- Strong Earnings, Balance Sheet and
Liquidity
- Enhanced Portfolio Through $1.5
Billion Life Science and Innovation Real Estate Acquisition Leased
by Leading Universities, Academic Medical Centers and Research
Institutions
- Commitment to Grow High-Quality
Hospital Business
- Updated and Improved 2016
Guidance
Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today
announced strong earnings for the third quarter ended September 30,
2016, driven by the Company’s high-quality healthcare and senior
living properties and accretive investments:
- Income from continuing operations per
diluted common share for the third quarter 2016 grew 223 percent to
$0.42 compared to the same period in 2015. The increase from the
third quarter 2015 is principally due to accretive investments,
improved property performance, and lower transaction costs.
- Normalized Funds From Operations
(“FFO”) for the third quarter 2016 grew 5 percent to $1.03 per
diluted common share on a comparable basis (“Comparable”), which
adjusts all prior periods for the effects of the successful spin
off (the “Spin-Off”) of Care Capital Properties, Inc. (“CCP”)
(NYSE: CCP) completed in August 2015.
- Reported FFO per diluted common share,
as defined by the National Association of Real Estate Investment
Trusts (“NAREIT FFO”), for the third quarter 2016 grew 28 percent
to $1.00 compared to the same period in 2015.
Strong Quarter Demonstrates the Ventas
Advantage
“We are delighted to report strong financial performance in the
third quarter, delivered by our excellent people, platforms and
properties,” said Chairman and Chief Executive Officer Debra A.
Cafaro. “With superior earnings growth, outstanding liquidity,
financial strength, terrific capital markets execution and
disciplined capital allocation, the Ventas team continues to
deliver on our promise of producing reliable growth and income from
a high-quality diversified portfolio. The completion of our
acquisition of life science and innovation centers leased by
leading universities and our commitment to finance Ardent’s
expansion and build an excellent hospital business further solidify
our position as the premier provider of capital at the intersection
of health care and real estate. We remain confident in our ability
to continue to drive shareholder value.”
Third Quarter Portfolio
Performance
Constant currency cash net operating income (“NOI”) growth for
the Company’s quarterly same-store total portfolio (1,184 assets)
was 2.4 percent on a reported basis for the third quarter 2016.
Reported quarterly same-store results by segment follow:
- The seniors housing operating portfolio
(“SHOP”) same-store cash NOI grew 2.0 percent, fueled by growth in
key markets.
- The triple net leased portfolio
same-store cash NOI grew 4.2 percent, benefiting from lease
escalations.
- Medical office building (“MOB”)
portfolio same-store cash NOI grew 0.2 percent, in line with
expectations.
Third Quarter & Other
Highlights
- In October 2016, the Company announced
that it issued a commitment to provide secured debt financing in
the amount of $700 million to a subsidiary of Ardent Health
Services (“Ardent”) in connection with Ardent’s agreement to
acquire LHP Hospital Group. The transaction is expected to be
accretive and close in the first quarter of 2017, pending customary
regulatory reviews and approvals.
- In September 2016, the Company
completed its accretive acquisition of institutional-quality life
science and innovation centers managed by Wexford Science &
Technology, LLC (“Wexford”) for total consideration of $1.5
billion. The acquisition marks Ventas’s entry into the attractive
life science sector with high-quality real estate leased by top
universities, academic medical centers and research companies and
includes a pipeline of attractive near-term development
opportunities.
- During and immediately following the
quarter, to fund the Wexford acquisition, Ventas raised over $900
million in aggregate gross proceeds from the sale of common stock
at an average gross price exceeding $73 per share through a block
equity offering and “at the market” equity issuances. Year-to-date,
total equity issuances have totaled 18.9 million shares and $1.3
billion in aggregate gross proceeds.
- The Company issued $450 million of 3.25
percent 10-year senior notes in September, which represented the
most attractive 10-year bond issuance in the Company’s
history.
- During and immediately following the
quarter, the Company sold real estate assets and received final
repayment on loans receivable for aggregate proceeds of $197
million. Year-to-date, the Company has sold 14 properties and
received final repayment on loans receivable for aggregate proceeds
of $272 million.
- The Company’s credit profile was
excellent at quarter-end, including:
- 5.8x net debt to adjusted EBITDA ratio,
consistent with the prior quarter and a 0.3x improvement
year-over-year;
- 39 percent total indebtedness to gross
asset value, an improvement of one percentage point from the prior
quarter and three percentage points year-over-year; and
- 4.7x fixed charge coverage, an
improvement of 0.1x from the prior quarter and 0.3x
year-over-year.
- The Company currently has an
outstanding liquidity position, with $1.8 billion available under
its revolving credit facility and $134 million of cash or cash
equivalents.
Collaborative Agreements with
Sunrise
- In September 2016, Ventas and Sunrise
Senior Living (“Sunrise”) reached mutually beneficial agreements
that strengthen the decade-long relationship of the companies.
These new arrangements provide Sunrise and its onsite employees
with long-term stability, reinforcing their focus on caring for
seniors, and align the companies behind profitable growth. The
agreements reduce management fees paid by Ventas to Sunrise under
existing management contracts, maintain the existing term of the
contracts and provide Sunrise with incentives for future
outperformance. Ventas and Sunrise have also entered into a new
multi-year development pipeline agreement that gives Ventas the
option to fund certain future Sunrise developments.
Continued Leadership
Excellence
- Ventas Chairman and Chief Executive
Officer Debra A. Cafaro was recognized by the Harvard Business
Review as one of “The Best-Performing CEOs in the World.” She
is one of 30 CEOs named to the Harvard Business Review list
for three consecutive years and one of only two women on this
year’s list. Ventas’s financial performance ranked in the top
30 of 886 companies globally for Ms. Cafaro’s tenure, which exceeds
17 years.
