CHICAGO--(BUSINESS WIRE)--Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) said today that normalized Funds From Operations (“FFO”) for the year ended December 31, 2011 increased approximately 71.1 percent to $777.0 million, from $454.0 million for the comparable 2010 period. Normalized FFO per diluted common share was $3.37 for the year ended December 31, 2011, an increase of 17.0 percent from $2.88 for the comparable 2010 period. Weighted average diluted shares outstanding for the full year rose by 46.4 percent to 230.8 million, compared to 157.7 million in 2010.
The substantial growth in 2011 normalized FFO per diluted common share from 2010 is due to the Company’s acquisitions of Nationwide Health Properties, Inc. (“NHP”) and 117 properties managed by Atria Senior Living, Inc. (“Atria”), the full year benefit of 2010 acquisitions, including the medical office building (“MOB”) portfolio acquired with the Company’s Lillibridge Healthcare Services subsidiary (“Lillibridge”), increased net operating income from the Company’s seniors housing communities managed by Sunrise Senior Living, Inc. (NYSE: SRZ) (“Sunrise”), and rental increases from the Company’s triple-net lease portfolio, partially offset by increases in general and administrative expenses (including stock-based compensation), higher interest expense and higher weighted average diluted shares outstanding.
“Ventas delivered excellent results in 2011, as our portfolio performed well while we successfully integrated over $11 billion of accretive acquisitions,” Ventas Chairman and CEO Debra A. Cafaro said. “We have a highly diversified portfolio approaching 1,400 properties, with nearly 80 percent of our annualized revenues derived from private pay sources, an outstanding balance sheet and an attractive cost of capital. We have positioned Ventas to be a leader in the $1 trillion healthcare real estate market as it consolidates,” she said. “Our proven and dedicated management team will use these powerful attributes to deliver consistent superior total returns to our shareholders.”
Normalized FFO for the year ended December 31, 2011 excludes the net benefit (totaling $47.9 million, or $0.21 per diluted share) from net litigation proceeds and income tax benefit, partially offset by merger-related expenses and deal costs (including integration costs), mark-to-market adjustment for derivatives, loss on extinguishment of debt and amortization of other intangibles. Normalized FFO for the year ended December 31, 2010 excluded the net expense (totaling $32.5 million, or $0.21 per diluted share) from merger-related expenses and deal costs (including integration costs), loss on extinguishment of debt, amortization of other intangibles and non-cash income tax expense.
Net income attributable to common stockholders for the year ended December 31, 2011 was $364.5 million, or $1.58 per diluted common share, including discontinued operations of $1.7 million, compared with net income attributable to common stockholders for the year ended December 31, 2010 of $246.2 million, or $1.56 per diluted common share, including discontinued operations of $30.8 million. This increase in net income attributable to common stockholders is primarily the result of the NHP acquisition, a full year benefit of the Company’s 2010 acquisitions, including its Lillibridge MOBs, and a net benefit of $47.9 million comprised principally of net litigation proceeds and income tax benefit, partially offset by merger-related expenses and deal costs (including integration costs), mark-to-market adjustment for derivatives, loss on extinguishment of debt and amortization of other intangibles.
FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), for the year ended December 31, 2011 increased 95.7 percent to $824.9 million, from $421.5 million in the comparable 2010 period. NAREIT FFO per diluted common share for the year ended December 31, 2011 increased 33.7 percent to $3.57, from $2.67 in 2010. This increase is primarily due to the factors described above for net income.
FOURTH QUARTER 2011
Fourth quarter 2011 normalized FFO increased 114 percent to $259.3 million, from $121.4 million for the comparable 2010 period. Normalized FFO per diluted common share was $0.89 for the quarter ended December 31, 2011, an increase of 15.6 percent from $0.77 for the comparable 2010 period. Fourth quarter 2011 normalized FFO per diluted common share versus the comparable period in 2010 benefited from the Company’s acquisitions of NHP and the Atria-managed communities and rental increases from the Company’s triple-net lease portfolio, partially offset by increases in general and administrative expenses (including stock-based compensation), higher interest expense and a greater number of weighted average diluted shares outstanding, which rose by 83.7 percent to 290.6 million, compared to 158.2 million in 2010.
Normalized FFO for the quarter ended December 31, 2011 excludes the net benefit (totaling $99.7 million, or $0.34 per diluted share) from net litigation proceeds and income tax benefit, partially offset by merger-related expenses and deal costs (including integration costs), loss on extinguishment of debt, mark-to-market adjustment for derivatives and amortization of other intangibles.
Net income attributable to common stockholders for the quarter ended December 31, 2011 was $192.9 million, or $0.66 per diluted common share, compared with net income attributable to common stockholders for the quarter ended December 31, 2010 of $77.6 million, or $0.49 per diluted common share. This increase in net income attributable to common stockholders is primarily the result of the NHP acquisition and a net benefit of $99.7 million from net litigation proceeds and income tax benefit, partially offset by merger-related expenses and deal costs (including integration costs), loss on extinguishment of debt, mark-to-market adjustment for derivatives and amortization of other intangibles.
NAREIT FFO for the quarter ended December 31, 2011 increased 232 percent to $359.1 million, from $108.3 million in the comparable 2010 period. Fourth quarter 2011 NAREIT FFO per diluted common share increased 82.4 percent to $1.24, from $0.68 in the fourth quarter of 2010. This increase is primarily due to the factors described above for net income.
FIRST QUARTER DIVIDEND INCREASES 8 PERCENT TO $0.62 PER COMMON SHARE
Ventas also said today that its Board of Directors increased the Company’s first quarter 2012 dividend by eight percent to $0.62 per share. The dividend is payable in cash on March 29, 2012 to stockholders of record on March 9, 2012.
“Dividends and dividend growth are important components of the total return proposition we offer to our shareholders. Because of our significant growth and reliable cash flows, we are pleased to increase our dividend by eight percent, which enables us to share our success with shareholders and still maintain an attractive, strong payout ratio,” Cafaro said.
PRIVATE PAY SENIORS HOUSING OPERATING PORTFOLIO
Fourth Quarter 2011 Total Portfolio NOI Grows 2.4 Percent Versus Third Quarter to $89.5 Million and Fourth Quarter Average Occupancy Trending Positively
At December 31, 2011, the Company’s seniors housing operating portfolio included 79 private pay seniors housing communities managed by Sunrise and 118 private pay seniors housing communities managed by Atria.
Net Operating Income after management fees (“NOI”) for all communities increased 2.4 percent to $89.5 million in the fourth quarter of 2011 compared to the third quarter of 2011, the Company’s first full quarter of ownership of the Atria-managed portfolio. Stabilized unit occupancy for the fourth quarter of 2011 increased 100 basis points.
NOI for the Sunrise-managed communities increased to $156.7 million for the year ended December 31, 2011, compared to $154.3 million for the comparable 2010 period. The comparable 2010 period included the benefit to NOI of a $5 million cash payment from Sunrise for expense overages. Excluding this 2010 payment, 2011 NOI for the Sunrise-managed communities increased 5.0 percent compared to 2010. Average daily resident occupancy for the year increased 120 basis points to 90.3 percent versus 2010, and the average daily rate increased year over year by 3.6 percent to $183.
2011 RECAP
- Ventas closed over $11 billion in acquisitions during 2011, including NHP and substantially all of the real estate assets of Atria Senior Living Group, Inc. (“ASLG”).
- Ventas delivered total shareholder return (“TSR”) of 9.8 percent in 2011 and 721.3 percent for the ten-year period ended December 31, 2011.
