Ventas (VTR) 10-Q 30 Apr 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information
	3 Months Ended Mar. 31, 2010	Apr. 27, 2010
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-03-31
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Trading Symbol	VTR
Entity Registrant Name	VENTAS INC
Entity Central Index Key	0000740260
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		156,853,254

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Real estate investments:
Land	$557,370	$557,276
Buildings and improvements	5,735,896	5,722,837
Construction in progress	4,370	12,508
Real Estate Investment Property, at Cost, Total	6,297,636	6,292,621
Accumulated depreciation	(1,226,252)	(1,177,911)
Net real estate property	5,071,384	5,114,710
Loans receivable, net	147,725	131,887
Net real estate investments	5,219,109	5,246,597
Cash and cash equivalents	132,729	107,397
Escrow deposits and restricted cash	41,023	39,832
Deferred financing costs, net	27,964	29,252
Other	213,000	193,167
Total assets	5,633,825	5,616,245
Liabilities:
Senior notes payable and other debt	2,698,171	2,670,101
Accrued interest	35,773	17,974
Accounts payable and other liabilities	183,574	190,445
Deferred income taxes	252,687	253,665
Total liabilities	3,170,205	3,132,185
Commitments and contingencies
Ventas stockholders' equity:
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued
Common stock, $0.25 par value; 300,000 shares authorized; 156,862 and 156,627 shares issued at March 31, 2010 and December 31, 2009, respectively	39,341	39,160
Capital in excess of par value	2,578,577	2,573,039
Accumulated other comprehensive income	25,154	19,669
Retained earnings (deficit)	(196,972)	(165,710)
Treasury stock, 10 and 15 shares at March 31, 2010 and December 31, 2009, respectively	(467)	(647)
Total Ventas stockholders' equity	2,445,633	2,465,511
Noncontrolling interest	17,987	18,549
Total equity	2,463,620	2,484,060
Total liabilities and equity	$5,633,825	$5,616,245

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Share data in Thousands, except Per Share data	Mar. 31, 2010	Dec. 31, 2009
Preferred stock, par value	$1	$1
Preferred stock, shares authorized	10,000	10,000
Common stock, par value	0.25	0.25
Common stock, shares authorized	300,000	300,000
Common stock, shares issued	156,862	156,627
Treasury stock, shares	10	15

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Thousands, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Revenues:
Rental income	$129,179	$122,398
Resident fees and services	108,486	102,939
Income from loans and investments	3,617	3,281
Interest and other income	263	286
Total revenues	241,545	228,904
Expenses:
Interest	44,300	45,930
Depreciation and amortization	52,476	49,498
Property-level operating expenses	78,879	75,468
General, administrative and professional fees (including non-cash stock-based compensation expense of $3,032 and $3,059 for the three months ended March 31, 2010 and 2009, respectively)	10,683	10,598
Foreign currency gain	(106)	(6)
Loss on extinguishment of debt		105
Merger-related expenses and deal costs	2,319	2,054
Total expenses	188,551	183,647
Income before income taxes, discontinued operations and noncontrolling interest	52,994	45,257
Income tax (expense) benefit	(286)	547
Income from continuing operations	52,708	45,804
Discontinued operations	460	29,165
Net income	53,168	74,969
Net income attributable to noncontrolling interest (net of tax of $419 and $390 for the three months ended March 31, 2010 and 2009, respectively)	549	741
Net income attributable to common stockholders	$52,619	$74,228
Basic:
Income from continuing operations attributable to common stockholders	0.34	0.32
Discontinued operations	$0	0.2
Net income attributable to common stockholders	0.34	0.52
Diluted:
Income from continuing operations attributable to common stockholders	0.34	0.32
Discontinued operations	$0	0.2
Net income attributable to common stockholders	0.34	0.52
Weighted average shares used in computing earnings per common share:
Basic	156,453	143,091
Diluted	156,967	143,145
Dividends declared per common share	0.535	0.5125

1_CONSOLIDATED STATEMENTS OF IN

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
General, administrative and professional fees, non-cash stock-based compensation expense	$3,032	$3,059
Net income attributable to noncontrolling interest, tax	$419	$390

