Ventas Reports 2020 Third Quarter Results

November 6, 2020 at 7:01 AM EST

CHICAGO--(BUSINESS WIRE)--Nov. 6, 2020-- Ventas, Inc. (NYSE: VTR) (the “Company”) today reported results for the third quarter ended September 30, 2020.

“Our solid third quarter results were driven by our strong and diverse portfolio, steady performance in our Office and Triple-Net Healthcare businesses and stable sequential income in our Senior Housing Operating Portfolio,” said Debra A. Cafaro, Ventas Chairman and CEO. “We also drove our Research and Innovation business forward with our investment in a $1 billion trophy life science portfolio in South San Francisco, while expanding our third-party capital management platform to over $3 billion in assets under management, demonstrating the compelling, demographically driven growth potential of healthcare real estate,” she added.

“In senior housing, our team reached significant mutually beneficial arrangements with Brookdale, our largest tenant. As we assess the Senior Housing Operating Portfolio, move-ins continued to show sustained improvement through the end of the third quarter and October when resident move-ins exceeded move-outs. However, recent clinical and economic trends remain dynamic and highly uncertain and will continue to affect our Senior Housing Operating Portfolio results. The health and safety of our residents, operating partners and frontline caregivers remains our top priority,” Cafaro concluded.

Third Quarter 2020 Results

Third quarter 2020 financial results for the Company were affected by the COVID-19 pandemic. Results per share, compared to third quarter 2019, are as follows:

 

 

Quarter Ended September 30

 

 

2020

 

2019

 

$ Change

 

% Change

Net (loss) income attributable to common stockholders (“Net Income (Loss)”)

 

$0.03

 

$0.23

 

($0.19)

 

(87%)

Reported Funds from Operations, as defined by the National Association of Real Estate Investment Trusts (“Nareit FFO”)*

 

$0.65

 

$0.84

 

($0.19)

 

(23%)

Normalized Funds from Operations (“FFO”)*

 

$0.75

 

$0.96

 

($0.21)

 

(22%)

*Represents a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release, our third quarter 2020 10-Q and our third quarter 2020 supplemental for additional information.

Net income attributable to common stockholders and Nareit FFO per share in the third quarter 2020 versus the same period in 2019 was the result of $0.21 per share of lower property and interest income and $0.06 per share of non-cash charges, as a result of the COVID-19 pandemic. The non-cash charges, including the write-off of all of the existing straight-line rents receivable from Genesis Healthcare, did not affect the Company’s Normalized FFO in the quarter. See page 34 of the third quarter 2020 supplemental for additional information.

 

Third Quarter Property Results, SHOP Operating Data and Select Fourth Quarter Information

 

 

 

 

 

Sequential Same-Store Cash NOI* Growth

 

 

 

Assets

 

3Q20

 

2Q20

 

% Change

 

% Change
(excl. BKD
Consideration)

 

 

 

 

 

 

 

 

 

 

SHOP

 

 

395

 

$109M

 

$109M

 

(0.6%)

 

(0.6%)

NNN

 

 

375

 

$310M

 

$166M

 

86.8%

 

(10.4%)

Office

 

 

364

 

$126M

 

$126M

 

0.4%

 

0.4%

Total Company

 

 

1,134

 

$545M

 

$401M

 

36.0%

 

(4.3%)

* Represents a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release, our third quarter 2020 10-Q and our third quarter 2020 supplemental for additional information.

  • Senior Housing Operating (“SHOP”) Portfolio (28 percent of portfolio):For the third quarter 2020, sequential same-store pool (395 assets) cash NOI of $109 million was stable compared to the prior quarter, in line with the Company’s expectations. All COVID-19 SHOP impacts, including elevated testing, labor, cleaning and supplies costs, have been reflected in property operating results.
    • Leading Indicators: Leads and move-ins showed consistently improving trends through the end of September. In September, leads and move-ins were 85 percent and 94 percent, respectively, as compared to the prior year.
    • Occupancy: September average occupancy of 79.6 percent was 130 basis points lower than June average occupancy of 80.9 percent. Occupancy loss declined at an improving rate intra quarter through the end of September. In September, average occupancy of was 30 basis points lower as compared to August 2020 average occupancy.
    • Revenue Per Occupied Room: Revenue per occupied room in the third quarter declined 0.3 percent sequentially in the United States and increased 0.5 percent sequentially in Canada.
    • Operating Expenses: Operating expenses improved 4.5 percent sequentially. Third quarter COVID-19 related operating expenses were lower as compared to the second quarter, though they remain elevated compared to the prior year due to the COVID-19 pandemic.
    • SHOP Operating Data and Fourth Quarter Trends:
      • October resident move-ins exceeded move-outs, netting nearly 100 incremental residents.
      • Ventas’s operators have administered nearly 140,000 COVID-19 tests to front line caregivers and residents.
      • 93 percent of Ventas’s SHOP communities have either never had a confirmed COVID-19 resident case or have not had a confirmed COVID-19 resident case in the last 14 days.
      • Currently, 96 percent of Ventas’s communities are open to new resident move-ins.
    • HHS Provider Relief: Ventas has applied for approximately $35 million in grants under Phase II of the Department of Health and Human Services’ Provider Relief Fund on behalf of its SHOP assisted living communities to partially mitigate losses attributable to COVID-19. Although the Company has begun to receive amounts under some of those applications, there can be no assurance that it will receive all of the grants for which it has applied. The Company continues to evaluate the terms, conditions and permitted uses associated with the grants and is in the process of determining what portions of these grants the Company will be able to retain and use.
 
  • Triple-Net (“NNN”) Portfolio (38 percent of portfolio):
    • Substantially all expected third quarter and October 2020 rent due to date has been paid by the Company’s NNN tenants.
    • Effective July 1, 2020, Ventas reached mutually beneficial arrangements (the “Brookdale Agreements”) with Brookdale Senior Living Inc. (“Brookdale”), the nation’s largest senior housing operator, to reset Brookdale’s annual cash rent to $100 million. Ventas received up-front consideration approximating $235 million (including $162 million in cash), representing over two and a half years of the cash rent reduction. Warrants exercisable at $3 per share through December 31, 2025, which represented eight percent of Brookdale’s fully diluted shares at the time of grant, were included in the up-front consideration, providing Ventas shareholders with the opportunity for meaningful upside participation in a senior housing recovery. All of the $235 million in consideration is being amortized in Ventas’s GAAP results over the 5.5-year remaining life of the Brookdale lease; and the up-front $162 million cash received is included only in the third quarter 2020 cash NOI and FAD results.
    • Same-store cash NOI growth was driven by the $162 million cash consideration received under the Brookdale Agreements. Excluding receipt of such cash payment, the decline in sequential NNN same store cash NOI was principally the result of the Brookdale cash rent reset.
  • Office Portfolio (31 percent of portfolio):
    • The Company has received 99 percent of third quarter and October Office contractual rent.
    • The Office portfolio again delivered sequentially improving performance in the third quarter, growing reported same store cash NOI 0.4 percent in the third quarter versus the second quarter 2020.
    • Medical Office tenant retention achieved a record 90 percent in third quarter 2020.

Driving Research & Innovation Business

  • The Ventas Life Science and Healthcare Real Estate Fund, L.P. (the “Fund”) acquired a trophy life science portfolio (“SSF Life Science Portfolio”) in the premier South San Francisco life science cluster for $1.0 billion at an expected forward cash NOI cap rate of approximately five percent. The portfolio consists of a campus of three newly developed or renovated buildings totaling nearly 800,000 square feet, is 96 percent leased and has a weighted average lease term of over six years. The portfolio is purpose-built for advanced research functions and predominantly dedicated to best-in-class lab space supporting biotechnology and other life sciences research. Ventas’s interest in the SSF Life Science Portfolio, as the sponsor and general partner of the Fund, is 21 percent. The acquisition was financed with over $400 million in mortgage debt at 2.6 percent for ten years. For additional information, please reference the press release issued October 15, 2020.
  • Construction of the One uCity project, Ventas’s expansion of the Philadelphia uCity Square submarket, recommenced on October 1, 2020. One uCity is a 400,000 square foot state-of-the-art life science building designed to LEED® standards.
  • Ventas now owns or has investments in an R&I portfolio:
    • Containing over seven million square feet and spanning 39 operating properties
    • Including a presence in the top two life science clusters, San Francisco and Cambridge, MA
    • Residing on the campuses of more than 15 top-tier research universities, including University of Pennsylvania, Yale University, Washington University in St Louis, Duke University and Brown University, collectively ranking in the top 5 percent of all NIH funding and conducting over 10 percent of all university life science research and development in the nation
    • Expanding with four new properties, consisting of nearly 1.4 million additional square feet, currently under development with three leading research institutions: the University of Pittsburgh, Arizona State University and Drexel University
 

Third-Party Capital Management Platform

  • With the acquisition of the SSF Life Science Portfolio, the Fund has more than doubled its assets under management to $1.8 billion.
  • In October, Ventas formed a joint venture with GIC. The joint venture, of which Ventas is the manager, will initially own four in-progress university-based R&I development projects with total estimated project costs of approximately $930 million. The joint venture may be expanded to over $2 billion in assets through the addition of pre-identified future R&I development projects. This joint venture enables Ventas to retain a majority interest in ongoing R&I developments and accelerate additional projects from its pipeline of opportunities. For additional information, please reference the separate press release issued today.
  • Ventas now has over $3 billion in assets under management in vehicles with private third-party capital from institutional sources. This institutional third-party capital management platform provides Ventas and its stakeholders numerous strategic benefits including:
    • Further diversification of Ventas’s capital sources
    • Augmenting Ventas’s significant investment capacity
    • Expanding Ventas’s strategic reach
    • Maximizing the impact of Ventas’s excellent team, industry knowledge and brand
    • Enabling global institutional investors to invest with Ventas in a public or private investment structure
    • Enhancing Ventas’s liquidity and financial flexibility
  • The results of both the Fund and the GIC JV assets are expected to be reported on an unconsolidated basis in the Company’s GAAP reported financial statements.

