Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today
reported results for the full year and fourth quarter ended
December 31, 2023.
CEO Remarks
“Ventas delivered strong growth in the fourth quarter and full
year 2023, fueled by property performance. We are pleased to have
achieved consecutive years of significant organic growth in our
senior housing operating portfolio (“SHOP”), led by our U.S.
communities and complemented by compounding contributions from our
Outpatient Medical & Research portfolio,” said Debra A. Cafaro,
Ventas Chairman and CEO.
“We expect unprecedented demand for senior housing in 2024 and
subsequent years because of the rapidly growing senior population
and the value our communities provide to residents and their
families. We are focused on leveraging our differentiated platform
to drive continued organic SHOP performance and investing in senior
housing to expand our participation in the compelling multiyear
growth opportunity that is underway.
“Accelerating demographic demand is driving advantaged growth
from our portfolio. We are optimistic about the future and
committed to delivering continued strong performance and value for
shareholders while enabling exceptional environments that benefit
the large and growing aging population,” Cafaro concluded.
Fourth Quarter and Full Year 2023
Results
Quarter Ended December
31,
2023
2022
$ Change
% Change
Attributable Net (Loss) Income
($0.23)
($0.11)
($0.12)
n/a
Nareit FFO*
$0.79
$0.65
$0.14
21.5%
Normalized FFO*
$0.76
$0.73
$0.03
4.1%
Year Ended December
31,
2023
2022
$ Change
% Change
Attributable Net (Loss) Income
($0.10)
($0.12)
$0.02
n/a
Nareit FFO*
$3.26
$2.82
$0.44
15.6%
Normalized FFO*
$2.99
$2.99
$0.00
—%
* Some of the financial measures
throughout this press release are non-GAAP measures. Refer to the
Non-GAAP Financial Measures Reconciliation tables at the end of
this press release for additional information and a reconciliation
to the most directly comparable GAAP measure.
A description of full year 2023 results is as follows:
- 2023 Net (Loss) Income Attributable to Common Stockholders per
share increased $0.02 compared to 2022. Results in 2022 included a
$53 million ($0.13 per share) benefit from HHS grants received and
a $9 million ($0.02 per share) benefit of promote revenue in the
fourth quarter of 2022 within the Company’s third-party
institutional capital management business.
- 2023 Nareit Funds From Operations* (“Nareit FFO”) per share
increased $0.44 year-over-year, or approximately 16%, driven by
valuation-related increases in connection with taking ownership of
the Equitized Loan Portfolio and unrealized gains on warrants of
Brookdale Senior Living common stock.
- Normalized Funds from Operations* (“Normalized FFO”) per share
in 2023 was $2.99, an increase of over 5% compared to the prior
year excluding the HHS grants and promote revenue discussed above.
Fourth quarter 2023 Normalized FFO also included an estimated
($0.01) per share impact of a cybersecurity incident at Ardent
Health Services (“Ardent”) in which the Company holds a 7.5%
ownership interest.
- 2023 Total Company Net Operating Income* (“NOI”) increased
year-over-year by 4.5% and Total Company Same-Store Cash NOI* was
8.1% higher year-over-year. On a Same-Store Cash NOI* basis, SHOP
grew 18.3% year-over-year.
2023 Full Year
Highlights
- SHOP Occupancy Growth Accelerated: Average occupancy
year-over-year growth in the SHOP same-store portfolio accelerated
in the fourth quarter due to demand strength, growing 170 basis
points. Average occupancy grew 120 basis points in 2023 versus
2022, exceeding guidance for average occupancy growth of
approximately 110 basis points. With favorable supply/demand
conditions combined with the implementation of the Ventas OITM
active asset management playbook, the Company believes it is well
positioned to benefit from an unprecedented multiyear growth
opportunity in senior housing.
- Attractive Capital Markets Activity: The Company raised
over $4 billion of attractively priced capital ahead of rising
interest rates, including proactively addressing 2024 debt
maturities, strengthening the balance sheet and enhancing
liquidity. This demonstrates the advantages of Ventas’s size, scale
and access to diverse forms of capital.
- Successful Execution of Equitized Loan Portfolio
Transaction: Ventas successfully took ownership of and
integrated the collateral for the “Santerre” mezzanine loan. The
initial $486 million mezzanine loan investment yielded an 11%
unlevered IRR through the date Ventas took ownership of the
portfolio, based on third-party appraised values. Ventas continues
to implement asset management initiatives designed to maximize NOI
and value of the assets.
- TSR Outperformance Compared to Key Benchmarks over Short-
and Long-Term: Ventas’s 2023 total shareholder return (“TSR”)
exceeding 15% continues the Company’s strong track record of
performance.