- Ventas Chairman and Chief Executive
Officer Debra A. Cafaro was recognized by Modern Healthcare as one
of the “100 Most Influential People in Healthcare” for 2016. This
is the third time Ms. Cafaro has received this recognition,
demonstrating her commitment to and stature in the healthcare
industry.
Updated 2016 Guidance
The Company updated and improved its expectations for full year
2016 constant currency cash NOI growth for the 1,044 assets in the
full year same-store pool to now range from 2.5 to 3 percent in
2016, compared to its previously disclosed guidance of 2 to 3
percent.
Ventas also increased its outlook for 2016 income from
continuing operations per diluted share to now range between $1.51
and $1.63. The Company expects reported normalized FFO per diluted
share to now range between $4.10 and $4.13, an increase of nearly 3
cents at the midpoint and now representing 4 to 5 percent per share
growth over 2015 on a Comparable basis. The Company also increased
its NAREIT FFO per diluted share expectations to range between
$4.09 and $4.13.
The Company continues to expect to complete approximately $500
million in total 2016 dispositions; it has already closed $272
million year-to-date. Consistent with its practice, the Company’s
guidance does not include any further material investments,
dispositions or capital activity. A reconciliation of the Company’s
guidance to the Company’s projected GAAP earnings is included in
this press release.
The Company’s guidance is based on a number of other assumptions
that are subject to change and many of which are outside the
control of the Company. If actual results vary from these
assumptions, the Company’s expectations may change. There can be no
assurance that the Company will achieve these results.
Third Quarter Conference
Call
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
(661) 378-9542 for international callers). The participant passcode
is “Ventas.” The conference call is being webcast live by NASDAQ
OMX and can be accessed at the Company’s website at
www.ventasreit.com. A replay of the
webcast will be available following the call online, or by calling
(855) 859-2056 (or (404) 537-3406 for international callers),
passcode 96801614, beginning at approximately 2:00 p.m. Eastern
Time and will remain for 36 days.
Ventas, Inc., an S&P 500 company, is a leading real estate
investment trust. Its diverse portfolio of approximately 1,300
assets in the United States, Canada and the United Kingdom consists
of seniors housing communities, medical office buildings, life
science and innovation centers, skilled nursing facilities,
specialty hospitals and general acute care hospitals. 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.
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 Securities and Exchange
Commission. These factors include without limitation: (a) 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; (b) 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; (c) 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; (d) 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; (e) the nature and extent of future
competition, including new construction in the markets in which the
Company’s seniors housing communities and medical office buildings
(“MOBs”) are located; (f) the extent of future or pending
healthcare reform and regulation, including cost containment
measures and changes in reimbursement policies, procedures and
rates; (g) increases in the Company’s borrowing costs as a result
of changes in interest rates and other factors; (h) 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; (i) 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; (j) the Company’s ability
to pay down, refinance, restructure or extend its indebtedness as
it becomes due; (k) the Company’s ability and willingness to
maintain its qualification as a REIT in light of economic, market,
legal, tax and other considerations; (l) final determination of the
Company’s taxable net income for the year ending December 31, 2016;
(m) 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; (n) 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; (o) changes
in exchange rates for any foreign currency in which the Company
may, from time to time, conduct business; (p) 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; (q) 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; (r)
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; (s) risks
associated with the Company’s MOB portfolio and operations,
including the Company’s ability to successfully design, develop and
manage MOBs and to retain key personnel; (t) the ability of the
hospitals on or near whose campuses the Company’s MOBs are located
and their affiliated health systems to remain competitive and
financially viable and to attract physicians and physician groups;
(u) 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; (v) the Company’s ability to obtain
the financial results expected from its development and
redevelopment projects; (w) the impact of market or issuer events
on the liquidity or value of the Company’s investments in
marketable securities; (x) consolidation activity in the seniors
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; (y) 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
(z) 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)