Environmental, Social and Governance (“ESG”) Leadership

  • Ventas today published its third annual Corporate Sustainability Report (“CSR”). The report includes details on its new ambitious, long-term environmental goals to significantly reduce the Company’s emissions, energy, water and waste and its commitment to the Science Based Targets initiative (SBTi) to set and measure its emissions goals in alignment with current climate science. The full CSR report and additional information about the Company’s ESG initiatives are available on the Company’s website at www.ventasreit.com/corporate-responsibility.

Balance Sheet and Financial Strength; Organizational Efficiency

  • Ventas paid down substantially all of its borrowings under its $3.0 billion Revolving Credit Facility in June and July 2020.
  • In October, Ventas used existing cash on hand to reduce near term debt maturities by retiring $236 million of the 3.25% senior notes due in 2022.
  • During and subsequent to the third quarter, the Company issued and sold under its “at the market” equity offering program a total of 1.5 million shares of common stock at an average gross issuance price of $44.88 per share, resulting in nearly $67 million in gross proceeds, used to fund its equity portion of the SSF Life Science investment.
  • As of November 5, 2020, the Company has robust liquidity of $3.2 billion, including $2.9 billion of undrawn revolver capacity and $0.3 billion in cash and cash equivalents on hand, and no commercial paper outstanding.
  • The Company ended the quarter with an annualized Adjusted Net Debt to EBITDA ratio of 6.8x and Total Indebtedness to Gross Asset Value of 37 percent.
  • As a result of its decisive actions, the Company realized approximately $30 million of annualized SG&A savings in the third quarter relative to the SG&A reported in FY 2019, consistent with its previous estimates.
 

Third Quarter Dividend

The Company paid its third quarter 2020 dividend of $0.45 per share on October 13, 2020 to stockholders of record on October 1, 2020.

Third Quarter 2020 Conference Call and Investor Presentation

Ventas will hold a conference call to discuss this earnings release today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The dial-in number for the conference call is (844) 776-7841 (or +1 (661) 378-9542 for international callers), and the participant passcode is “Ventas.” The call will also be webcast live by Intrado DM and can be accessed at the Company’s website at www.ventasreit.com. A replay of the call will be available at the Company’s website, or by calling (855) 859-2056 (or +1 (404) 537-3406 for international callers), passcode 1296127, beginning on November 6, 2020, at approximately 1:00 p.m. Eastern Time and will remain available for 30 days.

A presentation outlining the Company’s third quarter results and a business update is posted to the "Investor Presentations" section of Ventas’s website at https://www.ventasreit.com/investor-presentations.

About Ventas

Ventas, an S&P 500 company, operates at the intersection of two powerful and dynamic industries – healthcare and real estate. As one of the world’s foremost Real Estate Investment Trusts (REIT), we use the power of capital to unlock the value of real estate, partnering with leading care providers, developers, research and medical institutions, innovators and healthcare organizations whose success is buoyed by the demographic tailwind of an aging population. For more than twenty years, Ventas has followed a successful strategy that endures: combining a high-quality diversified portfolio of properties and capital sources to manage through cycles, working with industry leading partners, and a collaborative and experienced team focused on producing consistent growing cash flows and superior returns on a strong balance sheet, ultimately rewarding Ventas shareholders. As of September 30, 2020, Ventas owned or managed through unconsolidated joint ventures approximately 1,200 properties.

The Company routinely announces material information to investors and the marketplace using press releases, Securities and Exchange Commission (“SEC”) filings, public conference calls, webcasts and the Company’s website at www.ventasreit.com/investor-relations. The information that the Company posts to its website may be deemed to be material. Accordingly, the Company encourages investors and others interested in the Company to routinely monitor and review the information that the Company posts on its website, in addition to following the Company’s press releases, SEC filings and public conference calls and webcasts. Supplemental information regarding the Company can be found on the Company’s website under the “Investor Relations” section or at https://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.

Non-GAAP Financial Measures

This press release includes certain financial performance measures not defined by generally accepted accounting principles in the Unites States (“GAAP”). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release. We believe such measures provide investors with additional information concerning our operating performance and a basis to compare our performance with the performance of other REITs. 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 to net income attributable to common stockholders (determined in accordance with GAAP) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.

Certain of the information contained herein, including intra-quarter operating information and number of confirmed cases of COVID-19, 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 contains “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. The forward-looking statements are based on management’s beliefs as well as on a number of assumptions concerning future events. Readers of these materials are cautioned not to 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. Ventas, Inc. (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. Certain factors that could prevent the Company from achieving its stated goals include, but are not limited to: (a) the effects of the ongoing COVID-19 pandemic and measures intended to manage the pandemic on the Company’s business, results of operations, cash flows and financial condition, including declines in revenues and increases in operating costs in the Company’s senior housing operating portfolio, deterioration in the financial condition of the Company’s tenants and their ability to satisfy their payment obligations to the Company; constraints in the Company’s ability to access capital and other sources of financing; increased risk of claims, litigation and regulatory proceedings that may adversely affect the Company; and the ability of federal, state and local governments to respond to and manage the COVID-19 pandemic effectively; (b) the ability and willingness of the Company’s tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with the Company, including, in some cases, their obligations to indemnify, defend and hold harmless the Company from and against various claims, litigation and liabilities; (c) the ability of the Company’s tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness; (d) the Company’s ability to implement its business strategy; (e) 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 federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates; (f) the nature and extent of future competition, including new construction in the markets in which the Company’s senior housing communities and office buildings are located; (g) the extent and effect of the results of the Presidential election on, and more broadly, future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates; (h) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors, including the potential phasing out of the London Inter-bank Offered Rate after 2021; (i) the ability of the Company’s tenants, operators and managers, as applicable, to comply with laws, rules and regulations in the operation of the Company’s senior housing properties, to deliver high-quality services, to attract and retain qualified personnel and to attract residents and patients; (j) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and the effect of those changes on the Company’s revenues, earnings and funding sources; (k) the Company’s level of indebtedness and ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (l) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (m) final determination of the Company’s taxable net income for the year ending December 31, 2020; (n) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases, the Company’s ability to reposition its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations, including indemnification obligations, the Company may incur in connection with the replacement of an existing tenant; (o) risks associated with the Company’s senior living operating portfolio, such as factors that can cause volatility in the Company’s operating income and earnings generated by those properties, including without limitation national and regional economic conditions, costs of food, materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results for those properties; (p) changes in exchange rates for any foreign currency in which the Company may, from time to time, conduct business; (q) year-over-year changes in the Consumer Price Index or the UK Retail Price Index and the effect of those changes on the rent escalators contained in the Company’s leases and the Company’s earnings; (r) the Company’s ability and the ability of its tenants, operators, borrowers and managers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers; (s) the impact of damage to the Company’s properties from catastrophic weather and other natural events and the physical effects of climate change; (t) the impact of increased operating costs and uninsured professional liability claims on the Company’s liquidity, financial condition and results of operations or that of the Company’s tenants, operators, borrowers and managers, and the ability of the Company and the Company’s tenants, operators, borrowers and managers to accurately estimate the magnitude of those claims; (u) risks associated with the Company’s office building portfolio and operations, including the Company’s ability to successfully design, develop and manage office buildings and to retain key personnel; (v) the ability of the hospitals on or near whose campuses the Company’s medical office buildings are located and their affiliated health systems to remain competitive and financially viable and to attract physicians and physician groups; (w) risks associated with the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (x) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (y) the impact of market or issuer events on the liquidity or value of the Company’s investments in marketable securities; (z) consolidation activity in the senior housing and healthcare industries resulting in a change of control of, or a competitor’s investment in, one or more of the Company’s tenants, operators, borrowers or managers or significant changes in the senior management of the Company’s tenants, operators, borrowers or managers; (aa) the impact of litigation or any financial, accounting, legal or regulatory issues that may affect the Company or its tenants, operators, borrowers or managers; (bb) changes in accounting principles, or their application or interpretation, and the Company’s ability to make estimates and the assumptions underlying the estimates, which could have an effect on the Company’s earnings; and (cc) the other factors set forth in the Company’s periodic filings with the SEC.

