- Earnings Growth and Enhanced
Financial Strength
- Property Level Growth Across All
Segments; Updated and Improved 2017 Guidance
- Over $600 Million of Strategic
Dispositions with Gains Exceeding $500 Million
- Expansion of Attractive
University-Based Life Science Business
Ventas, Inc. (NYSE: VTR) today announced its results for the
third quarter ended September 30, 2017:
- Income from continuing operations per
diluted common share for the third quarter 2017 grew five percent
to $0.44 compared to the same period in 2016. The increase from the
third quarter 2016 was driven by improved property performance,
accretive investments and lower transaction costs. These benefits
were partially offset by the impact of dispositions and loan
repayments and $10 million, or approximately $0.03 per share, of
current period expenses related to natural disasters (the “natural
disaster expenses”).
- Normalized Funds From Operations
(“FFO”) per diluted common share for the third quarter 2017 grew
one percent to $1.04 compared to the same period in 2016. The
increase from the third quarter 2016 was principally due to
improved property performance and accretive investments, partially
offset by the impact of dispositions and loan repayments.
- Reported FFO per diluted common share,
as defined by the National Association of Real Estate Investment
Trusts (“NAREIT FFO”), for the third quarter 2017 grew two percent
to $1.02 compared to the same period in 2016. The increase from the
third quarter 2016 was principally due to the same items as
described for normalized FFO, but NAREIT FFO also includes the net
benefit of lower transaction costs partially offset by natural
disaster expenses.
Strong Results Fueled by the Ventas
Advantage
“We delivered yet another strong quarter for our shareholders.
With positive earnings and property growth, improved financial
strength and recognition of over $500 million in gains from our
ongoing divestiture of our skilled nursing assets, we are in an
excellent position,” said Debra A. Cafaro, Ventas Chairman and
Chief Executive Officer. “We are pleased to improve our 2017
property guidance and to accelerate the expansion of our
university-based life science business through acquisitions and
exciting ground-up developments with top-tier research
institutions. The Ventas Advantage of a high-quality, diversified
portfolio, leading platforms with care providers, developers,
universities and health networks, and a consistent cohesive team
will continue to fuel our success.”
Portfolio Performance
- The Company’s third quarter 2017
same-store total portfolio (1,045 assets) cash net operating income
(“NOI”) grew 2.1 percent compared to the same period in 2016.
Same-store cash NOI growth by segment follows:
- The triple-net leased portfolio
increased 3.8 percent, driven by in-place lease escalations;
- The seniors housing operating portfolio
(“SHOP”) grew 0.6 percent, supported by continued growth in
high-barrier markets, largely offset by the impact of new
deliveries in select markets; and
- The medical office building (“MOB”)
portfolio rose 1.5 percent, supported by lease escalations and a
strong tenant retention rate.
- The above results exclude the impact of
natural disaster expenses recorded in the third quarter 2017.
Third Quarter 2017 and Recent
Highlights
- The Company is further building out its
institutional life science business through development and
acquisition, with both existing university relationships and
newly-created ones:
- Expansion of Ventas’s university
footprint with the pending acquisition of a 262,000 square foot
class-A life science building affiliated with a AA-rated research
university that is a leading recipient of National Institutes of
Health funding and an awardee of a Bill & Melinda Gates
Foundation grant. The property is located in a thriving life
science, medical and research campus, is 82 percent occupied and
has potential for increased occupancy and NOI.
- Expansion of existing university
relationships through commitment to a new $62 million life science
and innovation center development affiliated with Brown University.
This building, located in the growing sub-market adjacent to the
Company’s recently opened South Street Landing project in
Providence, Rhode Island, is 80 percent pre-leased to tenants
including Brown, Johnson & Johnson and Cambridge Innovation
Center. The project broke ground in the third quarter and will be a
magnet to convene universities, private enterprise and
entrepreneurs, and to spawn new companies.
- Ventas funded investments of over $80
million, including $67 million for the Company’s share of
development and redevelopment projects during the quarter for
projects currently underway.
- During and immediately following the
quarter, Ventas sold properties and received final repayments on
loans receivable for proceeds of $630 million, with gains exceeding
$500 million, consisting principally of:
- The Company’s completed sales of 29 of
its Kindred Healthcare, Inc. (NYSE: KND) (“Kindred”) skilled
nursing facilities (“SNFs”) for proceeds of approximately $570
million. The Company continues to expect total aggregate proceeds
of $700 million from sales of its 36 Kindred SNFs in 2017,
representing a seven percent yield on cash rent and an eight
percent GAAP yield. Following the sales of the Company’s Kindred
SNFs, Ventas’s percentage of NOI received from SNFs will be only
one percent of its aggregate NOI.
- The Company's credit profile, liquidity
and financial health were excellent in the third quarter,
including:
- Sequential improvement in Net Debt to
Adjusted Pro Forma EBITDA to 5.7x;
- Sequential improvement in total
indebtedness to gross asset value to 39 percent at quarter end;
and
- Exceptional fixed charge coverage of
4.6x at quarter end.
- Ventas paid its shareholders a
quarterly dividend of $0.775 per share, a six percent
year-over-year increase.
- In September, Ventas closed a $400
million dollar revolving construction credit facility. The facility
increases the Company’s liquidity and is designed to facilitate
funding its growing development pipeline with its attractive
platform partners, including Wexford, PMB Medical, Sunrise and
Atria.