September 30, June 30, March 31,
December 31, September 30, 2016
2016 2016 2015 2015
Assets Real estate investments: Land and improvements $
2,089,329 $ 2,041,880 $ 2,060,247 $ 2,056,428 $ 2,068,467 Buildings
and improvements 21,551,049 20,272,554 20,395,386 20,309,599
20,220,624 Construction in progress 192,848 127,647 119,215 92,005
124,381 Acquired lease intangibles 1,522,708
1,332,173 1,343,187 1,344,422 1,347,493
25,355,934 23,774,254 23,918,035 23,802,454 23,760,965 Accumulated
depreciation and amortization (4,754,532 ) (4,560,504 )
(4,409,554 ) (4,177,234 ) (3,972,544 ) Net real estate property
20,601,402 19,213,750 19,508,481 19,625,220 19,788,421 Secured
loans receivable and investments, net 821,663 1,003,561 1,002,598
857,112 766,707 Investments in unconsolidated real estate entities
97,814 96,952 98,120 95,707
96,208 Net real estate investments 21,520,879 20,314,263
20,609,199 20,578,039 20,651,336 Cash and cash equivalents 89,279
57,322 51,701 53,023 65,231 Escrow deposits and restricted cash
89,521 65,626 76,710 77,896 74,491 Goodwill 1,043,075 1,043,479
1,044,983 1,047,497 1,052,321 Assets held for sale 195,252 195,271
54,263 93,060 152,014 Other assets 488,258 417,511
424,436 412,403 418,584
Total
assets $ 23,426,264 $ 22,093,472 $
22,261,292 $ 22,261,918 $ 22,413,977
Liabilities and equity Liabilities: Senior notes payable and
other debt $ 11,252,327 $ 10,901,131 $ 11,247,730 $ 11,206,996 $
11,284,957 Accrued interest 70,790 80,157 66,988 80,864 67,440
Accounts payable and other liabilities 930,103 735,287 738,327
779,380 791,556 Liabilities related to assets held for sale 77,608
88,967 12,625 34,340 48,860 Deferred income taxes 315,713
320,468 333,354 338,382 352,658
Total liabilities 12,646,541 12,126,010 12,399,024 12,439,962
12,545,471 Redeemable OP unitholder and noncontrolling
interests 209,278 217,686 191,739 196,529 198,832
Commitments and contingencies Equity: Ventas stockholders'
equity: Preferred stock, $1.00 par value; 10,000 shares authorized,
unissued — — — — — Common stock, $0.25 par value; 353,793; 341,055;
337,486; 334,386 and 333,027 shares issued at September 30, 2016,
June 30, 2016, March 31, 2016, December 31, 2015 and September 30,
2015, respectively 88,431 85,246 84,354 83,579 83,238 Capital in
excess of par value 12,870,566 11,961,951 11,758,306 11,602,838
11,523,312 Accumulated other comprehensive loss (49,614 ) (44,195 )
(19,932 ) (7,565 ) (592 ) Retained earnings (deficit) (2,420,766 )
(2,313,287 ) (2,208,474 ) (2,111,958 ) (1,992,848 ) Treasury stock,
1; 0; 1; 44 and 61 shares at September 30, 2016, June 30, 2016,
March 31, 2016, December 31, 2015 and September 30, 2015,
respectively (78 ) — (59 ) (2,567 ) (3,675 ) Total
Ventas stockholders' equity 10,488,539 9,689,715 9,614,195
9,564,327 9,609,435 Noncontrolling interest 81,906
60,061 56,334 61,100 60,239 Total
equity 10,570,445 9,749,776 9,670,529
9,625,427 9,669,674
Total liabilities and
equity $ 23,426,264 $ 22,093,472 $
22,261,292 $ 22,261,918 $ 22,413,977
CONSOLIDATED STATEMENTS OF INCOME (In thousands,
except per share amounts)
For the Three Months Ended For the Nine Months Ended
September 30, September 30, 2016 2015
2016 2015 Revenues: Rental income: Triple-net
leased $ 210,424 $ 201,028 $ 635,030 $ 571,591 Office 158,273
142,755 446,496 420,287 368,697 343,783
1,081,526 991,878 Resident fees and services 461,974 454,825
1,390,387 1,356,384 Office building and other services revenue
4,317 10,000 17,006 29,951 Income from loans and investments 31,566
18,924 78,098 66,192 Interest and other income 562 74
792 719 Total revenues 867,116 827,606 2,567,809
2,445,124
Expenses: Interest 105,063 97,135 312,001 263,422
Depreciation and amortization 208,387 226,332 666,735 657,262
Property-level operating expenses: Senior living 312,145 304,540
932,675 902,154 Office 48,972 43,305 136,619
129,152 361,117 347,845 1,069,294 1,031,306 Office building
services costs 974 6,416 6,277 19,098 General, administrative and
professional fees 31,567 32,114 95,387 100,399 Loss on
extinguishment of debt, net 383 15,331 3,165 14,897 Merger-related
expenses and deal costs 16,217 62,145 25,073 105,023 Other 2,430
4,795 8,901 13,948 Total expenses
726,138 792,113 2,186,833 2,205,355
Income before unconsolidated entities, income taxes, discontinued
operations, real estate dispositions and noncontrolling interest
140,978 35,493 380,976 239,769 Income (loss) from unconsolidated
entities 931 (955 ) 2,151 (1,197 ) Income tax benefit 8,537
10,697 28,507 27,736 Income from continuing
operations 150,446 45,235 411,634 266,308 Discontinued operations
(118 ) (22,383 ) (755 ) 13,434 (Loss) gain on real estate
dispositions (144 ) 265 31,779 14,420 Net
income 150,184 23,117 442,658 294,162 Net income attributable to
noncontrolling interest 732 265 1,064 1,047
Net income attributable to common stockholders $ 149,452
$ 22,852 $ 441,594 $ 293,115
Earnings per common share: Basic: Income from continuing
operations attributable to common stockholders, including real
estate dispositions $ 0.43 $ 0.14 $ 1.29 $ 0.85 Discontinued
operations (0.00 ) (0.07 ) (0.00 ) 0.04 Net income
attributable to common stockholders $ 0.43 $ 0.07 $
1.29 $ 0.89 Diluted: Income from continuing
operations attributable to common stockholders, including real
estate dispositions $ 0.42 $ 0.14 $ 1.28 $ 0.84 Discontinued
