Ventas Reports 2015 Fourth Quarter and Full Year Results
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Reported 2015 Normalized FFO of $4.47 Per Diluted Share; Nine
Percent Growth over 2014 on a Comparable Basis; Ahead of Prior
$4.43-$4.46 Guidance -
Reported Q4 2015 Normalized FFO of $1.03 Per Diluted Share; Seven
Percent Growth on a Comparable Basis -
2015 Portfolio Same-Store Cash Net Operating Income Grows 3.8
Percent -
2016 Normalized FFO Guidance Range Set at $4.07 to $4.15 Per
Diluted Share, Representing Three to Five Percent Comparable Growth -
Board of Directors Declares Regular First Quarter 2016 Dividend of
$0.73 Per Share
CHICAGO–(BUSINESS WIRE)–Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today announced
that reported normalized Funds From Operations (“FFO”) per diluted
common share was $4.47 for the year ended December 31, 2015. Reported
normalized FFO for the year ended December 31, 2015 was $1.5 billion.
Weighted average diluted shares outstanding for the full year increased
to 334.0 million, compared to 296.7 million in 2014.
Reported normalized FFO per diluted common share was $1.03 for the
fourth quarter of 2015. Fourth quarter 2015 reported normalized FFO was
$346.3 million, compared to $342.2 million for the 2014 period.
These current and prior period reported results include in discontinued
operations normalized FFO from the 355 properties that are now owned by
Care Capital Properties, Inc. (“CCP”) (NYSE:CCP). The spin-off of CCP as
an independent, publicly traded company (the “Spin-Off”) was
successfully completed on August 17, 2015. Ventas’s full year 2015
reported results include normalized FFO from those properties for the
period January 1 to August 17, 2015.
Normalized FFO for the year ended December 31, 2015 grew 9 percent on a
comparable basis (“Comparable”), which adjusts all current and prior
periods for the effects of the Spin-Off as if the Spin-Off were
completed January 1, 2014. Full-year 2015 Comparable normalized FFO
totaled $1.3 billion or $3.95 cents per diluted share. Normalized FFO
for the fourth quarter of 2015 grew 7 percent compared to the fourth
quarter 2014 on a Comparable basis.
Track Record of Excellence Demonstrated in 2015
“Ventas continued its long track record of consistent outperformance
with another exceptional year in 2015,” Ventas Chairman and Chief
Executive Officer Debra A. Cafaro said. “Our innovative and value
creating spin-off of Care Capital Properties improved the quality of our
diversified portfolio and our acquisition of the hospital real estate
network of Ardent, a top ten hospital operator, advanced our strategy of
building a formidable business in the large, growing and fragmented
acute care space. At the same time, the Company delivered superior
results to shareholders through 9 percent Comparable FFO per share
growth and a 10 percent dividend increase (combined with CCP).
“The Ventas advantage combines our outstanding people, our leading
operating partners and our diversified, high quality properties. This
unique advantage has enabled us to lead the market and deliver results
for shareholders for almost two decades, and gives us confidence that we
will sustain our record of excellence into 2016 and beyond,” Cafaro
added.
Fourth Quarter and Full Year Net Income and
NAREIT FFO
Reported net income attributable to common stockholders for the year
ended December 31, 2015 was $417.8 million, or $1.25 per diluted common
share. Reported net income attributable to common stockholders for the
year ended December 31, 2014 was $475.8 million, or $1.60 per diluted
common share.
Reported net income attributable to common stockholders for the quarter
ended December 31, 2015 was $124.7 million, or $0.37 per diluted common
share. Reported net income attributable to common stockholders for the
quarter ended December 31, 2014 was $107.2 million, or $0.36 per diluted
common share.
The decrease in full year 2015 reported net income per share from 2014
net income per share is principally due to the inclusion in 2014 of a
full year’s results from the properties that were spun off to CCP;
higher depreciation expense; and separation and transaction costs in the
current year principally related to the Spin-Off and the Ardent
transactions. These factors were partially offset by higher net
operating income (“NOI”) due to accretive investments and improved
property performance in 2015.
Reported FFO, as defined by the National Association of Real Estate
Investment Trusts (“NAREIT FFO”), for the year ended December 31, 2015
was $1.4 billion, or $4.09 per diluted common share. NAREIT FFO for the
fourth quarter of 2015 was $356.9 million, or $1.06 per diluted common
share.
