Ventas Reports 2015 Third Quarter Results

  • Reported Normalized FFO of $1.09 Per Diluted Share; 7 Percent
    Growth on a Comparable Basis
  • Portfolio Same Store Cash Net Operating Income Growth Exceeds 4
  • Company Completes $1.3 Billion of Investments and Care Capital
    Properties Spin-Off
  • 2015 Normalized FFO Guidance Range Increased to $4.43 to $4.46 Per
    Diluted Share

CHICAGO–(BUSINESS WIRE)–Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today announced
that reported normalized Funds From Operations (“FFO”) for the quarter
ended September 30, 2015 was $365.5 million, compared to $332.8 million
for the 2014 period. Reported normalized FFO per diluted common share
was $1.09 for the quarter ended September 30, 2015. Weighted average
diluted shares outstanding for the third quarter of 2015 increased to
336.3 million, compared to 296.5 million in the third quarter of 2014.

These current and prior period reported results include in discontinued
operations normalized FFO from the 355 properties that are now owned by
Care Capital Properties, Inc. (“CCP”) (NYSE:CCP). The spin-off of CCP as
an independent, publicly traded company (the “Spin-Off”) was
successfully completed on August 17, 2015. Ventas’s third quarter 2015
reported results include normalized FFO from those properties for the
period July 1 – August 17, 2015.

On a comparable basis (“Comparable”), adjusting all current and prior
periods for the effects of the Spin-Off as if the Spin-Off were
completed January 1, 2014, normalized FFO for the quarter ended
September 30, 2015 totaled $330.1 million or $0.98 cents per diluted
share, representing a Comparable per share growth rate of 7 percent
compared to the third quarter 2014.

Strong Results and Innovative Transactions

“We drove strong results, including over four percent same-store cash
NOI growth, and completed our innovative and value creating spin-off of
Care Capital Properties and the Ardent hospital acquisition, during the
quarter,” Ventas Chairman and Chief Executive Officer Debra A. Cafaro
said. “We have a terrific portfolio, enhanced growth prospects, leading
operating partners and excellent liquidity. With our positive momentum,
we are pleased to increase our full year 2015 guidance range for
same-store cash flow growth and normalized FFO per share.”

Third Quarter Net Income and NAREIT FFO

Reported net income attributable to common stockholders for the quarter
ended September 30, 2015 was $22.9 million, or $0.07 per diluted common
share. Reported net income attributable to common stockholders for the
quarter ended September 30, 2014 was $109.1 million, or $0.37 per
diluted common share.

The decrease in third quarter 2015 reported net income per share from
2014 net income per share is principally due to the inclusion in the
third quarter of 2014 of a full quarter’s results from the properties
that were spun off to CCP; higher depreciation expense; and separation
and transaction costs in the current period principally relating to the
CCP Spin-Off and the Ardent transactions. These factors were partially
offset by higher net operating income (“NOI”) due to accretive
investments and improved property performance in the third quarter 2015.

Reported FFO, as defined by the National Association of Real Estate
Investment Trusts (“NAREIT”), for the third quarter of 2015 was $260.7
million, or $0.78 per diluted common share. Reported NAREIT FFO for the
third quarter of 2014 was $304.1 million, or $1.03 per diluted common

Portfolio Performance

  • Same-store cash NOI growth for the Company’s total portfolio (1,024
    assets) was 4.3 percent, expressed in constant currency, for the
    quarter ended September 30, 2015 compared to the same period in 2014.
    Year-to-date, same-store cash NOI growth for the Company’s total
    portfolio (1,015 assets) was 4.4 percent.
  • Total seniors housing operating portfolio (“SHOP”) NOI was $150.3
    million in the third quarter, an increase of 15 percent over the
    respective 2014 period. Same-store SHOP NOI grew 3.2 percent,
    expressed in constant currency, for the 239 same-store properties over
    third quarter 2014 results.

