Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today
reported results for the second quarter ended June 30, 2024.
CEO Remarks
“We started 2024 with momentum, which continued in the second
quarter as we delivered another quarter of strong results. We are
executing on our focused strategy to capture the unprecedented
multiyear growth opportunity in senior housing,” said Debra A.
Cafaro, Ventas Chairman and CEO.
“We drove occupancy and revenue growth in our senior housing
operating portfolio (“SHOP”) to fuel our performance. We also are
expanding our SHOP footprint and our enterprise growth rate by
investing in attractive senior housing opportunities. Our financial
strength has improved meaningfully year to date as a result of
delivering profitable organic growth in SHOP, adding external
investments focused on senior housing, and driving performance
throughout our portfolio.
“We are pleased to again update and improve our guidance for the
full year as we continue to create value for our shareholders and
other stakeholders.
“As a major participant in the longevity economy, Ventas is
focused on enabling exceptional environments that benefit a large
and growing aging population,” Cafaro concluded.
Second Quarter and Other 2024
Highlights
- Net Income Attributable to Common Stockholders (“Attributable
Net Income”) per share of $0.05
- Normalized Funds From Operations* (“Normalized FFO”) per share
of $0.80, an increase of approximately 7% compared to the prior
year
- Total Company Net Operating Income* (“NOI”) year-over-year
growth of 6.9% and Total Company Same-Store Cash NOI*
year-over-year growth of 7.8%
- On a Same-Store Cash NOI* basis, SHOP grew 15.2% year-over-year
and was led by occupancy growth of 320 basis points
- Year to date, the Company closed approximately $350 million of
investments focused on senior housing, with a large and growing
pipeline of additional senior housing investment opportunities
- Year to date, the Company issued 10.4 million shares of common
stock under its at-the-market equity offering program for gross
proceeds of approximately $500 million. Proceeds have fully funded
the senior housing investments completed year to date
*Some of the financial measures throughout this press release
are non-GAAP measures. Refer to the Non-GAAP Financial Measures
Reconciliation tables at the end of this press release for
additional information and a reconciliation to the most directly
comparable GAAP measure.
Second Quarter 2024 Enterprise
Results
For the Second Quarter 2024, reported per share results
were:
Quarter Ended June 30,
2024
2023
$ Change
% Change
Attributable Net Income
$0.05
$0.26
($0.21)
(81%)
Nareit FFO*
$0.77
$1.02
($0.25)
(25%)
Normalized FFO*
$0.80
$0.75
$0.05
7%
* Some of the financial measures
throughout this press release are non-GAAP measures. Refer to the
Non-GAAP Financial Measures Reconciliation tables at the end of
this press release for additional information and a reconciliation
to the most directly comparable GAAP measure.
Delivering Profitable Organic Growth in
Senior Housing
The second quarter SHOP Same-Store portfolio benefited from
average occupancy growth of 320 basis points year-over-year and
rate growth, generating total revenue growth of 8.0%.
Second quarter average occupancy growth in the SHOP Same-Store
portfolio was led by the U.S. at 380 basis points year-over-year.
Canada average occupancy grew 170 basis points year-over-year,
approaching 96% in the second quarter. All SHOP community types,
geographies and operators experienced broad-based demand and strong
sales execution, generating net move-ins consistently above prior
year levels.
External Growth Opportunities Focused
on Senior Housing
Ventas has closed on approximately $350 million of investments
year to date focused on senior housing. These senior housing
investments are generating going-in NOI yields approximating 8% and
are priced below replacement cost, with significant multiyear NOI
growth potential, in line with the Company’s investment criteria.
Investment activity has been fully funded by the Company’s year to
date equity issuance of approximately $500 million. The Company has
a line of sight to additional investments focused on senior housing
of approximately $400 million and intends to build on its
investment momentum.
Financial Strength and
Flexibility
Ventas’s long-term success is supported by its scale, strong
liquidity and access to multiple sources of attractive capital. As
of June 30, 2024, the Company had $3.3 billion in liquidity,
including availability under its unsecured revolving credit
facility and $550 million of cash and cash equivalents.
- Leverage continued to improve, led by SHOP organic growth and
equity-funded senior housing investments. Net Debt-to-Further
Adjusted EBITDA* was 6.4x at the end of the second quarter, an
improvement of 0.3x from the first quarter and 0.5x from year-end
2023.
*Some of the financial measures throughout this press release
are non-GAAP measures. Refer to the Non-GAAP Financial Measures
Reconciliation tables at the end of this press release for
additional information and a reconciliation to the most directly
comparable GAAP measure.
Updated and Improved Full Year 2024
Guidance
The Company is updating and improving its guidance for the full
year. The Company’s guidance contains forward-looking statements
and is based on a number of assumptions, including select
assumptions identified later in this press release. Actual results
may differ materially.
As of 5/1/2024
As of 8/1/2024
Attributable Net Income Per Share
Range
$0.03 - $0.11
$0.07 - $0.13
Attributable Net Income Per Share
Midpoint
$0.07
$0.10
Nareit FFO Per Share Range*
$2.98 - $3.06
$3.02 - $3.08
Nareit FFO Per Share Midpoint*
$3.02
$3.05
Normalized Per Share FFO Range*
$3.10 - $3.18
$3.12 - $3.18
Normalized Per Share FFO Midpoint*
$3.14
$3.15
* Some of the financial measures
throughout this press release are non-GAAP measures. Refer to the
Non-GAAP Financial Measures Reconciliation tables at the end of
this press release for additional information and a reconciliation
to the most directly comparable GAAP measure.
