CHICAGO--(BUSINESS WIRE)--February 20, 2020--Ventas, Inc. (NYSE: VTR) (the “Company”) today announced its results for the fourth quarter and full year ended December 31, 2019.
“In 2019, we benefitted from our diverse high-quality portfolio, earnings accretion from external growth and effective capital markets execution to deliver solid enterprise results. Our Medical Office, Healthcare and Research & Innovation portfolios grew and performed well. While our Senior Housing business experienced challenges, we are taking actions to improve performance and position Ventas for success and growth,” said Debra A. Cafaro, Ventas Chairman and CEO.
“As we enter 2020, our team is sharply focused on achieving our goals and delivering value for our stakeholders. As we look ahead, we are well-positioned to benefit from the expected improvement in senior housing fundamentals, the opening and lease-up of our exciting Research & Innovation ground-up developments, reliable performance from our Office and Healthcare portfolios and the positive impact of investments and capital markets activities,” Cafaro added.
Full Year and Fourth Quarter 2019 Results
For the full year and fourth quarter 2019, the Company delivered on its enterprise expectations. Fourth quarter 2019 Normalized Funds from Operations (“FFO”) per share included $0.01 of fees and a cash tax refund that will not carry over into 2020. Reported per share results were:
|
| Year Ended December 31, 2019 |
|
| 2019 | | 2018 | | $ Change | | % Change |
Net income attributable to common stockholders |
| $1.17 | | $1.14 | | $0.03 | | 2.6% |
Nareit FFO |
| $3.88 | | $3.64 | | $0.24 | | 6.6% |
Normalized FFO |
| $3.85 | | $4.07 | | ($0.22) | | (5.4%) |
|
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|
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|
|
| |
|
| Quarter Ended December 31, 2019 |
|
| 2019 | | 2018 | | $ Change | | % Change |
Net income attributable to common stockholders |
| $0.03 | | $0.17 | | ($0.14) | | (82.4%) |
Nareit FFO |
| $0.94 | | $0.81 | | $0.13 | | 16.0% |
Normalized FFO |
| $0.93 | | $0.96 | | ($0.03) | | (3.1%) |
Full Year and Fourth Quarter 2019 Property Results
For the full year 2019, the Company’s same-store total property portfolio (1,096 assets that qualified as same-store for the full 2018 to 2019 years) cash net operating income (“NOI”) was stable compared to the same period in 2018. For the fourth quarter 2019, the Company’s quarterly same-store total property portfolio (1,102 assets, representing 93 percent of the company’s consolidated assets) cash NOI declined 0.6 percent compared to the same period in 2018. Reported full year 2019 same-store cash NOI performance, for each segment and the Company’s overall portfolio, was in line with the Company’s most recently provided guidance ranges. Same-store cash NOI results for the quarter and year follow:
| | | Same-Store Cash NOI (Constant Currency) |
| | | Q4 2019 |
| Full Year 2019 |
| | | Reported |
| Reported | | Guidance Range |
| | | |
| | | |
NNN | | | 2.1% |
| 2.2% | | 2.0 – 2.5% |
SHOP | | | (7.5%) |
| (4.4%) | | (5.0) – (4.0%) |
Office | | | 3.8% |
| 2.6% | | 2.0 – 2.5% |
Total Company | | | (0.6%) |
| 0.0% | | 0.0 - 0.3% |
For the full year and fourth quarter 2019, same-store performance was driven by:
- Triple-Net (“NNN”) portfolio: Full year and fourth quarter 2019 same-store growth was driven by in-place lease escalations, particularly in the Company’s growing NNN Healthcare portfolio of acute and post-acute assets.
- Senior Housing Operating Properties (“SHOP”) portfolio: Full year and fourth quarter 2019 same-store SHOP NOI performance was driven by the cumulative impact of new competition, which affected SHOP occupancy and rate. As anticipated:
- Results in the fourth quarter 2019 were negatively impacted by the third quarter revenue trajectory. Excluding Eclipse Senior Living (“ESL”), which experienced unique performance issues, same-store performance for the Company’s remaining SHOP same-store portfolio (92 percent of its quarterly same-store SHOP NOI) declined 4 percent in the fourth quarter.
- Excluding ESL properties for the full year 2019, the Company’s SHOP same-store NOI declined 3.1 percent.
- Office portfolio: In 2019 and accelerating into the fourth quarter, the Office portfolio continued to post attractive growth, led by the Company’s university-based Research & Innovation (“R&I”) portfolio and complemented by steady growth in the Company’s Medical Office Building (“MOB”) portfolio.
Recent Developments
Actions to Improve Senior Housing Performance:
- Ventas appointed J. Justin Hutchens as Executive Vice President, Senior Housing, North America, effective April 1, 2020. Additional details can be found in a separate press release issued today.
- Ventas initiated plans to dispose of $0.6 billion of non-strategic senior housing assets in 2020 to enhance the Company’s longer-term senior housing portfolio growth profile. Proceeds of these dispositions are targeted for reinvestment in the Company’s attractive R&I development pipeline.
- The Company has taken initial steps to effectuate an institutional joint venture with respect to the ESL portfolio (“ESL JV”).
- The Company is accelerating targeted senior housing capital expenditures to strengthen its competitive position in priority markets.
- Ventas is updating its SHOP non-GAAP policies, definitions and methodologies (“SHOP Policies”) to provide enhanced consistency, transparency and comparability between companies on organic operating results and guidance, effective as of January 1, 2020. The adoption of the revised policies in 2020 reduces same-store SHOP NOI 2020 guidance by 50 to 100 basis points because certain SHOP redevelopments that are in a strong lease-up phase will be excluded from the same-store pool in accordance with the revised SHOP Policies. Ventas’s updated SHOP policies may be accessed here.
New Growth Platform: The Company announced it has sponsored and formed a perpetual life vehicle (the “Fund”) to enable institutional investors to invest in core and core plus life science, medical office and senior housing real estate. The Fund has a broad range of financial and strategic benefits. Additional details are available in a separate press release issued today.
2019 Company Highlights
Attractive 2019 Investments: The Company completed or committed to nearly $4 billion of new investments in 2019 at an attractive blended 6.4 percent initial cash yield (6.8 percent GAAP yield). Investment highlights included:
- $1.8 billion investment in partnership with Le Groupe Maurice in a high-quality portfolio of senior housing communities in the attractive Quebec market.
- Five outstanding R&I development projects affiliated with top-tier new and existing university partners totaling nearly $1 billion.
Growth in R&I Development in Thriving uCity Market, Philadelphia, PA:
- Ventas closed a 100 percent pre-leased 450,000 square-foot build-to-suit lease (upsized from 258,000 square feet) with Drexel University to be occupied by its School of Nursing and Health Professions. With total project costs of $275 million and a 30-year lease, this attractive University-based R&I building is expected to open in 2022.
- Ventas commenced construction at One uCity, a $271 million (400,000 square feet) R&I ground up development, where leasing activity is robust.
Financial Strength:
- The Company enhanced its balance sheet and liquidity and funded new investments through the (a) issuance and refinancing of $1.4 billion of Company debt; (b) sourcing equity financing and attractive local currency debt for its Canadian investments; and (c) establishment of a robust commercial paper program.
- Ventas’s Net Debt to Adjusted Pro Forma EBITDA ratio was 6.0x for the full year 2019.
- At year-end, the Company maintained a weighted average debt maturity on senior notes of nearly 8 years and improved its cost of debt to 3.5 percent. Through 2021, the Company has only approximately $700 million of debt maturities, excluding commercial paper and the revolving credit facility.
- The Company had robust available liquidity from cash on hand and existing credit facilities totaling $2.6 billion, net of $567 million of outstanding commercial paper at the end of 2019.
Leadership & Recognition
Environmental, Social & Governance (“ESG”) Leadership: The Company was repeatedly recognized for its commitment to ESG principles and its achievements, including:
- Receipt of the 2019 Nareit Health Care “Leader in the Light” award for a third consecutive year.
- First time inclusion in the 2020 Bloomberg Gender-Equality Index.
- First S&P 500 REIT signatory to the United Nations Global Compact and the United Nations Women’s Empowerment Principles.
Executive Leadership and Recognition:
- The Company recently appointed Carey S. Roberts as Executive Vice President, General Counsel and Ethics and Compliance Officer. She will assume her role March 4, 2020.
- Debra A. Cafaro, the Company’s Chairman and CEO, was named one of Harvard Business Review’s CEO 100 for the sixth consecutive year, Chair of the Economic Club of Chicago and 100 Most Influential People in Healthcare by Modern Healthcare magazine.
Fourth Quarter Dividend
The Company’s Board of Directors declared a dividend for the fourth quarter 2019 of $0.7925 per share. The dividend was paid in cash on January 13, 2020 to stockholders of record on January 2, 2020.