operations (0.00 ) (0.07 ) (0.00 ) 0.04 Net income
attributable to common stockholders $ 0.42 $ 0.07 $
1.28 $ 0.88
Weighted average shares used in
computing earnings per common share: Basic 350,274 332,491
341,610 329,440 Diluted 354,186 336,338 345,352 333,210
Dividends declared per common share $ 0.73 $ 0.73 $ 2.19 $ 2.31
QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
2016 Quarters 2015
Quarters Third Second First Fourth
Third Revenues: Rental income: Triple-net
leased $ 210,424 $ 210,119 $ 214,487 $ 208,210 $ 201,028 Office
158,273 144,087 144,136 145,958 142,755
368,697 354,206 358,623 354,168 343,783 Resident fees and
services 461,974 464,437 463,976 454,871 454,825 Office building
and other services revenue 4,317 5,504 7,185 11,541 10,000 Income
from loans and investments 31,566 24,146 22,386 20,361 18,924
Interest and other income 562 111 119 333
74 Total revenues 867,116 848,404 852,289 841,274
827,606
Expenses: Interest 105,063 103,665 103,273
103,692 97,135 Depreciation and amortization 208,387 221,961
236,387 236,795 226,332 Property-level operating expenses: Senior
living 312,145 307,989 312,541 307,261 304,540 Office 48,972
43,966 43,681 45,073 43,305 361,117
351,955 356,222 352,334 347,845 Office building services costs 974
1,852 3,451 7,467 6,416 General, administrative and professional
fees 31,567 32,094 31,726 27,636 32,114 Loss (gain) on
extinguishment of debt, net 383 2,468 314 (486 ) 15,331
Merger-related expenses and deal costs 16,217 7,224 1,632 (2,079 )
62,145 Other 2,430 2,303 4,168 4,009
4,795 Total expenses 726,138 723,522 737,173
729,368 792,113 Income before
unconsolidated entities, income taxes, discontinued operations,
real estate dispositions and noncontrolling interest 140,978
124,882 115,116 111,906 35,493 Income (loss) from unconsolidated
entities 931 1,418 (198 ) (223 ) (955 ) Income tax benefit 8,537
11,549 8,421 11,548 10,697
Income from continuing operations 150,446 137,849 123,339 123,231
45,235 Discontinued operations (118 ) (148 ) (489 ) (2,331 )
(22,383 ) (Loss) gain on real estate dispositions (144 ) 5,739
26,184 4,160 265 Net income 150,184
143,440 149,034 125,060 23,117 Net income attributable to
noncontrolling interest 732 278 54 332
265 Net income attributable to common stockholders $ 149,452
$ 143,162 $ 148,980 $ 124,728 $ 22,852
Earnings per common share: Basic: Income from
continuing operations attributable to common stockholders,
including real estate dispositions $ 0.43 $ 0.42 $ 0.44 $ 0.38 $
0.14 Discontinued operations (0.00 ) (0.00 ) (0.00 ) (0.01 ) (0.07
) Net income attributable to common stockholders $ 0.43 $
0.42 $ 0.44 $ 0.37 $ 0.07 Diluted:
Income from continuing operations attributable to common
stockholders, including real estate dispositions $ 0.42 $ 0.42 $
0.44 $ 0.38 $ 0.14 Discontinued operations (0.00 ) (0.00 ) (0.00 )
(0.01 ) (0.07 ) Net income attributable to common stockholders $
0.42 $ 0.42 $ 0.44 $ 0.37 $ 0.07
Weighted average shares used in computing earnings per
common share: Basic 350,274 338,901 335,559 332,914 332,491
Diluted 354,186 342,571 339,202 336,406 336,338
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
For the Nine Months Ended September 30,
2016 2015 Cash flows from operating
activities: Net income $ 442,658 $ 294,162 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued
operations) 666,735 736,870 Amortization of deferred revenue and
lease intangibles, net (15,307 ) (19,312 ) Other non-cash
amortization 7,174 3,051 Stock-based compensation 15,885 16,061
Straight-lining of rental income, net (21,386 ) (25,118 ) Loss on
extinguishment of debt, net 3,165 14,897 Gain on real estate
dispositions (including amounts in discontinued operations) (31,779
) (14,649 ) Gain on real estate loan investments (2,271 ) — Gain on
sale of marketable debt securities — (5,800 ) Income tax benefit
(30,832 ) (30,717 ) (Income) loss from unconsolidated entities
(2,151 ) 1,197 Distributions from unconsolidated entities 5,574
20,550 Other (1,075 ) 3,276 Changes in operating assets and
liabilities: Decrease in other assets 1,753 11,164 (Decrease)
increase in accrued interest (10,053 ) 6,338 (Decrease) increase in
accounts payable and other liabilities (26,820 ) 10,075 Net
cash provided by operating activities 1,001,270 1,022,045 Cash
flows from investing activities: Net investment in real estate
property (1,421,592 ) (2,556,988 ) Investment in loans receivable
and other (154,949 ) (74,386 ) Proceeds from real estate disposals
63,561 409,633 Proceeds from loans receivable 194,063 106,909
Proceeds from sale or maturity of marketable securities — 76,800
Funds held in escrow for future development expenditures — 4,003
Development project expenditures (94,398 ) (90,458 ) Capital
expenditures (75,296 ) (75,812 ) Investment in unconsolidated
operating entity — (26,282 ) Other (6,175 ) (27,984 ) Net cash used
in investing activities (1,494,786 ) (2,254,565 ) Cash flows from
financing activities: Net change in borrowings under credit
facility 46,728 (790,406 ) Net cash impact of CCP Spin-Off —
(128,749 ) Proceeds from debt 876,617 2,511,061 Proceeds from debt
related to CCP Spin-Off — 1,400,000 Repayment of debt (916,505 )
(1,329,070 ) Purchase of noncontrolling interest (1,604 ) (3,819 )
Payment of deferred financing costs (6,147 ) (23,893 ) Issuance of
common stock, net 1,265,702 417,818 Cash distribution to common