- Ventas Sustainability & Governance Highlights: In
2023, Ventas continued its long history of industry-leading
corporate sustainability practices that support long-term value
creation. Highlights include:
- Significantly advancing toward achievement of the Company’s
2040 Net Zero Operational Carbon goal by creating and rolling out
~800 property-specific decarbonization roadmaps and incorporating
decarbonization into its capital planning processes
- Earning the 2023 ENERGY STAR Partner of the Year Sustained
Excellence in Energy Management Award, the ENERGY STAR program’s
highest honor, in addition to numerous other notable
recognitions
- Earning the Gold Award in Nareit’s annual Diversity, Equity
& Inclusion awards – the Company’s fourth consecutive year
being recognized
- Continuing the Company’s longstanding Board-led shareholder
engagement program in the Spring and the Fall, through which our
Board invites the Company’s top 50 shareholders, representing
>70% of outstanding shares, to engage and share their
perspectives
Full Year 2024 Guidance
The Company’s 2024 guidance contains forward-looking statements
and is based on a number of assumptions; actual results may differ
materially. Ventas expects to report 2024 per share Attributable
Net Income to common stockholders, Nareit FFO and Normalized FFO
within the following ranges:
FY 2024 Guidance
Per Share
Low
High
Attributable Net Income
$0.00
-
$0.11
Nareit FFO*
$2.94
-
$3.05
Normalized FFO*
$3.07
-
$3.18
* Some of the financial measures
throughout this press release are non-GAAP measures. Refer to the
Non-GAAP Financial Measures Reconciliation tables at the end of
this press release for additional information and a reconciliation
to the most directly comparable GAAP measure.
Full Year 2024 Guidance
Commentary
Consistent with 2023, the Company expects significant property
NOI growth, led by SHOP in 2024 based on favorable supply/demand
fundamentals and the Company’s advantaged platform.
The Company’s full year guidance for 2024 Attributable Net
Income per share of $0.06 at the midpoint of the range compares to
2023 Attributable Net Loss of ($0.10).
The Company’s full year guidance for 2024 Normalized FFO per
share of $3.13 at the midpoint of the range compares to 2023
Normalized FFO per share of $2.99. The year-over-year increase of
$0.14 or approximately 5% per share at the midpoint of the 2024
guidance range assumes: (1) the 2024 benefit of $0.28 per share of
property NOI growth primarily from the SHOP business partially
offset by (2) the impact of higher interest expense approximating
($0.11) per share, and (3) the approximately ($0.03) per share
impact of 2023 capital recycling activities.
The Company’s guidance is based on the assumptions described
above as well as other assumptions that are subject to change, many
of which are outside the control of the Company. If actual results
vary from these and other assumptions, the Company’s expectations
may change. There can be no assurance that the Company will achieve
these results. Information regarding potential risks that could
cause actual results to differ is set forth below and in our
filings with the SEC.
Investor Presentation
An Earnings Presentation is posted to the Events &
Presentations section of Ventas’s website at
ir.ventasreit.com/events-and-presentations. Additional information
regarding the Company can be found in its Supplemental posted at
ir.ventasreit.com. The information contained on, or that may be
accessed through, our website, including the information contained
in the aforementioned Earnings Presentation and Supplemental, is
not incorporated by reference into, and is not part of, this
document.
2023 Results Conference
Call
Ventas will hold a conference call to discuss this earnings
release on Thursday, February 15, 2024 at 1:00 p.m. Eastern Time
(12:00 p.m. Central Time).
The dial-in number for the conference call is (888) 330-3576 (or
+1 (646) 960-0672 for international callers), and the participant
passcode is 7655497. A live webcast can be accessed from the
Investor Relations section of www.ventasreit.com.
A telephonic replay will be available at (800) 770-2030 (or +1
(609) 800-9909 for international callers), passcode 7655497, after
the earnings call and will remain available for 30 days. The
webcast replay will be posted in the Investor Relations section of
www.ventasreit.com.
About Ventas
Ventas Inc. (NYSE: VTR) is a leading S&P 500 real estate
investment trust focused on delivering strong, sustainable
shareholder returns by enabling exceptional environments that
benefit a large and growing aging population. The Company’s growth
is fueled by its senior housing communities, which provide valuable
services to residents and enable them to thrive in supported
environments. Ventas leverages its unmatched operational expertise,
data-driven insights from its Ventas Operational InsightsTM
platform, extensive relationships and strong financial position to
achieve its goal of delivering outsized performance across
approximately 1,400 properties. The Ventas portfolio is composed of
senior housing communities, outpatient medical buildings, research
centers and healthcare facilities in North America and the United
Kingdom. The Company benefits from a seasoned team of talented
professionals who share a commitment to excellence, integrity and a
common purpose of helping people live longer, healthier, happier
lives.
Non-GAAP Financial
Measures
This press release includes certain financial performance
measures not defined by generally accepted accounting principles in
the United States (“GAAP”), such as Nareit FFO, Normalized FFO, NOI
and Same-Store Cash NOI. Reconciliations of these non-GAAP
financial measures to the most directly comparable GAAP measures
are included in this press release. Our definitions and
calculations of these non-GAAP measures may not be the same as
similar measures reported by other REITs.
These non-GAAP financial measures should not be considered as
alternatives for, or superior to, financial measures calculated in
accordance with GAAP.
Cautionary Statements
Certain of the information contained herein, including
intra-quarter operating information, has been provided by our
operators and we have not verified this information through an
independent investigation or otherwise. We have no reason to
believe that this information is inaccurate in any material
respect, but we cannot assure you of its accuracy.
