[VENTAS LOGO]
Ventas, Inc. 4360 Brownsboro Road Suite 115 Louisville, Kentucky 40207-1642
(502) 357.9000 (502) 357.9001 Fax
Contacts: Debra A. Cafaro
Chairman, President and CEO
or
Richard A. Schweinhart
Senior Vice President and CFO
(502) 357-9000
VENTAS TO SELL TEN FACILITIES TO KINDRED FOR $85 MILLION TOTAL
CONSIDERATION
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Transaction Expected to Close Before Year End
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LOUISVILLE, Ky (November 5, 2003) - Ventas, Inc. (NYSE:VTR) ("Ventas" or the
"Company") said today that it has reached an agreement to sell ten of its
facilities to its primary tenant Kindred Healthcare, Inc. (NASDAQ:KIND), which
currently leases and operates those facilities.
Total consideration for the sale is $85 million, consisting of a purchase
price of $79 million and a $6 million lease termination fee. Current annual rent
on the ten facilities is approximately $5 million. The purchase price and lease
termination fee will be payable in cash, at closing, which is expected to occur
by year-end.
"This transaction should provide significant benefits to Ventas and Kindred
shareholders. By completing the sale, Ventas will remove the worst performing
assets from its Master Leases with Kindred, which will improve the overall
quality of the portfolio and increase cash flow coverages in the Master Leases
with Kindred. It will also generate cash proceeds that will be available to fund
Ventas's strategic diversification program," Ventas Chairman, President and CEO
Debra A. Cafaro said. "By eliminating the operating losses in these ten assets,
Kindred should achieve increased profitability in the future. We are delighted
to work cooperatively and pro-actively with Kindred to craft a transaction that
should create shareholder value for both companies."
The assets consist of two hospitals, located in Minnesota and Michigan, and
eight skilled nursing facilities located in Kentucky, Massachusetts, Connecticut
and Wisconsin. The hospitals contain 332 beds and the eight skilled nursing
facilities contain 1,081 beds.
As a result of the sales, Ventas expects to record a book gain of
approximately $54 million in its 2003 earnings. The gain will be excluded from
FFO in accordance with the NAREIT definition of FFO. The Company does not expect
to incur any taxes or additional 2003 dividend requirements in connection with
the sale.
The transaction is expected to close in December 2003, subject to approval
by Kindred's lenders and other closing conditions. There can be no assurance
that the announced transaction will close or, if so, when it will close.
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Ventas To Sell Ten Facilities To Kindred
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November 5, 2003
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MASTER LEASE RENT COVERAGES
In its third quarter earnings report issued on October 27, 2003, Ventas
said that the EBITDAR to rent coverages on its Kindred portfolio is 1.6 times
for the trailing twelve months ended June 30, 2003 (the latest period
available). Excluding the ten assets to be sold, Kindred's EBIDTAR to rent
coverage for the same period is 1.7 times.
2003 AND 2004 NORMALIZED FFO GUIDANCE REAFFIRMED
Ventas re-affirmed its 2003 normalized FFO guidance of between $1.52 and
$1.54 per diluted share, and its 2004 normalized FFO guidance of between $1.58
and $1.62 per diluted share. The Company's FFO guidance (and related GAAP
earnings projections) for 2003 and 2004 excludes gains and losses on the sales
of assets, and the impact of acquisitions, additional divestitures and capital
transactions. It also excludes the impact of (a) any expense for "swap
ineffectiveness" equal to the portion of the unrealized loss on its $450 million
notional amount LIBOR swap (the Swap) in excess of its variable rate debt
balances or (b) any cash costs the Company may incur to reduce the notional
amount of the Swap to more closely match its variable rate debt balances.
The Company's FFO guidance is based on a number of assumptions, which are
subject to change and many of which are outside the control of the Company. If
actual results vary from these assumptions, the Company's expectations may
change. There can be no assurance that the Company will achieve these results.
Ventas, Inc. is a healthcare real estate investment trust that owns 44
hospitals, 202 nursing facilities and nine other healthcare and senior housing
facilities in 37 states. The Company also has investments in 25 additional
healthcare and senior housing facilities. More information about Ventas can be
found on its website at www.ventasreit.com.
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 Ventas,
Inc.'s ("Ventas" or the "Company") and its subsidiaries' expected future
financial position, results of operations, cash flows, funds from operations,
dividends and dividend plans, financing plans, business strategy, budgets,
projected costs, capital expenditures, competitive positions, growth
opportunities, expected lease income, continued qualification as a real estate
investment trust, 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. Such forward-looking
statements are inherently uncertain, and security holders must recognize that
actual results may differ from the Company's expectations. The Company does not
undertake a duty to update such forward-looking statements.