Third Quarter Developments

  • The Company completed its acquisition of Ardent Health Services and
    simultaneously sold its hospital operating company (“Ardent”) to a
    consortium composed of Equity Group Investments, Ardent’s management
    team and Ventas. Ventas now has approximately $1.3 billion invested in
    high quality 100% owned hospital real estate operated by Ardent, a top
    ten US hospital company, as its tenant under long-term triple-net
    leases at a going-in cash yield approximating 7.5 percent after all
    costs and expenses and 8 percent before such costs and expenses.
    Ventas invested $26 million for its 9.9 percent share of Ardent equity.
  • The Company successfully completed its Spin-Off of most of its skilled
    nursing facility portfolio into CCP, a pure-play skilled nursing REIT,
    on August 17, 2015.
  • The Company made $28 million in development and redevelopment funding
    during the third quarter.
  • Ventas paid its shareholders a dividend of $0.73 per share in the
    third quarter, representing a reported FFO payout ratio of 67 percent.
    As previously communicated, Ventas’s third quarter 2015 dividend to
    shareholders, combined with CCP’s third quarter dividend, delivered a
    10 percent increase for shareholders compared to the third quarter

Balance Sheet and Liquidity

  • During the third quarter of 2015, Ventas issued and sold a total of 1
    million shares of common stock for aggregate proceeds of approximately
    $67 million (before sales commissions) under its “at the market”
    equity offering program, of which approximately 580,000 were
    previously reported; and issued $500 million of 4.125 percent senior
    notes due 2026.
  • The Company completed a $900 million five year term loan with a
    variable interest rate of LIBOR plus 97.5 basis points in August.
  • In August, in connection with the Spin-Off, the Company received a
    dividend from CCP of $1.3 billion.
  • During and following the quarter, Ventas sold assets generating
    proceeds of $92 million and gains exceeding $9 million.
  • During the quarter, Ventas repaid $1.0 billion of debt in addition to
    payments that reduced its outstanding balance under the Company’s
    Revolving Credit Facility. This $1.0 billion of repaid debt had a
    weighted average maturity of 1.5 years and weighted average interest
    rate approximating 3.3 percent.
  • The Company has a strong liquidity position and credit profile,

    • $2 billion availability under its Revolving Credit Facility and
      $65 million of cash;
    • Debt maturities totaling only $667 million through 2016;
    • A weighted average debt maturity exceeding seven years;
    • Net Debt to Adjusted Pro Forma EBITDA at September 30, 2015 of
      6.1x; and
    • Current debt-to-enterprise value at 36 percent.

2015 Normalized FFO Per Share and Same Store
Cash Flow Guidance Increased from Previously Provided Range

Ventas currently expects its 2015 reported normalized FFO per diluted
share to increase to a range between $4.43 and $4.46, compared to its
previously provided guidance range of $4.39 to $4.45. If achieved, this
would represent 7 to 8 percent growth in normalized FFO per share over
2014 on a Comparable basis. Ventas currently expects its 2015 NAREIT
reported FFO per diluted share to be between $4.03 and $4.07.

Same-store cash NOI is forecast to grow 3.5 to 4 percent in 2015, an
improvement from the Company’s prior range of 2.5 to 3.5 percent, driven
by enhancement of our high-quality portfolio following the CCP Spin-Off.
SHOP same-store cash NOI is now forecast to grow 2 to 3 percent, while
triple-net same-store NOI is estimated to grow 5.5 to 6 percent in 2015.

The Company’s current expectations do not include any material
additional investments, dispositions or capital activity. A
reconciliation of the Company’s guidance to the Company’s projected GAAP
earnings is included in this press release.

The Company’s guidance is based on a number of other assumptions that
are subject to change and many of which are outside the control of the
Company. If actual results vary from these assumptions, the Company’s
expectations may change. There can be no assurance that the Company will
achieve these results.


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 (800) 706-7741 (or (617) 614-3471 for
international callers). The participant passcode is “Ventas.” The
conference call is being webcast live by NASDAQ OMX and can be accessed
at the Company’s website at
A replay of the webcast will be available following the call online, or
by calling (888) 286-8010 (or (617) 801-6888 for international callers),
passcode 23997249, beginning at approximately 2:00 p.m. Eastern Time and
will remain for 35 days.