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. These forward-looking statements include, among others,
statements of expectations, beliefs, future plans and strategies,
anticipated results from operations and developments and other
matters that are not historical facts. Forward-looking statements
include, among other things, statements regarding our and our
officers’ intent, belief or expectation as identified by the use of
words such as “assume,” “may,” “will,” “project,” “expect,”
“believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,”
“plan,” “potential,” “opportunity,” “estimate,” “could,” “would,”
“should” and other comparable and derivative terms or the negatives
thereof.
Forward-looking statements are based on management’s beliefs as
well as on a number of assumptions concerning future events. You
should not put undue reliance on these forward-looking statements,
which are not a guarantee of performance and are subject to a
number of uncertainties and other factors that could cause actual
events or results to differ materially from those expressed or
implied by the forward-looking statements. We do not undertake a
duty to update these forward-looking statements, which speak only
as of the date on which they are made. We urge you to carefully
review the disclosures we make concerning risks and uncertainties
that may affect our business and future financial performance,
including those made below and in our filings with the Securities
and Exchange Commission, such as in the sections titled “Cautionary
Statements — Summary Risk Factors,” “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report on Form 10-K for the
year ended December 31, 2023.
Certain factors that could affect our future results and our
ability to achieve our stated goals include, but are not limited
to: (a) our ability to achieve the anticipated benefits and
synergies from, and effectively integrate, our completed or
anticipated acquisitions and investments of properties, including
our ownership of the properties included in our equitized loan
portfolio; (b) our exposure and the exposure of our tenants,
managers and borrowers to complex healthcare and other regulation,
including evolving laws and regulations regarding data privacy and
cybersecurity and environmental matters, and the challenges and
expense associated with complying with such regulation; (c) the
potential for significant general and commercial claims, legal
actions, regulatory proceedings or enforcement actions that could
subject us or our tenants, managers or borrowers to increased
operating costs, uninsured liabilities, fines or significant
operational limitations, including the loss or suspension of or
moratoriums on accreditations, licenses or certificates of need,
suspension of or nonpayment for new admissions, denial of
reimbursement, suspension, decertification or exclusion from
federal, state or foreign healthcare programs or the closure of
facilities or communities; (d) the impact of market and general
economic conditions on us, our tenants, managers and borrowers and
in areas in which our properties are geographically concentrated,
including macroeconomic trends and financial market events, such as
bank failures and other events affecting financial institutions,
market volatility, increases in inflation, changes in or elevated
interest and exchange rates, tightening of lending standards and
reduced availability of credit or capital, geopolitical conditions,
supply chain pressures, rising labor costs and historically low
unemployment, events that affect consumer confidence, our occupancy
rates and resident fee revenues, and the actual and perceived state
of the real estate markets, labor markets and public and private
capital markets; (e) our reliance and the reliance of our tenants,
managers and borrowers on the financial, credit and capital markets
and the risk that those markets may be disrupted or become
constrained, including as a result of bank failures or concerns or
rumors about such events, tightening of lending standards and
reduced availability of credit or capital; (f) the secondary and
tertiary effects of the COVID-19 pandemic on our business,
financial condition and results of operations and the
implementation and impact of regulations related to the CARES Act
and other stimulus legislation, including the risk that some or all
of the CARES Act or other COVID-19 relief payments we or our
tenants, managers or borrowers received could be recouped; (g) our
ability, and the ability of our tenants, managers and borrowers, to
navigate the trends impacting our or their businesses and the
industries in which we or they operate, and the financial condition
or business prospect of our tenants, managers and borrowers; (h)
the risk of bankruptcy, inability to obtain benefits from
governmental programs, insolvency or financial deterioration of our
tenants, managers, borrowers and other obligors which may, among
other things, have an adverse impact on the ability of such parties
to make payments or meet their other obligations to us, which could
have an adverse impact on our results of operations and financial
condition; (i) the risk that the borrowers under our loans or other
investments default or that, to the extent we are able to foreclose
or otherwise acquire the collateral securing our loans or other
investments, we will be required to incur additional expense or
indebtedness in connection therewith, that the assets will
underperform expectations or that we may not be able to
subsequently dispose of all or part of such assets on favorable
terms; (j) our current and future amount of outstanding
indebtedness, and our ability to access capital and to incur
