8-K
Ventas, Inc. (VTR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 8, 2020
Ventas, Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 001-10989 | 61-1055020 |
|---|---|---|
| (State or Other Jurisdiction<br><br> of Incorporation) | (Commission<br><br> File Number) | (IRS Employer<br><br> Identification No.) |
| 353 N. Clark Street,<br> Suite 3300, Chicago,<br> Illinois | 60654 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (877) 483-6827
Not applicable
Former Name or Former Address, if Changed Since Last Report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common stock, $0.25 par value | VTR | New York Stock Exchange |
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 8, 2020, Ventas, Inc. (the “Company”) issued a press release announcing its results of operations for the quarter ended March 31, 2020. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated in this Item 2.02 by reference.
The information in this Item 2.02, including Exhibit 99.1, shall not be deemed filed with the U.S. Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Shell Company Transactions.
Not applicable.
(d) Exhibits:
| Exhibit<br><br> <br>Number | Description |
|---|---|
| 99.1 | Press release<br> issued by the Company on May 8, 2020. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VENTAS, INC. | ||
|---|---|---|
| Date: May 8, 2020 | By: | /s/ Carey S. Roberts |
| Carey S. Roberts | ||
| Executive Vice President, General Counsel and Ethics & Compliance Officer |
Exhibit 99.1
Ventas Reports 2020 First Quarter Results and Provides COVID-19 Business Update
CHICAGO--(BUSINESS WIRE)--May 8, 2020--Ventas, Inc. (NYSE: VTR) (the “Company”) today reported results for the first quarter ended March 31, 2020. The Company also provided an update regarding how its operations and financial condition have been affected in the second quarter 2020 by the pandemic.
“Ventas delivered strong first quarter results, which exceeded our expectations for the enterprise and each of our business segments. At the onset of the COVID-19 pandemic, we took swift and decisive action to ensure the strength and stability of the Company. Our top priority remains the health and safety of all Ventas employees, the residents and caregivers in our senior living communities, and the many others who work in or use our 1,200 healthcare sites. As a result of our unwavering efforts, Ventas will continue to serve as a reliable partner and focused industry leader. To demonstrate our commitment to mitigating the spread of the coronavirus and further enhancing the safety of our senior housing communities, we are providing access to COVID-19 test kits and analysis from Mayo Clinic Laboratories at no charge to certain of our senior housing operators who need them,” said Debra A. Cafaro, Ventas Chairman and CEO.
“Ventas is, and will continue to be, a leading healthcare property owner in the businesses and geographies where we invest, a desirable employer and attractive investment vehicle. We remain well positioned to manage through current conditions and take further action as necessary to sustain our enterprise and protect the Company’s future,” Cafaro concluded.
Decisive Actions Taken to Ensure the Continued Strength and Stability of Ventas
Supporting Tenants & Operators: Ventas has taken a leadership role in the COVID-19 crisis by:
- Establishing financial support programs for tenants and operators who are experiencing financial hardship as a result of the COVID-19 pandemic
- Providing information and assistance to tenants and partners who may be eligible to obtain relief through various government programs
- Proactively assisting its tenants and operators in acquiring personal protective equipment (“PPE”) and other scarce supplies by leveraging its national scale
- Providing COVID-19 testing kits and analysis from Mayo Clinic Laboratories free of charge to certain of Ventas’s senior housing operators who need them to further enhance the safety of Ventas’s senior living communities by accelerating employee testing. Ventas’s accelerated employee testing program initiative is being conducted in conjunction with Atria Senior Living’s comprehensive employee testing program, which is well underway.
Continuing Productive and Seamless Business Operations: Ventas’s organization was well prepared to conduct business remotely and it activated its pre-existing business continuity plans in early March. The Company limited travel, established a cross-functional business continuity leadership team, tested its remote work capabilities, expanded its communications and implemented work from home guidelines. As a result of these and other measures, the Company experienced no downtime and maintained a high level of productivity.
Increasing Financial Flexibility: The Company acted to enhance its balance sheet strength and liquidity. As a result, Ventas has approximately $3.2 billion in cash and cash equivalents on hand as of May 6, 2020 with no commercial paper outstanding; and its Net Debt to EBITDA ratio improved sequentially by 40 basis points to 5.7x at March 31, 2020. In March 2020, the Company drew $2.75 billion under its $3.0 billion Revolving Credit Facility and subsequent to quarter-end raised an additional $0.5 billion through a senior note issuance.
Announcing Holiday Transaction to Resolve Lease: As separately announced in a press release issued today, Ventas completed a transaction with affiliates of Holiday Retirement, including (a) entry into a new, terminable management agreement with Holiday Management Company for the Company’s 26 independent living assets previously subject to a lease between the Company and Holiday; (b) termination of the Holiday lease; and (c) receipt by Ventas from Holiday of a total of $100 million, consisting of cash and secured notes from the prior guarantor of the Holiday lease.
Enhancing Best-in-Class Leadership Team: As previously announced, Ventas appointed two new executive leaders. Both J. Justin Hutchens, Executive Vice President, Senior Housing, North America and Carey S. Roberts, Executive Vice President, General Counsel and Ethics & Compliance Officer joined the Company on March 4, 2020.
Reducing 2020 Expenditures: The Company has reduced its planned 2020 capital expenditures by $0.3 billion to approximately $0.5 billion. Ventas has paused certain of its previously announced ground-up developments that were not yet substantially underway. In addition, the Company is reviewing its General & Administrative expenses to identify additional opportunities to reduce costs.
Contributing to the Industry: Ventas has been an evidence-based advocate for senior living residents with federal policymakers, in alliance with other industry leaders and associations.
Communicating Transparently Regarding Financial Guidance: Based on its early understanding of the potential scope and effects of the COVID-19 pandemic, Ventas withdrew its previously issued financial guidance on March 17, 2020.
First Quarter 2020 Results
First quarter 2020 financial results for the Company exceeded Ventas’s expectations. Reported per share results are as follows:
| Quarter Ended March 31 | ||||
|---|---|---|---|---|
| 2020 | 2019 | $ Change | % Change | |
| Net income attributable to common stockholders | $1.26 | $0.35 | $0.91 | 260.0% |
| Nareit FFO | $1.31 | $0.98 | $0.33 | 33.7% |
| Normalized FFO | $0.97 | $0.99 | ($0.02) | (2.0%) |
Net income exceeded prior year results due to gains on sale and higher first quarter 2020 non-cash income tax benefits. Normalized FFO declined modestly compared to 2019, driven primarily by higher COVID-19 specific costs in the SHOP segment and increased interest expense from the Company‘s draw on its Revolving Credit Facility.
First Quarter Property Results
Property Performance: For the first quarter 2020, the Company’s reported same-store total property portfolio (1,094 assets, representing 93 percent of the Company’s cash net operating income “NOI”) declined modestly compared to the same period in 2019.
| Year-Over-Year Same-Store Cash NOI Growth | |
|---|---|
| Q1 2020 | |
| Triple-Net (“NNN”) | 3.9% |
| Seniors Housing Operating Portfolio (“SHOP”) | (10.4%) |
| Office | 5.8% |
| Total Company | (0.6%) |
For the first quarter 2020:
NNN Portfolio: Same-store Cash NOI growth was driven by the receipt of all expected rent from the Company’s NNN tenants, including in-place lease escalations, and a $3 million cash fee received from Capital Senior Living.
SHOP Portfolio: SHOP Cash NOI performance was driven by a lower occupancy starting point for the year and, beginning in mid-March, an estimated $6 million in COVID-19 related labor and supply costs. If these COVID-19 costs (“SHOP COVID Costs”) were excluded, the implied same-store NOI decline would have been approximately 6.9 percent, better than the Company’s expectations. Notably, SHOP sequential same-store NOI grew 2.3 percent. Excluding SHOP COVID costs, sequential same-store NOI growth would have been 6.0 percent.
Office Portfolio: The Office portfolio continued to post attractive same-store Cash NOI growth, led by the Company’s university-based Research & Innovation (“R&I”) portfolio, which grew 22 percent driven by strong lease-up, and further complemented by 1.9 percent growth in the Medical Office Building (“MOB”) portfolio.
