Exhibit 99.1
Ventas Reports 2017 Third Quarter Results
- Earnings Growth and Enhanced Financial Strength
- Property Level Growth Across All Segments; Updated and Improved 2017 Guidance
- Over $600 Million of Strategic Dispositions with Gains Exceeding $500 Million
- Expansion of Attractive University-Based Life Science Business
CHICAGO--(BUSINESS WIRE)--October 27, 2017--Ventas, Inc. (NYSE: VTR) today announced its results for the third quarter ended September 30, 2017:
- Income from continuing operations per diluted common share for the third quarter 2017 grew five percent to $0.44 compared to the same period in 2016. The increase from the third quarter 2016 was driven by improved property performance, accretive investments and lower transaction costs. These benefits were partially offset by the impact of dispositions and loan repayments and $10 million, or approximately $0.03 per share, of current period expenses related to natural disasters (the “natural disaster expenses”).
- Normalized Funds From Operations (“FFO”) per diluted common share for the third quarter 2017 grew one percent to $1.04 compared to the same period in 2016. The increase from the third quarter 2016 was principally due to improved property performance and accretive investments, partially offset by the impact of dispositions and loan repayments.
- Reported FFO per diluted common share, as defined by the National Association of Real Estate Investment Trusts (“NAREIT FFO”), for the third quarter 2017 grew two percent to $1.02 compared to the same period in 2016. The increase from the third quarter 2016 was principally due to the same items as described for normalized FFO, but NAREIT FFO also includes the net benefit of lower transaction costs partially offset by natural disaster expenses.
Strong Results Fueled by the Ventas Advantage
“We delivered yet another strong quarter for our shareholders. With positive earnings and property growth, improved financial strength and recognition of over $500 million in gains from our ongoing divestiture of our skilled nursing assets, we are in an excellent position,” said Debra A. Cafaro, Ventas Chairman and Chief Executive Officer. “We are pleased to improve our 2017 property guidance and to accelerate the expansion of our university-based life science business through acquisitions and exciting ground-up developments with top-tier research institutions. The Ventas Advantage of a high-quality, diversified portfolio, leading platforms with care providers, developers, universities and health networks, and a consistent cohesive team will continue to fuel our success.”
Portfolio Performance
- The Company’s third quarter 2017 same-store total portfolio (1,045 assets) cash net operating income (“NOI”) grew 2.1 percent compared to the same period in 2016. Same-store cash NOI growth by segment follows:
- The triple-net leased portfolio increased 3.8 percent, driven by in-place lease escalations;
- The seniors housing operating portfolio (“SHOP”) grew 0.6 percent, supported by continued growth in high-barrier markets, largely offset by the impact of new deliveries in select markets; and
- The medical office building (“MOB”) portfolio rose 1.5 percent, supported by lease escalations and a strong tenant retention rate.
- The above results exclude the impact of natural disaster expenses recorded in the third quarter 2017.
Third Quarter 2017 and Recent Highlights
- The Company is further building out its institutional life science business through development and acquisition, with both existing university relationships and newly-created ones:
- Expansion of Ventas’s university footprint with the pending acquisition of a 262,000 square foot class-A life science building affiliated with a AA-rated research university that is a leading recipient of National Institutes of Health funding and an awardee of a Bill & Melinda Gates Foundation grant. The property is located in a thriving life science, medical and research campus, is 82 percent occupied and has potential for increased occupancy and NOI.
- Expansion of existing university relationships through commitment to a new $62 million life science and innovation center development affiliated with Brown University. This building, located in the growing sub-market adjacent to the Company’s recently opened South Street Landing project in Providence, Rhode Island, is 80 percent pre-leased to tenants including Brown, Johnson & Johnson and Cambridge Innovation Center. The project broke ground in the third quarter and will be a magnet to convene universities, private enterprise and entrepreneurs, and to spawn new companies.
- Ventas funded investments of over $80 million, including $67 million for the Company’s share of development and redevelopment projects during the quarter for projects currently underway.
- During and immediately following the quarter, Ventas sold properties and received final repayments on loans receivable for proceeds of $630 million, with gains exceeding $500 million, consisting principally of:
- The Company’s completed sales of 29 of its Kindred Healthcare, Inc. (NYSE: KND) (“Kindred”) skilled nursing facilities (“SNFs”) for proceeds of approximately $570 million. The Company continues to expect total aggregate proceeds of $700 million from sales of its 36 Kindred SNFs in 2017, representing a seven percent yield on cash rent and an eight percent GAAP yield. Following the sales of the Company’s Kindred SNFs, Ventas’s percentage of NOI received from SNFs will be only one percent of its aggregate NOI.
- The Company's credit profile, liquidity and financial health were excellent in the third quarter, including:
- Sequential improvement in Net Debt to Adjusted Pro Forma EBITDA to 5.7x;
- Sequential improvement in total indebtedness to gross asset value to 39 percent at quarter end; and
- Exceptional fixed charge coverage of 4.6x at quarter end.
- Ventas paid its shareholders a quarterly dividend of $0.775 per share, a six percent year-over-year increase.
- In September, Ventas closed a $400 million dollar revolving construction credit facility. The facility increases the Company’s liquidity and is designed to facilitate funding its growing development pipeline with its attractive platform partners, including Wexford, PMB Medical, Sunrise and Atria.
- Currently, the Company has excellent liquidity with $2.9 billion of available borrowing capacity and over $100 million of cash on hand.
Other Updates
- The Company intends to partner with an institutional investor in a to-be-established joint venture (the “JV”) that will own one of the Company’s existing senior living portfolios (the “Portfolio”). The Portfolio contains over 70 private pay senior living assets currently operated by Elmcroft Senior Living under a Master Lease with the Company. Ventas also has formed a strategic relationship with a seniors housing operator recently founded by a team of experienced senior living executives, led by Kai Hsiao, with a demonstrated track record of value creation and success. The new management company is expected to begin operating the Portfolio, and the JV is expected to close, in early 2018. The Company is in the preliminary stages of the transactions, and there can be no assurance whether, when or on what terms the transactions will be completed.
Continued Sustainability and Leadership Excellence
- Ventas Chairman and Chief Executive Officer Debra A. Cafaro was recognized by the Harvard Business Review as one of “The Best-Performing CEOs in the World.” She is one of 23 CEOs named to the Harvard Business Review list for four consecutive years and one of only two women on this year’s list. Ventas’s financial performance ranked 32nd of 898 companies globally for Ms. Cafaro’s tenure, which exceeds 18 years.
- Ventas’s leadership in environmental, social and governance (“ESG”) matters was recognized by two prominent benchmarking organizations:
- The Company was included in the Dow Jones Sustainability™ North America Index for the first time, ranking in the top quartile of real estate companies in North America across a broad spectrum of ESG metrics.
- In the 2017 GRESB real estate ESG assessment, Ventas ranked first among the three listed healthcare real estate company participants, retained its Green Star designation for the fourth consecutive year and improved its score by nearly 10 percent. Ventas also achieved an “A” ranking, the highest possible score, on the new GRESB Public Disclosure Assessment, recognizing the Company’s focus on transparency and public reporting.
Updated 2017 Guidance
Ventas updated and improved its expectations for full year 2017 same-store cash NOI growth as follows:
| Full Year 2017 Projected Same-Store Cash NOI Growth | ||||||||
| Current Guidance | 07/28/2017 Guidance | |||||||
| Low | High | Low | High | |||||
| Triple-Net | 3% | 3.5% | 2.5% | 3.5% | ||||
| SHOP | 0.5% | 1.5% | 0% | 2% | ||||
| MOB | 1.5% | 2% | 1% | 2% | ||||
| Total Company | 2% | 2.5% | 1.5% | 2.5% | ||||
Ventas expects income from continuing operations per diluted common share to range between $1.63 and $1.74 and NAREIT FFO per diluted common share to range between $4.07 and $4.12, both modestly lower than previously disclosed guidance principally due to the $0.03 per share of natural disaster expenses in the third quarter 2017.
The Company projects normalized FFO per diluted common share to now range between $4.13 and $4.16. The midpoint of the Company’s narrowed normalized FFO per share range remains unchanged from its previously disclosed guidance because improved property performance offsets the accelerated completion of the Company’s Kindred SNF sales.