additional debt which is subject to our compliance with covenants
in instruments governing our and our subsidiaries’ existing
indebtedness; (k) the recognition of reserves, allowances, credit
losses or impairment charges are inherently uncertain, may increase
or decrease in the future and may not represent or reflect the
ultimate value of, or loss that we ultimately realize with respect
to, the relevant assets, which could have an adverse impact on our
results of operations and financial condition; (l) the non-renewal
of any leases or management agreement or defaults by tenants or
managers thereunder and the risk of our inability to replace those
tenants or managers on a timely basis or on favorable terms, if at
all; (m) our ability to identify and consummate future investments
in or dispositions of healthcare assets and effectively manage our
portfolio opportunities and our investments in co-investment
vehicles, joint ventures and minority interests, including our
ability to dispose of such assets on favorable terms as a result of
rights of first offer or rights of first refusal in favor of third
parties; (n) risks related to development, redevelopment and
construction projects, including costs associated with inflation,
rising or elevated interest rates, labor conditions and supply
chain pressures, and risks related to increased construction and
development in markets in which our properties are located,
including adverse effect on our future occupancy rates; (o) our
ability to attract and retain talented employees; (p) the
limitations and significant requirements imposed upon our business
as a result of our status as a REIT and the adverse consequences
(including the possible loss of our status as a REIT) that would
result if we are not able to comply with such requirements; (q) the
ownership limits contained in our certificate of incorporation with
respect to our capital stock in order to preserve our qualification
as a REIT, which may delay, defer or prevent a change of control of
our company; (r) the risk of changes in healthcare law or
regulation or in tax laws, guidance and interpretations,
particularly as applied to REITs, that could adversely affect us or
our tenants, managers or borrowers; (s) increases in our borrowing
costs as a result of becoming more leveraged, including in
connection with acquisitions or other investment activity and
rising or elevated interest rates; (t) our reliance on third-party
managers and tenants to operate or exert substantial control over
properties they manage for or rent from us, which limits our
control and influence over such operations and results; (u) our
exposure to various operational risks, liabilities and claims from
our operating assets; (v) our dependency on a limited number of
tenants and managers for a significant portion of our revenues and
operating income; (w) our exposure to particular risks due to our
specific asset classes and operating markets, such as adverse
changes affecting our specific asset classes and the real estate
industry, the competitiveness or financial viability of hospitals
on or near the campuses where our outpatient medical buildings are
located, our relationships with universities, the level of expense
and uncertainty of our research tenants, and the limitation of our
uses of some properties we own that are subject to ground lease,
air rights or other restrictive agreements; (x) the risk of damage
to our reputation; (y) the availability, adequacy and pricing of
insurance coverage provided by our policies and policies maintained
by our tenants, managers or other counterparties; (z) the risk of
exposure to unknown liabilities from our investments in properties
or businesses; (aa) the occurrence of cybersecurity threats and
incidents that could disrupt our or our tenants’, managers’ or
borrower’s operations, result in the loss of confidential or
personal information or damage our business relationships and
reputation; (bb) the failure to maintain effective internal
controls, which could harm our business, results of operations and
financial condition; (cc) the impact of merger, acquisition and
investment activity in the healthcare industry or otherwise
affecting our tenants, managers or borrowers; (dd) disruptions to
the management and operations of our business and the uncertainties
caused by activist investors; (ee) the risk of catastrophic or
extreme weather and other natural events and the physical effects
of climate change; (ff) the risk of potential dilution resulting
from future sales or issuances of our equity securities; and (gg)
the other factors set forth in our periodic filings with the
Securities and Exchange Commission.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share amounts; dollars in USD; unaudited)
As of December 31,
2023
2022
Assets
Real estate investments:
Land and improvements
$
2,596,274
$
2,437,905
Buildings and improvements
27,201,381
26,020,048
Construction in progress
368,143
310,456
Acquired lease intangibles
1,448,146
1,346,190
Operating lease assets
312,142
310,307
31,926,086
30,424,906
Accumulated depreciation and
amortization
(10,177,136
)
(9,264,456
)
Net real estate property
21,748,950
21,160,450
Secured loans receivable and investments,
net
27,986
537,075
Investments in unconsolidated real estate
entities
598,206
579,949
Net real estate investments
22,375,142
22,277,474
Cash and cash equivalents
508,794
122,564
Escrow deposits and restricted cash
54,668
48,181
Goodwill
1,045,176
1,044,415
Assets held for sale
56,489
44,893
Deferred income tax assets, net
1,754
10,490
Other assets
683,410
609,823
Total assets
$
24,725,433
$
24,157,840
Liabilities and equity
Liabilities:
Senior notes payable and other debt
$
13,490,896
$
12,296,780
Accrued interest