Total Company: Excluding SHOP COVID Costs, total company same-store cash NOI would have increased by approximately 0.6 percent.
Other Recent Highlights
Acquisitions, Dispositions & Loan Repayments: In February, Ventas completed the $80 million acquisition of two fully occupied life science buildings located in Raleigh, NC and affiliated with North Carolina State University (Moody’s Aaa rating). Ventas generated $109 million in proceeds from loan repayments and asset dispositions in the quarter in addition to those related to the Company’s recently established Fund described below.
Delivering Restored MOB: Ventas is delivering in May a fully restored 66,000 square foot medical office building on the campus of Ascension Sacred Heart Bay Hospital. The MOB, 100 percent leased by Ascension Sacred Heart Bay Hospital through 2027, is located in Panama City, Florida, an area that was devastated by Hurricane Michael in 2018. The MOB was redeveloped and designed in collaboration with Ascension, who is concurrently investing nearly $50 million in its adjacent Sacred Heart Bay Hospital.
Completion of Perpetual Life Vehicle: In March, the Company successfully completed the initial closing of the Ventas Life Science & Healthcare Real Estate Fund, L.P. (the “Fund”) to enable institutional investors to invest in core and core plus life science, medical office and senior housing real estate. The Fund is expected to provide a broad range of financial and strategic benefits to Ventas, who is the general partner of the Fund and has retained a 21 percent interest. The initial closing of the Fund generated over $600 million in net proceeds to Ventas and the Company recognized a $223 million gain in connection with the sale of assets to the Fund.
Balance Sheet & Liquidity: Ventas’s Net Debt to Adjusted Pro Forma EBITDA ratio improved to 5.7x as of March 31, 2020 from 6.1x at December 31, 2019. Currently, Ventas has $3.2 billion in cash on hand, negligible near-term debt maturities and no pending, unfunded or unannounced acquisitions.
Leadership & Recognition: Ventas CEO Debra A. Cafaro was elected to the American Academy of Arts & Sciences. Founded in 1780, the Academy honors artists, scholars, scientists and leaders in the public, non-profit, and private sectors who demonstrate excellence.
April Developments and Trends
SHOP: Ventas’s SHOP operators restricted access to communities commencing in March. As a result, April move-ins were approximately 25 percent of typical levels while move-outs were largely in line with historic patterns. Since mid-March, “spot” SHOP occupancy has trended down at a rate of approximately 70 basis points per week. As of May 1, 2020, spot occupancy was estimated at 80.7 percent, representing a loss of 330 basis points since the beginning of April based on unaudited information provided by Ventas’s SHOP operators. Excluding communities located in New York and New Jersey, occupancy declined 280 basis points. Despite lower occupancy, higher labor and supply costs to combat the pandemic are expected to increase SHOP operating expenses in April by approximately 10 percent.
NNN Senior Housing: The Company offered its NNN senior housing tenants a 25 percent rent deferral program in April to enable them to care for seniors, purchase needed supplies and pay employees. This program ultimately reduced April cash rent receipts by approximately $3 million. Adjusting for this tenant support program, the Company collected substantially all NNN senior housing rent in April.
NNN Healthcare: The Company received substantially all rent due in April from its NNN healthcare tenants. This cohort of tenants has benefitted from significant government financial support to partially offset the direct financial impact of the COVID-19 pandemic on healthcare providers.
Office: In April, the Company received 96 percent of anticipated rent for the month. Ventas expects the majority of remaining unpaid April rent to ultimately be collectible.
A presentation outlining the Company’s COVID-19 response and recent trends is posted to the "Investor Presentations" section of Ventas’s website at https://www.ventasreit.com/investor-presentations.
First Quarter 2020 Conference Call and Investor Presentation
Ventas will hold a conference call to discuss this earnings release today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The dial-in number for the conference call is (844) 776-7841 (or +1 (661) 378-9542 for international callers), and the participant passcode is “Ventas.” The call will also be webcast live by Intrado DM and can be accessed at the Company’s website at www.ventasreit.com. A replay of the call will be available at the Company’s website, or by calling (855) 859-2056 (or +1 (404) 537-3406 for international callers), passcode 2063106, beginning on May 8, 2020, at approximately 1:00 p.m. Eastern Time and will remain available for 30 days.
About Ventas
Ventas, Inc. (together with its subsidiaries, unless otherwise expressly noted), an S&P 500 company, is a real estate investment trust with a highly diversified portfolio of senior housing, research and innovation, and healthcare properties located throughout the United States, Canada and the United Kingdom. As of March 31, 2020, Ventas owned or managed through unconsolidated joint ventures approximately 1,200 properties (including properties classified as held for sale), consisting of senior housing communities, medical office buildings, research and innovation centers, inpatient rehabilitation and long-term acute care facilities, and health systems. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. More information about Ventas and Lillibridge can be found at www.ventasreit.com and www.lillibridge.com.
The Company routinely announces material information to investors and the marketplace using press releases, Securities and Exchange Commission (“SEC”) filings, public conference calls, webcasts and the Company’s website at www.ventasreit.com/investor-relations. The information that the Company posts to its website may be deemed to be material. Accordingly, the Company encourages investors and others interested in the Company to routinely monitor and review the information that the Company posts on its website, in addition to following the Company’s press releases, SEC filings and public conference calls and webcasts. Supplemental information regarding the Company can be found on the Company’s website under the “Investor Relations” section or at www.ventasreit.com/investor-relations/annual-reports---supplemental-information. A comprehensive listing of the Company’s properties is available at www.ventasreit.com/our-portfolio/properties-by-stateprovince.
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company’s or its tenants’, operators’, borrowers’ or managers’ expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, merger or acquisition integration, growth opportunities, expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of management for future operations and statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ from the Company’s expectations. The Company does not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.
The Company’s actual future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s filings with the SEC. These factors include without limitation: (a) the effects of the ongoing COVID-19 pandemic and measures intended to prevent its spread on the Company’s business, results of operations, cash flows and financial condition, including declines in rental revenues and increases in operating costs in the Company’s senior housing operating portfolio, deterioration in the financial conditions of the Company’s tenants and their ability to satisfy their payment obligations to the Company, constraints in the Company’s ability to access capital and other sources of funding and increased risk of claims, litigation and regulatory proceedings and uncertainty that may adversely affect the Company; (b) the ability and willingness of the Company’s tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with the Company, including, in some cases, their obligations to indemnify, defend and hold harmless the Company from and against various claims, litigation and liabilities; (c) the ability of the Company’s tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness; (d) the Company’s success in implementing its business strategy and the Company’s ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (e) macroeconomic conditions such as a disruption of or lack of access to the capital markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States of its obligations, and changes in the federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates; (f) the nature and extent of future competition, including new construction in the markets in which the Company’s senior housing communities and office buildings are located; (g) the extent and effect of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates; (h) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the potential phasing out of the London Inter-bank Offered Rate after 2021; (i) the ability of the Company’s tenants, operators and managers, as applicable, to comply with laws, rules and regulations in the operation of the Company’s properties, to deliver high-quality services, to attract and retain qualified personnel and to attract residents and patients; (j) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and the effect of those changes on the Company’s revenues, earnings and funding sources; (k) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (l) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (m) final determination of the Company’s taxable net income for the year ended December 31, 2019 and for the year ending December 31, 2020; (n) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases, the Company’s ability to reposition its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations, including indemnification obligations, the Company may incur in connection with the replacement of an existing tenant; (o) risks associated with the Company’s senior living operating portfolio, such as factors that can cause volatility in the Company’s operating income and earnings generated by those properties, including without limitation national and regional economic conditions, costs of food, materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results for those properties; (p) changes in exchange rates for any foreign currency in which the Company may, from time to time, conduct business; (q) year-over-year changes in the Consumer Price Index or the UK Retail Price Index and the effect of those changes on the rent escalators contained in the Company’s leases and the Company’s earnings; (r) the Company’s ability and the ability of its tenants, operators, borrowers and managers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers; (s) the impact of damage to the Company’s properties from catastrophic weather and other natural events and the physical effects of climate change; (t) the impact of increased operating costs and uninsured professional liability claims on the Company’s liquidity, financial condition and results of operations or that of the Company’s tenants, operators, borrowers and managers, and the ability of the Company and the Company’s tenants, operators, borrowers and managers to accurately estimate the magnitude of those claims; (u) risks associated with the Company’s office building portfolio and operations, including the Company’s ability to successfully design, develop and manage office buildings and to retain key personnel; (v) the ability of the hospitals on or near whose campuses the Company’s medical office buildings are located and their affiliated health systems to remain competitive and financially viable and to attract physicians and physician groups; (w) risks associated with the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (x) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (y) the impact of market or issuer events on the liquidity or value of the Company’s investments in marketable securities; (z) consolidation activity in the senior housing and healthcare industries resulting in a change of control of, or a competitor’s investment in, one or more of the Company’s tenants, operators, borrowers or managers or significant changes in the senior management of the Company’s tenants, operators, borrowers or managers; (aa) the impact of litigation or any financial, accounting, legal or regulatory issues that may affect the Company or its tenants, operators, borrowers or managers; and (bb) changes in accounting principles, or their application or interpretation, and the Company’s ability to make estimates and the assumptions underlying the estimates, which could have an effect on the Company’s earnings.
