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Ventas Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed February 22, 2007
Period End
December 31, 2006
Security
VTR
In the record · 2016–202610-K1110-Q348-K128

VTR filed 11 annual reports (10-K), 34 quarterly reports (10-Q) and 128 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Apr ’17Apr ’17
  2. Leadership change8-K · Oct ’19Oct ’19
  3. Leadership change8-K · Mar ’22Mar ’22
  4. Material agreement8-K · Jan ’26Jan ’26

01—Abstract

Summary

Summary of the 10-K filed February 22, 2007. Cited figures are marked; the original filing is the authoritative source.

Ventas, Inc. is a healthcare REIT that owns 452 seniors housing and healthcare-related properties, plus loans, in 43 states as of December 31, 2006.

Total revenues were $428.3 milliona in 2006, up from $333.0 million in 2005, with net income of $131.4 million, or $1.25 per diluted share. Rental income was $418.4 million, and the company reported FFO of $249.7 million. Ventas is highly concentrated in two tenants: Kindred Healthcare accounted for 51.6% of 2006 total revenues and Brookdale Senior Living for 28.6%.

Kindred's seven lease bundles covering 64 facilities are scheduled to expire April 30, 2008 unless renewed by April 30, 2007. In 2006 the company raised its Kindred base rent by $33.1 million per year under the Rent Reset to $239.0 millionb annual base rent, completed the $602.4 million Senior Care acquisition, and issued $225.0 million of 6 3/4% senior notes and $230.0 million of 3 7/8% convertible notes. Total indebtedness was $2.3 billion at year-end, with $2.33 billion in senior notes payable and other debt.

The company declared a first-quarter 2007 dividend of $0.475c per share. The most significant pending event is the agreed acquisition of Sunrise REIT for approximately $1.8 billion, expected to close in the second quarter of 2007 and subject to unitholder approval. It is financed through a $1.0 billion senior interim loan, a $600.0 million perpetual preferred stock issuance, and other sources.

Health Care Property Investors, Inc. made a competing proposal on February 14, 2007, and the parties are in legal proceedings in the Ontario Superior Court of Justice. Investors should weigh tenant concentration, lease expirations, leverage, and deal execution risk.

02—Key points

Key Highlights

  1. Total revenues rose to $428.3 million in 2006 from $333.0 million in 2005; net income was $131.4 million, or $1.25 per diluted share.
  2. FFO was $249.7 million in 2006, compared with $213.2 million in 2005.
  3. Kindred Healthcare and Brookdale Senior Living accounted for 51.6% and 28.6% of 2006 total revenues, respectively.
  4. Seven Kindred lease bundles covering 64 facilities expire April 30, 2008 unless Kindred elects renewal by April 30, 2007.
  5. The Kindred Rent Reset raised annual base rent by $33.1 million to $239.0 million, effective July 19, 2006.
  6. The pending Sunrise REIT acquisition, approximately $1.8 billion, is expected to close in Q2 2007 and faces a competing proposal from Health Care Property Investors, Inc.
  7. Total indebtedness was approximately $2.3 billion at December 31, 2006, and the company declared a $0.475 per share dividend for Q1 2007.

03—Questions

Frequently Asked Questions

  1. How concentrated is Ventas's revenue among its tenants?

    Highly concentrated. Kindred accounted for 51.6% of 2006 total revenues and Brookdale Senior Living for 28.6%. Kindred and Brookdale together operated 27.4% and 37.4% of properties by original cost, and the company states that their financial condition will largely determine its rental revenues and distributions.

  2. What is the status of the Sunrise REIT acquisition?

    Ventas entered a purchase agreement on January 14, 2007 to acquire Sunrise REIT for approximately $1.8 billion, with closing expected in Q2 2007 subject to unitholder approval. On February 14, 2007, HCPI submitted a competing proposal, and the parties are seeking legal interpretations in the Ontario Superior Court of Justice.

  3. What are the near-term lease expirations risks?

    Seven Kindred bundles containing 64 facilities are scheduled to expire April 30, 2008 if not renewed by Kindred on or before April 30, 2007. The filing states that Kindred has said it is applying disciplined M&A analysis to evaluate each bundle, and it cannot assure investors that Kindred will renew.

  4. How is the company financing its growth and how leveraged is it?

    The company had approximately $2.3 billion of indebtedness at December 31, 2006. In 2006 it issued $225.0 million of 6 3/4% senior notes due 2017 and $230.0 million of 3 7/8% convertible notes due 2011, and it has a $500.0 million unsecured revolving credit facility with an accordion feature to $600.0 million. The Sunrise acquisition is to be funded through a $1.0 billion senior interim loan and a $600.0 million perpetual preferred stock issuance, among other sources.

04—Continue

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