- Currently, the Company has excellent
liquidity with $2.9 billion of available borrowing capacity and
over $100 million of cash on hand.
Other Updates
- The Company intends to partner with an
institutional investor in a to-be-established joint venture (the
“JV”) that will own one of the Company’s existing senior living
portfolios (the “Portfolio”). The Portfolio contains over 70
private pay senior living assets currently operated by Elmcroft
Senior Living under a Master Lease with the Company. Ventas also
has formed a strategic relationship with a seniors housing operator
recently founded by a team of experienced senior living executives,
led by Kai Hsiao, with a demonstrated track record of value
creation and success. The new management company is expected to
begin operating the Portfolio, and the JV is expected to close, in
early 2018. The Company is in the preliminary stages of the
transactions, and there can be no assurance whether, when or on
what terms the transactions will be completed.
Continued Sustainability and 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 23 CEOs named to the Harvard Business Review list for four
consecutive years and one of only two women on this year’s list.
Ventas’s financial performance ranked 32nd of 898 companies
globally for Ms. Cafaro’s tenure, which exceeds 18 years.
- Ventas’s leadership in environmental,
social and governance (“ESG”) matters was recognized by two
prominent benchmarking organizations:
- The Company was included in the Dow
Jones Sustainability™ North America Index for the first time,
ranking in the top quartile of real estate companies in North
America across a broad spectrum of ESG metrics.
- In the 2017 GRESB real estate ESG
assessment, Ventas ranked first among the three listed healthcare
real estate company participants, retained its Green Star
designation for the fourth consecutive year and improved its score
by nearly 10 percent. Ventas also achieved an “A” ranking, the
highest possible score, on the new GRESB Public Disclosure
Assessment, recognizing the Company’s focus on transparency and
public reporting.
Updated 2017 Guidance
Ventas updated and improved its expectations for full year 2017
same-store cash NOI growth as follows:
Full Year 2017 Projected Same-Store Cash NOI Growth Current
Guidance 07/28/2017 Guidance Low High Low High
Triple-Net 3% 3.5% 2.5% 3.5% SHOP 0.5% 1.5% 0% 2% MOB
1.5% 2% 1% 2%
Total Company 2% 2.5%
1.5% 2.5%
Ventas expects income from continuing operations per diluted
common share to range between $1.63 and $1.74 and NAREIT FFO per
diluted common share to range between $4.07 and $4.12, both
modestly lower than previously disclosed guidance principally due
to the $0.03 per share of natural disaster expenses in the third
quarter 2017.
The Company projects normalized FFO per diluted common share to
now range between $4.13 and $4.16. The midpoint of the Company’s
narrowed normalized FFO per share range remains unchanged from its
previously disclosed guidance because improved property performance
offsets the accelerated completion of the Company’s Kindred SNF
sales.
No undisclosed material acquisitions or dispositions, loan
repayments or capital activity are included in guidance. The
Company expects to invest in future growth by funding approximately
$300 million in development and redevelopment projects for the full
year 2017, including attractive new ground-up medical office and
life science developments.
The 2017 outlook assumes approximately 359 million weighted
average fully-diluted shares. A reconciliation of the Company’s
guidance to the Company’s projected GAAP measures 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. In particular, the Company’s estimate of
natural disaster expenses is preliminary and subject to change. 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 2017 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 +1
(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 +1 (404) 537-3406 for international callers),
passcode 92386070, 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 more than 1,200 assets
in the United States, Canada and the United Kingdom consists of
seniors housing communities, medical office buildings, life science
and innovation centers, inpatient rehabilitation and long-term
acute care facilities, health systems and skilled nursing
facilities. 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. References to “Ventas” or the “Company” mean
Ventas, Inc. and its consolidated subsidiaries unless otherwise
expressly noted. 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 and effect 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, 2017; (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, 2017 2017 2017
2016 2016 Assets Real estate
investments: Land and improvements $ 2,121,214 $ 2,117,692 $
2,123,266 $ 2,089,591 $ 2,089,329 Buildings and improvements
21,935,860 21,827,419 21,869,961 21,516,396 21,551,049 Construction