- Ventas received ratings upgrades from all three nationally recognized rating agencies. Ventas’s senior unsecured debt is currently rated BBB+ (stable) by Fitch, BBB (stable) by Standard & Poor’s and Baa2 (stable) by Moody’s.
- Ventas issued and sold $700 million aggregate principal amount of senior notes at a stated annual interest rate of 4.75 percent, purchased or repaid $769 million aggregate principal amount of its outstanding senior and convertible notes, and repaid $308 million of mortgage debt.
- Ventas sold approximately 6 million shares of its common stock in an underwritten public offering and received proceeds of $300 million. In conjunction with the ASLG and NHP acquisitions, Ventas issued approximately 25 million and 100 million shares of common stock, respectively.
- Ventas received approximately $219 million in final repayments on its loans receivable investments.
- Ventas entered into a new $2.0 billion unsecured revolving credit facility priced at LIBOR plus 110 basis points (at December 31, 2011) that matures in October 2015, with a right to extend maturity for one year under certain conditions.
- In December 2011, Ventas closed a new $500 million unsecured term loan facility with a weighted average maturity of 4.5 years, priced at 125 basis points over LIBOR (at December 31, 2011).
- “Same-store” cash NOI growth for the Company’s total portfolio (498 assets) was 2.6 percent in 2011, compared to 2010. The prior period included the benefit to NOI of $5 million in cash payments from Sunrise to Ventas for expense overages; excluding such payments, the growth rate was 3.4 percent.
- Cash flows from operations totaled $773.2 million, an increase of 72.7 percent over 2010.
- Ventas received aggregate proceeds of $228 million from HCP, Inc. (“HCP”) in connection with the Company’s lawsuit against HCP arising out of the Company’s 2007 acquisition of Sunrise Senior Living REIT.
FOURTH QUARTER HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS
Portfolio, Performance and Balance Sheet Highlights
Investments
- As previously announced, Ventas and Cogdell Spencer Inc. (NYSE: CSA) (“Cogdell”) entered into a definitive agreement under which Ventas will acquire Cogdell and its 72 high-quality MOBs in an all-cash transaction. Completion of the acquisition is expected to occur in the second quarter of 2012, although there can be no assurance as to whether or when the closing will occur. Cogdell has called a special meeting of stockholders for March 9, 2012 to vote upon the transaction.
- In the fourth quarter of 2011, Ventas invested over $325 million, including the assumption of $139.1 million in debt, in MOBs and seniors housing communities.
Liquidity, Ratings and Balance Sheet
- In February 2012, the Company issued and sold $600.0 million aggregate principal amount of 4.25 percent senior notes due 2022, at a public offering price equal to 99.214 percent of par for total proceeds of $595.3 million, before the underwriting discount and expenses.
- In February 2012, the Company sold nine assets for aggregate consideration of $121.3 million and called $200.0 million principal amount of its 6½ percent senior notes due 2016 for redemption. The Company expects to recognize a net gain from these transactions.
- The Company currently has approximately $2.0 billion of borrowing capacity available under its unsecured revolving credit facility and approximately $270 million in cash and cash equivalents.
- At December 31, 2011, the Company had $455.6 million of borrowings outstanding under its unsecured revolving credit facility, $500 million of borrowings outstanding under its new unsecured term loan facility, and $45.8 million of cash and cash equivalents.
- The Company’s debt to total capitalization at December 31, 2011 was approximately 29 percent.
- The Company’s net debt to Adjusted Pro Forma EBITDA (as defined herein) at December 31, 2011 was 4.7x.
- In November 2011, Ventas received $125 million from HCP to settle the Company’s outstanding lawsuit against HCP. The Company recorded approximately $117 million in net income in the fourth quarter as a result of this litigation, after payment of expenses and a donation to the Ventas Charitable Foundation.
Portfolio & Additional Information
- The 197 skilled nursing facilities and hospitals master leased by the Company to Kindred Healthcare, Inc. (NYSE: KND) (“Kindred”) produced EBITDARM (earnings before interest, taxes, depreciation, amortization, rent and management fees) to actual cash rent coverage of 2.1x for the trailing 12-month period ended September 30, 2011 (the latest date available).
- 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.
VENTAS ISSUES 2012 NORMALIZED FFO PER DILUTED SHARE GUIDANCE OF $3.63 TO $3.69
Ventas currently expects its 2012 normalized FFO per diluted share, excluding the impact of unannounced acquisitions, divestitures and capital transactions, but including completion of its pending acquisition of Cogdell in the second quarter of 2012 on its contractual terms, to range between $3.63 and $3.69.
The Company’s normalized FFO guidance (and related GAAP earnings projections) for all periods assumes that all of the Company’s tenants and borrowers continue to meet all of their obligations to the Company. In addition, the Company’s normalized FFO guidance excludes (a) gains and losses on the sales of real property assets, (b) merger-related costs and expenses, including amortization of intangibles and transition and integration expenses, and deal costs and expenses, (c) the impact of any 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, (d) the non-cash effect of income tax benefits or expenses and derivative transactions that have non-cash mark-to-market impacts on the Company’s income statement, (e) the impact of future unannounced acquisitions or divestitures (including pursuant to tenant options to purchase) and capital transactions, and (f) the reversal or incurrence of contingent consideration and liabilities.
The Company’s guidance is based on a number of other assumptions, which are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.
A reconciliation of the Company’s guidance to the Company’s projected GAAP earnings is attached to this press release. The Company may from time to time update its publicly announced guidance, but it is not obligated to do so.
FOURTH QUARTER CONFERENCE CALL
Ventas will hold a conference call to discuss this earnings release today, at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). The dial-in number for the conference call is (617) 614-3922. The participant passcode is “Ventas.” The conference call is being webcast live by Thomson Reuters and can be accessed at the Company’s website at www.ventasreit.com or www.earnings.com. A replay of the webcast will be available today online, or by calling (617) 801-6888, passcode 35657471, beginning at approximately 1:00 p.m. Eastern Time and will be archived for 30 days.
Ventas, Inc., an S&P 500 company, is a leading healthcare real estate investment trust. Its diverse portfolio of more than 1,300 assets in 47 states (including the District of Columbia) and two Canadian provinces consists of seniors housing communities, skilled nursing facilities, hospitals, medical office buildings and other properties. 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.
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’, managers’ or borrowers’ 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 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. Such forward-looking statements are inherently uncertain, and security holders must recognize that actual results may differ from the Company’s expectations. The Company does not undertake a duty to update such forward-looking statements, 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 meet and/or perform 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 or investments, including the pending transaction with Cogdell Spencer Inc. and those in different asset types and outside the United States; (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 and/or delay in payment by the United States of its obligations, and changes in the federal budget resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates; (e) the nature and extent of future competition; (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 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 and/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 and/or extend its indebtedness as it becomes due; (k) the Company’s ability and willingness to maintain its qualification as a REIT due to economic, market, legal, tax or other considerations; (l) final determination of the Company’s taxable net income for the year ended December 31, 2011 and the year ending December 31, 2012; (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 upon default, and obligations, including indemnification obligations, the Company may incur in connection with the replacement of an existing tenant upon expiration or termination of its leases; (n) risks associated with the Company’s senior living operating portfolio, such as factors causing volatility in the Company’s operating income and earnings generated by its 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) the movement of U.S. and Canadian exchange rates; (p) year-over-year changes in the Consumer Price Index and the effect of those changes on the rent escalators contained in the Company’s leases, including the rent escalator for Master Lease 2 with Kindred, 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 liquidity, financial condition and results of operations of the Company’s tenants, operators, borrowers and managers, and the ability of 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 its ability to successfully design, develop and manage MOBs, to accurately estimate its costs in fixed fee-for-service projects 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) the Company’s ability to build, maintain and expand its relationships with existing and prospective hospital and health system clients; (v) 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; (w) the impact of market or issuer events on the liquidity or value of the Company’s investments in marketable securities; and (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. Many of these factors are beyond the control of the Company and its management.