 
 

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2020

 

2020

 

2020

 

2019

 

2019

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

Real estate investments:

 

 

 

 

 

 

 

 

 

 

Land and improvements

 

$

2,268,583

 

 

$

2,258,699

 

 

$

2,246,245

 

 

$

2,285,648

 

 

$

2,280,877

 

Buildings and improvements

 

24,196,730

 

 

23,964,691

 

 

23,826,989

 

 

24,386,051

 

 

24,459,114

 

Construction in progress

 

567,052

 

 

496,349

 

 

505,648

 

 

461,815

 

 

432,713

 

Acquired lease intangibles

 

1,246,312

 

 

1,242,414

 

 

1,243,571

 

 

1,308,077

 

 

1,334,915

 

Operating lease assets

 

386,946

 

 

389,302

 

 

391,908

 

 

385,225

 

 

388,480

 

 

 

28,665,623

 

 

28,351,455

 

 

28,214,361

 

 

28,826,816

 

 

28,896,099

 

Accumulated depreciation and amortization

 

(7,687,211

)

 

(7,453,251

)

 

(7,241,597

)

 

(7,092,243

)

 

(6,964,061

)

Net real estate property

 

20,978,412

 

 

20,898,204

 

 

20,972,764

 

 

21,734,573

 

 

21,932,038

 

Secured loans receivable and investments, net

 

604,452

 

 

681,831

 

 

623,716

 

 

704,612

 

 

709,714

 

Investments in unconsolidated real estate entities

 

162,860

 

 

166,039

 

 

165,745

 

 

45,022

 

 

45,905

 

Net real estate investments

 

21,745,724

 

 

21,746,074

 

 

21,762,225

 

 

22,484,207

 

 

22,687,657

 

Cash and cash equivalents

 

588,343

 

 

992,824

 

 

2,848,115

 

 

106,363

 

 

148,063

 

Escrow deposits and restricted cash

 

40,147

 

 

36,312

 

 

38,144

 

 

39,739

 

 

60,533

 

Goodwill

 

1,050,742

 

 

1,050,115

 

 

1,050,137

 

 

1,051,161

 

 

1,049,985

 

Assets held for sale

 

15,748

 

 

76,021

 

 

69,199

 

 

85,527

 

 

4,520

 

Deferred income tax assets, net

 

304

 

 

304

 

 

47,495

 

 

47,495

 

 

 

Other assets

 

779,475

 

 

687,738

 

 

802,513

 

 

877,716

 

 

852,795

 

Total assets

 

$

24,220,483

 

 

$

24,589,388

 

 

$

26,617,828

 

 

$

24,692,208

 

 

$

24,803,553

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

Senior notes payable and other debt

 

$

12,047,919

 

 

$

12,530,036

 

 

$

14,172,279

 

 

$

12,158,773

 

 

$

12,053,184

 

Accrued interest

 

97,828

 

 

117,687

 

 

87,245

 

 

111,115

 

 

85,214

 

Operating lease liabilities

 

247,255

 

 

248,912

 

 

250,357

 

 

251,196

 

 

249,237

 

Accounts payable and other liabilities

 

1,234,933

 

 

998,446

 

 

1,141,551

 

 

1,145,939

 

 

1,194,162

 

Liabilities related to assets held for sale

 

1,987

 

 

5,514

 

 

4,765

 

 

5,224

 

 

1,531

 

Deferred income tax liabilities

 

53,711

 

 

56,963

 

 

47,533

 

 

200,831

 

 

147,524

 

Total liabilities

 

13,683,633

 

 

13,957,558

 

 

15,703,730

 

 

13,873,078

 

 

13,730,852

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable OP unitholder and noncontrolling interests

 

249,143

 

 

231,920

 

 

197,701

 

 

273,678

 

 

312,478

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

Ventas stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

Preferred stock, $1.00 par value; 10,000 shares authorized, unissued

 

 

 

 

 

 

 

 

 

 

Common stock, $0.25 par value; 373,940; 373,113; 373,094; 372,811; and 372,726; shares issued at September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 30, 2019, respectively

 

93,467

 

 

93,261

 

 

93,256

 

 

93,185

 

 

93,164

 

Capital in excess of par value

 

14,142,349

 

 

14,118,119

 

 

14,135,657

 

 

14,056,453

 

 

14,017,030

 

Accumulated other comprehensive loss

 

(65,042

)

 

(82,761

)

 

(103,408

)

 

(34,564

)

 

(59,857

)

Retained earnings (deficit)

 

(3,972,647

)

 

(3,816,460

)

 

(3,491,696

)

 

(3,669,050

)

 

(3,384,421

)

Treasury stock, 33; 24; 22; 2; and 3 shares at September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 30, 2019, respectively

 

(1,275

)

 

(947

)

 

(867

)

 

(132

)

 

(210

)

Total Ventas stockholders’ equity

 

10,196,852

 

 

10,311,212

 

 

10,632,942

 

 

10,445,892

 

 

10,665,706

 

Noncontrolling interests

 

90,855

 

 

88,698

 

 

83,455

 

 

99,560

 

 

94,517

 

Total equity

 

10,287,707

 

 

10,399,910

 

 

10,716,397

 

 

10,545,452

 

 

10,760,223

 

Total liabilities and equity

 

$

24,220,483

 

 

$

24,589,388

 

 

$

26,617,828

 

 

$

24,692,208

 

 

$

24,803,553

 

                                         
 
CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Revenues

 

 

 

 

 

 

 

 

Rental income:

 

 

 

 

 

 

 

 

Triple-net leased

 

$

156,136

 

 

$

193,383

 

 

$

527,238

 

 

$

589,833

 

Office

 

198,376

 

 

214,939

 

 

599,696

 

 

618,555

 

 

 

354,512

 

 

408,322

 

 

1,126,934

 

 

1,208,388

 

Resident fees and services

 

541,322

 

 

541,090

 

 

1,667,421

 

 

1,583,262

 

Office building and other services revenue

 

3,868

 

 

2,959

 

 

10,669

 

 

8,168

 

Income from loans and investments

 

18,666

 

 

30,164

 

 

62,203

 

 

66,819

 

Interest and other income

 

572

 

 

620

 

 

6,965

 

 

10,109

 

Total revenues

 

918,940

 

 

983,155

 

 

2,874,192

 

 

2,876,746

 

Expenses

 

 

 

 

 

 

 

 

Interest

 

115,505

 

 

113,967

 

 

355,333

 

 

334,955

 

Depreciation and amortization

 

249,366

 

 

234,603

 

 

847,797

 

 

696,710

 

Property-level operating expenses:

 

 

 

 

 

 

 

 

Senior living

 

422,653

 

 

388,011

 

 

1,265,362

 

 

1,115,834

 

Office

 

66,934

 

 

67,144

 

 

192,192

 

 

191,972

 

Triple-net leased

 

5,398

 

 

6,338

 

 

17,004

 

 

20,092

 

 

 

494,985

 

 

461,493

 

 

1,474,558

 

 

1,327,898

 

Office building services costs

 

557

 

 

627

 

 

1,827

 

 

1,775

 

General, administrative and professional fees

 

34,228

 

 

40,530

 

 

106,747

 

 

124,369

 

Loss on extinguishment of debt, net

 

7,386

 

 

37,434

 

 

7,386

 

 

41,861

 

Merger-related expenses and deal costs

 

11,325

 

 

4,304

 

 

26,129

 

 

11,084

 

Allowance on loans receivable and investments

 

4,999

 

 

 

 

34,654

 

 

 

Other

 

3,534

 

 

2,164

 

 

10,624

 

 

(9,294

)

Total expenses

 

921,885

 

 

895,122

 

 

2,865,055

 

 

2,529,358

 

(Loss) income before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests

 

(2,945

)

 

88,033

 

 

9,137

 

 

347,388

 

Income (loss) from unconsolidated entities

 

865

 

 

854

 

 

(15,861

)

 

(2,621

)

Gain on real estate dispositions

 

12,622

 

 

36

 

 

240,101

 

 

24,633

 

Income tax benefit (expense)

 

3,195

 

 

(2,005

)

 

95,855

 

 

57,004

 

Income from continuing operations

 

13,737

 

 

86,918

 

 

329,232

 

 

426,404

 

Net income

 

13,737

 

 

86,918

 

 

329,232

 

 

426,404

 

Net income attributable to noncontrolling interests

 

986

 

 

1,659

 

 

534

 

 

4,831

 

Net income attributable to common stockholders

 

$

12,751

 

 

$

85,259

 

 

$

328,698

 

 

$

421,573

 

Earnings per common share

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.04

 

 

$

0.23

 

 

$

0.88

 

 

$

1.17

 

Net income attributable to common stockholders

 

0.03

 

 

0.23

 

 

0.88

 

 

1.16

 

Diluted:

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.04

 

 

$

0.23

 

 

$

0.88

 

 

$

1.16

 

Net income attributable to common stockholders

 

0.03

 

 

0.23

 

 

0.87

 

 

1.15

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in computing earnings per common share

 

 

 

 

 

 

 

 

Basic

 

373,177

 

 

372,426

 

 

372,997

 

 

363,724

 

Diluted

 

376,295

 

 

376,625

 

 

376,112

 

 

367,657

 

                 
 

QUARTERLY CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2020

 

2020

 

2020

 

2019

 

2019

Revenues

 

 

 

 

 

 

 

 

 

 

Rental income:

 

 

 

 

 

 

 

 

 

 

Triple-net leased

 

$

156,136

 

 

$

176,240

 

 

$

194,862

 

 

$

191,065

 

 

$

193,383

 

Office

 

198,376

 

 

192,925

 

 

208,395

 

 

210,423

 

 

214,939

 

 

 

354,512

 

 

369,165

 

 

403,257

 

 

401,488

 

 

408,322

 

Resident fees and services

 

541,322

 

 

549,329

 

 

576,770

 

 

568,271

 

 

541,090

 

Office building and other services revenue

 

3,868

 

 

3,673

 

 

3,128

 

 

2,988

 

 

2,959

 

Income from loans and investments

 

18,666

 

 

19,491

 

 

24,046

 

 

22,382

 

 

30,164

 

Interest and other income

 

572

 

 

1,540

 

 

4,853

 

 

875

 

 

620

 

Total revenues

 

918,940

 

 

943,198

 

 

1,012,054

 

 

996,004

 

 

983,155

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Interest

 

115,505

 

 

123,132

 

 

116,696

 

 

116,707

 

 

113,967

 