Portfolio Performance
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For the year ended December 31, 2015, same-store cash NOI growth for
the Company’s total portfolio (1,008) assets was 3.8 percent compared
to 2014, in-line with previous company guidance of 3.5 to 4 percent.
For the quarter ended December 31, 2015 same-store cash NOI growth for
the Company’s total portfolio (1,056) assets was 1.7 percent. -
At a segment level for full year 2015: triple net same-store cash NOI
grew 5.8 percent; the seniors housing operating portfolio (“SHOP”)
same-store NOI grew 2.3 percent, consistent with previous guidance;
and the medical office building (“MOB”) portfolio grew 2 percent.
2015 and Fourth Quarter Highlights
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Ventas completed the innovative and strategic spin-off of Care Capital
Properties and acquired $1.3 billion of Ardent’s hospital real estate
network, further enhancing and diversifying the Company’s high-quality
portfolio and creating a platform for growth. -
The Company made $5.2 billion in acquisitions in 2015. In addition,
Ventas committed to funding approximately $350 million in new
development and redevelopment projects, primarily in seniors housing
and medical office buildings. -
In the fourth quarter of 2015, the Company acquired $93 million in
high quality MOBs that were previously managed by the Company and in
which the Company had a minority interest. -
In the fourth quarter, the Company committed to funding approximately
$240 million in new high-quality development and redevelopment
projects, including:-
A $166 million ($150 million at the Company’s share), 233,000
square foot multi-tenant “trophy” medical office building
development in a 90 / 10 joint venture with Ventas’s existing
development partner, Pacific Medical Buildings. The development is
located in downtown San Francisco and is connected to Sutter
Health’s (AA-; Standard & Poor’s) new flagship hospital, which is
currently under construction. The project is expected to be 75
percent leased upon opening. -
The redevelopment of four Atria communities totaling $86 million.
The communities are located in top coastal markets including New
York, San Francisco and Philadelphia.
Recent Developments
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To fund new investments, Ventas issued and sold a total of 1.6 million
shares of common stock since January 1, 2016 for aggregate proceeds of
approximately $92 million at an average gross price of $55.88 (before
sales commissions) under its “at the market” equity offering program.
The Company’s fully diluted full year 2016 share count is assumed to
be 340.4 million. -
Since January 1, 2016 Ventas has sold 6 properties for aggregate
proceeds of approximately $61 million. -
The Company currently has a strong liquidity position, with
approximately $2.0 billion available under its revolving credit
facility, as well as $236 million of cash on hand.
First Quarter Dividend
The Company said today that its Board of Directors declared a dividend
for the first quarter of $0.73 per share. The dividend is payable in
cash on March 31, 2016 to stockholders of record on March 7, 2016.2016 Guidance Range for Reported Normalized FFO
of $4.07 to $4.15 Per Diluted ShareVentas currently expects its 2016 reported normalized FFO per diluted
share to range between $4.07 and $4.15, representing 3 to 5 percent
growth over 2015 on a Comparable basis. Ventas currently expects its
2016 NAREIT reported FFO per diluted share to be between $4.13 and $4.21.Total Company same-store cash NOI is forecast to grow 1.5 to 3 percent
in 2016. Triple-net same-store cash NOI is forecast to grow 2 to 3
percent, SHOP same-store cash NOI is forecast to grow 1 to 3 percent and
MOB same-store cash NOI is estimated to grow 1 to 2 percent in 2016.The Company’s guidance assumes continued sale of assets, estimating $500
million in proceeds in 2016. The net proceeds are assumed to be
reinvested in approximately $350 million in acquisitions and to fund
development and redevelopment projects.Consistent with its practice, the Company’s guidance does not include
any further material investments, dispositions or capital activity. A
modest reduction in leverage in 2016 to below 6x net debt to adjusted
pro forma EBITDA is also assumed in its guidance. A reconciliation of
the Company’s guidance to the Company’s projected GAAP earnings is
included in this press release.The Company’s guidance is based on a number of other assumptions that
are subject to change and many of which are outside the control of the
Company. 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 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 (877) 703-6105 (or (857) 244-7304 for
international callers). The participant passcode is “Ventas.” The
conference call is being webcast live by NASDAQ OMX and can be accessed
at the Company’s website at www.ventasreit.com.