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||||||||
| As of December 31, 2011, September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 2010 | ||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
| 2011 | 2011 | 2011 | 2011 | 2010 | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Real estate investments: | ||||||||||||||||||||
| Land and improvements | $ | 1,614,847 | $ | 1,584,842 | $ | 854,055 | $ | 560,086 | $ | 559,072 | ||||||||||
| Buildings and improvements | 15,337,919 | 15,289,744 | 8,969,465 | 6,051,148 | 6,035,295 | |||||||||||||||
| Construction in progress | 76,638 | 60,978 | 41,240 | 5,848 | 6,519 | |||||||||||||||
| Acquired lease intangibles | 800,858 | 821,613 | 317,850 | 147,381 | 146,813 | |||||||||||||||
| 17,830,262 | 17,757,177 | 10,182,610 | 6,764,463 | 6,747,699 | ||||||||||||||||
| Accumulated depreciation and amortization | (1,916,530 | ) | (1,761,135 | ) | (1,601,662 | ) | (1,521,039 | ) | (1,468,180 | ) | ||||||||||
| Net real estate property | 15,913,732 | 15,996,042 | 8,580,948 | 5,243,424 | 5,279,519 | |||||||||||||||
| Secured loans receivable, net | 212,577 | 302,264 | 634,472 | 130,608 | 149,263 | |||||||||||||||
| Investments in unconsolidated entities | 105,303 | 119,322 | 14,765 | 15,011 | 15,332 | |||||||||||||||
| Net real estate investments | 16,231,612 | 16,417,628 | 9,230,185 | 5,389,043 | 5,444,114 | |||||||||||||||
| Cash and cash equivalents | 45,807 | 57,482 | 26,702 | 41,899 | 21,812 | |||||||||||||||
| Escrow deposits and restricted cash | 76,590 | 84,783 | 64,261 | 35,399 | 38,940 | |||||||||||||||
| Deferred financing costs, net | 26,669 | 12,424 | 16,129 | 17,141 | 19,533 | |||||||||||||||
| Other assets | 891,232 | 633,453 | 296,756 | 210,616 | 233,622 | |||||||||||||||
| Total assets | $ | 17,271,910 | $ | 17,205,770 | $ | 9,634,033 | $ | 5,694,098 | $ | 5,758,021 | ||||||||||
| Liabilities and equity | ||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Senior notes payable and other debt | $ | 6,429,116 | $ | 6,313,141 | $ | 5,007,080 | $ | 2,571,368 | $ | 2,900,044 | ||||||||||
| Accrued interest | 37,694 | 65,985 | 26,558 | 34,543 | 19,296 | |||||||||||||||
| Accounts payable and other liabilities | 1,085,597 | 1,128,706 | 401,151 | 203,594 | 207,143 | |||||||||||||||
| Deferred income taxes | 260,722 | 274,852 | 279,668 | 238,146 | 241,333 | |||||||||||||||
| Total liabilities | 7,813,129 | 7,782,684 | 5,714,457 | 3,047,651 | 3,367,816 | |||||||||||||||
| Redeemable OP unitholder interests | 102,837 | 92,817 | - | - | - | |||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||
| Equity: | ||||||||||||||||||||
| Ventas stockholders' equity: | ||||||||||||||||||||
|
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued |
- | - | - | - | - | |||||||||||||||
|
Common stock, $0.25 par value; 288,823, 287,962, 188,106, 163,118 and 157,279 shares issued at December 31, 2011, September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 2010, respectively |
72,240 | 72,025 | 47,063 | 40,818 | 39,391 | |||||||||||||||
| Capital in excess of par value | 9,593,583 | 9,595,495 | 4,254,137 | 2,874,879 | 2,576,843 | |||||||||||||||
| Accumulated other comprehensive income | 22,062 | 19,237 | 28,212 | 28,097 | 26,868 | |||||||||||||||
| Retained earnings (deficit) | (412,181 | ) | (439,015 | ) | (412,694 | ) | (300,382 | ) | (255,628 | ) | ||||||||||
|
Treasury stock, 14, 37, 0, 0 and 14 shares at December 31, 2011, September 30, 2011, June 30, 2011, March 31, 2011 and December 31, 2010, respectively |
(747 | ) | (1,980 | ) | - | (8 | ) | (748 | ) | |||||||||||
| Total Ventas stockholders' equity | 9,274,957 | 9,245,762 | 3,916,718 | 2,643,404 | 2,386,726 | |||||||||||||||
| Noncontrolling interest | 80,987 | 84,507 | 2,858 | 3,043 | 3,479 | |||||||||||||||
| Total equity | 9,355,944 | 9,330,269 | 3,919,576 | 2,646,447 | 2,390,205 | |||||||||||||||
| Total liabilities and equity | $ | 17,271,910 | $ | 17,205,770 | $ | 9,634,033 | $ | 5,694,098 | $ | 5,758,021 | ||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| For the three months and years ended December 31, 2011 and 2010 | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| For the Three Months |
For the Year |
|||||||||||||||
| Ended December 31, | Ended December 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenues: | ||||||||||||||||
| Rental income: | ||||||||||||||||
| Triple-net leased | $ | 209,854 | $ | 116,171 | $ | 652,577 | $ | 461,709 | ||||||||
| Medical office buildings | 60,611 | 22,501 | 167,003 | 69,747 | ||||||||||||
| 270,465 | 138,672 | 819,580 | 531,456 | |||||||||||||
| Resident fees and services | 279,960 | 114,766 | 873,308 | 446,301 | ||||||||||||
| Medical office building and other services revenue | 10,421 | 7,387 | 36,471 | 14,098 | ||||||||||||
| Income from loans and investments | 9,867 | 5,076 | 34,415 | 16,412 | ||||||||||||
| Interest and other income | 688 | 64 | 1,217 | 484 | ||||||||||||
| Total revenues | 571,401 | 265,965 | 1,764,991 | 1,008,751 | ||||||||||||
| Expenses: | ||||||||||||||||
| Interest | 70,244 | 44,614 | 236,807 | 175,653 | ||||||||||||
| Depreciation and amortization | 165,091 | 50,697 | 456,590 | 203,762 | ||||||||||||
| Property-level operating expenses: | ||||||||||||||||
| Senior living | 190,271 | 72,029 | 593,977 | 291,831 | ||||||||||||
| Medical office buildings | 20,337 | 7,855 | 57,584 | 24,122 | ||||||||||||
| 210,608 | 79,884 | 651,561 | 315,953 | |||||||||||||
| Medical office building services costs | 7,245 | 4,885 | 27,082 | 9,518 | ||||||||||||
| General, administrative and professional fees | 23,527 | 14,011 | 74,537 | 49,830 | ||||||||||||
| Loss on extinguishment of debt | 2,393 | 3,242 | 27,604 | 9,791 | ||||||||||||
| Litigation proceeds, net | (116,932 | ) | - | (202,259 | ) | - | ||||||||||
| Merger-related expenses and deal costs | 22,317 | 7,575 | 153,923 | 19,243 | ||||||||||||
| Other | 1,989 | 676 | 8,653 | 272 | ||||||||||||
| Total expenses | 386,482 | 205,584 | 1,434,498 | 784,000 | ||||||||||||
|
Income before income/loss from unconsolidated entities, income taxes, discontinued operations and noncontrolling interest |
184,919 | 60,381 | 330,493 | 224,751 | ||||||||||||
| Income (loss) from unconsolidated entities | 19 | (272 | ) | (52 | ) | (664 | ) | |||||||||
| Income tax benefit (expense) | 7,827 | (2,849 | ) | 31,137 | (5,201 | ) | ||||||||||
| Income from continuing operations | 192,765 | 57,260 | 361,578 | 218,886 | ||||||||||||
| Discontinued operations | (268 | ) | 21,442 | 1,683 | 30,843 | |||||||||||
| Net income | 192,497 | 78,702 | 363,261 | 249,729 | ||||||||||||
|