in progress 306,095 281,093 213,281 210,599 192,848 Acquired lease
intangibles 1,536,476 1,534,173 1,532,365
1,510,629 1,522,708 25,899,645 25,760,377 25,738,873
25,327,215 25,355,934 Accumulated depreciation and amortization
(5,434,772 ) (5,220,611 ) (5,123,144 ) (4,932,461 ) (4,754,532 )
Net real estate property 20,464,873 20,539,766 20,615,729
20,394,754 20,601,402 Secured loans receivable and investments, net
1,352,434 1,395,404 1,398,417 702,021 821,663 Investments in
unconsolidated real estate entities 117,185 119,794
108,976 95,921 97,814 Net real estate
investments 21,934,492 22,054,964 22,123,122 21,192,696 21,520,879
Cash and cash equivalents 85,063 103,353 91,284 286,707 89,279
Escrow deposits and restricted cash 76,522 68,343 92,175 80,647
89,521 Goodwill 1,034,497 1,034,054 1,033,484 1,033,225 1,043,075
Assets held for sale 68,926 89,569 61,983 54,961 195,252 Other
assets 540,295 505,475 517,283 518,364
488,258
Total assets $ 23,739,795 $ 23,855,758
$ 23,919,331 $ 23,166,600 $ 23,426,264
Liabilities and equity Liabilities: Senior notes
payable and other debt $ 11,424,145 $ 11,907,997 $ 11,943,733 $
11,127,326 $ 11,252,327 Accrued interest 95,684 87,248 78,219
83,762 70,790 Accounts payable and other liabilities 943,800
929,573 946,674 907,928 930,103 Liabilities related to assets held
for sale 9,837 9,812 1,389 1,462 77,608 Deferred income taxes
296,272 296,822 294,057 316,641 315,713
Total liabilities 12,769,738 13,231,452 13,264,072
12,437,119 12,646,541 Redeemable OP unitholder and
noncontrolling interests 171,813 182,154 171,384 200,728 209,278
Commitments and contingencies Equity: Ventas
stockholders' equity: Preferred stock, $1.00 par value; 10,000
shares authorized, unissued — — — — — Common stock, $0.25 par
value; 356,163; 356,134; 354,863; 354,125; and 353,793 shares
issued at September 30, 2017, June 30, 2017, March 31, 2017,
December 31, 2016, and September 30, 2016, respectively 89,023
89,016 88,698 88,514 88,431 Capital in excess of par value
13,034,527 13,019,023 12,944,501 12,917,002 12,870,566 Accumulated
other comprehensive loss (40,780 ) (45,035 ) (53,657 ) (57,534 )
(49,614 ) Retained earnings (deficit) (2,351,430 ) (2,688,946 )
(2,564,936 ) (2,487,695 ) (2,420,766 ) Treasury stock, 0; 0; 0; 1
and 1 shares at September 30, 2017, June 30, 2017, March 31, 2017,
December 31, 2016, and September 30, 2016, respectively — —
— (47 ) (78 ) Total Ventas stockholders' equity
10,731,340 10,374,058 10,414,606 10,460,240 10,488,539
Noncontrolling interests 66,904 68,094 69,269
68,513 81,906 Total equity 10,798,244
10,442,152 10,483,875 10,528,753 10,570,445
Total liabilities and equity $ 23,739,795 $
23,855,758 $ 23,919,331 $ 23,166,600 $
23,426,264
CONSOLIDATED STATEMENTS OF
INCOME (In thousands, except per share amounts)
For the Three Months Ended For the Nine Months
Ended September 30, September 30, 2017
2016 2017 2016 Revenues Rental income:
Triple-net leased $ 212,370 $ 210,424 $ 634,955 $ 635,030 Office
189,506 158,273 561,641 446,496 401,876
368,697 1,196,596 1,081,526 Resident fees and services 461,700
461,974 1,386,131 1,390,387 Office building and other services
revenue 3,196 4,317 9,781 17,006 Income from loans and investments
32,985 31,566 85,499 78,098 Interest and other income 171
562 854 792 Total revenues 899,928 867,116
2,678,861 2,567,809
Expenses Interest 113,869 105,063
336,245 312,001 Depreciation and amortization 213,407 208,387
655,298 666,735 Property-level operating expenses: Senior living
315,598 312,145 936,296 932,675 Office 60,609 48,972
174,728 136,619 376,207 361,117 1,111,024 1,069,294
Office building services costs 418 974 1,708 6,277 General,
administrative and professional fees 33,317 31,567 100,560 95,387
Loss on extinguishment of debt, net 511 383 856 3,165
Merger-related expenses and deal costs 804 16,217 8,903 25,073
Other 13,030 2,430 16,066 8,901 Total
expenses 751,563 726,138 2,230,660 2,186,833
Income before unconsolidated entities, income taxes,
discontinued operations, real estate dispositions and
noncontrolling interests 148,365 140,978 448,201 380,976 Income
from unconsolidated entities 750 931 3,794 2,151 Income tax benefit
7,815 8,537 13,119 28,507 Income from
continuing operations 156,930 150,446 465,114 411,634 Discontinued
operations (19 ) (118 ) (95 ) (755 ) Gain (loss) on real estate
dispositions 458,280 (144 ) 502,288 31,779 Net
income 615,191 150,184 967,307 442,658 Net income attributable to
noncontrolling interests 1,233 732 3,391 1,064
Net income attributable to common stockholders $ 613,958
$ 149,452 $ 963,916 $ 441,594
Earnings per common share Basic: Income from continuing
operations $ 0.44 $ 0.43 $ 1.31 $ 1.20 Net income attributable to
common stockholders 1.72 0.43 2.71 1.29 Diluted: Income from
continuing operations $ 0.44 $ 0.42 $ 1.30 $ 1.19 Net income
attributable to common stockholders 1.71 0.42 2.69 1.28
Weighted average shares used in computing earnings per common