CONSOLIDATED STATEMENTS OF EQUI

CONSOLIDATED STATEMENTS OF EQUITY (USD $)
In Thousands	Common Stock Par Value	Capital in Excess of Par Value	Accumulated Other Comprehensive Income (Loss)	Retained Earnings (Deficit)	Treasury Stock	Total Ventas Stockholders' Equity	Noncontrolling Interest	Total
Beginning balance at Dec. 31, 2008	$35,825	$2,264,125	($21,089)	($117,806)	($457)	$2,160,598	$19,137	$2,179,735
Comprehensive Income:
Net income				266,495		266,495	2,865	269,360
Foreign currency translation			23,552			23,552		23,552
Unrealized gain (loss) on marketable debt securities			17,327			17,327		17,327
Other			(121)			(121)		(121)
Comprehensive income						307,253	2,865	310,118
Net change in noncontrolling interest		334				334	(3,453)	(3,119)
Dividends to common stockholders-$0.535 in 2010 and $2.05 in 2009 per share				(314,399)		(314,399)		(314,399)
Issuance of common stock	3,266	295,935				299,201		299,201
Issuance of common stock for stock plans	30	12,819			175	13,024		13,024
Grant of restricted stock, net of forfeitures	39	(174)			(365)	(500)		(500)
Ending balance at Dec. 31, 2009	39,160	2,573,039	19,669	(165,710)	(647)	2,465,511	18,549	2,484,060
Comprehensive Income:
Net income				52,619		52,619	549	53,168
Foreign currency translation			5,946			5,946		5,946
Unrealized gain (loss) on marketable debt securities			(293)			(293)		(293)
Other			(168)			(168)		(168)
Comprehensive income						58,104	549	58,653
Net change in noncontrolling interest							(1,111)	(1,111)
Dividends to common stockholders-$0.535 in 2010 and $2.05 in 2009 per share				(83,881)		(83,881)		(83,881)
Issuance of common stock for stock plans	147	4,566			1,988	6,701		6,701
Grant of restricted stock, net of forfeitures	34	972			(1,808)	(802)		(802)
Ending balance at Mar. 31, 2010	$39,341	$2,578,577	$25,154	($196,972)	($467)	$2,445,633	$17,987	$2,463,620

2_CONSOLIDATED STATEMENTS OF EQ

CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) (USD $)
	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Dividends to common stockholders, per share	0.535	2.05

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash flows from operating activities:
Net income	$53,168	$74,969
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued operations)	52,537	49,908
Amortization of deferred revenue and lease intangibles, net	(1,549)	(1,858)
Other amortization expenses	2,154	608
Stock-based compensation	3,032	3,059
Straight-lining of rental income	(2,449)	(2,938)
Loss on extinguishment of debt		158
Net gain on sale of real estate assets	(184)	(27,871)
Income tax expense (benefit)	286	(547)
Other	53	157
Changes in operating assets and liabilities:
(Increase) decrease in other assets	(3,772)	1,688
Increase in accrued interest	17,799	20,190
Decrease in accounts payable and other liabilities	(5,514)	(3,967)
Net cash provided by operating activities	115,561	113,556
Cash flows from investing activities:
Net investment in real estate property	(11,860)	(8,387)
Investment in loans receivable	(15,796)	(7,373)
Proceeds from real estate disposals	754	56,614
Proceeds from loans receivable	1,192	1,650
Capital expenditures	(4,295)	(3,870)
Net cash (used in) provided by investing activities	(30,005)	38,634
Cash flows from financing activities:
Net change in borrowings under revolving credit facilities	29,089	(87,046)
Proceeds from debt	196	9,201
Repayment of debt	(7,807)	(74,357)
Payment of deferred financing costs	(1,113)	(9,567)
Cash distribution to common stockholders	(83,881)	(73,546)
Contributions from noncontrolling interest	265
Distributions to noncontrolling interest	(1,989)	(1,414)
Other	4,169	3,649
Net cash used in financing activities	(61,071)	(233,080)
Net increase (decrease) in cash and cash equivalents	24,485	(80,890)
Effect of foreign currency translation on cash and cash equivalents	847	(116)
Cash and cash equivalents at beginning of period	107,397	176,812
Cash and cash equivalents at end of period	132,729	95,806
Assets and liabilities assumed from acquisitions:
Real estate investments	496	8,307
Utilization of escrow funds held for an Internal Revenue Code Section 1031 exchange		(9,295)
Other assets acquired	(355)	82
Other liabilities	141	(1,886)
Noncontrolling interest		980
Debt transferred on the sale of assets		$38,759