Investor Presentation
A Second Quarter Earnings Presentation is posted to the Events
& Presentations section of Ventas’s website at
ir.ventasreit.com/events-and-presentations. Additional information
regarding the Company can be found in its Second Quarter 2024
Supplemental posted at ir.ventasreit.com. The information contained
on, or that may be accessed through, the Company’s website,
including the information contained in the aforementioned Earnings
Presentation and Supplemental, is not incorporated by reference
into, and is not part of, this document.
Second Quarter 2024 Results Conference
Call
Ventas will hold a conference call to discuss this earnings
release on Friday, August 2, 2024 at 10:00 a.m. Eastern Time (9:00
a.m. Central Time).
The dial-in number for the conference call is (888) 330-3576 (or
+1 (646) 960-0672 for international callers), and the participant
passcode is 7655497. A live webcast can be accessed from the
Investor Relations section of www.ventasreit.com.
A telephonic replay will be available at (800) 770-2030 (or +1
(609) 800-9909 for international callers), passcode 7655497, after
the earnings call and will remain available for 30 days. The
webcast replay will be posted in the Investor Relations section of
www.ventasreit.com.
About Ventas
Ventas, Inc. (NYSE: VTR) is a leading S&P 500 real estate
investment trust enabling exceptional environments that benefit a
large and growing aging population. With approximately 1,350
properties in North America and the United Kingdom, Ventas occupies
an essential role in the longevity economy. The Company’s growth is
fueled by its approximately 800 senior housing communities, which
provide valuable services to residents and enable them to thrive in
supported environments. The Ventas portfolio also includes
outpatient medical buildings, research centers and healthcare
facilities. The Company aims to deliver outsized performance by
leveraging its unmatched operational expertise, data-driven
insights from its Ventas OITM platform, extensive relationships and
strong financial position. Ventas’s seasoned team of talented
professionals shares a commitment to excellence, integrity and a
common purpose of helping people live longer, healthier, happier
lives.
Non-GAAP Financial
Measures
This press release of Ventas, Inc. (the “Company,” “we,” “us,”
“our” and similar terms) includes certain financial performance
measures not defined by generally accepted accounting principles in
the United States (“GAAP”), such as Nareit FFO, Normalized FFO, Net
Operating Income (“NOI”), Same-Store Cash NOI, Same-Store Cash NOI
Growth and Net Debt to Further Adjusted EBITDA. Reconciliations of
these non-GAAP financial measures to the most directly comparable
GAAP measures are included in the appendix to this press release.
Our definitions and calculations of these non-GAAP measures may not
be the same as similar measures reported by other REITs.
These non-GAAP financial measures should not be considered as
alternatives for, or superior to, financial measures calculated in
accordance with GAAP.
Cautionary Statements
Certain of the information contained herein, including
intra-quarter operating information, has been provided by our
operators and we have not verified this information through an
independent investigation or otherwise. We have no reason to
believe that this information is inaccurate in any material
respect, but we cannot assure you of its accuracy.
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements include, among others,
statements of expectations, beliefs, future plans and strategies,
anticipated results from operations and developments and other
matters that are not historical facts. Forward-looking statements
include, among other things, statements regarding our and our
officers’ intent, belief or expectation as identified by the use of
words such as “assume,” “may,” “will,” “project,” “expect,”
“believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,”
“plan,” “potential,” “opportunity,” “estimate,” “could,” “would,”
“should” and other comparable and derivative terms or the negatives
thereof.
Forward-looking statements are based on management’s beliefs as
well as on a number of assumptions concerning future events. You
should not put undue reliance on these forward-looking statements,
which are not a guarantee of performance and are subject to a
number of uncertainties and other factors that could cause actual
events or results to differ materially from those expressed or
implied by the forward-looking statements. We do not undertake a
duty to update these forward-looking statements, which speak only
as of the date on which they are made. We urge you to carefully
review the disclosures we make concerning risks and uncertainties
that may affect our business and future financial performance,
including those made below and in our filings with the Securities
and Exchange Commission, such as in the sections titled “Cautionary
Statements — Summary Risk Factors,” “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report on Form 10-K for the
year ended December 31, 2023 and our subsequent Quarterly Reports
on Form 10-Q.