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share amounts) | |||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||
| Assets | |||||||||||||||
| Real estate investments: | |||||||||||||||
| Land and improvements | $ | 2,244,526 | $ | 2,283,929 | $ | 2,280,877 | $ | 2,128,409 | $ | 2,116,086 | |||||
| Buildings and improvements | 23,821,353 | 24,380,440 | 24,459,114 | 22,837,251 | 22,609,780 | ||||||||||
| Construction in progress | 505,188 | 461,354 | 432,713 | 386,550 | 335,773 | ||||||||||
| Acquired lease intangibles | 1,241,646 | 1,306,152 | 1,334,915 | 1,267,322 | 1,279,490 | ||||||||||
| Operating lease assets | 391,908 | 385,225 | 388,480 | 374,319 | 359,025 | ||||||||||
| 28,204,621 | 28,817,100 | 28,896,099 | 26,993,851 | 26,700,154 | |||||||||||
| Accumulated depreciation and amortization | (7,237,345 | ) | (7,088,013 | ) | (6,964,061 | ) | (6,758,067 | ) | (6,570,557 | ) | |||||
| Net real estate property | 20,967,276 | 21,729,087 | 21,932,038 | 20,235,784 | 20,129,597 | ||||||||||
| Secured loans receivable and investments, net | 623,717 | 704,612 | 709,714 | 693,651 | 496,344 | ||||||||||
| Investments in unconsolidated real estate entities | 165,745 | 45,022 | 45,905 | 47,112 | 48,162 | ||||||||||
| Net real estate investments | 21,756,738 | 22,478,721 | 22,687,657 | 20,976,547 | 20,674,103 | ||||||||||
| Cash and cash equivalents | 2,848,115 | 106,363 | 148,063 | 81,987 | 82,514 | ||||||||||
| Escrow deposits and restricted cash | 38,144 | 39,739 | 60,533 | 56,309 | 57,717 | ||||||||||
| Goodwill | 1,050,137 | 1,051,161 | 1,049,985 | 1,050,470 | 1,050,876 | ||||||||||
| Assets held for sale | 75,039 | 91,433 | 4,520 | 1,754 | 5,978 | ||||||||||
| Deferred income tax assets, net | 47,495 | 47,495 | — | — | — | ||||||||||
| Other assets | 802,160 | 877,296 | 852,795 | 821,844 | 796,909 | ||||||||||
| Total assets | $ | 26,617,828 | $ | 24,692,208 | $ | 24,803,553 | $ | 22,988,911 | $ | 22,668,097 | |||||
| Liabilities and equity | |||||||||||||||
| Liabilities: | |||||||||||||||
| Senior notes payable and other debt | $ | 14,172,279 | $ | 12,158,773 | $ | 12,053,184 | $ | 10,256,092 | $ | 10,690,176 | |||||
| Accrued interest | 87,245 | 111,115 | 85,214 | 111,388 | 81,766 | ||||||||||
| Operating lease liabilities | 250,357 | 251,196 | 249,237 | 233,757 | 214,046 | ||||||||||
| Accounts payable and other liabilities | 1,141,309 | 1,145,700 | 1,194,162 | 1,137,980 | 1,063,707 | ||||||||||
| Liabilities related to assets held for sale | 5,007 | 5,463 | 1,531 | 1,216 | 947 | ||||||||||
| Deferred income tax liabilities | 47,533 | 200,831 | 147,524 | 149,454 | 205,056 | ||||||||||
| Total liabilities | 15,703,730 | 13,873,078 | 13,730,852 | 11,889,887 | 12,255,698 | ||||||||||
| Redeemable OP unitholder and noncontrolling interests | 197,701 | 273,678 | 312,478 | 222,662 | 206,386 | ||||||||||
| Commitments and contingencies | |||||||||||||||
| Equity: | |||||||||||||||
| Ventas stockholders’ equity: | |||||||||||||||
| Preferred stock, $1.00 par value; 10,000 shares authorized, unissued | — | — | — | — | — | ||||||||||
| Common stock, $0.25 par value; 373,094; 372,811; 372,726; 371,478; and 358,387 shares issued at March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019 and March 31,<br> 2019, respectively | 93,256 | 93,185 | 93,164 | 92,852 | 89,579 | ||||||||||
| Capital in excess of par value | 14,135,657 | 14,056,453 | 14,017,030 | 13,940,117 | 13,160,550 | ||||||||||
| Accumulated other comprehensive loss | (103,408 | ) | (34,564 | ) | (59,857 | ) | (39,671 | ) | (12,065 | ) | |||||
| Retained earnings (deficit) | (3,491,696 | ) | (3,669,050 | ) | (3,384,421 | ) | (3,173,287 | ) | (3,088,401 | ) | |||||
| Treasury stock, 22; 2; 3; 0; and 0 shares at March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019, and March 31, 2019, respectively | (867 | ) | (132 | ) | (210 | ) | — | — | |||||||
| Total Ventas stockholders’ equity | 10,632,942 | 10,445,892 | 10,665,706 | 10,820,011 | 10,149,663 | ||||||||||
| Noncontrolling interests | 83,455 | 99,560 | 94,517 | 56,351 | 56,350 | ||||||||||
| Total equity | 10,716,397 | 10,545,452 | 10,760,223 | 10,876,362 | 10,206,013 | ||||||||||
| Total liabilities and equity | $ | 26,617,828 | $ | 24,692,208 | $ | 24,803,553 | $ | 22,988,911 | $ | 22,668,097 |
| CONSOLIDATED STATEMENTS OF INCOME | ||||||
|---|---|---|---|---|---|---|
| (In thousands, except per share amounts) | ||||||
| For the Three Months Ended | ||||||
| March 31, | ||||||
| 2020 | 2019 | |||||
| Revenues | ||||||
| Rental income: | ||||||
| Triple-net leased | $ | 194,862 | $ | 200,068 | ||
| Office | 208,395 | 201,428 | ||||
| 403,257 | 401,496 | |||||
| Resident fees and services | 576,770 | 521,447 | ||||
| Office building and other services revenue | 3,128 | 2,518 | ||||
| Income from loans and investments | 24,046 | 17,126 | ||||
| Interest and other income | 4,853 | 287 | ||||
| Total revenues | 1,012,054 | 942,874 | ||||
| Expenses | ||||||
| Interest | 116,696 | 110,619 | ||||
| Depreciation and amortization | 248,837 | 235,920 | ||||
| Property-level operating expenses: | ||||||
| Senior living | 410,131 | 360,986 | ||||
| Office | 64,506 | 62,085 | ||||
| Triple-net leased | 6,331 | 7,433 | ||||
| 480,968 | 430,504 | |||||
| Office building services costs | 727 | 633 | ||||
| General, administrative and professional fees | 42,535 | 40,760 | ||||
| Loss on extinguishment of debt, net | — | 405 | ||||
| Merger-related expenses and deal costs | 8,218 | 2,180 | ||||
| Other | 3,708 | 23 | ||||
| Total expenses | 901,689 | 821,044 | ||||
| Income before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests | 110,365 | 121,830 | ||||
| Loss from unconsolidated entities | (10,876 | ) | (946 | ) | ||
| Gain on real estate dispositions | 226,225 | 5,447 | ||||
| Income tax benefit | 149,016 | 1,257 | ||||
| Income from continuing operations | 474,730 | 127,588 | ||||
| Net income | 474,730 | 127,588 | ||||
| Net income attributable to noncontrolling interests | 1,613 | 1,803 | ||||
| Net income attributable to common stockholders | $ | 473,117 | $ | 125,785 | ||
| Earnings per common share | ||||||
| Basic: | ||||||
| Income from continuing operations | $ | 1.27 | $ | 0.36 | ||
| Net income attributable to common stockholders | 1.27 | 0.35 | ||||
| Diluted: | ||||||
| Income from continuing operations | $ | 1.26 | $ | 0.35 | ||
| Net income attributable to common stockholders | 1.26 | 0.35 | ||||
| Weighted average shares used in computing earnings per common share | ||||||
| Basic | 372,829 | 356,853 | ||||
| Diluted | 375,997 | 360,619 |
| QUARTERLY CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share amounts) | |||||||||||||||
| For the Quarters Ended | |||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||
| Revenues | |||||||||||||||