Net (loss) income attributable to noncontrolling interest (net of tax of $0 and $680 for the three months ended December 2011 and 2010, respectively, and $0 and $2,271 for the year ended December 2011 and 2010, respectively) |
(451 | ) | 1,119 | (1,232 | ) | 3,562 | ||||||||||
| Net income attributable to common stockholders | $ | 192,948 | $ | 77,583 | $ | 364,493 | $ | 246,167 | ||||||||
| Earnings per common share: | ||||||||||||||||
| Basic: | ||||||||||||||||
|
Income from continuing operations attributable to common stockholders |
$ | 0.67 | $ | 0.36 | $ | 1.59 | $ | 1.37 | ||||||||
| Discontinued operations | (0.00 | ) | 0.13 | 0.01 | 0.20 | |||||||||||
| Net income attributable to common stockholders | $ | 0.67 | $ | 0.49 | $ | 1.60 | $ | 1.57 | ||||||||
| Diluted: | ||||||||||||||||
|
Income from continuing operations attributable to common stockholders |
$ | 0.66 | $ | 0.35 | $ | 1.57 | $ | 1.36 | ||||||||
| Discontinued operations | (0.00 | ) | 0.14 | 0.01 | 0.20 | |||||||||||
| Net income attributable to common stockholders | $ | 0.66 | $ | 0.49 | $ | 1.58 | $ | 1.56 | ||||||||
| Weighted average shares used in computing earnings per common share: | ||||||||||||||||
| Basic | 287,793 | 156,734 | 228,453 | 156,608 | ||||||||||||
| Diluted | 290,607 | 158,231 | 230,790 | 157,657 | ||||||||||||
| Dividends declared per common share | $ | 0.575 | $ | 0.535 | $ | 2.30 | $ | 2.14 | ||||||||
| QUARTERLY CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||
| 2011 Quarters | 2010 Fourth | |||||||||||||||||||
| Fourth | Third | Second | First | Quarter | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Rental income: | ||||||||||||||||||||
| Triple-net leased | $ | 209,854 | $ | 208,050 | $ | 118,099 | $ | 116,574 | $ | 116,171 | ||||||||||
| Medical office buildings | 60,611 | 58,398 | 23,758 | 24,236 | 22,501 | |||||||||||||||
| 270,465 | 266,448 | 141,857 | 140,810 | 138,672 | ||||||||||||||||
| Resident fees and services | 279,960 | 276,364 | 202,482 | 114,502 | 114,766 | |||||||||||||||
| Medical office building and other services revenue | 10,421 | 9,271 | 9,822 | 6,957 | 7,387 | |||||||||||||||
| Income from loans and investments | 9,867 | 10,072 | 8,391 | 6,085 | 5,076 | |||||||||||||||
| Interest and other income | 688 | 373 | 78 | 78 | 64 | |||||||||||||||
| Total revenues | 571,401 | 562,528 | 362,630 | 268,432 | 265,965 | |||||||||||||||
| Expenses: | ||||||||||||||||||||
| Interest | 70,244 | 71,906 | 52,917 | 41,740 | 44,614 | |||||||||||||||
| Depreciation and amortization | 165,091 | 159,875 | 80,310 | 51,314 | 50,697 | |||||||||||||||
| Property-level operating expenses: | ||||||||||||||||||||
|
Senior living |
190,271 | 188,856 | 136,739 | 78,111 | 72,029 | |||||||||||||||
| Medical office buildings | 20,337 | 20,293 | 8,278 | 8,676 | 7,855 | |||||||||||||||
| 210,608 | 209,149 | 145,017 | 86,787 | 79,884 | ||||||||||||||||
| Medical office building services costs | 7,245 | 6,347 | 7,954 | 5,536 | 4,885 | |||||||||||||||
| General, administrative and professional fees | 23,527 | 20,624 | 15,554 | 14,832 | 14,011 | |||||||||||||||
| Loss on extinguishment of debt | 2,393 | 8,685 | 6 | 16,520 | 3,242 | |||||||||||||||
| Litigation proceeds, net | (116,932 | ) | (85,327 | ) | - | - | - | |||||||||||||
| Merger-related expenses and deal costs | 22,317 | 69,350 | 55,807 | 6,449 | 7,575 | |||||||||||||||
| Other | 1,989 | 14,436 | (7,773 | ) | 1 | 676 | ||||||||||||||
| Total expenses | 386,482 | 475,045 | 349,792 | 223,179 | 205,584 | |||||||||||||||
|
Income before income/loss from unconsolidated entities, income taxes, discontinued operations and noncontrolling interest |
184,919 | 87,483 | 12,838 | 45,253 | 60,381 | |||||||||||||||
| Income (loss) from unconsolidated entities | 19 | 182 | (83 | ) | (170 | ) | (272 | ) | ||||||||||||
| Income tax benefit (expense) | 7,827 | 13,904 | 6,209 | 3,197 | (2,849 | ) | ||||||||||||||
| Income from continuing operations | 192,765 | 101,569 | 18,964 | 48,280 | 57,260 | |||||||||||||||
| Discontinued operations | (268 | ) | 415 | 770 | 766 | 21,442 | ||||||||||||||
| Net income | 192,497 | 101,984 | 19,734 | 49,046 | 78,702 | |||||||||||||||
|
Net (loss) income attributable to noncontrolling interest (net of tax of $0, $0, $0, $0 and $680, respectively) |
(451 | ) | (901 | ) | 58 | 62 | 1,119 | |||||||||||||
| Net income attributable to common stockholders | $ | 192,948 | $ | 102,885 | $ | 19,676 | $ | 48,984 | $ | 77,583 | ||||||||||
| Earnings per common share: | ||||||||||||||||||||
| Basic: | ||||||||||||||||||||
| Income from continuing operations attributable to common stockholders | $ | 0.67 | $ | 0.36 | $ | 0.11 | $ | 0.30 | $ | 0.36 | ||||||||||
| Discontinued operations | (0.00 | ) | 0.00 | 0.00 | 0.01 | 0.13 | ||||||||||||||
| Net income attributable to common stockholders | $ | 0.67 | $ | 0.36 | $ | 0.11 | $ | 0.31 | $ | 0.49 | ||||||||||
| Diluted: | ||||||||||||||||||||
| Income from continuing operations attributable to common stockholders | $ | 0.66 | $ | 0.35 | $ | 0.11 | $ | 0.30 | $ | 0.35 | ||||||||||
| Discontinued operations | (0.00 | ) | 0.00 | 0.00 | 0.00 | 0.14 | ||||||||||||||
| Net income attributable to common stockholders | $ | 0.66 | $ | 0.35 | $ | 0.11 | $ | 0.30 | $ | 0.49 | ||||||||||
| Weighted average shares used in computing earnings per common share: | ||||||||||||||||||||
| Basic | 287,793 | 287,365 | 176,262 | 160,420 | 156,734 | |||||||||||||||
| Diluted | 290,607 | 290,794 | 177,945 | 162,023 | 158,231 | |||||||||||||||
| Dividends declared per common share | $ | 0.575 | $ | 0.4486 | $ | 0.7014 | $ | 0.575 | $ | 0.535 | ||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
|
For the years ended December 31, 2011 and 2010 |
||||||||
| (In thousands) | ||||||||
| 2011 | 2010 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 363,261 | $ | 249,729 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization (including amounts in discontinued operations) | 459,704 | 206,064 | ||||||
| Amortization of deferred revenue and lease intangibles, net | (12,159 | ) | (1,764 | ) | ||||
| Other non-cash amortization | (13,163 | ) | 8,750 | |||||
| Stock-based compensation | 19,346 | 14,078 | ||||||
| Straight-lining of rental income, net | (14,885 | ) | (10,167 | ) | ||||
| Gain on real estate loan investments | (3,255 | ) | (915 | ) | ||||
| Gain on sale of marketable securities | (733 | ) | - | |||||
| Change in fair value of financial instruments | 2,959 | - | ||||||
| Loss on extinguishment of debt | 27,604 | 9,791 | ||||||
| Net gain on sale of real estate assets (including amounts in discontinued operations) | - | (25,241 | ) | |||||
| Income tax (benefit) expense | (31,137 | ) | 5,201 | |||||
| Loss from unconsolidated entities | 52 | 664 | ||||||