A replay of the webcast will be available following the call online, or
by calling (888) 286-8010 (or (617) 801-6888 for international callers),
passcode 97749067, beginning at approximately 2:00 p.m. Eastern Time and
will remain for 35 days.Ventas, Inc., an S&P 500 company, is a leading real estate investment
trust. Its diverse portfolio of approximately 1,300 assets in the United
States, Canada and the United Kingdom consists of seniors housing
communities, medical office buildings, skilled nursing facilities,
specialty hospitals and general acute care hospitals. 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. More information about
Ventas and Lillibridge can be found at www.ventasreit.com
and www.lillibridge.com.Supplemental information regarding the Company can be found on the
Company’s website under the “Investor Relations” section or at www.ventasreit.com/investor-relations/financial-information/supplemental-information.
A comprehensive listing of the Company’s properties is available at www.ventasreit.com/our-portfolio/properties-by-location.This press release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements regarding the Company’s or its tenants’, operators’,
borrowers’ or managers’ expected future financial condition, results of
operations, cash flows, funds from operations, dividends and dividend
plans, financing opportunities and plans, capital markets transactions,
business strategy, budgets, projected costs, operating metrics, capital
expenditures, competitive positions, acquisitions, investment
opportunities, dispositions, merger or acquisition integration, growth
opportunities, expected lease income, continued qualification as a real
estate investment trust (“REIT”), plans and objectives of management for
future operations and statements that include words such as
“anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,”
“may,” “could,” “should,” “will” and other similar expressions are
forward-looking statements. These forward-looking statements are
inherently uncertain, and actual results may differ from the Company’s
expectations. The Company does not undertake a duty to update
these forward-looking statements, which speak only as of the date on
which they are made.The Company’s actual future results and trends may differ materially
from expectations depending on a variety of factors discussed in the
Company’s filings with the Securities and Exchange Commission. These
factors include without limitation: (a) the ability and willingness of
the Company’s tenants, operators, borrowers, managers and other third
parties to satisfy their obligations under their respective contractual
arrangements with the Company, including, in some cases, their
obligations to indemnify, defend and hold harmless the Company from and
against various claims, litigation and liabilities; (b) the ability of
the Company’s tenants, operators, borrowers and managers to maintain the
financial strength and liquidity necessary to satisfy their respective
obligations and liabilities to third parties, including without
limitation obligations under their existing credit facilities and other
indebtedness; (c) the Company’s success in implementing its business
strategy and the Company’s ability to identify, underwrite, finance,
consummate and integrate diversifying acquisitions and investments; (d)
macroeconomic conditions such as a disruption of or lack of access to
the capital markets, changes in the debt rating on U.S. government
securities, default or delay in payment by the United States of its
obligations, and changes in the federal or state budgets resulting in
the reduction or nonpayment of Medicare or Medicaid reimbursement rates;
(e) the nature and extent of future competition, including new
construction in the markets in which the Company’s seniors housing
communities and medical office buildings (“MOBs”) are located;
(f) the extent of future or pending healthcare reform and regulation,
including cost containment measures and changes in reimbursement
policies, procedures and rates; (g) increases in the Company’s borrowing
costs as a result of changes in interest rates and other factors; (h)
the ability of the Company’s tenants, operators and managers, as
applicable, to comply with laws, rules and regulations in the operation
of the Company’s properties, to deliver high-quality services, to
attract and retain qualified personnel and to attract residents and
patients; (i) changes in general economic conditions or economic
conditions in the markets in which the Company may, from time to time,
compete, and the effect of those changes on the Company’s revenues,
earnings and funding sources; (j) the Company’s ability to pay down,
