Ventas Reports 2016 Fourth Quarter and Full-Year Results
  • Strong 2016 Earnings Growth
  • Enhanced Balance Sheet and Financial Strength
  • Continued Portfolio Optimization and Accelerated Capital Recycling
  • First Quarter 2017 Dividend of $0.775 Per Share Declared by Board
  • 2017 Guidance Consistent with Preliminary Company Expectations

CHICAGO--(BUSINESS WIRE)--Feb. 10, 2017-- Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today announced earnings for the fourth quarter and full year ended December 31, 2016, driven by the Company’s high-quality healthcare, senior living and life science properties and accretive investments:

  • Income from continuing operations per diluted common share for the full year 2016 grew 36 percent to $1.59 compared to the same period in 2015. The year-over-year increase was principally due to accretive investments, strong property performance, profits and fees from beneficial transactions and lower transaction costs. For the fourth quarter 2016, income from continuing operations per diluted common share was $0.40.
  • Normalized Funds From Operations (“FFO”) for the full year 2016 grew 5 percent to $4.13 per diluted common share on a comparable basis (“Comparable”), which adjusts all prior periods for the effects of the successful spin-off of Care Capital Properties, Inc. (“CCP”) (NYSE: CCP) completed in August 2015. For the fourth quarter 2016, normalized FFO per diluted common share was $1.03.
  • Reported FFO per diluted common share, as defined by the National Association of Real Estate Investment Trusts (“NAREIT FFO”), for the full year 2016 grew 1 percent to $4.13 compared to the same period in 2015. The 2015 period includes results through August 17, 2015 of the properties that were spun off to CCP. For the fourth quarter 2016, NAREIT FFO per diluted common share was $1.04.

Track Record of Excellence Continued

“Ventas extended its long track record of excellence and success in 2016, generating strong growth and income from a high-quality diverse portfolio while enhancing its financial strength,” said Chairman and Chief Executive Officer Debra A. Cafaro. “We also delivered 16 percent total shareholder return as our exciting investment in life science and innovation centers and strategic dispositions created additional value. We are confident that demand from an aging population combined with our productive and cohesive team, our leading operator partners and our attractive mix of healthcare, senior living and life science properties will sustain excellence over the long term.

“Looking ahead to 2017, we expect to deliver property cash flow growth, improve our portfolio mix as we substantially exit the skilled nursing business, accelerate our investment in future growth through attractive development and redevelopment projects, particularly in our life science and innovation platform, and enhance our financial strength. These steps will advance our position as the premier capital provider to leading healthcare and senior living providers and research institutions. The outstanding Ventas team is excited to continue its long track record of excellence in 2017 and beyond.”

Portfolio Performance

  • For the year ended December 31, 2016, same-store cash net operating income (“NOI”) growth for the Company’s total portfolio (1,038 assets) was 2.7 percent compared to 2015, in-line with previous guidance of 2.5 to 3 percent.
    • At a segment level for the full year 2016: the triple net leased portfolio same-store cash NOI grew 3.7 percent; the seniors housing operating portfolio (“SHOP”) grew 2.3 percent; and the medical office building (“MOB”) portfolio grew 1.3 percent, all consistent with previous guidance ranges.
  • The Company’s fourth quarter 2016 same-store total portfolio (1,189 assets) cash NOI growth was 2.9 percent compared to the same period in 2015.
    • At a segment level for the fourth quarter 2016: the triple net leased portfolio same-store cash NOI increased 4.5 percent; SHOP grew 1.1 percent; and the MOB portfolio rose 2.1 percent.

2016 and Fourth Quarter Highlights

  • The Company invested approximately $1.6 billion in 2016, including its accretive acquisition of institutional-quality life science and innovation centers leased by leading research universities. Ventas also committed to funding more than $300 million of development and redevelopment projects, including attractive new ground-up life science developments.
  • To fund investments and enhance the Company’s balance sheet and liquidity profile in 2016, Ventas raised approximately $1.3 billion in aggregate gross proceeds from the sale of 18.9 million shares of common stock at an average gross price of approximately $70 per share; and $850 million in long-term senior notes.
  • The Company sold properties and received final repayment on loans receivable in 2016 for proceeds of approximately $620 million, ahead of previously-disclosed guidance of $500 million. Fourth quarter proceeds approached $350 million.
  • The Company’s credit profile and financial health were outstanding at year end 2016, including:
    • Net Debt to Adjusted Pro Forma EBITDA ratio of 5.7x, compared to 6.1x at year end 2015;
    • 38 percent total indebtedness to gross asset value, an improvement of 4 percentage points year-over-year; and
    • 4.8x fixed charge coverage, an improvement of 0.3x year-over-year.
  • The Company currently has over $2 billion of available liquidity.
  • Ventas paid its shareholders dividends of $2.965 per share in 2016, with an attractive payout ratio.
  • The Company demonstrated its commitment to excellence through strong corporate governance, Board of Directors (“Board”) refreshment, director independence and diversity. In 2016 the Board appointed Roxanne M. Martino and Walter C. Rakowich as Ventas directors and James D. Shelton as the Company’s independent presiding director.
  • Ventas Chairman and Chief Executive Officer Debra A. Cafaro was recognized in 2016 as a top global CEO and a leader in the real estate and healthcare industries, including being named by: Forbes as one of the “World’s 100 Most Powerful Women” and first among “Top-Performing Women CEOs, Ranked by Total Return;” the Harvard Business Review as one of “The Best-Performing CEOs in the World,” one of only 30 CEOs named to the Harvard Business Review list for three consecutive years and one of only two women on 2016’s list; and Modern Healthcare as one of the “100 Most Influential People in Healthcare” for 2016, the third time Ms. Cafaro has received this recognition.

Recent Developments

  • The Board declared a dividend for the first quarter 2017 of $0.775 per share, representing a 6 percent increase from the first quarter 2016. The dividend is payable in cash on March 31, 2017 to stockholders of record on March 7, 2017.
  • The Company continues to expect to close on its $700 million loan commitment to fund Ardent Health Services’ (“Ardent’s”) acquisition of LHP Hospital Group (“LHP”) late in the first quarter of 2017, subject to customary regulatory reviews and approvals. Pro forma for the acquisition, Ardent’s leading hospital platform is expected to generate $3 billion in revenues in 6 states.
  • In January 2017, the Company sold assets and received final repayment on loans receivable for proceeds of $88 million, primarily comprised of 5 seniors housing communities at a cap rate of 6 percent on a cash and GAAP basis.

2017 Guidance

Ventas expects 2017 income from continuing operations per diluted common share to range between $1.72 and $1.78. The Company expects normalized FFO per diluted common share to range between $4.12 and $4.18, in line with the Company’s preliminary outlook provided on January 10, 2017. NAREIT FFO per diluted common share is forecast to range between $4.10 and $4.19.