Full Year 2020 Guidance
Ventas expects 2020 per share Normalized FFO, Nareit FFO and net income attributable to common stockholders, and same-store cash NOI growth, assuming no new investments and approximately $1.3 billion in divestitures and receipt of loan repayments (inclusive of $0.6 billion in proceeds arising from property contributions to seed the Fund), to range as follows:
| | FY 2020 Guidance |
| | Per Share |
| | Low | | High |
| | | | |
Net Income Attributable to Common Stockholders | | $1.61 | - | $1.74 |
Nareit FFO | | $3.79 | - | $3.94 |
Normalized FFO | | $3.56 | - | $3.69 |
| | |
| | FY 2020 Projected |
| | Same-Store Cash NOI Growth |
| | Low | | High |
| | | | |
NNN | | 1.5% | - | 2.5% |
SHOP | | (9.0%) | - | (4.0%) |
Office | | 3.0% | - | 4.0% |
Total Company | | (1.5%) | | 1.0% |
Full year SHOP year over year same-store NOI growth is projected to be negative in 2020 as a result of the trajectory of the business in the second half of 2019 and the resulting lower occupancy start point in January 2020, together with the impact of cumulative supply. 2020 SHOP same-store NOI is expected to be flat at the guidance midpoint with 2019 Q4 same-store SHOP NOI annualized.
2020 Guidance Commentary
Consistent with the Company’s previous communications, Normalized FFO per share in the fourth quarter of 2019, multiplied by four, represented a reasonable starting point for estimating full year 2020 Normalized FFO expectations, excluding any impact from 2020 investments, dispositions and capital transactions. The below table reconciles (a) the Company’s fourth quarter 2019 Normalized FFO per share, adjusted for fourth quarter items that will not carry over to 2020, times four to annualize; with (b) the midpoint of its 2020 full year expectations for Normalized FFO per share.
| | Increase / (Decrease) to Normalized FFO/sh. |
| | 2020 Guidance Midpoint vs. 4Q19 Adjusted Annualized |
4Q 2019 Normalized FFO | | $0.93 |
4Q 2019 Adjustments | | (0.01) |
4Q 2019 Adjusted Normalized FFO | | 0.92 |
4Q 2019 Annualized Adjusted Normalized FFO | | 3.68 |
Senior Housing (NNN and SHOP) | | 0.00 |
Other Property NOI growth | | 0.04 |
Capital Recycling | | (0.05) |
Asset Contributions to Seed the Fund with Proceeds Used to Repay Debt | | (0.03) |
Other | | (0.01) |
2020 Normalized FFO Guidance Midpoint | | $3.63 |
Compared to the fourth quarter 2019 annualized property performance, the Company expects its Office and NNN Healthcare portfolio to contribute an incremental $0.04 per share to its 2020 Normalized FFO, and the Company expects its total Senior Housing (NNN and SHOP) portfolio to contribute approximately the same amount per share of Normalized FFO in 2020 as it did in the fourth quarter 2019 annualized.
Capital recycling, including the anticipated sale of non-core senior housing assets ($0.6 billion), as well as other dispositions and loan repayments ($0.2 billion), is expected to be approximately ($0.05) dilutive to earnings in 2020. Proceeds from the dispositions will be used to fund future growth through investment in $0.6 billion of high-quality developments and redevelopment projects in 2020, principally in the Office segment.
While the Fund is expected to be accretive to Ventas earnings as it scales assets under management, it will initially be dilutive to the Company by ($0.03) per share in 2020. The initial dilution is as a result of the contribution of five R&I and MOB assets at an approximate cash yield of 4.9 percent, generating net proceeds to Ventas of $0.6 billion that will be used to repay debt and therefore be modestly deleveraging.
Consistent with historical practice, the Company’s 2020 guidance does not include any new unannounced acquisitions, fees or capital markets activity. The Company’s guidance also does not include the impact of an ESL JV. The 2020 outlook assumes 376 million weighted average fully-diluted shares. Ventas expects leverage to remain stable for the full year 2020.
A reconciliation of the Company’s 2020 guidance to the Company’s projected GAAP measures is included in this press release. The Company’s 2020 guidance is based on a number of other assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.
Fourth Quarter 2019 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), and the participant passcode is “Ventas.” The call will also be webcast live by NASDAQ OMX and can be accessed at the Company’s website at www.ventasreit.com. A replay of the call will be available at the Company’s website, or by calling (855) 859-2056 (or +1 (404) 537-3406 for international callers), passcode 3291199, beginning on February 20, 2020, at approximately 1:00 p.m. Eastern Time and will remain available for 30 days.
Ventas, Inc., an S&P 500 company, is a leading real estate investment trust. Its diverse portfolio of approximately 1,200 assets in the United States, Canada and the United Kingdom consists of senior housing communities, medical office buildings, university-based research and innovation centers, inpatient rehabilitation and long-term acute care facilities, and health systems. 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.
The Company routinely announces material information to investors and the marketplace using press releases, Securities and Exchange Commission (“SEC”) filings, public conference calls, webcasts and the Company’s website at www.ventasreit.com/investor-relations. The information that the Company posts to its website may be deemed to be material. Accordingly, the Company encourages investors and others interested in the Company to routinely monitor and review the information that the Company posts on its website, in addition to following the Company’s press releases, SEC filings and public conference calls and webcasts. Supplemental information regarding the Company can be found on the Company’s website under the “Investor Relations” section or at 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 SEC. 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 senior housing communities and office buildings 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, including the potential phasing out of the London Inter-bank Offered Rate after 2021; (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 ended December 31, 2019 and for the year ending December 31, 2020; (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 damage to the Company’s properties from catastrophic weather and other natural events and the physical effects of climate change; (s) 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; (t) risks associated with the Company’s office building portfolio and operations, including the Company’s ability to successfully design, develop and manage office buildings and to retain key personnel; (u) the ability of the hospitals on or near whose campuses the Company’s medical office buildings are located and their affiliated health systems to remain competitive and financially viable and to attract physicians and physician groups; (v) risks associated with the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (w) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (x) the impact of market or issuer events on the liquidity or value of the Company’s investments in marketable securities; (y) consolidation activity in the senior housing and healthcare industries resulting in a change of control of, or a competitor’s investment in, one or more of the Company’s tenants, operators, borrowers or managers or significant changes in the senior management of the Company’s tenants, operators, borrowers or managers; (z) 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 (aa) 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) |