refinance, restructure or extend its indebtedness as it becomes due; (k)
the Company’s ability and willingness to maintain its qualification as a
REIT in light of economic, market, legal, tax and other considerations;
(l) final determination of the Company’s taxable net income for the year
ended December 31, 2015 and for the year ending December 31, 2016; (m)
the ability and willingness of the Company’s tenants to renew their
leases with the Company upon expiration of the leases, the Company’s
ability to reposition its properties on the same or better terms in the
event of nonrenewal or in the event the Company exercises its right to
replace an existing tenant, and obligations, including indemnification
obligations, the Company may incur in connection with the replacement of
an existing tenant; (n) risks associated with the Company’s senior
living operating portfolio, such as factors that can cause volatility in
the Company’s operating income and earnings generated by those
properties, including without limitation national and regional economic
conditions, costs of food, materials, energy, labor and services,
employee benefit costs, insurance costs and professional and general
liability claims, and the timely delivery of accurate property-level
financial results for those properties; (o) changes in exchange rates
for any foreign currency in which the Company may, from time to time,
conduct business; (p) year-over-year changes in the Consumer Price Index
or the UK Retail Price Index and the effect of those changes on the rent
escalators contained in the Company’s leases and the Company’s earnings;
(q) the Company’s ability and the ability of its tenants, operators,
borrowers and managers to obtain and maintain adequate property,
liability and other insurance from reputable, financially stable
providers; (r) the impact of increased operating costs and uninsured
professional liability claims on the Company’s liquidity, financial
condition and results of operations or that of the Company’s tenants,
operators, borrowers and managers, and the ability of the Company and
the Company’s tenants, operators, borrowers and managers to accurately
estimate the magnitude of those claims; (s) risks associated with the
Company’s MOB portfolio and operations, including the Company’s ability
to successfully design, develop and manage MOBs and to retain key
personnel; (t) the ability of the hospitals on or near whose campuses
the Company’s MOBs are located and their affiliated health systems to
remain competitive and financially viable and to attract physicians and
physician groups; (u) risks associated with the Company’s investments in
joint ventures and unconsolidated entities, including its lack of sole
decision-making authority and its reliance on its joint venture
partners’ financial condition; (v) the impact of market or issuer events
on the liquidity or value of the Company’s investments in marketable
securities; (w) consolidation activity in the seniors housing and
healthcare industries resulting in a change of control of, or a
competitor’s investment in, one or more of the Company’s tenants,
operators, borrowers or managers or significant changes in the senior
management of the Company’s tenants, operators, borrowers or managers;
(x) 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 (y) 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 As of December 31, 2015, September 30, 2015, June 30, 2015, March
31, 2015 and December 31, 2014(In thousands, except per share amounts) December 31, September 30, June 30, March 31, December 31, 2015 2015 2015 2015 2014 Assets Real estate investments: Land and improvements $ 2,056,428 $ 2,068,467 $ 2,016,281 $ 1,974,013 $ 1,711,654 Buildings and improvements 20,309,599 20,220,624 19,247,902 19,049,345 17,420,392 Construction in progress 92,005 124,381 129,186 118,483 109,689 Acquired lease intangibles 1,344,422 1,347,493 1,214,702 1,197,567 955,035 23,802,454 23,760,965 22,608,071 22,339,408 20,196,770 Accumulated depreciation and amortization (4,177,234 ) (3,972,544 ) (3,780,388 ) (3,569,773 ) (3,423,780 ) Net real estate property 19,625,220 19,788,421 18,827,683 18,769,635 16,772,990 Secured loans receivable and investments, net 857,112 766,707 762,312 746,793 802,881 Investments in unconsolidated real estate entities 95,707 96,208 85,461 95,147 91,872 Net real estate investments 20,578,039 20,651,336 19,675,456 19,611,575 17,667,743 Cash and cash equivalents 53,023 65,231 60,532 120,225 55,348 Escrow deposits and restricted cash 77,896 74,491 193,960 223,772 71,771 Goodwill 1,047,497 1,052,321 1,058,607 947,386 363,971 Assets held for sale 93,060 152,014 2,822,553 3,012,994 2,555,322 Other assets 412,403 