No undisclosed material acquisitions or dispositions, loan repayments or capital activity are included in guidance. The Company expects to invest in future growth by funding approximately $300 million in development and redevelopment projects for the full year 2017, including attractive new ground-up medical office and life science developments.
The 2017 outlook assumes approximately 359 million weighted average fully-diluted shares. A reconciliation of the Company’s guidance to the Company’s projected GAAP measures is included in this press release.
The Company’s guidance is based on a number of other assumptions that are subject to change and many of which are outside the control of the Company. In particular, the Company’s estimate of natural disaster expenses is preliminary and subject to change. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.
Third Quarter 2017 Conference Call
Ventas will hold a conference call to discuss this earnings release today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The dial-in number for the conference call is (844) 776-7841 (or +1 (661) 378-9542 for international callers). The participant passcode is “Ventas.” The conference call is being webcast live by NASDAQ OMX and can be accessed at the Company’s website at www.ventasreit.com. A replay of the webcast will be available following the call online, or by calling (855) 859-2056 (or +1 (404) 537-3406 for international callers), passcode 92386070, beginning at approximately 2:00 p.m. Eastern Time and will remain for 36 days.
Ventas, Inc., an S&P 500 company, is a leading real estate investment trust. Its diverse portfolio of more than 1,200 assets in the United States, Canada and the United Kingdom consists of seniors housing communities, medical office buildings, life science and innovation centers, inpatient rehabilitation and long-term acute care facilities, health systems and skilled nursing facilities. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. References to “Ventas” or the “Company” mean Ventas, Inc. and its consolidated subsidiaries unless otherwise expressly noted. More information about Ventas and Lillibridge can be found at www.ventasreit.com and www.lillibridge.com.
Supplemental information regarding the Company can be found on the Company’s website under the “Investor Relations” section or at www.ventasreit.com/investor-relations/annual-reports---supplemental-information. A comprehensive listing of the Company’s properties is available at www.ventasreit.com/our-portfolio/properties-by-stateprovince.
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company’s or its tenants’, operators’, borrowers’ or managers’ expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, merger or acquisition integration, growth opportunities, expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of management for future operations and statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ from the Company’s expectations. The Company does not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.
The Company’s actual future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s filings with the Securities and Exchange Commission. These factors include without limitation: (a) the ability and willingness of the Company’s tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with the Company, including, in some cases, their obligations to indemnify, defend and hold harmless the Company from and against various claims, litigation and liabilities; (b) the ability of the Company’s tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness; (c) the Company’s success in implementing its business strategy and the Company’s ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (d) macroeconomic conditions such as a disruption of or lack of access to the capital markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States of its obligations, and changes in the federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates; (e) the nature and extent of future competition, including new construction in the markets in which the Company’s seniors housing communities and medical office buildings (“MOBs”) are located; (f) the extent and effect of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates; (g) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors; (h) the ability of the Company’s tenants, operators and managers, as applicable, to comply with laws, rules and regulations in the operation of the Company’s properties, to deliver high-quality services, to attract and retain qualified personnel and to attract residents and patients; (i) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and the effect of those changes on the Company’s revenues, earnings and funding sources; (j) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (k) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (l) final determination of the Company’s taxable net income for the year ending December 31, 2017; (m) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases, the Company’s ability to reposition its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations, including indemnification obligations, the Company may incur in connection with the replacement of an existing tenant; (n) risks associated with the Company’s senior living operating portfolio, such as factors that can cause volatility in the Company’s operating income and earnings generated by those properties, including without limitation national and regional economic conditions, costs of food, materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results for those properties; (o) changes in exchange rates for any foreign currency in which the Company may, from time to time, conduct business; (p) year-over-year changes in the Consumer Price Index or the UK Retail Price Index and the effect of those changes on the rent escalators contained in the Company’s leases and the Company’s earnings; (q) the Company’s ability and the ability of its tenants, operators, borrowers and managers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers; (r) the impact of increased operating costs and uninsured professional liability claims on the Company’s liquidity, financial condition and results of operations or that of the Company’s tenants, operators, borrowers and managers, and the ability of the Company and the Company’s tenants, operators, borrowers and managers to accurately estimate the magnitude of those claims; (s) risks associated with the Company’s MOB portfolio and operations, including the Company’s ability to successfully design, develop and manage MOBs and to retain key personnel; (t) the ability of the hospitals on or near whose campuses the Company’s MOBs are located and their affiliated health systems to remain competitive and financially viable and to attract physicians and physician groups; (u) risks associated with the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (v) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (w) the impact of market or issuer events on the liquidity or value of the Company’s investments in marketable securities; (x) consolidation activity in the seniors housing and healthcare industries resulting in a change of control of, or a competitor’s investment in, one or more of the Company’s tenants, operators, borrowers or managers or significant changes in the senior management of the Company’s tenants, operators, borrowers or managers; (y) the impact of litigation or any financial, accounting, legal or regulatory issues that may affect the Company or its tenants, operators, borrowers or managers; and (z) changes in accounting principles, or their application or interpretation, and the Company’s ability to make estimates and the assumptions underlying the estimates, which could have an effect on the Company’s earnings.