|
| | | | | | | | | |
|
| December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
|
| 2019 | | 2019 | | 2019 | | 2019 | | 2018 |
|
| | | | | | | | | |
Assets |
| | | | | | | | | |
Real estate investments: |
| | | | | | | | | |
Land and improvements |
| $ | 2,283,929 | | | $ | 2,280,877 | | | $ | 2,128,409 | | | $ | 2,116,086 | | | $ | 2,114,406 | |
Buildings and improvements |
| 24,380,440 | | | 24,459,114 | | | 22,837,251 | | | 22,609,780 | | | 22,437,243 | |
Construction in progress |
| 461,354 | | | 432,713 | | | 386,550 | | | 335,773 | | | 422,334 | |
Acquired lease intangibles |
| 1,306,152 | | | 1,334,915 | | | 1,267,322 | | | 1,279,490 | | | 1,502,955 | |
Operating lease assets |
| 385,225 | | | 388,480 | | | 374,319 | | | 359,025 | | | — | |
|
| 28,817,100 | | | 28,896,099 | | | 26,993,851 | | | 26,700,154 | | | 26,476,938 | |
Accumulated depreciation and amortization |
| (7,088,013 | ) | | (6,964,061 | ) | | (6,758,067 | ) | | (6,570,557 | ) | | (6,383,281 | ) |
Net real estate property |
| 21,729,087 | | | 21,932,038 | | | 20,235,784 | | | 20,129,597 | | | 20,093,657 | |
Secured loans receivable and investments, net |
| 704,612 | | | 709,714 | | | 693,651 | | | 496,344 | | | 495,869 | |
Investments in unconsolidated real estate entities |
| 45,022 | | | 45,905 | | | 47,112 | | | 48,162 | | | 48,378 | |
Net real estate investments |
| 22,478,721 | | | 22,687,657 | | | 20,976,547 | | | 20,674,103 | | | 20,637,904 | |
Cash and cash equivalents |
| 106,363 | | | 148,063 | | | 81,987 | | | 82,514 | | | 72,277 | |
Escrow deposits and restricted cash |
| 39,739 | | | 60,533 | | | 56,309 | | | 57,717 | | | 59,187 | |
Goodwill |
| 1,051,161 | | | 1,049,985 | | | 1,050,470 | | | 1,050,876 | | | 1,050,548 | |
Assets held for sale |
| 91,433 | | | 4,520 | | | 1,754 | | | 5,978 | | | 5,454 | |
Deferred income tax assets, net |
| 47,495 | | | — | | | — | | | — | | | — | |
Other assets |
| 877,296 | | | 852,795 | | | 821,844 | | | 796,909 | | | 759,185 | |
Total assets |
| $ | 24,692,208 | | | $ | 24,803,553 | | | $ | 22,988,911 | | | $ | 22,668,097 | | | $ | 22,584,555 | |
|
| | | | | | | | | |
Liabilities and equity |
| | | | | | | | | |
Liabilities: |
| | | | | | | | | |
Senior notes payable and other debt |
| $ | 12,158,773 | | | $ | 12,053,184 | | | $ | 10,256,092 | | | $ | 10,690,176 | | | $ | 10,733,699 | |
Accrued interest |
| 111,115 | | | 85,214 | | | 111,388 | | | 81,766 | | | 99,667 | |
Operating lease liabilities |
| 251,196 | | | 249,237 | | | 233,757 | | | 214,046 | | | — | |
Accounts payable and other liabilities |
| 1,145,700 | | | 1,194,162 | | | 1,137,980 | | | 1,063,707 | | | 1,086,030 | |
Liabilities related to assets held for sale |
| 5,463 | | | 1,531 | | | 1,216 | | | 947 | | | 205 | |
Deferred income tax liabilities |
| 200,831 | | | 147,524 | | | 149,454 | | | 205,056 | | | 205,219 | |
Total liabilities |
| 13,873,078 | | | 13,730,852 | | | 11,889,887 | | | 12,255,698 | | | 12,124,820 | |
|
| | | | | | | | | |
Redeemable OP unitholder and noncontrolling interests |
| 273,678 | | | 312,478 | | | 222,662 | | | 206,386 | | | 188,141 | |
|
| | | | | | | | | |
Commitments and contingencies |
| | | | | | | | | |
|
| | | | | | | | | |
Equity: |
| | | | | | | | | |
Ventas stockholders’ equity: |
| | | | | | | | | |
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued |
| — | | | — | | | — | | | — | | | — | |
Common stock, $0.25 par value; 372,811; 372,726; 371,478; 358,387; and 356,572 shares issued at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively |
| 93,185 | | | 93,164 | | | 92,852 | | | 89,579 | | | 89,125 | |
Capital in excess of par value |
| 14,056,453 | | | 14,017,030 | | | 13,940,117 | | | 13,160,550 | | | 13,076,528 | |
Accumulated other comprehensive loss |
| (34,564 | ) | | (59,857 | ) | | (39,671 | ) | | (12,065 | ) | | (19,582 | ) |
Retained earnings (deficit) |
| (3,669,050 | ) | | (3,384,421 | ) | | (3,173,287 | ) | | (3,088,401 | ) | | (2,930,214 | ) |
Treasury stock, 2; 3; 0; 0; and 0; shares at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively |
| (132 | ) | | (210 | ) | | — | | | — | | | — | |
Total Ventas stockholders’ equity |
| 10,445,892 | | | 10,665,706 | | | 10,820,011 | | | 10,149,663 | | | 10,215,857 | |
Noncontrolling interests |
| 99,560 | | | 94,517 | | | 56,351 | | | 56,350 | | | 55,737 | |
Total equity |
| 10,545,452 | | | 10,760,223 | | | 10,876,362 | | | 10,206,013 | | | 10,271,594 | |
Total liabilities and equity |
| $ | 24,692,208 | | | $ | 24,803,553 | | | $ | 22,988,911 | | | $ | 22,668,097 | | | $ | 22,584,555 | |
|
| | | | | | | | | |
CONSOLIDATED STATEMENTS OF INCOME |
(In thousands, except per share amounts) |
|
| | | | | | | |
|
| For the Three Months Ended | | For the Years Ended |
|
| December 31, | | December 31, |
|
| 2019 | | 2018 | | 2019 | | 2018 |
Revenues |
| | | | | | | |
Rental income: |
| | | | | | | |
Triple-net leased |
| $ | 191,065 | | | $ | 189,168 | | | $ | 780,898 | | | $ | 737,796 | |
Office |
| 210,423 | | | 195,540 | | | 828,978 | | | 776,011 | |
|
| 401,488 | | | 384,708 | | | 1,609,876 | | | 1,513,807 | |
Resident fees and services |
| 568,271 | | | 517,175 | | | 2,151,533 | | | 2,069,477 | |
Office building and other services revenue |
| 2,988 | | | 2,511 | | | 11,156 | | | 13,416 | |
Income from loans and investments |
| 22,382 | | | 18,512 | | | 89,201 | | | 124,218 | |
Interest and other income |
| 875 | | | 357 | | | 10,984 | | | 24,892 | |
Total revenues |
| 996,004 | | | 923,263 | | | 3,872,750 | | | 3,745,810 | |
Expenses |
| | | | | | | |
Interest |
| 116,707 | | | 110,524 | | | 451,662 | | | 442,497 | |
Depreciation and amortization |
| 348,910 | | | 244,276 | | | 1,045,620 | | | 919,639 | |
Property-level operating expenses: |
| | | | | | | |
Senior living |
| 405,564 | | | 366,148 | | | 1,521,398 | | | 1,446,201 | |
Office |
| 68,277 | | | 61,017 | | | 260,249 | | | 243,679 | |
Triple-net leased |
| 6,469 | | | — | | | 26,561 | | | — | |
|
| 480,310 | | | 427,165 | | | 1,808,208 | | | 1,689,880 | |
Office building services costs |
| 544 | | | 338 | | | 2,319 | | | 1,418 | |
General, administrative and professional fees |
| 41,627 | | | 38,475 | | | 165,996 | | | 151,982 | |
Loss on extinguishment of debt, net |
| 39 | | | 7,843 | | | 41,900 | | | 58,254 | |
Merger-related expenses and deal costs |
| 4,151 | | | 4,259 | | | 15,235 | | | 30,547 | |
Other |
| (8,315 | ) | | 58,877 | | | (17,609 | ) | | 66,768 | |
Total expenses |
| 983,973 | | | 891,757 | | | 3,513,331 | | | 3,360,985 | |
Income before unconsolidated entities, real estate dispositions, income taxes, discontinued operations and noncontrolling interests |
| 12,031 | | | 31,506 | | | 359,419 | | | 384,825 | |
Income (loss) from unconsolidated entities |
| 167 | | | (7,208 | ) | | (2,454 | ) | | (55,034 | ) |
Gain on real estate dispositions |
| 1,389 | | | 10,354 | | | 26,022 | | | 46,247 | |
Income tax (expense) benefit |
| (694 | ) | | 28,650 | | | 56,310 | | | 39,953 | |
Income from continuing operations |
| 12,893 | | | 63,302 | | | 439,297 | | | 415,991 | |
Discontinued operations |
| — | | | — | | | — | | | (10 | ) |
Net income |
| 12,893 | | | 63,302 | | | 439,297 | | | 415,981 | |
Net income attributable to noncontrolling interests |
| 1,450 | | | 1,029 | | | 6,281 | | | 6,514 | |
Net income attributable to common stockholders |
| $ | 11,443 | | | $ | 62,273 | | | $ | 433,016 | | | $ | 409,467 | |
Earnings per common share |
| | | | | | | |
Basic: |
| | | | | | | |
Income from continuing operations |
| $ | 0.03 | | | $ | 0.18 | | | $ | 1.20 | | | $ | 1.17 | |