The Company expects full year 2017 cash NOI growth for the 1,163 assets in the full-year same-store pool to range from 1.5 to 2.5 percent, consistent with the Company’s previous outlook. Triple net same-store cash NOI is forecast to grow 2.5 to 3.5 percent driven by lease escalations; SHOP same-store cash NOI is forecast to grow 0 to 2 percent, led by assets in high barrier-to-entry locations; and MOB same-store cash NOI is forecast to grow 1 to 2 percent, supported by new leasing activity.

The Company expects to complete approximately $900 million in strategic dispositions in 2017 (of which $88 million have closed to date), including $700 million in proceeds in the second half of the year through the potential sale of 36 skilled nursing facilities owned by Ventas at a 7 percent cash yield and a gain of over $650 million. Disposition proceeds are expected to be redeployed at approximately the same rate into new 2017 investments approximating $1 billion, principally to scale the Company’s life science and acute care hospital platforms, including $700 million in secured debt financing to fund Ardent’s acquisition of LHP.

During 2017, the Company also expects to invest in future growth by funding approximately $300 million in development and redevelopment projects, including attractive new ground-up life science developments.

During 2017, the Company expects to refinance approximately $1 billion of current debt and lengthen the Company’s weighted average maturity schedule. The 2017 outlook assumes 358.5 million weighted average fully-diluted shares, with no new equity issuance in 2017.

Consistent with its practice, the Company’s guidance does not include any further material investments, dispositions or capital activity. A reconciliation of the Company’s guidance to the Company’s projected GAAP measures is included in this press release.

The Company’s guidance is based on a number of other assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.

Fourth Quarter and Full Year 2016 Conference Call

Ventas will hold a conference call to discuss this earnings release today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The dial-in number for the conference call is (844) 776-7841 (or (661) 378-9542 for international callers). The participant passcode is “Ventas.” The conference call is being webcast live by NASDAQ OMX and can be accessed at the Company’s website at www.ventasreit.com. A replay of the webcast will be available following the call online, or by calling (855) 859-2056 (or (404) 537-3406 for international callers), passcode 50587913, beginning at approximately 2:00 p.m. Eastern Time and will remain for 36 days.

Ventas, Inc., an S&P 500 company, is a leading real estate investment trust. Its diverse portfolio of approximately 1,300 assets in the United States, Canada and the United Kingdom consists of seniors housing communities, medical office buildings, life science and innovation centers, skilled nursing facilities, specialty hospitals and general acute care hospitals. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. More information about Ventas and Lillibridge can be found at www.ventasreit.com and www.lillibridge.com.

Supplemental information regarding the Company can be found on the Company’s website under the “Investor Relations” section or at www.ventasreit.com/investor-relations/annual-reports---supplemental-information. A comprehensive listing of the Company’s properties is available at www.ventasreit.com/our-portfolio/properties-by-stateprovince.

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company’s or its tenants’, operators’, borrowers’ or managers’ expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, merger or acquisition integration, growth opportunities, expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of management for future operations and statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ from the Company’s expectations. The Company does not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.

The Company’s actual future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s filings with the Securities and Exchange Commission. These factors include without limitation: (a) the ability and willingness of the Company’s tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with the Company, including, in some cases, their obligations to indemnify, defend and hold harmless the Company from and against various claims, litigation and liabilities; (b) the ability of the Company’s tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness; (c) the Company’s success in implementing its business strategy and the Company’s ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (d) macroeconomic conditions such as a disruption of or lack of access to the capital markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States of its obligations, and changes in the federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates; (e) the nature and extent of future competition, including new construction in the markets in which the Company’s seniors housing communities and medical office buildings (“MOBs”) are located; (f) the extent and effect of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates; (g) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors; (h) the ability of the Company’s tenants, operators and managers, as applicable, to comply with laws, rules and regulations in the operation of the Company’s properties, to deliver high-quality services, to attract and retain qualified personnel and to attract residents and patients; (i) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and the effect of those changes on the Company’s revenues, earnings and funding sources; (j) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (k) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (l) final determination of the Company’s taxable net income for the year ended December 31, 2016 and for the year ending December 31, 2017; (m) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases, the Company’s ability to reposition its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations, including indemnification obligations, the Company may incur in connection with the replacement of an existing tenant; (n) risks associated with the Company’s senior living operating portfolio, such as factors that can cause volatility in the Company’s operating income and earnings generated by those properties, including without limitation national and regional economic conditions, costs of food, materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results for those properties; (o) changes in exchange rates for any foreign currency in which the Company may, from time to time, conduct business; (p) year-over-year changes in the Consumer Price Index or the UK Retail Price Index and the effect of those changes on the rent escalators contained in the Company’s leases and the Company’s earnings; (q) the Company’s ability and the ability of its tenants, operators, borrowers and managers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers; (r) the impact of increased operating costs and uninsured professional liability claims on the Company’s liquidity, financial condition and results of operations or that of the Company’s tenants, operators, borrowers and managers, and the ability of the Company and the Company’s tenants, operators, borrowers and managers to accurately estimate the magnitude of those claims; (s) risks associated with the Company’s MOB portfolio and operations, including the Company’s ability to successfully design, develop and manage MOBs and to retain key personnel; (t) the ability of the hospitals on or near whose campuses the Company’s MOBs are located and their affiliated health systems to remain competitive and financially viable and to attract physicians and physician groups; (u) risks associated with the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (v) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (w) the impact of market or issuer events on the liquidity or value of the Company’s investments in marketable securities; (x) consolidation activity in the seniors housing and healthcare industries resulting in a change of control of, or a competitor’s investment in, one or more of the Company’s tenants, operators, borrowers or managers or significant changes in the senior management of the Company’s tenants, operators, borrowers or managers; (y) the impact of litigation or any financial, accounting, legal or regulatory issues that may affect the Company or its tenants, operators, borrowers or managers; and (z) changes in accounting principles, or their application or interpretation, and the Company’s ability to make estimates and the assumptions underlying the estimates, which could have an effect on the Company’s earnings.

