairs and cleanup expenses. General and administrative expenses decreased $245,000 or 2% this quarter compared with the third quarter of last year excluding the $8 million accrual this quarter for the estimated business management incentive fee. The incentive fee accrued this quarter is based on SNH’s total return in comparison to the SNL US REIT healthcare index through the beginning of 2015 through the end of the…

Ladies and gentlemen, at this time we will start the question-and-answer session [Operator Instructions]. And our first question today comes from Tayo Okusanya from Jefferies. Please go ahead with your question.

Could you talk a little bit about the cap rates on the recent acquisitions?

Sure. Look with regards to the recent announced transaction with Five Star. Each of those properties was independently valued and the cap rate ranges between 7 and 7.5 for those assets. And with regards to the Medical Office Buildings and Life Science properties, the cap rates are in the mid-8 to 1 as highest, about 13%. But generally, the average is close to about 9.

Are those cap rates are meaningfully higher versus what you’re kind of seeing some of your peers buying assets at? Could you kind of talk a little bit about what's causing that difference, is it just because they were kind of not heavily marketed transactions, the quality of the portfolio?

Sure. For one thing they are one-off individual properties and through our acquisitions groups, we see about 99% of the properties available for sale across the country in this area. And these particular ones they might have been something with the lease term being a bit shorter than somebody could get financing for or couple of our relationships. They for instance one of the properties in Overland Park, Kansas is a clinical research lab with a company called Quintiles, and they are a publicly traded, A rated company and for long-term lease for about 9 years. So, kind of unique situation and I have found that we have been successful in many more offers that we’ve made lately. So, I envision the acquisition pipeline to pick-up.

Then just one more for me if you don’t mind. Now the Five Start transaction given you guys are doing it as a RIDEA transaction. Could you talk about what the potential upside is you are expecting from the portfolio I noticed it’s already 91% occupied? So, what do you kind of think about the stabilized same-store NOI growth out of that portfolio. What are you kind of expecting from it?

Well, for one thing these properties we believe that we can put some additional capital into the properties and achieve better rates and to some degree occupancy. In addition, we believe that there is one significant community in Tennessee that they would, well, we with them to build a 91-unit independent living community on the premises. And that is significant capital investment and so we believe that, we would get the benefit of the upside with that. And so, we would hope to, we could achieve another 50 to 100 basis points increase in return over the next couple of years from our investments in these assets.

Our next question comes from [indiscernible] from Bank of America Merrill Lynch. Please go ahead with your question.

Hi, it’s Kevin up for Juan. I just had a question relating to the first question, basically since you guys have been acquiring MOB is kind of shorter lease terms. What is your I guess your confidence in the current, I guess MOB releasing market as far as like rent per square foot goes moving forward?

We are very confident in releasing our renewal of existing space within the medical office building area. It seems like on a national basis, I’d say the average is around $24, $28 a foot, but since these particular investments we’re looking at, we evaluate the market that we’re acquiring it within and the downside risk or opportunity risk of releasing it should the tenant not renew there. So, we’re trying to pick our Class A assets, I want to just mention in Overland Park is silver lead rated building. So, I guess I would expect the releasing to be very positive, very likely and we believe that the rents in place the below market in our situation.

Our next question comes from Michael Carroll from RBC Capital Markets. Please go ahead with your question.

Yeah. Thanks, David can you talk a little bit about the agreement by the six Five Star communities. Do you know what Five Star's plan with that cash is?

Sure. For one thing in Five Star's case, from their perspective is a positive that they can reach some value out of these assets from cash, because they are certainly not getting the valuation in their stock price. And then what they’re going to -- they virtually have no debt to prepay down, we’re going assume some debt as part of the transaction. But the cash is going to be reinvested into the existing portfolio that they have. As you know they come to us typically for a lot of the capital and the rent goes up by normally about 8% on the amount funded. This would allow them to invest some of their own cash without seeking capital from us and some of it. And then just they’ve done a lot of extensive investing in electronic medical records in other IT systems and this allows them to continue to rollup up those programs. Rick, I don’t know if you have anything you want to add to that.