Net income attributable to common stockholders |
| 0.03 | | | 0.17 | | | 1.18 | | | 1.15 | |
Diluted: |
| | | | | | | |
Income from continuing operations |
| $ | 0.03 | | | $ | 0.18 | | | $ | 1.19 | | | $ | 1.16 | |
Net income attributable to common stockholders |
| 0.03 | | | 0.17 | | | 1.17 | | | 1.14 | |
|
| | | | | | | |
Weighted average shares used in computing earnings per common share |
| | | | | | | |
Basic |
| 372,663 | | | 356,389 | | | 365,977 | | | 356,265 | |
Diluted |
| 376,453 | |
| 359,989 | | | 369,886 |
| | 359,301 | |
QUARTERLY CONSOLIDATED STATEMENTS OF INCOME |
(In thousands, except per share amounts) |
|
| | | | | | | | | |
|
| For the Quarters Ended |
|
| December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
|
| 2019 | | 2019 | | 2019 | | 2019 | | 2018 |
Revenues |
| | | | | | | | | |
Rental income: |
| | | | | | | | | |
Triple-net leased |
| $ | 191,065 | | | $ | 193,383 | | | $ | 196,382 | | | $ | 200,068 | | | $ | 189,168 | |
Office |
| 210,423 | | | 214,939 | | | 202,188 | | | 201,428 | | | 195,540 | |
|
| 401,488 | | | 408,322 | | | 398,570 | | | 401,496 | | | 384,708 | |
Resident fees and services |
| 568,271 | | | 541,090 | | | 520,725 | | | 521,447 | | | 517,175 | |
Office building and other services revenue |
| 2,988 | | | 2,959 | | | 2,691 | | | 2,518 | | | 2,511 | |
Income from loans and investments |
| 22,382 | | | 30,164 | | | 19,529 | | | 17,126 | | | 18,512 | |
Interest and other income |
| 875 | | | 620 | | | 9,202 | | | 287 | | | 357 | |
Total revenues |
| 996,004 | | | 983,155 | | | 950,717 | | | 942,874 | | | 923,263 | |
|
| | | | | | | | | |
Expenses |
| | | | | | | | | |
Interest |
| 116,707 | | | 113,967 | | | 110,369 | | | 110,619 | | | 110,524 | |
Depreciation and amortization |
| 348,910 | | | 234,603 | | | 226,187 | | | 235,920 | | | 244,276 | |
Property-level operating expenses: |
| | | | | | | | | |
Senior living |
| 405,564 | | | 388,011 | | | 366,837 | | | 360,986 | | | 366,148 | |
Office |
| 68,277 | | | 67,144 | | | 62,743 | | | 62,085 | | | 61,017 | |
Triple-net leased |
| 6,469 | | | 6,338 | | | 6,321 | | | 7,433 | | | — | |
|
| 480,310 | | | 461,493 | | | 435,901 | | | 430,504 | | | 427,165 | |
Office building services costs |
| 544 | | | 627 | | | 515 | | | 633 | | | 338 | |
General, administrative and professional fees |
| 41,627 | | | 40,530 | | | 43,079 | | | 40,760 | | | 38,475 | |
Loss on extinguishment of debt, net |
| 39 | | | 37,434 | | | 4,022 | | | 405 | | | 7,843 | |
Merger-related expenses and deal costs |
| 4,151 | | | 4,304 | | | 4,600 | | | 2,180 | | | 4,259 | |
Other |
| (8,315 | ) | | 2,164 | | | (11,481 | ) | | 23 | | | 58,877 | |
Total expenses |
| 983,973 | | | 895,122 | | | 813,192 | | | 821,044 | | | 891,757 | |
|
| | | | | | | | | |
Income before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests |
| 12,031 | | | 88,033 | | | 137,525 | | | 121,830 | | | 31,506 | |
Income (loss) from unconsolidated entities |
| 167 | | | 854 | | | (2,529 | ) | | (946 | ) | | (7,208 | ) |
Gain on real estate dispositions |
| 1,389 | | | 36 | | | 19,150 | | | 5,447 | | | 10,354 | |
Income tax (expense) benefit |
| (694 | ) | | (2,005 | ) | | 57,752 | | | 1,257 | | | 28,650 | |
Income from continuing operations |
| 12,893 | | | 86,918 | | | 211,898 | | | 127,588 | | | 63,302 | |
Net income |
| 12,893 | | | 86,918 | | | 211,898 | | | 127,588 | | | 63,302 | |
Net income attributable to noncontrolling interests |
| 1,450 | | | 1,659 | | | 1,369 | | | 1,803 | | | 1,029 | |
Net income attributable to common stockholders |
| $ | 11,443 | | | $ | 85,259 | | | $ | 210,529 | | | $ | 125,785 | | | $ | 62,273 | |
|
| | | | | | | | | |
Earnings per common share |
| | | | | | | | | |
Basic: |
| | | | | | | | | |
Income from continuing operations |
| $ | 0.03 | | | $ | 0.23 | | | $ | 0.59 | | | $ | 0.36 | | | $ | 0.18 | |
Net income attributable to common stockholders |
| 0.03 | | | 0.23 | | | 0.58 | | | 0.35 | | | 0.17 | |
Diluted: |
| | | | | | | | | |
Income from continuing operations |
| $ | 0.03 | | | $ | 0.23 | | | $ | 0.58 | | | $ | 0.35 | | | $ | 0.18 | |
Net income attributable to common stockholders |
| 0.03 | | | 0.23 | | | 0.58 | | | 0.35 | | | 0.17 | |
|
| | | | | | | | | |
Weighted average shares used in computing earnings per common share |
| | | | | | | | | |
Basic |
| 372,663 | | | 372,426 | | | 361,722 | | | 356,853 | | | 356,389 | |
Diluted |
| 376,453 | | | 376,625 | | | 365,553 | | | 360,619 | | | 359,989 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands) |
|
| For the Years Ended |
|
| December 31, |
|
| 2019 | |
| 2018 |
Cash flows from operating activities: |
| | |
| |
Net income |
| $ | 439,297 | | |
| $ | 415,981 | |
Adjustments to reconcile net income to net cash provided by operating activities: |
| | |
| |
Depreciation and amortization |
| 1,045,620 | | |
| 919,639 | |
Amortization of deferred revenue and lease intangibles, net |
| (7,967 | ) | |
| (30,660 | ) |
Other non-cash amortization |
| 22,985 | | |
| 18,886 | |
Stock-based compensation |
| 33,923 | | |
| 29,963 | |
Straight-lining of rental income |
| (30,073 | ) | |
| 13,396 | |
Loss on extinguishment of debt, net |
| 41,900 | | |
| 58,254 | |
Gain on real estate dispositions |
| (26,022 | ) | |
| (46,247 | ) |
Gain on real estate loan investments |
| — | | |
| (13,202 | ) |
Income tax benefit |
| (58,918 | ) | |
| (43,026 | ) |
Loss from unconsolidated entities |
| 2,464 | | |
| 55,034 | |
Distributions from unconsolidated entities |
| 1,600 | | |
| 2,934 | |
Real estate impairments related to natural disasters |
| — | | |
| 52,510 | |
Other |
| 13,264 | | |
| 3,720 | |
Changes in operating assets and liabilities: |
| | |
| |
Increase in other assets |
| (76,693 | ) | |
| (23,198 | ) |
Increase in accrued interest |
| 9,737 | | |
| 4,992 | |
Increase (decrease) in accounts payable and other liabilities |
| 26,666 | | |
| (37,509 | ) |
Net cash provided by operating activities |
| 1,437,783 | | |
| 1,381,467 | |
Cash flows from investing activities: |
| | |
| |
Net investment in real estate property |
| (958,125 | ) | |
| (265,907 | ) |
Investment in loans receivable |
| (1,258,187 | ) | |
| (229,534 | ) |
Proceeds from real estate disposals |
| 147,855 | | |
| 353,792 | |
Proceeds from loans receivable |
| 1,017,309 | | |
| 911,540 | |
Development project expenditures |
| (403,923 | ) | |
| (330,876 | ) |
Capital expenditures |
| (156,724 | ) | |
| (131,858 | ) |
Distributions from unconsolidated entities |
| 172 | | |
| 57,455 | |
Investment in unconsolidated entities |
| (3,855 | ) | |
| (47,007 | ) |
Insurance proceeds for property damage claims |
| 30,179 | | |
| 6,891 | |
Net cash (used in) provided by investing activities |
| (1,585,299 | ) | |
| 324,496 | |
Cash flows from financing activities: |
| | |
| |
Net change in borrowings under revolving credit facilities |
| (569,891 | ) | |
| 321,463 | |
Net change in borrowings under commercial paper program |
| 565,524 | | |
| — | |
Proceeds from debt |
| 3,013,191 | | |
| 2,549,473 | |
Repayment of debt |
| (2,623,916 | ) | |
| (3,465,579 | ) |
Purchase of noncontrolling interests |
| — | | |
| (4,724 | ) |
Payment of deferred financing costs |
| (21,403 | ) | |
| (20,612 | ) |
Issuance of common stock, net |
| 942,085 | | |
| — | |
Cash distribution to common stockholders |
| (1,157,720 | ) | |
| (1,127,143 | ) |
Cash distribution to redeemable OP unitholders |
| (9,218 | ) | |
| (7,459 | ) |
Cash issued for redemption of OP Units |
| (2,203 | ) | |
| (1,370 | ) |
Contributions from noncontrolling interests |
| 6,282 | | |
| 1,883 | |
Distributions to noncontrolling interests |
| (9,717 | ) | |
| (11,574 | ) |