| Rental income: | |||||||||||||||
| Triple-net leased | $ | 194,862 | $ | 191,065 | $ | 193,383 | $ | 196,382 | $ | 200,068 | |||||
| Office | 208,395 | 210,423 | 214,939 | 202,188 | 201,428 | ||||||||||
| 403,257 | 401,488 | 408,322 | 398,570 | 401,496 | |||||||||||
| Resident fees and services | 576,770 | 568,271 | 541,090 | 520,725 | 521,447 | ||||||||||
| Office building and other services revenue | 3,128 | 2,988 | 2,959 | 2,691 | 2,518 | ||||||||||
| Income from loans and investments | 24,046 | 22,382 | 30,164 | 19,529 | 17,126 | ||||||||||
| Interest and other income | 4,853 | 875 | 620 | 9,202 | 287 | ||||||||||
| Total revenues | 1,012,054 | 996,004 | 983,155 | 950,717 | 942,874 | ||||||||||
| Expenses | |||||||||||||||
| Interest | 116,696 | 116,707 | 113,967 | 110,369 | 110,619 | ||||||||||
| Depreciation and amortization | 248,837 | 348,910 | 234,603 | 226,187 | 235,920 | ||||||||||
| Property-level operating expenses: | |||||||||||||||
| Senior living | 410,131 | 405,564 | 388,011 | 366,837 | 360,986 | ||||||||||
| Office | 64,506 | 68,277 | 67,144 | 62,743 | 62,085 | ||||||||||
| Triple-net leased | 6,331 | 6,469 | 6,338 | 6,321 | 7,433 | ||||||||||
| 480,968 | 480,310 | 461,493 | 435,901 | 430,504 | |||||||||||
| Office building services costs | 727 | 544 | 627 | 515 | 633 | ||||||||||
| General, administrative and professional fees | 42,535 | 41,627 | 40,530 | 43,079 | 40,760 | ||||||||||
| Loss on extinguishment of debt, net | — | 39 | 37,434 | 4,022 | 405 | ||||||||||
| Merger-related expenses and deal costs | 8,218 | 4,151 | 4,304 | 4,600 | 2,180 | ||||||||||
| Other | 3,708 | (8,315 | ) | 2,164 | (11,481 | ) | 23 | ||||||||
| Total expenses | 901,689 | 983,973 | 895,122 | 813,192 | 821,044 | ||||||||||
| Income before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests | 110,365 | 12,031 | 88,033 | 137,525 | 121,830 | ||||||||||
| (Loss) income from unconsolidated entities | (10,876 | ) | 167 | 854 | (2,529 | ) | (946 | ) | |||||||
| Gain on real estate dispositions | 226,225 | 1,389 | 36 | 19,150 | 5,447 | ||||||||||
| Income tax benefit (expense) | 149,016 | (694 | ) | (2,005 | ) | 57,752 | 1,257 | ||||||||
| Income from continuing operations | 474,730 | 12,893 | 86,918 | 211,898 | 127,588 | ||||||||||
| Net income | 474,730 | 12,893 | 86,918 | 211,898 | 127,588 | ||||||||||
| Net income attributable to noncontrolling interests | 1,613 | 1,450 | 1,659 | 1,369 | 1,803 | ||||||||||
| Net income attributable to common stockholders | $ | 473,117 | $ | 11,443 | $ | 85,259 | $ | 210,529 | $ | 125,785 | |||||
| Earnings per common share | |||||||||||||||
| Basic: | |||||||||||||||
| Income from continuing operations | $ | 1.27 | $ | 0.03 | $ | 0.23 | $ | 0.59 | $ | 0.36 | |||||
| Net income attributable to common stockholders | 1.27 | 0.03 | 0.23 | 0.58 | 0.35 | ||||||||||
| Diluted: | |||||||||||||||
| Income from continuing operations | $ | 1.26 | $ | 0.03 | $ | 0.23 | $ | 0.58 | $ | 0.35 | |||||
| Net income attributable to common stockholders | 1.26 | 0.03 | 0.23 | 0.58 | 0.35 | ||||||||||
| Weighted average shares used in computing earnings per common share | |||||||||||||||
| Basic | 372,829 | 372,663 | 372,426 | 361,722 | 356,853 | ||||||||||
| Diluted | 375,997 | 376,453 | 376,625 | 365,553 | 360,619 |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
|---|---|---|---|---|---|---|
| (In thousands) | ||||||
| For the Three Months Ended | ||||||
| March 31, | ||||||
| 2020 | 2019 | |||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 474,730 | $ | 127,588 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 248,837 | 235,920 | ||||
| Amortization of deferred revenue and lease intangibles, net | (2,973 | ) | (2,846 | ) | ||
| Other non-cash amortization | 3,851 | 6,131 | ||||
| Stock-based compensation | 10,514 | 8,405 | ||||
| Straight-lining of rental income | (6,788 | ) | (8,489 | ) | ||
| Loss on extinguishment of debt, net | — | 405 | ||||
| Gain on real estate dispositions | (226,225 | ) | (5,447 | ) | ||
| Gain on real estate loan investments | (167 | ) | — | |||
| Income tax benefit | (150,273 | ) | (1,715 | ) | ||
| Loss from unconsolidated entities | 10,876 | 946 | ||||
| Distributions from unconsolidated entities | 1,600 | 1,200 | ||||
| Other | 3,805 | 2,283 | ||||
| Changes in operating assets and liabilities: | ||||||
| Increase in other assets | (13,768 | ) | (13,704 | ) | ||
| Decrease in accrued interest | (23,032 | ) | (18,047 | ) | ||
| (Decrease) increase in accounts payable and other liabilities | (16,535 | ) | 3,490 | |||
| Net cash provided by operating activities | 314,452 | 336,120 | ||||
| Cash flows from investing activities: | ||||||
| Net investment in real estate property | (79,539 | ) | (13,097 | ) | ||
| Investment in loans receivable | (1,051 | ) | (4,257 | ) | ||
| Proceeds from real estate disposals | 625,439 | 17,551 | ||||
| Proceeds from loans receivable | 99,117 | 1,275 | ||||
| Development project expenditures | (94,229 | ) | (49,652 | ) | ||
| Capital expenditures | (26,789 | ) | (21,955 | ) | ||
| Investment in unconsolidated entities | (5,809 | ) | (687 | ) | ||
| Insurance proceeds for property damage claims | 42 | 2,998 | ||||
| Net cash provided by (used in) investing activities | 517,181 | (67,824 | ) | |||
| Cash flows from financing activities: | ||||||
| Net change in borrowings under revolving credit facilities | 2,762,153 | (700,775 | ) | |||
| Net change in borrowings under commercial paper program | (565,524 | ) | 194,498 | |||
| Proceeds from debt | 82,759 | 706,591 | ||||
| Repayment of debt | (62,973 | ) | (262,570 | ) | ||
| Payment of deferred financing costs | (1,963 | ) | (6,837 | ) | ||
| Issuance of common stock, net | — | 98,378 | ||||
| Cash distribution to common stockholders | (296,304 | ) | (282,874 | ) | ||
| Cash distribution to redeemable OP unitholders | (2,325 | ) | (2,216 | ) | ||
| Cash issued for redemption of OP Units | (570 | ) | — | |||
| Contributions from noncontrolling interests | 155 | 1,223 | ||||
| Distributions to noncontrolling interests | (2,543 | ) | (2,623 | ) | ||
| Proceeds from stock option exercises | 3,389 | 4,316 | ||||
| Other | (4,954 | ) | (6,874 | ) | ||
| Net cash provided by (used in) financing activities | 1,911,300 | (259,763 | ) | |||
| Net increase in cash, cash equivalents and restricted cash | 2,742,933 | 8,533 | ||||
| Effect of foreign currency translation | (2,776 | ) | 234 | |||
| Cash, cash equivalents and restricted cash at beginning of period | 146,102 | 131,464 | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | 2,886,259 | $ | 140,231 | ||
| Supplemental schedule of non-cash activities: | ||||||
| Assets acquired and liabilities assumed from acquisitions and other: | ||||||
| Real estate investments | $ | 533 | $ | — | ||