Depreciation and amortization

 

249,366

 

 

349,594

 

 

248,837

 

 

348,910

 

 

234,603

 

Property-level operating expenses:

 

 

 

 

 

 

 

 

 

 

Senior living

 

422,653

 

 

432,578

 

 

410,131

 

 

405,564

 

 

388,011

 

Office

 

66,934

 

 

60,752

 

 

64,506

 

 

68,277

 

 

67,144

 

Triple-net leased

 

5,398

 

 

5,275

 

 

6,331

 

 

6,469

 

 

6,338

 

 

 

494,985

 

 

498,605

 

 

480,968

 

 

480,310

 

 

461,493

 

Office building services costs

 

557

 

 

543

 

 

727

 

 

544

 

 

627

 

General, administrative and professional fees

 

34,228

 

 

29,984

 

 

42,535

 

 

41,627

 

 

40,530

 

Loss on extinguishment of debt, net

 

7,386

 

 

 

 

 

 

39

 

 

37,434

 

Merger-related expenses and deal costs

 

11,325

 

 

6,586

 

 

8,218

 

 

4,151

 

 

4,304

 

Allowance on loans receivable and investments

 

4,999

 

 

29,655

 

 

 

 

 

 

 

Other

 

3,534

 

 

3,382

 

 

3,708

 

 

(8,315

)

 

2,164

 

Total expenses

 

921,885

 

 

1,041,481

 

 

901,689

 

 

983,973

 

 

895,122

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests

 

(2,945

)

 

(98,283

)

 

110,365

 

 

12,031

 

 

88,033

 

Income (loss) from unconsolidated entities

 

865

 

 

(5,850

)

 

(10,876

)

 

167

 

 

854

 

Gain on real estate dispositions

 

12,622

 

 

1,254

 

 

226,225

 

 

1,389

 

 

36

 

Income tax benefit (expense)

 

3,195

 

 

(56,356

)

 

149,016

 

 

(694

)

 

(2,005

)

Income (loss) from continuing operations

 

13,737

 

 

(159,235

)

 

474,730

 

 

12,893

 

 

86,918

 

Net income (loss)

 

13,737

 

 

(159,235

)

 

474,730

 

 

12,893

 

 

86,918

 

Net income (loss) attributable to noncontrolling interests

 

986

 

 

(2,065

)

 

1,613

 

 

1,450

 

 

1,659

 

Net income (loss) attributable to common stockholders

 

$

12,751

 

 

$

(157,170

)

 

$

473,117

 

 

$

11,443

 

 

$

85,259

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.04

 

 

$

(0.43

)

 

$

1.27

 

 

$

0.03

 

 

$

0.23

 

Net income (loss) attributable to common stockholders

 

0.03

 

 

(0.42

)

 

1.27

 

 

0.03

 

 

0.23

 

Diluted:1

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.04

 

 

$

(0.43

)

 

$

1.26

 

 

$

0.03

 

 

$

0.23

 

Net income (loss) attributable to common stockholders

 

0.03

 

 

(0.42

)

 

1.26

 

 

0.03

 

 

0.23

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in computing earnings per common share

 

 

 

 

 

 

 

 

 

 

Basic

 

373,177

 

 

372,982

 

 

372,829

 

 

372,663

 

 

372,426

 

Diluted

 

376,295

 

 

376,024

 

 

375,997

 

 

376,453

 

 

376,625

 

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.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

For the Nine Months Ended September 30,

 

 

2020

 

2019

Cash flows from operating activities:

 

 

 

 

Net income

 

$

329,232

 

 

$

426,404

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

847,797

 

 

696,710

 

Amortization of deferred revenue and lease intangibles, net

 

(25,343

)

 

(6,484

)

Other non-cash amortization

 

15,211

 

 

16,910

 

Allowance on loans receivable and investments

 

34,654

 

 

 

Stock-based compensation

 

17,322

 

 

26,670

 

Straight-lining of rental income

 

107,134

 

 

(25,680

)

Loss on extinguishment of debt, net

 

7,386

 

 

41,861

 

Gain on real estate dispositions

 

(240,101

)

 

(24,633

)

Gain on real estate loan investments

 

(167

)

 

 

Income tax benefit

 

(99,702

)

 

(60,249

)

Loss from unconsolidated entities

 

15,869

 

 

2,621

 

Distributions from unconsolidated entities

 

2,960

 

 

1,400

 

Other

 

15,615

 

 

9,236

 

Changes in operating assets and liabilities:

 

 

 

 

Increase in other assets

 

(68,228

)

 

(59,366

)

Decrease in accrued interest

 

(12,975

)

 

(15,909

)

Increase in accounts payable and other liabilities

 

207,749

 

 

54,057

 

Net cash provided by operating activities

 

1,154,413

 

 

1,083,548

 

Cash flows from investing activities:

 

 

 

 

Net investment in real estate property

 

(77,625

)

 

(939,805

)

Investment in loans receivable

 

(113,147

)

 

(1,257,577

)

Proceeds from real estate disposals

 

682,604

 

 

77,555

 

Proceeds from loans receivable

 

106,966

 

 

1,008,683

 

Development project expenditures

 

(309,967

)

 

(229,845

)

Capital expenditures

 

(94,407

)

 

(99,787

)

Distributions from unconsolidated entities

 

 

 

151

 

Investment in unconsolidated entities

 

(7,832

)

 

(1,711

)

Insurance proceeds for property damage claims

 

33

 

 

20,457

 

Net cash provided by (used in) investing activities

 

186,625

 

 

(1,421,879

)

Cash flows from financing activities:

 

 

 

 

Net change in borrowings under revolving credit facilities

 

(74,144

)

 

278,677

 

Net change in borrowings under commercial paper program

 

(565,524

)

 

304,508

 

Proceeds from debt

 

657,557

 

 

2,206,577

 

Repayment of debt

 

(127,528

)

 

(2,456,135

)

Payment of deferred financing costs

 

(7,564

)

 

(17,867

)

Issuance of common stock, net

 

36,395

 

 

942,250

 

Cash distribution to common stockholders

 

(760,363

)

 

(861,789

)

Cash distribution to redeemable OP unitholders

 

(5,954

)

 

(6,882

)

Cash issued for redemption of OP Units

 

(575

)

 

(361

)

Contributions from noncontrolling interests

 

1,138

 

 

4,959

 

Distributions to noncontrolling interests

 

(9,666

)

 

(6,403

)

Proceeds from stock option exercises

 

3,518

 

 

34,134

 

Other

 

(4,989

)

 

(6,601

)

Net cash (used in) provided by financing activities

 

(857,699

)

 

415,067

 

Net increase in cash, cash equivalents and restricted cash

 

483,339

 

 

76,736

 

Effect of foreign currency translation

 

(951

)

 

396

 

Cash, cash equivalents and restricted cash at beginning of period

 

146,102

 

 

131,464

 

Cash, cash equivalents and restricted cash at end of period

 

$

628,490

 

 

$

208,596

 

 

 

 

 

 

Supplemental schedule of non-cash activities:

 

 

 

 

Assets acquired and liabilities assumed from acquisitions and other:

 

 

 

 

Real estate investments

 

$

169,484

 

 

$

1,056,481

 

Other assets

 

1,224

 

 

11,123

 

Debt

 

55,368

 

 

907,746

 

Other liabilities

 

2,707

 

 

46,336

 

Deferred income tax liability

 

337

 

 

 

Noncontrolling interests

 

20,259

 

 

113,522

 

             
 
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

For the Three Months Ended

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2020

 

2020

 

2020

 

2019

 

2019

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

13,737

 

 

$

(159,235

)

 

$

474,730

 

 

$

12,893

 

 

$

86,918

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

249,366

 

 

349,594

 

 

248,837

 

 

348,910

 

 

234,603

 

Amortization of deferred revenue and lease intangibles, net

 

(19,009

)

 

(3,361

)

 

(2,973

)

 

(1,483

)

 

(339

)

Other non-cash amortization

 

5,558

 

 

5,802

 

 

3,851

 

 

6,075

 

 

5,323

 

Allowance on loans receivable and investments

 

4,999

 

 

29,655

 

 

 

 

 

 

 

Stock-based compensation

 

5,765

 

 

1,043

 

 

10,514

 

 

7,253

 

 

8,195

 

Straight-lining of rental income

 

15,635

 

 

98,287

 

 

(6,788

)

 

(4,393

)

 

(8,680

)

Loss on extinguishment of debt, net

 

7,386

 

 

 

 

 

 

39

 

 

37,434

 

Gain on real estate dispositions

 

(12,622

)

 

(1,254

)

 

(226,225

)

 

(1,389

)

 

(36

)

Gain on real estate loan investments

 

 

 

 

 

(167

)

 

 

 

 

Income tax (benefit) expense

 

(4,575

)

 

55,146

 

 

(150,273

)

 

1,331

 

 

946

 

(Income) loss from unconsolidated entities

 

(865

)

 

5,858

 

 

10,876

 

 

(157

)

 

(854

)

Distributions from unconsolidated entities

 

1,360

 

 

 

 

1,600

 

 

200

 

 

100

 

Other

 

2,859

 

 

8,951

 

 

3,805

 

 

4,028

 

 

4,145

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

(Increase) decrease in other assets

 

(55,765

)

 

1,305

 

 

(13,768

)

 

(17,327

)

 

(14,894

)

(Decrease) increase in accrued interest

 

(20,069

)

 

30,126

 

 

(23,032

)

 

25,646

 

 

(27,307

)

Increase (decrease) in accounts payable and other liabilities

 

240,642

 