Proceeds from stock option exercises |
| 36,179 | | |
| 8,762 | |
Other |
| (8,519 | ) | |
| (5,057 | ) |
Net cash provided by (used in) financing activities |
| 160,674 | | |
| (1,761,937 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
| 13,158 | | |
| (55,974 | ) |
Effect of foreign currency translation |
| 1,480 | | |
| (815 | ) |
Cash, cash equivalents and restricted cash at beginning of year |
| 131,464 | | |
| 188,253 | |
Cash, cash equivalents and restricted cash at end of year |
| $ | 146,102 | | |
| $ | 131,464 | |
|
| | |
| |
Supplemental schedule of non-cash activities: |
| | |
| |
Assets acquired and liabilities assumed from acquisitions and other: |
| | |
| |
Real estate investments |
| $ | 1,057,138 | | |
| $ | 94,280 | |
Other assets |
| 11,140 | | |
| 5,398 | |
Debt |
| 907,746 | | |
| 30,508 | |
Other liabilities |
| 47,121 | | |
| 18,086 | |
Deferred income tax liability |
| 95 | | |
| 922 | |
Noncontrolling interests |
| 113,316 | | |
| 2,591 | |
Equity issued |
| — | | |
| 30,487 | |
Equity issued for redemption of OP Units |
| 127 | |
|
| 907 | |
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands) |
|
| For the Quarters Ended |
|
| December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
|
| 2019 | | 2019 | | 2019 | | 2019 | | 2018 |
Cash flows from operating activities: |
| | | | | | | | | |
Net income |
| $ | 12,893 | | | $ | 86,918 | | | $ | 211,898 | | | $ | 127,588 | | | $ | 63,302 | |
Adjustments to reconcile net income to net cash provided by operating activities: |
| | | | | | | | | |
Depreciation and amortization |
| 348,910 | | | 234,603 | | | 226,187 | | | 235,920 | | | 244,276 | |
Amortization of deferred revenue and lease intangibles, net |
| (1,483 | ) | | (339 | ) | | (3,299 | ) | | (2,846 | ) | | (4,659 | ) |
Other non-cash amortization |
| 6,075 | | | 5,323 | | | 5,456 | | | 6,131 | | | 5,359 | |
Stock-based compensation |
| 7,253 | | | 8,195 | | | 10,070 | | | 8,405 | | | 9,202 | |
Straight-lining of rental income |
| (4,393 | ) | | (8,680 | ) | | (8,511 | ) | | (8,489 | ) | | (6,587 | ) |
Loss on extinguishment of debt, net |
| 39 | | | 37,434 | | | 4,022 | | | 405 | | | 7,843 | |
Gain on real estate dispositions |
| (1,389 | ) | | (36 | ) | | (19,150 | ) | | (5,447 | ) | | (10,354 | ) |
Income tax expense (benefit) |
| 1,331 | | | 946 | | | (59,480 | ) | | (1,715 | ) | | (29,562 | ) |
(Income) loss from unconsolidated entities |
| (157 | ) | | (854 | ) | | 2,529 | | | 946 | | | 7,208 | |
Distributions from unconsolidated entities |
| 200 | | | 100 | | | 100 | | | 1,200 | | | 200 | |
Real estate impairments related to natural disasters |
| — | | | — | | | — | | | — | | | 52,510 | |
Other |
| 4,028 | | | 4,145 | | | 2,808 | | | 2,283 | | | 3,330 | |
Changes in operating assets and liabilities: |
| | | | | | | | | |
(Increase) decrease in other assets |
| (17,327 | ) | | (14,894 | ) | | (30,768 | ) | | (13,704 | ) | | 11,681 | |
Increase (decrease) in accrued interest |
| 25,646 | | | (27,307 | ) | | 29,445 | | | (18,047 | ) | | 22,500 | |
(Decrease) increase in accounts payable and other liabilities |
| (27,391 | ) | | 28,775 | | | 21,792 | | | 3,490 | | | (12,404 | ) |
Net cash provided by operating activities |
| 354,235 | | | 354,329 | | | 393,099 | | | 336,120 | | | 363,845 | |
Cash flows from investing activities: |
| | | | | | | | | |
Net investment in real estate property |
| (18,320 | ) | | (731,766 | ) | | (194,942 | ) | | (13,097 | ) | | (230,107 | ) |
Investment in loans receivable |
| (610 | ) | | (750,429 | ) | | (502,891 | ) | | (4,257 | ) | | (17,445 | ) |
Proceeds from real estate disposals |
| 70,300 | | | 3,150 | | | 56,854 | | | 17,551 | | | 22,549 | |
Proceeds from loans receivable |
| 8,626 | | | 719,026 | | | 288,382 | | | 1,275 | | | 45,227 | |
Development project expenditures |
| (174,078 | ) | | (115,619 | ) | | (64,574 | ) | | (49,652 | ) | | (100,528 | ) |
Capital expenditures |
| (56,937 | ) | | (41,406 | ) | | (36,426 | ) | | (21,955 | ) | | (58,833 | ) |
Distributions from unconsolidated entities |
| 21 | | | 151 | | | — | | | — | | | 25 | |
Investment in unconsolidated entities |
| (2,144 | ) | | (777 | ) | | (247 | ) | | (687 | ) | | (1,901 | ) |
Insurance proceeds for property damage claims |
| 9,722 | | | 3,518 | | | 13,941 | | | 2,998 | | | 564 | |
Net cash used in investing activities |
| (163,420 | ) | | (914,152 | ) | | (439,903 | ) | | (67,824 | ) | | (340,449 | ) |
Cash flows from financing activities: |
| | | | | | | | | |
Net change in borrowings under revolving credit facilities |
| (848,568 | ) | | 785,228 | | | 194,224 | | | (700,775 | ) | | 280,171 | |
Net change in borrowings under commercial paper program |
| 261,016 | | | 34,698 | | | 75,312 | | | 194,498 | | | — | |
Proceeds from debt |
| 806,614 | | | 1,493,643 | | | 6,343 | | | 706,591 | | | 137,053 | |
Repayment of debt |
| (167,781 | ) | | (1,459,074 | ) | | (734,491 | ) | | (262,570 | ) | | (171,475 | ) |
Purchase of noncontrolling interests |
| — | | | — | | | — | | | — | | | (2,295 | ) |
Payment of deferred financing costs |
| (3,536 | ) | | (11,030 | ) | | — | | | (6,837 | ) | | (4,029 | ) |
Issuance of common stock, net |
| (165 | ) | | 76,217 | | | 767,655 | | | 98,378 | | | — | |
Cash distribution to common stockholders |
| (295,931 | ) | | (294,647 | ) | | (284,268 | ) | | (282,874 | ) | | (281,895 | ) |
Cash distribution to redeemable OP unitholders |
| (2,336 | ) | | (2,331 | ) | | (2,335 | ) | | (2,216 | ) | | (1,865 | ) |
Cash issued for redemption of OP Units |
| (1,842 | ) | | (361 | ) | | — | | | — | | | — | |
Contributions from noncontrolling interests |
| 1,323 | | | 1,365 | | | 2,371 | | | 1,223 | | | 1,383 | |
Distributions to noncontrolling interests |
| (3,314 | ) | | (2,300 | ) | | (1,480 | ) | | (2,623 | ) | | (1,606 | ) |
Proceeds from stock option exercises |
| 2,045 | | | 8,396 | | | 21,422 | | | 4,316 | | | 4,524 | |
Other |
| (1,918 | ) | | 131 | | | 142 | | | (6,874 | ) | | (83 | ) |
Net cash (used in) provided by financing activities |
| (254,393 | ) | | 629,935 | | | 44,895 | | | (259,763 | ) | | (40,117 | ) |
Net (decrease) increase in cash, cash equivalents and restricted cash |
| (63,578 | ) | | 70,112 | | | (1,909 | ) | | 8,533 | | | (16,721 | ) |
Effect of foreign currency translation |
| 1,084 | | | 188 | | | (26 | ) | | 234 | | | (362 | ) |
Cash, cash equivalents and restricted cash at beginning of period |
| 208,596 | | | 138,296 | | | 140,231 | | | 131,464 | | | 148,547 | |
Cash, cash equivalents and restricted cash at end of period |
| $ | 146,102 | | | $ | 208,596 | | | $ | 138,296 | | | $ | 140,231 | | | $ | 131,464 | |
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) |
(In thousands) |
|
| For the Quarters Ended |
|
| December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
|
| 2019 | | 2019 | | 2019 | | 2019 | | 2018 |
Supplemental schedule of non-cash activities: |
| | | | | | | | | |
Assets acquired and liabilities assumed from acquisitions and other: |
| | | | | | | | | |
Real estate investments |
| $ | 657 | | | $ | 1,055,412 | | | $ | 1,069 | | | $ | — | | | $ | 65,174 | |
Other assets |
| 17 | | | 10,940 | | | 183 | | | — | | | 1,286 | |
Debt |
| — | | | 907,746 | | | — | | | — | | | 30,508 | |
Other liabilities |
| 785 | | | 45,084 | | | 1,252 | | | — | | | 1,952 | |
Deferred income tax liability |
| 95 | | | — | | | — | | | — | | | 922 | |
Noncontrolling interests |
| (206 | ) | | 113,522 | | | — | | | — | | | 2,591 | |
Equity issued |
| — | | | — | | | — | | | — | | | 30,487 | |
Equity issued for redemption of OP Units |
| 127 | | | — | | | — | | | — | | | 641 | |