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS
	3 Months Ended Mar. 31, 2010
DESCRIPTION OF BUSINESS	NOTE 1DESCRIPTION OF BUSINESS Ventas, Inc. (together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, we, us or our) is a real estate investment trust (REIT) with a geographically diverse portfolio of seniors housing and healthcare properties in the United States and Canada. As of March31, 2010, this portfolio consisted of 505 assets: 244 seniors housing communities, 187 skilled nursing facilities, 40 hospitals and 34 medical office buildings (MOBs) and other properties in 43 states and two Canadian provinces. With the exception of our seniors housing communities that are managed by Sunrise Senior Living, Inc. (together with its subsidiaries, Sunrise) pursuant to long-term management agreements and the majority of our MOBs, we lease our properties to healthcare operating companies under triple-net or absolute-net leases, which require the tenants to pay all property-related expenses. We also had real estate loan investments relating to seniors housing and healthcare companies or properties as of March31, 2010. We conduct substantially all of our business through our wholly owned subsidiaries, Ventas Realty, Limited Partnership (Ventas Realty), PSLT OP, L.P. and Ventas SSL, Inc. Our primary business consists of acquiring, financing and owning seniors housing and healthcare properties and leasing those properties to third parties or operating those properties through independent third party managers.

ACCOUNTING POLICIES

ACCOUNTING POLICIES
	3 Months Ended Mar. 31, 2010
ACCOUNTING POLICIES	NOTE 2ACCOUNTING POLICIES The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information set forth in the Accounting Standards Codification (ASC), as published by the Financial Accounting Standards Board (FASB), and with the Securities and Exchange Commission (the SEC) instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim period have been included. Operating results for the three-month period ended March31, 2010 are not necessarily an indication of the results that may be expected for the year ending December31, 2010. The accompanying Consolidated Financial Statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December31, 2009, filed with the SEC on February19, 2010. Certain prior period amounts have been reclassified to conform to the current period presentation. Revenue Recognition Certain of our leases, including the majority of our leases with Brookdale Senior Living Inc. (together with its subsidiaries, Brookdale Senior Living), provide for periodic and determinable increases in base rent. Base rental revenues under these leases are recognized on a straight-line basis over the terms of the applicable lease. Income on our straight-line revenue is recognized when collectibility is reasonably assured, and in the event we determine that collectibility of straight-line revenue is not reasonably assured, we establish an allowance for estimated losses. Recognizing rental income on a straight-line basis results in recognized revenue exceeding cash amounts contractually due from our tenants during the first half of the term for leases that have straight-line treatment. The cumulative excess is included in other assets, net of allowances, on our Consolidated Balance Sheets and totaled $80.8 million and $78.4 million at March31, 2010 and December31, 2009, respectively. Our master lease agreements with Kindred Healthcare, Inc. (together with its subsidiaries, Kindred) (the Kindred Master Leases) and certain of our other leases provide for an annual increase in rental payments only if certain revenue parameters or other substantive contingencies are met. We recognize the increased rental revenue under these leases only if the revenue parameters or other substantive contingencies are met, rather than on a straight-line basis over the term of the applicable lease. We recognize income from rent, lease termination fees and all other income when all of the following criteria are met in accordance with SEC Staff Accounting Bulletin 104: (i)the agreement has been fully executed and delivered; (ii)services have been rendered; (iii)the amount is fixed or determinable; and (iv)collectibility is reasonably assured. We recogn

