EXHIBIT 99.1
[LETTERHEAD OF VENTAS, INC.]
Contact: Debra A. Cafaro
President and CEO
or
John C. Thompson
Vice President
(502) 357-9000
VENTAS CLOSES $225 MILLION CMBS TRANSACTION;
LOWERS LONG-TERM DEBT COSTS;
ISSUES 2002 FFO AND DIVIDEND GUIDANCE
Louisville, KY (December 17, 2001) - Ventas, Inc. (NYSE:VTR) ("Ventas" or the
"Company") said today it has raised $225 million from the completion of its
commercial mortgage backed securitization ("CMBS") transaction. Net proceeds of
$213 million have been used to pay down a portion of the outstanding balance
under its existing Amended Credit Agreement. The outstanding principal balance
under its Amended Credit Agreement is currently $634 million.
The floating rate, 5-year CMBS certificates, secured by 40 skilled nursing
facilities, carry an average interest rate spread of 146 basis points over the
one-month LIBOR rate, for an initial nominal interest rate of 3.4 percent per
year. With fees of approximately 3 percent, the all-in rate is 206 basis points
over one-month LIBOR. Because of the Company's existing interest rate swap that
fixes LIBOR at 5.985 percent, the all-in effective swapped rate on the CMBS loan
is approximately 8 percent. The CMBS loan is non-recourse to the Company and the
principal balance will amortize on a 25-year schedule. The transaction will add
approximately $0.038 per share to the Company's 2002 Funds From Operation
("FFO").
With the successful completion of the CMBS transaction, Ventas has removed the
dividend restriction in its Amended Credit Agreement, which had limited its
dividend
payout to 90 percent of taxable net income. In addition, the Company will now
have no debt maturities prior to December 2005.
"The successful completion of our CMBS transaction is a first important step in
meeting one of our chief corporate goals - to reduce our borrowing costs,"
Ventas President and CEO Debra A. Cafaro said. "In a single transaction, we have
reduced our costs of debt, removed the dividend restriction in our Credit
Agreement and increased cash flow and FFO. Importantly, the Company will have no
debt maturities until December 2005. We look forward to using the CMBS
transaction as a stepping stone to our next goal - refinancing the remainder of
our balance sheet at lower rates in 2002."
Merrill Lynch was the lead manager on the CMBS transaction and Morgan Stanley
was the co-manager.
2002 FFO AND DIVIDEND GUIDANCE
Ventas said it expects to report FFO of $1.24 to $1.26 per share for 2002,
assuming no additional debt reduction, no sale of any of its equity stake in its
primary tenant, Kindred Healthcare, Inc. (Nasdaq:KIND), and no refinancing
transactions. Because Kindred's annual rent increases from $180.7 million to
$187 million on May 1, 2002, quarterly FFO will likely be lower during the
pre-May 1 period and higher during the post-May 1 period.
With the lifting of the dividend payout restriction contained in its Credit
Agreement. Ventas said that it expects its 2002 dividend will be $0.95 per
share, which is an 8 percent increase over the 2001 annual rate of $0.88 per
share (excluding the one-time adjustment of $0.04 per share declared in the
fourth quarter). It further expects that 2002 dividends will be paid quarterly,
in cash, although it reserves the right to pay dividends in whole or in part by
distribution of shares of common stock of Kindred, or other securities or
property. Earlier this month, Ventas announced that it will likely distribute up
to 350,000 shares of Kindred common stock to satisfy all or part of the fourth
quarter 2001 dividend, which will be paid to stockholders on January 7, 2002.
"For the last three years, we have tried to position the Company for a return to
growth, and the ability to pay an increasing, stabilized quarterly dividend,"
Cafaro said. "It is gratifying to achieve these goals. If we are successful in
continuing to meet our corporate objectives of de-levering our balance sheet,
decreasing our cost of debt and driving FFO growth, we expect that will use free
cash flow in a balanced way to increase the dividend and reduce our outstanding
debt balance, both of which materially benefit our shareholders."
There can be no assurances regarding the Company's ability to pay future
dividends. The Company may from time to time update its publicly announced
expectations regarding future dividends, but it is not obligated to do so.
ASSUMPTIONS
The Company's FFO and dividend guidance are based on a number of additional
assumptions, including, but not limited to, the following: Kindred performs its
obligations under the five Amended Master Leases covering 210 nursing homes and
44 hospitals and various other agreements between the companies; the Company's
other tenants perform their obligations under their leases with the Company; no
other debt refinancings (excluding the CMBS transaction) occur; no additional
dispositions of Kindred stock occur; no capital transactions, acquisitions or
divestitures occur; Ventas's tax and accounting positions do not change; Ventas
does not incur any impact from new Accounting Rule FASB 133 relating to
derivatives; interest rates remain constant; Ventas satisfies its fourth quarter
2001 dividend principally through a distribution of Kindred common stock; Ventas
uses cash available to pay down Tranche B debt under its Credit Agreement such
that the Tranche B interest rate declines to Libor plus 325 basis points; and
the Company's issued outstanding and diluted shares are unchanged.
Ventas, Inc. is a healthcare, real estate investment trust whose properties
include 44 hospitals, 216 nursing homes and eight personal care facilities in 36
states. Its website can be found at www.ventasreit.com.
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This Press Release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). All statements regarding Ventas 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 ("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.
Such forward-looking statements are inherently uncertain, and stockholders 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 (the "Commission"). Factors that may affect
the plans or results of the Company include, without limitation, (a) the ability
and willingness of Kindred Healthcare, Inc. and certain of its affiliates
(collectively "Kindred") to continue to meet and/or honor its obligations under
its contractual arrangements with the Company and the Company's wholly owned
operating partnership, Ventas Realty, Limited Partnership ("Ventas Realty"),
including without limitation the various agreements (the "Spin Agreements")
entered into by the Company and Kindred at the time of the corporate
reorganization on May 1, 1998 (the "1998 Spin Off") pursuant to which the
Company was separated into two publicly held corporations, (b) the ability and
willingness of Kindred to continue to meet and/or honor its obligation to
indemnify and defend the Company for all litigation and other claims relating to
the health care 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 extent of
future competition, (f) the extent of future health care reform and regulation,
including cost containment measures and changes in reimbursement policies and
procedures, (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
the Company's interest rate swap agreement and the ability of the Company to
satisfy its obligation to post cash collateral if required to do so under such
interest rate swap agreement, (m) the ability and willingness of Atria, Inc.
("Atria") to continue to meet and honor its contractual arrangements with the
Company and Ventas Realty entered into connection with the Company's spin off of
its assisted living operations and related assets and liabilities to Atria in
August 1996, (n) the ability and willingness of the Company to maintain its
qualification as a REIT due to economic, market, legal, tax or other
considerations, including, without limitation, the Company's failure to qualify
as a REIT due to its ownership of Kindred common stock, (o) the outcome of the
audit being conducted by the Internal Revenue Service for the Company's tax
years ended December 31, 1997 and 1998, (p) final determination of the Company's
net taxable income for the tax year ended December 31, 2001, (q) 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 (r) the limitations on the ability of the Company to
sell, transfer or otherwise dispose of its common stock in Kindred arising out
of the securities laws and the registration rights agreement the Company entered
into with Kindred and certain of the holders of the Kindred common stock. Many
of such factors are beyond the control of the Company and its management.