 
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
         
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
 
Assets
Real estate investments:
Land and improvements $ 2,089,591 $ 2,089,329 $ 2,041,880 $ 2,060,247 $ 2,056,428
Buildings and improvements 21,516,396 21,551,049 20,272,554 20,395,386 20,309,599
Construction in progress 210,599 192,848 127,647 119,215 92,005
Acquired lease intangibles 1,510,629   1,522,708   1,332,173   1,343,187   1,344,422  
25,327,215 25,355,934 23,774,254 23,918,035 23,802,454
Accumulated depreciation and amortization (4,932,461 ) (4,754,532 ) (4,560,504 ) (4,409,554 ) (4,177,234 )
Net real estate property 20,394,754 20,601,402 19,213,750 19,508,481 19,625,220
Secured loans receivable and investments, net 702,021 821,663 1,003,561 1,002,598 857,112
Investments in unconsolidated real estate entities 95,921   97,814   96,952   98,120   95,707  
Net real estate investments 21,192,696 21,520,879 20,314,263 20,609,199 20,578,039
Cash and cash equivalents 286,707 89,279 57,322 51,701 53,023
Escrow deposits and restricted cash 80,647 89,521 65,626 76,710 77,896
Goodwill 1,033,225 1,043,075 1,043,479 1,044,983 1,047,497
Assets held for sale 54,961 195,252 195,271 54,263 93,060
Other assets 518,364   488,258   417,511   424,436   412,403  
Total assets $ 23,166,600   $ 23,426,264   $ 22,093,472   $ 22,261,292   $ 22,261,918  
 
Liabilities and equity
Liabilities:
Senior notes payable and other debt $ 11,127,326 $ 11,252,327 $ 10,901,131 $ 11,247,730 $ 11,206,996
Accrued interest 83,762 70,790 80,157 66,988 80,864
Accounts payable and other liabilities 907,928 930,103 735,287 738,327 779,380
Liabilities related to assets held for sale 1,462 77,608 88,967 12,625 34,340
Deferred income taxes 316,641   315,713   320,468   333,354   338,382  
Total liabilities 12,437,119 12,646,541 12,126,010 12,399,024 12,439,962
 
Redeemable OP unitholder and noncontrolling interests 200,728 209,278 217,686 191,739 196,529
 
Commitments and contingencies
 
Equity:
Ventas stockholders' equity:
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued
Common stock, $0.25 par value; 354,125; 353,793; 341,055; 337,486; and 334,386 shares issued at December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively 88,514 88,431 85,246 84,354 83,579
Capital in excess of par value 12,917,002 12,870,566 11,961,951 11,758,306 11,602,838
Accumulated other comprehensive loss (57,534 ) (49,614 ) (44,195 ) (19,932 ) (7,565 )
Retained earnings (deficit) (2,487,695 ) (2,420,766 ) (2,313,287 ) (2,208,474 ) (2,111,958 )
Treasury stock, 1; 1; 0; 1; and 44 shares at December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016 and December 31, 2015, respectively (47 ) (78 )   (59 ) (2,567 )
Total Ventas stockholders' equity 10,460,240 10,488,539 9,689,715 9,614,195 9,564,327
Noncontrolling interest 68,513   81,906   60,061   56,334   61,100  
Total equity 10,528,753   10,570,445   9,749,776   9,670,529   9,625,427  
Total liabilities and equity $ 23,166,600   $ 23,426,264   $ 22,093,472   $ 22,261,292   $ 22,261,918  

 
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
       
For the Three Months Ended For the Years Ended
December 31, December 31,
2016 2015 2016 2015
Revenues:
Rental income:
Triple-net leased $ 210,804 $ 208,210 $ 845,834 $ 779,801
Office 183,846   145,958   630,342   566,245  
394,650 354,168 1,476,176 1,346,046
Resident fees and services 456,919 454,871 1,847,306 1,811,255
Office building and other services revenue 4,064 11,541 21,070 41,492
Income from loans and investments 19,996 20,361 98,094 86,553
Interest and other income 84   333   876   1,052  
Total revenues 875,713 841,274 3,443,522 3,286,398
Expenses:
Interest 107,739 103,692 419,740 367,114
Depreciation and amortization 232,189 236,795 898,924 894,057
Property-level operating expenses:
Senior living 310,303 307,261 1,242,978 1,209,415
Office 55,165   45,073   191,784   174,225  
365,468 352,334 1,434,762 1,383,640
Office building services costs 1,034 7,467 7,311 26,565
General, administrative and professional fees 31,488 27,636 126,875 128,035
(Gain) loss on extinguishment of debt, net (386 ) (486 ) 2,779 14,411
Merger-related expenses and deal costs (438 ) (2,079 ) 24,635 102,944
Other 1,087   4,009   9,988   17,957  
Total expenses 738,181   729,368   2,925,014   2,934,723  
Income before unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest 137,532 111,906 518,508 351,675
Income (loss) from unconsolidated entities 2,207 (223 ) 4,358 (1,420 )
Income tax benefit 2,836   11,548   31,343   39,284  
Income from continuing operations 142,575 123,231 554,209 389,539
Discontinued operations (167 ) (2,331 ) (922 ) 11,103
Gain on real estate dispositions 66,424   4,160   98,203   18,580  
Net income 208,832 125,060 651,490 419,222
Net income attributable to noncontrolling interest 1,195   332   2,259   1,379  
Net income attributable to common stockholders $ 207,637   $ 124,728   $ 649,231   $ 417,843  
Earnings per common share:
Basic:
Income from continuing operations attributable to common stockholders, including real estate dispositions $ 0.59 $ 0.38 $ 1.88 $ 1.23
Discontinued operations 0.00   (0.01 ) 0.00   0.03  
Net income attributable to common stockholders $ 0.59   $ 0.37   $ 1.88   $ 1.26  
Diluted:
Income from continuing operations attributable to common stockholders, including real estate dispositions $ 0.58 $ 0.38 $ 1.86 $ 1.22
Discontinued operations 0.00   (0.01 ) 0.00   0.03  
Net income attributable to common stockholders $ 0.58   $ 0.37   $ 1.86   $ 1.25  
 
Weighted average shares used in computing earnings per common share:
Basic 353,911 332,914 344,703 330,311
Diluted 357,435 336,406 348,390 334,007
 
Dividends declared per common share $ 0.775 $ 0.73 $ 2.965 $ 3.04

 
QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
         
2016 Quarters 2015
Fourth
Fourth Third Second First Quarter
 
Revenues:
Rental income:
Triple-net leased $ 210,804 $ 210,424 $ 210,119 $ 214,487 $ 208,210
Office 183,846   158,273   144,087   144,136   145,958  
394,650 368,697 354,206 358,623 354,168
Resident fees and services 456,919 461,974 464,437 463,976 454,871
Office building and other services revenue 4,064 4,317 5,504 7,185 11,541
Income from loans and investments 19,996 31,566 24,146 22,386 20,361
Interest and other income 84   562   111   119   333  
Total revenues 875,713 867,116 848,404 852,289 841,274
 