CONCENTRATION OF CREDIT RISK

CONCENTRATION OF CREDIT RISK
	3 Months Ended Mar. 31, 2010
CONCENTRATION OF CREDIT RISK	NOTE 3CONCENTRATION OF CREDIT RISK As of March31, 2010, approximately 38.9%, 21.7% and 14.0% of our properties, based on the gross book value of real estate investments (including assets held for sale), were managed or operated by Sunrise, Brookdale Senior Living (whose subsidiaries include Brookdale Living Communities, Inc. (Brookdale) and Alterra Healthcare Corporation (Alterra)) and Kindred, respectively. Seniors housing communities and skilled nursing facilities constituted approximately 73.9% and 12.5%, respectively, of our portfolio, based on the gross book value of real estate investments (including assets held for sale), as of March31, 2010, with the remaining properties consisting of hospitals, MOBs and other healthcare assets. Our properties are located in 43 states and two Canadian provinces, with properties in two states each accounting for 10% or more of total revenues during the three months ended March31, 2010. Approximately 25.2% and 26.3% of our total revenues and 37.4% and 39.1% of our total net operating income (NOI, which is defined as total revenues, less interest and other income and property-level operating expenses) (including amounts in discontinued operations) for the three months ended March31, 2010 and 2009, respectively, were derived from our four Kindred Master Leases. Approximately 12.6% and 13.0% of our total revenues and 18.7% and 19.4% of our total NOI (including amounts in discontinued operations) for the three months ended March31, 2010 and 2009, respectively, were derived from our lease agreements with Brookdale Senior Living. Each of the Kindred Master Leases and our leases with Brookdale Senior Living is a triple-net lease pursuant to which the tenant is required to pay all insurance, taxes, utilities and maintenance and repairs related to the properties. In addition, the tenants are required to comply with the terms of the mortgage financing documents, if any, affecting the properties. In view of the fact that Kindred and Brookdale Senior Living lease a substantial portion of our triple-net leased properties and are each a significant source of our revenues and operating income, their financial condition and ability and willingness to satisfy their obligations under their respective leases and other agreements with us, as well as their willingness to renew those leases upon expiration of the terms thereof, have a considerable impact on our results of operations and our ability to service our indebtedness and to make distributions to our stockholders. We cannot assure you that Kindred or Brookdale Senior Living will have sufficient assets, income and access to financing to enable it to satisfy its obligations under its respective leases and other agreements with us, and any inability or unwillingness on its part to do so would have a material adverse effect on our business, financial condition, results of operations and liquidity, our ability to service our indebtedness and our ability to make distributions to our stockholders, as required for us to continue to qualify as a REIT (a Material Adverse Effect). We also cannot assure you that Kindred or Brookdale Senior Living will elect to renew

DISPOSITIONS

DISPOSITIONS
	3 Months Ended Mar. 31, 2010
DISPOSITIONS	NOTE 4DISPOSITIONS We present separately, as discontinued operations, in all periods presented the results of operations for all long-lived assets disposed of or held for sale. 2010 Dispositions and Assets Held for Sale During the first quarter of 2010, we classified the operations of five seniors housing communities as held for sale. The net book value of these assets, $19.0 million, is reflected as held for sale as of March31, 2010 and included in other assets on our Consolidated Balance Sheets, and the operations for these assets have been reported as discontinued operations for the three months ended March31, 2010 and 2009. We expect to record a gain from the sale of these assets during the second quarter of 2010 of approximately $5.2 million. In February 2010, we sold one seniors housing community for approximately $2.5 million. We recognized a gain from the sale of this asset of $0.1 million during the first quarter of 2010. The operations for this asset have been reported as discontinued operations for the three months ended March31, 2010 and 2009. 2009 Dispositions In June 2009, we sold six skilled nursing facilities to Kindred for total consideration of $58.0 million, consisting of a $55.7 million aggregate sale price and a $2.3 million lease termination fee. The proceeds from the sale were held in an Internal Revenue Code Section1031 exchange escrow account with a qualified intermediary and used for our acquisition of three MOBs in December 2009. Cash rent for these assets for the May1, 2008 to April30, 2009 lease year was approximately $5.6 million. We recognized a net gain from the sale of these assets of $38.9 million in the second quarter of 2009. During 2009, we also sold five seniors housing communities, one hospital, one MOB and one other property to the existing tenants for an aggregate sale price of $96.2 million and transferred related debt of $38.8 million. We recognized a net gain from the sales of these assets of $27.5 million in 2009. Set forth below is a summary of the results of operations for the three-month periods ended March31, 2010 and 2009 with respect to the properties sold or held for sale during the three months ended March31, 2010 and the year ended December31, 2009: FortheThreeMonths Ended March31, 2010 2009 (In thousands) Revenues: Rental income $ 496 $ 2,460 Interest and other income 123 496 2,583 Expenses: Interest 159 879 Depreciation and amortization 61 410 220 1,289 Income before gain on sale of real estate assets 276 1,294 Gain on sale of real estate assets 184 27,871 Discontinued operations $ 460 $ 29,165