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2017 | 2017 | 2017 | 2016 | 2016 | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Real estate investments: | ||||||||||||||||||||
| Land and improvements | $ | 2,121,214 | $ | 2,117,692 | $ | 2,123,266 | $ | 2,089,591 | $ | 2,089,329 | ||||||||||
| Buildings and improvements | 21,935,860 | 21,827,419 | 21,869,961 | 21,516,396 | 21,551,049 | |||||||||||||||
| Construction in progress | 306,095 | 281,093 | 213,281 | 210,599 | 192,848 | |||||||||||||||
| Acquired lease intangibles | 1,536,476 | 1,534,173 | 1,532,365 | 1,510,629 | 1,522,708 | |||||||||||||||
| 25,899,645 | 25,760,377 | 25,738,873 | 25,327,215 | 25,355,934 | ||||||||||||||||
| Accumulated depreciation and amortization | (5,434,772 | ) | (5,220,611 | ) | (5,123,144 | ) | (4,932,461 | ) | (4,754,532 | ) | ||||||||||
| Net real estate property | 20,464,873 | 20,539,766 | 20,615,729 | 20,394,754 | 20,601,402 | |||||||||||||||
| Secured loans receivable and investments, net | 1,352,434 | 1,395,404 | 1,398,417 | 702,021 | 821,663 | |||||||||||||||
| Investments in unconsolidated real estate entities | 117,185 | 119,794 | 108,976 | 95,921 | 97,814 | |||||||||||||||
| Net real estate investments | 21,934,492 | 22,054,964 | 22,123,122 | 21,192,696 | 21,520,879 | |||||||||||||||
| Cash and cash equivalents | 85,063 | 103,353 | 91,284 | 286,707 | 89,279 | |||||||||||||||
| Escrow deposits and restricted cash | 76,522 | 68,343 | 92,175 | 80,647 | 89,521 | |||||||||||||||
| Goodwill | 1,034,497 | 1,034,054 | 1,033,484 | 1,033,225 | 1,043,075 | |||||||||||||||
| Assets held for sale | 68,926 | 89,569 | 61,983 | 54,961 | 195,252 | |||||||||||||||
| Other assets | 540,295 | 505,475 | 517,283 | 518,364 | 488,258 | |||||||||||||||
| Total assets | $ | 23,739,795 | $ | 23,855,758 | $ | 23,919,331 | $ | 23,166,600 | $ | 23,426,264 | ||||||||||
| Liabilities and equity | ||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Senior notes payable and other debt | $ | 11,424,145 | $ | 11,907,997 | $ | 11,943,733 | $ | 11,127,326 | $ | 11,252,327 | ||||||||||
| Accrued interest | 95,684 | 87,248 | 78,219 | 83,762 | 70,790 | |||||||||||||||
| Accounts payable and other liabilities | 943,800 | 929,573 | 946,674 | 907,928 | 930,103 | |||||||||||||||
| Liabilities related to assets held for sale | 9,837 | 9,812 | 1,389 | 1,462 | 77,608 | |||||||||||||||
| Deferred income taxes | 296,272 | 296,822 | 294,057 | 316,641 | 315,713 | |||||||||||||||
| Total liabilities | 12,769,738 | 13,231,452 | 13,264,072 | 12,437,119 | 12,646,541 | |||||||||||||||
| Redeemable OP unitholder and noncontrolling interests | 171,813 | 182,154 | 171,384 | 200,728 | 209,278 | |||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||
| Equity: | ||||||||||||||||||||
| Ventas stockholders' equity: | ||||||||||||||||||||
| Preferred stock, $1.00 par value; 10,000 shares authorized, unissued | — | — | — | — | — | |||||||||||||||
| Common stock, $0.25 par value; 356,163; 356,134; 354,863; 354,125; and 353,793 shares issued at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively | 89,023 | 89,016 | 88,698 | 88,514 | 88,431 | |||||||||||||||
| Capital in excess of par value | 13,034,527 | 13,019,023 | 12,944,501 | 12,917,002 | 12,870,566 | |||||||||||||||
| Accumulated other comprehensive loss | (40,780 | ) | (45,035 | ) | (53,657 | ) | (57,534 | ) | (49,614 | ) | ||||||||||
| Retained earnings (deficit) | (2,351,430 | ) | (2,688,946 | ) | (2,564,936 | ) | (2,487,695 | ) | (2,420,766 | ) | ||||||||||
| Treasury stock, 0; 0; 0; 1 and 1 shares at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively | — | — | — | (47 | ) | (78 | ) | |||||||||||||
| Total Ventas stockholders' equity | 10,731,340 | 10,374,058 | 10,414,606 | 10,460,240 | 10,488,539 | |||||||||||||||
| Noncontrolling interests | 66,904 | 68,094 | 69,269 | 68,513 | 81,906 | |||||||||||||||
| Total equity | 10,798,244 | 10,442,152 | 10,483,875 | 10,528,753 | 10,570,445 | |||||||||||||||
| Total liabilities and equity | $ | 23,739,795 | $ | 23,855,758 | $ | 23,919,331 | $ | 23,166,600 | $ | 23,426,264 | ||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues | ||||||||||||||||
| Rental income: | ||||||||||||||||
| Triple-net leased | $ | 212,370 | $ | 210,424 | $ | 634,955 | $ | 635,030 | ||||||||
| Office | 189,506 | 158,273 | 561,641 | 446,496 | ||||||||||||
| 401,876 | 368,697 | 1,196,596 | 1,081,526 | |||||||||||||
| Resident fees and services | 461,700 | 461,974 | 1,386,131 | 1,390,387 | ||||||||||||
| Office building and other services revenue | 3,196 | 4,317 | 9,781 | 17,006 | ||||||||||||
| Income from loans and investments | 32,985 | 31,566 | 85,499 | 78,098 | ||||||||||||
| Interest and other income | 171 | 562 | 854 | 792 | ||||||||||||
| Total revenues | 899,928 | 867,116 | 2,678,861 | 2,567,809 | ||||||||||||
| Expenses | ||||||||||||||||
| Interest | 113,869 | 105,063 | 336,245 | 312,001 | ||||||||||||
| Depreciation and amortization | 213,407 | 208,387 | 655,298 | 666,735 | ||||||||||||
| Property-level operating expenses: | ||||||||||||||||
| Senior living | 315,598 | 312,145 | 936,296 | 932,675 | ||||||||||||
| Office | 60,609 | 48,972 | 174,728 | 136,619 | ||||||||||||
| 376,207 | 361,117 | 1,111,024 | 1,069,294 | |||||||||||||
| Office building services costs | 418 | 974 | 1,708 | 6,277 | ||||||||||||
| General, administrative and professional fees | 33,317 | 31,567 | 100,560 | 95,387 | ||||||||||||
| Loss on extinguishment of debt, net | 511 | 383 | 856 | 3,165 | ||||||||||||
| Merger-related expenses and deal costs | 804 | 16,217 | 8,903 | 25,073 | ||||||||||||
| Other | 13,030 | 2,430 | 16,066 | 8,901 | ||||||||||||
| Total expenses | 751,563 | 726,138 | 2,230,660 | 2,186,833 | ||||||||||||
| Income before unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interests | 148,365 | 140,978 | 448,201 | 380,976 | ||||||||||||
| Income from unconsolidated entities | 750 | 931 | 3,794 | 2,151 | ||||||||||||
| Income tax benefit | 7,815 | 8,537 | 13,119 | 28,507 | ||||||||||||
| Income from continuing operations | 156,930 | 150,446 | 465,114 | 411,634 | ||||||||||||
| Discontinued operations | (19 | ) | (118 | ) | (95 | ) | (755 | ) | ||||||||
| Gain (loss) on real estate dispositions | 458,280 | (144 | ) | 502,288 | 31,779 | |||||||||||
| Net income | 615,191 | 150,184 | 967,307 | 442,658 | ||||||||||||
| Net income attributable to noncontrolling interests | 1,233 | 732 | 3,391 | 1,064 | ||||||||||||
| Net income attributable to common stockholders | $ | 613,958 | $ | 149,452 | $ | 963,916 | $ | 441,594 | ||||||||
| Earnings per common share | ||||||||||||||||
| Basic: | ||||||||||||||||
| Income from continuing operations | $ | 0.44 | $ | 0.43 | $ | 1.31 | $ | 1.20 | ||||||||
| Net income attributable to common stockholders | 1.72 | 0.43 | 2.71 | 1.29 | ||||||||||||
| Diluted: | ||||||||||||||||
| Income from continuing operations | $ | 0.44 | $ | 0.42 | $ | 1.30 | $ | 1.19 | ||||||||
| Net income attributable to common stockholders | 1.71 | 0.42 | 2.69 | 1.28 | ||||||||||||
| Weighted average shares used in computing earnings per common share | ||||||||||||||||
| Basic | 355,929 | 350,274 | 355,110 | 341,610 | ||||||||||||
| Diluted | 359,333 | 354,186 | 358,365 | 345,352 | ||||||||||||
| Dividends declared per common share | $ | 0.775 | $ | 0.73 | $ | 2.325 | $ | 2.19 | ||||||||
| QUARTERLY CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||
| For the Quarters Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2017 | 2017 | 2017 | 2016 | 2016 | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| Rental income: | ||||||||||||||||||||