Ventas, Inc., an S&P 500 company, is a leading real estate investment
trust. Its diverse portfolio of nearly 1,300 assets in the United
States, Canada and the United Kingdom consists of seniors housing
communities, medical office buildings, skilled nursing facilities,
hospitals and other properties. Through its Lillibridge subsidiary,
Ventas provides management, leasing, marketing, facility development and
advisory services to highly rated hospitals and health systems
throughout the United States. More information about Ventas and
Lillibridge can be found at

Supplemental information regarding the Company can be found on the
Company’s website under the “Investor Relations” section or at
A comprehensive listing of the Company’s properties is available at

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.
statements regarding the Company’s or its tenants’, operators’,
borrowers’ or managers’ expected future financial condition, results of
operations, cash flows, funds from operations, dividends and dividend
plans, financing opportunities and plans, capital markets transactions,
business strategy, budgets, projected costs, operating metrics, capital
expenditures, competitive positions, acquisitions, investment
opportunities, dispositions, merger or acquisition integration, growth
opportunities, expected lease income, continued qualification as a real
estate investment trust (“REIT”), plans and objectives of management for
future operations and statements that include words such as
“anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,”
“may,” “could,” “should,” “will” and other similar expressions are
forward-looking statements.
These forward-looking statements are
inherently uncertain, and actual results may differ from the Company’s
The Company does not undertake a duty to update
these forward-looking statements, which speak only as of the date on
which they are made.

The Company’s actual future results and trends may differ materially
from expectations depending on a variety of factors discussed in the
Company’s filings with the Securities and Exchange Commission.
factors include without limitation: (a) the ability and willingness of
the Company’s tenants, operators, borrowers, managers and other third
parties to satisfy their obligations under their respective contractual
arrangements with the Company, including, in some cases, their
obligations to indemnify, defend and hold harmless the Company from and
against various claims, litigation and liabilities; (b) the ability of
the Company’s tenants, operators, borrowers and managers to maintain the
financial strength and liquidity necessary to satisfy their respective
obligations and liabilities to third parties, including without
limitation obligations under their existing credit facilities and other
indebtedness; (c) the Company’s success in implementing its business
strategy and the Company’s ability to identify, underwrite, finance,
consummate and integrate diversifying acquisitions and investments,
including investments in different asset types and outside the United
States; (d) macroeconomic conditions such as a disruption of or lack of
access to the capital markets, changes in the debt rating on U.S.
government securities, default or delay in payment by the United States
of its obligations, and changes in the federal or state budgets
resulting in the reduction or nonpayment of Medicare or Medicaid
reimbursement rates; (e) the nature and extent of future competition,
including new construction in the markets in which the Company’s seniors
housing communities and medical office buildings (“MOBs”)
located; (f) the extent of future or pending healthcare reform and
regulation, including cost containment measures and changes in
reimbursement policies, procedures and rates; (g) increases in the
Company’s borrowing costs as a result of changes in interest rates and
other factors; (h) the ability of the Company’s operators and managers,
as applicable, to comply with laws, rules and regulations in the
operation of the Company’s properties, to deliver high-quality services,
to attract and retain qualified personnel and to attract residents and
patients; (i) changes in general economic conditions or economic
conditions in the markets in which the Company may, from time to time,
compete, and the effect of those changes on the Company’s revenues,
earnings and funding sources; (j) the Company’s ability to pay down,
refinance, restructure or extend its indebtedness as it becomes due; (k)
the Company’s ability and willingness to maintain its qualification as a
REIT in light of economic, market, legal, tax and other considerations;
(l) final determination of the Company’s taxable net income for the year
ending December 31, 2015; (m) the ability and willingness of the
Company’s tenants to renew their leases with the Company upon expiration
of the leases, the Company’s ability to reposition its properties on the
same or better terms in the event of nonrenewal or in the event the
Company exercises its right to replace an existing tenant or manager,
and obligations, including indemnification obligations, the Company may
incur in connection with the replacement of an existing tenant or
manager; (n) risks associated with the Company’s senior living operating
portfolio, such as factors that can cause volatility in the Company’s
operating income and earnings generated by those properties, including
without limitation national and regional economic conditions, costs of
food, materials, energy, labor and services, employee benefit costs,
insurance costs and professional and general liability claims, and the
timely delivery of accurate property-level financial results for those
properties; (o) changes in exchange rates for any foreign currency in
which the Company may, from time to time, conduct business; (p)
year-over-year changes in the Consumer Price Index or the UK Retail
Price Index and the effect of those changes on the rent escalators
contained in the Company’s leases and the Company’s earnings; (q) the
Company’s ability and the ability of its tenants, operators, borrowers
and managers to obtain and maintain adequate property, liability and
other insurance from reputable, financially stable providers; (r) the
impact of increased operating costs and uninsured professional liability
claims on the Company’s liquidity, financial condition and results of
operations or that of the Company’s tenants, operators, borrowers and
managers, and the ability of the Company and the Company’s tenants,
operators, borrowers and managers to accurately estimate the magnitude
of those claims; (s) risks associated with the Company’s MOB portfolio
and operations, including the Company’s ability to successfully design,
develop and manage MOBs, to accurately estimate its costs in fixed
fee-for-service projects and to retain key personnel; (t) the ability of
the hospitals on or near whose campuses the Company’s MOBs are located
and their affiliated health systems to remain competitive and
financially viable and to attract physicians and physician groups; (u)
the Company’s ability to build, maintain and expand its relationships
with existing and prospective hospital and health system clients; (v)
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; (w) the impact of market or issuer events on the liquidity or
value of the Company’s investments in marketable securities; (x) merger
and acquisition activity in the seniors housing and healthcare
industries resulting in a change of control of, or a competitor’s
investment in, one or more of the Company’s tenants, operators,
borrowers or managers or significant changes in the senior management of
the Company’s tenants, operators, borrowers or managers; (y) the impact
of litigation or any financial, accounting, legal or regulatory issues
that may affect the Company or its tenants, operators, borrowers or
managers; and (z) changes in accounting principles, or their application
or interpretation, and the Company’s ability to make estimates and the
assumptions underlying the estimates, which could have an effect on the
Company’s earnings.
Many of these factors are beyond the control
of the Company and its management.