117,403
110,542
Operating lease liabilities
194,734
190,440
Accounts payable and other liabilities
1,041,616
1,031,689
Liabilities related to assets held for
sale
9,243
6,492
Deferred income tax liabilities
24,500
35,570
Total liabilities
14,878,392
13,671,513
Redeemable OP unitholder and
noncontrolling interests
302,636
264,650
Commitments and contingencies
Equity:
Ventas stockholders’ equity:
Preferred stock, $1.00 par value; 10,000
shares authorized, unissued
—
—
Common stock, $0.25 par value; 600,000
shares authorized, 402,380 and 399,707 shares issued at December
31, 2023 and 2022, respectively
100,648
99,912
Capital in excess of par value
15,650,734
15,539,777
Accumulated other comprehensive loss
(35,757
)
(36,800
)
Retained earnings (deficit)
(6,213,803
)
(5,449,385
)
Treasury stock, 279 and 10 shares issued
at December 31, 2023 and 2022, respectively
(13,764
)
(536
)
Total Ventas stockholders’ equity
9,488,058
10,152,968
Noncontrolling interests
56,347
68,709
Total equity
9,544,405
10,221,677
Total liabilities and equity
$
24,725,433
$
24,157,840
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per
share amounts; dollars in USD; unaudited)
For the Three Months
Ended
December 31,
For the Twelve Months
Ended
December 31,
2023
2022
2023
2022
Revenues
Rental income:
Triple-net leased
$
155,302
$
147,081
$
619,208
$
598,154
Outpatient medical and research
portfolio
222,056
200,511
867,193
801,159
377,358
347,592
1,486,401
1,399,313
Resident fees and services
775,195
674,126
2,959,219
2,651,886
Third party capital management
revenues
4,353
13,374
17,841
26,199
Income from loans and investments
1,601
14,889
22,952
48,160
Interest and other income
5,885
1,444
11,414
3,635
Total revenues
1,164,392
1,051,425
4,497,827
4,129,193
Expenses
Interest
154,853
123,399
574,112
467,557
Depreciation and amortization
435,276
324,178
1,392,461
1,197,798
Property-level operating expenses:
Senior housing
589,765
521,472
2,247,812
2,004,420
Outpatient medical and research
portfolio
74,777
64,394
292,776
257,003
Triple-net leased
3,377
3,952
14,557
15,301
667,919
589,818
2,555,145
2,276,724
Third party capital management
expenses
1,487
1,721
6,101
6,194
General, administrative and professional
fees
36,382
33,540
148,876
144,874
Loss (gain) on extinguishment of debt,
net
85
—
(6,104
)
581
Transaction, transition and restructuring
costs
3,635
13,507
15,215
30,884
Allowance on loans receivable and
investments
(75
)
19,936
(20,270
)
19,757
Gain on foreclosure of real estate
—
—
(29,127
)
—
Shareholder relations matters
—
218
—
20,693
Other (income) expense
(22,236
)
28,180
(23,001
)
58,268
Total expenses
1,277,326
1,134,497
4,613,408
4,223,330
Loss before unconsolidated entities, real
estate dispositions, income taxes and noncontrolling interests
(112,934
)
(83,072
)
(115,581
)
(94,137
)
(Loss) income from unconsolidated
entities
(6,886
)
31,846
13,626
28,500
Gain on real estate dispositions
39,802
5,223
62,119
7,780
Income tax (expense) benefit
(4,698
)
2,619
9,539
16,926
Loss from continuing operations
(84,716
)
(43,384
)
(30,297
)
(40,931
)
Net loss
(84,716
)
(43,384
)
(30,297
)
(40,931
)
Net income attributable to noncontrolling
interests
6,103
1,635
10,676
6,516
Net loss attributable to common
stockholders
$
(90,819
)
$
(45,019
)
$
(40,973
)
$
(47,447
)
Earnings per common share
Basic:
Loss from continuing operations
$
(0.21
)
$
(0.11
)
$
(0.08
)
$
(0.10
)
Net loss attributable to common
stockholders
(0.23
)
(0.11
)
(0.10
)
(0.12
)
Diluted:1
Loss from continuing operations
$
(0.21
)
$
(0.11
)
$
(0.08
)
$
(0.10
)
Net loss attributable to common
stockholders
(0.23
)
(0.11
)
(0.10
)
(0.12
)
Weighted average shares used in
computing earnings per common share
Basic
402,995
399,655
401,809
399,549
Diluted
406,977
403,570
405,670
403,454
1
Potential common shares are not
included in the computation of diluted earnings per share when a
loss from continuing operations exists as the effect would be an
antidilutive per share amount.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Funds From Operations
Attributable to Common Stockholders (FFO)
(In thousands, except per
share amounts; dollars in USD; totals may not sum due to rounding;
unaudited)
Q4 YoY
2023
2022
Change
Q4
Q4
’23-’22
2023
2022
Net loss attributable to common
stockholders
$
(90,819
)
$
(45,019
)
n/a
$
(40,973
)
$
(47,447
)
Net loss attributable to common
stockholders per share
$
(0.23
)
$
(0.11
)
n/a
$
(0.10
)
$
(0.12
)
Adjustments:
Depreciation and amortization on real
estate assets
434,673
323,539
1,390,025
1,194,751
Depreciation on real estate assets related
to noncontrolling interests
(3,892
)
(4,352
)
(16,657
)
(17,451
)
Depreciation on real estate assets related
to unconsolidated entities
13,044
7,074
44,953
30,940
Gain on real estate dispositions
(39,802
)
(5,223
)
(62,119
)
(7,780
)
Gain (loss) on real estate dispositions
related to noncontrolling interests
6,688
(6
)
6,685
32
Gain on real estate dispositions and other
related to unconsolidated entities
—
(11,857
)
(180
)
(14,546
)
Subtotal: Nareit FFO adjustments
410,711
309,175
1,362,707
1,185,946
Subtotal: Nareit FFO adjustments per
share
$
1.01
$
0.77
$
3.36
$
2.94
Nareit FFO attributable to common
stockholders
$
319,892
$
264,156
21
%
$
1,321,734
$
1,138,499
Nareit FFO attributable to common
stockholders per share
$
0.79
$
0.65
22
%
$
3.26
$
2.82
Adjustments:
Change in fair value of financial
instruments
(24,392
)
14,192
(32,076
)
23,615
Non-cash income tax expense (benefit)
3,961
(4,388
)
(15,269
)
(21,349
)
Loss (gain) on extinguishment of debt
85
—
(6,104
)
581
Transaction, transition and restructuring
costs
3,635
13,506
15,215
30,884
Amortization of other intangibles
97
96
385
385
Non-cash impact of changes to equity
plan
(2,465