| Other | 4,446 | (46 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (increase) in other assets | 424 | (8,245 | ) | |||||
| (Decrease) increase in accrued interest | (9,150 | ) | 1,311 | |||||
| (Decrease) increase in accounts payable and other liabilities | (20,117 | ) | (1,588 | ) | ||||
| Net cash provided by operating activities | 773,197 | 447,622 | ||||||
| Cash flows from investing activities: | ||||||||
| Net investment in real estate property | (531,605 | ) | (274,441 | ) | ||||
| Purchase of noncontrolling interest | (3,319 | ) | (42,333 | ) | ||||
| Investment in loans receivable | (628,133 | ) | (38,725 | ) | ||||
| Proceeds from sale of marketable securities | 23,050 | - | ||||||
| Proceeds from real estate disposals | 20,618 | 58,163 | ||||||
| Proceeds from loans receivable | 220,179 | 19,291 | ||||||
| Development project expenditures | (47,591 | ) | (1,662 | ) | ||||
| Capital expenditures | (50,473 | ) | (18,193 | ) | ||||
| Other | (165 | ) | (4,020 | ) | ||||
| Net cash used in investing activities | (997,439 | ) | (301,920 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net change in borrowings under revolving credit facilities | 537,452 | 28,564 | ||||||
| Proceeds from debt | 1,343,640 | 597,382 | ||||||
| Repayment of debt | (1,388,962 | ) | (524,760 | ) | ||||
| Payment of deferred financing costs | (20,040 | ) | (2,694 | ) | ||||
| Issuance of common stock, net | 299,847 | - | ||||||
| Cash distribution to common stockholders | (521,046 | ) | (336,085 | ) | ||||
| Cash distributions to redeemable OP unitholders | (2,359 | ) | - | |||||
| Purchases of redeemable OP units | (185 | ) | - | |||||
| Contributions from noncontrolling interest | 2 | 818 | ||||||
| Distributions to noncontrolling interest | (2,556 | ) | (8,082 | ) | ||||
| Other | 2,489 | 13,405 | ||||||
| Net cash provided by (used in) financing activities | 248,282 | (231,452 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | 24,040 | (85,750 | ) | |||||
| Effect of foreign currency translation on cash and cash equivalents | (45 | ) | 165 | |||||
| Cash and cash equivalents at beginning of period | 21,812 | 107,397 | ||||||
| Cash and cash equivalents at end of period | $ | 45,807 | $ | 21,812 | ||||
| Supplemental schedule of non-cash activities: | ||||||||
| Assets and liabilities assumed from acquisitions: | ||||||||
| Real estate investments | $ | 10,973,093 | $ | 125,846 | ||||
| Other assets acquired | 594,176 | (385 | ) | |||||
| Debt assumed | 3,651,089 | 125,320 | ||||||
| Other liabilities | 952,279 | 141 | ||||||
| Deferred income tax liability | 43,889 | - | ||||||
| Redeemable OP unitholder interests | 100,888 | - | ||||||
| Noncontrolling interests | 81,192 | - | ||||||
| Equity issued | 6,737,932 | - | ||||||
| QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| 2011 Quarters | 2010 Fourth | |||||||||||||||||||
| Fourth | Third | Second | First | Quarter | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Net income | $ | 192,497 | $ | 101,984 | $ | 19,734 | $ | 49,046 | $ | 78,702 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization (including amounts in discontinued operations) | 166,163 | 161,027 | 80,755 | 51,759 | 51,142 | |||||||||||||||
| Amortization of deferred revenue and lease intangibles, net | (4,700 | ) | (5,908 | ) | (882 | ) | (668 | ) | (582 | ) | ||||||||||
| Other non-cash amortization | (7,734 | ) | (8,568 | ) | 626 | 2,513 | 2,244 | |||||||||||||
| Stock-based compensation | 5,750 | 5,228 | 4,352 | 4,016 | 3,950 | |||||||||||||||
| Straight-lining of rental income, net | (5,631 | ) | (5,505 | ) | (1,977 | ) | (1,772 | ) | (2,192 | ) | ||||||||||
| Gain on real estate loan investments | - | - | (3,078 | ) | (177 | ) | (915 | ) | ||||||||||||
| Gain on sale of marketable securities | - | - | - | (733 | ) | - | ||||||||||||||
| Change in fair value of financial instruments | 61 | 11,785 | (8,887 | ) | - | - | ||||||||||||||
| Loss on extinguishment of debt | 2,393 | 8,685 | 6 | 16,520 | 3,242 | |||||||||||||||
| Net gain on sale of real estate assets (including amounts in discontinued operations) | - | - | - | - | (19,848 | ) | ||||||||||||||
| Income tax (benefit) expense | (7,827 | ) | (13,906 | ) | (6,207 | ) | (3,197 | ) | 2,849 | |||||||||||
| (Income) loss from unconsolidated entities | (19 | ) | (182 | ) | 83 | 170 | 272 | |||||||||||||
| Other | 2,442 | 1,315 | 291 | 398 | (38 | ) | ||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Decrease (increase) in other assets | 27,433 | (17,069 | ) | (8,400 | ) | (1,540 | ) | 772 | ||||||||||||
| (Decrease) increase in accrued interest | (28,291 | ) | 15,133 | (11,245 | ) | 15,253 | (14,452 | ) | ||||||||||||
| (Decrease) increase in accounts payable and other liabilities | (13,241 | ) | 3,582 | (9,640 | ) | (819 | ) | (3,643 | ) | |||||||||||
| Net cash provided by operating activities | 329,296 | 257,601 | 55,531 | 130,769 | 101,503 | |||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Net investment in real estate property | (186,918 | ) | (80,223 | ) | (264,464 | ) | - | (35,284 | ) | |||||||||||
| Purchase of noncontrolling interest | - | - | - | (3,319 | ) | (42,333 | ) | |||||||||||||
| Investment in loans receivable | (8,274 | ) | (6,934 | ) | (612,925 | ) | - | - | ||||||||||||
| Proceeds from sale of marketable securities | - | - | - | 23,050 | - | |||||||||||||||
| Proceeds from real estate disposals | 5,657 | 14,961 | - | - | 32,566 | |||||||||||||||
| Proceeds from loans receivable | 81,245 | 6,571 | 112,413 | 19,950 | 17,739 | |||||||||||||||
| Development project expenditures | (24,358 | ) | (17,546 | ) | (5,556 | ) | (131 | ) | (13 | ) | ||||||||||
| Capital expenditures | (21,815 | ) | (15,109 | ) | (5,717 | ) | (7,832 | ) | (6,599 | ) | ||||||||||
| Other | (52 | ) | (38 | ) | (38 | ) | (37 | ) | 480 | |||||||||||
| Net cash (used in) provided by investing activities | (154,515 | ) | (98,318 | ) | (776,287 | ) | 31,681 | (33,444 | ) | |||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Net change in borrowings under revolving credit facilities | 103,452 | 334,500 | 131,500 | (32,000 | ) | (204,440 | ) | |||||||||||||
| Proceeds from debt | 385,887 | 253,642 | 689,481 | 14,630 | 396,145 | |||||||||||||||
| Repayment of debt | (493,919 | ) | (557,616 | ) | (6,358 | ) | (331,069 | ) | (193,382 | ) | ||||||||||
| Payment of deferred financing costs | (18,142 | ) | (535 | ) | (1,049 | ) | (314 | ) | (822 | ) | ||||||||||
| Issuance of common stock, net | (79 | ) | - | - | 299,926 | - | ||||||||||||||
| Cash distribution to common stockholders | (166,114 | ) | (152,983 | ) | (108,211 | ) | (93,738 | ) | (84,164 | ) | ||||||||||
| Cash distributions to redeemable OP unitholders | 1,679 | (4,038 | ) | - | - | - | ||||||||||||||
