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Ventas Reports 2022 Second Quarter Results

Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today reported results for the second quarter ended June 30, 2022.

Second Quarter 2022 Highlights

  • Net Income (Loss) Attributable to Common Stockholders (“Attributable Net Income (Loss)”) per share of ($0.11)
  • Normalized Funds from Operations* (“Normalized FFO”) per share of $0.72
  • Total Company year-over-year same-store cash Net Operating Income* (“NOI”) growth of 3.5%, above the high end of the guidance range
  • Senior Housing Operating Portfolio (“SHOP”) segment year-over-year same-store cash NOI* growth of nearly 9%, at the high end of the guidance range, driven by same-store revenue growth exceeding 10%

*Some of the financial measures throughout this press release are non-GAAP measures. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release for additional information and a reconciliation to the most directly comparable GAAP measure.

CEO Remarks

“Ventas delivered strong results in the second quarter of 2022, with business performance at the high end of our expectations. We drove attractive year-over-year top and bottom-line growth in our SHOP portfolio, which benefitted from strong demand and expanding pricing power, offsetting anticipated expense growth caused by broad inflationary pressures,” said Debra A. Cafaro, Ventas Chairman and CEO.

“In the third quarter of 2022, we are again projecting that our earnings will benefit from outstanding year-over-year growth in our SHOP segment. Third quarter earnings will also reflect the benefit of HHS grants received during the quarter.

“We continue to find compelling investment opportunities, with $1.3 billion of investment activity year to date. Our life science, research & innovation business is demonstrating significant momentum in investments, deliveries and leasing, including the announcement of two new marquee projects with major research institutions. We are experiencing accelerating demand across this portfolio from leading universities and other prominent commercial enterprises.

“We believe Ventas is in an advantaged position to deliver value in a dynamic business environment because of our high quality, diversified portfolio and our differentiated industry insights and deep experience,” Cafaro concluded.

Second Quarter 2022 Enterprise Results

For the second quarter 2022, reported per share results were:

 

Quarter Ended June 30,

 

20222

20211

$ Change

% Change

Attributable Net Income (Loss)

($0.11)

$0.23

($0.34)

n/a

Nareit FFO*

$0.60

$0.78

($0.18)

(23.1%)

Normalized FFO*

$0.72

$0.73

($0.01)

(1.4%)

 

 

 

 

 

*

Some of the financial measures throughout this press release are non-GAAP measures. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release for additional information and a reconciliation to the most directly comparable GAAP measure.

1

The 2Q21 period included a benefit of $0.02 due to Ventas’s share of HHS grants received by Ardent.

2

The 2Q22 period includes a non-cash mark to market charge of ($0.09) per share on Brookdale warrants in Attributable Net Income (Loss) and Nareit FFO. The Brookdale warrants are valued at approximately $40 million as of June 30, 2022.

 
 

Second Quarter 2022 Property Results

 

 

2Q22 (Quarterly Pools) Year-Over-Year

Same-Store Cash NOI* Growth

Business Segment

 

Properties

% Growth

SHOP

 

321

8.7%

Office

 

331

3.2%

Triple-Net

 

330

(0.6%)

Total Company

 

982

3.5%

*

Some of the financial measures throughout this press release are non-GAAP measures. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release for additional information and a reconciliation to the most directly comparable GAAP measure.

 
 

SHOP Portfolio (33% of Total Portfolio)

SHOP year-over-year same-store (321 assets) cash NOI growth of nearly 9% in the second quarter of 2022 was driven primarily by the U.S., which increased nearly 14%. Canada continued to experience COVID-19 related impacts in the quarter and grew NOI by 1%.

  • Same-store SHOP revenue in the second quarter grew year-over-year by over 10% due to positive trends in occupancy and accelerating RevPOR growth.
  • Same-store average occupancy grew year-over-year by 390 basis points to 83.7% in the second quarter 2022, in-line with the guidance of 400 basis points. Robust demand continued a trend of positive net move-ins each month in the second quarter.
  • Same-store RevPOR increased by 5% versus the prior year, the largest increase in the past decade, driven by growth in base rent and care pricing, and re-leasing spreads that continue to trend favorably and ended the quarter at nearly flat.
  • Operating expenses were consistent with the Company’s guidance. Year-over-year same-store operating expenses grew 11%, driven by continued macro inflationary impacts throughout the quarter on labor, utilities and other operating expenses.
  • Resident confirmed COVID-19 cases and employee absences due to COVID-19 increased during the quarter. The increase in COVID-19 cases affected move-ins and staffing at certain communities.
  • On a sequential basis, SHOP same-store (536 assets) cash NOI outperformed pre-COVID seasonal trends, and grew over 6%, led by 70 basis points of occupancy growth and strong performance across the portfolio. Net hiring improved, and contract labor costs declined, modestly from the first quarter 2022. Cash NOI margins also increased sequentially by 110 basis points to 23.0% in the second quarter 2022.

Office Portfolio (32% of Total Portfolio)

  • Office year-over-year same-store cash NOI increased by 3.2%, above the high end of the Company’s guidance range, driven by contractual escalators, strong retention, new leasing and favorable expense controls.

Triple-Net Portfolio (32% of Total Portfolio)

  • Triple-Net year-over-year same-store cash NOI decreased by (0.6%), better than the high end of the Company’s guidance range, driven by the previously communicated lease resolutions with several smaller senior housing triple-net tenants who were materially affected by the COVID-19 pandemic.