Certain factors that could affect our future results and our
ability to achieve our stated goals include, but are not limited
to: (a) our ability to achieve the anticipated benefits and
synergies from, and effectively integrate, our completed or
anticipated acquisitions and investments; (b) our exposure and the
exposure of our tenants, managers and borrowers to complex
healthcare and other regulation, including evolving laws and
regulations regarding data privacy and cybersecurity and
environmental matters, and the challenges and expense associated
with complying with such regulation; (c) the potential for
significant general and commercial claims, legal actions,
investigations, regulatory proceedings and enforcement actions that
could subject us or our tenants, managers or borrowers to increased
operating costs, uninsured liabilities, including fines and other
penalties, reputational harm or significant operational
limitations, including the loss or suspension of or moratoriums on
accreditations, licenses or certificates of need, suspension of or
nonpayment for new admissions, denial of reimbursement, suspension,
decertification or exclusion from federal, state or foreign
healthcare programs or the closure of facilities or communities;
(d) the impact of market and general economic conditions on us, our
tenants, managers and borrowers and in areas in which our
properties are geographically concentrated, including macroeconomic
trends and financial market events, such as bank failures and other
events affecting financial institutions, market volatility,
increases in inflation, changes in or elevated interest and
exchange rates, tightening of lending standards and reduced
availability of credit or capital, geopolitical conditions, supply
chain pressures, rising labor costs and historically low
unemployment, events that affect consumer confidence, our occupancy
rates and resident fee revenues, and the actual and perceived state
of the real estate markets, labor markets and public and private
capital markets; (e) our reliance and the reliance of our tenants,
managers and borrowers on the financial, credit and capital markets
and the risk that those markets may be disrupted or become
constrained; (f) the implementation and impact of regulations
related to the Coronavirus Aid, Relief and Economic Security Act
(the “CARES Act”) and other stimulus legislation, including the
risk that some or all of the CARES Act or other COVID-19 relief
payments we or our tenants, managers or borrowers received could be
recouped; (g) our ability, and the ability of our tenants, managers
and borrowers, to navigate the trends impacting our or their
businesses and the industries in which we or they operate, and the
financial condition or business prospect of our tenants, managers
and borrowers; (h) the risk of bankruptcy, inability to obtain
benefits from governmental programs, insolvency or financial
deterioration of our tenants, managers, borrowers and other
obligors which may, among other things, have an adverse impact on
the ability of such parties to make payments or meet their other
obligations to us, which could have an adverse impact on our
results of operations and financial condition; (i) the risk that
the borrowers under our loans or other investments default or that,
to the extent we are able to foreclose or otherwise acquire the
collateral securing our loans or other investments, we will be
required to incur additional expense or indebtedness in connection
therewith, that the assets will underperform expectations or that
we may not be able to subsequently dispose of all or part of such
assets on favorable terms; (j) our current and future amount of
outstanding indebtedness, and our ability to access capital and to
incur additional debt which is subject to our compliance with
covenants in instruments governing our and our subsidiaries’
existing indebtedness; (k) risks related to the recognition of
reserves, allowances, credit losses or impairment charges which are
inherently uncertain and may increase or decrease in the future and
may not represent or reflect the ultimate value of, or loss that we
ultimately realize with respect to, the relevant assets, which
could have an adverse impact on our results of operations and
financial condition; (l) the risk that our leases or management
agreement are not renewed or are renewed on less favorable terms,
that our tenants or managers default under those agreements or that
we are unable to replace tenants or managers on a timely basis or
on favorable terms, if at all; (m) our ability to identify and
consummate future investments in, or dispositions of, healthcare
assets and effectively manage our portfolio opportunities and our
investments in co-investment vehicles, joint ventures and minority
interests, including our ability to dispose of such assets on
favorable terms as a result of rights of first offer or rights of
first refusal in favor of third parties; (n) risks related to
development, redevelopment and construction projects, including
costs associated with inflation, rising or elevated interest rates,
labor conditions and supply chain pressures, and risks related to
increased construction and development in markets in which our
properties are located, including adverse effect on our future
occupancy rates; (o) our ability to attract and retain talented
employees; (p) the limitations and significant requirements imposed
upon our business as a result of our status as a REIT and the
adverse consequences (including the possible loss of our status as
a REIT) that would result if we are not able to comply with such
requirements; (q) the ownership limits contained in our certificate
of incorporation with respect to our capital stock in order to
preserve our qualification as a REIT, which may delay, defer or
prevent a change of control of our company; (r) the risk of changes
in healthcare law or regulation or in tax laws, guidance and
interpretations, particularly as applied to REITs, that could
adversely affect us or our tenants, managers or borrowers; (s)
increases in our borrowing costs as a result of becoming more
leveraged, including in connection with acquisitions or other