Yeah, no I think that’s right that Five Star's going to continue to invest in their profitability initiatives and make sure that they’re well positioned, they still own 20 communities after this along with all properties that they lease from us and other landlords. From our perspective, it was a good deal, very stable assets 91% occupied. And because Five Star's managed them before there is virtually zero transition risk here. So, we’re excited about some of the expansion opportunities within this portfolio and looking forward to getting out of the underway.

Okay. Then how much does it cost for their electronic medical records program. It seems like they’ve been or did you sell your last round of assets to fund that within -- or is this more going into your property levels.

This is continuing to rollout that program. I believe they are spending several millions of dollars per year in all of the skilled nursing facilities as well as the skilled nursing units within the CCRC and again some of the more traditional IT software, so it's an ongoing project and I believe they rolled that out in about more than half of the facilities at this point.

Okay and then just last question, how much capacity do you see you have out there to go out there and acquire most assets, I mean are you done after the senior housing deal and the MOB deals, are you going to go out there and be more aggressive?

I mean based on the cap rates, I wouldn’t say we been particularly aggressive I mean I think a lot of success has to do with the patient continuing to evaluate every deal without there and our underwriting team certainly stays busy. I think we still have plenty of capacity based on what we see in the pipeline right now, there were a lot of balances, possibly a little higher than it has been in the past but with our equity price trading where it is there is not of appetite for that. We do have some other options we could look to refinancing the long-term debt, we can look to sell assets, either into the JV or outright. So I think we got a number of options but we also have some time, taking a good hard look at the pipeline, we're not particularly concerned about where we're from a liquidity perspective.

Several trade actions not likely to close still just about yearend '17 or throughout the first quarter of '18.

[Operator Instructions] Our next question comes from Bryan Maher from FBR. Please go ahead.

You touched a little bit upon one of my questions, which is your appetite for doing more of the vertex type deals, how many assets in the portfolio are big enough for you to contemplate doing a JV and not too similar to what [Gov] is doing with kind of upgrading their portfolio, selling of some of the lower end stuff, would you consider doing that as well.

I think that’s on the table for us to consider. Vertex was an unusual transaction actually $1 billion transaction. So I don’t -- doing any acquisition of that size or nature for the foreseeable future, but I do see that, we have both the living side of business as well as the medical office life science side, so I could envision taking some of the housing assets and potentially putting them into a JV as opposed to life science and medical office. But I think I do have assets, [indiscernible] in LA would be another example of an asset that would yield of several hundred of millions of dollars of new fresh capital. But I would say right now those are options that we have available to us, I think we try to keep our structure as stable and simply as possible and we do have some flexibility in our balance sheet to debt issuances or even a follow on from secured that if we chose to. And with regards to assets sales, I think we do look at selling assets, I think historically it’s been smaller amounts I could see envision maybe $50 million or something like that, but that’s another option for us to consider. It’s not out of the question.

And then just as a kind of a follow up. What are you seeing in the way of seller motivation? Is it picking up with where we saw cap rates decline 2% of the bigger portfolio earlier this year. Or is it been stable. What are you seeing from the seller community?

I think a couple of things, one is that a number of investors made investments in properties and added value several years ago and took advantage of the weaker economy. And now that the properties are leased up, I think they just want to capitalized on selling it. Some transactions want to close by year-end because of concerns about potential tax changes like maybe 10-31 rules maybe revised in the certain circumstances. Although at the moment, we seem to be pretty safe, but there are all kinds of tax rules are influx at the moment. And we’re finding a few motivated sellers who really want to push the year-end closings. I mean the main thing capital, certainly in senior living business and I think right now people are concerned about lending sources and re-financing risk and things like that. So, that’s causing some people to sell sooner than they would have preferred to.

[Operator Instructions] And at this time it showing no additional questions. We like to turn the conference call back over to management for any closing remarks.

I like to thank you all for joining us on today’s call. And I look forward to meeting up with several of you at NAREIT Conference down in Dallas next week. Have a good day. Good bye.

Ladies and gentlemen, that does conclude today’s conference call. We thank you for attending. You may now disconnect your lines.