Expenses:
Interest 107,739 105,063 103,665 103,273 103,692
Depreciation and amortization 232,189 208,387 221,961 236,387 236,795
Property-level operating expenses:
Senior living 310,303 312,145 307,989 312,541 307,261
Office 55,165   48,972   43,966   43,681   45,073  
365,468 361,117 351,955 356,222 352,334
Office building services costs 1,034 974 1,852 3,451 7,467
General, administrative and professional fees 31,488 31,567 32,094 31,726 27,636
(Gain) loss on extinguishment of debt, net (386 ) 383 2,468 314 (486 )
Merger-related expenses and deal costs (438 ) 16,217 7,224 1,632 (2,079 )
Other 1,087   2,430   2,303   4,168   4,009  
Total expenses 738,181   726,138   723,522   737,173   729,368  
 
Income before unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interest 137,532 140,978 124,882 115,116 111,906
Income (loss) from unconsolidated entities 2,207 931 1,418 (198 ) (223 )
Income tax benefit 2,836   8,537   11,549   8,421   11,548  
Income from continuing operations 142,575 150,446 137,849 123,339 123,231
Discontinued operations (167 ) (118 ) (148 ) (489 ) (2,331 )
Gain (loss) on real estate dispositions 66,424   (144 ) 5,739   26,184   4,160  
Net income 208,832 150,184 143,440 149,034 125,060
Net income attributable to noncontrolling interest 1,195   732   278   54   332  
Net income attributable to common stockholders $ 207,637   $ 149,452   $ 143,162   $ 148,980   $ 124,728  
 
Earnings per common share:
Basic:
Income from continuing operations attributable to common stockholders, including real estate dispositions $ 0.59 $ 0.43 $ 0.42 $ 0.44 $ 0.38
Discontinued operations 0.00   0.00   0.00   0.00   (0.01 )
Net income attributable to common stockholders $ 0.59   $ 0.43   $ 0.42   $ 0.44   $ 0.37  
Diluted:
Income from continuing operations attributable to common stockholders, including real estate dispositions $ 0.58 $ 0.42 $ 0.42 $ 0.44 $ 0.38
Discontinued operations 0.00   0.00   0.00   0.00   (0.01 )
Net income attributable to common stockholders $ 0.58   $ 0.42   $ 0.42   $ 0.44   $ 0.37  
 
Weighted average shares used in computing earnings per common share:
Basic 353,911 350,274 338,901 335,559 332,914
Diluted 357,435 354,186 342,571 339,202 336,406

 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
  For the Year Ended
December 31,
2016   2015
Cash flows from operating activities:
Net income $ 651,490 $ 419,222
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued operations) 898,924 973,663
Amortization of deferred revenue and lease intangibles, net (20,336 ) (24,129 )
Other non-cash amortization 10,357 5,448
Stock-based compensation 20,958 19,537
Straight-lining of rental income, net (27,988 ) (33,792 )
Loss on extinguishment of debt, net 2,779 14,411
Gain on real estate dispositions (including amounts in discontinued operations) (98,203 ) (18,811 )
Gain on real estate loan investments (2,271 )
Gain on sale of marketable debt securities (5,800 )
Income tax benefit (34,227 ) (42,384 )
(Income) loss from unconsolidated entities (4,358 ) 1,244
Distributions from unconsolidated entities 7,598 23,462
Other (1,847 ) 6,693
Changes in operating assets and liabilities:
Decrease in other assets 5,560 42,316
Increase in accrued interest 2,604 19,995
Decrease in accounts payable and other liabilities (43,583 ) (9,308 )

Net cash provided by operating activities

1,367,457 1,391,767
Cash flows from investing activities:
Net investment in real estate property (1,429,112 ) (2,650,788 )
Investment in loans receivable and other (158,635 ) (171,144 )
Proceeds from real estate disposals 300,561 492,408
Proceeds from loans receivable 320,082 109,176
Proceeds from sale or maturity of marketable securities 76,800
Funds held in escrow for future development expenditures 4,003
Development project expenditures (143,647 ) (119,674 )
Capital expenditures (117,456 ) (107,487 )
Investment in unconsolidated operating entity (26,282 )
Contributions to unconsolidated entities (30,704 )
Other (6,436 )  
Net cash used in investing activities (1,234,643 ) (2,423,692 )
Cash flows from financing activities:
Net change in borrowings under credit facility (35,637 ) (723,457 )
Net cash impact of CCP Spin-Off (128,749 )
Proceeds from debt 893,218 2,512,747
Proceeds from debt related to CCP Spin-Off 1,400,000
Repayment of debt (1,022,113 ) (1,435,596 )
Purchase of noncontrolling interest (2,846 ) (3,819 )
Payment of deferred financing costs (6,555 ) (24,665 )
Issuance of common stock, net 1,286,680 491,023
Cash distribution to common stockholders (1,024,968 ) (1,003,413 )
Cash distribution to redeemable OP unitholders (8,640 ) (15,095 )
Purchases of redeemable OP units (33,188 )
Contributions from noncontrolling interest 7,326
Distributions to noncontrolling interest (6,879 ) (12,649 )
Other 22,136   6,983  
Net cash provided by financing activities 101,722   1,030,122  
Net increase (decrease) in cash and cash equivalents 234,536 (1,803 )
Effect of foreign currency translation on cash and cash equivalents (852 ) (522 )
Cash and cash equivalents at beginning of period 53,023   55,348  
Cash and cash equivalents at end of period $ 286,707   $ 53,023  
 
Supplemental schedule of non-cash activities:
Assets and liabilities assumed from acquisitions:
Real estate investments $ 69,092 $ 2,565,960
Utilization of funds held for an Internal Revenue Code Section 1031 exchange (6,954 ) (8,911 )
Other assets acquired 90,037 20,090
Debt assumed 47,641 177,857
Other liabilities 72,636 54,459
Deferred income tax liability 9,381 52,153
Noncontrolling interest 22,517 88,085
Equity issued 2,204,585
Non-cash impact of CCP Spin-Off 1,256,404
Equity issued for purchase of OP and Class C units 24,318