Select Investment Activity

  • Ventas continues to expand its advantaged university-based life science, research & innovation (“R&I”) platform by committing to additional attractive development projects that will generate future growth. Ventas has $1.6 billion of life science, R&I developments in progress, including two exciting new projects announced today. These new projects demonstrate Ventas’s ability to leverage strong relationships with the nation’s leaders in research, medicine and higher education to execute on high-quality, large-scale transactions:
    • Atrium Health/Wake Forest University School of Medicine: Ventas, together with JV partners Wexford and Atrium Health, expect to break ground on a new 637k square foot development (the “Pearl Project”) in Charlotte, North Carolina, one of the fastest growing cities in the U.S. The Pearl Project will include research, lab, medical and academic uses and is ~70% pre-leased to Aa3 rated non-profit health system Atrium Health and to Wake Forest University School of Medicine. The Pearl Project has an expected completion date of 2025 and is expected to achieve a 7.5% GAAP yield upon stabilization on estimated project costs of $0.4 billion.
      • Atrium Health is an integrated, non-profit health system and, following the completion of its announced merger with Advocate Aurora Health, will be among the Top 10 largest health systems in the U.S. with nearly 70 hospitals and $27 billion in annual revenue. Wake Forest University School of Medicine is one of the top ranked medical schools in the U.S. and is expected to become the academic core of the combined Atrium Health system in Charlotte.
      • IRCAD, the renowned training institute in advanced surgical techniques and robotics for world-class surgeons, plans to open its exclusive North American headquarters in the Pearl Project via a public-private partnership with Atrium Health.
    • University of Washington: Ventas and Wexford have been selected by the University of Washington to develop a project exceeding 300k square feet in Seattle anchored by the University of Washington and designated as its Center for Advanced Materials and Clean Energy Testbeds. The University of Washington is a world-class research university, receiving more federal research funding than any other U.S. public university. Seattle is the nation’s #6 ranked life science market. The building is expected to support a planned mix of research programming in clean energy, medicine and life science.
  • In July, Ventas delivered the Drexel University Health Science Building, a 100%-leased, 450k square foot development in Philadelphia’s renowned University City submarket. Drexel University Health Science Building, which was developed in collaboration with Ventas and its strategic partner Wexford, was delivered on-budget and ahead of schedule. The project is within Ventas’s institutional third-party capital management platform (VIM), with GIC as a partner. The project is expected to generate an attractive cash and GAAP yield of 7% and 10%, respectively.
  • The Company expects to acquire a newly developed 88-unit Class A assisted living and memory care community in the Charlotte, NC MSA for $33 million at an attractive in-place yield of nearly 6%. Favorable local market dynamics, including attractive demographics and limited existing or new competition, underpin the community’s strong occupancy and financial performance. The current manager, a well-regarded regional operator, will continue to manage the community.
  • Additionally, the Ventas Life Science and Healthcare Real Estate Fund, LP (the “Fund”) continued its momentum in identifying attractive core investments and successfully generating strong returns for investment partners. In the second quarter, the Fund acquired a high-quality medical office building leased to leading Portland, Oregon healthcare provider Legacy Health System for $53 million. This off-market transaction was acquired at an attractive expected GAAP yield of 5.7%. In just two years since inception, the Fund now has over $3 billion in assets under management across 12 properties principally in life science and ranks among the most successful fund launches in the real estate space.

Financial Strength and Flexibility

  • During and subsequent to the second quarter of 2022, Ventas strengthened its liquidity and debt maturity profile, received positive credit rating actions and enjoyed a strong financial position:
    • Three credit rating agencies – S&P Global Ratings, Fitch Ratings and Moody’s – took positive actions regarding Ventas’s credit. The agencies attributed their actions to the sustained SHOP recovery that is underway, the durable cashflows from our diversified portfolio and Ventas’s commitment to a strong financial position. S&P and Fitch reaffirmed Ventas’s BBB+ investment grade credit rating and Moody’s reaffirmed Ventas’s Baa1 investment grade credit rating, and all three rating agencies improved their outlook for Ventas to Stable.
    • In June, Ventas extended its debt duration and committed capital at more attractive pricing by refinancing an existing $200 million term loan maturing in 2023 with a new $500 million term loan facility that matures in 2027. The new term loan was supported by twenty lending relationships.
    • Key financial statistics at quarter-end include:
      • $2.5 billion quarter-end liquidity
      • Weighted average cost of debt of 3.5% with a total weighted average maturity of 6 years
      • 89% of consolidated debt outstanding is at fixed rates
      • Limited total enterprise debt maturities through year-end 2024

Corporate Leadership

  • Women Corporate Directors (“WCD”) announced that Debra A. Cafaro, Ventas Chairman and CEO, will receive its annual Visionary Award for Strategic Leadership. Through this award, WCD identifies women CEOs or board chairs who demonstrate leadership through innovation, board and management team diversity and the successful pursuit of long-term strategic growth, while developing programs to mentor and promote female employees and playing a role in their community.

Third Quarter 2022 Guidance

The Company currently expects to report third quarter 2022 Attributable Net Income (Loss), Nareit FFO and Normalized FFO per share within the following ranges, which include $20 million (or $0.05 per share) of HHS grants received to date in the third quarter 2022:

 

 

3Q22 Guidance

 

 

Per Share

 

 

Low

 

High

 

 

 

 

 

Attributable Net Income (Loss)

 

$0.04

-

$0.09

Nareit FFO*

 

$0.74

-

$0.79

Normalized FFO*

 

$0.73

-

$0.78

*

Some of the financial measures throughout this press release are non-GAAP measures. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release for additional information and a reconciliation to the most directly comparable GAAP measure.

 
 

Third quarter 2022 same-store cash NOI growth guidance ranges are as follows, with the SHOP same-store cash NOI outlook excluding the benefit of the HHS grants:

 

 

 

3Q22 Guidance: Same-Store Cash NOI* Growth

 

 

(vs. 3Q21, Quarterly Pools)

 

 

Percentage Change

Business Segment

 

Low

 

High

SHOP

 

9.0%

-

15.0%

Office

 

1.0%

-

2.0%

Triple-Net

 

(1.0%)

-

0.0%

Total Company

 

2.5%

-

5.0%

*

Some of the financial measures throughout this press release are non-GAAP measures. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release for additional information and a reconciliation to the most directly comparable GAAP measure.

 
 

Key assumptions underlying the third quarter 2022 guidance include:

  • SHOP: SHOP same-store cash NOI is expected to grow in the range of 9% to 15% year-over-year. Ventas anticipates year-over-year revenue growth of approximately 8% at the midpoint of the same-store cash NOI guidance range, driven by the expected combination of 250 to 300 basis points of occupancy growth and improved rates. Year-over-year revenue growth is expected to be partially mitigated by continued broad inflationary expense pressure. Sequential SHOP cash NOI is expected to outperform pre-pandemic seasonal patterns. SHOP same-store cash NOI results and guidance do not include the benefit of the HHS grants in any period.
  • Office: Same-store cash NOI growth year-over-year is expected to be driven by contractual escalators and new leasing partially offset by expense growth and frictional vacancy in R&I.
  • Triple-Net: Same-store cash NOI growth year-over-year is driven by previously announced lease resolutions with senior housing triple-net tenants who were materially affected by the COVID-19 pandemic. Ventas expects to receive the benefit of upward future performance in its assets over time through revenue- or NOI-based payments.
  • HHS grants: In the third quarter 2022, to date, the Company has received approximately $20 million of HHS grants. The Company’s guidance assumes that no additional HHS grants are received during the quarter.
  • Interest Rates and Foreign Exchange: Rising interest rates on floating rate debt and a strengthening U.S. Dollar are expected to reduce Normalized FFO by approximately ($0.02) per share in the third quarter versus the second quarter 2022.
  • General and Administrative Expenses: The Normalized FFO impact of third quarter general and administrative expenses is expected to range from approximately $36 million to $38 million.
  • Transactions: The guidance does not assume any new or unannounced material acquisitions or capital markets activities.
  • Dispositions: Disposition proceeds of $100 million are anticipated in the second half of 2022.
  • The guidance assumes no material changes in the impact of COVID-19 on the Company’s business. The trajectory and future impact of COVID-19 on various aspects of the business remain highly uncertain and may change rapidly.