stockholders (750,402 ) (759,575 ) Cash distribution to redeemable
OP unitholders (6,486 ) (12,776 ) Purchases of redeemable OP units
— (33,188 ) Contributions from noncontrolling interest 5,926 —
Distributions to noncontrolling interest (5,121 ) (11,250 ) Other
21,507 6,489 Net cash provided by financing
activities 530,215 1,242,642 Net increase in cash and
cash equivalents 36,699 10,122 Effect of foreign currency
translation on cash and cash equivalents (443 ) (239 ) Cash and
cash equivalents at beginning of period 53,023 55,348
Cash and cash equivalents at end of period $ 89,279 $ 65,231
Supplemental schedule of non-cash activities: Assets
and liabilities assumed from acquisitions: Real estate investments
$ 59,666 $ 2,567,150 Utilization of funds held for an Internal
Revenue Code Section 1031 exchange (6,954 ) (8,911 ) Other assets
acquired 79,879 20,221 Debt assumed 47,641 177,857 Other
liabilities 60,446 57,937 Deferred income tax liability 2,279
50,836 Redeemable OP unitholder interests assumed — 87,245
Noncontrolling interest 22,225 — Equity issued — 2,204,585 Non-cash
impact of CCP Spin-Off — 1,256,404 Equity issued for purchase of OP
and Class C units 22,970 —
QUARTERLY CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)
2016 Quarters 2015
Quarters Third Second First Fourth
Third Cash flows from operating activities: Net income $
150,184 $ 143,440 $ 149,034 $ 125,060 $ 23,117 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued
operations) 208,387 221,961 236,387 236,793 240,210 Amortization of
deferred revenue and lease intangibles, net (5,217 ) (5,053 )
(5,037 ) (4,817 ) (5,682 ) Other non-cash amortization 2,487 2,241
2,446 2,397 2,142 Stock-based compensation 5,848 5,008 5,029 3,476
4,869 Straight-lining of rental income, net (5,960 ) (5,581 )
(9,845 ) (8,674 ) (8,357 ) Loss (gain) on extinguishment of debt,
net 383 2,468 314 (486 ) 15,331 Loss (gain) on real estate
dispositions (including amounts in discontinued operations) 144
(5,739 ) (26,184 ) (4,162 ) (217 ) Gain on real estate loan
investments (2,238 ) (33 ) — — — Income tax benefit (9,389 )
(12,287 ) (9,156 ) (11,667 ) (12,477 ) (Income) loss from
unconsolidated entities (931 ) (1,418 ) 198 47 955 Loss on
re-measurement of equity interest upon acquisition, net — — — 176 —
Distributions from unconsolidated entities 1,701 1,884 1,989 2,912
5,577 Other (1,799 ) (375 ) 1,099 3,241 170 Changes in operating
assets and liabilities: (Increase) decrease in other assets (8,856
) 15,444 (4,835 ) 31,152 20,875 (Decrease) increase in accrued
interest (9,284 ) 13,542 (14,311 ) 13,657 (9,770 ) Increase
(decrease) in accounts payable and other liabilities 19,335
8,082 (54,237 ) (19,383 ) 27,578 Net cash provided by
operating activities 344,795 383,584 272,891 369,722 304,321 Cash
flows from investing activities: Net investment in real estate
property (1,387,139 ) (20,833 ) (13,620 ) (93,800 ) (1,303,078 )
Investment in loans receivable and other (2,499 ) (6,236 ) (146,214
) (96,758 ) (18,727 ) Proceeds from real estate disposals — 9,350
54,211 82,775 136,442 Proceeds from loans receivable 186,419 6,019
1,625 2,267 13,634 Proceeds from sale or maturity of marketable
securities — — — — 19,575 Development project expenditures (24,719
) (34,912 ) (34,767 ) (29,216 ) (27,828 ) Capital expenditures
(28,371 ) (23,204 ) (23,721 ) (31,675 ) (32,383 ) Investment in
unconsolidated operating entity — — — — (26,282 ) Other (1,910 ) —
(4,265 ) (2,720 ) (19,171 ) Net cash used in investing
activities (1,258,219 ) (69,816 ) (166,751 ) (169,127 ) (1,257,818
) Cash flows from financing activities: Net change in borrowings
under credit facility 22,424 (113,136 ) 137,440 66,949 (469,072 )
Net cash impact of CCP Spin-Off — — — — (128,749 ) Proceeds from
debt 460,400 416,072 145 1,686 1,403,090 Proceeds from debt related
to CCP Spin-Off — — — — 1,400,000 Repayment of debt (176,168 )
(589,028 ) (151,309 ) (106,526 ) (1,050,628 ) Purchase of
noncontrolling interest — (1,604 ) — — (3 ) Payment of deferred
financing costs (2,303 ) (3,768 ) (76 ) (772 ) (9,285 ) Issuance of
common stock, net 887,963 228,108 149,631 73,205 65,651 Cash
distribution to common stockholders (256,931 ) (247,975 ) (245,496
) (243,838 ) (243,171 ) Cash distribution to redeemable OP
unitholders (2,049 ) (2,114 ) (2,323 ) (2,319 ) (8,079 )
Contributions from noncontrolling interest 246 5,680 — — —
Distributions to noncontrolling interest (1,539 ) (1,839 ) (1,743 )
(1,399 ) (1,783 ) Other 13,624 1,732 6,151 494
561 Net cash provided by (used in) financing
activities 945,667 (307,872 ) (107,580 ) (212,520 ) 958,532
Net increase (decrease) in cash and cash equivalents 32,243
5,896 (1,440 ) (11,925 ) 5,035 Effect of foreign currency
translation on cash and cash equivalents (286 ) (275 ) 118 (283 )
(336 ) Cash and cash equivalents at beginning of period 57,322
51,701 53,023 65,231 60,532 Cash
and cash equivalents at end of period $ 89,279 $ 57,322
$ 51,701 $ 53,023 $ 65,231
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued) (In thousands)
2016 Quarters
2015 Quarters Third Second First
Fourth Third Supplemental schedule of non-cash
activities: Assets and liabilities assumed from acquisitions: Real
estate investments $ 51,001 $ 6,107 $ 2,558 $ (1,190 ) $ 3,649
Utilization of funds held for an Internal Revenue Code Section 1031