 

(16,358

)

 

(16,535

)

 

(27,391

)

 

28,775

 

Net cash provided by operating activities

 

434,402

 

 

405,559

 

 

314,452

 

 

354,235

 

 

354,329

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

Net investment in real estate property

 

(156

)

 

2,070

 

 

(79,539

)

 

(18,320

)

 

(731,766

)

Investment in loans receivable

 

(45,857

)

 

(66,239

)

 

(1,051

)

 

(610

)

 

(750,429

)

Proceeds from real estate disposals

 

54,800

 

 

2,365

 

 

625,439

 

 

70,300

 

 

3,150

 

Proceeds from loans receivable

 

191

 

 

7,658

 

 

99,117

 

 

8,626

 

 

719,026

 

Development project expenditures

 

(129,569

)

 

(86,169

)

 

(94,229

)

 

(174,078

)

 

(115,619

)

Capital expenditures

 

(40,888

)

 

(26,730

)

 

(26,789

)

 

(56,937

)

 

(41,406

)

Distributions from unconsolidated entities

 

 

 

 

 

 

 

21

 

 

151

 

Investment in unconsolidated entities

 

33

 

 

(2,056

)

 

(5,809

)

 

(2,144

)

 

(777

)

Insurance (expense) proceeds for property damage claims

 

(9

)

 

 

 

42

 

 

9,722

 

 

3,518

 

Net cash (used in) provided by investing activities

 

(161,455

)

 

(169,101

)

 

517,181

 

 

(163,420

)

 

(914,152

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

Net change in borrowings under revolving credit facilities

 

(539,560

)

 

(2,296,737

)

 

2,762,153

 

 

(848,568

)

 

785,228

 

Net change in borrowings under commercial paper program

 

 

 

 

 

(565,524

)

 

261,016

 

 

34,698

 

Proceeds from debt

 

17,024

 

 

557,774

 

 

82,759

 

 

806,614

 

 

1,493,643

 

Repayment of debt

 

(16,227

)

 

(48,328

)

 

(62,973

)

 

(167,781

)

 

(1,459,074

)

Payment of deferred financing costs

 

(15

)

 

(5,586

)

 

(1,963

)

 

(3,536

)

 

(11,030

)

Issuance of common stock, net

 

36,395

 

 

 

 

 

 

(165

)

 

76,217

 

Cash distribution to common stockholders

 

(168,078

)

 

(295,981

)

 

(296,304

)

 

(295,931

)

 

(294,647

)

Cash distribution to redeemable OP unitholders

 

(1,326

)

 

(2,303

)

 

(2,325

)

 

(2,336

)

 

(2,331

)

Cash issued for redemption of OP Units

 

(5

)

 

 

 

(570

)

 

(1,842

)

 

(361

)

Contributions from noncontrolling interests

 

792

 

 

191

 

 

155

 

 

1,323

 

 

1,365

 

Distributions to noncontrolling interests

 

(3,373

)

 

(3,750

)

 

(2,543

)

 

(3,314

)

 

(2,300

)

Proceeds from stock option exercises

 

 

 

129

 

 

3,389

 

 

2,045

 

 

8,396

 

Other

 

(98

)

 

63

 

 

(4,954

)

 

(1,918

)

 

131

 

Net cash (used in) provided by financing activities

 

(674,471

)

 

(2,094,528

)

 

1,911,300

 

 

(254,393

)

 

629,935

 

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(401,524

)

 

(1,858,070

)

 

2,742,933

 

 

(63,578

)

 

70,112

 

Effect of foreign currency translation

 

878

 

 

947

 

 

(2,776

)

 

1,084

 

 

188

 

Cash, cash equivalents and restricted cash at beginning of period

 

1,029,136

 

 

2,886,259

 

 

146,102

 

 

208,596

 

 

138,296

 

Cash, cash equivalents and restricted cash at end of period

 

$

628,490

 

 

$

1,029,136

 

 

$

2,886,259

 

 

$

146,102

 

 

$

208,596

 

                                         
 
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(In thousands)

 

 

For the Three Months Ended

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2020

 

2020

 

2020

 

2019

 

2019

Supplemental schedule of non-cash activities:

 

 

 

 

 

 

 

 

 

 

Assets acquired and liabilities assumed from acquisitions and other:

 

 

 

 

 

 

 

 

 

 

Real estate investments

 

$

92,373

 

 

$

76,578

 

 

$

533

 

 

$

657

 

 

$

1,055,412

 

Other assets

 

610

 

 

558

 

 

56

 

 

17

 

 

10,940

 

Debt

 

 

 

55,368

 

 

 

 

 

 

907,746

 

Other liabilities

 

610

 

 

1,699

 

 

398

 

 

785

 

 

45,084

 

Deferred income tax liability

 

337

 

 

 

 

 

 

95

 

 

 

Noncontrolling interests

 

 

 

20,068

 

 

191

 

 

(206

)

 

113,522

 

Equity issued for redemption of OP Units

 

 

 

 

 

 

 

127

 

 

 

                               
 
NON-GAAP FINANCIAL MEASURES RECONCILIATION

Funds From Operations (FFO) and Funds Available for Distribution (FAD)1

(Dollars in thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

Q3 YoY

 

 

2019

 

2020

 

Growth

 

 

Q3

Q4

FY

Q1

Q2

Q3

YTD

19-'20

Net income (loss) attributable to common stockholders

 

$

85,259

 

 

$

11,443

 

 

$

433,016

 

 

$

473,117

 

 

$

(157,170

)

 

$

12,751

 

 

$

328,698

 

 

(85

%)

Net income (loss) attributable to common stockholders per share2

 

$

0.23

 

 

$

0.03

 

 

$

1.17

 

 

$

1.26

 

 

$

(0.42

)

 

$

0.03

 

 

$

0.87

 

 

(87

%)

Adjustments:

 

 

 

 

 

 

 

 

 

Depreciation and amortization on real estate assets

 

233,078

 

 

347,371

 

 

1,039,550

 

 

247,330

 

 

348,110

 

 

247,969

 

 

843,409

 

 

 

Depreciation on real estate assets related to noncontrolling interests

 

(2,496

)

 

(3,682

)

 

(9,762

)

 

(3,843

)

 

(4,068

)

 

(4,475

)

 

(12,386

)

 

 

Depreciation on real estate assets related to unconsolidated entities

 

(456

)

 

311

 

 

187

 

 

561

 

 

1,307

 

 

1,360

 

 

3,228

 

 

 

Gain on real estate dispositions

 

(36

)

 

(1,389

)

 

(26,022

)

 

(226,225

)

 

(1,254

)

 

(12,622

)

 

(240,101

)

 

 

(Loss) gain on real estate dispositions related to noncontrolling interests

 

 

 

(11

)

 

343

 

 

(6

)

 

(3

)

 

 

 

(9

)

 

 

Gain on real estate dispositions related to unconsolidated entities

 

(67

)

 

(395

)

 

(1,263

)

 

 

 

 

 

 

 

 

 

 

Subtotal: FFO add-backs

 

230,023

 

 

342,205

 

 

1,003,033

 

 

17,817

 

 

344,092

 

 

232,232

 

 

594,141

 

 

 

Subtotal: FFO add-backs per share

 

$

0.61

 

 

$

0.91

 

 

$

2.71

 

 

$

0.05

 

 

$

0.92

 

 

$

0.62

 

 

$

1.58

 

 

 

FFO (Nareit) attributable to common stockholders

 

$

315,282

 

 

$

353,648

 

 

$

1,436,049

 

 

$

490,934

 

 

$

186,922

 

 

$

244,983

 

 

$

922,839

 

 

(22

%)

FFO (Nareit) attributable to common stockholders per share

 

$

0.84

 

 

$

0.94

 

 

$

3.88

 

 

$

1.31

 

 

$

0.50

 

 

$

0.65

 

 

$

2.45

 

 

(23

%)

 

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

 

 

Change in fair value of financial instruments

 

(7

)

 

(22

)

 

(78

)

 

(10

)

 

(13

)

 

1,157

 

 

1,134

 

 

 

Non-cash income tax expense (benefit)

 

946

 

 

1,330

 

 

(58,918

)

 

(140,895

)

 

55,505

 

 

(4,763

)

 

(90,153

)

 

 

Loss on extinguishment of debt, net

 

37,434

 

 

39

 

 

41,900

 

 

 

 

 

 

7,386

 

 

7,386

 

 

 

(Gain) loss on non-real estate dispositions related to unconsolidated entities

 

(34

)

 

19

 

 

(18

)

 

239

 

 

 

 

(244

)

 

(5

)

 

 

Merger-related expenses, deal costs and re-audit costs

 

4,726

 

 

5,089

 

 

18,208

 

 

8,773

 

 

6,605

 

 

12,793

 

 

28,171

 

 

 

Amortization of other intangibles

 

121

 

 

121

 

 

484

 

 

118

 

 

118

 

 

118

 

 

354

 

 

 

Other items related to unconsolidated entities

 

502

 

 

374

 

 

3,291

 

 

(875

)

 

(263

)

 

290

 

 

(848

)

 

 

Non-cash impact of changes to equity plan

 

1,729

 

 

1,165

 

 

7,812

 

 

6,895

 

 

(3,337

)

 

(1,923

)

 

1,635

 

 

 

Natural disaster (recoveries) expenses, net

 

(101

)

 

(10,704

)

 

(25,683

)

 

941

 

 

252

 

 

125

 

 

1,318

 

 

 

Impact of Holiday lease termination

 

 

 

 

 

 

 

 

 

(50,184

)

 