 
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
         
2016 Quarters 2015
Fourth
Fourth Third Second First Quarter
Cash flows from operating activities:
Net income $ 208,832 $ 150,184 $ 143,440 $ 149,034 $ 125,060
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued operations) 232,189 208,387 221,961 236,387 236,793
Amortization of deferred revenue and lease intangibles, net (5,029 ) (5,217 ) (5,053 ) (5,037 ) (4,817 )
Other non-cash amortization 3,183 2,487 2,241 2,446 2,397
Stock-based compensation 5,073 5,848 5,008 5,029 3,476
Straight-lining of rental income, net (6,602 ) (5,960 ) (5,581 ) (9,845 ) (8,674 )
(Gain) loss on extinguishment of debt, net (386 ) 383 2,468 314 (486 )
(Gain) loss on real estate dispositions (including amounts in discontinued operations) (66,424 ) 144 (5,739 ) (26,184 ) (4,162 )
Gain on real estate loan investments (2,238 ) (33 )
Income tax benefit (3,395 ) (9,389 ) (12,287 ) (9,156 ) (11,667 )
(Income) loss from unconsolidated entities (2,207 ) (931 ) (1,418 ) 198 47
Distributions from unconsolidated entities 2,024 1,701 1,884 1,989 2,912
Other (772 ) (1,799 ) (375 ) 1,099 3,417
Changes in operating assets and liabilities:
Decrease (increase) in other assets 3,807 (8,856 ) 15,444 (4,835 ) 31,152
Increase (decrease) in accrued interest 12,657 (9,284 ) 13,542 (14,311 ) 13,657
(Decrease) increase in accounts payable and other liabilities (16,763 ) 19,335   8,082   (54,237 ) (19,383 )
Net cash provided by operating activities 366,187 344,795 383,584 272,891 369,722
Cash flows from investing activities:
Net investment in real estate property (7,520 ) (1,387,139 ) (20,833 ) (13,620 ) (93,800 )
Investment in loans receivable and other (3,686 ) (2,499 ) (6,236 ) (146,214 ) (96,758 )
Proceeds from real estate disposals 237,000 9,350 54,211 82,775
Proceeds from loans receivable 126,019 186,419 6,019 1,625 2,267
Development project expenditures (49,249 ) (24,719 ) (34,912 ) (34,767 ) (29,216 )
Capital expenditures (42,160 ) (28,371 ) (23,204 ) (23,721 ) (31,675 )
Contributions to unconsolidated entities (2,720 )
Other (261 ) (1,910 )   (4,265 )  
Net cash provided by (used in) investing activities 260,143 (1,258,219 ) (69,816 ) (166,751 ) (169,127 )
Cash flows from financing activities:
Net change in borrowings under credit facility (82,365 ) 22,424 (113,136 ) 137,440 66,949
Proceeds from debt 16,601 460,400 416,072 145 1,686
Repayment of debt (105,608 ) (176,168 ) (589,028 ) (151,309 ) (106,526 )
Purchase of noncontrolling interest (1,242 ) (1,604 )
Payment of deferred financing costs (408 ) (2,303 ) (3,768 ) (76 ) (772 )
Issuance of common stock, net 20,978 887,963 228,108 149,631 73,205
Cash distribution to common stockholders (274,566 ) (256,931 ) (247,975 ) (245,496 ) (243,838 )
Cash distribution to redeemable OP unitholders (2,154 ) (2,049 ) (2,114 ) (2,323 ) (2,319 )
Contributions from noncontrolling interest 1,400 246 5,680
Distributions to noncontrolling interest (1,758 ) (1,539 ) (1,839 ) (1,743 ) (1,399 )
Other 629   13,624   1,732   6,151   494  
Net cash (used in) provided by financing activities (428,493 ) 945,667   (307,872 ) (107,580 ) (212,520 )
Net increase (decrease) in cash and cash equivalents 197,837 32,243 5,896 (1,440 ) (11,925 )
Effect of foreign currency translation on cash and cash equivalents (409 ) (286 ) (275 ) 118 (283 )
Cash and cash equivalents at beginning of period 89,279   57,322   51,701   53,023   65,231  
Cash and cash equivalents at end of period $ 286,707   $ 89,279   $ 57,322   $ 51,701   $ 53,023  

 
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
         
2016 Quarters 2015
Fourth
Fourth Third Second First Quarter
Supplemental schedule of non-cash activities:
Assets and liabilities assumed from acquisitions:
Real estate investments $ 9,426 $ 51,001 $ 6,107 $ 2,558 $ (1,190 )
Utilization of funds held for an Internal Revenue Code Section 1031 exchange (6,954 )
Other assets acquired 10,158 79,018 927 (66 ) (131 )
Debt assumed 47,641
Other liabilities 12,190 57,808 80 2,558 (3,478 )
Deferred income tax liability 7,102 2,345 (66 ) 1,317
Noncontrolling interest 292 22,225 840
Equity issued for purchase of OP and Class C units 1,348 2,200 1,422 19,348

       
NON-GAAP FINANCIAL MEASURES RECONCILIATION

Funds From Operations (FFO) and Funds Available for Distribution (FAD) Including Comparable Earnings1

(Dollars in thousands, except per share amounts)
 
FY YOY
2015   2016   Growth
    Q4   YTD   Q1   Q2   Q3   Q4   YTD   '15-'16
Income from continuing operations $ 123,231   $ 389,539   $ 123,339   $ 137,849   $ 150,446 $ 142,575 $ 554,209 42 %
Income from continuing operations per share   $ 0.37     $ 1.17     $ 0.36     $ 0.40     $ 0.42     $ 0.40     $ 1.59     36 %
Discontinued operations (2,331 ) 11,103 (489 ) (148 ) (118 ) (167 ) (922 )
Gain (loss) on real estate dispositions 4,160     18,580     26,184     5,739     (144 )   66,424     98,203  
Net income 125,060 419,222 149,034 143,440 150,184 208,832 651,490
Net income attributable to noncontrolling interest 332     1,379     54     278     732     1,195     2,259  
Net income attributable to common stockholders 2 $ 124,728 $ 417,843 $ 148,980 $ 143,162 $ 149,452 $ 207,637 $ 649,231 55 %
Net income attributable to common stockholders per share 2 $ 0.37 $ 1.25 $ 0.44 $ 0.42 $ 0.42 $ 0.58 $ 1.86 49 %
 
Adjustments:
Depreciation and amortization on real estate assets 235,101 887,126 234,726 220,346 206,560 230,353 891,985
Depreciation on real estate assets related to noncontrolling interest (1,926 ) (7,906 ) (2,075 ) (1,814 ) (1,865 ) (2,031 ) (7,785 )
Depreciation on real estate assets related to unconsolidated entities 2,982 7,353 1,989 1,220 1,113 1,432 5,754
Loss on re-measurement of equity interest upon acquisition, net 176 176
(Gain) loss on real estate dispositions (4,160 ) (18,580 ) (26,184 ) (5,739 ) 144 (66,424 ) (98,203 )
Loss (gain) on real estate dispositions related to unconsolidated entities 19 19 (536 ) 41 56 (439 )
Discontinued operations:
(Gain) loss on real estate dispositions (2 ) (231 ) 1 1
Depreciation and amortization on real estate assets     79,608                      
Subtotal: FFO add-backs 232,190 947,565 207,920 214,055 205,952 163,386 791,313
Subtotal: FFO add-backs per share   $ 0.69     $ 2.84     $ 0.61     $ 0.62     $ 0.58     $ 0.46     $ 2.27      
FFO (NAREIT) attributable to common stockholders $ 356,918 $ 1,365,408 $ 356,900 $ 357,217 $ 355,404 $ 371,023 $ 1,440,544 6 %
FFO (NAREIT) attributable to common stockholders per share   $ 1.06     $ 4.09     $ 1.05     $ 1.04     $ 1.00     $ 1.04     $ 4.13     1 %
 