| Other assets | 56 | — | ||||
| Other liabilities | 398 | — | ||||
| Noncontrolling interests | 191 | — |
| QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | |||||||||||||||
| For the Quarters Ended | |||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||
| Cash flows from operating activities: | |||||||||||||||
| Net income | $ | 474,730 | $ | 12,893 | $ | 86,918 | $ | 211,898 | $ | 127,588 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
| Depreciation and amortization | 248,837 | 348,910 | 234,603 | 226,187 | 235,920 | ||||||||||
| Amortization of deferred revenue and lease intangibles, net | (2,973 | ) | (1,483 | ) | (339 | ) | (3,299 | ) | (2,846 | ) | |||||
| Other non-cash amortization | 3,851 | 6,075 | 5,323 | 5,456 | 6,131 | ||||||||||
| Stock-based compensation | 10,514 | 7,253 | 8,195 | 10,070 | 8,405 | ||||||||||
| Straight-lining of rental income | (6,788 | ) | (4,393 | ) | (8,680 | ) | (8,511 | ) | (8,489 | ) | |||||
| Loss on extinguishment of debt, net | — | 39 | 37,434 | 4,022 | 405 | ||||||||||
| Gain on real estate dispositions | (226,225 | ) | (1,389 | ) | (36 | ) | (19,150 | ) | (5,447 | ) | |||||
| Gain on real estate loan investments | (167 | ) | — | — | — | — | |||||||||
| Income tax (benefit) expense | (150,273 | ) | 1,331 | 946 | (59,480 | ) | (1,715 | ) | |||||||
| Loss (income) from unconsolidated entities | 10,876 | (157 | ) | (854 | ) | 2,529 | 946 | ||||||||
| Distributions from unconsolidated entities | 1,600 | 200 | 100 | 100 | 1,200 | ||||||||||
| Other | 3,805 | 4,028 | 4,145 | 2,808 | 2,283 | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||
| Increase in other assets | (13,768 | ) | (17,327 | ) | (14,894 | ) | (30,768 | ) | (13,704 | ) | |||||
| (Decrease) increase in accrued interest | (23,032 | ) | 25,646 | (27,307 | ) | 29,445 | (18,047 | ) | |||||||
| (Decrease) increase in accounts payable and other liabilities | (16,535 | ) | (27,391 | ) | 28,775 | 21,792 | 3,490 | ||||||||
| Net cash provided by operating activities | 314,452 | 354,235 | 354,329 | 393,099 | 336,120 | ||||||||||
| Cash flows from investing activities: | |||||||||||||||
| Net investment in real estate property | (79,539 | ) | (18,320 | ) | (731,766 | ) | (194,942 | ) | (13,097 | ) | |||||
| Investment in loans receivable | (1,051 | ) | (610 | ) | (750,429 | ) | (502,891 | ) | (4,257 | ) | |||||
| Proceeds from real estate disposals | 625,439 | 70,300 | 3,150 | 56,854 | 17,551 | ||||||||||
| Proceeds from loans receivable | 99,117 | 8,626 | 719,026 | 288,382 | 1,275 | ||||||||||
| Development project expenditures | (94,229 | ) | (174,078 | ) | (115,619 | ) | (64,574 | ) | (49,652 | ) | |||||
| Capital expenditures | (26,789 | ) | (56,937 | ) | (41,406 | ) | (36,426 | ) | (21,955 | ) | |||||
| Distributions from unconsolidated entities | — | 21 | 151 | — | — | ||||||||||
| Investment in unconsolidated entities | (5,809 | ) | (2,144 | ) | (777 | ) | (247 | ) | (687 | ) | |||||
| Insurance proceeds for property damage claims | 42 | 9,722 | 3,518 | 13,941 | 2,998 | ||||||||||
| Net cash provided by (used in) investing activities | 517,181 | (163,420 | ) | (914,152 | ) | (439,903 | ) | (67,824 | ) | ||||||
| Cash flows from financing activities: | |||||||||||||||
| Net change in borrowings under revolving credit facilities | 2,762,153 | (848,568 | ) | 785,228 | 194,224 | (700,775 | ) | ||||||||
| Net change in borrowings under commercial paper program | (565,524 | ) | 261,016 | 34,698 | 75,312 | 194,498 | |||||||||
| Proceeds from debt | 82,759 | 806,614 | 1,493,643 | 6,343 | 706,591 | ||||||||||
| Repayment of debt | (62,973 | ) | (167,781 | ) | (1,459,074 | ) | (734,491 | ) | (262,570 | ) | |||||
| Payment of deferred financing costs | (1,963 | ) | (3,536 | ) | (11,030 | ) | — | (6,837 | ) | ||||||
| Issuance of common stock, net | — | (165 | ) | 76,217 | 767,655 | 98,378 | |||||||||
| Cash distribution to common stockholders | (296,304 | ) | (295,931 | ) | (294,647 | ) | (284,268 | ) | (282,874 | ) | |||||
| Cash distribution to redeemable OP unitholders | (2,325 | ) | (2,336 | ) | (2,331 | ) | (2,335 | ) | (2,216 | ) | |||||
| Cash issued for redemption of OP Units | (570 | ) | (1,842 | ) | (361 | ) | — | — | |||||||
| Contributions from noncontrolling interests | 155 | 1,323 | 1,365 | 2,371 | 1,223 | ||||||||||
| Distributions to noncontrolling interests | (2,543 | ) | (3,314 | ) | (2,300 | ) | (1,480 | ) | (2,623 | ) | |||||
| Proceeds from stock option exercises | 3,389 | 2,045 | 8,396 | 21,422 | 4,316 | ||||||||||
| Other | (4,954 | ) | (1,918 | ) | 131 | 142 | (6,874 | ) | |||||||
| Net cash provided by (used in) financing activities | 1,911,300 | (254,393 | ) | 629,935 | 44,895 | (259,763 | ) | ||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 2,742,933 | (63,578 | ) | 70,112 | (1,909 | ) | 8,533 | ||||||||
| Effect of foreign currency translation | (2,776 | ) | 1,084 | 188 | (26 | ) | 234 | ||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 146,102 | 208,596 | 138,296 | 140,231 | 131,464 | ||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 2,886,259 | $ | 146,102 | $ | 208,596 | $ | 138,296 | $ | 140,231 |
| QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | |||||||||||
| For the Quarters Ended | |||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||
| Supplemental schedule of non-cash activities: | |||||||||||
| Assets acquired and liabilities assumed from acquisitions and other: | |||||||||||
| Real estate investments | $ | 533 | $ | 657 | $ | 1,055,412 | $ | 1,069 | $ | — | |
| Other assets | 56 | 17 | 10,940 | 183 | — | ||||||
| Debt | — | — | 907,746 | — | — | ||||||
| Other liabilities | 398 | 785 | 45,084 | 1,252 | — | ||||||
| Deferred income tax liability | — | 95 | — | — | — | ||||||
| Noncontrolling interests | 191 | (206 | ) | 113,522 | — | — | |||||
| Equity issued for redemption of OP Units | — | 127 | — | — | — |
| NON-GAAP FINANCIAL MEASURES RECONCILIATION | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Funds From Operations (FFO) and Funds Available for Distribution (FAD)^1^ | ||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||
| Q1 YoY | ||||||||||||||||||||
| 2019 | 2020 | Growth | ||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | FY | Q1 | '19-'20 | ||||||||||||||
| Net income attributable to common stockholders | $ | 125,785 | $ | 210,529 | $ | 85,259 | $ | 11,443 | $ | 433,016 | $ | 473,117 | 276 | % | ||||||
| Net income attributable to common stockholders per share | $ | 0.35 | $ | 0.58 | $ | 0.23 | $ | 0.03 | $ | 1.17 | $ | 1.26 | 260 | % | ||||||
| Adjustments: | ||||||||||||||||||||
| Depreciation and amortization on real estate assets | 234,471 | 224,630 | 233,078 | 347,371 | 1,039,550 | 247,330 | ||||||||||||||