Please see below for further discussion and our definitions of non-GAAP measures along with reconciliations to the most directly comparable GAAP measure. Ventas will provide additional detail regarding its third quarter outlook and assumptions on the second quarter 2022 conference call.

Investor Presentation

A second quarter business update presentation is posted to the Events & Presentations section of Ventas’s website at ir.ventasreit.com/events-and-presentations. Additional information regarding the Company can be found in its second quarter 2022 supplemental posted at ir.ventasreit.com. The information contained on, or that may be accessed through, our website, including the information contained in the aforementioned presentation and supplemental, is not incorporated by any reference into, and is not part of, this document.

Second Quarter 2022 Results Conference Call

Ventas will hold a conference call to discuss this earnings release on Friday, August 5, 2022 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).

The dial-in number for the conference call is (888) 330-3576 (or +1 (646) 960-0672 for international callers), and the participant passcode is 7655497. A live webcast can be accessed from the Investor Relations section of www.ventasreit.com.

A telephonic replay will be available at (800) 770-2030 (or +1 (647) 362-9199 for international callers), passcode 7655497, after the earnings call and will remain available for 30 days. The webcast replay will be posted in the Investor Relations section of www.ventasreit.com.

About Ventas

Ventas Inc., an S&P 500 company, operates at the intersection of two large and dynamic industries – healthcare and real estate. Fueled by powerful demographic demand from growth in the aging population, Ventas owns a diversified portfolio of over 1,200 properties in the United States, Canada, and the United Kingdom. Ventas uses the power of its capital to unlock the value of senior living communities; life science, research & innovation properties; medical office & outpatient facilities, hospitals and other healthcare real estate. A globally-recognized real estate investment trust, Ventas follows a successful long-term strategy, proven over more than 20 years, built on diversification of property types, capital sources and industry leading partners, financial strength and flexibility, consistent and reliable growth and industry leading ESG achievements, managed by a collaborative and experienced team dedicated to its stakeholders.

Non-GAAP Financial Measures

This press release includes certain financial performance measures not defined by generally accepted accounting principles in the United States (“GAAP”). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release. We believe such measures provide investors with additional information concerning our operating performance and a basis to compare our performance with the performance of other REITs. Our definitions and calculations of these non-GAAP measures may not be the same as similar measures reported by other REITs.

These non-GAAP financial measures should not be considered as alternatives to net income attributable to common stockholders (determined in accordance with GAAP) as indicators of our financial performance, as alternatives to cash flow from operating activities (determined in accordance with GAAP), or as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.

Cautionary Statements

Certain of the information contained herein, including intra-quarter operating information and number of confirmed cases of COVID-19, has been provided by our operators and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy.

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. These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments and other matters that are not historical facts. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,” “plan,” “potential,” “opportunity,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof.

Forward-looking statements are based on management’s beliefs as well as on a number of assumptions concerning future events. You should not put undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made. You are urged to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance, including those made below and in our filings with the Securities and Exchange Commission, such as in the section titled “Cautionary Statements — Summary Risk Factors,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

Certain factors that could affect our future results and our ability to achieve our stated goals include, but are not limited to: (a) the impact of the ongoing COVID-19 pandemic and its extended consequences, including of the Delta, Omicron or any other variant, on our revenue, level of profitability, liquidity and overall risk exposure and the implementation and impact of regulations related to the CARES Act and other stimulus legislation and any future COVID-19 relief measures; (b) our ability to achieve the anticipated benefits and synergies from, and effectively integrate, our acquisitions and investments, including our acquisition of New Senior Investment Group Inc.; (c) our exposure and the exposure of our tenants, managers and borrowers to complex healthcare and other regulation and the challenges and expense associated with complying with such regulation; (d) the potential for significant general and commercial claims, legal actions, regulatory proceedings or enforcement actions that could subject us or our tenants, managers or borrowers to increased operating costs and uninsured liabilities; (e) the impact of market and general economic conditions, including economic and financial market events, inflation, changes in interest rates, supply chain pressures, events that affect consumer confidence, our occupancy rates and resident fee revenues, and the actual and perceived state of the real estate markets, labor markets and public capital markets; (f) our ability, and the ability of our tenants, managers and borrowers, to navigate the trends impacting our or their businesses and the industries in which we or they operate; (g) the risk of bankruptcy, insolvency or financial deterioration of our tenants, managers, borrowers and other obligors and our ability to foreclose successfully on the collateral securing our loans and other investments in the event of a borrower default; (h) our ability to identify and consummate future investments in or dispositions of healthcare assets and effectively manage our portfolio opportunities and our investments in co-investment vehicles, joint ventures and minority interests; (i) risks related to development, redevelopment and construction projects; (j) our ability to attract and retain talented employees; (k) the limitations and significant requirements imposed upon our business as a result of our status as a REIT and the adverse consequences (including the possible loss of our status as a REIT) that would result if we are not able to comply; (l) the risk of changes in healthcare law or regulation or in tax laws, guidance and interpretations, particularly as applied to REITs, that could adversely affect us or our tenants, managers or borrowers; (m) increases in our borrowing costs as a result of becoming more leveraged or as a result of changes in interest rates and phasing out of LIBOR rates; (n) our reliance on third parties to operate a majority of our assets and our limited control and influence over such operations and results; (o) our dependency on a limited number of tenants and managers for a significant portion of our revenues and operating income; (p) the adequacy of insurance coverage provided by our policies and policies maintained by our tenants, managers or other counterparties; (q) the occurrence of cyber incidents that could disrupt our operations, result in the loss of confidential information or damage our business relationships and reputation; (r) the impact of merger, acquisition and investment activity in the healthcare industry or otherwise affecting our tenants, managers or borrowers; (s) disruptions to the management and operations of our business and the uncertainties caused by activist investors; and (t) the risk of catastrophic or extreme weather and other natural events and the physical effects of climate change.