As of September 30, 2015, June 30, 2015, March 31, 2015, December
31, 2014 and September 30, 2014
(In thousands, except per share amounts)
September 30, June 30, March 31, December 31, September 30,
2015 2015 2015 2014 2014
Real estate investments:
Land and improvements $ 2,065,664 $ 2,013,478 $ 1,971,210 $ 1,708,851 $ 1,690,085
Buildings and improvements 20,203,784 19,231,061 19,032,505 17,403,552 17,182,025
Construction in progress 124,377 129,186 118,483 109,689 100,445
Acquired lease intangibles 1,344,708   1,211,917   1,194,783   952,251   952,487  
23,738,533 22,585,642 22,316,981 20,174,343 19,925,042
Accumulated depreciation and amortization (3,966,947 ) (3,774,841 ) (3,564,277 ) (3,420,089 ) (3,249,081 )
Net real estate property 19,771,586 18,810,801 18,752,704 16,754,254 16,675,961
Secured loans receivable and investments, net 766,707 762,312 746,793 802,881 380,792
Investments in unconsolidated real estate entities 96,208   85,461   95,147   91,872   88,175  
Net real estate investments 20,634,501 19,658,574 19,594,644 17,649,007 17,144,928
Cash and cash equivalents 65,231 60,532 120,225 55,348 64,595
Escrow deposits and restricted cash 74,491 193,960 223,772 71,771 78,746
Goodwill 1,052,321 1,058,607 947,386 363,971 358,672
Assets held for sale 168,931 2,839,453 3,030,030 2,574,174 2,581,040
Other assets 418,502   395,752   452,428   451,642   358,356  
Total assets $ 22,413,977   $ 24,206,878   $ 24,368,485   $ 21,165,913   $ 20,586,337  
Liabilities and equity
Senior notes payable and other debt $ 11,268,560 $ 11,439,577 $ 11,532,539 $ 10,827,764 $ 10,404,208
Accrued interest 67,358 77,631 77,359 62,097 69,112
Accounts payable and other liabilities 791,430 784,465 777,517 750,622 720,601
Liabilities related to assets held for sale 65,465 241,894 239,075 254,680 244,709
Deferred income taxes 352,658   370,161   371,785   344,337   361,454  
Total liabilities 12,545,471 12,913,728 12,998,275 12,239,500 11,800,084
Redeemable OP unitholder and noncontrolling interests 198,832 199,404 257,246 172,016 163,080
Commitments and contingencies
Ventas stockholders’ equity:
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued
Common stock, $0.25 par value; 333,027; 331,965; 330,913; 298,478
and 294,359 shares issued at September 30, 2015, June 30, 2015,
March 31, 2015, December 31, 2014 and September 30, 2014,
83,238 82,982 82,718 74,656 73,603
Capital in excess of par value 11,523,312 12,708,898 12,616,056 10,119,306 9,859,490
Accumulated other comprehensive income (592 ) 10,180 4,357 13,121 16,156
Retained earnings (deficit) (1,992,848 ) (1,772,529 ) (1,660,856 ) (1,526,388 ) (1,398,378 )
Treasury stock, 61; 28; 32; 7 and 32 shares at September 30, 2015,
June 30, 2015, March 31, 2015, December 31, 2014 and September 30,
2014, respectively
(3,675 ) (2,048 ) (2,385 ) (511 ) (2,075 )
Total Ventas stockholders’ equity 9,609,435 11,027,483 11,039,890 8,680,184 8,548,796
Noncontrolling interest 60,239   66,263   73,074   74,213   74,377  