| Triple-net leased | $ | 212,370 | $ | 213,258 | $ | 209,327 | $ | 210,804 | $ | 210,424 | ||||||||||
| Office | 189,506 | 186,240 | 185,895 | 183,846 | 158,273 | |||||||||||||||
| 401,876 | 399,498 | 395,222 | 394,650 | 368,697 | ||||||||||||||||
| Resident fees and services | 461,700 | 460,243 | 464,188 | 456,919 | 461,974 | |||||||||||||||
| Office building and other services revenue | 3,196 | 3,179 | 3,406 | 4,064 | 4,317 | |||||||||||||||
| Income from loans and investments | 32,985 | 32,368 | 20,146 | 19,996 | 31,566 | |||||||||||||||
| Interest and other income | 171 | 202 | 481 | 84 | 562 | |||||||||||||||
| Total revenues | 899,928 | 895,490 | 883,443 | 875,713 | 867,116 | |||||||||||||||
| Expenses | ||||||||||||||||||||
| Interest | 113,869 | 113,572 | 108,804 | 107,739 | 105,063 | |||||||||||||||
| Depreciation and amortization | 213,407 | 224,108 | 217,783 | 232,189 | 208,387 | |||||||||||||||
| Property-level operating expenses: | ||||||||||||||||||||
| Senior living | 315,598 | 308,625 | 312,073 | 310,303 | 312,145 | |||||||||||||||
| Office | 60,609 | 57,205 | 56,914 | 55,165 | 48,972 | |||||||||||||||
| 376,207 | 365,830 | 368,987 | 365,468 | 361,117 | ||||||||||||||||
| Office building services costs | 418 | 552 | 738 | 1,034 | 974 | |||||||||||||||
| General, administrative and professional fees | 33,317 | 33,282 | 33,961 | 31,488 | 31,567 | |||||||||||||||
| Loss (gain) on extinguishment of debt, net | 511 | 36 | 309 | (386 | ) | 383 | ||||||||||||||
| Merger-related expenses and deal costs | 804 | 6,043 | 2,056 | (438 | ) | 16,217 | ||||||||||||||
| Other | 13,030 | 1,848 | 1,188 | 1,087 | 2,430 | |||||||||||||||
| Total expenses | 751,563 | 745,271 | 733,826 | 738,181 | 726,138 | |||||||||||||||
| Income before unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interests | 148,365 | 150,219 | 149,617 | 137,532 | 140,978 | |||||||||||||||
| Income (loss) from unconsolidated entities | 750 | (106 | ) | 3,150 | 2,207 | 931 | ||||||||||||||
| Income tax benefit | 7,815 | 2,159 | 3,145 | 2,836 | 8,537 | |||||||||||||||
| Income from continuing operations | 156,930 | 152,272 | 155,912 | 142,575 | 150,446 | |||||||||||||||
| Discontinued operations | (19 | ) | (23 | ) | (53 | ) | (167 | ) | (118 | ) | ||||||||||
| Gain (loss) on real estate dispositions | 458,280 | 719 | 43,289 | 66,424 | (144 | ) | ||||||||||||||
| Net income | 615,191 | 152,968 | 199,148 | 208,832 | 150,184 | |||||||||||||||
| Net income attributable to noncontrolling interests | 1,233 | 1,137 | 1,021 | 1,195 | 732 | |||||||||||||||
| Net income attributable to common stockholders | $ | 613,958 | $ | 151,831 | $ | 198,127 | $ | 207,637 | $ | 149,452 | ||||||||||
| Earnings per common share | ||||||||||||||||||||
| Basic: | ||||||||||||||||||||
| Income from continuing operations | $ | 0.44 | $ | 0.43 | $ | 0.44 | $ | 0.40 | $ | 0.43 | ||||||||||
| Net income attributable to common stockholders | 1.72 | 0.43 | 0.56 | 0.59 | 0.43 | |||||||||||||||
| Diluted: | ||||||||||||||||||||
| Income from continuing operations | $ | 0.44 | $ | 0.42 | $ | 0.44 | $ | 0.40 | $ | 0.42 | ||||||||||
| Net income attributable to common stockholders | 1.71 | 0.42 | 0.55 | 0.58 | 0.42 | |||||||||||||||
| Weighted average shares used in computing earnings per common share | ||||||||||||||||||||
| Basic | 355,929 | 355,024 | 354,410 | 353,911 | 350,274 | |||||||||||||||
| Diluted | 359,333 | 358,311 | 357,572 | 357,435 | 354,186 | |||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| For the Nine Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 967,307 | $ | 442,658 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 655,298 | 666,735 | ||||||
| Amortization of deferred revenue and lease intangibles, net | (16,283 | ) | (15,307 | ) | ||||
| Other non-cash amortization | 11,186 | 7,174 | ||||||
| Stock-based compensation | 19,923 | 15,885 | ||||||
| Straight-lining of rental income, net | (17,384 | ) | (21,386 | ) | ||||
| Loss on extinguishment of debt, net | 856 | 3,165 | ||||||
| Gain on real estate dispositions | (502,288 | ) | (31,779 | ) | ||||
| Gain on real estate loan investments | (124 | ) | (2,271 | ) | ||||
| Income tax benefit | (15,619 | ) | (30,832 | ) | ||||
| Income from unconsolidated entities | (767 | ) | (2,151 | ) | ||||
| Gain on re-measurement of equity interest upon acquisition, net | (3,027 | ) | — | |||||
| Distributions from unconsolidated entities | 3,909 | 5,574 | ||||||
| Other | 7,439 | (1,075 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in other assets | (17,598 | ) | 1,753 | |||||
| Increase (decrease) in accrued interest | 12,688 | (10,053 | ) | |||||
| Decrease in accounts payable and other liabilities | (19,277 | ) | (21,944 | ) | ||||
| Net cash provided by operating activities | 1,086,239 | 1,006,146 | ||||||
| Cash flows from investing activities: | ||||||||
| Net investment in real estate property | (262,123 | ) | (1,421,592 | ) | ||||
| Investment in loans receivable and other | (734,033 | ) | (154,949 | ) | ||||
| Proceeds from real estate disposals | 532,137 | 63,561 | ||||||
| Proceeds from loans receivable | 84,361 | 194,063 | ||||||
| Development project expenditures | (210,423 | ) | (94,398 | ) | ||||
| Capital expenditures | (83,387 | ) | (75,296 | ) | ||||
| Distributions from unconsolidated entities | 5,816 | — | ||||||
| Investment in unconsolidated entities | (42,399 | ) | (6,175 | ) | ||||
| Net cash used in investing activities | (710,051 | ) | (1,494,786 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net change in borrowings under revolving credit facility | 384,738 | 46,728 | ||||||
| Proceeds from debt | 1,058,437 | 876,617 | ||||||
| Repayment of debt | (1,225,525 | ) | (916,505 | ) | ||||
| Purchase of noncontrolling interests | (15,809 | ) | (1,604 | ) | ||||
| Payment of deferred financing costs | (26,426 | ) | (6,147 | ) | ||||
| Issuance of common stock, net | 73,596 | 1,265,702 | ||||||
| Cash distribution to common stockholders | (827,285 | ) | (750,402 | ) | ||||
| Cash distribution to redeemable OP unitholders | (5,677 | ) | (6,486 | ) | ||||
| Contributions from noncontrolling interests | 4,402 | 5,926 | ||||||
| Distributions to noncontrolling interests | (9,248 | ) | (5,121 | ) | ||||
| Other | 10,543 | 16,631 | ||||||
| Net cash (used in) provided by financing activities | (578,254 | ) | 525,339 | |||||
| Net (decrease) increase in cash and cash equivalents | (202,066 | ) | 36,699 | |||||
| Effect of foreign currency translation on cash and cash equivalents | 422 | (443 | ) | |||||
| Cash and cash equivalents at beginning of period | 286,707 | 53,023 | ||||||
| Cash and cash equivalents at end of period | $ | 85,063 | $ | 89,279 | ||||
| Supplemental schedule of non-cash activities: | ||||||||
| Assets acquired and liabilities assumed from acquisitions: | ||||||||
| Real estate investments | $ | 206,771 | $ | 59,666 | ||||
| Utilization of funds held for an Internal Revenue Code Section 1031 exchange | (84,995 | ) | (6,954 | ) | ||||
| Other assets | (5,546 | ) | 79,879 | |||||
| Debt | 64,629 | 47,641 | ||||||
| Other liabilities | 64,090 | 60,446 | ||||||
| Deferred income tax liability | (16,116 | ) | 2,279 | |||||
| Noncontrolling interests | 3,627 | 22,225 | ||||||
| Equity issued for redemption of OP and Class C units | 22,694 | 22,970 | ||||||
| QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| For the Quarters Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2017 | 2017 | 2017 | 2016 | 2016 | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income | $ | 615,191 | $ | 152,968 | $ | 199,148 | $ | 208,832 | $ | 150,184 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization | 213,407 | 224,108 | 217,783 | 232,189 | 208,387 | |||||||||||||||
