Five Star Senior Living Inc. (NASDAQ:FVE) Q1 2019 Earnings Conference Call Transcript
May 08, 2019 • 10:00 am ET
Good morning, and welcome to the Five Star Senior Living First Quarter 2019 Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Michael Kodesch, Director of Investor Relations. Please go ahead.
Thank you, and welcome to Five Star Senior Living's call covering the first quarter 2019 results. The agenda for today's call includes a presentation by Katie Potter, President and CEO; and Rick Doyle, Executive Vice President, CFO and Treasurer. Following this presentation, the management team will open the floor to a question-and-answer session with research analysts. I would like to note that the transcription, recording and retransmission of today's conference call is strictly prohibited without the prior written consent of Five Star.
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 on Five Star's present beliefs and expectations as of today, Wednesday, May 8, 2019. The company undertakes no 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, regarding this reporting period. 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 will now turn the call over to Katie.
Katherine E. Potter
Thanks, Michael, and thanks, everyone, for joining us on our first quarter earnings call. I'd like to start the call off by discussing the restructuring with Senior Housing Properties Trust. On April 1, 2019, we entered into a transaction agreement with SNH to modify our existing business arrangement, including terminating the leases for all senior living communities we leased from SNH and replacing those leases with new management agreements. The rent expense we incurred in 2018 from the leases to be terminated was over $206 million.
The management agreements for all senior living communities we currently manage on behalf of SNH will also be terminated and replaced with new management agreements. After the termination of the existing leases and entry into new management agreements, our senior living operating portfolio will consist of four leased communities containing 204 units, for which we pay approximately $3 million in rent annually to HCP; 20 communities containing approximately 2,100 units that we own directly; and the remainder of the communities will be managed by Five Star on behalf of SNH. We expect to terminate the SNH leases and enter into the new management agreements on January 1, 2020.
In addition to terminating the SNH leases and entering into the new management agreements, we have executed several financial transactions with SNH designed to immediately improve our financial position and provide us with a source of liquidity. First, fixed rent payments under our SNH