 
 

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts; dollars in USD; unaudited)

 

 

 

 

 

June 30,

 

December 31,

 

 

2022

 

 

 

2021

 

Assets

 

 

 

Real estate investments:

 

 

 

Land and improvements

$

2,444,519

 

 

$

2,432,065

 

Buildings and improvements

 

26,186,712

 

 

 

25,778,490

 

Construction in progress

 

251,300

 

 

 

269,315

 

Acquired lease intangibles

 

1,361,671

 

 

 

1,369,747

 

Operating lease assets

 

315,896

 

 

 

317,858

 

 

 

30,560,098

 

 

 

30,167,475

 

Accumulated depreciation and amortization

 

(8,834,315

)

 

 

(8,350,637

)

Net real estate property

 

21,725,783

 

 

 

21,816,838

 

Secured loans receivable and investments, net

 

529,630

 

 

 

530,126

 

Investments in unconsolidated real estate entities

 

533,705

 

 

 

523,465

 

Net real estate investments

 

22,789,118

 

 

 

22,870,429

 

Cash and cash equivalents

 

127,073

 

 

 

149,725

 

Escrow deposits and restricted cash

 

48,958

 

 

 

46,872

 

Goodwill

 

1,044,509

 

 

 

1,046,140

 

Assets held for sale

 

31,768

 

 

 

28,399

 

Deferred income tax assets, net

 

11,152

 

 

 

11,152

 

Other assets

 

575,577

 

 

 

565,069

 

Total assets

$

24,628,155

 

 

$

24,717,786

 

Liabilities and equity

 

 

 

Liabilities:

 

 

 

Senior notes payable and other debt

$

12,328,140

 

 

$

12,027,544

 

Accrued interest

 

104,419

 

 

 

106,602

 

Operating lease liabilities

 

194,241

 

 

 

197,234

 

Accounts payable and other liabilities

 

1,062,935

 

 

 

1,090,254

 

Liabilities related to assets held for sale

 

5,871

 

 

 

10,850

 

Deferred income tax liabilities

 

46,613

 

 

 

59,259

 

Total liabilities

 

13,742,219

 

 

 

13,491,743

 

Redeemable OP unitholder and noncontrolling interests

 

282,542

 

 

 

280,283

 

Commitments and contingencies

 

 

 

Equity:

 

 

 

Ventas stockholders’ equity:

 

 

 

Preferred stock, $1.00 par value; 10,000 shares authorized, unissued

 

 

 

 

 

Common stock, $0.25 par value; 600,000 shares authorized, 399,715 and 399,420 shares issued at June 30, 2022 and December 31, 2021, respectively

 

99,913

 

 

 

99,838

 

Capital in excess of par value

 

15,514,015

 

 

 

15,498,956

 

Accumulated other comprehensive loss

 

(56,355

)

 

 

(64,520

)

Retained earnings (deficit)

 

(5,044,569

)

 

 

(4,679,889

)

Treasury stock, 7 and 0 shares issued at June 30, 2022 and December 31, 2021, respectively

 

(408

)

 

 

 

Total Ventas stockholders’ equity

 

10,512,596

 

 

 

10,854,385

 

Noncontrolling interests

 

90,798

 

 

 

91,375

 

Total equity

 

10,603,394

 

 

 

10,945,760

 

Total liabilities and equity

$

24,628,155

 

 

$

24,717,786

 

 

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts; dollars in USD; unaudited)

 

 

 

 

 

 

 

 

 

For the Three Months Ended

June 30,

 

For the Six Months Ended

June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

 

 

 

 

 

 

Rental income:

 

 

 

 

 

 

 

Triple-net leased

$

149,397

 

 

$

159,223

 

 

$

300,958

 

 

$

319,108

 

Office

 

199,241

 

 

 

200,388

 

 

 

399,781

 

 

 

397,843

 

 

 

348,638

 

 

 

359,611

 

 

 

700,739

 

 

 

716,951

 

Resident fees and services

 

658,056

 

 

 

535,952

 

 

 

1,309,177

 

 

 

1,064,602

 

Office building and other services revenue

 

4,326

 

 

 

5,381

 

 

 

8,275

 

 

 

10,331

 

Income from loans and investments

 

10,752

 

 

 

17,665

 

 

 

20,599

 

 

 

36,675

 

Interest and other income

 

1,166

 

 

 

585

 

 

 

1,702

 

 

 

926

 

Total revenues

 

1,022,938

 

 

 

919,194

 

 

 

2,040,492

 

 

 

1,829,485

 

Expenses

 

 

 

 

 

 

 

Interest

 

113,951

 

 

 

110,051

 

 

 

224,745

 

 

 

220,818

 

Depreciation and amortization

 

283,075

 

 

 

250,700

 

 

 

572,139

 

 

 

564,848

 

Property-level operating expenses:

 

 

 

 

 

 

 

Senior housing

 

507,446

 

 

 

424,813

 

 

 

982,976

 

 

 

842,642

 

Office

 

63,328

 

 

 

64,950

 

 

 

126,511

 

 

 

128,896

 

Triple-net leased

 

3,585

 

 

 

4,432

 

 

 

7,593

 

 

 

9,257

 

 

 

574,359

 

 

 

494,195

 

 

 

1,117,080

 

 

 

980,795

 

Office building and other services costs

 

1,410

 

 

 

658

 

 

 

2,723

 

 

 

1,276

 

General, administrative and professional fees

 

32,915

 

 

 

30,588

 

 

 

75,913

 

 

 

70,897

 

Loss (gain) on extinguishment of debt, net

 

7

 

 

 

(74

)

 

 

7

 

 

 

27,016

 

Transaction expenses and deal costs

 

13,078

 

 

 

721

 

 

 

33,070

 

 

 

5,338

 

Allowance on loans receivable and investments

 

(62

)

 

 

(59

)

 

 

(116

)

 

 

(8,961

)

Other

 

48,116

 

 

 

(13,490

)

 

 

20,926

 

 

 

(22,918

)

Total expenses

 

1,066,849

 

 

 

873,290

 

 

 

2,046,487

 

 

 

1,839,109

 

(Loss) income before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests

 

(43,911

)

 

 

45,904

 

 

 

(5,995

)

 

 

(9,624

)

(Loss) income from unconsolidated entities

 

(1,047

)

 

 

4,767

 

 

 

(5,316

)

 

 

4,517

 

(Loss) gain on real estate dispositions

 

(34

)

 

 

41,258

 

 

 

2,421

 

 

 

43,791

 

Income tax benefit (expense)

 

3,790

 

 

 

(3,641

)

 

 

8,280

 

 

 

(5,794

)

(Loss) income from continuing operations

 

(41,202

)

 

 

88,288

 

 

 

(610

)

 

 

32,890

 

Net (loss) income

 

(41,202

)

 

 

88,288

 

 

 

(610

)

 

 

32,890

 

Net income attributable to noncontrolling interests

 

1,214

 

 

 

1,897

 

 

 

3,074

 

 

 

3,708

 

Net (loss) income attributable to common stockholders

$

(42,416

)

 

$

86,391

 

 

$

(3,684

)

 

$

29,182

 