share Basic 355,929 350,274 355,110 341,610 Diluted 359,333
354,186 358,365 345,352 Dividends declared per common share
$ 0.775 $ 0.73 $ 2.325 $ 2.19
QUARTERLY CONSOLIDATED
STATEMENTS OF INCOME (In thousands, except per share
amounts) For the Quarters
Ended September 30, June 30, March 31,
December 31, September 30, 2017 2017
2017 2016 2016 Revenues Rental income:
Triple-net leased $ 212,370 $ 213,258 $ 209,327 $ 210,804 $ 210,424
Office 189,506 186,240 185,895 183,846
158,273 401,876 399,498 395,222 394,650 368,697 Resident
fees and services 461,700 460,243 464,188 456,919 461,974 Office
building and other services revenue 3,196 3,179 3,406 4,064 4,317
Income from loans and investments 32,985 32,368 20,146 19,996
31,566 Interest and other income 171 202 481
84 562 Total revenues 899,928 895,490 883,443 875,713
867,116
Expenses Interest 113,869 113,572 108,804
107,739 105,063 Depreciation and amortization 213,407 224,108
217,783 232,189 208,387 Property-level operating expenses: Senior
living 315,598 308,625 312,073 310,303 312,145 Office 60,609
57,205 56,914 55,165 48,972 376,207
365,830 368,987 365,468 361,117 Office building services costs 418
552 738 1,034 974 General, administrative and professional fees
33,317 33,282 33,961 31,488 31,567 Loss (gain) on extinguishment of
debt, net 511 36 309 (386 ) 383 Merger-related expenses and deal
costs 804 6,043 2,056 (438 ) 16,217 Other 13,030 1,848
1,188 1,087 2,430 Total expenses
751,563 745,271 733,826 738,181 726,138
Income before unconsolidated entities, income taxes,
discontinued operations, real estate dispositions and
noncontrolling interests 148,365 150,219 149,617 137,532 140,978
Income (loss) from unconsolidated entities 750 (106 ) 3,150 2,207
931 Income tax benefit 7,815 2,159 3,145 2,836
8,537 Income from continuing operations 156,930
152,272 155,912 142,575 150,446 Discontinued operations (19 ) (23 )
(53 ) (167 ) (118 ) Gain (loss) on real estate dispositions 458,280
719 43,289 66,424 (144 ) Net income
615,191 152,968 199,148 208,832 150,184 Net income attributable to
noncontrolling interests 1,233 1,137 1,021
1,195 732 Net income attributable to common
stockholders $ 613,958 $ 151,831 $ 198,127 $
207,637 $ 149,452
Earnings per common
share Basic: Income from continuing operations $ 0.44 $ 0.43 $
0.44 $ 0.40 $ 0.43 Net income attributable to common stockholders
1.72 0.43 0.56 0.59 0.43 Diluted: Income from continuing operations
$ 0.44 $ 0.42 $ 0.44 $ 0.40 $ 0.42 Net income attributable to
common stockholders 1.71 0.42 0.55 0.58 0.42
Weighted
average shares used in computing earnings per common share
Basic 355,929 355,024 354,410 353,911 350,274 Diluted 359,333
358,311 357,572 357,435 354,186
CONSOLIDATED STATEMENTS
OF CASH FLOWS (In thousands) For the
Nine Months Ended September 30, 2017 2016
Cash flows from operating activities: Net income $ 967,307 $
442,658 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 655,298 666,735
Amortization of deferred revenue and lease intangibles, net (16,283
) (15,307 ) Other non-cash amortization 11,186 7,174 Stock-based
compensation 19,923 15,885 Straight-lining of rental income, net
(17,384 ) (21,386 ) Loss on extinguishment of debt, net 856 3,165
Gain on real estate dispositions (502,288 ) (31,779 ) Gain on real
estate loan investments (124 ) (2,271 ) Income tax benefit (15,619
) (30,832 ) Income from unconsolidated entities (767 ) (2,151 )
Gain on re-measurement of equity interest upon acquisition, net
(3,027 ) — Distributions from unconsolidated entities 3,909 5,574
Other 7,439 (1,075 ) Changes in operating assets and liabilities:
(Increase) decrease in other assets (17,598 ) 1,753 Increase
(decrease) in accrued interest 12,688 (10,053 ) Decrease in
accounts payable and other liabilities (19,277 ) (21,944 ) Net cash
provided by operating activities 1,086,239 1,006,146 Cash flows
from investing activities: Net investment in real estate property
(262,123 ) (1,421,592 ) Investment in loans receivable and other
(734,033 ) (154,949 ) Proceeds from real estate disposals 532,137
63,561 Proceeds from loans receivable 84,361 194,063 Development
project expenditures (210,423 ) (94,398 ) Capital expenditures
(83,387 ) (75,296 ) Distributions from unconsolidated entities
5,816 — Investment in unconsolidated entities (42,399 ) (6,175 )
Net cash used in investing activities (710,051 ) (1,494,786 ) Cash
flows from financing activities: Net change in borrowings under
revolving credit facility 384,738 46,728 Proceeds from debt
1,058,437 876,617 Repayment of debt (1,225,525 ) (916,505 )
Purchase of noncontrolling interests (15,809 ) (1,604 ) Payment of
deferred financing costs (26,426 ) (6,147 ) Issuance of common
stock, net 73,596 1,265,702 Cash distribution to common
stockholders (827,285 ) (750,402 ) Cash distribution to redeemable
OP unitholders (5,677 ) (6,486 ) Contributions from noncontrolling
interests 4,402 5,926 Distributions to noncontrolling interests