exchange — (6,954 ) — — — Other assets acquired 79,018 927 (66 )
(131 ) 3,716 Debt assumed 47,641 — — — — Other liabilities 57,808
80 2,558 (3,478 ) 8,149 Deferred income tax liability 2,345 — (66 )
1,317 (784 ) Noncontrolling interest 22,225 — — 840 — Non-cash
impact of CCP Spin-Off — — — — 1,256,404 Equity issued for purchase
of OP and Class C units 2,200 1,422 19,348 — —
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Funds From Operations (FFO) and Funds
Available for Distribution (FAD) Including Comparable
Earnings1
(Dollars in thousands, except per share
amounts)
Q3 YOY 2015 2016 Growth
Q3 Q4 YTD
Q1 Q2 Q3
YTD '15-'16 Income from continuing
operations $ 45,235 $ 123,231
$ 389,539 $ 123,339 $
137,849 $ 150,446 $ 411,634
233 % Income from continuing operations per
share $ 0.13 $
0.37 $ 1.17
$ 0.36 $ 0.40
$ 0.42 $ 1.19
223 % Discontinued operations
(22,383 ) (2,331 ) 11,103
(489 ) (148 ) (118 )
(755 ) Gain (loss) on real estate dispositions
265 4,160 18,580
26,184 5,739
(144 ) 31,779 Net
income 23,117 125,060 419,222
149,034 143,440 150,184 442,658 Net
income attributable to noncontrolling interest 265
332 1,379
54 278 732
1,064 Net income attributable to common
stockholders 2 $ 22,852 $
124,728 $ 417,843 $ 148,980
$ 143,162 $ 149,452 $
441,594 554 % Net income attributable to
common stockholders per share 2 $ 0.07
$ 0.37 $ 1.25 $ 0.44
$ 0.42 $ 0.42 $ 1.28
500 % Adjustments: Depreciation and
amortization on real estate assets 224,688
235,101 887,126 234,726 220,346
206,560 661,632 Depreciation on real estate assets
related to noncontrolling interest (1,964 )
(1,926 ) (7,906 ) (2,075
) (1,814 ) (1,865 )
(5,754 ) Depreciation on real estate assets
related to unconsolidated entities 1,445 2,982
7,353 1,989 1,220 1,113 4,322
Loss on re-measurement of equity interest upon acquisition,
net — 176 176 — — —
— (Gain) loss on real estate dispositions (265
) (4,160 ) (18,580 )
(26,184 ) (5,739 ) 144
(31,779 ) Loss (gain) on real estate dispositions
related to unconsolidated entities — 19 19
(536 ) 41 — (495 )
Discontinued operations: Loss (gain) on real estate
dispositions 48 (2 ) (231 )
— 1 — 1 Depreciation and
amortization on real estate assets 13,878
— 79,608 —
— — —
Subtotal: FFO add-backs 237,830
232,190 947,565 207,920 214,055
205,952 627,927 Subtotal: FFO add-backs per
share $ 0.71 $
0.69 $ 2.84
$ 0.61 $ 0.62
$ 0.58 $ 1.82
FFO (NAREIT) attributable to common
stockholders $ 260,682 $ 356,918
$ 1,365,408 $ 356,900 $
357,217 $ 355,404 $ 1,069,521
36 % FFO (NAREIT) attributable to common
stockholders per share $ 0.78
$ 1.06 $
4.09 $ 1.05
$ 1.04 $ 1.00
$ 3.10 28 %
Adjustments: Change in fair value of financial
instruments (18 ) 454 460
(79 ) (7 ) 14 (72
) Non-cash income tax benefit (12,477 )
(11,668 ) (42,384 ) (9,157
) (12,286 ) (9,389 )
(30,832 ) Loss (gain) on extinguishment of debt,
net 16,301 (486 ) 15,797 314
2,468 383 3,165 (Gain) loss on non-real
estate dispositions related to unconsolidated entities —
— — — (585 ) 28
(557 ) Merger-related expenses, deal costs and
re-audit costs 100,548 659 152,344
3,254 8,550 16,965 28,769
Amortization of other intangibles 438
438 2,058 438
438 438
1,314 Subtotal: normalized FFO
add-backs 104,792 (10,603 ) 128,275
(5,230 ) (1,422 ) 8,439
1,787 Subtotal: normalized FFO add-backs per share
$ 0.31 $
(0.03 ) $ 0.38
$ (0.02 ) $ (0.00
) $ 0.02 $
0.01 Normalized FFO attributable to
common stockholders $ 365,474 $
346,315 $ 1,493,683 $ 351,670
$ 355,795 $ 363,843 $
1,071,308 (0 %) Normalized FFO attributable
to common stockholders per share $ 1.09 $
1.03 $ 4.47 $ 1.04 $
1.04 $ 1.03 $ 3.10 (6
%) Adjusted: Normalized FFO from CCP Spin-Off
$
(35,393 ) $ — $ (173,400
) — — $ — $ —
Adjusted Normalized FFO per share from CCP Spin-Off
$
(0.11 ) $ — $ (0.52
) $ — $ — $ —
$ — Comparable Normalized FFO attributable to
common stockholders $ 330,081 $
346,315 $ 1,320,283 $ 351,670
$ 355,795 $ 363,843 $
1,071,308 10 % Comparable Normalized FFO
attributable to common stockholders per share
$ 0.98 $ 1.03
$ 3.95 $ 1.04
$ 1.04 $
1.03 $ 3.10
5 % Non-cash items included in normalized
FFO: Amortization of deferred revenue and lease intangibles,
net (5,682 ) (4,817 )
(24,129 ) (5,037 ) (5,053
) (5,217 ) (15,307 ) Other
non-cash amortization, including fair market value of debt
2,142 2,397 5,448 2,446 2,241
2,487 7,174 Stock-based compensation
4,869 3,476 19,537 5,029 5,008
5,848 15,885 Straight-lining of rental income,
net (8,357 ) (8,674 )
(33,792 ) (9,845 )
(5,581 ) (5,960 )
(21,386 ) Subtotal: non-cash items included
in normalized FFO (7,028 ) (7,618 )
(32,936 ) (7,407 ) (3,385
) (2,842 ) (13,634 ) Capital
expenditures (33,536 )
(33,496 ) (112,700 )
(24,987 ) (25,103 )
(29,991 ) (80,081 )
Normalized FAD attributable to common stockholders
$ 324,910 $ 305,201 $
1,348,047 $ 319,276 $ 327,307
$ 331,010 $ 977,593 2 %
Adjusted: Normalized FAD from CCP Spin-Off
$ (29,987
) $ — $ (155,081 )
$ — — $ — $ —
Comparable Normalized FAD attributable to common
stockholders $ 294,923
$ 305,201 $
1,192,966 $ 319,276
$ 327,307 $
331,010 $ 977,593
12 % Merger-related expenses, deal costs and
re-audit costs (100,548 )
(659 ) (152,344 )
(3,254 ) (8,550 )
(16,965 ) (28,769 )
FAD attributable to common stockholders $
224,362 $ 304,542 $ 1,195,703
$ 316,022 $ 318,757 $
314,045 $ 948,824 40 % Adjusted:
FAD from CCP Spin-Off
$ 7,204 $ 2,333
$ (108,677 ) $ 489 $