Earnings per common share

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

(Loss) income from continuing operations

$

(0.10

)

 

$

0.24

 

 

$

 

 

$

0.09

 

Net (loss) income attributable to common stockholders

 

(0.11

)

 

 

0.23

 

 

 

(0.01

)

 

 

0.08

 

Diluted:1

 

 

 

 

 

 

 

(Loss) income from continuing operations

$

(0.10

)

 

$

0.23

 

 

$

 

 

$

0.09

 

Net (loss) income attributable to common stockholders

 

(0.11

)

 

 

0.23

 

 

 

(0.01

)

 

 

0.08

 

Weighted average shares used in computing earnings per common share

 

 

 

 

 

 

 

Basic

 

399,592

 

 

 

375,067

 

 

 

399,445

 

 

 

374,869

 

Diluted

 

403,526

 

 

 

378,408

 

 

 

403,393

 

 

 

378,161

 

1

Potential common shares are not included in the computation of diluted earnings per share when a loss from continuing operations exists as the effect would be an antidilutive per share amount.

 
 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Funds From Operations Attributable to Common Stockholders (FFO)

(In thousands, except per share amounts; dollars in USD; totals may not sum due to rounding; unaudited)

 

 

 

 

 

 

 

 

 

 

 

Q2 YoY

 

 

2022

 

 

 

2021

 

 

Change

 

Q2

 

Q2

 

’22-’21

Net (loss) income attributable to common stockholders

$

(42,416

)

 

$

86,391

 

 

(149

%)

Net (loss) income attributable to common stockholders per share 1

$

(0.11

)

 

$

0.23

 

 

N/A

 

Adjustments:

 

 

 

 

 

Depreciation and amortization on real estate assets

 

282,313

 

 

 

249,527

 

 

 

Depreciation on real estate assets related to noncontrolling interests

 

(4,335

)

 

 

(4,678

)

 

 

Depreciation on real estate assets related to unconsolidated entities

 

7,621

 

 

 

4,615

 

 

 

Loss (gain) on real estate dispositions

 

34

 

 

 

(41,258

)

 

 

Loss on real estate dispositions related to noncontrolling interests

 

 

 

 

(7

)

 

 

Gain on real estate dispositions related to unconsolidated entities

 

(301

)

 

 

 

 

 

Subtotal: Nareit FFO adjustments

 

285,332

 

 

 

208,199

 

 

 

Subtotal: Nareit FFO adjustments per share

$

0.71

 

 

$

0.55

 

 

 

Nareit FFO attributable to common stockholders

$

242,916

 

 

$

294,590

 

 

(18

%)

Nareit FFO attributable to common stockholders per share

$

0.60

 

 

$

0.78

 

 

(23

%)

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

Change in fair value of financial instruments

 

37,837

 

 

 

(23,211

)

 

 

Non-cash income tax (benefit) expense

 

(5,379

)

 

 

1,166

 

 

 

Loss (gain) on extinguishment of debt, net of noncontrolling interests and including Ventas’ share attributable to unconsolidated entities

 

7

 

 

 

(74

)

 

 

Gain on transactions related to unconsolidated entities

 

 

 

 

(10

)

 

 

Transaction expenses and deal costs, net of noncontrolling interests and including Ventas’ share attributable to unconsolidated entities

 

15,027

 

 

 

1,769

 

 

 

Amortization of other intangibles including Ventas’ share attributable to unconsolidated entities

 

268

 

 

 

116

 

 

 

Other items related to unconsolidated entities

 

(1,285

)

 

 

43

 

 

 

Non-cash impact of changes to equity plan

 

(2,389

)

 

 

(2,298

)

 

 

Materially disruptive events, net including Ventas’ share attributable to unconsolidated entities

 

2,074

 

 

 

3,128

 

 

 

Allowance on loan investments, net of noncontrolling interests

 

(61

)

 

 

(57

)

 

 

Subtotal: Normalized FFO adjustments

 

46,099

 

 

 

(19,428

)

 

 

Subtotal: Normalized FFO adjustments per share

$

0.11

 

 

$

(0.05

)

 

 

Normalized FFO attributable to common stockholders

$

289,015

 

 

$

275,162

 

 

5

%

Normalized FFO attributable to common stockholders per share

$

0.72

 

 

$

0.73

 

 

(1

%)

Weighted average diluted shares

 

403,526

 

 

 

378,408

 

 

 

1

Potential common shares are not included in the computation of diluted earnings per share when a loss from continuing operations exists as the effect would be an antidilutive per share amount.

 

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 Nareit FFO and Normalized FFO to be appropriate supplemental measures of operating performance of an equity REIT. The Company believes that the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers Nareit FFO to be a useful measure for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses on depreciable real estate and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), Nareit FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies. 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 across 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 Nareit 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.

Nareit Funds from Operations Attributable to Common Stockholders (“Nareit FFO”)

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 gain (or loss) 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 entities and noncontrolling interests. Adjustments for unconsolidated entities and noncontrolling interests will be calculated to reflect FFO on the same basis.

Normalized FFO

The Company defines Normalized FFO as Nareit FFO excluding the following income and expense items, without duplication: (a) transaction expenses and deal costs, including transaction, integration and severance-related costs and expenses, and amortization of intangibles, in each case net of noncontrolling interests’ share of these items and including Ventas’ share of these items from unconsolidated entities; (b) the impact of 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 leases; (d) the financial impact of contingent consideration; (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 items related to unconsolidated entities; (g) net expenses or recoveries related to materially disruptive events; and (h) other items set forth in the Normalized FFO reconciliation included herein.

Nareit FFO and Normalized FFO 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. Nareit FFO and Normalized FFO 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, Nareit FFO and Normalized FFO should be examined in conjunction with net income attributable to common stockholders as presented elsewhere herein.

 
 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Third Quarter 2022 Guidance1

Net Income and FFO Attributable to Common Stockholders

(In millions, except per share amounts; dollars in USD; totals may not sum due to rounding; unaudited)

 

 

 

Q3 2022

 

Q3 2022 - Per Share

 

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

 

$16

 

$38

 

$0.04

 

$0.09

 

 

 

 

 

 

 

 

 

Depreciation and amortization adjustments

 

283

 

281

 

0.70

 

0.70

Gain on real estate dispositions

 

 

 

0.00

 

0.00

Other adjustments2

 

 

 

0.00

 

0.00

 

 

 

 

 

 

 

 

 

Nareit FFO attributable to common stockholders

 

$299

 

$319

 

$0.74

 

$0.79

 

 

 

 

 

 

 

 

 

Other adjustments2

 

(4)

 

(4)

 

(0.01)

 

(0.01)

 

 

 

 

 

 

 

 

 

Normalized FFO attributable to common stockholders

 

$295

 

$315

 

$0.73

 

$0.78

% Year-over-year growth

 

 

 

 

 

0%

 

7%

 

 

 

 

 

 

 

 

 

Memo: Net HHS grants included in above earnings measures

 

$20

 

$20

 

$0.05

 

$0.05

 

 

 

 

 

 

 

 

 

Weighted average diluted shares (in millions)

 

404

 

404

 

 

 

 

1

Per share amounts may not add to total per share amounts due to changes in the Company's weighted average diluted share count, if any. Same-store Cash NOI is at constant currency.