| Amortization of deferred revenue and lease intangibles, net | (5,434 | ) | (5,834 | ) | (5,015 | ) | (5,029 | ) | (5,217 | ) | ||||||||||
| Other non-cash amortization | 4,602 | 4,124 | 2,460 | 3,183 | 2,487 | |||||||||||||||
| Stock-based compensation | 6,527 | 6,695 | 6,701 | 5,073 | 5,848 | |||||||||||||||
| Straight-lining of rental income, net | (6,229 | ) | (5,778 | ) | (5,377 | ) | (6,602 | ) | (5,960 | ) | ||||||||||
| Loss (gain) on extinguishment of debt, net | 511 | 36 | 309 | (386 | ) | 383 | ||||||||||||||
| (Gain) loss on real estate dispositions | (458,280 | ) | (719 | ) | (43,289 | ) | (66,424 | ) | 144 | |||||||||||
| Gain on real estate loan investments | (120 | ) | (4 | ) | — | — | (2,238 | ) | ||||||||||||
| Income tax benefit | (8,515 | ) | (2,959 | ) | (4,145 | ) | (3,395 | ) | (9,389 | ) | ||||||||||
| (Income) loss from unconsolidated entities | (750 | ) | 106 | (123 | ) | (2,207 | ) | (931 | ) | |||||||||||
| Gain on re-measurement of equity interest upon acquisition, net | — | — | (3,027 | ) | — | — | ||||||||||||||
| Distributions from unconsolidated entities | 775 | 754 | 2,380 | 2,024 | 1,701 | |||||||||||||||
| Other | 6,091 | 696 | 652 | (772 | ) | (1,799 | ) | |||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| (Increase) decrease in other assets | (47,532 | ) | 33,648 | (3,714 | ) | 3,807 | (8,856 | ) | ||||||||||||
| Increase (decrease) in accrued interest | 8,138 | 9,291 | (4,741 | ) | 12,657 | (9,284 | ) | |||||||||||||
| Increase (decrease) in accounts payable and other liabilities | 20,601 | (15,607 | ) | (24,271 | ) | (16,755 | ) | 19,950 | ||||||||||||
| Net cash provided by operating activities | 348,983 | 401,525 | 335,731 | 366,195 | 345,410 | |||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Net investment in real estate property | (22,625 | ) | (40,655 | ) | (198,843 | ) | (7,520 | ) | (1,387,139 | ) | ||||||||||
| Investment in loans receivable and other | (15,800 | ) | (16,875 | ) | (701,358 | ) | (3,686 | ) | (2,499 | ) | ||||||||||
| Proceeds from real estate disposals | 512,567 | 19,570 | — | 237,000 | — | |||||||||||||||
| Proceeds from loans receivable | 59,294 | 21,704 | 3,363 | 126,019 | 186,419 | |||||||||||||||
| Development project expenditures | (67,154 | ) | (56,817 | ) | (86,452 | ) | (49,249 | ) | (24,719 | ) | ||||||||||
| Capital expenditures | (27,435 | ) | (32,117 | ) | (23,835 | ) | (42,160 | ) | (28,371 | ) | ||||||||||
| Distributions from unconsolidated entities | 5,816 | — | — | — | — | |||||||||||||||
| Investment in unconsolidated entities | (3,351 | ) | (12,108 | ) | (26,940 | ) | (261 | ) | (1,910 | ) | ||||||||||
| Net cash provided by (used in) investing activities | 441,312 | (117,298 | ) | (1,034,065 | ) | 260,143 | (1,258,219 | ) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Net change in borrowings under revolving credit facility | 20,282 | 341,634 | 22,822 | (82,365 | ) | 22,424 | ||||||||||||||
| Proceeds from debt | 29,928 | 231,295 | 797,214 | 16,601 | 460,400 | |||||||||||||||
| Repayment of debt | (568,989 | ) | (636,040 | ) | (20,496 | ) | (105,608 | ) | (176,168 | ) | ||||||||||
| Purchase of noncontrolling interests | — | — | (15,809 | ) | (1,242 | ) | — | |||||||||||||
| Payment of deferred financing costs | (6,739 | ) | (13,303 | ) | (6,384 | ) | (408 | ) | (2,303 | ) | ||||||||||
| Issuance of common stock, net | — | 73,596 | — | 20,978 | 887,963 | |||||||||||||||
| Cash distribution to common stockholders | (276,320 | ) | (275,597 | ) | (275,368 | ) | (274,566 | ) | (256,931 | ) | ||||||||||
| Cash distribution to redeemable OP unitholders | (1,957 | ) | (1,827 | ) | (1,893 | ) | (2,154 | ) | (2,049 | ) | ||||||||||
| Contributions from noncontrolling interests | 2,175 | 125 | 2,102 | 1,400 | 246 | |||||||||||||||
| Distributions to noncontrolling interests | (5,092 | ) | (1,746 | ) | (2,410 | ) | (1,758 | ) | (1,539 | ) | ||||||||||
| Other | 841 | 6,405 | 3,297 | 621 | 13,009 | |||||||||||||||
| Net cash (used in) provided by financing activities | (805,871 | ) | (275,458 | ) | 503,075 | (428,501 | ) | 945,052 | ||||||||||||
| Net (decrease) increase in cash and cash equivalents | (15,576 | ) | 8,769 | (195,259 | ) | 197,837 | 32,243 | |||||||||||||
| Effect of foreign currency translation on cash and cash equivalents | (2,714 | ) | 3,300 | (164 | ) | (409 | ) | (286 | ) | |||||||||||
| Cash and cash equivalents at beginning of period | 103,353 | 91,284 | 286,707 | 89,279 | 57,322 | |||||||||||||||
| Cash and cash equivalents at end of period | $ | 85,063 | $ | 103,353 | $ | 91,284 | $ | 286,707 | $ | 89,279 | ||||||||||
| QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) | |||||||||||||||||||
| (In thousands) | |||||||||||||||||||
| For the Quarters Ended | |||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
| 2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||
| Supplemental schedule of non-cash activities: | |||||||||||||||||||
| Assets acquired and liabilities assumed from acquisitions: | |||||||||||||||||||
| Real estate investments | $ | 1,505 | $ | 16,347 | $ | 188,919 | $ | 9,426 | $ | 51,001 | |||||||||
| Utilization of funds held for an Internal Revenue Code Section 1031 exchange | — | — | (84,995 | ) | — | — | |||||||||||||
| Other assets | (1,450 | ) | (3,723 | ) | (373 | ) | 10,158 | 79,018 | |||||||||||
| Debt | — | 12,167 | 52,462 | — | 47,641 | ||||||||||||||
| Other liabilities | (1,664 | ) | (2,922 | ) | 68,676 | 12,190 | 57,808 | ||||||||||||
| Deferred income tax liability | 64 | 3,384 | (19,564 | ) | 7,102 | 2,345 | |||||||||||||
| Noncontrolling interests | 1,655 | (5 | ) | 1,977 | 292 | 22,225 | |||||||||||||
| Equity issued for redemption of OP and Class C units | 335 | 288 | 22,071 | 1,348 | 2,200 | ||||||||||||||
| NON-GAAP FINANCIAL MEASURES RECONCILIATION | |||||||||||||||||||||||||||||||
Funds From Operations (FFO) and Funds Available for Distribution (FAD)1 | |||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||||||||||||||||
| YOY | |||||||||||||||||||||||||||||||
| 2016 | 2017 | Growth | |||||||||||||||||||||||||||||
| Q3 | Q4 | FY | Q1 | Q2 | Q3 | YTD | '16-'17 | ||||||||||||||||||||||||
| Income from continuing operations | $ | 150,446 | $ | 142,575 | $ | 554,209 | $ | 155,912 | $ | 152,272 | $ | 156,930 | $ | 465,114 | 4 | % | |||||||||||||||
| Income from continuing operations per share | $ | 0.42 | $ | 0.40 | $ | 1.59 | $ | 0.44 | $ | 0.42 | $ | 0.44 | $ | 1.30 | 5 | % | |||||||||||||||
| Discontinued operations | (118 | ) | (167 | ) | (922 | ) | (53 | ) | (23 | ) | (19 | ) | (95 | ) | |||||||||||||||||
| (Loss) gain on real estate dispositions | (144 | ) | 66,424 | 98,203 | 43,289 | 719 | 458,280 | 502,288 | |||||||||||||||||||||||
| Net income | 150,184 | 208,832 | 651,490 | 199,148 | 152,968 | 615,191 | 967,307 | ||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 732 | 1,195 | 2,259 | 1,021 | 1,137 | 1,233 | 3,391 | ||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | 149,452 | $ | 207,637 | $ | 649,231 | $ | 198,127 | $ | 151,831 | $ | 613,958 | $ | 963,916 | 311 | % | |||||||||||||||
| Net income attributable to common stockholders per share | $ | 0.42 | $ | 0.58 | $ | 1.86 | $ | 0.55 | $ | 0.42 | $ | 1.71 | $ | 2.69 | 307 | % | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||
| Depreciation and amortization on real estate assets | 206,560 | 230,353 | 891,985 | 215,961 | 222,347 | 211,784 | 650,092 | ||||||||||||||||||||||||