(9,248 ) (5,121 ) Other 10,543 16,631 Net cash (used
in) provided by financing activities (578,254 ) 525,339 Net
(decrease) increase in cash and cash equivalents (202,066 ) 36,699
Effect of foreign currency translation on cash and cash equivalents
422 (443 ) Cash and cash equivalents at beginning of period 286,707
53,023 Cash and cash equivalents at end of period $
85,063 $ 89,279 Supplemental schedule of
non-cash activities: Assets acquired and liabilities assumed from
acquisitions: Real estate investments $ 206,771 $ 59,666
Utilization of funds held for an Internal Revenue Code Section 1031
exchange (84,995 ) (6,954 ) Other assets (5,546 ) 79,879 Debt
64,629 47,641 Other liabilities 64,090 60,446 Deferred income tax
liability (16,116 ) 2,279 Noncontrolling interests 3,627 22,225
Equity issued for redemption of OP and Class C units 22,694 22,970
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) For the Quarters Ended
September 30, June 30, March 31,
December 31, September 30, 2017
2017 2017 2016 2016 Cash flows from
operating activities: Net income $ 615,191 $ 152,968 $ 199,148 $
208,832 $ 150,184 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
213,407 224,108 217,783 232,189 208,387 Amortization of deferred
revenue and lease intangibles, net (5,434 ) (5,834 ) (5,015 )
(5,029 ) (5,217 ) Other non-cash amortization 4,602 4,124 2,460
3,183 2,487 Stock-based compensation 6,527 6,695 6,701 5,073 5,848
Straight-lining of rental income, net (6,229 ) (5,778 ) (5,377 )
(6,602 ) (5,960 ) Loss (gain) on extinguishment of debt, net 511 36
309 (386 ) 383 (Gain) loss on real estate dispositions (458,280 )
(719 ) (43,289 ) (66,424 ) 144 Gain on real estate loan investments
(120 ) (4 ) — — (2,238 ) Income tax benefit (8,515 ) (2,959 )
(4,145 ) (3,395 ) (9,389 ) (Income) loss from unconsolidated
entities (750 ) 106 (123 ) (2,207 ) (931 ) Gain on re-measurement
of equity interest upon acquisition, net — — (3,027 ) — —
Distributions from unconsolidated entities 775 754 2,380 2,024
1,701 Other 6,091 696 652 (772 ) (1,799 ) Changes in operating
assets and liabilities: (Increase) decrease in other assets (47,532
) 33,648 (3,714 ) 3,807 (8,856 ) Increase (decrease) in accrued
interest 8,138 9,291 (4,741 ) 12,657 (9,284 ) Increase (decrease)
in accounts payable and other liabilities 20,601 (15,607 )
(24,271 ) (16,755 ) 19,950 Net cash provided by operating
activities 348,983 401,525 335,731 366,195 345,410 Cash flows from
investing activities: Net investment in real estate property
(22,625 ) (40,655 ) (198,843 ) (7,520 ) (1,387,139 ) Investment in
loans receivable and other (15,800 ) (16,875 ) (701,358 ) (3,686 )
(2,499 ) Proceeds from real estate disposals 512,567 19,570 —
237,000 — Proceeds from loans receivable 59,294 21,704 3,363
126,019 186,419 Development project expenditures (67,154 ) (56,817
) (86,452 ) (49,249 ) (24,719 ) Capital expenditures (27,435 )
(32,117 ) (23,835 ) (42,160 ) (28,371 ) Distributions from
unconsolidated entities 5,816 — — — — Investment in unconsolidated
entities (3,351 ) (12,108 ) (26,940 ) (261 ) (1,910 ) Net cash
provided by (used in) investing activities 441,312 (117,298 )
(1,034,065 ) 260,143 (1,258,219 ) Cash flows from financing
activities: Net change in borrowings under revolving credit
facility 20,282 341,634 22,822 (82,365 ) 22,424 Proceeds from debt
29,928 231,295 797,214 16,601 460,400 Repayment of debt (568,989 )
(636,040 ) (20,496 ) (105,608 ) (176,168 ) Purchase of
noncontrolling interests — — (15,809 ) (1,242 ) — Payment of
deferred financing costs (6,739 ) (13,303 ) (6,384 ) (408 ) (2,303
) Issuance of common stock, net — 73,596 — 20,978 887,963 Cash
distribution to common stockholders (276,320 ) (275,597 ) (275,368
) (274,566 ) (256,931 ) Cash distribution to redeemable OP
unitholders (1,957 ) (1,827 ) (1,893 ) (2,154 ) (2,049 )
Contributions from noncontrolling interests 2,175 125 2,102 1,400
246 Distributions to noncontrolling interests (5,092 ) (1,746 )
(2,410 ) (1,758 ) (1,539 ) Other 841 6,405 3,297
621 13,009 Net cash (used in) provided by
financing activities (805,871 ) (275,458 ) 503,075 (428,501
) 945,052 Net (decrease) increase in cash and cash
equivalents (15,576 ) 8,769 (195,259 ) 197,837 32,243 Effect of
foreign currency translation on cash and cash equivalents (2,714 )
3,300 (164 ) (409 ) (286 ) Cash and cash equivalents at beginning
of period 103,353 91,284 286,707 89,279
57,322 Cash and cash equivalents at end of period $ 85,063
$ 103,353 $ 91,284 $ 286,707 $ 89,279
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued) (In thousands) For the
Quarters Ended September 30, June 30,
March 31, December 31,
September 30, 2017 2017 2017
2016 2016 Supplemental schedule of non-cash
activities: Assets acquired and liabilities assumed from
acquisitions: Real estate investments
$
1,505
$
16,347
$
188,919
$
9,426
$
51,001
Utilization of funds held for an Internal Revenue Code Section 1031
exchange — — (84,995 ) — — Other assets (1,450 ) (3,723 ) (373 )