NON-GAAP FINANCIAL MEASURES RECONCILIATION Funds From Operations (FFO) and Funds Available for Distribution (FAD)1 (Dollars in thousands, except per share amounts) |
|
|
|
|
|
|
|
| |
| | | | | | | | |
| | | | | | | | FY YoY |
| 2018 | 2019 | Growth |
| Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | '18-'19 |
Net income attributable to common stockholders | $ | 62,273 | | $ | 409,467 | | $ | 125,785 | | $ | 210,529 | | $ | 85,259 | | $ | 11,443 | | $ | 433,016 | | 6 | % |
Net income attributable to common stockholders per share | $ | 0.17 | | $ | 1.14 | | $ | 0.35 | | $ | 0.58 | | $ | 0.23 | | $ | 0.03 | | $ | 1.17 | | 3 | % |
Adjustments: | | | | | | | | |
Depreciation and amortization on real estate assets | 242,834 | | 913,537 | | 234,471 | | 224,630 | | 233,078 | | 347,371 | | 1,039,550 | | |
Depreciation on real estate assets related to noncontrolling interests | (1,621 | ) | (6,926 | ) | (1,834 | ) | (1,750 | ) | (2,496 | ) | (3,682 | ) | (9,762 | ) | |
Depreciation on real estate assets related to unconsolidated entities | (78 | ) | 1,977 | | 165 | | 167 | | (456 | ) | 311 | | 187 | | |
Impairment on equity method investment | — | | 35,708 | | — | | — | | — | | — | | — | | |
Gain on real estate dispositions | (10,354 | ) | (46,247 | ) | (5,447 | ) | (19,150 | ) | (36 | ) | (1,389 | ) | (26,022 | ) | |
Gain (loss) on real estate dispositions related to noncontrolling interests | — | | 1,508 | | 354 | | — | | — | | (11 | ) | 343 | | |
Gain on real estate dispositions related to unconsolidated entities | — | | (875 | ) | (799 | ) | (2 | ) | (67 | ) | (395 | ) | (1,263 | ) | |
Subtotal: FFO add-backs | 230,781 | | 898,682 | | 226,910 | | 203,895 | | 230,023 | | 342,205 | | 1,003,033 | | |
Subtotal: FFO add-backs per share | $ | 0.64 | | $ | 2.50 | | $ | 0.63 | | $ | 0.56 | | $ | 0.61 | | $ | 0.91 | | $ | 2.71 | | |
FFO (Nareit) attributable to common stockholders | $ | 293,054 | | $ | 1,308,149 | | $ | 352,695 | | $ | 414,424 | | $ | 315,282 | | $ | 353,648 | | $ | 1,436,049 | | 10 | % |
FFO (Nareit) attributable to common stockholders per share | $ | 0.81 | | $ | 3.64 | | $ | 0.98 | | $ | 1.13 | | $ | 0.84 | | $ | 0.94 | | $ | 3.88 | | 7 | % |
| | | | | | | | |
Adjustments: | | | | | | | | |
Change in fair value of financial instruments | (14 | ) | (18 | ) | (38 | ) | (11 | ) | (7 | ) | (22 | ) | (78 | ) | |
Non-cash income tax (benefit) expense | (4,944 | ) | (18,427 | ) | (1,714 | ) | (59,480 | ) | 946 | | 1,330 | | (58,918 | ) | |
Impact of tax reform | (24,618 | ) | (24,618 | ) | — | | — | | — | | — | | — | | |
Loss on extinguishment of debt, net | 7,890 | | 63,073 | | 405 | | 4,022 | | 37,434 | | 39 | | 41,900 | | |
Loss (gain) on non-real estate dispositions related to unconsolidated entities | 10 | | (2 | ) | — | | (3 | ) | (34 | ) | 19 | | (18 | ) | |
Merger-related expenses, deal costs and re-audit costs | 6,375 | | 38,145 | | 2,829 | | 5,564 | | 4,726 | | 5,089 | | 18,208 | | |
Amortization of other intangibles | 120 | | 759 | | 121 | | 121 | | 121 | | 121 | | 484 | | |
Other items related to unconsolidated entities | 678 | | 5,035 | | 1,038 | | 1,377 | | 502 | | 374 | | 3,291 | | |
Non-cash charges related to lease terminations | — | | 21,299 | | — | | — | | — | | — | | — | | |
Non-cash impact of changes to equity plan | 1,509 | | 4,830 | | 2,334 | | 2,584 | | 1,729 | | 1,165 | | 7,812 | | |
Natural disaster expenses (recoveries), net | 64,041 | | 63,830 | | (1,539 | ) | (13,339 | ) | (101 | ) | (10,704 | ) | (25,683 | ) | |
Subtotal: normalized FFO add-backs | 51,047 | | 153,906 | | 3,436 | | (59,165 | ) | 45,316 | | (2,589 | ) | (13,002 | ) | |
Subtotal: normalized FFO add-backs per share | $ | 0.14 | | $ | 0.43 | | $ | 0.01 | | $ | (0.16 | ) | $ | 0.12 | | $ | (0.01 | ) | $ | (0.04 | ) | |
Normalized FFO attributable to common stockholders | $ | 344,101 | | $ | 1,462,055 | | $ | 356,131 | | $ | 355,259 | | $ | 360,598 | | $ | 351,059 | | $ | 1,423,047 | | (3 | %) |
Normalized FFO attributable to common stockholders per share | $ | 0.96 | | $ | 4.07 | | $ | 0.99 | | $ | 0.97 | | $ | 0.96 | | $ | 0.93 | | $ | 3.85 | | (5 | %) |
| | | | | | | | |
Non-cash items included in normalized FFO: | | | | | | | | |
Amortization of deferred revenue and lease intangibles, net | (4,659 | ) | (13,680 | ) | (2,846 | ) | (3,299 | ) | (339 | ) | (1,483 | ) | (7,967 | ) | |
Other non-cash amortization, including fair market value of debt | 5,359 | | 18,886 | | 6,131 | | 5,335 | | 5,444 | | 6,075 | | 22,985 | | |
Stock-based compensation | 7,693 | | 25,133 | | 6,071 | | 7,486 | | 6,466 | | 6,088 | | 26,111 | | |
Straight-lining of rental income | (6,587 | ) | (24,883 | ) | (8,489 | ) | (8,511 | ) | (8,680 | ) | (4,393 | ) | (30,073 | ) | |
Subtotal: non-cash items included in normalized FFO | 1,806 | | 5,456 | | 867 | | 1,011 | | 2,891 | | 6,287 | | 11,056 | | |
Capital expenditures | (60,667 | ) | (140,060 | ) | (24,015 | ) | (34,366 | ) | (41,406 | ) | (56,937 | ) | (156,724 | ) | |
Normalized FAD attributable to common stockholders | $ | 285,240 | | $ | 1,327,451 | | $ | 332,983 | | $ | 321,904 | | $ | 322,083 | | $ | 300,409 | | $ | 1,277,379 | | (4 | %) |
Merger-related expenses, deal costs and re-audit costs | (6,375 | ) | (38,145 | ) | (2,829 | ) | (5,564 | ) | (4,726 | ) | (5,089 | ) | (18,208 | ) | |
Other items related to unconsolidated entities | (678 | ) | (5,035 | ) | (1,038 | ) | (1,377 | ) | (502 | ) | (374 | ) | (3,291 | ) | |
FAD attributable to common stockholders | $ | 278,187 | | $ | 1,284,271 | | $ | 329,116 | | $ | 314,963 | | $ | 316,855 | | $ | 294,946 | | $ | 1,255,880 | | (2 | %) |
Weighted average diluted shares | 359,989 | | 359,301 | | 360,619 | | 365,553 | | 376,625 | | 376,453 | | 369,886 | | |
| | | | | | | | |
1 Per share quarterly amounts may not add to annual per share amounts due to material changes in the Company’s weighted average diluted share count, if any. Per share amounts may not add to total per share amounts due to rounding. |
Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers FFO, normalized FFO, FAD and normalized FAD to be appropriate supplemental measures of operating performance of an equity REIT. In particular, the Company believes that normalized FFO is useful because it allows investors, analysts and Company management to compare the Company’s operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by non-recurring items and other non-operational events such as transactions and litigation. In some cases, the Company provides information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and Company management to assess the impact of those items on the Company’s financial results.
The Company uses the National Association of Real Estate Investment Trusts (“Nareit”) definition of FFO. Nareit defines FFO as net income attributable to common stockholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property, including gains or losses on re-measurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. The Company defines normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to acquisition lawsuits; (b) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of the Company’s debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to the Company’s executive equity compensation plan, derivative transactions that have non-cash mark-to-market impacts on the Company’s income statement and non-cash charges related to lease terminations; (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 certain tenant allowances and leasing commissions. FAD represents normalized FAD after subtracting merger-related expenses, deal costs and re-audit costs and other unusual items related to unconsolidated entities.