 

 

(50,184

)

 

 

Write-off of straightline rental income, net of noncontrolling interests

 

 

 

 

 

 

 

 

 

52,368

 

 

18,408

 

 

70,776

 

 

 

Allowance on loan investments and impairment of unconsolidated entities, net of noncontrolling interests

 

 

 

 

 

 

 

 

 

40,320

 

 

4,635

 

 

44,955

 

 

 

Subtotal: normalized FFO add-backs

 

45,316

 

 

(2,589

)

 

(13,002

)

 

(124,814

)

 

101,371

 

 

37,982

 

 

14,539

 

 

 

Subtotal: normalized FFO add-backs per share

 

$

0.12

 

 

$

(0.01

)

 

$

(0.04

)

 

$

(0.33

)

 

$

0.27

 

 

$

0.10

 

 

$

0.04

 

 

 

Normalized FFO attributable to common stockholders

 

$

360,598

 

 

$

351,059

 

 

$

1,423,047

 

 

$

366,120

 

 

$

288,293

 

 

$

282,965

 

 

$

937,378

 

 

(22

%)

Normalized FFO attributable to common stockholders per share

 

$

0.96

 

 

$

0.93

 

 

$

3.85

 

 

$

0.97

 

 

$

0.77

 

 

$

0.75

 

 

$

2.49

 

 

(22

%)

 

 

 

 

 

 

 

 

 

 

Non-cash items included in normalized FFO:

 

 

 

 

 

 

 

 

 

Amortization of deferred revenue and lease intangibles, net

 

(339

)

 

(1,483

)

 

(7,967

)

 

(2,973

)

 

(3,362

)

 

(19,009

)

 

(25,344

)

 

 

Other non-cash amortization, including fair market value of debt

 

5,444

 

 

6,075

 

 

22,985

 

 

3,851

 

 

5,803

 

 

5,558

 

 

15,212

 

 

 

Stock-based compensation

 

6,466

 

 

6,088

 

 

26,111

 

 

3,619

 

 

4,380

 

 

7,688

 

 

15,687

 

 

 

Straight-lining of rental income

 

(8,680

)

 

(4,393

)

 

(30,073

)

 

(6,788

)

 

(5,526

)

 

(4,648

)

 

(16,962

)

 

 

Subtotal: non-cash items included in normalized FFO

 

2,891

 

 

6,287

 

 

11,056

 

 

(2,291

)

 

1,295

 

 

(10,411

)

 

(11,407

)

 

 

Cash impact of Brookdale lease modification

 

 

 

 

 

 

 

 

 

 

 

161,533

 

 

161,533

 

 

 

Cash impact of Holiday lease termination

 

 

 

 

 

 

 

 

 

33,795

 

 

 

 

33,795

 

 

 

FAD Capital Expenditures3 

 

(39,695

)

 

(55,400

)

 

(152,582

)

 

(24,972

)

 

(26,102

)

 

(39,955

)

 

(91,029

)

 

 

Normalized FAD attributable to common stockholders

 

$

323,794

 

 

$

301,946

 

 

$

1,281,521

 

 

$

338,857

 

 

$

297,281

 

 

$

394,132

 

 

$

1,030,270

 

 

22

%

Merger-related expenses, deal costs and re-audit costs

 

(4,726

)

 

(5,089

)

 

(18,208

)

 

(8,773

)

 

(6,605

)

 

(12,793

)

 

(28,171

)

 

 

Other items related to unconsolidated entities

 

(502

)

 

(374

)

 

(3,291

)

 

875

 

 

263

 

 

(290

)

 

848

 

 

 

FAD attributable to common stockholders

 

$

318,566

 

 

$

296,483

 

 

$

1,260,022

 

 

$

330,959

 

 

$

290,939

 

 

$

381,049

 

 

$

1,002,947

 

 

20

%

Weighted average diluted shares

 

376,625

 

 

376,453

 

 

369,886

 

 

375,997

 

 

376,024

 

 

376,295

 

 

376,112

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Per share quarterly amounts may not add to annual per share amounts due to material changes in the Company’s weighted average diluted share count, if any. Per share amounts may not add to total per share amounts due to rounding.

2 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.

3 2019 FAD Capital Expenditures have been updated to exclude the impact of Initial Capital Expenditures. Impact on reported values are as follows: Q3 2019 ($1.7M), Q4 2019 ($1.5M) and FY 2019 ($4.1M).

 

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers FFO, normalized FFO, FAD and normalized FAD to be appropriate supplemental measures of operating performance of an equity REIT. In particular, the Company believes that normalized FFO is useful because it allows investors, analysts and Company management to compare the Company’s operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by non-recurring items and other non-operational events such as transactions and litigation. In some cases, the Company provides information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and Company management to assess the impact of those items on the Company’s financial results.

The Company uses the National Association of Real Estate Investment Trusts (“Nareit”) definition of FFO. Nareit defines FFO as net income attributable to common stockholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property, including gains or losses on re-measurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. The Company defines normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to acquisition lawsuits; (b) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of the Company’s debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to the Company’s executive equity compensation plan, derivative transactions that have non-cash mark-to-market impacts on the Company’s income statement and non-cash charges related to leases; (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; (h) net expenses or recoveries related to natural disasters and (i) any other incremental items set forth in the normalized FFO reconciliation included herein.

Normalized FAD represents normalized FFO excluding non-cash components and straight-line rent adjustments, deducting FAD Capital Expenditures plus cash received related to lease terminations and modifications. FAD Capital Expenditures are (i) Ventas-invested capital expenditures, whether routine or non-routine, that extend the useful life of a property but are not expected to generate incremental income for the Company (ii) Office Building and Triple-Net leasing commissions paid to third-party agents and (iii) capital expenditures for second-generation tenant improvements. It excludes (i) costs for a first generation lease (e.g., a development project) or related to properties that have undergone redevelopment and (ii) Initial Capital Expenditures, which are defined as capital expenditures required to bring a newly acquired or newly transitioned property up to standard. Initial Capital Expenditures are typically incurred within the first 12 months after acquisition or transition, respectively.

FAD represents normalized FAD after subtracting merger-related expenses, deal costs and re-audit costs and other unusual items related to unconsolidated entities.

FFO, normalized FFO, FAD and normalized FAD presented herein may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO, normalized FFO, FAD and normalized FAD should not be considered as alternatives to net income attributable to common stockholders (determined in accordance with GAAP) as indicators of the Company’s financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company’s liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company’s needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO, normalized FFO, FAD and normalized FAD should be examined in conjunction with net income attributable to common stockholders as presented elsewhere herein.

 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Net Debt to Adjusted Pro Forma EBITDA1

(Dollars in thousands)

For the Three Months Ended September 30, 2020:

 

 

 

Net income attributable to common stockholders

 

$

12,751

 

Adjustments:

 

 

Interest

 

115,505

 

Loss on extinguishment of debt, net

 

7,386

 

Taxes (including tax amounts in general, administrative and professional fees)

 

(1,849

)

Depreciation and amortization

 

249,366

 

Non-cash stock-based compensation expense

 

5,765

 

Merger-related expenses, deal costs and re-audit costs

 

11,325

 

Net income attributable to noncontrolling interests, adjusted for consolidated joint venture partners’ share of EBITDA

 

(6,359

)

Loss from unconsolidated entities, adjusted for Ventas share of EBITDA from unconsolidated entities

 

11,811

 

Gain on real estate dispositions

 

(12,622

)

Unrealized foreign currency gains

 

(146

)

Change in fair value of financial instruments

 

1,155

 

Natural disaster expenses (recoveries), net

 

181

 

Write-off of straightline rental income, net of noncontrolling interests

 

18,408

 

Allowance on loan investments, net of noncontrolling interests

 

4,635

 

Adjusted EBITDA

 

$

417,312

 

Adjustments for current period activity

 

(1,385

)

Adjusted Pro Forma EBITDA

 

$

415,927

 

 

 

 

Adjusted Pro Forma EBITDA annualized

 

$

1,663,708

 

 

 

 

As of September 30, 2020:

 

 

 

Total debt

 

$

12,047,919

 

Cash

 

(588,343

)

Restricted cash pertaining to debt

 

(21,021

)

Consolidated joint venture partners’ share of debt

 

(259,994

)

Ventas share of debt from unconsolidated entities

 

120,807

 

Net debt

 

$

11,299,368

 

 

 

 

Net debt to Adjusted Pro Forma EBITDA

 

6.8

x

 

 

 

1 Totals may not add due to rounding.

The table above illustrates net debt to pro forma earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense, asset impairment and valuation allowances), excluding gains or losses on extinguishment of debt, consolidated joint venture partners’ share of EBITDA, merger-related expenses and deal costs, expenses related to the re-audit and re-review in 2014 of the Company’s historical financial statements, net gains or losses on real estate activity, gains or losses on re-measurement of equity interest upon acquisition, changes in the fair value of financial instruments, unrealized foreign currency gains or losses, net expenses or recoveries related to natural disasters and non-cash charges related to leases, and including (a) the Company’s share of EBITDA from unconsolidated entities and (b) other immaterial or identified items (“Adjusted EBITDA”).

The information above considers the pro forma effect on Adjusted EBITDA of the Company’s activity during the three months ended September 30, 2020, as if the transactions had been consummated as of the beginning of the period (“Adjusted Pro Forma EBITDA”) and considers any other incremental items set forth in the Adjusted Pro Forma EBITDA reconciliation included herein.