investment activity and rising or elevated interest rates; (t) our
reliance on third-party managers and tenants to operate or exert
substantial control over properties they manage for, or rent from,
us, which limits our control and influence over such operations and
results; (u) our exposure to various operational risks, liabilities
and claims from our operating assets; (v) our dependency on a
limited number of tenants and managers for a significant portion of
our revenues and operating income; (w) our exposure to particular
risks due to our specific asset classes and operating markets, such
as adverse changes affecting our specific asset classes and the
real estate industry, the competitiveness or financial viability of
hospitals on or near the campuses where our outpatient medical
buildings are located, our relationships with universities, the
level of expense and uncertainty of our research tenants, and the
limitation of our uses of some properties we own that are subject
to ground lease, air rights or other restrictive agreements; (x)
the risk of damage to our reputation; (y) the availability,
adequacy and pricing of insurance coverage provided by our policies
and policies maintained by our tenants, managers or other
counterparties; (z) the risk of exposure to unknown liabilities
from our investments in properties or businesses; (aa) the
occurrence of cybersecurity threats and incidents that could
disrupt our or our tenants’, managers’ or borrower’s operations,
result in the loss of confidential or personal information or
damage our business relationships and reputation; (bb) the failure
to maintain effective internal controls, which could harm our
business, results of operations and financial condition; (cc) the
impact of merger, acquisition and investment activity in the
healthcare industry or otherwise affecting our tenants, managers or
borrowers; (dd) disruptions to the management and operations of our
business and the uncertainties caused by activist investors; (ee)
the risk of catastrophic or extreme weather and other natural
events and the physical effects of climate change; (ff) the risk of
potential dilution resulting from future sales or issuances of our
equity securities; and (gg) the other factors set forth in our
periodic filings with the Securities and Exchange Commission.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share amounts; dollars in USD; unaudited)
As of June 30, 2024
As of December 31,
2023
Assets
Real estate investments:
Land and improvements
$
2,588,599
$
2,596,274
Buildings and improvements
27,358,282
27,201,381
Construction in progress
410,663
368,143
Acquired lease intangibles
1,454,473
1,448,146
Operating lease assets
312,812
312,142
32,124,829
31,926,086
Accumulated depreciation and
amortization
(10,647,898
)
(10,177,136
)
Net real estate property
21,476,931
21,748,950
Secured loans receivable and investments,
net
36,195
27,986
Investments in unconsolidated real estate
entities
608,844
598,206
Net real estate investments
22,121,970
22,375,142
Cash and cash equivalents
557,082
508,794
Escrow deposits and restricted cash
58,202
54,668
Goodwill
1,045,071
1,045,176
Assets held for sale
43,261
56,489
Deferred income tax assets, net
1,657
1,754
Other assets
702,986
683,410
Total assets
$
24,530,229
$
24,725,433
Liabilities and equity
Liabilities:
Senior notes payable and other debt
$
13,175,077
$
13,490,896
Accrued interest
122,132
117,403
Operating lease liabilities
213,110
194,734
Accounts payable and other liabilities
1,003,078
1,041,616
Liabilities related to assets held for
sale
4,988
9,243
Deferred income tax liabilities
32,660
24,500
Total liabilities
14,551,045
14,878,392
Redeemable OP unitholder and
noncontrolling interests
311,468
302,636
Commitments and contingencies
Equity:
Ventas stockholders’ equity:
Preferred stock, $1.00 par value; 10,000
shares authorized, unissued
—
—
Common stock, $0.25 par value; 600,000
shares authorized, 413,154 and 402,380 shares outstanding at June
30, 2024 and December 31, 2023, respectively
103,242
100,648
Capital in excess of par value
16,135,972
15,650,734
Accumulated other comprehensive loss
(17,409
)
(35,757
)
Retained earnings (deficit)
(6,577,395
)
(6,213,803
)
Treasury stock, 2 and 279 shares issued at
June 30, 2024 and December 31, 2023, respectively
(25,060
)
(13,764
)
Total Ventas stockholders’ equity
9,619,350
9,488,058
Noncontrolling interests
48,366
56,347
Total equity
9,667,716
9,544,405
Total liabilities and equity
$
24,530,229
$
24,725,433
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per
share amounts; dollars in USD; unaudited)
For the Three Months
Ended
June 30,
For the Six Months
Ended
June 30,
2024
2023
2024
2023
Revenues
Rental income:
Triple-net leased
$
153,934
$
154,355
$
309,302
$
304,094
Outpatient medical and research
portfolio
218,853
215,807
437,730
418,811
372,787
370,162
747,032
—
722,905
Resident fees and services
817,600
724,614
1,630,904
1,429,607
Third party capital management
revenues
4,332
3,996
8,628
8,173
Income from loans and investments
1,436
6,554
2,725
20,143
Interest and other income
4,825
1,032
11,605
2,775
Total revenues
1,200,980
1,106,358
2,400,894
2,183,603
Expenses
Interest
149,259
143,265
299,192
271,340
Depreciation and amortization
339,848
304,689
640,103
586,808
Property-level operating expenses:
Senior housing
603,359
547,110
1,213,180
1,084,332
Outpatient medical and research
portfolio
73,286
72,171
147,224
139,084
Triple-net leased
3,506
3,537
7,244
7,333
680,151
622,818
1,367,648
1,230,749
Third party capital management
expenses
1,650
1,436
3,403
3,142
General, administrative and professional
fees
37,727
34,399
86,464
79,197
Loss (gain) on extinguishment of debt,
net
420
(6,801
)
672
(6,801
)
Transaction, transition and restructuring
costs
2,886
3,069
7,563
4,455
Allowance on loans receivable and
investments, net
(42
)
(12,065
)
(110
)
(20,129
)
Gain on foreclosure of real estate
—
(29,127
)
—
(29,127
)
Shareholder relations matters
37
—
15,751
—
Other expense (income)
8,128
(17,959
)
6,794
(10,197
)
Total expenses
1,220,064
1,043,724
2,427,480
2,109,437
(Loss) income before unconsolidated
entities, real estate dispositions, income taxes and noncontrolling