Adjustments:
Change in fair value of financial instruments 454 460 (79 ) (7 ) 14 134 62
Non-cash income tax benefit (11,668 ) (42,384 ) (9,157 ) (12,286 ) (9,389 ) (3,395 ) (34,227 )
(Gain) loss on extinguishment of debt, net (486 ) 15,797 314 2,468 383 (386 ) 2,779
(Gain) loss on non-real estate dispositions related to unconsolidated entities (585 ) 28 (557 )
Merger-related expenses, deal costs and re-audit costs 659 152,344 3,254 8,550 16,965 (479 ) 28,290
Amortization of other intangibles 438     2,058     438     438     438     438     1,752  
Subtotal: normalized FFO add-backs (10,603 ) 128,275 (5,230 ) (1,422 ) 8,439 (3,688 ) (1,901 )
Subtotal: normalized FFO add-backs per share   $ (0.03 )   $ 0.38     $ (0.02 )   $ (0.00 )   $ 0.02     $ (0.01 )   $ (0.01 )    
Normalized FFO attributable to common stockholders $ 346,315 $ 1,493,683 $ 351,670 $ 355,795 $ 363,843 $ 367,335 $ 1,438,643 (4 %)
Normalized FFO attributable to common stockholders per share   $ 1.03     $ 4.47     $ 1.04     $ 1.04     $ 1.03     $ 1.03     $ 4.13     (8 %)
Adjusted: Normalized FFO from CCP Spin-Off $ $ (173,400 ) $ $ $ $ $
Adjusted Normalized FFO per share from CCP Spin-Off   $     $ (0.52 )   $     $     $     $     $      
Comparable Normalized FFO attributable to common stockholders $ 346,315 $ 1,320,283 $ 351,670 $ 355,795 $ 363,843 $ 367,335 $ 1,438,643 9 %
Comparable Normalized FFO attributable to common stockholders per share   $ 1.03     $ 3.95     $ 1.04     $ 1.04     $ 1.03     $ 1.03     $ 4.13     5 %
 
Non-cash items included in normalized FFO:
Amortization of deferred revenue and lease intangibles, net (4,817 ) (24,129 ) (5,037 ) (5,053 ) (5,217 ) (5,029 ) (20,336 )
Other non-cash amortization, including fair market value of debt 2,397 5,448 2,446 2,241 2,487 3,183 10,357
Stock-based compensation 3,476 19,537 5,029 5,008 5,848 5,073 20,958
Straight-lining of rental income, net (8,674 )   (33,792 )   (9,845 )   (5,581 )   (5,960 )   (6,602 )   (27,988 )
Subtotal: non-cash items included in normalized FFO (7,618 ) (32,936 ) (7,407 ) (3,385 ) (2,842 ) (3,375 ) (17,009 )
Capital expenditures   (33,496 )   (112,700 )   (24,987 )   (25,103 )   (29,991 )   (44,540 )   (124,621 )    
Normalized FAD attributable to common stockholders $ 305,201 $ 1,348,047 $ 319,276 $ 327,307 $ 331,010 $ 319,420 $ 1,297,013 (4 %)
Adjusted: Normalized FAD from CCP Spin-Off $ $ (155,081 ) $ $ $ $ $
Comparable Normalized FAD attributable to common stockholders   $ 305,201     $ 1,192,966     $ 319,276     $ 327,307     $ 331,010     $ 319,420     $ 1,297,013     9 %
Merger-related expenses, deal costs and re-audit costs   (659 )   (152,344 )   (3,254 )   (8,550 )   (16,965 )   479     (28,290 )    
FAD attributable to common stockholders $ 304,542 $ 1,195,703 $ 316,022 $ 318,757 $ 314,045 $ 319,899 $ 1,268,723 6 %
Adjusted: FAD from CCP Spin-Off $ 2,333 $ (108,677 ) $ 489 $ 148 $ 118 $ 167 $ 922
Comparable FAD attributable to common stockholders   $ 306,875     $ 1,087,026     $ 316,511     $ 318,905     $ 314,163     $ 320,066     $ 1,269,645     17 %
Weighted average diluted shares 336,406 334,007 339,202 342,571 354,186 357,435 348,390
 
1 Per share amounts may not add due to rounding. Per share quarterly amounts may not add to annual per share amounts due to material changes in the Company’s weighted average diluted share count, if any.
2 CCP impacts calculated based on net income related to discontinued operations, less the de minimis share of discontinued operations net income not related to CCP assets, assuming (a) G&A of $2.5 million in Q1’15 and Q2’15 ($0.01 per share per quarter) and $1.3 million in Q3’15 ($0.00 per share) and (b) interest expense of $6.9 million in Q1’15 and Q2’15 ($0.02 per share per quarter) and $4.3 million in Q3’15 ($0.01 per share); these adjustments differ from the respective amounts found in discontinued operations.
 

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 FFO, normalized FFO, FAD and normalized FAD to be appropriate supplemental measures of operating performance of an equity REIT. In particular, 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 and between 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 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.

The Company uses the 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 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) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to acquisition lawsuits; (b) 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; (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 and derivative transactions that have non-cash mark-to-market impacts on the Company’s income statement; (d) the financial impact of contingent consideration, severance-related costs and charitable donations made to the Ventas Charitable Foundation; (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 unusual items related to unconsolidated entities; and (g) expenses related to the re-audit and re-review in 2014 of the Company’s historical financial statements and related matters. Normalized FAD represents normalized FFO excluding non-cash components, straight-line rental adjustments and deducting capital expenditures, including tenant allowances and leasing commissions. FAD represents normalized FAD after subtracting merger-related expenses, deal costs and re-audit costs.

FFO, normalized FFO, FAD and normalized FAD presented herein may not be identical to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO, normalized FFO, FAD and normalized FAD should not be considered as alternatives to net income or income from continuing operations (both 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 income from continuing operations is the most comparable GAAP measure because it provides insight into the Company’s continuing operations. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO, normalized FFO, FAD and normalized FAD should be examined in conjunction with net income and income from continuing operations as presented elsewhere herein.