|
Purchases of redeemable OP units |
(185 | ) | - | - | - | - | ||||||||||||||
| Contributions from noncontrolling interest | - | 2 | - | - | - | |||||||||||||||
| Distributions to noncontrolling interest | (559 | ) | (1,381 | ) | (267 | ) | (349 | ) | (1,449 | ) | ||||||||||
| Other | 1,472 | 104 | 455 | 458 | 7,979 | |||||||||||||||
| Net cash (used in) provided by financing activities | (186,508 | ) | (128,305 | ) | 705,551 | (142,456 | ) | (80,133 | ) | |||||||||||
| Net (decrease) increase in cash and cash equivalents | (11,727 | ) | 30,978 | (15,205 | ) | 19,994 | (12,074 | ) | ||||||||||||
| Effect of foreign currency translation on cash and cash equivalents | 52 | (198 | ) | 8 | 93 | 96 | ||||||||||||||
| Cash and cash equivalents at beginning of period | 57,482 | 26,702 | 41,899 | 21,812 | 33,790 | |||||||||||||||
| Cash and cash equivalents at end of period | $ | 45,807 | $ | 57,482 | $ | 26,702 | $ | 41,899 | $ | 21,812 | ||||||||||
| Supplemental schedule of non-cash activities: | ||||||||||||||||||||
| Assets and liabilities assumed from acquisitions: | ||||||||||||||||||||
| Real estate investments | $ | (61,527 | ) | $ | 7,893,696 | $ | 3,140,924 | $ | - | $ | - | |||||||||
| Other assets acquired | 162,497 | 320,957 | 110,722 | - | - | |||||||||||||||
| Debt assumed | 142,863 | 1,886,585 | 1,621,641 | - | - | |||||||||||||||
| Other liabilities | (39,843 | ) | 791,160 | 200,962 | - | - | ||||||||||||||
| Deferred income tax liability | - | (4,198 | ) | 48,087 | - | - | ||||||||||||||
| Redeemable OP unitholder interests | 458 | 100,430 | - | - | - | |||||||||||||||
| Noncontrolling interests | (2,510 | ) | 83,702 | - | - | - | ||||||||||||||
| Equity issued | 2 | 5,356,974 | 1,380,956 | - | - | |||||||||||||||
| QUARTERLY FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO | ||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||
| 2011 Quarters | 2010 Fourth | |||||||||||||||||||
| Fourth | Third | Second | First | Quarter | ||||||||||||||||
| Net income attributable to common stockholders | $ | 192,948 | $ | 102,885 | $ | 19,676 | $ | 48,984 | $ | 77,583 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Depreciation and amortization on real estate assets | 164,457 | 159,251 | 79,727 | 50,728 | 50,200 | |||||||||||||||
| Depreciation on real estate assets related to noncontrolling interest | ||||||||||||||||||||
| (1,744 | ) | (1,313 | ) | (210 | ) | (204 | ) | (1,184 | ) | |||||||||||
| Depreciation on real estate assets related to unconsolidated entities | ||||||||||||||||||||
| 2,339 | 2,247 | 931 | 1,035 | 1,092 | ||||||||||||||||
| Discontinued operations: | ||||||||||||||||||||
| Gain on sale of real estate assets | - | - | - | - | (19,848 | ) | ||||||||||||||
| Depreciation and amortization on real estate assets | 1,072 | 1,152 | 445 | 445 | 445 | |||||||||||||||
| FFO | 359,072 | 264,222 | 100,569 | 100,988 | 108,288 | |||||||||||||||
| Income tax (benefit) expense | (7,827 | ) | (13,904 | ) | (6,209 | ) | (3,197 | ) | 2,169 | |||||||||||
| Loss on extinguishment of debt | 2,393 | 8,685 | 6 | 16,520 | 3,242 | |||||||||||||||
| Merger-related expenses and deal costs | 22,317 | 69,350 | 55,807 | 6,449 | 7,575 | |||||||||||||||
| Litigation proceeds, net | (116,932 | ) | (85,327 | ) | - | - | - | |||||||||||||
| Amortization of other intangibles | 255 | 256 | 255 | 256 | 173 | |||||||||||||||
| Change in fair value of financial instruments | 61 | 11,785 | (8,887 | ) | - | - | ||||||||||||||
| Normalized FFO | $ | 259,339 | $ | 255,067 | $ | 141,541 | $ | 121,016 | $ | 121,447 | ||||||||||
| Per diluted share (1): | ||||||||||||||||||||
| Net income attributable to common stockholders | $ | 0.66 | $ | 0.35 | $ | 0.11 | $ | 0.30 | $ | 0.49 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Depreciation and amortization on real estate assets | 0.57 | 0.55 | 0.45 | 0.31 | 0.32 | |||||||||||||||
| Depreciation on real estate assets related to noncontrolling interest | ||||||||||||||||||||
| (0.01 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.01 | ) | |||||||||||
| Depreciation on real estate assets related to unconsolidated entities | ||||||||||||||||||||
| 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||||||||
| Discontinued operations: | ||||||||||||||||||||
| Gain on sale of real estate assets | - | - | - | - | (0.13 | ) | ||||||||||||||
| Depreciation and amortization on real estate assets | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
| FFO | 1.24 | 0.91 | 0.57 | 0.62 | 0.68 | |||||||||||||||
| Income tax (benefit) expense | (0.03 | ) | (0.05 | ) | (0.03 | ) | (0.02 | ) | 0.01 | |||||||||||
| Loss on extinguishment of debt | 0.01 | 0.03 | 0.00 | 0.10 | 0.02 | |||||||||||||||
| Merger-related expenses and deal costs | 0.08 | 0.24 | 0.31 | 0.04 | 0.05 | |||||||||||||||
| Litigation proceeds, net | (0.40 | ) | (0.29 | ) | - | - | - | |||||||||||||
| Amortization of other intangibles | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
| Change in fair value of financial instruments | 0.00 | 0.04 | (0.05 | ) | - | - | ||||||||||||||
| Normalized FFO | $ | 0.89 | $ | 0.88 | $ | 0.80 | $ | 0.75 | $ | 0.77 | ||||||||||
| (1) Per share amounts may not add due to rounding. | ||||||||||||||||||||
Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. To overcome this problem, the Company considers FFO and normalized FFO appropriate measures of operating performance of an equity REIT. Moreover, the Company believes that normalized FFO provides useful information because it allows investors, analysts and Company management to compare the Company’s operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items. The Company uses the NAREIT definition of FFO. NAREIT defines FFO as net income, computed in accordance with GAAP, excluding gains (or losses) from sales of real estate property and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. The Company defines normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) gains and losses on the sales of real property assets, (b) merger-related costs and expenses, including amortization of intangibles and transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to the Company’s lawsuit against HCP, (c) the impact of any 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, (d) the non-cash effect of income tax benefits or expenses, (e) the impact of future unannounced acquisitions or divestitures (including pursuant to tenant options to purchase) and capital transactions, (f) the reversal or incurrence of contingent consideration and liabilities, (g) charitable donations made to the Ventas Charitable Foundation, and (h) changes in the fair value of financial instruments.