interests
(19,084
)
62,634
(26,586
)
74,166
(Loss) income from unconsolidated
entities
(1,652
)
31,254
(10,035
)
25,631
Gain on real estate dispositions
49,670
1,405
50,011
11,606
Income tax (expense) benefit
(7,766
)
9,773
(4,762
)
12,575
Income from continuing operations
21,168
105,066
8,628
123,978
Net income
21,168
105,066
8,628
123,978
Net income attributable to noncontrolling
interests
1,781
1,613
3,553
3,008
Net income attributable to common
stockholders
$
19,387
$
103,453
$
5,075
$
120,970
Earnings per common share
Basic:
Income from continuing operations
$
0.05
$
0.26
$
0.02
$
0.31
Net income attributable to common
stockholders
0.05
0.26
0.01
0.30
Diluted:1
Income from continuing operations
$
0.05
$
0.26
$
0.02
$
0.31
Net income attributable to common
stockholders
0.05
0.26
0.01
0.30
Weighted average shares used in
computing earnings per common share
Basic
408,097
400,431
405,747
400,211
Diluted
411,823
404,122
409,472
403,957
1 Potential common shares are not included
in the computation of diluted earnings per share when a loss from
continuing operations exists as the effect would be an antidilutive
per share amount.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Funds From Operations
Attributable to Common Stockholders (FFO)
(In thousands, except per
share amounts; dollars in USD; totals may not sum due to rounding;
unaudited)
Q2 YoY
2024
2023
Change
Q2
Q2
’24-’23
Net income attributable to common
stockholders
$
19,387
$
103,453
(81%)
Net income attributable to common
stockholders per share1
$
0.05
$
0.26
(81%)
Adjustments:
Depreciation and amortization on real
estate assets
339,186
304,095
Depreciation on real estate assets related
to noncontrolling interests
(3,723
)
(4,344
)
Depreciation on real estate assets related
to unconsolidated entities
12,012
10,675
Gain on real estate dispositions
(49,670
)
(1,405
)
Subtotal: Nareit FFO adjustments
297,805
309,021
Subtotal: Nareit FFO adjustments per
share
$
0.72
$
0.76
Nareit FFO attributable to common
stockholders
$
317,192
$
412,474
(23%)
Nareit FFO attributable to common
stockholders per share
$
0.77
$
1.02
(25%)
Adjustments:
Loss (gain) on derivatives, net
1,387
(12,634
)
Non-cash income tax expense (benefit)
6,074
(11,514
)
Loss (gain) on extinguishment of debt,
net
420
(6,801
)
Transaction, transition and restructuring
costs
2,886
3,069
Amortization of other intangibles
96
96
Non-cash impact of changes to equity
plan
(2,366
)
(2,402
)
Significant disruptive events, net
2,363
(6,675
)
Allowance on loans receivable and
investments, net
(42
)
(12,065
)
Gain on foreclosure of real estate
—
(29,127
)
Shareholder relations matters
37
—
Other normalizing items2
302
—
Normalizing items related to
noncontrolling interests and unconsolidated entities, net
770
(32,076
)
Subtotal: Normalized FFO adjustments
11,927
(110,129
)
Subtotal: Normalized FFO adjustments per
share
$
0.03
$
(0.27
)
Normalized FFO attributable to common
stockholders
$
329,119
$
302,345
9%
Normalized FFO attributable to common
stockholders per share
$
0.80
$
0.75
7%
Weighted average diluted shares
411,823
404,122
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.
2 Includes adjustments for unusual items,
including $0.3 million for the three months ended June 30, 2024,
primarily related to the settlement by one of our operators of
class action litigation in our SHOP segment.
Historical cost accounting for real estate assets implicitly
assumes that the value of real estate assets diminishes predictably
over time. However, since real estate values historically have
risen or fallen with market conditions, many industry investors
deem presentations of operating results for real estate companies
that use historical cost accounting to be insufficient by
themselves. For that reason, the Company considers Nareit FFO and
Normalized FFO to be appropriate supplemental measures of operating
performance of an equity REIT. The Company believes that the
presentation of FFO, combined with the presentation of required
GAAP financial measures, has improved the understanding of
operating results of REITs among the investing public and has
helped make comparisons of REIT operating results more meaningful.
Management generally considers Nareit FFO to be a useful measure
for understanding and comparing our operating results because, by
excluding gains and losses related to sales of previously
depreciated operating real estate assets, impairment losses on
depreciable real estate and real estate asset depreciation and
amortization (which can differ across owners of similar assets in
similar condition based on historical cost accounting and useful
life estimates), Nareit FFO can help investors compare the
operating performance of a company’s real estate across reporting
periods and to the operating performance of other companies. The
Company believes that Normalized FFO is useful because it allows
investors, analysts and Company management to compare the Company’s
operating performance to the operating performance of other real
estate companies across periods on a consistent basis without
having to account for differences caused by non-recurring items and
other non-operational events such as transactions and litigation.
In some cases, the Company provides information about identified
non-cash components of Nareit FFO and Normalized FFO because it
allows investors, analysts and Company management to assess the
impact of those items on the Company’s financial results.
Nareit Funds From Operations Attributable to Common
Stockholders (“Nareit FFO”)
The Company uses the National Association of Real Estate
Investment Trusts (“Nareit”) definition of FFO. Nareit defines FFO
as net income attributable to common stockholders (computed in
accordance with GAAP) excluding gains (or losses) from sales of
real estate property, including gain (or loss) on re-measurement of
equity method investments and impairment write-downs of depreciable
real estate, plus real estate depreciation and amortization, and
after adjustments for unconsolidated entities and noncontrolling
interests. Adjustments for unconsolidated entities and
noncontrolling interests will be calculated to reflect FFO on the
same basis.