)
(2,565
)
161
(312
)
Materially disruptive events, net
(1,900
)
11,106
(5,339
)
12,451
Allowance on loan investments
(75
)
19,936
(20,270
)
19,757
Gain on foreclosure of real estate
—
—
(29,127
)
—
Shareholder relations matters
—
218
—
20,693
Other normalizing items 1
8,257
—
8,257
—
Normalizing items related to
noncontrolling interests and unconsolidated entities, net
1,018
(20,729
)
(25,683
)
(18,233
)
Subtotal: Normalized FFO adjustments
(11,779
)
31,372
(109,850
)
68,472
Subtotal: Normalized FFO adjustments per
share
$
(0.03
)
$
0.08
$
(0.27
)
$
0.17
Normalized FFO attributable to common
stockholders
$
308,113
$
295,528
4
%
$
1,211,884
$
1,206,971
Normalized FFO attributable to common
stockholders per share
$
0.76
$
0.73
4
%
$
2.99
$
2.99
Weighted average diluted shares
406,977
403,570
405,670
403,454
(1)
Includes adjustments for other
unusual items, including: (i) approximately $5.5 million payment
obligation arising in connection with sale of real estate, and (ii)
approximately $2.7 million related to certain legal matters,
primarily related to class action litigation in our SHOP
segment.
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 Nareit FFO and
Normalized FFO to be appropriate supplemental measures of operating
performance of an equity REIT. The Company believes that the
presentation of FFO, combined with the presentation of required
GAAP financial measures, has improved the understanding of
operating results of REITs among the investing public and has
helped make comparisons of REIT operating results more meaningful.
Management generally considers Nareit FFO to be a useful measure
for understanding and comparing our operating results because, by
excluding gains and losses related to sales of previously
depreciated operating real estate assets, impairment losses on
depreciable real estate and real estate asset depreciation and
amortization (which can differ across owners of similar assets in
similar condition based on historical cost accounting and useful
life estimates), Nareit FFO can help investors compare the
operating performance of a company’s real estate across reporting
periods and to the operating performance of other companies. 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 across 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 Nareit 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.
Nareit Funds from Operations Attributable to Common
Stockholders (“Nareit FFO”)
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 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 entities and noncontrolling
interests. Adjustments for unconsolidated entities and
noncontrolling interests will be calculated to reflect FFO on the
same basis.
Normalized FFO
The Company defines Normalized FFO as Nareit FFO excluding the
following income and expense items, without duplication: (a)
transaction, transition and restructuring costs, including
transaction, integration and restructuring-related costs and
expenses, and amortization of intangibles, in each case net of
noncontrolling interests’ share of these items and including
Ventas’ share of these items from unconsolidated entities; (b) the
impact of expenses related to asset impairment and valuation
allowances, the write-off of unamortized deferred financing fees or
additional costs, expenses, discounts, make-whole payments,
penalties or premiums incurred as a result of early retirement or
payment of the Company’s debt; (c) the non-cash effect of income
tax benefits or expenses, the non-cash impact of changes to the
Company’s executive equity compensation plan, derivative
transactions that have non-cash mark-to-market impacts on the
Company’s income statement and non-cash charges related to leases;
(d) the financial impact of contingent consideration; (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 items related to
unconsolidated entities and noncontrolling interests; (g) net
expenses or recoveries related to materially disruptive events; and
(h) other items set forth in the Normalized FFO reconciliation
included herein.
Nareit FFO and Normalized FFO 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. Nareit FFO and Normalized FFO should not be considered
as alternatives to net income attributable to common stockholders
(determined in accordance with GAAP) as indicators of the Company’s
financial performance or as alternatives to cash flow from
operating activities (determined in accordance with GAAP) as
measures of the Company’s liquidity, nor are they necessarily
indicative of sufficient cash flow to fund all of the Company’s
needs. The Company believes that in order to facilitate a clear
understanding of the consolidated historical operating results of
the Company, Nareit FFO and Normalized FFO should be examined in
conjunction with net income attributable to common stockholders as
presented elsewhere herein.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Full Year 2024
Guidance1
Net Income and FFO
Attributable to Common Stockholders
(In millions, except per share
amounts; dollars in USD; totals may not sum due to rounding;
unaudited)
FY 2024
FY 2024 - Per Share
Low
High
Low
High
Net income attributable to common
stockholders
$0
$47
$0.00
$0.11
Depreciation and amortization
adjustments
1,209
1,209
2.94
2.94
Nareit FFO attributable to common
stockholders
$1,209
$1,256
$2.94
$3.05
Other adjustments2
53
53
0.13
0.13
Normalized FFO attributable to common
stockholders
$1,262
$1,309
$3.07
$3.18
% Year-over-year growth
3%
6%
Weighted average diluted shares (in
millions)
411
411
1
Per share amounts may not add to
total per share amounts due to changes in the Company's weighted
average diluted share count, if any. Same-store Cash NOI is at
constant currency.