2

Other adjustments include the categories of adjustments presented in our “Non-GAAP Financial Measures Reconciliation – Funds From Operations Attributable to Common Stockholders (FFO)”.

 
 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Net Operating Income (NOI) and Same-Store Cash NOI by Segment (Constant Currency)

(Dollars in thousands USD, unless otherwise noted; totals may not sum due to rounding; unaudited)

 

 

 

 

 

For the Three Months Ended June 30, 2022

 

 

SHOP

 

Office

 

Triple-Net

 

Non-Segment

 

Total

Net loss attributable to common stockholders

 

 

 

 

 

 

 

 

 

$

(42,416

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

 

 

 

 

 

(1,166

)

Interest expense

 

 

 

 

 

 

 

 

 

 

113,951

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

283,075

 

General, administrative and professional fees

 

 

 

 

 

 

 

 

 

 

32,915

 

Loss on extinguishment of debt, net

 

 

 

 

 

 

 

 

 

 

7

 

Transaction expenses and deal costs

 

 

 

 

 

 

 

 

 

 

13,078

 

Allowance on loans receivable and investments

 

 

 

 

 

 

 

 

 

 

(62

)

Other

 

 

 

 

 

 

 

 

 

 

48,116

 

Loss from unconsolidated entities

 

 

 

 

 

 

 

 

 

 

1,047

 

Loss on real estate dispositions

 

 

 

 

 

 

 

 

 

 

34

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

(3,790

)

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

1,214

 

NOI

 

$

150,610

 

 

$

136,583

 

 

$

145,812

 

 

$

12,998

 

 

$

446,003

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Straight-lining of rental income

 

 

 

 

 

(2,747

)

 

 

(971

)

 

 

 

 

 

(3,718

)

Non-cash rental income

 

 

 

 

 

(3,493

)

 

 

(12,610

)

 

 

 

 

 

(16,103

)

NOI not included in Cash NOI1

 

 

(317

)

 

 

(576

)

 

 

(197

)

 

 

 

 

 

(1,090

)

Non-segment NOI

 

 

 

 

 

 

 

 

 

 

 

(12,998

)

 

 

(12,998

)

Cash NOI

 

$

150,293

 

 

$

129,767

 

 

$

132,034

 

 

$

 

 

$

412,094

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Cash NOI not included in same-store

 

 

(31,830

)

 

 

(7,065

)

 

 

(1,559

)

 

 

 

 

 

(40,454

)

Same-store Cash NOI - constant currency

 

$

118,463

 

 

$

122,702

 

 

$

130,475

 

 

$

 

 

$

371,640

 

Percentage increase (decrease) - constant currency

 

 

8.7

%

 

 

3.2

%

 

 

(0.6

%)

 

 

 

 

3.5

%

 

 

 

For the Three Months Ended June 30, 2021

 

 

SHOP

 

Office

 

Triple-Net

 

Non-Segment

 

Total

Net income attributable to common stockholders

 

 

 

 

 

 

 

 

 

$

86,391

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

 

 

 

 

 

(585

)

Interest expense

 

 

 

 

 

 

 

 

 

 

110,051

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

250,700

 

General, administrative and professional fees

 

 

 

 

 

 

 

 

 

 

30,588

 

Gain on extinguishment of debt, net

 

 

 

 

 

 

 

 

 

 

(74

)

Transaction expenses and deal costs

 

 

 

 

 

 

 

 

 

 

721

 

Allowance on loans receivable and investments

 

 

 

 

 

 

 

 

 

 

(59

)

Other

 

 

 

 

 

 

 

 

 

 

(13,490

)

Income from unconsolidated entities

 

 

 

 

 

 

 

 

 

 

(4,767

)

Gain on real estate dispositions

 

 

 

 

 

 

 

 

 

 

(41,258

)

Income tax expense

 

 

 

 

 

 

 

 

 

 

3,641

 

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

1,897

 

NOI

 

$

111,139

 

 

$

137,320

 

 

$

154,791

 

 

$

20,506

 

 

$

423,756

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Straight-lining of rental income

 

 

 

 

 

(1,496

)

 

 

(1,808

)

 

 

 

 

 

(3,304

)

Non-cash rental income

 

 

 

 

 

(4,478

)

 

 

(11,905

)

 

 

 

 

 

(16,383

)

Cash modification/termination fees

 

 

 

 

 

12,037

 

 

 

 

 

 

 

 

 

12,037

 

NOI not included in Cash NOI1

 

 

(1,313

)

 

 

(9,583

)

 

 

(9,127

)

 

 

 

 

 

(20,023

)

Non-segment NOI

 

 

 

 

 

 

 

 

 

 

 

(20,506

)

 

 

(20,506

)

NOI impact from change in FX

 

 

(1,687

)

 

 

 

 

 

(695

)

 

 

 

 

 

(2,382

)

Cash NOI

 

$

108,139

 

 

$

133,800

 

 

$

131,256

 

 

$

 

 

$

373,195

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Cash termination fees not in same-store

 

 

 

 

 

(12,037

)

 

 

 

 

 

 

 

 

(12,037

)

Cash NOI not included in same-store

 

 

784

 

 

 

(2,922

)

 

 

 

 

 

 

 

 

(2,138

)

NOI impact from change in FX not in same-store

 

 

29

 

 

 

 

 

 

 

 

 

 

 

 

29

 

Same-store Cash NOI - constant currency

 

$

108,952

 

 

$

118,841

 

 

$

131,256

 

 

$

 

 

$

359,049

 

1

Excludes sold assets, assets held for sale, development properties not yet operational and land parcels.