       
NON-GAAP FINANCIAL MEASURES RECONCILIATION

Income from Continuing Operations, FFO and FAD Guidance Attributable to Common Stockholders 1,2

(Dollars in millions, except per share amounts)
 
Tentative / Preliminary and Subject to Change
FY2017 - Guidance 2017 - Per Share
Low   High Low   High
                 
Income from Continuing Operations   $616   $639   $1.72   $1.78
 
Gain on Real Estate Dispositions 683 713 1.90 1.99
Other Adjustments 3 (6 ) (8 ) (0.02 ) (0.02 )
                 
Net Income Attributable to Common Stockholders   $1,293   $1,344   $3.61   $3.75
 
Depreciation and Amortization Adjustments 872 888 2.43 2.48
Gain on Real Estate Dispositions (683 ) (713 ) (1.90 ) (1.99 )
Other Adjustments 3 (13 ) (15 ) (0.04 ) (0.04 )
                 
FFO (NAREIT) Attributable to Common Stockholders   $1,469   $1,504   $4.10   $4.19
 
Merger-Related Expenses, Deal Costs and Re-Audit Costs 10 5 0.03 0.01
Other Adjustments 3 (2 ) (11 ) (0.03 )
                 
Normalized FFO Attributable to Common Stockholders $1,477 $1,498 $4.12 $4.18
% Year-Over-Year Growth           0 %   1 %
 
Non-Cash Items Included in Normalized FFO (4 ) (8 )
Capital Expenditures (126 ) (136 )
           
Normalized FAD Attributable to Common Stockholders   $1,347   $1,354  
 
Merger-Related Expense, Deal Costs and Re-Audit Costs (10 ) (5 )
Other Adjustments (4 ) (3 )
           
FAD Attributable to Common Stockholders   $1,333   $1,346  
 
Weighted Average Diluted Shares 358,452 358,452

1

  The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company’s expectations depending on factors discussed in the Company’s filings with the Securities and Exchange Commission.

2

Totals and per share amounts may not add due to rounding. Per share quarterly amounts may not add to annual per share amounts due to changes in the Company's weighted average diluted share count, if any.

3

See table titled “Funds From Operations (FFO) and Funds Available for Distribution (FAD) Including Comparable Earnings” for detailed breakout of “other adjustments” for each respective category.
 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Net Debt to Adjusted Pro Forma EBITDA

 
The following information considers the pro forma effect on income from continuing operations of the Company’s investments and other capital transactions that were completed during the three months ended December 31, 2016, as if the transactions had been consummated as of the beginning of the period. The following table illustrates net debt to pro forma earnings, which includes amounts in discontinued operations, before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding gains or losses on extinguishment of debt, consolidated joint venture partners’ share of EBITDA, merger-related expenses and deal costs, expenses related to the re-audit and re-review in 2014 of the Company’s historical financial statements, net gains or losses on real estate activity, gains or losses on re-measurement of equity interest upon acquisition, changes in the fair value of financial instruments and unrealized foreign currency gains or losses, and including the Company’s share of EBITDA from unconsolidated entities and adjustments for other immaterial or identified items (“Adjusted Pro Forma EBITDA”) (dollars in thousands). The Company believes that net debt, Adjusted Pro Forma EBITDA and net debt to Adjusted Pro Forma EBITDA are important supplemental measures in evaluating the credit strength of the Company and its ability to service its debt obligations. 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 and tend to obscure the Company’s actual credit quality. For a reconciliation of Net Debt to Adjusted Pro Forma EBITDA for the year ended December 31, 2015, please refer to the reconciliation included in the Company’s Current Report on Form 8-K filed with the SEC on February 12, 2016, which reconciliation is hereby incorporated by reference.
 
Income from continuing operations   $ 142,575
Discontinued operations (167 )
Gain on real estate dispositions 66,424  
Net income 208,832
Net income attributable to noncontrolling interest 1,195  
Net income attributable to common stockholders 207,637
Pro forma adjustments for current period investments, capital transactions and dispositions 9,623  
Pro forma net income attributable to common stockholders for the three months ended December 31, 2016 217,260
Add back:
Interest 107,370
Depreciation and amortization 217,282
Stock-based compensation 5,073
Gain on real estate dispositions (66,424 )
Loss on extinguishment of debt, net 1
Loss from unconsolidated entities, net of Ventas share of EBITDA from unconsolidated entities 4,309
Net income (loss) attributable to noncontrolling interest, net of consolidated joint venture partners’ share of EBITDA (3,390 )
Income tax benefit (2,837 )
Change in fair value of financial instruments 152
Unrealized foreign currency gains (509 )
Other taxes 921
Merger-related expenses, deal costs and re-audit costs (600 )
Adjusted Pro Forma EBITDA 478,608  
Adjusted Pro Forma EBITDA annualized $ 1,914,432  
 
As of December 31, 2016:
Debt $ 11,127,326
Cash (286,707 )
Restricted cash pertaining to debt (22,324 )
Consolidated joint venture partners’ share of debt (80,863 )
Ventas share of debt from unconsolidated entities 122,037  
Net debt $ 10,859,469  
 
Net debt to Adjusted Pro Forma EBITDA 5.7   x
 

NON-GAAP FINANCIAL MEASURES RECONCILIATION

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

(Dollars in thousands)

 

The Company considers NOI and same-store 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. The Company defines NOI as total revenues, less interest and other income, property-level operating expenses and office building services costs. In the case of NOI, cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies. The Company believes that income from continuing operations is the most comparable GAAP measure for both NOI and same-store cash NOI because it provides insight into the Company’s continuing operations. The Company defines same-store as properties owned, consolidated and operational for the full period in both comparison periods, and excluding assets intended for disposition, and for SHOP, those properties that transitioned operators after the start of the prior comparison period. To normalize for exchange rate movements, all same-store cash NOI measures 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.

 
  Triple-Net        
Leased Senior Living Office
Properties Operations Operations All Other Total
For the Three Months Ended December 31, 2016
 
Income from continuing operations $ 142,575
Adjustments:
Interest and other income (84 )
Interest 107,739
Depreciation and amortization 232,189
General, administrative and professional fees 31,488
Gain on extinguishment of debt, net (386 )
Merger-related expenses and deal costs (438 )
Other 1,087
Income from unconsolidated entities (2,207 )
Income tax benefit (2,836 )
Reported Segment NOI $ 212,049 $ 146,616 $ 130,120 $ 20,342 $ 509,127
Adjustments:
NOI not included in same-store (6,265 ) (3,236 ) (28,731 ) (38,232 )
Straight-lining of rental income (1,774 ) (4,828 ) (6,602 )
Non-cash rental income (4,782 ) (131 ) (4,913 )
Non-segment NOI (20,342 ) (20,342 )
NOI impact from change in FX          
(12,821 ) (3,236 ) (33,690 ) (20,342 ) (70,089 )
Same-Store cash NOI (USD) $ 199,228   $ 143,380   $ 96,430     $ 439,038  
 
Percentage increase (USD) 4.5 % 1.1 % 2.1 % 2.9 %
         

Triple-Net

 