Actual future results and trends for the Company may differ materially
depending on a variety of factors discussed in the Company's filings with the
Securities and Exchange Commission. Factors that may affect the plans or results
of the Company include, without limitation, (a) the ability and willingness of
Kindred Healthcare, Inc. ("Kindred") and certain of its affiliates to continue
to meet and/or perform their obligations under their contractual arrangements
with the Company and the Company's subsidiaries, including without limitation
the lease agreements and various agreements entered into by the Company and
Kindred at the time of the Company's spin off of Kindred on May 1, 1998 (the
"1998 Spin Off"), as such agreements may have been amended and restated in
connection with Kindred's emergence from bankruptcy on April 20, 2001, (b) the
ability and willingness of Kindred to continue to meet and/or perform its
obligation to indemnify and defend the Company for all litigation and other
claims relating to the healthcare operations and other assets and liabilities
transferred to Kindred in the 1998 Spin Off, (c) the ability of Kindred and the
Company's other operators to maintain the financial strength and liquidity
necessary to satisfy their respective obligations and duties under the leases
and other agreements with the Company, and their existing credit agreements, (d)
the Company's success in implementing its business strategy, (e) the nature and
Ventas To Sell Ten Facilities To Kindred
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November 5, 2003
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extent of future competition, (f) the extent of future healthcare reform and
regulation, including cost containment measures and changes in reimbursement
policies, procedures and rates, (g) increases in the cost of borrowing for the
Company, (h) the ability of the Company's operators to deliver high quality care
and to attract patients, (i) the results of litigation affecting the Company,
(j) changes in general economic conditions and/or economic conditions in the
markets in which the Company may, from time to time, compete, (k) the ability of
the Company to pay down, refinance, restructure, and/or extend its indebtedness
as it becomes due, (l) the movement of interest rates and the resulting impact
on the value of and the accounting for the Company's interest rate swap
agreement, (m) the ability and willingness of the Company to maintain its
qualification as a REIT due to economic, market, legal, tax or other
considerations, (n) final determination of the Company's taxable net income for
the year ending December 31, 2003, (o) the ability and willingness of the
Company's tenants to renew their leases with the Company upon expiration of the
leases and the Company's ability to relet its properties on the same or better
terms in the event such leases expire and are not renewed by the existing
tenants, and (p) the impact on the liquidity, financial condition and results of
operations of Kindred and the Company's other operators resulting from increased
operating costs and uninsured liabilities for professional liability claims, and
the ability of Kindred and the Company's other operators to accurately estimate
the magnitude of such liabilities. Many of such factors are beyond the control
of the Company and its management.
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Ventas To Sell Ten Facilities To Kindred
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November 5, 2003
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SUPPLEMENTAL DATA
Projected FFO per diluted share for the years ended December 31, 2003 and 2004:
2003 Projected 2004 Projected
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Per diluted share:
Net income ............................... $1.32 - $1.34 $1.11 - $1.15
Adjustments:
Depreciation on real estate assets ... 0.52 - 0.52 0.47 - 0.47
Realized loss on sale of
real estate assets.................. 0.04 - 0.04 -- - --
----- ----- ----- -----
FFO ...................................... $1.88 - $1.90 $1.58 - $1.62
Adjustments:
Gain on sale of Kindred common stock . (0.11) - (0.11) -- - --
Reversal of contingent liability ..... (0.25) - (0.25) -- - --
----- ----- ----- -----
Normalized FFO............................ $1.52 - $1.54 $1.58 - $1.62
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Historical cost accounting for real estate assets implicitly assumes that
the value of real estate assets diminishes predictably over time. Since real
estate values instead have historically risen or fallen with market conditions,
many industry investors have considered presentations of operating results for
real estate companies that use historical cost accounting to be insufficient by
themselves. To overcome this problem, the Company considers FFO an appropriate
measure of performance of an equity REIT and uses the National Association of
Real Estate Investment Trusts ("NAREIT") definition of FFO. NAREIT defines FFO
as net income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from sales of property, plus
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated partnerships and
joint ventures will be calculated to reflect funds from operations on the same
basis.
FFO presented herein is not necessarily comparable to FFO presented by
other real estate companies due to the fact that not all real estate companies
use the same definition. FFO should not be considered as an alternative to net
income (determined in accordance with accounting principles generally accepted
in the United States ("GAAP")), as an indicator of the Company's financial
performance, as an alternative to cash flow from operating activities
(determined in accordance with GAAP), as a measure of the Company's liquidity,
nor is FFO 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 should be examined in conjunction with net income as presented elsewhere in
the Company's public filings on Form 10-Q and Form 10-K.
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