FFO, normalized FFO, FAD and normalized FAD presented herein may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO, normalized FFO, FAD and normalized FAD should not be considered as alternatives to net income attributable to common stockholders (determined in accordance with GAAP) as indicators of the Company’s financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company’s liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company’s needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO, normalized FFO, FAD and normalized FAD should be examined in conjunction with net income attributable to common stockholders as presented elsewhere herein.
NON-GAAP FINANCIAL MEASURES RECONCILIATION NET INCOME, FFO and FAD Attributable to Common Stockholders 2020 Guidance 1,2 (Dollars in millions, except per share amounts) |
|
| |
| | Tentative / Preliminary and Subject to Change |
| | FY2020 - Guidance | | FY2020 - Per Share |
| | Low | | High | | Low | | High |
| | | | | | | | |
Net Income Attributable to Common Stockholders | | $ | 606 | | | $ | 653 | | | $ | 1.61 | | | $ | 1.74 | |
| | | | | | | | |
Depreciation and Amortization Adjustments | | | 1,117 | | | | 1,147 | | | | 2.97 | | | | 3.05 | |
Gain on Real Estate Dispositions | | | (296 | ) | | | (316 | ) | | | (0.79 | ) | | | (0.84 | ) |
Other Adjustments 3 | | — | | | — | | | | 0.00 | | | | 0.00 | |
| | | | | | | | |
FFO (Nareit) Attributable to Common Stockholders | | $ | 1,427 | | | $ | 1,484 | | | $ | 3.79 | | | $ | 3.94 | |
| | | | | | | | |
Merger-Related Expenses, Deal Costs and Re-Audit Costs | | | 25 | | | | 15 | | | | 0.07 | | | | 0.04 | |
Natural Disaster Expenses (Recoveries), Net | | | (1 | ) | | | (1 | ) | | | (0.00 | ) | | | (0.00 | ) |
Other Adjustments 3 | | | (111 | ) | | | (109 | ) | | | (0.30 | ) | | | (0.29 | ) |
| | | | | | | | |
Normalized FFO Attributable to Common Stockholders | | $ | 1,340 | | | $ | 1,389 | | | $ | 3.56 | | | $ | 3.69 | |
% Year-Over-Year Growth | | | | | | | (8% | ) | | | (4% | ) |
| | | | | | | | |
Non-Cash Items Included in Normalized FFO | | | 14 | | | | 12 | | | | | |
Capital Expenditures | | | (175 | ) | | | (185 | ) | | | | |
| | | | | | | | |
Normalized FAD Attributable to Common Stockholders | | $ | 1,179 | | | $ | 1,216 | | | | | |
| | | | | | | | |
Merger-Related Expenses, Deal Costs and Re-Audit Costs | | | (25 | ) | | | (15 | ) | | | | |
Other Adjustments 3 | | | (3 | ) | | | (3 | ) | | | | |
| | | | | | | | |
FAD Attributable to Common Stockholders | | $ | 1,151 | | | $ | 1,198 | | | | | |
| | | | | | | | |
Weighted Average Diluted Shares (in millions) | | | 376 | | | | 376 | | | | | |
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. Totals may not add due to minor corporate-level adjustments. |
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 EBITDA1
(Dollars in thousands)
The following table illustrates net debt to pro forma earnings 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, net expenses or recoveries related to natural disasters and non-cash charges related to lease terminations, 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 year ended December 31, 2019, 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.
For the Year Ended December 31, 2019 |
| |
Net income attributable to common stockholders | $ | 433,016 | |
Adjustments: | |
Interest | 451,662 | |
Loss on extinguishment of debt, net | 41,900 | |
Taxes (including tax amounts in general, administrative and professional fees) | (52,677 | ) |
Depreciation and amortization | 1,045,620 | |
Non-cash stock-based compensation expense | 33,923 | |
Merger-related expenses, deal costs and re-audit costs | 15,246 | |
Net income attributable to noncontrolling interests, adjusted for consolidated joint venture partners’ share of EBITDA | (16,396 | ) |
Loss from unconsolidated entities, adjusted for Ventas share of EBITDA from unconsolidated entities | 32,462 | |
Gain on real estate dispositions | (26,022 | ) |
Unrealized foreign currency gains | (1,061 | ) |
Change in fair value of financial instruments | (104 | ) |
Natural disaster expenses (recoveries), net | (25,981 | ) |
Adjusted EBITDA | $ | 1,931,588 | |
Adjustments for current period activity | 57,747 | |
Adjusted Pro Forma EBITDA | $ | 1,989,335 | |
| |
As of December 31, 2019: |
| |
Total debt | $ | 12,158,773 | |
Cash | (106,363 | ) |
Restricted cash pertaining to debt | (18,425 | ) |
Consolidated joint venture partners’ share of debt | (228,154 | ) |
Ventas share of debt from unconsolidated entities | 60,605 | |
Net debt | $ | 11,866,436 | |
| |
Net debt to Adjusted Pro Forma EBITDA | 6.0 | x |
| |
1 Totals may not add due to rounding. |
NON-GAAP FINANCIAL MEASURES RECONCILIATION
Net Operating Income (NOI) and Same-Store Cash NOI by Segment (Constant Currency)
(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 defines same-store as properties owned, consolidated and operational for the full period in both comparison periods and are not otherwise excluded; provided, however, that the Company may include selected properties that otherwise meet the same-store criteria if they are included in substantially all of, but not a full, period for one or both of the comparison periods, and in the Company’s judgment such inclusion provides a more meaningful presentation of its portfolio performance. Same-store excludes: (i) properties sold or classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) for properties included in the Company’s office operations reportable business segment, those properties for which management has an intention to institute a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase NOI, maintain a market-competitive position and/or achieve property stabilization; and (iii) for other assets, those properties (A) that have transitioned operators or business models after the start of the prior comparison period or (B) for which an operator or business model transition has been scheduled after the start of the prior comparison period. Newly-developed properties in the office operations and triple-net leased properties reportable business segments will be included in same-store if in service for the full period in both periods presented. To eliminate the impact of exchange rate movements, all same-store NOI measures assume constant exchange rates across comparable periods, using the following methodology: the current period’s results are shown in actual reported USD, while prior comparison period’s results are adjusted and converted to USD based on the average exchange rate for the current period.