| Depreciation on real estate assets related to noncontrolling interests | (1,865 | ) | (2,031 | ) | (7,785 | ) | (1,995 | ) | (1,817 | ) | (1,911 | ) | (5,723 | ) | |||||||||||||||||
| Depreciation on real estate assets related to unconsolidated entities | 1,113 | 1,432 | 5,754 | 1,187 | 1,458 | 855 | 3,500 | ||||||||||||||||||||||||
| Gain on re-measurement of equity interest upon acquisition, net | — | — | — | (3,027 | ) | — | — | (3,027 | ) | ||||||||||||||||||||||
| Loss (gain) on real estate dispositions | 144 | (66,424 | ) | (98,203 | ) | (43,289 | ) | (719 | ) | (458,280 | ) | (502,288 | ) | ||||||||||||||||||
| Gain on real estate dispositions related to noncontrolling interests | — | — | — | — | — | 18 | 18 | ||||||||||||||||||||||||
| Loss (gain) on real estate dispositions related to unconsolidated entities | — | 56 | (439 | ) | 23 | (82 | ) | (986 | ) | (1,045 | ) | ||||||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||||||||||
| Loss on real estate dispositions | — | — | 1 | — | — | — | — | ||||||||||||||||||||||||
| Subtotal: FFO add-backs | 205,952 | 163,386 | 791,313 | 168,860 | 221,187 | (248,520 | ) | 141,527 | |||||||||||||||||||||||
| Subtotal: FFO add-backs per share | $ | 0.58 | $ | 0.46 | $ | 2.27 | $ | 0.47 | $ | 0.62 | $ | (0.69 | ) | $ | 0.39 | ||||||||||||||||
| FFO (NAREIT) attributable to common stockholders | $ | 355,404 | $ | 371,023 | $ | 1,440,544 | $ | 366,987 | $ | 373,018 | $ | 365,438 | $ | 1,105,443 | 3 | % | |||||||||||||||
| FFO (NAREIT) attributable to common stockholders per share | $ | 1.00 | $ | 1.04 | $ | 4.13 | $ | 1.03 | $ | 1.04 | $ | 1.02 | $ | 3.08 | 2 | % | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||
| Change in fair value of financial instruments | 14 | 134 | 62 | 23 | (153 | ) | 8 | (122 | ) | ||||||||||||||||||||||
| Non-cash income tax benefit | (9,389 | ) | (3,395 | ) | (34,227 | ) | (4,145 | ) | (2,959 | ) | (8,515 | ) | (15,619 | ) | |||||||||||||||||
| Loss (gain) on extinguishment of debt, net | 383 | (386 | ) | 2,779 | 403 | 47 | 486 | 936 | |||||||||||||||||||||||
| Loss (gain) on non-real estate dispositions related to unconsolidated entities | 28 | — | (557 | ) | 4 | (16 | ) | (22 | ) | (34 | ) | ||||||||||||||||||||
| Merger-related expenses, deal costs and re-audit costs | 16,965 | (479 | ) | 28,290 | 3,129 | 7,036 | 2,741 | 12,906 | |||||||||||||||||||||||
| Amortization of other intangibles | 438 | 438 | 1,752 | 438 | 365 | 328 | 1,131 | ||||||||||||||||||||||||
| Unusual items related to unconsolidated entities | — | — | — | 212 | 280 | 1,207 | 1,699 | ||||||||||||||||||||||||
| Non-cash impact of changes to equity plan | — | — | — | 999 | 1,711 | 1,372 | 4,082 | ||||||||||||||||||||||||
| Natural disaster expenses (recoveries), net | — | — | — | — | — | 9,810 | 9,810 | ||||||||||||||||||||||||
| Subtotal: normalized FFO add-backs | 8,439 | (3,688 | ) | (1,901 | ) | 1,063 | 6,311 | 7,415 | 14,789 | ||||||||||||||||||||||
| Subtotal: normalized FFO add-backs per share | $ | 0.02 | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.00 | $ | 0.02 | $ | 0.02 | $ | 0.04 | |||||||||||||||
| Normalized FFO attributable to common stockholders | $ | 363,843 | $ | 367,335 | $ | 1,438,643 | $ | 368,050 | $ | 379,329 | $ | 372,853 | $ | 1,120,232 | 2 | % | |||||||||||||||
| Normalized FFO attributable to common stockholders per share | $ | 1.03 | $ | 1.03 | $ | 4.13 | $ | 1.03 | $ | 1.06 | $ | 1.04 | $ | 3.13 | 1 | % | |||||||||||||||
| Non-cash items included in normalized FFO: | |||||||||||||||||||||||||||||||
| Amortization of deferred revenue and lease intangibles, net | (5,217 | ) | (5,029 | ) | (20,336 | ) | (5,015 | ) | (5,834 | ) | (5,434 | ) | (16,283 | ) | |||||||||||||||||
| Other non-cash amortization, including fair market value of debt | 2,487 | 3,183 | 10,357 | 2,460 | 4,124 | 4,602 | 11,186 | ||||||||||||||||||||||||
| Stock-based compensation | 5,848 | 5,073 | 20,958 | 5,702 | 4,984 | 5,155 | 15,841 | ||||||||||||||||||||||||
| Straight-lining of rental income, net | (5,960 | ) | (6,602 | ) | (27,988 | ) | (5,377 | ) | (5,778 | ) | (6,229 | ) | (17,384 | ) | |||||||||||||||||
| Subtotal: non-cash items included in normalized FFO | (2,842 | ) | (3,375 | ) | (17,009 | ) | (2,230 | ) | (2,504 | ) | (1,906 | ) | (6,640 | ) | |||||||||||||||||
| Capital expenditures | (29,991 | ) | (44,540 | ) | (124,621 | ) | (24,919 | ) | (33,148 | ) | (30,899 | ) | (88,966 | ) | |||||||||||||||||
| Normalized FAD attributable to common stockholders | $ | 331,010 | $ | 319,420 | $ | 1,297,013 | $ | 340,901 | $ | 343,677 | $ | 340,048 | $ | 1,024,626 | 3 | % | |||||||||||||||
| Merger-related expenses, deal costs and re-audit costs | (16,965 | ) | 479 | (28,290 | ) | (3,129 | ) | (7,036 | ) | (2,741 | ) | (12,906 | ) | ||||||||||||||||||
| Unusual items related to unconsolidated entities | — | — | — | (212 | ) | (280 | ) | (1,207 | ) | (1,699 | ) | ||||||||||||||||||||
| FAD attributable to common stockholders | $ | 314,045 | $ | 319,899 | $ | 1,268,723 | $ | 337,560 | $ | 336,361 | $ | 336,100 | $ | 1,010,021 | 7 | % | |||||||||||||||
| Weighted average diluted shares | 354,186 | 357,435 | 348,390 | 357,572 | 358,311 | 359,333 | 358,365 | ||||||||||||||||||||||||
| 1 Per share amounts may not add due to rounding. Per share quarterly amounts may not add to annual per share amounts due to material changes in the Company’s weighted average diluted share count, if any. | |||||||||||||||||||||||||||||||
Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers FFO, normalized FFO, FAD and normalized FAD to be appropriate supplemental measures of operating performance of an equity REIT. In particular, the Company believes that normalized FFO is useful because it allows investors, analysts and Company management to compare the Company’s operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by non-recurring items and other non-operational events such as transactions and litigation. In some cases, the Company provides information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and Company management to assess the impact of those items on the Company’s financial results.
The Company uses the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO. NAREIT defines FFO as net income attributable to common stockholders (computed in accordance with GAAP) excluding gains or losses from sales of real estate property, including gains or losses on re-measurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. The Company defines normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to acquisition lawsuits; (b) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of the Company’s debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to the Company’s executive equity compensation plan and derivative transactions that have non-cash mark-to-market impacts on the Company’s income statement; (d) the financial impact of contingent consideration, severance-related costs and charitable donations made to the Ventas Charitable Foundation; (e) gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; (f) gains and losses on non-real estate dispositions and other unusual items related to unconsolidated entities; (g) expenses related to the re-audit and re-review in 2014 of the Company’s historical financial statements and related matters; and (h) net expenses or recoveries related to natural disasters. Normalized FAD represents normalized FFO excluding non-cash components, which include straight-line rental adjustments, and deducting capital expenditures, including tenant allowances and leasing commissions. FAD represents normalized FAD after subtracting merger-related expenses, deal costs and re-audit costs and unusual items related to unconsolidated entities.