Total equity 9,669,674   11,093,746   11,112,964   8,754,397   8,623,173  
Total liabilities and equity $ 22,413,977   $ 24,206,878   $ 24,368,485   $ 21,165,913   $ 20,586,337  
For the three and nine months ended September 30, 2015 and 2014
(In thousands, except per share amounts)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
Rental income:
Triple-net leased $ 201,028 $ 170,873 $ 571,591 $ 500,047
Medical office buildings 142,755   116,686   420,287   346,942  
343,783 287,559 991,878 846,989
Resident fees and services 454,825 396,247 1,356,384 1,141,781
Medical office building and other services revenue 10,000 7,573 29,951 18,240
Income from loans and investments 18,924 13,186 66,192 36,902
Interest and other income 74   367   719   811  
Total revenues 827,606 704,932 2,445,124 2,044,723
Interest 97,135 77,325 263,422 214,117
Depreciation and amortization 226,332 173,006 657,262 507,167
Property-level operating expenses:
Senior living 304,540 265,274 902,154 762,993
Medical office buildings 43,305   41,262   129,152   120,021  
347,845 306,536 1,031,306 883,014
Medical office building services costs 6,416 4,568 19,098 9,565
General, administrative and professional fees 32,114 29,464 100,399 93,632
Loss on extinguishment of debt, net 15,331 2,414 14,897 5,079
Merger-related expenses and deal costs 62,145 16,188 105,023 35,944
Other 4,795   9,413   13,948   18,070  
Total expenses 792,113   618,914   2,205,355   1,766,588  
Income before (loss) income from unconsolidated entities, income
taxes, discontinued operations, real estate dispositions and
noncontrolling interest
35,493 86,018 239,769 278,135
(Loss) income from unconsolidated entities (955 ) (47 ) (1,197 ) 549
Income tax benefit (expense) 10,697   1,887   27,736   (4,820 )
Income from continuing operations 45,235 87,858 266,308 273,864
Discontinued operations (22,383 ) 18,171 13,434 79,026
Gain on real estate dispositions 265   3,625   14,420   16,514  
Net income 23,117 109,654 294,162 369,404
Net income attributable to noncontrolling interest 265   522   1,047   827  
Net income attributable to common stockholders $ 22,852   $ 109,132   $ 293,115   $ 368,577  
Earnings per common share:
Income from continuing operations attributable to common
stockholders, including real estate dispositions
$ 0.14 $ 0.31 $ 0.85 $ 0.98
Discontinued operations (0.07 ) 0.06   0.04   0.27  
Net income attributable to common stockholders $ 0.07   $ 0.37   $ 0.89   $ 1.25  
Income from continuing operations attributable to common
stockholders, including real estate dispositions
$ 0.14 $ 0.31 $


$ 0.97
Discontinued operations (0.07 ) 0.06   0.03   0.27  
Net income attributable to common stockholders $ 0.07   $ 0.37   $


  $ 1.24  
Weighted average shares used in computing earnings per common
Basic 332,491 294,030 329,440 293,965
Diluted 336,338 296,495 333,210 296,411
Dividends declared per common share $ 0.73 $ 0.725 $ 2.31 $ 2.175


Ventas, Inc.
Ryan K. Shannon
(877) 4-VENTAS

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