Normalized FFO
The Company defines Normalized FFO as Nareit FFO excluding the
following income and expense items, without duplication: (a)
transaction, transition and restructuring costs; (b) amortization
of other intangibles; (c) the impact of expenses related to asset
impairment and valuation allowances; (d) 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; (e)
the non-cash impact of income tax benefits or expenses; (f) the
non-cash impact of changes to the Company’s executive equity
compensation plan; (g) non-cash charges related to leases; (h) the
financial impact of contingent consideration; (i) gains and losses
on derivatives and changes in the fair value of financial
instruments; (j) gains and losses on non-real estate dispositions
and other normalizing items related to noncontrolling interests and
unconsolidated entities; (k) net expenses or recoveries related to
significant disruptive events; and (l) other items set forth in the
Normalized FFO reconciliation included herein.
Nareit FFO and Normalized FFO presented herein may not be
comparable to those presented by other real estate companies due to
the fact that not all real estate companies use the same
definitions. Nareit FFO and Normalized FFO should not be considered
as alternatives to net income attributable to common stockholders
(determined in accordance with GAAP) as indicators of the Company’s
financial performance or as alternatives to cash flow from
operating activities (determined in accordance with GAAP) as
measures of the Company’s liquidity, nor are they necessarily
indicative of sufficient cash flow to fund all of the Company’s
needs. The Company believes that in order to facilitate a clear
understanding of the consolidated historical operating results of
the Company, Nareit FFO and Normalized FFO should be examined in
conjunction with net income attributable to common stockholders as
presented elsewhere herein.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Full Year 2024 Guidance as of
August 1, 20241
Net Income and FFO
Attributable to Common Stockholders2
(In millions, except per share
amounts; dollars in USD; totals may not sum due to rounding;
unaudited)
FY 2024
FY 2024 - Per Share
Low
High
Low
High
Net income attributable to common
stockholders
$31
$56
$0.07
$0.13
Depreciation and amortization
adjustments
1,272
1,272
3.07
3.07
Gain on real estate dispositions
(50)
(50)
(0.12)
(0.12)
Nareit FFO attributable to common
stockholders
$1,253
$1,278
$3.02
$3.08
Other adjustments3
40
40
0.10
0.10
Normalized FFO attributable to common
stockholders
$1,294
$1,318
$3.12
$3.18
% Year-over-year growth
4%
6%
Weighted average diluted shares (in
millions)
415
415
1 The Company’s guidance constitutes
forward-looking statements within the meaning of the federal
securities laws and is based on a number of assumptions that are
subject to change and many of which are outside the control of the
Company. Actual results may differ materially from the Company’s
expectations depending on factors discussed herein and in the
Company’s filings with the Securities and Exchange Commission.
2 Totals may not add due to minor
corporate-level adjustments.
3 Other adjustments include the categories
of adjustments presented in our “Non-GAAP Financial Measures
Reconciliation – Funds From Operations Attributable to Common
Stockholders (FFO)”.
Select Guidance
Assumptions:
- Close ~$750 million of investments focused on senior housing,
all equity funded (no further investment activity assumed)
- Dispose of assets for $300 million in net proceeds
- FAD capital expenditures of ~$250 million
- General and administrative expenses expected to range from $155
million to $160 million
- Interest expense expected to range from $603 million to $611
million
- 2024 Guidance midpoint includes ~($0.015) per share non-cash
GAAP impact on Normalized FFO from straight-lining upon potential
Kindred lease resolution
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Full Year 2024 Guidance as of
May 1, 20241
Net Income and FFO
Attributable to Common Stockholders2
(In millions, except per share
amounts; dollars in USD; totals may not sum due to rounding;
unaudited)
FY 2024
FY 2024 - Per Share
Low
High
Low
High
Net income attributable to common
stockholders
$11
$45
$0.03
$0.11
Depreciation and amortization
adjustments
1,214
1,214
2.95
2.95
Nareit FFO attributable to common
stockholders
$1,225
$1,258
$2.98
$3.06
Other adjustments3
51
51
0.12
0.12
Normalized FFO attributable to common
stockholders
$1,276
$1,309
$3.10
$3.18
% Year-over-year growth
4%
6%
Weighted average diluted shares (in
millions)
411
411
1 The Company’s guidance constitutes
forward-looking statements within the meaning of the federal
securities laws and is based on a number of assumptions that are
subject to change and many of which are outside the control of the
Company. Actual results may differ materially from the Company’s
expectations depending on factors discussed herein and in the
Company’s filings with the Securities and Exchange Commission.
2 Totals may not add due to minor
corporate-level adjustments.
3 Other adjustments include the categories
of adjustments presented in our “Non-GAAP Financial Measures
Reconciliation – Funds From Operations Attributable to Common
Stockholders (FFO)”.