| Depreciation on real estate assets related to noncontrolling interests | (1,834 | ) | (1,750 | ) | (2,496 | ) | (3,682 | ) | (9,762 | ) | (3,843 | ) | ||||||||
| Depreciation on real estate assets related to unconsolidated entities | 165 | 167 | (456 | ) | 311 | 187 | 561 | |||||||||||||
| Gain on real estate dispositions | (5,447 | ) | (19,150 | ) | (36 | ) | (1,389 | ) | (26,022 | ) | (226,225 | ) | ||||||||
| Gain (loss) on real estate dispositions related to noncontrolling interests | 354 | — | — | (11 | ) | 343 | (6 | ) | ||||||||||||
| Gain on real estate dispositions related to unconsolidated entities | (799 | ) | (2 | ) | (67 | ) | (395 | ) | (1,263 | ) | — | |||||||||
| Subtotal: FFO add-backs | 226,910 | 203,895 | 230,023 | 342,205 | 1,003,033 | 17,817 | ||||||||||||||
| Subtotal: FFO add-backs per share | $ | 0.63 | $ | 0.56 | $ | 0.61 | $ | 0.91 | $ | 2.71 | $ | 0.05 | ||||||||
| FFO (Nareit) attributable to common stockholders | $ | 352,695 | $ | 414,424 | $ | 315,282 | $ | 353,648 | $ | 1,436,049 | $ | 490,934 | 39 | % | ||||||
| FFO (Nareit) attributable to common stockholders per share | $ | 0.98 | $ | 1.13 | $ | 0.84 | $ | 0.94 | $ | 3.88 | $ | 1.31 | 34 | % | ||||||
| Adjustments: | ||||||||||||||||||||
| Change in fair value of financial instruments | (38 | ) | (11 | ) | (7 | ) | (22 | ) | (78 | ) | (10 | ) | ||||||||
| Non-cash income tax (benefit) expense | (1,714 | ) | (59,480 | ) | 946 | 1,330 | (58,918 | ) | (140,895 | ) | ||||||||||
| Loss on extinguishment of debt, net | 405 | 4,022 | 37,434 | 39 | 41,900 | — | ||||||||||||||
| (Gain) loss on non-real estate dispositions related to unconsolidated entities | — | (3 | ) | (34 | ) | 19 | (18 | ) | 239 | |||||||||||
| Merger-related expenses, deal costs and re-audit costs | 2,829 | 5,564 | 4,726 | 5,089 | 18,208 | 8,773 | ||||||||||||||
| Amortization of other intangibles | 121 | 121 | 121 | 121 | 484 | 118 | ||||||||||||||
| Other items related to unconsolidated entities | 1,038 | 1,377 | 502 | 374 | 3,291 | (875 | ) | |||||||||||||
| Non-cash impact of changes to equity plan | 2,334 | 2,584 | 1,729 | 1,165 | 7,812 | 6,895 | ||||||||||||||
| Natural disaster (recoveries) expenses, net | (1,539 | ) | (13,339 | ) | (101 | ) | (10,704 | ) | (25,683 | ) | 941 | |||||||||
| Subtotal: normalized FFO add-backs | 3,436 | (59,165 | ) | 45,316 | (2,589 | ) | (13,002 | ) | (124,814 | ) | ||||||||||
| Subtotal: normalized FFO add-backs per share | $ | 0.01 | $ | (0.16 | ) | $ | 0.12 | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.33 | ) | ||||
| Normalized FFO attributable to common stockholders | $ | 356,131 | $ | 355,259 | $ | 360,598 | $ | 351,059 | $ | 1,423,047 | $ | 366,120 | 3 | % | ||||||
| Normalized FFO attributable to common stockholders per share | $ | 0.99 | $ | 0.97 | $ | 0.96 | $ | 0.93 | $ | 3.85 | $ | 0.97 | (2 | %) | ||||||
| Non-cash items included in normalized FFO: | ||||||||||||||||||||
| Amortization of deferred revenue and lease intangibles, net | (2,846 | ) | (3,299 | ) | (339 | ) | (1,483 | ) | (7,967 | ) | (2,973 | ) | ||||||||
| Other non-cash amortization, including fair market value of debt | 6,131 | 5,335 | 5,444 | 6,075 | 22,985 | 3,851 | ||||||||||||||
| Stock-based compensation | 6,071 | 7,486 | 6,466 | 6,088 | 26,111 | 3,619 | ||||||||||||||
| Straight-lining of rental income | (8,489 | ) | (8,511 | ) | (8,680 | ) | (4,393 | ) | (30,073 | ) | (6,788 | ) | ||||||||
| Subtotal: non-cash items included in normalized FFO | 867 | 1,011 | 2,891 | 6,287 | 11,056 | (2,291 | ) | |||||||||||||
| FAD Capital Expenditures^2^ | (23,710 | ) | (33,777 | ) | (39,695 | ) | (55,400 | ) | (152,582 | ) | (24,972 | ) | ||||||||
| Normalized FAD attributable to common stockholders | $ | 333,288 | $ | 322,493 | $ | 323,794 | $ | 301,946 | $ | 1,281,521 | $ | 338,857 | 2 | % | ||||||
| Merger-related expenses, deal costs and re-audit costs | (2,829 | ) | (5,564 | ) | (4,726 | ) | (5,089 | ) | (18,208 | ) | (8,773 | ) | ||||||||
| Other items related to unconsolidated entities | (1,038 | ) | (1,377 | ) | (502 | ) | (374 | ) | (3,291 | ) | 875 | |||||||||
| FAD attributable to common stockholders | $ | 329,421 | $ | 315,552 | $ | 318,566 | $ | 296,483 | $ | 1,260,022 | $ | 330,959 | 0 | % | ||||||
| Weighted average diluted shares | 360,619 | 365,553 | 376,625 | 376,453 | 369,886 | 375,997 | ||||||||||||||
| ^1^ | Per share quarterly amounts may not add to annual per share amounts due to material changes in the Company’s weighted average diluted share count, if any. Per share amounts may not add to total per share amounts due to rounding. | |||||||||||||||||||
| --- | --- | |||||||||||||||||||
| ^2^ | 2019 FAD Capital Expenditures have been updated to exclude the impact of Initial Capital Expenditures. Impact on quarterly reported values are as follows: Q1 2019 ($0.3M), Q2 2019 ($0.6M), Q3 2019 ($1.7M), Q4 2019 ($1.5M), Q1 2020 ($1.8M). |
Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers FFO, normalized FFO, FAD and normalized FAD to be appropriate supplemental measures of operating performance of an equity REIT. In particular, the Company believes that normalized FFO is useful because it allows investors, analysts and Company management to compare the Company’s operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by non-recurring items and other non-operational events such as transactions and litigation. In some cases, the Company provides information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and Company management to assess the impact of those items on the Company’s financial results.
The Company uses the National Association of Real Estate Investment Trusts (“Nareit”) definition of FFO. Nareit defines FFO as net income attributable to common stockholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property, including gains or losses on re-measurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. The Company defines normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to acquisition lawsuits; (b) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of the Company’s debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to the Company’s executive equity compensation plan, derivative transactions that have non-cash mark-to-market impacts on the Company’s income statement and non-cash charges related to lease terminations; (d) the financial impact of contingent consideration, severance-related costs and charitable donations made to the Ventas Charitable Foundation; (e) gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; (f) gains and losses on non-real estate dispositions and other unusual items related to unconsolidated entities; (g) expenses related to the re-audit and re-review in 2014 of the Company’s historical financial statements and related matters; and (h) net expenses or recoveries related to natural disasters.