10,158 79,018 Debt — 12,167 52,462 — 47,641 Other liabilities
(1,664 ) (2,922 ) 68,676 12,190 57,808 Deferred income tax
liability 64 3,384 (19,564 ) 7,102 2,345 Noncontrolling interests
1,655 (5 ) 1,977 292 22,225 Equity issued for redemption of OP and
Class C units 335 288 22,071 1,348 2,200
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Funds From Operations (FFO) and Funds
Available for Distribution (FAD)1
(Dollars in thousands, except per share amounts)
YOY 2016 2017 Growth
Q3 Q4 FY
Q1 Q2 Q3 YTD
'16-'17 Income from continuing operations
$ 150,446 $ 142,575 $
554,209 $ 155,912 $ 152,272
$ 156,930 $ 465,114 4 %
Income from continuing operations per share $
0.42 $ 0.40
$ 1.59 $ 0.44
$ 0.42 $ 0.44
$ 1.30 5 %
Discontinued operations (118 ) (167
) (922 ) (53 ) (23
) (19 ) (95 ) (Loss) gain on
real estate dispositions (144 )
66,424 98,203
43,289 719 458,280
502,288 Net income
150,184 208,832 651,490 199,148
152,968 615,191 967,307 Net income
attributable to noncontrolling interests 732
1,195 2,259
1,021 1,137 1,233
3,391 Net income
attributable to common stockholders $ 149,452
$ 207,637 $ 649,231 $
198,127 $ 151,831 $ 613,958
$ 963,916 311 % Net income
attributable to common stockholders per share $
0.42 $ 0.58
$ 1.86 $ 0.55
$ 0.42 $ 1.71
$ 2.69 307
% Adjustments: Depreciation and
amortization on real estate assets 206,560
230,353 891,985 215,961 222,347
211,784 650,092 Depreciation on real estate assets
related to noncontrolling interests (1,865 )
(2,031 ) (7,785 ) (1,995
) (1,817 ) (1,911 )
(5,723 ) Depreciation on real estate assets
related to unconsolidated entities 1,113 1,432
5,754 1,187 1,458 855 3,500
Gain on re-measurement of equity interest upon acquisition,
net — — — (3,027 ) —
— (3,027 ) Loss (gain) on real estate
dispositions 144 (66,424 ) (98,203
) (43,289 ) (719 )
(458,280 ) (502,288 ) Gain on real
estate dispositions related to noncontrolling interests
— — — — — 18 18
Loss (gain) on real estate dispositions related to
unconsolidated entities — 56 (439 )
23 (82 ) (986 ) (1,045
) Discontinued operations: Loss on real estate
dispositions — —
1 —
—
— — Subtotal: FFO
add-backs 205,952 163,386 791,313
168,860 221,187 (248,520 )
141,527 Subtotal: FFO add-backs per share
$ 0.58 $ 0.46
$ 2.27 $ 0.47
$ 0.62 $
(0.69 ) $ 0.39
FFO (NAREIT) attributable to common stockholders
$ 355,404 $ 371,023 $
1,440,544 $ 366,987 $ 373,018
$ 365,438 $ 1,105,443 3 %
FFO (NAREIT) attributable to common stockholders per share
$ 1.00 $ 1.04
$ 4.13 $
1.03 $ 1.04
$ 1.02 $ 3.08
2 % Adjustments: Change in
fair value of financial instruments 14 134
62 23 (153 ) 8 (122
) Non-cash income tax benefit (9,389 )
(3,395 ) (34,227 ) (4,145
) (2,959 ) (8,515 )
(15,619 ) Loss (gain) on extinguishment of debt,
net 383 (386 ) 2,779 403
47 486 936 Loss (gain) on non-real estate
dispositions related to unconsolidated entities 28
— (557 ) 4 (16 )
(22 ) (34 ) Merger-related expenses,
deal costs and re-audit costs 16,965 (479
) 28,290 3,129 7,036 2,741
12,906 Amortization of other intangibles 438
438 1,752 438 365 328
1,131 Unusual items related to unconsolidated
entities — — — 212 280
1,207 1,699 Non-cash impact of changes to equity
plan — — — 999 1,711
1,372 4,082 Natural disaster expenses
(recoveries), net — —
— — —
9,810 9,810 Subtotal:
normalized FFO add-backs 8,439 (3,688 )
(1,901 ) 1,063 6,311 7,415
14,789 Subtotal: normalized FFO add-backs per share
$ 0.02 $ (0.01
) $ (0.01 ) $
0.00 $ 0.02
$ 0.02 $ 0.04
Normalized FFO attributable to common
stockholders $ 363,843 $ 367,335
$ 1,438,643 $ 368,050 $
379,329 $ 372,853 $ 1,120,232
2 % Normalized FFO attributable to common
stockholders per share $ 1.03
$ 1.03 $ 4.13
$ 1.03 $
1.06 $ 1.04
$ 3.13 1 %
Non-cash items included in normalized FFO: Amortization
of deferred revenue and lease intangibles, net (5,217
) (5,029 ) (20,336 )
(5,015 ) (5,834 ) (5,434
) (16,283 ) Other non-cash amortization,
including fair market value of debt 2,487 3,183
10,357 2,460 4,124 4,602 11,186
Stock-based compensation 5,848 5,073
20,958 5,702 4,984 5,155 15,841
Straight-lining of rental income, net (5,960 )
(6,602 ) (27,988 )
(5,377 ) (5,778 )
(6,229 ) (17,384 ) Subtotal:
non-cash items included in normalized FFO (2,842
) (3,375 ) (17,009 )
(2,230 ) (2,504 ) (1,906
) (6,640 ) Capital expenditures
(29,991 ) (44,540 )
(124,621 ) (24,919 )
(33,148 ) (30,899 )
(88,966 ) Normalized FAD
attributable to common stockholders $
331,010 $ 319,420
$ 1,297,013 $ 340,901
$ 343,677 $
340,048 $ 1,024,626
3 % Merger-related expenses, deal costs and
re-audit costs (16,965 ) 479
(28,290 ) (3,129 ) (7,036
) (2,741 ) (12,906 ) Unusual
items related to unconsolidated entities —
— — (212
) (280 ) (1,207 )
(1,699 ) FAD attributable to
common stockholders $ 314,045
$ 319,899 $
1,268,723 $ 337,560
$ 336,361 $
336,100 $ 1,010,021
7 % Weighted average diluted shares
354,186 357,435
348,390 357,572
358,311 359,333
358,365 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.