 
 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Sequential Net Operating Income (NOI) and Same-Store Cash NOI by Segment (Constant Currency)

(Dollars in thousands USD, unless otherwise noted; totals may not sum due to rounding; unaudited)

 

 

 

 

 

For the Three Months Ended June 30, 2022

 

 

SHOP

 

Office

 

Triple-Net

 

Non-Segment

 

Total

Net loss attributable to common stockholders

 

 

 

 

 

 

 

 

 

$

(42,416

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

 

 

 

 

 

(1,166

)

Interest expense

 

 

 

 

 

 

 

 

 

 

113,951

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

283,075

 

General, administrative and professional fees

 

 

 

 

 

 

 

 

 

 

32,915

 

Loss on extinguishment of debt, net

 

 

 

 

 

 

 

 

 

 

7

 

Transaction expenses and deal costs

 

 

 

 

 

 

 

 

 

 

13,078

 

Allowance on loans receivable and investments

 

 

 

 

 

 

 

 

 

 

(62

)

Other

 

 

 

 

 

 

 

 

 

 

48,116

 

Loss from unconsolidated entities

 

 

 

 

 

 

 

 

 

 

1,047

 

Loss on real estate dispositions

 

 

 

 

 

 

 

 

 

 

34

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

(3,790

)

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

1,214

 

NOI

 

$

150,610

 

 

$

136,583

 

 

$

145,812

 

 

$

12,998

 

 

$

446,003

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Straight-lining of rental income

 

 

 

 

 

(2,747

)

 

 

(971

)

 

 

 

 

 

(3,718

)

Non-cash rental income

 

 

 

 

 

(3,493

)

 

 

(12,610

)

 

 

 

 

 

(16,103

)

NOI not included in Cash NOI1

 

 

(317

)

 

 

(576

)

 

 

(197

)

 

 

 

 

 

(1,090

)

Non-segment NOI

 

 

 

 

 

 

 

 

 

 

 

(12,998

)

 

 

(12,998

)

Cash NOI

 

$

150,293

 

 

$

129,767

 

 

$

132,034

 

 

$

 

 

$

412,094

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Cash NOI not included in same-store

 

 

(2,276

)

 

 

(6,283

)

 

 

 

 

 

 

 

 

(8,559

)

Same-store Cash NOI - constant currency

 

$

148,017

 

 

$

123,484

 

 

$

132,034

 

 

$

 

 

$

403,535

 

Percentage increase (decrease) - constant currency

 

 

6.1

%

 

 

(0.6

%)

 

 

(1.3

%)

 

 

 

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2022

 

 

SHOP

 

Office

 

Triple-Net

 

Non-Segment

 

Total

Net income attributable to common stockholders

 

 

 

 

 

 

 

 

 

$

38,732

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

 

 

 

 

 

 

 

 

 

(536

)

Interest expense

 

 

 

 

 

 

 

 

 

 

110,794

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

289,064

 

General, administrative and professional fees

 

 

 

 

 

 

 

 

 

 

42,998

 

Transaction expenses and deal costs

 

 

 

 

 

 

 

 

 

 

19,992

 

Allowance on loans receivable and investments

 

 

 

 

 

 

 

 

 

 

(54

)

Other

 

 

 

 

 

 

 

 

 

 

(27,190

)

Loss from unconsolidated entities

 

 

 

 

 

 

 

 

 

 

4,269

 

Gain on real estate dispositions

 

 

 

 

 

 

 

 

 

 

(2,455

)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

(4,490

)

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

1,860

 

NOI

 

$

175,591

 

 

$

137,974

 

 

$

147,553

 

 

$

11,866

 

 

$

472,984

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Straight-lining of rental income

 

 

 

 

 

(2,785

)

 

 

(1,056

)

 

 

 

 

 

(3,841

)

Non-cash rental income

 

 

 

 

 

(5,698

)

 

 

(11,716

)

 

 

 

 

 

(17,414

)

NOI not included in Cash NOI1

 

 

(654

)

 

 

(564

)

 

 

(538

)

 

 

 

 

 

(1,756

)

Non-segment NOI

 

 

 

 

 

 

 

 

 

 

 

(11,866

)

 

 

(11,866

)

NOI impact from change in FX

 

 

(351

)

 

 

 

 

 

(433

)

 

 

 

 

 

(784

)

HHS grants received

 

 

(32,821

)

 

 

 

 

 

 

 

 

 

 

 

(32,821

)

Cash NOI

 

$

141,765

 

 

$

128,927

 

 

$

133,810

 

 

$

 

 

$

404,502

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

Cash NOI not included in same-store

 

 

(2,798

)

 

 

(4,710

)

 

 

 

 

 

 

 

 

(7,508

)

HHS grants not included in same-store

 

 

558

 

 

 

 

 

 

 

 

 

 

 

 

558

 

NOI impact from change in FX not in same-store

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

13

 

Same-store Cash NOI - constant currency

 

$

139,538

 

 

$

124,217

 

 

$

133,810

 

 

$

 

 

$

397,565

 

1

Excludes sold assets, assets held for sale, development properties not yet operational and land parcels.

 
 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Net Debt to Adjusted Pro Forma EBITDA

(Dollars in thousands USD; totals may not sum due to rounding; unaudited)

 

 

 

For the Three Months

Ended June 30, 2022

Net loss attributable to common stockholders

 

$

(42,416

)

Adjustments:

 

 

Interest

 

 

113,951

 

Loss on extinguishment of debt, net

 

 

7

 

Taxes (including tax amounts in general, administrative and professional fees)

 

 

(2,032

)

Depreciation and amortization

 

 

283,075

 

Non-cash stock-based compensation expense

 

 

6,805

 

Transaction expenses and deal costs

 

 

13,078

 

Net income attributable to noncontrolling interests, adjusted for partners’ share of consolidated entity EBITDA

 

 

(6,959

)

Loss from unconsolidated entities, adjusted for Ventas’ share of EBITDA from unconsolidated entities

 

 

17,981

 

Loss on real estate dispositions

 

 

34

 

Unrealized foreign currency loss

 

 

371

 

Change in fair value of financial instruments

 

 

37,863

 

Materially disruptive events, net

 

 

2,852

 

Allowance on loan investments, net of noncontrolling interests

 

 

(60

)

Adjusted EBITDA

 

$

424,550

 

Adjustment for current period activity

 

 

(1,394

)

Adjusted Pro Forma EBITDA

 

$

423,156

 

 

 

 

Adjusted Pro Forma EBITDA annualized

 

$

1,692,624

 

 

 

 

Total debt

 

$

12,328,140

 

Cash

 

 

(127,073

)

Restricted cash pertaining to debt

 

 

(24,387

)

Partners’ share of consolidated debt

 

 

(271,372

)

Ventas’ share of unconsolidated debt

 

 

424,561

 

Net debt

 

$

12,329,869

 

 

 

 

Net debt to Adjusted Pro Forma EBITDA

 

7.3 x

 

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.