Normalized FAD represents normalized FFO excluding non-cash components and straight-line rental adjustments, and deducting FAD Capital Expenditures. FAD Capital Expenditures are (i) Ventas-invested capital expenditures, whether routine or non-routine, that extend the useful life of a property but are not expected to generate incremental income for the Company (ii) Office Building and Triple-Net leasing commissions paid to third-party agents and (iii) capital expenditures for second-generation tenant improvements. It excludes (i) costs for a first generation lease (e.g., a development project) or related to properties that have undergone redevelopment and (ii) Initial Capital Expenditures, which are defined as capital expenditures required to bring a newly acquired or newly transitioned property up to standard. Initial Capital Expenditures are typically incurred within the first 12 months after acquisition or transition, respectively.
FAD represents normalized FAD after subtracting merger-related expenses, deal costs and re-audit costs and other unusual items related to unconsolidated entities.
FFO, normalized FFO, FAD and normalized FAD presented herein may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO, normalized FFO, FAD and normalized FAD should not be considered as alternatives to net income attributable to common stockholders (determined in accordance with GAAP) as indicators of the Company’s financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company’s liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company’s needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO, normalized FFO, FAD and normalized FAD should be examined in conjunction with net income attributable to common stockholders as presented elsewhere herein.
| NON-GAAP FINANCIAL MEASURES RECONCILIATION | |||
|---|---|---|---|
| Net Debt to Adjusted Pro Forma EBITDA^1^ | |||
| (Dollars in thousands) | |||
| For the Three Months Ended March 31, 2020: | |||
| Net income attributable to common stockholders | $ | 473,117 | |
| Adjustments: | |||
| Interest | 116,696 | ||
| Taxes (including tax amounts in general, administrative and professional fees) | (147,707 | ) | |
| Depreciation and amortization | 248,837 | ||
| Non-cash stock-based compensation expense | 10,514 | ||
| Merger-related expenses, deal costs and re-audit costs | 8,218 | ||
| Net income attributable to noncontrolling interests, adjusted for consolidated joint venture partners’ share of EBITDA | (6,098 | ) | |
| Loss from unconsolidated entities, adjusted for Ventas share of EBITDA from unconsolidated entities | 17,733 | ||
| Gain on real estate dispositions | (226,225 | ) | |
| Unrealized foreign currency gains | (73 | ) | |
| Change in fair value of financial instruments | (9 | ) | |
| Natural disaster expenses (recoveries), net | 783 | ||
| Adjusted EBITDA | $ | 495,786 | |
| Adjustments for current period activity | (8,920 | ) | |
| Adjusted Pro Forma EBITDA | $ | 486,866 | |
| Adjusted Pro Forma EBITDA annualized | $ | 1,947,464 | |
| As of March 31, 2020: | |||
| Total debt | $ | 14,172,279 | |
| Cash | (2,848,115 | ) | |
| Restricted cash pertaining to debt | (19,290 | ) | |
| Consolidated joint venture partners’ share of debt | (221,047 | ) | |
| Ventas share of debt from unconsolidated entities | 113,725 | ||
| Net debt | $ | 11,197,551 | |
| Net debt to Adjusted Pro Forma EBITDA | 5.7 | x |
^1^ Totals may not add due to rounding.
The table above illustrates net debt to pro forma earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding gains or losses on extinguishment of debt, consolidated joint venture partners’ share of EBITDA, merger-related expenses and deal costs, expenses related to the re-audit and re-review in 2014 of the Company’s historical financial statements, net gains or losses on real estate activity, gains or losses on re-measurement of equity interest upon acquisition, changes in the fair value of financial instruments, unrealized foreign currency gains or losses, net expenses or recoveries related to natural disasters and non-cash charges related to lease terminations, and including the Company’s share of EBITDA from unconsolidated entities and adjustments for other immaterial or identified items (“Adjusted EBITDA”).
The information above considers the pro forma effect on Adjusted EBITDA of the Company’s activity during the three months ended March 31, 2020, as if the transactions had been consummated as of the beginning of the period (“Adjusted Pro Forma EBITDA”).
The Company believes that net debt, Adjusted Pro Forma EBITDA and net debt to Adjusted Pro Forma EBITDA are useful to investors, analysts and Company management because they allow the comparison of the Company’s credit strength between periods and to other real estate companies without the effect of items that by their nature are not comparable from period to period.
| NON-GAAP FINANCIAL MEASURES RECONCILIATION | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Operating Income (NOI) and Same-Store Cash NOI by Segment (Constant Currency) | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||
| For the Three Months Ended March 31, 2020 and 2019 | |||||||||||||||
| Triple-Net | Senior Housing Operating | Office | Non-Segment | Total | |||||||||||
| For the Three Months Ended March 31, 2020: | |||||||||||||||
| Net income attributable to common stockholders | $ | 473,117 | |||||||||||||
| Adjustments: | |||||||||||||||
| Interest and other income | (4,853 | ) | |||||||||||||
| Interest | 116,696 | ||||||||||||||
| Depreciation and amortization | 248,837 | ||||||||||||||
| General, administrative and professional fees | 42,535 | ||||||||||||||
| Merger-related expenses and deal costs | 8,218 | ||||||||||||||
| Other | 3,708 | ||||||||||||||
| Loss from unconsolidated entities | 10,876 | ||||||||||||||
| Gain on real estate dispositions | (226,225 | ) | |||||||||||||
| Income tax benefit | (149,016 | ) | |||||||||||||
| Net income attributable to noncontrolling interests | 1,613 | ||||||||||||||
| Reported segment NOI | $ | 188,531 | $ | 166,639 | $ | 145,336 | $ | 25,000 | $ | 525,506 | |||||
| Adjustments to Cash NOI: | |||||||||||||||
| Straight-lining of rental income | (2,693 | ) | — | (4,095 | ) | — | (6,788 | ) | |||||||
| Non-cash rental income | (1,529 | ) | — | (1,104 | ) | — | (2,633 | ) | |||||||
| Cash modification fees | 3,029 | — | (1,000 | ) | — | 2,029 | |||||||||
| NOI not included in cash NOI^1^ | (582 | ) | 210 | (7,255 | ) | — | (7,627 | ) | |||||||
| Non-segment NOI | — | — | — | (25,000 | ) | (25,000 | ) | ||||||||
| Cash NOI | $ | 186,756 | $ | 166,849 | $ | 131,882 | $ | — | $ | 485,487 | |||||
| Adjustments to Same-store NOI: | |||||||||||||||
| Cash modification fees not in same-store | — | — | 1,000 | — | 1,000 | ||||||||||
| Cash NOI not included in same-store | (941 | ) | (25,507 | ) | (9,166 | ) | — | (35,614 | ) | ||||||
| Same-store cash NOI (constant currency) | $ | 185,815 | $ | 141,342 | $ | 123,716 | $ | — | $ | 450,873 | |||||
| Percentage increase | 3.9 | % | (10.4 | %) | 5.8 | % | (0.6 | %) |
| For the Three Months Ended March 31, 2019: | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net income attributable to common stockholders | $ | 125,785 | |||||||||||||
| Adjustments: | |||||||||||||||
| Interest and other income | (287 | ) | |||||||||||||
| Interest | 110,619 | ||||||||||||||
| Depreciation and amortization | 235,920 | ||||||||||||||
| General, administrative and professional fees | 40,760 | ||||||||||||||
| Loss on extinguishment of debt, net | 405 | ||||||||||||||
| Merger-related expenses and deal costs | 2,180 | ||||||||||||||
| Other | 23 | ||||||||||||||
| Loss from unconsolidated entities | 946 | ||||||||||||||
| Gain on real estate dispositions | (5,447 | ) | |||||||||||||
| Income tax benefit | (1,257 | ) | |||||||||||||
| Net income attributable to noncontrolling interests | 1,803 | ||||||||||||||
| Reported segment NOI | $ | 192,635 | $ | 160,461 | $ | 140,485 | $ | 17,869 | $ | 511,450 | |||||
| Adjustments to Cash NOI: | |||||||||||||||
| Straight-lining of rental income | (3,581 | ) | — | (4,908 | ) | — | (8,489 | ) | |||||||
| Non-cash rental income | (1,020 | ) | — | (1,786 | ) | — | (2,806 | ) | |||||||
| Cash modification fees | 100 | — | — | — | 100 | ||||||||||
| NOI not included in cash NOI^1^ | (8,067 | ) | (768 | ) | (10,592 | ) | — | (19,427 | ) | ||||||
| Non-segment NOI | — | — | — | (17,869 | ) | (17,869 | ) | ||||||||
| NOI impact from change in FX | (103 | ) | (188 | ) | — | — | (291 | ) | |||||||
| Cash NOI | $ | 179,964 | $ | 159,505 | $ | 123,199 | $ | — | $ | 462,668 | |||||
| Adjustments to Same-store NOI: | |||||||||||||||
| Cash NOI not included in same-store | (1,132 | ) | (1,682 | ) | (6,231 | ) | — | (9,045 | ) | ||||||
| Same-store cash NOI (constant currency) | $ | 178,832 | $ | 157,823 | $ | 116,968 | $ | — | $ | 453,623 |
^1^ Excludes sold assets, assets held for sale, development properties not yet operational and land parcels.