| Triple-Net | Senior Housing Operating | Office | Non-Segment | Total |
For the Three Months Ended December 31, 2019: |
Net income attributable to common stockholders | | | | | $ | 11,443 | |
Adjustments: | | | | | |
Interest and other income | | | | | (875 | ) |
Interest | | | | | 116,707 | |
Depreciation and amortization | | | | | 348,910 | |
General, administrative and professional fees | | | | | 41,627 | |
Loss on extinguishment of debt, net | | | | | 39 | |
Merger-related expenses and deal costs | | | | | 4,151 | |
Other | | | | | (8,315 | ) |
Income from unconsolidated entities | | | | | (167 | ) |
Gain on real estate dispositions | | | | | (1,389 | ) |
Income tax expense | | | | | 694 | |
Net income attributable to noncontrolling interests | | | | | 1,450 | |
Reported segment NOI | $ | 184,596 | | $ | 162,707 | | $ | 143,664 | | $ | 23,308 | | $ | 514,275 | |
Adjustments: | | | | | |
Modification fee | — | | — | | (180 | ) | — | | (180 | ) |
NOI not included in same-store | (5,235 | ) | (24,995 | ) | (14,939 | ) | — | | (45,169 | ) |
Straight-lining of rental income | (112 | ) | — | | (4,281 | ) | — | | (4,393 | ) |
Non-cash rental income | (364 | ) | 14 | | (762 | ) | — | | (1,112 | ) |
Non-segment NOI | — | | — | | — | | (23,308 | ) | (23,308 | ) |
Same-store cash NOI (constant currency) | $ | 178,885 | | $ | 137,726 | | $ | 123,502 | | $ | — | | $ | 440,113 | |
YOY growth ‘18 - ‘19 | 2.1 | % | (7.5 | %) | 3.8 | % | | (0.6 | %) |
For the Three Months Ended December 31, 2018: |
Net income attributable to common stockholders | | | | | $ | 62,273 | |
Adjustments: | | | | | |
Interest and other income | | | | | (357 | ) |
Interest | | | | | 110,524 | |
Depreciation and amortization | | | | | 244,276 | |
General, administrative and professional fees | | | | | 38,475 | |
Loss on extinguishment of debt, net | | | | | 7,843 | |
Merger-related expenses and deal costs | | | | | 4,259 | |
Other | | | | | 58,877 | |
Loss from unconsolidated entities | | | | | 7,208 | |
Gain on real estate dispositions | | | | | (10,354 | ) |
Income tax benefit | | | | | (28,650 | ) |
Net income attributable to noncontrolling interests | | | | | 1,029 | |
Reported segment NOI | $ | 189,168 | | $ | 151,027 | | $ | 135,992 | | $ | 19,216 | | $ | 495,403 | |
Adjustments: | | | | | |
Modification fee | 72 | | — | | — | | — | | 72 | |
Adjustment for technology costs1 | — | | (2 | ) | — | | — | | (2 | ) |
NOI not included in same-store | (10,520 | ) | (2,203 | ) | (9,465 | ) | — | | (22,188 | ) |
Straight-lining of rental income | (2,710 | ) | — | | (3,876 | ) | — | | (6,586 | ) |
Non-cash rental income | (894 | ) | — | | (3,689 | ) | — | | (4,583 | ) |
Non-segment NOI | — | | — | | — | | (19,216 | ) | (19,216 | ) |
NOI impact from change in FX | 9 | | 28 | | — | | — | | 37 | |
Same-store cash NOI (constant currency) | $ | 175,125 | | $ | 148,850 | | $ | 118,962 | | $ | — | | $ | 442,937 | |
| | | | | |
1Represents costs expensed by one operator related to implementation of new software. |
| Triple-Net | Senior Housing Operating | Office | Non-Segment | Total |
For the Year Ended December 31, 2019: |
Net income attributable to common stockholders | | | | | $ | 433,016 | |
Adjustments: | | | | | |
Interest and other income | | | | | (10,984 | ) |
Interest | | | | | 451,662 | |
Depreciation and amortization | | | | | 1,045,620 | |
General, administrative and professional fees | | | | | 165,996 | |
Loss on extinguishment of debt, net | | | | | 41,900 | |
Merger-related expenses and deal costs | | | | | 15,235 | |
Other | | | | | (17,609 | ) |
Loss from unconsolidated entities | | | | | 2,454 | |
Gain on real estate dispositions | | | | | (26,022 | ) |
Income tax benefit | | | | | (56,310 | ) |
Net income attributable to noncontrolling interests | | | | | 6,281 | |
Reported segment NOI | $ | 754,337 | | $ | 630,135 | | $ | 574,157 | | $ | 92,610 | | $ | 2,051,239 | |
Adjustments: | | | | | |
Modification fees | 100 | | — | | (180 | ) | — | | (80 | ) |
Adjustment for technology costs1 | — | | (1 | ) | — | | — | | (1 | ) |
NOI not included in same-store | (31,470 | ) | (41,301 | ) | (68,198 | ) | — | | (140,969 | ) |
Straight-lining of rental income | (11,557 | ) | — | | (18,516 | ) | — | | (30,073 | ) |
Non-cash rental income | (3,250 | ) | 18 | | (3,830 | ) | — | | (7,062 | ) |
Non-segment NOI | — | | — | | — | | (92,610 | ) | (92,610 | ) |
Same-store cash NOI (constant currency) | $ | 708,160 | | $ | 588,851 | | $ | 483,433 | | $ | — | | $ | 1,780,444 | |
YOY growth ‘18 - ‘19 | 2.2 | % | (4.4 | %) | 2.6 | % | | (0.0 | %) |
For the Year Ended December 31, 2018: |
Net income attributable to common stockholders | | | | | $ | 409,467 | |
Adjustments: | | | | | |
Interest and other income | | | | | (24,892 | ) |
Interest | | | | | 442,497 | |
Depreciation and amortization | | | | | 919,639 | |
General, administrative and professional fees | | | | | 151,982 | |
Loss on extinguishment of debt, net | | | | | 58,254 | |
Merger-related expenses and deal costs | | | | | 30,547 | |
Other | | | | | 66,768 | |
Loss from unconsolidated entities | | | | | 55,034 | |
Gain on real estate dispositions | | | | | (46,247 | ) |
Income tax benefit | | | | | (39,953 | ) |
Discontinued operations | | | | | 10 | |
Net income attributable to noncontrolling interests | | | | | 6,514 | |
Reported segment NOI | $ | 740,318 | | $ | 623,276 | | $ | 538,506 | | $ | 127,520 | | $ | 2,029,620 | |
Adjustments: | | | | | |
Modification fees | 2,528 | | — | | 431 | | — | | 2,959 | |
Adjustment for technology costs1 | — | | 651 | | — | | — | | 651 | |
Pro forma adjustment for partial prior year period2 | — | | 2,691 | | — | | — | | 2,691 | |
NOI not included in same-store | (54,652 | ) | (8,676 | ) | (46,437 | ) | — | | (109,765 | ) |
Straight-lining of rental income | 29,638 | | — | | (16,242 | ) | — | | 13,396 | |
Non-cash rental income | (23,743 | ) | — | | (5,057 | ) | — | | (28,800 | ) |
Non-segment NOI | — | | — | | — | | (127,520 | ) | (127,520 | ) |
NOI impact from change in FX | (1,060 | ) | (1,687 | ) | — | | — | | (2,747 | ) |
Same-store cash NOI (constant currency) | $ | 693,029 | | $ | 616,255 | | $ | 471,201 | | $ | — | | $ | 1,780,485 | |
| | | | | |
1 Represents costs expensed by one operator related to implementation of new software. 2 Represents pro forma adjustment for partial period of ESL transition (effectuated January 21, 2018). |
NON-GAAP FINANCIAL MEASURES RECONCILIATION Full Year 2020 Same-Store Cash NOI Guidance by Segment 1,2,3 (Dollars in millions) |
|
| |
| | For the Twelve Months Ended December 31, 2020 |
| | Tentative / Preliminary and Subject to Change |
| | Triple-Net | | Senior Housing Operating | | Office | | Non-Segment | | Total |
High End | | | | | | | | | | |
Net Income Attributable to Common Stockholders | | | | | | | | | | $ | 653 | |
Depreciation and Amortization4 | | | | | | | | | | 1,165 | |
Interest Expense, G&A, Other Income and Expenses5 | | | | | | | | | | 222 | |
Reported Segment NOI6 | | $ | 739 | | | $ | 663 | | | $ | 548 | | | $ | 85 | | | 2,040 | |
Non-Cash and Non-Same-Store Adjustments | | (88 | ) | | (114 | ) | | (51 | ) | | (85 | ) | | (338 | ) |
Same-Store Cash NOI6 | | $ | 651 | | | $ | 549 | | | $ | 497 | | | $ | — | | | $ | 1,702 | |
Percentage Increase | | 2.5 | % | | (4.0 | %) | | 4.0 | % | | NM | | 1.0 | % |
| | | | | | | | | | |
Low End | | | | | | | | | | |
Net Income Attributable to Common Stockholders | | | | | | | | | | $ | 606 | |
Depreciation and Amortization4 | | | | | | | | | | 1,135 | |
Interest Expense, G&A, Other Income and Expenses5 | | | | | | | | | | 241 | |
Reported Segment NOI6 | | $ | 733 | | | $ | 634 | | | $ | 543 | | | $ | 69 | | | 1,982 | |
Non-Cash and Non-Same-Store Adjustments | | (88 | ) | | (114 | ) | | (51 | ) | | (69 | ) | | (322 | ) |
Same-Store Cash NOI6 | | $ | 645 | | | $ | 520 | | | $ | 492 | | | $ | — | | | $ | 1,660 | |
Percentage Increase | | 1.5 | % | | (9.0 | %) | | 3.0 | % | | NM | | (1.5 | %) |
| | | | | | | | | | |
Prior Year | | | | | | | | | | |
Net Income Attributable to Common Stockholders | | | | | | | | | | $ | 433 | |
Depreciation and Amortization4 | | | | | | | | | | 1,046 | |
Interest Expense, G&A, Other Income and Expenses5 | | | | | | | | | | 572 | |
Reported Segment NOI | | $ | 754 | | | $ | 630 | | | $ | 574 | | | $ | 93 | | | 2,051 | |
Non-Cash and Non-Same-Store Adjustments | | (119 | ) | | (60 | ) | | (96 | ) | | (93 | ) | | (368 | ) |
NOI Impact from Change in FX | | 0 | | | 2 | | | — | | | — | | | 2 | |
Same-Store Cash NOI | | $ | 635 | | | $ | 572 | | | $ | 478 | | | $ | — | | | $ | 1,685 | |
| | | | | | | | | | |
| | 2020 | | | | | | | | |
GBP (£) to USD ($) | | 1.30 | | | | | | | | | |
USD ($) to CAD (C$) | | 1.30 | | | | | | | | | |
Note: Reflects the Company’s full year same-store pool.
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 a detailed breakout of adjustments for each respective category. |
3 | Totals may not add due to rounding. |
4 | Includes real estate depreciation and amortization, corporate depreciation and amortization, and amortization of other intangibles. |
5 | 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. |
6 | Totals may not add across due to minor corporate-level adjustments and rounding. |