FFO, normalized FFO, FAD and normalized FAD presented herein may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO, normalized FFO, FAD and normalized FAD should not be considered as alternatives to net income or income from continuing operations (both determined in accordance with GAAP) as indicators of the Company’s financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company’s liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company’s needs. The Company believes that income from continuing operations is the most comparable GAAP measure because it provides insight into the Company’s continuing operations. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO, normalized FFO, FAD and normalized FAD should be examined in conjunction with net income and income from continuing operations as presented elsewhere herein.
| NON-GAAP FINANCIAL MEASURES RECONCILIATION | ||||||||||||||||
EPS, FFO and FAD Guidance Attributable to Common Stockholders 1,2 | ||||||||||||||||
| (Dollars in millions, except per share amounts) | ||||||||||||||||
| Tentative / Preliminary and Subject to Change | ||||||||||||||||
| FY2017 - Guidance | 2017 - Per Share | |||||||||||||||
| Low | High | Low | High | |||||||||||||
| Income from Continuing Operations | $ | 584 | $ | 623 | $ | 1.63 | $ | 1.74 | ||||||||
| Gain on Real Estate Dispositions | 705 | 725 | 1.97 | 2.02 | ||||||||||||
| Other Adjustments 3 | (4 | ) | (5 | ) | (0.01 | ) | (0.01 | ) | ||||||||
| Net Income Attributable to Common Stockholders | $ | 1,285 | $ | 1,343 | $ | 3.58 | $ | 3.74 | ||||||||
| Depreciation and Amortization Adjustments | 884 | 865 | 2.47 | 2.41 | ||||||||||||
| Gain on Real Estate Dispositions | (705 | ) | (725 | ) | (1.97 | ) | (2.02 | ) | ||||||||
| Other Adjustments 3 | (4 | ) | (4 | ) | (0.01 | ) | (0.01 | ) | ||||||||
| FFO (NAREIT) Attributable to Common Stockholders | $ | 1,460 | $ | 1,479 | $ | 4.07 | $ | 4.12 | ||||||||
| Merger-Related Expenses, Deal Costs and Re-Audit Costs | 15 | 13 | 0.04 | 0.04 | ||||||||||||
| Other Adjustments 3 | 6 | 1 | 0.02 | 0.00 | ||||||||||||
| Normalized FFO Attributable to Common Stockholders | $ | 1,481 | $ | 1,493 | $ | 4.13 | $ | 4.16 | ||||||||
| % Year-Over-Year Growth | 0 | % | 1 | % | ||||||||||||
| Non-Cash Items Included in Normalized FFO | (7 | ) | (7 | ) | ||||||||||||
| Capital Expenditures | (130 | ) | (136 | ) | ||||||||||||
| Normalized FAD Attributable to Common Stockholders | $ | 1,344 | $ | 1,350 | ||||||||||||
| Merger-Related Expense, Deal Costs and Re-Audit Costs | (15 | ) | (13 | ) | ||||||||||||
| Other Adjustments 3 | (3 | ) | (3 | ) | ||||||||||||
| FAD Attributable to Common Stockholders | $ | 1,326 | $ | 1,334 | ||||||||||||
| Weighted Average Diluted Shares (in millions) | 359 | 359 | ||||||||||||||
1 | The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company’s expectations depending on factors discussed in the Company’s filings with the Securities and Exchange Commission. | |
2 | Per share quarterly amounts may not add to annual per share amounts due to changes in the Company's weighted average diluted share count, if any. | |
3 | See table titled “Funds From Operations (FFO) and Funds Available for Distribution (FAD)” for detailed breakout of adjustments for each respective category. |
NON-GAAP FINANCIAL MEASURES RECONCILIATION |
Net Debt to Adjusted Pro Forma EBITDA |
(Dollars in thousands) |
The following table illustrates net debt to pro forma earnings, which includes amounts in discontinued operations, before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding gains or losses on extinguishment of debt, consolidated joint venture partners’ share of EBITDA, merger-related expenses and deal costs, expenses related to the re-audit and re-review in 2014 of the Company’s historical financial statements, net gains or losses on real estate activity, gains or losses on re-measurement of equity interest upon acquisition, changes in the fair value of financial instruments, unrealized foreign currency gains or losses and net expenses or recoveries related to natural disasters, and including the Company’s share of EBITDA from unconsolidated entities and adjustments for other immaterial or identified items (“Adjusted EBITDA”).
The following information considers the pro forma effect on Adjusted EBITDA of the Company’s activity during the three months ended September 30, 2017, as if the transactions had been consummated as of the beginning of the period (“Adjusted Pro Forma EBITDA”).
The Company believes that net debt, Adjusted Pro Forma EBITDA and net debt to Adjusted Pro Forma EBITDA are useful to investors, analysts and Company management because they allow the comparison of the Company’s credit strength between periods and to other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual credit quality.
| Income from continuing operations | $ | 156,930 | ||
| Discontinued operations | (19 | ) | ||
| Gain on real estate dispositions | 458,280 | |||
| Net income | 615,191 | |||
| Net income attributable to noncontrolling interests | 1,233 | |||
| Net income attributable to common stockholders | 613,958 | |||
| Adjustments: | ||||
| Interest | 113,869 | |||
| Loss on extinguishment of debt, net | 511 | |||
| Taxes (including tax amounts in general, administrative and professional fees) | (8,130 | ) | ||
| Depreciation and amortization | 213,407 | |||
| Non-cash stock-based compensation expense | 6,527 | |||
| Merger-related expenses, deal costs and re-audit costs | 2,092 | |||
| Net income (loss) attributable to noncontrolling interests, net of consolidated joint venture partners’ share of EBITDA | (3,278 | ) | ||
| (Income) loss from unconsolidated entities, net of Ventas share of EBITDA from unconsolidated entities | 6,660 | |||
| Gain on real estate dispositions | (458,280 | ) | ||
| Unrealized foreign currency losses | 210 | |||
| Change in fair value of financial instruments | 6 | |||
| Natural disaster expenses (recoveries), net | 9,810 | |||
| Adjusted EBITDA | 497,362 | |||
| Pro forma adjustments for current period activity | (3,069 | ) | ||
| Adjusted Pro Forma EBITDA | $ | 494,293 | ||
| Adjusted Pro Forma EBITDA annualized | $ | 1,977,172 | ||
| As of September 30, 2017: | ||||
| Total debt | $ | 11,424,145 | ||
| Cash | (85,063 | ) | ||
| Restricted cash pertaining to debt | (38,727 | ) | ||
| Consolidated joint venture partners’ share of debt | (74,135 | ) | ||
| Ventas share of debt from unconsolidated entities | 89,860 | |||
| Net debt | $ | 11,316,080 | ||
| Net debt to Adjusted Pro Forma EBITDA | 5.7 | x | ||
NON-GAAP FINANCIAL MEASURES RECONCILIATION |
Net Operating Income (NOI) and Same-Store Cash NOI by Segment |
(Dollars in thousands) |
The Company considers NOI and same-store cash NOI as important supplemental measures because they allow investors, analysts and the Company’s management to assess its unlevered property-level operating results and to compare its operating results with those of other real estate companies and between periods on a consistent basis. The Company defines NOI as total revenues, less interest and other income, property-level operating expenses and office building services costs. In the case of NOI, cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies. The Company believes that income from continuing operations is the most comparable GAAP measure for both NOI and same-store cash NOI because it provides insight into the Company’s continuing operations. The Company defines same-store as properties owned, consolidated, operational and reported under a consistent business model for the full period in both comparison periods, and excluding assets intended for disposition and for SHOP, those properties that transitioned operators after the start of the prior comparison period. To normalize for exchange rate movements, all same-store cash NOI measures assume constant exchange rates across comparable periods, using the following methodology: the current period’s results are shown in actual reported USD, while prior comparison period’s results are adjusted and converted to USD based on the average exchange rate for the current period.