2
Other adjustments include the
categories of adjustments presented in our “Non-GAAP Financial
Measures Reconciliation – Funds From Operations Attributable to
Common Stockholders (FFO)”.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Fourth Quarter 2023 Same-Store
Cash NOI by Segment
(Dollars in thousands USD,
unless otherwise noted; totals may not sum due to rounding;
unaudited)
For the Three Months Ended
December 31, 2023
SHOP
Outpatient
Medical &
Research
Portfolio
Triple-Net
Leased
Properties
Non-Segment
Total
Net loss attributable to common
stockholders
$
(90,819
)
Adjustments:
Interest and other income
(5,885
)
Interest expense
154,853
Depreciation and amortization
435,276
General, administrative and professional
fees
36,382
Loss on extinguishment of debt, net
85
Transaction, transition and restructuring
costs
3,635
Allowance on loans receivable and
investments
(75
)
Other income
(22,236
)
Loss from unconsolidated entities
6,886
Gain on real estate dispositions
(39,802
)
Income tax expense
4,698
Net income attributable to noncontrolling
interests
6,103
NOI
$
185,430
$
147,945
$
151,925
$
3,801
$
489,101
Adjustments:
Straight-lining of rental income
—
(2,989
)
(182
)
—
(3,171
)
Non-cash rental income
—
(2,144
)
(12,916
)
—
(15,060
)
NOI not included in cash NOI1
877
(3,434
)
(391
)
—
(2,948
)
Non-segment NOI
—
—
—
(3,801
)
(3,801
)
Cash NOI
$
186,307
$
139,378
$
138,436
$
—
$
464,121
Adjustments:
Cash NOI not included in same-store
(22,827
)
(13,826
)
(10,787
)
—
(47,440
)
Same-store Cash NOI
$
163,480
$
125,552
$
127,649
$
—
$
416,681
Percentage increase
15.0
%
2.4
%
1.4
%
6.6
%
For the Three Months Ended
December 31, 2022
SHOP
Outpatient
Medical &
Research
Portfolio
Triple-Net
Leased
Properties
Non-Segment
Total
Net loss attributable to common
stockholders
$
(45,019
)
Adjustments:
Interest and other income
(1,444
)
Interest expense
123,399
Depreciation and amortization
324,178
General, administrative and professional
fees
33,540
Transaction, transition and restructuring
costs
13,507
Allowance on loans receivable and
investments
19,936
Shareholder relations matters
218
Other expense
28,180
Income from unconsolidated entities
(31,846
)
Gain on real estate dispositions
(5,223
)
Income tax benefit
(2,619
)
Net income attributable to noncontrolling
interests
1,635
NOI
$
152,654
$
136,731
$
143,129
$
25,928
$
458,442
Adjustments:
Straight-lining of rental income
—
(2,040
)
1,076
—
(964
)
Non-cash rental income
—
(2,537
)
(12,550
)
—
(15,087
)
NOI not included in cash NOI1
2,273
(6,133
)
(6,082
)
—
(9,942
)
Non-segment NOI
—
—
—
(25,928
)
(25,928
)
NOI impact from change in FX
(100
)
—
354
—
254
Cash NOI
$
154,827
$
126,021
$
125,927
$
—
$
406,775
Adjustments:
Cash NOI not included in same-store
(12,655
)
(3,359
)
—
—
(16,014
)
NOI impact from change in FX not in
same-store
2
—
—
—
2
Same-store Cash NOI
$
142,174
$
122,662
$
125,927
$
—
$
390,763
1
Excludes sold assets, assets held for
sale, development properties not yet operational, land parcels, and
third-party capital management revenues.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Full Year 2023 Same-Store Cash
NOI by Segment
(Dollars in thousands USD,
unless otherwise noted; totals may not sum due to rounding;
unaudited)
For the Year Ended December
31, 2023
SHOP
Outpatient
Medical &
Research
Portfolio
Triple-Net
Leased
Properties
Non-Segment
Total
Net loss attributable to common
stockholders
$
(40,973
)
Adjustments:
Interest and other income
(11,414
)
Interest expense
574,112
Depreciation and amortization
1,392,461
General, administrative and professional
fees
148,876
Gain on extinguishment of debt, net
(6,104
)
Transaction, transition and restructuring
costs
15,215
Allowance on loans receivable and
investments
(20,270
)
Gain on foreclosure of real estate
(29,127
)
Other income
(23,001
)
Income from unconsolidated entities
(13,626
)
Gain on real estate dispositions
(62,119
)
Income tax benefit
(9,539
)
Net income attributable to noncontrolling
interests
10,676
NOI
$
711,407
$
576,932
$
604,651
$
32,177
$
1,925,167
Adjustments:
Straight-lining of rental income
—
(9,642
)
2,046
—
(7,596
)
Non-cash rental income
—
(9,379
)
(50,221
)
—
(59,600
)
NOI not included in cash NOI1
5,470
(21,277
)
(12,184
)
—
(27,991
)
Non-segment NOI
—
—
—
(32,177
)
(32,177
)
Cash NOI
$
716,877
$
536,634
$
544,292
$
—
$
1,797,803
Adjustments:
Cash NOI not included in same-store
(90,731
)
(53,129
)
(29,040
)
—
(172,900
)
Same-store Cash NOI
$
626,146
$
483,505
$
515,252
$
—
$
1,624,903
Percentage increase
18.3
%
2.7
%
2.5
%
8.1
%
For the Year Ended December
31, 2022
SHOP
Outpatient
Medical &
Research
Portfolio
Triple-Net
Leased
Properties
Non-Segment
Total
Net loss attributable to common
stockholders
$
(47,447
)
Adjustments:
Interest and other income
(3,635
)
Interest expense
467,557
Depreciation and amortization
1,197,798
General, administrative and professional
fees
144,874
Loss on extinguishment of debt, net
581