148 $ 118 $ 755 Comparable
FAD attributable to common stockholders $
231,566 $ 306,875
$ 1,087,026 $ 316,511
$ 318,905 $
314,163 $ 949,579
36 % Weighted average diluted shares
336,338 336,406 334,007 339,202
342,571 354,186 345,352 1 Per
share amounts may not add due to rounding. 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. 2 CCP impacts calculated based on net income
related to discontinued operations, less the de minimis share of
discontinued operations net income not related to CCP assets,
assuming (a) G&A of $2.5 million in Q1’15 and Q2’15 ($0.01 per
share per quarter) and $1.3 million in Q3’15 ($0.00 per share) and
(b) interest expense of $6.9 million in Q1’15 and Q2’15 ($0.02 per
share per quarter) and $4.3 million in Q3’15 ($0.01 per share);
these adjustments differ from the respective amounts found in
discontinued operations.
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 unanticipated items and
other 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 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 gain (or loss) 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 and
derivative transactions that have non-cash mark-to-market impacts
on the Company’s income statement; (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 related to unconsolidated
entities; and (g) expenses related to the re-audit and re-review in
2014 of the Company’s historical financial statements and related
matters. Normalized FAD represents normalized FFO excluding
non-cash components, straight-line rental adjustments and deducting
capital expenditures, including tenant allowances and leasing
commissions. FAD represents normalized FAD after subtracting
merger-related expenses, deal costs and re-audit costs.
FFO, normalized FFO, FAD and normalized FAD presented herein may
not be identical 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 or income from
continuing operations (both 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 income from
continuing operations is the most comparable GAAP measure because
it provides insight into the Company’s continuing operations. 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 and income from continuing operations
as presented elsewhere herein.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
EPS, FFO and FAD Guidance Attributable
to Common Stockholders 1,2
(Dollars in millions, except per share
amounts)
Tentative / Preliminary and
Subject to Change FY2016 - Guidance 2016 - Per
Share Low High Low
High
Income from Continuing Operations $525
$568 $1.51
$1.63 Adjustments 3 98 88 0.28 0.25
Net
Income Attributable to Common Stockholders $623
$656 $1.79
$1.89 Depreciation and Amortization
Adjustments 901 870 2.59 2.50 Other Adjustments 3 (100 ) (90 )
(0.29 ) (0.26 )
FFO (NAREIT) Attributable to Common
Stockholders $1,424 $1,436
$4.09 $4.13
Merger-Related Expenses, Deal Costs and Re-Audit Costs 29 31 0.08
0.09 Other Adjustments 3 (27 ) (31 ) (0.08 ) (0.09 )
Normalized FFO
Attributable to Common Stockholders $1,426 $1,436
$4.10 $4.13 % Year-Over-Year Comparable Growth
4 % 5 % Non-Cash Items
Included in Normalized FFO (16 ) (18 ) Capital Expenditures (111 )
(116 )
Normalized FAD
Attributable to Common Stockholders $1,299
$1,302 Merger-Related Expense,
Deal Costs and Re-Audit Costs (29 ) (31 ) Other Adjustments 3 0 0
FAD Attributable to
Common Stockholders $1,270
$1,271 Weighted Average Diluted Shares
347,897 347,897 1
The Company’s guidance constitutes
forward-looking statements within the meaning of the federal
securities laws and is based on a number of assumptions that are
subject to change and many of which are outside the control of the
Company. Actual results may differ materially from the Company’s
expectations depending on factors discussed in the Company’s
filings with the Securities and Exchange Commission.
2
Totals and per share amounts may not add
due to rounding. Per share quarterly amounts may not add to annual
per share amounts due to changes in the Company's weighted average
diluted share count, if any.
3
See table titled “Funds From Operations
(FFO) and Funds Available for Distribution (FAD) Including
Comparable Earnings” for detailed breakout of “adjustments” for
each respective category.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION Net Debt to Adjusted Pro Forma EBITDA
The following information considers the pro forma effect on net
income attributable to common stockholders of the Company’s
investments and other capital transactions that were completed
during the three months ended September 30, 2016, as if the
transactions had been consummated as of the beginning of the
period. The following table 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 and unrealized foreign currency gains or
losses, and including the Company’s share of EBITDA from
unconsolidated entities and adjustments for other immaterial or
identified items (including amounts in discontinued operations)
(“Adjusted Pro Forma EBITDA”) (dollars in thousands). The Company
believes that net debt, Adjusted Pro Forma EBITDA and net debt to
Adjusted Pro Forma EBITDA are important supplemental measures in
evaluating the credit strength of the Company and its ability to
service its debt obligations. 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
and tend to obscure the Company’s actual credit quality.