Triple-Net Leased Properties | Senior Living Operations | Office Operations | All Other | Total | ||||||||||||||||
| For the Three Months Ended September 30, 2017 | ||||||||||||||||||||
| Income from continuing operations | $ | 156,930 | ||||||||||||||||||
| Adjustments: | ||||||||||||||||||||
| Interest and other income | (171 | ) | ||||||||||||||||||
| Interest | 113,869 | |||||||||||||||||||
| Depreciation and amortization | 213,407 | |||||||||||||||||||
| General, administrative and professional fees | 33,317 | |||||||||||||||||||
| Loss on extinguishment of debt, net | 511 | |||||||||||||||||||
| Merger-related expenses and deal costs | 804 | |||||||||||||||||||
| Other | 13,030 | |||||||||||||||||||
| Income from unconsolidated entities | (750 | ) | ||||||||||||||||||
| Income tax benefit | (7,815 | ) | ||||||||||||||||||
| Reported Segment NOI | $ | 213,495 | $ | 146,102 | $ | 130,047 | $ | 33,488 | 523,132 | |||||||||||
| Adjustments: | ||||||||||||||||||||
| Normalizing adjustment for technology costs | — | 1,616 | — | — | 1,616 | |||||||||||||||
| NOI not included in same-store | (37,009 | ) | (5,628 | ) | (29,114 | ) | — | (71,751 | ) | |||||||||||
| Straight-lining of rental income | (1,195 | ) | — | (5,034 | ) | — | (6,229 | ) | ||||||||||||
| Non-cash rental income | (4,277 | ) | — | (312 | ) | — | (4,589 | ) | ||||||||||||
| Non-segment NOI | — | — | — | (33,488 | ) | (33,488 | ) | |||||||||||||
| (42,481 | ) | (4,012 | ) | (34,460 | ) | (33,488 | ) | (114,441 | ) | |||||||||||
| Same-Store cash NOI (Constant Currency) | $ | 171,014 | $ | 142,090 | $ | 95,587 | $ | — | $ | 408,691 | ||||||||||
| Percentage increase | 3.8 | % | 0.6 | % | 1.5 | % | 2.1 | % | ||||||||||||
Triple-Net Leased Properties | Senior Living Operations | Office Operations | All Other | Total | ||||||||||||||||
| For the Three Months Ended September 30, 2016 | ||||||||||||||||||||
| Income from continuing operations | $ | 150,446 | ||||||||||||||||||
| Adjustments: | ||||||||||||||||||||
| Interest and other income | (562 | ) | ||||||||||||||||||
| Interest | 105,063 | |||||||||||||||||||
| Depreciation and amortization | 208,387 | |||||||||||||||||||
| General, administrative and professional fees | 31,567 | |||||||||||||||||||
| Loss on extinguishment of debt, net | 383 | |||||||||||||||||||
| Merger-related expenses and deal costs | 16,217 | |||||||||||||||||||
| Other | 2,430 | |||||||||||||||||||
| Income from unconsolidated entities | (931 | ) | ||||||||||||||||||
| Income tax benefit | (8,537 | ) | ||||||||||||||||||
| Reported Segment NOI | $ | 211,670 | $ | 149,829 | $ | 110,538 | $ | 32,426 | 504,463 | |||||||||||
| Adjustments: | ||||||||||||||||||||
| NOI not included in same-store | (39,209 | ) | (9,237 | ) | (13,439 | ) | — | (61,885 | ) | |||||||||||
| Straight-lining of rental income | (2,607 | ) | — | (3,329 | ) | — | (5,936 | ) | ||||||||||||
| Non-cash rental income | (5,092 | ) | — | 383 | — | (4,709 | ) | |||||||||||||
| Non-segment NOI | — | — | — | (32,426 | ) | (32,426 | ) | |||||||||||||
| NOI impact from change in FX | (14 | ) | 699 | — | — | 685 | ||||||||||||||
| (46,922 | ) | (8,538 | ) | (16,385 | ) | (32,426 | ) | (104,271 | ) | |||||||||||
| Same-Store cash NOI (Constant Currency) | $ | 164,748 | $ | 141,291 | $ | 94,153 | $ | — | $ | 400,192 | ||||||||||
| NON-GAAP FINANCIAL MEASURES RECONCILIATION | ||||||||||||||||||||
NOI and Same-Store Cash NOI by Segment Guidance 1,2 | ||||||||||||||||||||
| (Dollars in millions, except per share amounts) | ||||||||||||||||||||
| FY2017 - Guidance | ||||||||||||||||||||
| Tentative / Preliminary and Subject to Change | ||||||||||||||||||||
| NNN | SHOP | Office | Non-Segment | Total | ||||||||||||||||
| High End | ||||||||||||||||||||
| Income from Continuing Operations | $ | 623 | ||||||||||||||||||
| Depreciation and Amortization3 | 874 | |||||||||||||||||||
| Interest Expense, G&A, Other Income and Expenses4 | 588 | |||||||||||||||||||
| Reported Segment NOI5 | $ | 844 | $ | 594 | $ | 523 | $ | 123 | 2,085 | |||||||||||
| Normalizing Adjustment for Technology Costs6 | — | 3 | — | — | 3 | |||||||||||||||
| Non-Cash and Non-Same-Store Adjustments | (163 | ) | (32 | ) | (140 | ) | (123 | ) | (458 | ) | ||||||||||
| Same-Store Cash NOI5 | 681 | 565 | 383 | — | 1,630 | |||||||||||||||
| Percentage Increase | 3.5 | % | 1.5 | % | 2.0 | % | NM | 2.5 | % | |||||||||||
| Modification Fees | — | — | — | — | — | |||||||||||||||
| Adjusted Same-Store Cash NOI5 | $ | 681 | $ | 565 | $ | 383 | $ | — | $ | 1,630 | ||||||||||
| Adjusted Percentage Increase | 3.9 | % | 1.5 | % | 2.0 | % | NM | 2.7 | % | |||||||||||
| Low End | ||||||||||||||||||||
| Income from Continuing Operations | $ | 584 | ||||||||||||||||||
| Depreciation and Amortization3 | 869 | |||||||||||||||||||
| Interest Expense, G&A, Other Income and Expenses4 | 622 | |||||||||||||||||||
| Reported Segment NOI5 | $ | 840 | $ | 589 | $ | 521 | $ | 121 | 2,075 | |||||||||||
| Normalizing Adjustment for Technology Costs6 | — | 3 | — | — | 3 | |||||||||||||||
| Non-Cash and Non-Same-Store Adjustments | (162 | ) | (32 | ) | (140 | ) | (121 | ) | (456 | ) | ||||||||||
| Same-Store Cash NOI5 | 678 | 560 | 381 | — | 1,622 | |||||||||||||||
| Percentage Increase | 3.0 | % | 0.5 | % | 1.5 | % | NM | 2.0 | % | |||||||||||
| Modification Fees | — | — | — | — | — | |||||||||||||||
| Adjusted Same-Store Cash NOI5 | $ | 678 | $ | 560 | $ | 381 | $ | — | $ | 1,622 | ||||||||||
| Adjusted Percentage Increase | 3.4 | % | 0.5 | % | 1.5 | % | NM | 2.2 | % | |||||||||||
| Prior Year | ||||||||||||||||||||
| Income from Continuing Operations | $ | 554 | ||||||||||||||||||
| Depreciation and Amortization3 | 899 | |||||||||||||||||||
| Interest Expense, G&A, Other Income and Expenses4 | 548 | |||||||||||||||||||
| Reported Segment NOI5 | $ | 851 | $ | 604 | $ | 444 | $ | 102 | 2,001 | |||||||||||
| Modification Fees | 3 | — | — | — | 3 | |||||||||||||||
| Non-Cash and Non-Same-Store Adjustments | (192 | ) | (49 | ) | (68 | ) | (102 | ) | (411 | ) | ||||||||||
| NOI Impact from Change in FX | (4 | ) | 1 | — | — | (3 | ) | |||||||||||||
| Same-Store Cash NOI5 | 658 | 556 | 376 | — | 1,590 | |||||||||||||||
| Modification Fees | (3 | ) | — | — | — | (3 | ) | |||||||||||||
| Adjusted Same-Store Cash NOI | $ | 655 | $ | 556 | $ | 376 | $ | — | $ | 1,587 | ||||||||||
| 2017 | ||||||||||||||||||||
| GBP (£) to USD ($) | 1.32 | |||||||||||||||||||
| USD ($) to CAD (C$) | 1.25 | |||||||||||||||||||
1 | The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company’s expectations depending on factors discussed in the Company’s filings with the Securities and Exchange Commission. | |
| 2 | See table titled “Net Operating Income (NOI) and Same-Store Cash NOI by Segment” for the three months ended September 30, 2017 for a detailed breakout of adjustments for each respective category. | |
| 3 | Includes real estate depreciation and amortization, corporate depreciation and amortization and amortization of other intangibles. | |
| 4 | Includes interest expense, general and administrative expenses (including stock-based compensation), loss on extinguishment of debt, merger-related expenses and deal costs, income from unconsolidated entities, income tax benefit, and other income and expenses. | |
| 5 | Totals may not add across due to minor corporate-level adjustments and rounding. | |
| 6 | Represents costs expensed by one operator related to implementation of new software. | |
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CONTACT:
Ventas, Inc.
Ryan K. Shannon
(877) 4-VENTAS