INTANGIBLES

INTANGIBLES
	3 Months Ended Mar. 31, 2010
INTANGIBLES	NOTE 5INTANGIBLES At March31, 2010, intangible lease assets, comprised of above market resident leases, in-place resident leases and other intangibles, were $9.4 million, $96.8 million and $3.4 million, respectively. At December31, 2009, these intangible lease assets were $10.5 million, $96.3 million and $2.5 million, respectively. At March31, 2010 and December31, 2009, the accumulated amortization of the intangible assets was $93.8 million and $92.6 million, respectively. The remaining weighted average amortization period of our lease-related intangible assets at March31, 2010 was approximately 7.7 years. At March31, 2010 and December31, 2009, intangible lease liabilities, comprised of below market resident leases, were $15.3 million and $15.1 million, respectively. At March31, 2010 and December31, 2009, the accumulated amortization of the intangible liabilities was $11.0 million and $10.8 million, respectively. The remaining weighted average amortization period of intangible liabilities at March31, 2010 was approximately 8.2 years.

SENIOR NOTES PAYABLE AND OTHER

SENIOR NOTES PAYABLE AND OTHER DEBT
	3 Months Ended Mar. 31, 2010
SENIOR NOTES PAYABLE AND OTHER DEBT	NOTE 6SENIOR NOTES PAYABLE AND OTHER DEBT The following is a summary of our senior notes payable and other debt as of March31, 2010 and December31, 2009: March31, 2010 December31, 2009 (In thousands) Unsecured revolving credit facilities $ 38,204 $ 8,466 63/4 % Senior Notes due 2010 1,375 1,375 37/8 % Convertible Senior Notes due 2011 230,000 230,000 9% Senior Notes due 2012 82,433 82,433 65/8 % Senior Notes due 2014 71,654 71,654 71/8 % Senior Notes due 2015 142,669 142,669 61/2 % Senior Notes due 2016 400,000 400,000 63/4 % Senior Notes due 2017 225,000 225,000 Mortgage loans and other 1,537,004 1,540,064 Total 2,728,339 2,701,661 Unamortized fair value adjustment 10,980 11,642 Unamortized commission fees and discounts (41,148 ) (43,202 ) Senior notes payable and other debt $ 2,698,171 $ 2,670,101 As of March31, 2010, our indebtedness had the following maturities: PrincipalAmount Due at Maturity Unsecured RevolvingCredit Facilities (1) ScheduledPeriodic Amortization TotalMaturities (In thousands) 2010 $ 176,412 $ $ 20,887 $ 197,299 2011 301,323 26,450 327,773 2012 388,937 38,204 22,899 450,040 2013 150,962 17,373 168,335 2014 109,137 15,168 124,305 Thereafter 1,401,136 59,451 1,460,587 Total maturities $ 2,527,907 $ 38,204 $ 162,228 $ 2,728,339 (1) At March31, 2010, we had $132.7 million of unrestricted cash and cash equivalents for cash available of $94.5 million, net of amounts outstanding on our unsecured revolving credit facilities. As of March31, 2010, our joint venture partners share of total debt was $158.5 million. Unsecured Revolving Credit Facilities As of March31, 2010, our aggregate borrowing capacity under the unsecured revolving credit facilities was $1.0 billion, of which $875.0 million matures on April26, 2012 and $125.0 million matured on April26, 2010. Borrowings under our unsecured revolving credit facilities bear interest at a fluctuating rate per annum (based on U.S. or Canadian LIBOR, the Canadian Bankers Acceptance rate, or the U.S. or Canadian Prime rate), plus an applicable percentage based on our consolidated leverage. At March31, 2010, the applicable percentage was 0.75% for 2010 maturities and 2.80% for 2012 maturities. Our unsecured revolving credit facilities have a 20 basis point facility fee. At March31, 2010, we had $38.2 million outstanding under our unsecured revolving credit facilities and approximately $961.8 million of availability. At the time of filing, we have $1.0 billion of total committed capital under our revolving credit facilities all of which will mature April 26, 2012.