Transaction, transition and restructuring
costs
30,884
Allowance on loans receivable and
investments
19,757
Shareholder relations matters
20,693
Other expense
58,268
Income from unconsolidated entities
(28,500
)
Gain on real estate dispositions
(7,780
)
Income tax benefit
(16,926
)
Net income attributable to noncontrolling
interests
6,516
NOI
$
647,466
$
546,604
$
582,853
$
65,717
$
1,842,640
Adjustments:
Straight-lining of rental income
—
(9,499
)
(1,595
)
—
(11,094
)
Non-cash rental income
—
(14,359
)
(49,229
)
—
(63,588
)
NOI not included in cash NOI1
6,724
(24,963
)
(29,668
)
—
(47,907
)
Non-segment NOI
—
—
—
(65,717
)
(65,717
)
NOI impact from change in FX
(6,463
)
—
140
—
(6,323
)
HHS grants received
(53,070
)
—
—
—
(53,070
)
Cash NOI
$
594,657
$
497,783
$
502,501
$
—
$
1,594,941
Adjustments:
Cash NOI not included in same-store
(65,692
)
(26,988
)
—
—
(92,680
)
NOI impact from change in FX not in
same-store
508
—
—
—
508
Same-store Cash NOI
$
529,473
$
470,795
$
502,501
$
—
$
1,502,769
1
Excludes sold assets, assets held
for sale, development properties not yet operational, land parcels,
and third-party capital management revenues.
The Company considers NOI and 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.
NOI
The Company defines NOI as total revenues, less interest and
other income, property-level operating expenses and third party
capital management expenses.
Cash NOI
The Company defines Cash NOI as NOI for its reportable business
segments (i.e., SHOP, outpatient medical and research portfolio and
triple-net leased properties), determined on a Constant Currency
basis, excluding the impact of, without duplication (i) non-cash
items such as straight-line rent and the amortization of lease
intangibles, (ii) sold assets, assets held for sale, development
properties not yet operational and land parcels and (iii) other
items set forth in the Cash NOI reconciliation included herein. In
certain cases, results may be adjusted to reflect the receipt of
cash payments, fees, and other consideration that is not fully
recognized as NOI in the period.
Same-store
The Company defines same-store as properties owned, consolidated
and operational for the full period in both comparison periods and
that are not otherwise excluded; provided, however, that the
Company may include selected properties that otherwise meet the
same-store criteria if they are included in substantially all of,
but not a full, period for one or both of the comparison periods,
and in the Company’s judgment such inclusion provides a more
meaningful presentation of its segment performance. Newly acquired
development properties and recently developed or redeveloped
properties in the Company’s SHOP reportable business segment will
be included in same-store once they are stabilized for the full
period in both periods presented. These properties are considered
stabilized upon the earlier of (a) the achievement of 80% sustained
occupancy or (b) 24 months from the date of acquisition or
substantial completion of work. Recently developed or redeveloped
properties in our outpatient medical and research portfolio and
triple-net leased properties reportable business segments will be
included in same-store once substantial completion of work has
occurred for the full period in both periods presented. Our senior
housing operating portfolio and triple-net leased properties that
have undergone operator or business model transitions will be
included in same-store once operating under consistent operating
structures for the full period in both periods presented.
Properties are excluded from same-store if they are: (i) sold,
classified as held for sale or properties whose operations were
classified as discontinued operations in accordance with GAAP; (ii)
impacted by materially disruptive events such as flood or fire;
(iii) for SHOP, those properties that are currently undergoing a
materially disruptive redevelopment; (iv) for our outpatient
medical and research portfolio and triple-net leased properties
reportable business segments, those properties for which management
has an intention to institute, or has instituted, a redevelopment
plan because the properties may require major property-level
expenditures to maximize value, increase NOI, or maintain a
market-competitive position and/or achieve property stabilization,
most commonly as the result of an expected or actual material
change in occupancy or NOI; or (v) for SHOP and triple-net leased
properties reportable business segments, those properties that are
scheduled to undergo operator or business model transitions, or
have transitioned operators or business models after the start of
the prior comparison period.
Constant Currency
To eliminate the impact of exchange rate movements, all
portfolio performance-based disclosures 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240214248735/en/
BJ Grant (877) 4-VENTAS
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