Adjusted EBITDA

The Company defines Adjusted EBITDA as consolidated earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense, asset impairment and valuation allowances), excluding (a) gains or losses on extinguishment of debt; (b) noncontrolling interests’ share of adjusted EBITDA; (c) transaction expenses and deal costs; (d) net gains or losses on real estate activity; (e) gains or losses on re-measurement of equity interest upon acquisition; (f) changes in the fair value of financial instruments; (g) unrealized foreign currency gains or losses; (h) net expenses or recoveries related to materially disruptive events; and (i) non-cash charges related to leases, and including (x) Ventas’ share of adjusted EBITDA from unconsolidated entities and (y) the impact of other items set forth in the Adjusted EBITDA reconciliation included herein.

Adjusted Pro Forma EBITDA

Adjusted Pro Forma EBITDA considers the pro forma effect on Adjusted EBITDA of transactions and events that were completed during the period, as if the transaction or event had been consummated at the beginning of the relevant period and considers any other incremental items set forth in the Adjusted Pro Forma EBITDA reconciliation included herein.

The Company considers NOI and 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.

NOI

The Company defines NOI as total revenues, less interest and other income, property-level operating expenses and office building and other services costs.

Cash NOI

The Company defines Cash NOI as NOI for its reportable business segments (i.e., SHOP, Office and Triple-Net), determined on a Constant Currency basis, excluding the impact of, without duplication (i) non-cash items such as straight-line rent and the amortization of lease intangibles, (ii) sold assets, assets held for sale, development properties not yet operational and land parcels and (iii) other items set forth in the Cash NOI reconciliation included herein. In certain cases, results may be adjusted to reflect the receipt of cash payments, fees, and other consideration that is not fully recognized as NOI in the period.

Same-store

The Company defines same-store as properties owned, consolidated and operational for the full period in both comparison periods and that 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 segment performance. Newly acquired development properties and recently developed or redeveloped properties in the Company’s SHOP reportable business segment will be included in same-store once they are stabilized for the full period in both periods presented. These properties are considered stabilized upon the earlier of (a) the achievement of 80% sustained occupancy or (b) 24 months from the date of acquisition or substantial completion of work. Recently developed or redeveloped properties in the office operations and triple-net leased properties reportable business segments will be included in same-store once substantial completion of work has occurred for the full period in both periods presented. SHOP and triple-net leased properties that have undergone operator or business model transitions will be included in same-store once operating under consistent operating structures for the full period in both periods presented.

Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by materially disruptive events such as flood or fire; (iii) for SHOP, those properties that are currently undergoing a materially disruptive redevelopment; (iv) for the office operations and triple-net leased properties reportable business segments, those properties for which management has an intention to institute, or has instituted, a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase NOI, or maintain a market-competitive position and/or achieve property stabilization, most commonly as the result of an expected or actual material change in occupancy or NOI; or (v) for SHOP and triple-net leased properties reportable business segments, those properties that are scheduled to undergo operator or business model transitions, or have transitioned operators or business models after the start of the prior comparison period.

Constant Currency

To eliminate the impact of exchange rate movements, all portfolio performance-based disclosures 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.

 
 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Same-Store Cash NOI Guidance by Segment1,2

(Dollars in millions USD, unless otherwise noted; totals may not sum due to rounding; unaudited)

 

 

 

 

 

For the Three Months Ended September 30, 2022

 

 

SHOP

 

Office

 

Triple-Net

 

Non-Segment

 

Total

High End

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

 

 

 

 

 

 

 

 

 

$

38

 

Depreciation and amortization3

 

 

 

 

 

 

 

 

 

 

282

 

Interest expense, G&A, other income and expenses4

 

 

 

 

 

 

 

 

 

 

151

 

NOI

 

$

175

 

 

$

135

 

 

$

146

 

 

$

15

 

 

 

471

 

Net HHS grants

 

 

(20

)

 

 

 

 

 

 

 

 

 

 

 

(20

)

Non-cash and non-same-store adjustments

 

 

(34

)

 

 

(12

)

 

 

(14

)

 

 

(15

)

 

 

(76

)

Same-store Cash NOI

 

$

120

 

 

$

123

 

 

$

132

 

 

$

 

 

$

375

 

Percentage increase

 

 

15.0

%

 

 

2.0

%

 

 

0.0

%

 

 

NM

 

 

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

Low End

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

 

 

 

 

 

 

 

 

 

$

16

 

Depreciation and amortization3

 

 

 

 

 

 

 

 

 

 

284

 

Interest expense, G&A, other income and expenses4

 

 

 

 

 

 

 

 

 

 

155

 

NOI

 

$

162

 

 

$

133

 

 

$

145

 

 

$

15

 

 

 

455

 

Net HHS grants

 

 

(20

)

 

 

 

 

 

 

 

 

 

 

 

(20

)

Non-cash and non-same-store adjustments

 

 

(28

)

 

 

(12

)

 

 

(15

)

 

 

(15

)

 

 

(70

)

Same-store Cash NOI

 

$

114

 

 

$

121

 

 

$

130

 

 

$

 

 

$

365

 

Percentage increase (decrease)

 

 

9.0

%

 

 

1.0

%

 

 

(1.0

%)

 

 

NM

 

 

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended September 30, 2021

 

 

SHOP

 

Office

 

Triple-Net

 

Non-Segment

 

Total

Prior Year

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stockholders

 

 

 

 

 

 

 

 

 

$

61

 

Depreciation and amortization3

 

 

 

 

 

 

 

 

 

 

314

 

Interest expense, G&A, other income and expenses4

 

 

 

 

 

 

 

 

 

 

78

 

NOI

 

$

104

 

 

$

138

 

 

$

178

 

 

$

32

 

 

 

452

 

Non-cash and non-same-store adjustments

 

 

1

 

 

 

(17

)

 

 

(46

)

 

 

(32

)

 

 

(94

)

NOI impact from change in FX

 

 

(1

)

 

 

 

 

 

(1

)

 

 

 

 

 

(2

)

Same-store Cash NOI

 

$

105

 

 

$

120

 

 

$

132

 

 

$

 

 

$

356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3Q22

 

 

 

 

 

 

 

 

 

GBP (£) to USD ($)

 

 

1.19

 

 

 

 

 

 

 

 

 

USD ($) to CAD (C$)

 

 

1.30

 

 

 

 

 

 

 

 

 

1

See table titled “Net Operating Income (NOI) and Same-Store Cash NOI by Segment” for a detailed breakout of adjustments for each respective category.

2

Total may not sum across due to minor corporate-level adjustments.

3

Includes real estate depreciation and amortization, corporate depreciation and amortization and amortization of other intangibles.

4

Includes interest expense, general, administrative and professional fees (including stock-based compensation), loss (gain) on extinguishment of debt, transaction expenses and deal costs, loss (income) from unconsolidated entities, income tax (expense) benefit, and other income and expenses.

 

 

Contacts

BJ Grant

(877) 4-VENTAS

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