FAIR VALUES OF FINANCIAL INSTRU

FAIR VALUES OF FINANCIAL INSTRUMENTS
	3 Months Ended Mar. 31, 2010
FAIR VALUES OF FINANCIAL INSTRUMENTS	NOTE 7FAIR VALUES OF FINANCIAL INSTRUMENTS As of March31, 2010 and December31, 2009, the carrying amounts and fair values of our financial instruments were as follows: March31, 2010 December31, 2009 Carrying Amount Fair Value Carrying Amount Fair Value (In thousands) Cash and cash equivalents $ 132,729 $ 132,729 $ 107,397 $ 107,397 Loans receivable, net 147,725 149,196 131,887 129,512 Marketable debt securities 65,050 65,050 65,038 65,038 Senior notes payable and other debt, gross (2,728,339 ) (2,948,248 ) (2,701,661 ) (2,780,405 ) Fair value estimates are subjective in nature and depend on a number of important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument. The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented above are not necessarily indicative of the amounts we would realize in a current market exchange. At March31, 2010, we held marketable debt securities, classified as available-for-sale, with an aggregate amortized cost basis and fair value of $60.9 million and $65.1 million, respectively. At December31, 2009, these securities had an aggregate amortized cost basis and fair value of $60.6 million and $65.0 million, respectively. The contractual maturities of our marketable debt securities range from October1, 2012 to April15, 2016. We do not intend to sell these securities and it is more likely than not that we will not be required to sell these securities prior to maturity.

LITIGATION

LITIGATION
	3 Months Ended Mar. 31, 2010
LITIGATION	NOTE 8LITIGATION Legal Proceedings Defended and Indemnified by Third Parties Kindred, Brookdale Senior Living, Sunrise and our other tenants, operators and managers are parties to certain legal actions and regulatory investigations arising in the normal course of their business. In certain cases, the tenant, operator or manager, as applicable, has agreed to indemnify, defend and hold us harmless against these actions and investigations. However, the resolution of any litigation or investigations, either individually or in the aggregate, could have a material adverse effect on Kindreds, Brookdale Senior Livings, Sunrises or such other tenants, operators and managers liquidity, financial condition or results of operations, which, in turn, could have a Material Adverse Effect on us. Litigation Related to the Sunrise REIT Acquisition On May3, 2007, we filed a lawsuit against HCP, Inc. (HCP) in the United States District Court for the Western District of Kentucky, entitled Ventas, Inc. v. HCP, Inc., Case No.07-cv-238-JGH. We asserted claims of tortious interference with contract and tortious interference with prospective business advantage. Our complaint alleged that HCP interfered with our purchase agreement to acquire the assets and liabilities of Sunrise Senior Living Real Estate Investment Trust (Sunrise REIT) and with the process for unitholder consideration of the purchase agreement. The complaint alleged, among other things, that HCP made certain improper and misleading public statements and/or offers to acquire Sunrise REIT and that HCPs actions caused us to suffer substantial damages, including, among other things, the payment of materially greater consideration to acquire Sunrise REIT resulting from the substantial increase in the purchase price above the original contract price necessary to obtain unitholder approval and increased costs associated with the delay in closing the acquisition, including increased costs to finance the transaction as a result of the delay. HCP brought counterclaims against us alleging misrepresentation and negligent misrepresentation by Sunrise REIT related to its sale process, claiming that we were responsible for those actions as successor. HCP sought compensatory and punitive damages. On March25, 2009, the District Court granted us judgment on the pleadings against all counterclaims brought by HCP and dismissed HCPs counterclaims with prejudice.Thereafter, the District Court confirmed the dismissal of HCPs counterclaims. On July16, 2009, the District Court denied HCPs summary judgment motion as to our claim for tortious interference with business expectation, permitting us to present that claim against HCP at trial. The District Court granted HCPs motion for summary judgment as to our claim for tortious interference with contract and dismissed that claim. The District Court also ruled that we could not seek to recover a portion of our alleged damages. On September4, 2009, the jury unanimously held that HCP tortiously interfered with our business expectation to acquire Sunrise REIT at the agreed price by employing significantly wrongful means such as fraudulent misrepresentation, dece