FFO and normalized FFO presented herein are not necessarily comparable to FFO and normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO and normalized FFO should not be considered as alternatives to net income (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 FFO and normalized FFO necessarily indicative of sufficient cash flow to fund all of the Company’s needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO and normalized FFO should be examined in conjunction with net income as presented elsewhere herein.
NORMALIZED FFO GUIDANCE FOR THE YEAR ENDING DECEMBER 31, 2012
The following table illustrates the Company’s normalized FFO per diluted common share guidance for the year ending December 31, 2012:
| GUIDANCE | ||||||||
| For the Year | ||||||||
| Ending | ||||||||
| December 31, 2012 | ||||||||
| Net income attributable to common stockholders | $ |
0.87 |
- |
$ |
1.11 |
|||
| Adjustments: | ||||||||
|
Depreciation and amortization on real estate assets, depreciation related to noncontrolling interest and gain/loss on sale of real estate assets, net |
2.36 |
- |
2.30 |
|||||
| FFO |
3.23 |
- |
3.41 |
|||||
| Adjustments: |
|
|||||||
|
Income tax benefit/expense, gain/loss on extinguishment of debt, integration and transition expenses, amortization of intangibles, merger-related expenses and deal costs, net and certain derivative transactions |
0.40 |
- |
0.28 |
|||||
| Normalized FFO | $ |
3.63 |
- |
$ |
3.69 |
|||
Net Debt to Adjusted Pro Forma EBITDA
The following information considers the pro forma effect on net income, interest and depreciation of the Company’s investments and other capital transactions that were completed during the three months ended December 31, 2011, as if the transactions had been consummated as of the beginning of the period. The following table illustrates net debt to pro forma earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding loss on extinguishment of debt, net litigation proceeds, merger-related expenses and deal costs, gains or losses on sales of real property assets and changes in the fair value of financial instruments (including amounts in discontinued operations) (“Adjusted Pro Forma EBITDA”) (dollars in thousands):
| Net income attributable to common stockholders | $ | 192,948 | |||
| Pro forma adjustments for current period investments, capital | |||||
| transactions and dispositions | (3,337 | ) | |||
| Pro forma net income for the three months ended | |||||
| December 31, 2011 | $ | 189,611 | |||
| Add back: | |||||
| Pro forma interest (including discontinued operations) | 72,516 | ||||
| Pro forma depreciation and amortization (including discontinued operations) | 168,930 | ||||
| Stock-based compensation | 5,750 | ||||
| Loss on extinguishment of debt | 2,393 | ||||
| Income tax benefit | (7,827 | ) | |||
| Change in fair value of financial instruments | 61 | ||||
| Other taxes | 628 | ||||
| Merger-related expenses and deal costs | 22,317 | ||||
| Litigation proceeds, net | (116,932 | ) | |||
| Income from unconsolidated entities | (19 | ) | |||
| Adjusted Pro Forma EBITDA | $ | 337,428 | |||
| Adjusted Pro Forma EBITDA annualized | $ | 1,349,712 | |||
| As of December 31, 2011: | |||||
| Debt | $ | 6,429,116 | |||
| Cash, including cash escrows pertaining to debt | (58,038 | ) | |||
| Net debt | $ | 6,371,078 | |||
| Net debt to Adjusted Pro Forma EBITDA | 4.7 | x | |||
| Non-GAAP Financial Measures Reconciliation | ||||||||
| (In thousands, except per share amounts) | ||||||||
| For the Year | ||||||||
| Ended December 31, | ||||||||
| 2011 | 2010 | |||||||
| Net income attributable to common stockholders | $ | 364,493 | $ | 246,167 | ||||
| Adjustments: | ||||||||
| Depreciation and amortization on real estate assets | 454,163 | 202,128 | ||||||
| Depreciation on real estate assets related to noncontrolling interest | (3,471 | ) | (6,217 | ) | ||||
| Depreciation on real estate assets related to unconsolidated entities | 6,552 | 2,367 | ||||||
| Discontinued operations: | ||||||||
| Gain on sale of real estate assets | - | (25,241 | ) | |||||
| Depreciation and amortization on real estate assets | 3,114 | 2,302 | ||||||
| FFO | 824,851 | 421,506 | ||||||
| Income tax (benefit) expense | (31,137 | ) | 2,930 | |||||
| Loss on extinguishment of debt | 27,604 | 9,791 | ||||||
| Merger-related expenses and deal costs | 153,923 | 19,243 | ||||||
| Litigation proceeds, net | (202,259 | ) | - | |||||
| Amortization of other intangibles | 1,022 | 511 | ||||||
| Change in fair value of financial instruments | 2,959 | - | ||||||
| Normalized FFO | $ | 776,963 | $ | 453,981 | ||||
| Per diluted share (1): | ||||||||
| Net income attributable to common stockholders | $ | 1.58 | $ | 1.56 | ||||
| Adjustments: | ||||||||
| Depreciation and amortization on real estate assets | 1.97 | 1.29 | ||||||
| Depreciation on real estate assets related to noncontrolling interest | (0.02 | ) | (0.04 | ) | ||||
| Depreciation on real estate assets related to unconsolidated entities | 0.03 | 0.02 | ||||||
| Discontinued operations: | ||||||||
| Gain on sale of real estate assets | - | (0.16 | ) | |||||
| Depreciation and amortization on real estate assets | 0.01 | 0.00 | ||||||
| FFO | 3.57 | 2.67 | ||||||
| Income tax (benefit) expense | (0.13 | ) | 0.02 | |||||
| Loss on extinguishment of debt | 0.12 | 0.06 | ||||||
| Merger-related expenses and deal costs | 0.67 | 0.12 | ||||||
| Litigation proceeds, net | (0.88 | ) | - | |||||
| Amortization of other intangibles | 0.00 | 0.00 | ||||||
| Change in fair value of financial instruments | 0.01 | - | ||||||
| Normalized FFO | $ | 3.37 | $ | 2.88 | ||||
| (1) Per share amounts may not add due to rounding. | ||||||||
| Non-GAAP Financial Measures Reconciliation | |||||||||||||||
|
NOI Reconciliation by Segment |
|||||||||||||||
| (In thousands) | |||||||||||||||
| For the Year | |||||||||||||||
| 2011 Quarters | 2010 Fourth | Ended December 31, | |||||||||||||
| Fourth | Third | Quarter | 2011 | 2010 | |||||||||||
| Revenues | |||||||||||||||
| Triple-Net | |||||||||||||||
| Triple-Net Rental Income | $ | 209,854 | $ | 208,050 | $ | 116,171 | $ | 652,577 | $ | 461,709 | |||||