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 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 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, which include 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 and 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 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 FY2017 -
Guidance 2017 - Per Share Low
High Low High
Income from Continuing
Operations $ 584 $
623 $ 1.63
$ 1.74 Gain on Real Estate
Dispositions 705 725 1.97 2.02 Other Adjustments 3 (4 ) (5 ) (0.01
) (0.01 )
Net Income Attributable to Common Stockholders
$ 1,285 $ 1,343
$ 3.58 $ 3.74
Depreciation and Amortization Adjustments 884 865
2.47 2.41 Gain on Real Estate Dispositions (705 ) (725 ) (1.97 )
(2.02 ) Other Adjustments 3 (4 ) (4 ) (0.01 ) (0.01 )
FFO (NAREIT)
Attributable to Common Stockholders $
1,460 $ 1,479
$ 4.07 $ 4.12
Merger-Related Expenses, Deal Costs and Re-Audit Costs 15 13
0.04 0.04 Other Adjustments 3 6 1 0.02 0.00
Normalized FFO
Attributable to Common Stockholders $ 1,481
$ 1,493 $ 4.13 $ 4.16 %
Year-Over-Year Growth 0 %
1 % Non-Cash Items Included in Normalized FFO
(7 ) (7 ) Capital Expenditures (130 ) (136 )
Normalized FAD Attributable to Common
Stockholders $ 1,344
$ 1,350 Merger-Related Expense,
Deal Costs and Re-Audit Costs (15 ) (13 ) Other Adjustments 3 (3 )
(3 )
FAD Attributable
to Common Stockholders $ 1,326
$ 1,334 Weighted Average
Diluted Shares (in millions) 359 359
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
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)” for detailed
breakout of adjustments for each respective category.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Net Debt to Adjusted Pro Forma
EBITDA
(Dollars in thousands)
The following table illustrates net debt to pro forma earnings,
which includes amounts in discontinued operations, 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 and net expenses or
recoveries related to natural disasters, and including the
Company’s share of EBITDA from unconsolidated entities and
adjustments for other immaterial or identified items (“Adjusted
EBITDA”).
The following information considers the pro forma effect on
Adjusted EBITDA of the Company’s activity during the three months
ended September 30, 2017, 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 and tend to obscure the
Company’s actual credit quality.
Income from continuing operations $ 156,930 Discontinued
operations (19 ) Gain on real estate dispositions 458,280
Net income 615,191 Net income attributable to noncontrolling
interests 1,233 Net income attributable to common
stockholders 613,958 Adjustments: Interest 113,869 Loss on
extinguishment of debt, net 511 Taxes (including tax amounts in
general, administrative and professional fees) (8,130 )
Depreciation and amortization 213,407 Non-cash stock-based
compensation expense 6,527 Merger-related expenses, deal costs and
re-audit costs 2,092 Net income (loss) attributable to
noncontrolling interests, net of consolidated joint venture
partners’ share of EBITDA (3,278 ) (Income) loss from
unconsolidated entities, net of Ventas share of EBITDA from
unconsolidated entities 6,660 Gain on real estate dispositions
(458,280 ) Unrealized foreign currency losses 210 Change in fair
value of financial instruments 6 Natural disaster expenses
(recoveries), net 9,810 Adjusted EBITDA 497,362 Pro forma
adjustments for current period activity (3,069 ) Adjusted Pro Forma
EBITDA $ 494,293 Adjusted Pro Forma EBITDA annualized
$ 1,977,172 As of September 30, 2017: Total debt $
11,424,145 Cash (85,063 ) Restricted cash pertaining to debt
(38,727 ) Consolidated joint venture partners’ share of debt
(74,135 ) Ventas share of debt from unconsolidated entities 89,860
Net debt $ 11,316,080 Net debt to Adjusted Pro
Forma EBITDA 5.7 x
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Net Operating Income (NOI) and
Same-Store Cash NOI by Segment
(Dollars in thousands)
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 believes that income from continuing
operations is the most comparable GAAP measure for both NOI and
same-store cash NOI because it provides insight into the Company’s
continuing operations. The Company defines same-store as properties
owned, consolidated, operational and reported under a consistent
business model for the full period in both comparison periods, and
excluding assets intended for disposition and for SHOP, those
properties that transitioned operators after the start of the prior
comparison period. To normalize for exchange rate movements, all
same-store cash 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.