418,584 395,770 452,533 451,758 Total assets $ 22,261,918 $ 22,413,977 $ 24,206,878 $ 24,368,485 $ 21,165,913 Liabilities and equity Liabilities: Senior notes payable and other debt $ 11,206,996 $ 11,284,957 $ 11,456,038 $ 11,549,062 $ 10,844,351 Accrued interest 80,864 67,440 77,713 77,444 62,182 Accounts payable and other liabilities 779,380 791,556 784,547 777,595 750,657 Liabilities related to assets held for sale 34,340 48,860 225,269 222,389 237,973 Deferred income taxes 338,382 352,658 370,161 371,785 344,337 Total liabilities 12,439,962 12,545,471 12,913,728 12,998,275 12,239,500 Redeemable OP unitholder and noncontrolling interests 196,529 198,832 199,404 257,246 172,016 Commitments and contingencies Equity: Ventas stockholders’ equity: Preferred stock, $1.00 par value; 10,000 shares authorized, unissued — — — — — Common stock, $0.25 par value; 334,386; 333,027; 331,965; 330,913
and 298,478 shares issued at December 31, 2015, September 30, 2015,
June 30, 2015, March 31, 2015 and December 31, 2014, respectively83,579 83,238 82,982 82,718 74,656 Capital in excess of par value 11,602,838 11,523,312 12,708,898 12,616,056 10,119,306 Accumulated other comprehensive (loss) income (7,565 ) (592 ) 10,180 4,357 13,121 Retained earnings (deficit) (2,111,958 ) (1,992,848 ) (1,772,529 ) (1,660,856 ) (1,526,388 ) Treasury stock, 44; 61; 28; 32 and 7 shares at December 31, 2015,
September 30, 2015, June 30, 2015, March 31, 2015 and December 31,
2014, respectively(2,567 ) (3,675 ) (2,048 ) (2,385 ) (511 ) Total Ventas stockholders’ equity 9,564,327 9,609,435 11,027,483 11,039,890 8,680,184 Noncontrolling interest 61,100 60,239 66,263 73,074 74,213 Total equity 9,625,427 9,669,674 11,093,746 11,112,964 8,754,397 Total liabilities and equity $ 22,261,918 $ 22,413,977 $ 24,206,878 $ 24,368,485 $ 21,165,913 CONSOLIDATED STATEMENTS OF INCOME For the three months and years ended December 31, 2015 and 2014 (In thousands, except per share amounts) For the Three Months Ended For the Year Ended December 31, December 31, 2015 2014 2015 2014 Revenues: Rental income: Triple-net leased $ 208,210 $ 174,500 $ 779,801 $ 674,547 Medical office buildings 145,958 116,968 566,245 463,910 354,168 291,468 1,346,046 1,138,457 Resident fees and services 454,871 411,170 1,811,255 1,552,951 Medical office building and other services revenue 11,541 11,124 41,492 29,364 Income from loans and investments 20,361 14,876 86,553 51,778 Interest and other income 333 3,452 1,052 4,263 Total revenues 841,274 732,090 3,286,398 2,776,813 Expenses: Interest 103,692 77,948 367,114 292,065 Depreciation and amortization 236,795 218,049 894,057 725,216 Property-level operating expenses: Senior living 307,261 273,563 1,209,415 1,036,556 Medical office buildings 45,073 38,811 174,225 158,832 352,334 312,374 1,383,640 1,195,388 Medical office building services costs 7,467 7,527 26,565 17,092 General, administrative and professional fees 27,636 28,106 128,035 121,738 (Gain) loss on extinguishment of debt, net (486 ) 485 14,411 5,564 Merger-related expenses and deal costs (2,079 ) 7,360 102,944 43,304 Other 4,009 7,673 17,957 25,743 Total expenses 729,368 659,522 2,934,723 2,426,110 Income before loss from unconsolidated entities, income taxes,
discontinued operations, real estate dispositions and noncontrolling
interest111,906 72,568 351,675 350,703 Loss from unconsolidated entities (223 ) (688 ) (1,420 ) (139 ) Income tax benefit 11,548 13,552 39,284 8,732 Income from continuing operations 123,231 85,432 389,539 359,296 Discontinued operations (2,331 ) 20,709 11,103 99,735 Gain on real estate dispositions 4,160 1,456 18,580 17,970 Net income 125,060 107,597 419,222 477,001 Net income attributable to noncontrolling interest 332 407 1,379 1,234 Net income attributable to common stockholders $ 124,728 $ 107,190 $ 417,843 $ 475,767 Earnings per common share: Basic: Income from continuing operations attributable to common
stockholders, including real estate dispositions$ 0.38 $ 0.29 $ 1.23 $ 1.28 Discontinued operations (0.01 ) 0.07 0.03 0.34 Net income attributable to common stockholders $ 0.37 $ 0.36 $ 1.26 $ 1.62 Diluted: Income from continuing operations attributable to common
stockholders, including real estate dispositions$ 0.38 $ 0.29 $ 1.22 $ 1.26 Discontinued operations (0.01 ) 0.07 0.03 0.34 Net income attributable to common stockholders $ 0.37 $ 0.36 $ 1.25 $ 1.60 Weighted average shares used in computing earnings per common
share:Basic 332,914 294,810 330,311 294,175 Diluted 336,406 297,480 334,007 296,677 Dividends declared per common share $ 0.73 $ 0.79 $ 3.04 $ 2.965 Contacts
Ventas, Inc.
Ryan K. Shannon
(877) 4-VENTAS -
A $166 million ($150 million at the Company’s share), 233,000