| Medical Office Buildings | |||||||||||||||
| Medical Office - Stabilized | 54,068 | 52,231 | 19,326 | 147,389 | 61,551 | ||||||||||
| Medical Office - Lease up | 6,543 | 6,167 | 3,176 | 19,614 | 8,196 | ||||||||||
| Total Medical Office Buildings - Rental Income | 60,611 | 58,398 | 22,502 | 167,003 | 69,747 | ||||||||||
| Total Rental Income | 270,465 | 266,448 | 138,673 | 819,580 | 531,456 | ||||||||||
| Medical Office Building Services Revenue | 9,313 | 8,162 | 7,387 | 34,254 | 14,098 | ||||||||||
| Total Medical Office Buildings - Revenue | 69,924 | 66,560 | 29,889 | 201,257 | 83,845 | ||||||||||
| Triple-Net Services Revenue | 1,108 | 1,109 | - | 2,217 | - | ||||||||||
| Total Medical Office Building and Other Services Revenue | 10,421 | 9,271 | 7,387 | 36,471 | 14,098 | ||||||||||
| Seniors Housing Operating | |||||||||||||||
| Seniors Housing - Stabilized | 266,828 | 267,719 | 110,320 | 842,964 | 431,312 | ||||||||||
| Seniors Housing - Lease up | 11,866 | 7,410 | 3,208 | 25,301 | 11,645 | ||||||||||
| Seniors Housing - Other | 1,266 | 1,235 | 1,238 | 5,043 | 3,344 | ||||||||||
| Total Resident Fees and Services | 279,960 | 276,364 | 114,766 | 873,308 | 446,301 | ||||||||||
| Non-Segment Income from Loans and Investments | 9,867 | 10,072 | 5,076 | 34,415 | 16,412 | ||||||||||
| Total Revenues, excluding Interest and Other Income | 570,713 | 562,155 | 265,902 | 1,763,774 | 1,008,267 | ||||||||||
| Property-Level Operating Expenses | |||||||||||||||
| Medical Office Buildings | |||||||||||||||
| Medical Office - Stabilized | 17,832 | 17,878 | 6,458 | 49,811 | 20,604 | ||||||||||
| Medical Office - Lease up | 2,505 | 2,426 | 1,396 | 7,784 | 3,515 | ||||||||||
| Total Medical Office Buildings | 20,337 | 20,304 | 7,854 | 57,595 | 24,119 | ||||||||||
| Seniors Housing Operating | |||||||||||||||
| Seniors Housing - Stabilized | 179,371 | 181,483 | 68,816 | 568,552 | 281,406 | ||||||||||
| Seniors Housing - Lease up | 9,803 | 6,218 | 2,088 | 20,846 | 7,291 | ||||||||||
| Seniors Housing - Other | 1,097 | 1,155 | 1,125 | 4,579 | 3,134 | ||||||||||
| Total Seniors Housing | 190,271 | 188,856 | 72,029 | 593,977 | 291,831 | ||||||||||
| Total Property-Level Operating Expenses | 210,608 | 209,160 | 79,883 | 651,572 | 315,953 | ||||||||||
| Medical Office Building Services Costs | 7,245 | 6,347 | 4,885 | 27,082 | 9,518 | ||||||||||
| Net Operating Income | |||||||||||||||
| Triple-Net | |||||||||||||||
| Triple-Net Properties | 209,854 | 208,050 | 116,171 | 652,577 | 461,709 | ||||||||||
| Triple-Net Services Revenue | 1,108 | 1,109 | - | 2,217 | - | ||||||||||
| Total Triple-Net | 210,962 | 209,159 | 116,171 | 654,794 | 461,709 | ||||||||||
| Medical Office Buildings | |||||||||||||||
| Medical Office - Stabilized | 36,236 | 34,353 | 12,868 | 97,578 | 40,947 | ||||||||||
| Medical Office - Lease up | 4,038 | 3,741 | 1,780 | 11,830 | 4,681 | ||||||||||
| Medical Office Buildings Services | 2,068 | 1,815 | 2,502 | 7,172 | 4,580 | ||||||||||
| Total Medical Office Buildings | 42,342 | 39,909 | 17,150 | 116,580 | 50,208 | ||||||||||
| Seniors Housing Operating | |||||||||||||||
| Seniors Housing - Stabilized | 87,457 | 86,236 | 41,504 | 274,412 | 149,906 | ||||||||||
| Seniors Housing - Lease up | 2,063 | 1,192 | 1,120 | 4,455 | 4,354 | ||||||||||
| Seniors Housing - Other | 169 | 80 | 113 | 464 | 210 | ||||||||||
| Total Seniors Housing | 89,689 | 87,508 | 42,737 | 279,331 | 154,470 | ||||||||||
| Non-Segment | 9,867 | 10,072 | 5,076 | 34,415 | 16,412 | ||||||||||
| Net Operating Income | $ | 352,860 | $ | 346,648 | $ | 181,134 | $ | 1,085,120 | $ | 682,799 | |||||
|
Note: Amounts above are adjusted to exclude discontinued operations for all periods presented. |
|||||||||||||||
| Non-GAAP Financial Measures Reconciliation | |||||||
| Same-store NOI Reconciliation by Segment | |||||||
| (Dollars in thousands) | |||||||
| For the Year Ended | |||||||
| December 31, | |||||||
|
|
2011 |
2010 | |||||
| Revenues | |||||||
| Triple-Net | |||||||
| Triple-Net Rental Income | $ | 652,577 | $ | 461,709 | |||
| Rental Income Included in Discontinued Operations | 10,013 | 7,903 | |||||
| Less: | |||||||
| Rental Income not Included in Same-Store | 171,022 | 780 | |||||
| Straight-Lining of Rental Income, net | 6,997 | 7,175 | |||||
| Non-Cash Rental Income | 11,275 | 867 | |||||
| Other Pro Forma Adjustments | 83 | 90 | |||||
| 189,377 | 8,912 | ||||||
| Same-Store Cash Rental Income | $ | 473,213 | $ | 460,700 | |||
| Net Operating Income | |||||||
| Triple-Net Same-Store NOI | $ | 473,213 | $ | 460,700 | |||
| Total Seniors Housing | 279,331 | 154,470 | |||||
| Total Medical Office Buildings | 116,580 | 50,208 | |||||
| Less: | |||||||
| MOB Noncontrolling Interest Portion of NOI |
1,592 |
1,478 | |||||
| MOB Cash NOI not Included in Same-Store |
70,447 |
12,218 | |||||
| Medical Office Building and Other Services NOI |
|
7,172 |
4,580 | ||||
| Straight-Lining of Rental Income |
7,809 |
2,690 | |||||
| Non-Cash Rental Income |
(350) |
809 | |||||
| Seniors Housing NOI not Included in Same-Store |
122,518 |
177 | |||||
| Other Pro Forma Adjustments |
(16) |
4 | |||||
| Same-Store Net Operating Income | $ |
659,952 |
$ | 643,422 | |||
| Percentage Increase |
2.6 |
% | |||||
| Same-Store Net Operating Income |
659,952 |
643,422 | |||||
| Sunrise Cash Payment for Expense Overages | - | 4,960 | |||||
| Same-Store Net Operating Income excl Expense Overages | $ |
659,952 |
$ | 638,462 | |||
| Percentage Increase |
3.4 |
% | |||||
The Company believes that NOI, same-store cash rental income and same-store NOI provide useful information because those disclosures allow investors, analysts and Company management to measure unlevered property-level operating results and to compare the Company’s operating results to the operating results of other real estate companies and between periods on a consistent basis. Those terms are commonly used in evaluating results of real estate companies. The Company defines NOI as total revenues, excluding interest and other income, less property-level operating expenses and medical office building services costs (including amounts in discontinued operations).