Leased

Senior Living

Office

Properties

Operations

Operations

All Other

Total

For the Three Months Ended December 31, 2015
 
Income from continuing operations $ 123,231
Adjustments:
Interest and other income (333 )
Interest 103,692
Depreciation and amortization 236,795
General, administrative and professional fees 27,636
Gain on extinguishment of debt, net (486 )
Merger-related expenses and deal costs (2,079 )
Other 4,009
Loss from unconsolidated entities 223
Income tax benefit (11,548 )
Reported Segment NOI $ 209,357 $ 147,610 $ 102,788 $ 21,385 481,140
Adjustments:
NOI not included in same-store (8,761 ) (5,851 ) (4,494 ) (19,106 )
Straight-lining of rental income (4,056 ) (4,597 ) (8,653 )
Non-cash rental income (4,919 ) 755 (4,164 )
Non-segment NOI (21,385 ) (21,385 )
NOI impact from change in FX (1,043 ) 1       (1,042 )
(18,779 ) (5,850 ) (8,336 ) (21,385 ) (54,350 )
Same-Store cash NOI (USD) $ 190,578   $ 141,760   $ 94,452     $ 426,790  

         
Triple-Net
Leased Senior Living Office
Properties Operations Operations All Other Total
For the Twelve Months Ended December 31, 2016
 
Income from continuing operations $ 554,209
Adjustments:
Interest and other income (876 )
Interest 419,740
Depreciation and amortization 898,924
General, administrative and professional fees 126,875
Loss on extinguishment of debt, net 2,779
Merger-related expenses and deal costs 24,635
Other 9,988
Income from unconsolidated entities (4,358 )
Income tax benefit (31,343 )
Reported Segment NOI $ 850,755 $ 604,328 $ 444,276 $ 101,214 2,000,573
Adjustments:
Modification fee 3,500 3,500
NOI not included in same-store (161,300 ) (53,158 ) (145,529 ) (359,987 )
Straight-lining of rental income (15,411 ) (12,577 ) (27,988 )
Non-cash rental income (20,288 ) 1,905 (18,383 )
Non-segment NOI (101,214 ) (101,214 )
NOI impact from change in FX          
(193,499 ) (53,158 ) (156,201 ) (101,214 ) (504,072 )
Same-Store cash NOI (USD) $ 657,256   $ 551,170   $ 288,075     $ 1,496,501  
 
Percentage increase (USD) 3.7 % 2.3 % 1.3 % 2.7 %
 
Less: Modification fee (3,500 )       (3,500 )
Adjusted Same-Store cash NOI $ 653,756   $ 551,170   $ 288,075     $ 1,493,001  
 
Adjusted percentage increase 4.0 % 2.3 % 1.3 % 2.9 %
         

Triple-Net

Leased

Senior Living

Office

Properties

Operations

Operations

All Other

Total

For the Twelve Months Ended December 31, 2015
 
Income from continuing operations $ 389,539
Adjustments:
Interest and other income (1,052 )
Interest 367,114
Depreciation and amortization 894,057
General, administrative and professional fees 128,035
Loss on extinguishment of debt, net 14,411
Merger-related expenses and deal costs 102,944
Other 17,957
Loss from unconsolidated entities 1,420
Income tax benefit (39,284 )
Reported segment NOI $ 784,234 $ 601,840 $ 399,891 $ 89,176 1,875,141
Adjustments:
Modification fee 5,200 5,200
NOI not included in same-store (116,928 ) (60,933 ) (103,947 ) (281,808 )
Straight-lining of rental income (18,964 ) (14,744 ) (33,708 )
Non-cash rental income (18,681 ) 3,225 (15,456 )
Non-segment NOI (89,176 ) (89,176 )
NOI impact from change in FX (1,300 ) (2,331 )     (3,631 )
(150,673 ) (63,264 ) (115,466 ) (89,176 ) (418,579 )
Same-store cash NOI (USD) $ 633,561   $ 538,576   $ 284,425     $ 1,456,562  
 
Less: Modification fee (5,200 )       (5,200 )
Adjusted Same-store cash NOI $ 628,361   $ 538,576   $ 284,425     $ 1,451,362  

 
NON-GAAP FINANCIAL MEASURES RECONCILIATION

NOI and Same-Store Cash NOI by Segment Guidance 1,2

(Dollars in millions, except per share amounts)
 
FY2017 - Guidance
Tentative / Preliminary and Subject to Change
      Non-  
NNN SHOP Office Segment Total
High End
 
Income from Continuing Operations $ 639
Depreciation and Amortization3 902

Interest Expense, G&A, Other Income & Expenses4

543

 

Reported Segment NOI5

$ 823 $ 606 $ 520 139

2,084

Non-Cash and Non-Same Store Adjustments5

(57 ) (8 ) (124 ) (139 )

(326

)

Same-Store Cash NOI5

766 598 396

1,758

Percentage Increase 3.5 % 2.0 % 2.0 %

NM

2.5 %
 
Modification Fees          

Adjusted Same-Store Cash NOI5

$ 766   $ 598   $ 396   $   $

1,758

 
Adjusted Percentage Increase 4.0 % 2.0 % 2.0 %

NM

2.7

%
 
Low End
 
Income from Continuing Operations $ 616
Depreciation and Amortization3 882

Interest Expense, G&A, Other Income & Expenses4

575

 

Reported Segment NOI5

$ 816 $ 594 $ 516 $ 144

2,073

Non-Cash and Non-Same Store Adjustments5

(57 ) (7 ) (124 ) (144 ) (333 )

Same-Store Cash NOI5

759 587 392

1,740

Percentage Increase 2.5 % 0.0 % 1.0 % NM 1.5 %
 
Modification Fees          

Adjusted Same-Store Cash NOI5

$ 759   $ 587   $ 392   $   $

1,740

 
Adjusted Percentage Increase 3.0 % 0.0 % 1.0 % NM

1.7

%
 
Prior Year
 
Income from Continuing Operations $ 554
Depreciation and Amortization 3 899

Interest Expense, G&A, Other Income & Expenses4

547  

Reported Segment NOI5

$

851

$ 604 $ 444 $ 101

2,001

Modification Fees

4

4
Non-Cash and Non-Same Store Adjustments

(113

) (17 ) (56 ) (101 ) (287 )

NOI Impact from FX5

(2

) 0   0     (3 )
Same-Store Cash NOI

740

587 388

1,715

 

Modification Fees (4 )       (4 )

Adjusted Same-Store Cash NOI5

$

737

  $ 587   $ 388   $   $

1,711

 

1

  The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company’s expectations depending on factors discussed in the Company’s filings with the Securities and Exchange Commission.

2

Totals may not add due to rounding. See table titled “Net Operating Income (NOI) and Same-Store Cash NOI by Segment” for the twelve months ended December 31, 2016 for a detailed breakout of adjustments for each respective category.

3

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

4

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

5

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

 

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Source: Ventas, Inc.

Ventas, Inc.
Ryan K. Shannon
(877) 4-VENTAS