Triple-Net Leased Properties
Senior Living Operations
Office Operations
All Other
Total
For the Three Months Ended September 30, 2017 Income from
continuing operations $ 156,930 Adjustments: Interest and other
income (171 ) Interest 113,869 Depreciation and amortization
213,407 General, administrative and professional fees 33,317 Loss
on extinguishment of debt, net 511 Merger-related expenses and deal
costs 804 Other 13,030 Income from unconsolidated entities (750 )
Income tax benefit (7,815 ) Reported Segment NOI $ 213,495 $
146,102 $ 130,047 $ 33,488 523,132 Adjustments: Normalizing
adjustment for technology costs — 1,616 — — 1,616 NOI not included
in same-store (37,009 ) (5,628 ) (29,114 ) — (71,751 )
Straight-lining of rental income (1,195 ) — (5,034 ) — (6,229 )
Non-cash rental income (4,277 ) — (312 ) — (4,589 ) Non-segment NOI
— — — (33,488 ) (33,488 ) (42,481 ) (4,012 )
(34,460 ) (33,488 ) (114,441 ) Same-Store cash NOI (Constant
Currency) $ 171,014 $ 142,090 $ 95,587 $ —
$ 408,691 Percentage increase 3.8 % 0.6 % 1.5 % 2.1 %
Triple-Net Leased Properties
Senior Living Operations
Office Operations
All Other
Total
For the Three Months Ended September 30, 2016 Income from
continuing operations $ 150,446 Adjustments: Interest and other
income (562 ) Interest 105,063 Depreciation and amortization
208,387 General, administrative and professional fees 31,567 Loss
on extinguishment of debt, net 383 Merger-related expenses and deal
costs 16,217 Other 2,430 Income from unconsolidated entities (931 )
Income tax benefit (8,537 ) Reported Segment NOI $ 211,670 $
149,829 $ 110,538 $ 32,426 504,463 Adjustments: NOI not included in
same-store (39,209 ) (9,237 ) (13,439 ) — (61,885 ) Straight-lining
of rental income (2,607 ) — (3,329 ) — (5,936 ) Non-cash rental
income (5,092 ) — 383 — (4,709 ) Non-segment NOI — — — (32,426 )
(32,426 ) NOI impact from change in FX (14 ) 699 — —
685 (46,922 ) (8,538 ) (16,385 ) (32,426 ) (104,271 )
Same-Store cash NOI (Constant Currency) $ 164,748 $ 141,291
$ 94,153 $ — $ 400,192
NON-GAAP FINANCIAL MEASURES RECONCILIATION
NOI and Same-Store Cash NOI by Segment
Guidance 1,2
(Dollars in millions, except per share amounts)
FY2017 - Guidance Tentative / Preliminary and Subject to
Change NNN SHOP Office
Non-Segment Total High End
Income from Continuing Operations $ 623
Depreciation and Amortization3 874 Interest Expense, G&A, Other
Income and Expenses4 588
Reported Segment NOI5
$ 844 $ 594 $ 523
$ 123 2,085 Normalizing Adjustment for
Technology Costs6 — 3 — — 3 Non-Cash and Non-Same-Store Adjustments
(163 ) (32 ) (140 ) (123 ) (458 )
Same-Store Cash
NOI5 681 565 383 —
1,630 Percentage Increase 3.5 %
1.5 % 2.0 % NM 2.5
% Modification Fees — — — —
—
Adjusted Same-Store Cash NOI5
$ 681 $ 565 $
383 $ — $ 1,630
Adjusted Percentage Increase 3.9 %
1.5 % 2.0 % NM 2.7
% Low End Income from Continuing
Operations $ 584 Depreciation and Amortization3
869 Interest Expense, G&A, Other Income and Expenses4 622
Reported Segment NOI5 $ 840
$ 589 $ 521 $ 121
2,075 Normalizing Adjustment for Technology Costs6 — 3 — — 3
Non-Cash and Non-Same-Store Adjustments (162 ) (32 ) (140 ) (121 )
(456 )
Same-Store Cash NOI5 678 560
381 — 1,622 Percentage Increase
3.0 % 0.5 % 1.5 %
NM 2.0 % Modification Fees — —
— — —
Adjusted Same-Store Cash
NOI5 $ 678 $ 560
$ 381 $ — $
1,622 Adjusted Percentage Increase 3.4
% 0.5 % 1.5 % NM
2.2 % Prior Year Income from
Continuing Operations $ 554 Depreciation and
Amortization3 899 Interest Expense, G&A, Other Income and
Expenses4 548
Reported Segment NOI5 $
851 $ 604 $ 444 $
102 2,001 Modification Fees 3 — — — 3 Non-Cash and
Non-Same-Store Adjustments (192 ) (49 ) (68 ) (102 ) (411 ) NOI
Impact from Change in FX (4 ) 1 — — (3 )
Same-Store Cash NOI5 658 556 376
— 1,590 Modification Fees (3 ) — — —
(3 )
Adjusted Same-Store Cash NOI $
655 $ 556 $ 376
$ — $ 1,587
2017 GBP (£) to USD ($) 1.32 USD ($) to CAD (C$) 1.25
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
See table titled “Net Operating Income
(NOI) and Same-Store Cash NOI by Segment” for the three months
ended September 30, 2017 for a detailed breakout of adjustments for
each respective category.
3
Includes real estate depreciation and
amortization, corporate depreciation and amortization and
amortization of other intangibles.
4
Includes interest expense, general and
administrative expenses (including stock-based compensation), loss
on extinguishment of debt, merger-related expenses and deal costs,
income from unconsolidated entities, income tax benefit, and other
income and expenses.
5
Totals may not add across due to minor
corporate-level adjustments and rounding.
6
Represents costs expensed by one operator
related to implementation of new software.
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Ventas, Inc.Ryan K. Shannon(877) 4-VENTAS
Ventas (NYSE:VTR)
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