Income from continuing operations $ 150,446 Discontinued
operations (118 ) Loss on real estate dispositions (144 ) Net
income 150,184 Net income attributable to noncontrolling interest
732 Net income attributable to common stockholders 149,452
Pro forma adjustments for current period investments, capital
transactions and dispositions 14,323 Pro forma net income
attributable to common stockholders for the three months ended
September 30, 2016 163,775 Add back: Interest 100,281 Depreciation
and amortization 204,317 Stock-based compensation 5,848 Loss on
real estate dispositions 145 Loss on extinguishment of debt, net 7
(Income) loss from unconsolidated entities, net of Ventas share of
EBITDA from unconsolidated entities 5,509 Net income (loss)
attributable to noncontrolling interest, net of consolidated joint
venture partners’ share of EBITDA (3,076 ) Income tax benefit
(8,537 ) Change in fair value of financial instruments 12
Unrealized foreign currency gains (359 ) Other taxes 597
Merger-related expenses, deal costs and re-audit costs 16,489
Adjusted Pro Forma EBITDA 485,008 Adjusted Pro Forma
EBITDA annualized $ 1,940,032 As of September 30,
2016: Debt $ 11,252,327 Debt on held for sale assets 65,981 Cash
(89,279 ) Restricted cash pertaining to debt (22,888 ) Consolidated
joint venture partners’ share of debt (80,938 ) Ventas share of
debt from unconsolidated entities 116,118 Net debt $
11,241,321 Net debt to Adjusted Pro Forma EBITDA 5.8
x
NON-GAAP FINANCIAL MEASURES
RECONCILIATION NOI and Same-Store Cash NOI
The Company considers NOI and same-store cash NOI to be
important supplemental measures to net income because they allow
investors, analysts and Company management to assess the Company’s
unlevered property-level operating results and to compare the
Company’s operating results with the operating results 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 (including amounts in discontinued operations). 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 cash NOI as the NOI for properties
owned, consolidated and operational for the full period in both
comparison periods excluding the impact of non-cash items such as
straight-line rent and the impact of exchange rate movements across
the comparison periods. In certain cases, results for same-store
cash NOI may be adjusted to reflect non-recurring items and the
receipt of cash payments and fees not fully recognized as NOI in
the period. Same-store cash NOI excludes assets intended for
disposition and, for the SHOP portfolio, those properties that
transitioned operators after the start of the prior comparison
period.
NON-GAAP FINANCIAL MEASURES RECONCILIATION
(Dollars in thousands) Total Portfolio Same-Store Cash
NOI For the Three Months Ended
Percentage September 30, Increase 2016
2015 Total Revenues, Excluding Interest and
Other Income $ 866,554 $ 827,532 Less: Total Property-Level
Operating Expenses (361,117 ) (347,845 ) Office Building Services
Costs (974 ) (6,416 )
Net Operating Income 504,463
473,271 Adjustments: NOI Not Included in Same-Store
(47,519 ) (36,759 ) Straight-Lining of Rental Income (5,936 )
(8,353 ) Non-Cash Rental Income (4,709 ) (3,879 ) Non-Segment NOI
(32,426 ) (19,453 ) Constant Currency Adjustment — (845 )
(90,590 ) (69,289 ) Cash NOI as Reported $ 413,873 $
403,982
2.4 % NON-GAAP
FINANCIAL MEASURES RECONCILIATION (Dollars in thousands)
Triple-Net Portfolio Same-Store Cash NOI
For the Three Months Ended Percentage September
30, Increase 2016 2015 Total
Revenues, Excluding Interest and Other Income $ 211,670 $ 202,039
Less: Total Property-Level Operating Expenses — — Office Building
Services Costs — —
Net Operating Income
211,670 202,039 Adjustments: NOI Not Included
in Same-Store (30,893 ) (25,387 ) Straight-Lining of Rental Income
(2,607 ) (4,991 ) Non-Cash Rental Income (5,092 ) (4,601 ) Constant
Currency Adjustment — (898 ) (38,592 ) (35,877 ) Cash
NOI as Reported $ 173,078 $ 166,162
4.2
% NON-GAAP FINANCIAL MEASURES
RECONCILIATION (Dollars in thousands) Senior
Housing Operating Portfolio Same-Store Cash NOI
For the Three Months Ended Percentage September
30, Increase 2016 2015 Total
Revenues, Excluding Interest and Other Income $ 461,974 $ 454,825
Less: Total Property-Level Operating Expenses (312,145 ) (304,540 )
Office Building Services Costs — —
Net Operating
Income 149,829 150,285 Adjustments: NOI
Not Included in Same-Store (3,164 ) (6,505 ) Constant Currency
Adjustment — 53 (3,164 ) (6,452 ) Cash NOI as
Reported $ 146,665 $ 143,833
2.0 %
NON-GAAP FINANCIAL MEASURES RECONCILIATION
(Dollars in thousands) Office Portfolio Same-Store
Cash NOI For the Three Months Ended
Percentage September 30, Increase 2016
2015 Total Revenues, Excluding Interest and
Other Income $ 160,484 $ 151,214 Less: Total Property-Level
Operating Expenses (48,972 ) (43,305 ) Office Building Services
Costs (974 ) (6,416 )
Net Operating Income 110,538
101,493 Adjustments: NOI Not Included in Same-Store
(13,463 ) (4,867 ) Straight-Lining of Rental Income (3,329 ) (3,363
) Non-Cash Rental Income 383 722 (16,409 ) (7,508 )
Cash NOI as Reported $ 94,129 $ 93,985
0.2 %
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Ventas, Inc.Ryan K. Shannon(877) 4-VENTAS
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Ventas (NYSE:VTR)
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From Apr 2023 to Apr 2024