The Company believes that net debt, Adjusted Pro Forma EBITDA and net debt to Adjusted Pro Forma EBITDA are useful to investors, analysts and Company management because they allow the comparison of the Company’s credit strength between periods and to other real estate companies without the effect of items that by their nature are not comparable from period to period.

 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Net Operating Income (NOI) and Same-Store Cash NOI by Segment (Constant Currency)

(Dollars in thousands)

 

For the Three Months Ended September 30, 2020 and 2019

 

 

Triple-Net

Senior Housing
Operating

Office

Non-Segment

Total

For the Three Months Ended September 30, 2020

Net income attributable to common stockholders

 

 

 

 

 

$

12,751

 

Adjustments:

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

(572

)

Interest

 

 

 

 

 

115,505

 

Depreciation and amortization

 

 

 

 

 

249,366

 

General, administrative and professional fees

 

 

 

 

 

34,228

 

Loss on extinguishment of debt, net

 

 

 

 

 

7,386

 

Merger-related expenses and deal costs

 

 

 

 

 

11,325

 

Allowance on loans receivable and investments

 

 

 

 

 

4,999

 

Other

 

 

 

 

 

3,534

 

Income from unconsolidated entities

 

 

 

 

 

(865

)

Gain on real estate dispositions

 

 

 

 

 

(12,622

)

Income tax benefit

 

 

 

 

 

(3,195

)

Net income attributable to noncontrolling interests

 

 

 

 

 

986

 

Reported segment NOI

 

$

150,738

 

 

$

118,669

 

 

$

133,325

 

 

$

20,094

 

 

$

422,826

 

Adjustments to Cash NOI:

 

 

 

 

 

 

Straight-lining of rental income

 

(2,072

)

 

 

 

(2,576

)

 

 

 

(4,648

)

Non-cash rental income

 

(12,687

)

 

 

 

(5,936

)

 

 

 

(18,623

)

Cash impact of Brookdale lease modification

 

161,533

 

 

 

 

 

 

 

 

161,533

 

Write-off of straightline rental income

 

14,312

 

 

 

 

5,970

 

 

 

 

20,282

 

NOI not included in cash NOI1

 

(642

)

 

553

 

 

(1,749

)

 

 

 

(1,838

)

Non-segment NOI

 

 

 

 

 

 

 

(20,094

)

 

(20,094

)

Cash NOI

 

311,182

 

 

119,222

 

 

129,034

 

 

 

 

559,438

 

Adjustments to Same-store NOI:

 

 

 

 

 

 

Cash NOI not included in same-store

 

(689

)

 

(35,420

)

 

(4,274

)

 

 

 

(40,383

)

Same-store cash NOI (constant currency)

 

$

310,493

 

 

$

83,802

 

 

$

124,760

 

 

$

 

 

$

519,055

 

Percentage increase (decrease)

 

90.2

%

(42.2

%)

(2.2

%)

 

19.1

%

Adjusted Same-store cash NOI:

 

 

 

 

 

 

Less cash impact of Brookdale lease modification

 

(161,533

)

 

 

 

 

 

 

 

(161,533

)

Adjusted Same-store cash NOI - constant currency

 

$

148,960

 

 

$

83,802

 

 

$

124,760

 

 

$

 

 

$

357,522

 

Adjusted percentage decrease - constant currency

 

(8.7

%)

(42.2

%)

(2.2

%)

 

(17.9

%)

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2019

Net income attributable to common stockholders

 

 

 

 

 

$

85,259

 

Adjustments:

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

(620

)

Interest

 

 

 

 

 

113,967

 

Depreciation and amortization

 

 

 

 

 

234,603

 

General, administrative and professional fees

 

 

 

 

 

40,530

 

Loss on extinguishment of debt, net

 

 

 

 

 

37,434

 

Merger-related expenses and deal costs

 

 

 

 

 

4,304

 

Other

 

 

 

 

 

2,164

 

Income from unconsolidated entities

 

 

 

 

 

(854

)

Gain on real estate dispositions

 

 

 

 

 

(36

)

Income tax expense

 

 

 

 

 

2,005

 

Net income attributable to noncontrolling interests

 

 

 

 

 

1,659

 

Reported segment NOI

 

$

187,045

 

 

$

153,079

 

 

$

149,227

 

 

$

31,064

 

 

$

520,415

 

Adjustments to Cash NOI:

 

 

 

 

 

 

Straight-lining of rental income

 

(3,871

)

 

 

 

(4,809

)

 

 

 

(8,680

)

Non-cash rental income

 

(906

)

 

 

 

928

 

 

 

 

22

 

NOI not included in cash NOI1

 

(18,939

)

 

540

 

 

(13,565

)

 

 

 

(31,964

)

Non-segment NOI

 

 

 

 

 

 

 

(31,064

)

 

(31,064

)

NOI impact from change in FX

 

278

 

 

(171

)

 

 

 

 

 

107

 

Cash NOI

 

$

163,607

 

 

$

153,448

 

 

$

131,781

 

 

$

 

 

$

448,836

 

Adjustments to Same-store NOI:

 

 

 

 

 

 

Cash NOI not included in same-store

 

(382

)

 

(8,596

)

 

(4,201

)

 

 

 

(13,179

)

NOI impact from change in FX

 

 

 

15

 

 

 

 

 

 

15

 

Same-store cash NOI (constant currency)

 

$

163,225

 

 

$

144,867

 

 

$

127,580

 

 

$

 

 

$

435,672

 

1 Excludes sold assets, assets held for sale, development properties not yet operational and land parcels.

 

For the Three Months Ended September 30, 2020 and June 30, 2020

 

 

Triple-Net

Senior Housing
Operating

Office

Non-Segment

Total

For the Three Months Ended September 30, 2020

Net income attributable to common stockholders

 

 

 

 

 

$

12,751

 

 

Adjustments:

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

(572

)

 

Interest

 

 

 

 

 

115,505

 

 

Depreciation and amortization

 

 

 

 

 

249,366

 

 

General, administrative and professional fees

 

 

 

 

 

34,228

 

 

Loss on extinguishment of debt, net

 

 

 

 

 

7,386

 

 

Merger-related expenses and deal costs

 

 

 

 

 

11,325

 

 

Allowance on loans receivable and investments

 

 

 

 

 

4,999

 

 

Other

 

 

 

 

 

3,534

 

 

Income from unconsolidated entities

 

 

 

 

 

(865

)

 

Gain on real estate dispositions

 

 

 

 

 

(12,622

)

 

Income tax benefit

 

 

 

 

 

(3,195

)

 

Net income attributable to noncontrolling interests

 

 

 

 

 

986

 

 

Reported segment NOI

 

$

150,738

 

 

$

118,669

 

 

$

133,325

 

 

$

20,094

 

 

$

422,826

 

 

Adjustments to Cash NOI:

 

 

 

 

 

 

Straight-lining of rental income

 

(2,072

)

 

 

 

(2,576

)

 

 

 

(4,648

)

 

Non-cash rental income

 

(12,687

)

 

 

 

(5,936

)

 

 

 

(18,623

)

 

Cash impact of Brookdale lease modification

 

161,533

 

 

 

 

 

 

 

 

161,533

 

 

Write-off of straightline rental income

 

14,312

 

 

 

 

5,970

 

 

 

 

20,282

 

 

NOI not included in cash NOI1

 

(642

)

 

553

 

 

(1,749

)

 

 

 

(1,838

)

 

Non-segment NOI

 

 

 

 

 

 

 

(20,094

)

 

(20,094

)

 

Cash NOI

 

311,182

 

 

119,222

 

 

129,034

 

 

 

 

559,438

 

 

Adjustments to Same-store NOI:

 

 

 

 

 

 

Cash NOI not included in same-store

 

(689

)

 

(10,578

)

 

(2,969

)

 

 

 

(14,236

)

 

Same-store cash NOI (constant currency)

 

$

310,493

 

 

$

108,644

 

 

$

126,065

 

 

$

 

 

$

545,202

 

 

Percentage increase (decrease)

 

86.8

%

(0.6

%)

0.4

%

 

36.0

%

Adjusted Same-store cash NOI:

 

 

 

 

 

 

Less cash impact of Brookdale lease modification

 

(161,533

)

 

 

 

 

 

 

 

(161,533

)

 

Adjusted Same-store cash NOI - constant currency

 

$

148,960

 

 

$

108,644

 

 

$

126,065

 

 

$

 

 

$

383,669

 

 

Adjusted percentage (decrease) increase - constant currency

 

(10.4

%)

(0.6

%)

0.4

%

 

(4.3

%)

 

 

 

 

 

 

 

For the Three Months Ended June 30, 2020

Net loss attributable to common stockholders

 

 

 

 

 

$

(157,170

)

 

Adjustments:

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

(1,540

)

 

Interest

 

 

 

 

 

123,132

 

 

Depreciation and amortization

 

 

 

 

 

349,594

 

 

General, administrative and professional fees

 

 

 

 

 

29,984

 

 

Merger-related expenses and deal costs

 

 

 

 

 

6,586

 

 

Allowance on loans receivable and investments

 

 

 

 

 

29,655

 

 

Other

 

 

 

 

 

3,382

 

 

Loss from unconsolidated entities

 

 

 

 

 

5,850

 

 

Gain on real estate dispositions

 

 

 

 

 

(1,254

)

 

Income tax expense

 

 

 

 

 

56,356

 

 

Net loss attributable to noncontrolling interests

 

 

 

 

 

(2,065

)

 

Reported segment NOI

 

$

170,965

 

 

$

116,751

 

 

$

133,887

 

 

$

20,907

 

 

$

442,510

 

 

Adjustments to Cash NOI:

 

 

 

 

 

 

Straight-lining of rental income

 

(2,183

)

 

 

 

(3,343

)

 

 

 

(5,526

)

 

Non-cash rental income

 

(1,803

)

 

 

 

(1,238

)

 

 

 

(3,041

)

 

Impact of Holiday lease termination

 

(50,184

)

 

 

 

 

 

 

 

(50,184

)

 

Write-off of straightline rental income

 

53,304

 

 

 

 

898

 

 

 

 

54,202

 

 

NOI not included in cash NOI1

 

(3,754

)

 

(1,917

)

 

(1,750

)

 

 

 

(7,421

)

 

Non-segment NOI

 

 

 

 

 

 

 

(20,907

)

 

(20,907

)

 

NOI impact from change in FX

 

245

 

 

1,378

 

 

 

 

 

 

1,623

 

 

Cash NOI

 

$

166,590

 

 

$

116,212

 

 

$

128,454

 

 

$

 

 

$

411,256

 

 

Adjustments to Same-store NOI:

 

 

 

 

 

 

Cash NOI not included in same-store

 

(389

)

 

(6,905

)

 

(2,953

)

 

 

 

(10,247

)

 

NOI impact from change in FX not in same-store

 

 

 

1

 

 

 

 

 

 

1

 

 

Same-store cash NOI (constant currency)

 

$

166,201

 

 

$

109,308

 

 

$

125,501

 

 

$

 

 

$

401,010

 

 

1 Excludes sold assets, assets held for sale, development properties not yet operational and land parcels.

 

For the Nine Months Ended September 30, 2020 and 2019

 

 

Triple-Net

Senior Housing
Operating

Office

Non-Segment

Total

For the Nine Months Ended September 30, 2020

Net income attributable to common stockholders

 

 

 

 

 

$

328,698

 

 

Adjustments:

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

(6,965

)

 

Interest

 

 

 

 

 

355,333

 

 

Depreciation and amortization

 

 

 

 

 

847,797

 

 

General, administrative and professional fees

 

 

 

 

 

106,747

 

 

Loss on extinguishment of debt, net

 

 

 

 

 

7,386

 

 

Merger-related expenses and deal costs

 

 

 

 

 

26,129

 

 

Allowance on loans receivable and investments

 

 

 

 

 

34,654

 

 

Other

 

 

 

 

 

10,624

 

 

Loss from unconsolidated entities

 

 

 

 

 

15,861

 

 

Gain on real estate dispositions

 

 

 

 

 

(240,101

)

 

Income tax benefit

 

 

 

 

 

(95,855

)

 

Net income attributable to noncontrolling interests

 

 

 

 

 

534

 

 

Reported segment NOI

 

$

510,234

 

 

$

402,059

 

 

$

412,548

 

 

$

66,001

 

 

$

1,390,842

 

 

Adjustments to Cash NOI:

 

 

 

 

 

 

Straight-lining of rental income

 

(6,948

)

 

 

 

(10,014

)

 

 

 

(16,962

)

 

Non-cash rental income

 

(16,019

)

 

 

 

(8,278

)

 

 

 

(24,297

)

 

Cash modification fees

 

3,029

 

 

 

 

(1,000

)

 

 

 

2,029

 

 

Cash impact of Brookdale lease modification

 

161,533

 

 

 

 

 

 

 

 

161,533

 

 

Impact of Holiday lease termination

 

(50,184

)

 

 

 

 

 

 

 

(50,184

)

 

Write-off of straightline rental income

 

67,616

 

 

 

 

6,868

 

 

 

 

74,484

 

 

NOI not included in cash NOI1

 

(20,569

)

 

(1,184

)

 

(10,957

)

 

 

 

(32,710

)

 

Non-segment NOI

 

 

 

 

 

 

 

(66,001

)

 

(66,001

)

 

Cash NOI

 

648,692

 

 

400,875

 

 

389,167

 

 

 

 

1,438,734

 

 

Adjustments to Same-store NOI:

 

 

 

 

 

 

Cash modification fees not in same-store

 

 

 

 

 

1,000

 

 

 

 

1,000

 

 

Cash NOI not included in same-store

 

(4,593

)

 

(89,768

)

 

(16,995

)

 

 

 

(111,356

)

 

Same-store cash NOI (constant currency)

 

$

644,099

 

 

$

311,107

 

 

$

373,172

 

 

$

 

 

$

1,328,378

 

 

Percentage increase (decrease)

 

32.0

%

(31.3

%)

3.3

%

 

2.0

%

Adjusted Same-store cash NOI:

 

 

 

 

 

 

Less cash impact of Brookdale lease modification

 

(161,533

)

 

 

 

 

 

 

 

(161,533

)

 

Adjusted Same-store cash NOI - constant currency

 

$

482,566

 

 

$

311,107

 

 

$

373,172

 

 

$

 

 

$

1,166,845

 

 

Adjusted percentage (decrease) increase - constant currency

 

(1.1

%)

(31.3

%)

3.3

%

 

(10.4

%)

 

 

 

 

 

 

 

For the Nine Months Ended September 30, 2019

Net income attributable to common stockholders

 

 

 

 

 

$

421,573

 

 

Adjustments:

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

(10,109

)

 

Interest

 

 

 

 

 

334,955

 

 

Depreciation and amortization

 

 

 

 

 

696,710

 

 

General, administrative and professional fees

 

 

 

 

 

124,369

 

 

Loss on extinguishment of debt, net

 

 

 

 

 

41,861

 

 

Merger-related expenses and deal costs

 

 

 

 

 

11,084

 

 

Other

 

 

 

 

 

(9,294

)

 

Loss from unconsolidated entities

 

 

 

 

 

2,621

 

 

Gain on real estate dispositions

 

 

 

 

 

(24,633

)

 

Income tax benefit

 

 

 

 

 

(57,004

)

 

Net income attributable to noncontrolling interests

 

 

 

 

 

4,831

 

 

Reported segment NOI

 

$

569,741

 

 

$

467,428

 

 

$

430,493

 

 

$

69,302

 

 

$

1,536,964

 

 

Adjustments to Cash NOI:

 

 

 

 

 

 

Straight-lining of rental income

 

(11,444

)

 

 

 

(14,235

)

 

 

 

(25,679

)

 

Non-cash rental income

 

(2,885

)

 

 

 

(3,068

)

 

 

 

(5,953

)

 

Cash modification fees

 

100

 

 

 

 

 

 

 

 

100

 

 

NOI not included in cash NOI1

 

(63,134

)

 

(558

)

 

(33,731

)

 

 

 

(97,423

)

 

Non-segment NOI

 

 

 

 

 

 

 

(69,302

)

 

(69,302

)

 

NOI impact from change in FX

 

(32

)

 

(1,198

)

 

 

 

 

 

(1,230

)

 

Cash NOI

 

$

492,346

 

 

$

465,672

 

 

$

379,459

 

 

$

 

 

$

1,337,477

 

 

Adjustments to Same-store NOI:

 

 

 

 

 

 

Cash NOI not included in same-store

 

(4,298

)

 

(12,848

)

 

(18,175

)

 

 

 

(35,321

)

 

NOI impact from change in FX not in same-store

 

 

 

163

 

 

 

 

 

 

163

 

 

Same-store cash NOI (constant currency)

 

$

488,048

 

 

$

452,987

 

 

$

361,284

 

 

$

 

 

$

1,302,319

 

 

 

 

 

 

 

 

 

1 Excludes sold assets, assets held for sale, development properties not yet operational and land parcels.

 

The Company considers NOI and same-store cash NOI as important supplemental measures because they allow investors, analysts and the Company’s management to assess its unlevered property-level operating results and to compare its operating results with those of other real estate companies and between periods on a consistent basis. The Company defines NOI as total revenues, less interest and other income, property-level operating expenses and office building services costs. In the case of NOI, cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies. The Company defines same-store as properties owned, consolidated and operational for the full period in both comparison periods and are not otherwise excluded; provided, however, that the Company may include selected properties that otherwise meet the same-store criteria if they are included in substantially all of, but not a full, period for one or both of the comparison periods, and in the Company’s judgment such inclusion provides a more meaningful presentation of its portfolio performance. Newly acquired or recently developed or redeveloped properties in the Company’s Seniors Housing Operating Portfolio (“SHOP”) will be included in same-store once they are stabilized for the full period in both periods presented. These properties are considered stabilized upon the earlier of (a) the achievement of 80% sustained occupancy or (b) 24 months from the date of acquisition or substantial completion of work. Recently developed or redeveloped properties in the Office and Triple-Net Leased Portfolios will be included in same-store once substantial completion of work has occurred for the full period in both periods presented. SHOP and Triple-Net Leased properties that have undergone operator or business model transitions will be included in same-store once operating under consistent operating structures for the full period in both periods presented.

Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by materially disruptive events such as flood or fire; (iii) those properties that are currently undergoing a materially disruptive redevelopment; (iv) for the Office Portfolio, those properties for which management has an intention to institute a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase net operating income, or maintain a market-competitive position and/or achieve property stabilization; or (v) for the SHOP and Triple-Net Leased Portfolios, those properties that are scheduled to undergo operator or business model transitions, or have transitioned operators or business models after the start of the prior comparison period.

To eliminate the impact of exchange rate movements, all same-store NOI measures assume constant exchange rates across comparable periods, using the following methodology: the current period’s results are shown in actual reported USD, while prior comparison period’s results are adjusted and converted to USD based on the average exchange rate for the current period.

Sarah Whitford
(877) 4-VENTAS

Source: Ventas, Inc.