| For the Three Months Ended March 31, 2020 and December 31, 2019 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Triple-Net | Senior Housing Operating | Office | Non-Segment | Total | |||||||||||
| For the Three Months Ended March 31, 2020: | |||||||||||||||
| Net income attributable to common stockholders | $ | 473,117 | |||||||||||||
| Adjustments: | |||||||||||||||
| Interest and other income | (4,853 | ) | |||||||||||||
| Interest | 116,696 | ||||||||||||||
| Depreciation and amortization | 248,837 | ||||||||||||||
| General, administrative and professional fees | 42,535 | ||||||||||||||
| Merger-related expenses and deal costs | 8,218 | ||||||||||||||
| Other | 3,708 | ||||||||||||||
| Loss from unconsolidated entities | 10,876 | ||||||||||||||
| Gain on real estate dispositions | (226,225 | ) | |||||||||||||
| Income tax benefit | (149,016 | ) | |||||||||||||
| Net income attributable to noncontrolling interests | 1,613 | ||||||||||||||
| Reported segment NOI | $ | 188,531 | $ | 166,639 | $ | 145,336 | $ | 25,000 | $ | 525,506 | |||||
| Adjustments to Cash NOI: | |||||||||||||||
| Straight-lining of rental income | (2,693 | ) | — | (4,095 | ) | — | (6,788 | ) | |||||||
| Non-cash rental income | (1,529 | ) | — | (1,104 | ) | — | (2,633 | ) | |||||||
| Cash modification fees | 3,029 | — | (1,000 | ) | — | 2,029 | |||||||||
| NOI not included in cash NOI^1^ | (582 | ) | 210 | (7,255 | ) | — | (7,627 | ) | |||||||
| Non-segment NOI | — | — | — | (25,000 | ) | (25,000 | ) | ||||||||
| Cash NOI | $ | 186,756 | $ | 166,849 | $ | 131,882 | $ | — | $ | 485,487 | |||||
| Adjustments to Same-store NOI: | |||||||||||||||
| Cash modification fees not in same-store | — | — | 1,000 | — | 1,000 | ||||||||||
| Cash NOI not included in same-store | 8 | (3,735 | ) | (8,545 | ) | — | (12,272 | ) | |||||||
| Same-store cash NOI (constant currency) | $ | 186,764 | $ | 163,114 | $ | 124,337 | $ | — | $ | 474,215 | |||||
| Percentage increase | 3.7 | % | 2.3 | % | 2.5 | % | 2.9 | % |
| For the Three Months Ended December 31, 2019: | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net income attributable to common stockholders | $ | 11,443 | |||||||||||||
| Adjustments: | |||||||||||||||
| Interest and other income | (875 | ) | |||||||||||||
| Interest | 116,707 | ||||||||||||||
| Depreciation and amortization | 348,910 | ||||||||||||||
| General, administrative and professional fees | 41,627 | ||||||||||||||
| Loss on extinguishment of debt, net | 39 | ||||||||||||||
| Merger-related expenses and deal costs | 4,151 | ||||||||||||||
| Other | (8,315 | ) | |||||||||||||
| Income from unconsolidated entities | (167 | ) | |||||||||||||
| Gain on real estate dispositions | (1,389 | ) | |||||||||||||
| Income tax expense | 694 | ||||||||||||||
| Net income attributable to noncontrolling interests | 1,450 | ||||||||||||||
| Reported segment NOI | $ | 184,596 | $ | 162,707 | $ | 143,664 | $ | 23,308 | $ | 514,275 | |||||
| Adjustments to Cash NOI: | |||||||||||||||
| Straight-lining of rental income | (112 | ) | — | (4,281 | ) | — | (4,393 | ) | |||||||
| Non-cash rental income | (364 | ) | — | (761 | ) | — | (1,125 | ) | |||||||
| Cash modification fees | — | — | (180 | ) | — | (180 | ) | ||||||||
| NOI not included in cash NOI^1^ | (3,899 | ) | 39 | (11,587 | ) | — | (15,447 | ) | |||||||
| Non-segment NOI | — | — | — | (23,308 | ) | (23,308 | ) | ||||||||
| NOI impact from change in FX | (36 | ) | (632 | ) | — | — | (668 | ) | |||||||
| Cash NOI | $ | 180,185 | $ | 162,114 | $ | 126,855 | $ | — | $ | 469,154 | |||||
| Adjustments to Same-store NOI: | |||||||||||||||
| Cash NOI not included in same-store | — | (2,601 | ) | (5,562 | ) | — | (8,163 | ) | |||||||
| Same-store cash NOI (constant currency) | $ | 180,185 | $ | 159,513 | $ | 121,293 | $ | — | $ | 460,991 |
^1^Excludes sold assets, assets held for sale, development properties not yet operational and land parcels.
The Company considers NOI and same-store cash NOI as important supplemental measures because they allow investors, analysts and the Company’s management to assess its unlevered property-level operating results and to compare its operating results with those of other real estate companies and between periods on a consistent basis. The Company defines NOI as total revenues, less interest and other income, property-level operating expenses and office building services costs. In the case of NOI, cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies. The Company defines same-store as properties owned, consolidated and operational for the full period in both comparison periods and are not otherwise excluded; provided, however, that the Company may include selected properties that otherwise meet the same-store criteria if they are included in substantially all of, but not a full, period for one or both of the comparison periods, and in the Company’s judgment such inclusion provides a more meaningful presentation of its portfolio performance. Newly acquired or recently developed or redeveloped properties in the Company’s Seniors Housing Operating Portfolio (“SHOP”) will be included in same-store once they are stabilized for the full period in both periods presented. These properties are considered stabilized upon the earlier of (a) the achievement of 80% sustained occupancy or (b) 24 months from the date of acquisition or substantial completion of work. Recently developed or redeveloped properties in the Office and Triple-Net Leased Portfolios will be included in same-store once substantial completion of work has occurred for the full period in both periods presented. SHOP and Triple-Net Leased properties that have undergone operator or business model transitions will be included in same-store once operating under consistent operating structures for the full period in both periods presented.
Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by materially disruptive events such as flood or fire; (iii) those properties that are currently undergoing a materially disruptive redevelopment; (iv) for the Office Portfolio, those properties for which management has an intention to institute a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase net operating income, or maintain a market-competitive position and/or achieve property stabilization; or (v) for the SHOP and Triple-Net Leased Portfolios, those properties that are scheduled to undergo operator or business model transitions, or have transitioned operators or business models after the start of the prior comparison period.
To eliminate the impact of exchange rate movements, all same-store NOI measures assume constant exchange rates across comparable periods, using the following methodology: the current period’s results are shown in actual reported USD, while prior comparison period’s results are adjusted and converted to USD based on the average exchange rate for the current period.
Contacts
Juan Sanabria
\(877\) 4-VENTAS