INCOME TAXES

INCOME TAXES
	3 Months Ended Mar. 31, 2010
INCOME TAXES	NOTE 9INCOME TAXES We have elected for certain of our subsidiaries to be treated as taxable REIT subsidiaries (TRS or TRS entities), which are subject to federal and state income taxes. Although the TRS entities were not liable for any cash federal income taxes for the three-month period ended March31, 2010, federal income tax liabilities for these TRS entities may increase in future periods as we exhaust net operating loss carryforwards and as our senior living operations segment grows. Such increases could be significant. The consolidated provision for income taxes for the three-month periods ended March31, 2010 and 2009 was an expense of $0.3 million and a benefit of $0.5 million, respectively. The expense and benefit were reduced by income tax expense of $0.4 million for each period, related to the noncontrolling interest share of net income. Realization of a deferred tax benefit is dependent in part upon generating sufficient taxable income in future periods. Our net operating loss carryforwards begin to expire in 2024 with respect to the TRS entities and 2020 with respect to our other entities. Each TRS is a tax paying component for purposes of classifying deferred tax assets and liabilities. Net deferred tax liabilities related to TRS entities totaled $252.7 million and $253.7 million at March31, 2010 and December31, 2009, respectively, and related primarily to book and tax basis differences for fixed and intangible assets and to net operating losses. Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service for the year ended December31, 2006 and subsequent years and are subject to audit by state taxing authorities for the year ended December31, 2005 and subsequent years. The potential impact on income tax expense of years open under the statute of limitations for Canadian entities acquired as part of the Sunrise REIT acquisition is not expected to be material.

CAPITAL STOCK

CAPITAL STOCK
	3 Months Ended Mar. 31, 2010
CAPITAL STOCK	NOTE 10CAPITAL STOCK In March 2010, in connection with our outstanding 37/8% convertible senior notes due 2011, issued in 2006, we filed a registration statement on Form S-3 with the SEC relating to the resale, from time to time, by the selling stockholders of shares of our common stock, if any, that may become issuable upon conversion of the convertible notes. The registration statement replaced our previous resale shelf registration statement, which expired pursuant to the SECs rules. Accumulated Other Comprehensive Income March31, 2010 December31, 2009 (In thousands) Foreign currency translation $ 22,005 $ 16,059 Unrealized gain on marketable debt securities 4,147 4,440 Other (998 ) (830 ) Total accumulated other comprehensive income $ 25,154 $ 19,669

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE
	3 Months Ended Mar. 31, 2010
EARNINGS PER COMMON SHARE	NOTE 11EARNINGS PER COMMON SHARE The following table shows the amounts used in computing basic and diluted earnings per common share: For the Three Months Ended March31, 2010 2009 (Inthousands,exceptper share amounts) Numerator for basic and diluted earnings per share: Income from continuing operations attributable to common stockholders $ 52,159 $ 45,063 Discontinued operations 460 29,165 Net income attributable to common stockholders $ 52,619 $ 74,228 Denominator: Denominator for basic earnings per shareweighted average shares 156,453 143,091 Effect of dilutive securities: Stock options 316 48 Restricted stock awards 42 6 Convertible notes 156 Denominator for diluted earnings per shareadjusted weighted average shares 156,967 143,145 Basic earnings per share: Income from continuing operations attributable to common stockholders $ 0.34 $ 0.32 Discontinued operations 0.00 0.20 Net income attributable to common stockholders $ 0.34 $ 0.52 Diluted earnings per share: Income from continuing operations attributable to common stockholders $ 0.34 $ 0.32 Discontinued operations 0.00 0.20 Net income attributable to common stockholders $ 0.34 $ 0.52