Select Guidance
Assumptions
- Close ~$350M of investments focused on senior housing (no
further investment activity assumed)
- Dispose of assets for $300M in net proceeds
- FAD capital expenditures of ~$250M
- General and administrative expenses expected to approximate
$155M at the guidance midpoint
- Interest expense expected to range from $604M to $614M
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Second Quarter 2024 Same-Store
Cash NOI by Segment
(In thousands, unless
otherwise noted; dollars in USD; totals may not sum due to
rounding; unaudited)x
For the Three Months Ended
June 30, 2024
SHOP
OM&R
Triple-Net
Leased
Properties
Non-Segment
Total
Net income attributable to common
stockholders
$
19,387
Adjustments:
Interest and other income
(4,825
)
Interest expense
149,259
Depreciation and amortization
339,848
General, administrative and professional
fees
37,727
Loss on extinguishment of debt, net
420
Transaction, transition and restructuring
costs
2,886
Allowance on loans receivable and
investments, net
(42
)
Shareholder relations matters
37
Other expense
8,128
Loss from unconsolidated entities
1,652
Gain on real estate dispositions
(49,670
)
Income tax expense
7,766
Net income attributable to noncontrolling
interests
1,781
NOI
$
214,241
$
146,273
$
150,428
$
3,412
$
514,354
Adjustments:
Straight-lining of rental income
—
(3,482
)
744
—
(2,738
)
Non-cash rental income
—
(2,223
)
(11,538
)
—
(13,761
)
Cash modification fees
—
500
—
—
500
NOI not included in cash NOI1
423
(551
)
(763
)
—
(891
)
Non-segment NOI
—
—
—
(3,412
)
(3,412
)
Cash NOI
$
214,664
$
140,517
$
138,871
$
—
$
494,052
Adjustments:
Cash NOI not included in Same-Store
(25,061
)
(16,389
)
(9,428
)
—
(50,878
)
Same-Store Cash NOI
$
189,603
$
124,128
$
129,443
$
—
$
443,174
Percentage increase
15.2
%
3.3
%
2.6
%
7.8
%
1 Includes consolidated properties.
Excludes sold assets, assets owned by unconsolidated real estate
entities, assets held for sale, loan repayments, development
properties not yet operational and land parcels from all periods.
Assets that have undergone business model transitions are reflected
within the new business segment as of the transition date.
For the Three Months Ended
June 30, 2023
SHOP
OM&R
Triple-Net
Leased
Properties
Non-Segment
Total
Net income attributable to common
stockholders
$
103,453
Adjustments:
Interest and other income
(1,032
)
Interest expense
143,265
Depreciation and amortization
304,689
General, administrative and professional
fees
34,399
Gain on extinguishment of debt, net
(6,801
)
Transaction, transition and restructuring
costs
3,069
Allowance on loans receivable and
investments, net
(12,065
)
Gain on foreclosure of real estate
(29,127
)
Other income
(17,959
)
Income from unconsolidated entities
(31,254
)
Gain on real estate dispositions
(1,405
)
Income tax benefit
(9,773
)
Net income attributable to noncontrolling
interests
1,613
NOI
$
177,504
$
144,195
$
150,818
$
8,555
$
481,072
Adjustments:
Straight-lining of rental income
—
(1,958
)
519
—
(1,439
)
Non-cash rental income
—
(2,177
)
(12,502
)
—
(14,679
)
NOI not included in cash NOI1
2,504
(6,865
)
(5,998
)
—
(10,359
)
Non-segment NOI
—
—
—
(8,555
)
(8,555
)
NOI impact from change in FX
(872
)
—
54
—
(818
)
Cash NOI
$
179,136
$
133,195
$
132,891
$
—
$
445,222
Adjustments:
Cash NOI not included in Same-Store
(14,533
)
(12,999
)
(6,681
)
—
(34,213
)
NOI impact from change in FX not in
Same-Store
5
—
—
—
5
Same-Store Cash NOI
$
164,608
$
120,196
$
126,210
$
—
$
411,014
1 Includes consolidated properties.
Excludes sold assets, assets owned by unconsolidated real estate
entities, assets held for sale, loan repayments, development
properties not yet operational and land parcels from all periods.
Assets that have undergone business model transitions are reflected
within the new business segment as of the transition date.
NON-GAAP FINANCIAL MEASURES
RECONCILIATION
Adjusted EBITDA and Net
Debt
(Dollars in thousands USD;
totals may not sum due to rounding; unaudited)
For the Three Months
Ended
June 30, 2024
March 31, 2024
December 31, 2023
Net income (loss) attributable to
common stockholders
$
19,387
$
(14,312
)
$
(90,819
)
Adjustments:
Interest expense
149,259
149,933
154,853
Loss on extinguishment of debt, net
420
252
85
Taxes (including tax amounts in general,
administrative and professional fees)
9,214
(1,637
)
5,743
Depreciation and amortization
339,848
300,255
435,276
Non-cash stock-based compensation
expense
5,791
16,284
5,690
Transaction, transition and restructuring
costs
2,886
4,677
3,635
Shareholder relations matters
37
15,714
—
Net income attributable to noncontrolling
interests, adjusted for partners’ share of consolidated entity
EBITDA
(7,014
)
(5,353
)
(3,491
)
Loss from unconsolidated entities,
adjusted for Ventas’ share of EBITDA from unconsolidated
entities
29,038
33,746
30,539
Gain on real estate dispositions
(49,670
)
(341
)
(39,802
)
Unrealized foreign currency loss
(gain)
33
6
(320
)
Loss (gain) on derivatives, net
1,401
(9,321
)
(24,375
)
Significant disruptive events, net
2,363
1,160
(1,901
)
Allowance on loan investments and
impairment of unconsolidated entities, net of noncontrolling
interest
(39
)
(68
)
(73
)
Other normalizing items 1
302
2,357
2,750
Adjusted EBITDA
$
503,256
$
493,352
$
477,790
Adjustment for current period activity
(375
)
(658
)
1,035
Further Adjusted EBITDA
$
502,881
$
492,694
$
478,825
Further Adjusted EBITDA
annualized
$
2,011,524
$
1,970,776
$
1,915,300
Total debt
$
13,175,077
$
13,555,194
$
13,490,896
Cash and cash equivalents
(557,082
)
(632,443
)
(508,794
)
Restricted cash pertaining to debt
(31,461
)
(31,234
)
(29,019
)
Partners’ share of consolidated debt
(302,231
)
(298,719
)
(297,480
)
Ventas’ share of unconsolidated debt
637,504
602,088
575,329
Net debt
$
12,921,807
$
13,194,886
$
13,230,932
Net Debt / Further Adjusted
EBITDA
6.4 x
6.7 x
6.9 x
1 Includes adjustments for unusual items,
including approximately $0.3 million, $2.4 million and $2.8 million
for the three months ended June 30, 2024, March 31, 2024 and
December 31, 2023, respectively, primarily related to the
settlement by one of our operators of class action litigation in
our SHOP segment.
The Company believes that Net debt and Further Adjusted 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.
Adjusted EBITDA
The Company defines Adjusted EBITDA as consolidated earnings
before interest, taxes, depreciation and amortization (including
non-cash stock-based compensation expense, asset impairment and
valuation allowances), excluding (a) gains or losses on
extinguishment of debt; (b) noncontrolling interests’ share of
adjusted EBITDA; (c) transaction, transition and restructuring
costs; (d) net gains or losses on real estate activity; (e) gains
or losses on re-measurement of equity interest upon acquisition;
(f) gains or losses on derivatives and changes in the fair value of
financial instruments; (g) unrealized foreign currency gains or
losses; (h) net expenses or recoveries related to significant
disruptive events; and (i) non-cash charges related to leases, and
including (x) Ventas’ share of adjusted EBITDA from unconsolidated
entities and (y) the impact of other items set forth in the
Adjusted EBITDA reconciliation included herein.
Further Adjusted EBITDA
Further Adjusted EBITDA is Adjusted EBITDA further adjusted for
transactions and events that were completed during the period, as
if the transaction or event had been consummated at the beginning
of the relevant period and considers any other incremental items
set forth in the Further Adjusted EBITDA reconciliation included
herein.
The Company considers NOI and Cash NOI as important supplemental
measures because they allow investors, analysts and the Company’s
management to assess its unlevered property-level operating results
and to compare its operating results with those of other real
estate companies and between periods on a consistent basis.
NOI
The Company defines NOI as total revenues, less interest and
other income, property-level operating expenses and third party
capital management expenses.
Cash NOI
The Company defines Cash NOI as NOI for its reportable business
segments (i.e., SHOP, outpatient medical and research portfolio and
triple-net leased properties), determined on a Constant Currency
basis, excluding the impact of, without duplication (i) non-cash
items such as straight-line rent and the amortization of lease
intangibles, (ii) sold assets, assets held for sale, development
properties not yet operational and land parcels and (iii) other
items set forth in the Cash NOI reconciliation included herein. In
certain cases, results may be adjusted to reflect the receipt of
cash payments, fees, and other consideration that is not fully
recognized as NOI in the period.
Same-Store
The Company defines Same-Store as properties owned, consolidated
and operational for the full period in both comparison periods and
that are not otherwise excluded; provided, however, that the
Company may include selected properties that otherwise meet the
Same-Store criteria if they are included in substantially all of,
but not a full, period for one or both of the comparison periods,
and in the Company’s judgment such inclusion provides a more
meaningful presentation of its segment performance. Newly acquired
development properties and recently developed or redeveloped
properties in the Company’s SHOP reportable business segment will
be included in Same-Store once they are stabilized for the full
period in both periods presented. These properties are considered
stabilized upon the earlier of (a) the achievement of 80% sustained
occupancy or (b) 24 months from the date of acquisition or
substantial completion of work. Recently developed or redeveloped
properties in the outpatient medical and research portfolio and
triple-net leased properties reportable business segments will be
included in Same-Store once substantial completion of work has
occurred for the full period in both periods presented. Senior
housing operating portfolio and triple-net leased properties that
have undergone operator or business model transitions will be
included in Same-Store once operating under consistent operating
structures for the full period in both periods presented.
Properties are excluded from Same-Store if they are: (i) sold,
classified as held for sale or properties whose operations were
classified as discontinued operations in accordance with GAAP; (ii)
impacted by significant disruptive events such as flood or fire;
(iii) for SHOP, those properties that are currently undergoing a
significant disruptive redevelopment; (iv) for the outpatient
medical and research portfolio and triple-net leased properties
reportable business segments, those properties for which management
has an intention to institute, or has instituted, a redevelopment
plan because the properties may require major property-level
expenditures to maximize value, increase NOI, or maintain a
market-competitive position and/or achieve property stabilization,
most commonly as the result of an expected or actual material
change in occupancy or NOI; or (v) for SHOP and triple-net leased
properties reportable business segments, those properties that are
scheduled to undergo operator or business model transitions, or
have transitioned operators or business models after the start of
the prior comparison period.
Constant Currency
To eliminate the impact of exchange rate movements, all
portfolio performance-based disclosures assume constant exchange
rates across comparable periods, using the following methodology:
the current period’s results are shown in actual reported USD,
while prior comparison period’s results are adjusted and converted
to USD based on the average exchange rate for the current
period.
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version on businesswire.com: https://www.businesswire.com/news/home/20240801507402/en/
BJ Grant (877) 4-VENTAS
Ventas (NYSE:VTR)
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