SEGMENT INFORMATION

SEGMENT INFORMATION
	3 Months Ended Mar. 31, 2010
SEGMENT INFORMATION	NOTE 12SEGMENT INFORMATION As of March31, 2010, we operated through two reportable business segments: triple-net leased properties and senior living operations. Our triple-net leased properties segment consists of acquiring, financing and owning seniors housing and healthcare properties in the United States and leasing those properties to healthcare operating companies under triple-net or absolute-net leases, which require the tenants to pay all property-related expenses. Our senior living operations segment consists of investments in seniors housing communities located in the United States and Canada for which we engage Sunrise to manage the operations. Our MOB segment consists of leasing space primarily to physicians and other healthcare businesses and engaging third parties to manage those operations. Due to our limited operation of and allocation of capital to the MOBs, the MOB segment is not individually reported and is included in All Other because it does not meet necessary quantitative thresholds at the current time. We evaluate performance of the combined properties in each segment based on NOI. There are no intersegment sales or transfers. All other revenues consist primarily of rental income related to the MOBs, income from loans and investments and other miscellaneous income. Summary information by business segment is as follows: For the three months ended March31, 2010: Triple-Net Leased Properties Senior Living Operations All Other Total (In thousands) Revenues: Rental income $ 116,989 $ $ 12,190 $ 129,179 Resident fees and services 108,486 108,486 Income from loans and investments 3,617 3,617 Interest and other income 205 13 45 263 Total revenues $ 117,194 $ 108,499 $ 15,852 $ 241,545 Segment net operating income $ 116,989 $ 33,809 $ 11,605 $ 162,403 Interest and other income 205 13 45 263 Interest expense (21,832 ) (21,265 ) (1,203 ) (44,300 ) Depreciation and amortization (29,567 ) (17,963 ) (4,946 ) (52,476 ) General, administrative and professional fees (10,683 ) (10,683 ) Foreign currency gain 106 106 Merger-related expenses and deal costs (38 ) (711 ) (1,570 ) (2,319 ) Income (loss) before income taxes, discontinued operations and noncontrolling interest $ 65,757 $ (6,011 ) $ (6,752 ) $ 52,994 For the three months ended March31, 2009: Triple-Net Leased Properties Senior Living Operations All Other Total (In thousands) Revenues: Rental income $ 114,050 $ $ 8,348 $ 122,398 Resident fees and services 102,939 102,939 Income from loans and investments

CONDENSED CONSOLIDATING INFORMA

CONDENSED CONSOLIDATING INFORMATION
	3 Months Ended Mar. 31, 2010
CONDENSED CONSOLIDATING INFORMATION	NOTE 13CONDENSED CONSOLIDATING INFORMATION We and certain of our direct and indirect wholly owned subsidiaries (the Wholly Owned Subsidiary Guarantors) have fully and unconditionally guaranteed, on a joint and several basis, the obligation to pay principal and interest with respect to the senior notes of our subsidiaries, Ventas Realty and Ventas Capital Corporation (the Issuers). Ventas Capital Corporation is a wholly owned direct subsidiary of Ventas Realty that was formed to facilitate the offering of the senior notes and has no assets or operations. In addition, Ventas Realty and the Wholly Owned Subsidiary Guarantors have fully and unconditionally guaranteed, on a joint and several basis, the obligation to pay principal and interest with respect to our convertible notes. In April 2009, ElderTrust Operating Limited Partnership (ETOP), of which we owned substantially all of the partnership units, was liquidated and dissolved. Accordingly, the financial results of ETOP and its wholly owned subsidiaries are no longer separately reported but are now included among the Wholly Owned Subsidiary Guarantors. We have other subsidiaries (Non-Guarantor Subsidiaries) that are not included among the Wholly Owned Subsidiary Guarantors, and such subsidiaries are not obligated with respect to the senior notes or the convertible notes. Contractual and legal restrictions, including those contained in the instruments governing certain Non-Guarantor Subsidiaries outstanding indebtedness, may under certain circumstances restrict our ability to obtain cash from our Non-Guarantor Subsidiaries for the purpose of meeting our debt service obligations, including our guarantee of payment of principal and interest on the senior notes and our primary obligation to pay principal and interest on the convertible notes. Certain of our real estate assets are also subject to mortgages. The following summarizes our condensed consolidating information as of March31, 2010 and December31, 2009 and for the three months ended March31, 2010 and 2009: CONDENSED CONSOLIDATING BALANCE SHEET As of March 31, 2010 Ventas, Inc. Wholly Owned Subsidiary Guarantors Issuers Non-Guarantor Subsidiaries Consolidated Elimination Consolidated (In thousands) Assets Net real estate investments $ 9,356 $ 2,196,390 $ 744,952 $ 2,268,411 $ $ 5,219,109 Cash and cash equivalents 75,670 6,034 51,025 132,729 Escrow deposits and restricted cash 83 9,649 9,455 21,836 41,023 Deferred financing costs, net 3,154 1,299 13,128 10,383 27,964 Investment in and advances to affiliates 1,370,971 1,124,483 (2,495,454 ) Other 72,815 78,762 26,530 34,893 213,000 Total assets $ 1,532,049 $ 2,292,134 $ 1,918,548 $ 2,386,548 $ (2,495,454 ) $ 5,633,825 Liabilities and equity Liabilities: