01—Abstract
Summary
Summary of the 10-K filed February 18, 2011. Cited figures are marked; the original filing is the authoritative source.
Ventas, Inc. (NYSE: VTR) is a REIT with a geographically diverse portfolio of 602 seniors housing and healthcare assets in the United States and Canada as of December 31, 2010, comprising 240 seniors housing communities, 187 skilled nursing facilities, 40 hospitals and 135 medical office buildings and other properties.
Most non-managed properties are leased to operators under triple-net leases. The company operates three reportable segments: triple-net leased properties, senior living operations and MOB operations. Total revenues were $1,016,867 thousanda in 2010 versus $931,575 thousand in 2009, and net income attributable to common stockholders was $246,167 thousand, compared with $266,495 thousand in 2009.
Normalized FFO was $453,981 thousandb, up from $409,045 thousand. Dividends declared were $2.14 per share in 2010, versus $2.05 in 2009. The filing highlights concentration risk.
Kindred Healthcare and Brookdale Senior Living lease a significant share of triple-net properties, and Sunrise manages 79 seniors housing communities. Sunrise's operations accounted for approximately 43.4% of 2010 total revenues. The company had $2.9 billionc of outstanding indebtedness at year-end, with only 5.3% of consolidated debt at variable rates.
Senior unsecured debt maintained investment grade ratings from all three rating agencies since February 2010. Revolving credit capacity was $1.0 billiond, maturing April 26, 2012. Subsequent to year-end, the company completed a February 2011 sale of 5,563,000 common shares for $300.0 million in proceeds.
The pending acquisition of Atria Senior Living Group, Inc. for a total purchase price of $3.1 billion, comprising $1.35 billion of common stock, $150 million in cash and $1.6 billion of net debt assumed or repaid, is expected to close in the first half of 2011, subject to conditions. A Sixth Circuit appeal in the company's litigation against HCP, Inc. arising from a $101.6 million jury verdict is scheduled for oral argument on March 10, 2011.
02—Key points
Key Highlights
- Total revenues rose to $1,016,867 thousand in 2010 from $931,575 thousand in 2009.
- Net income attributable to common stockholders was $246,167 thousand in 2010, versus $266,495 thousand in 2009.
- Normalized FFO increased to $453,981 thousand in 2010 from $409,045 thousand in 2009.
- Segment NOI totaled $690,912 thousand in 2010, with MOB operations rising to $50,205 thousand from $23,154 thousand after the Lillibridge acquisition.
- Pending $3.1 billion Atria Senior Living acquisition is expected to close in the first half of 2011, financed with 24.96 million shares, $150 million cash and assumed debt.
- Total debt was approximately $2.9 billion at year-end, with only 5.3% at variable rates, and senior unsecured debt holds investment grade ratings from all three agencies.
- Concentration risk remains significant: Sunrise, Kindred and Brookdale Senior Living represented 43.4%, 24.2% and 11.9% of 2010 total revenues, respectively.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 18, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $1.00B$923.47M | +8.4% |
| Operating Expenses | $777.76M$731.90M | +6.3% |
| Operating Income | $213.44M$190.42M | +12.1% |
| Interest Expense | $172.47M$173.81M | −0.8% |
| Net Income | $246.17M$266.50M | −7.6% |
| EPS (Basic) | $1.57$1.75 | −10.3% |
| EPS (Diluted) | $1.56$1.74 | −10.3% |
| Shares Outstanding (Basic) | 156.61M152.57M | +2.6% |
| Shares Outstanding (Diluted) | 157.66M152.76M | +3.2% |
05—Questions
Frequently Asked Questions
How concentrated is Ventas's revenue among its operators and managers?
Sunrise managed operations accounted for approximately 43.4% of 2010 total revenues, Kindred Master Leases for 24.2% and Brookdale Senior Living leases for 11.9%. Together these three counterparties make up a substantial share of revenue, so the financial condition of each is significant to Ventas.
What does the pending Atria acquisition involve?
Ventas agreed in October 2010 to acquire substantially all real estate assets of Atria Senior Living Group for a total purchase price of $3.1 billion, consisting of $1.35 billion of common stock (a fixed 24.96 million shares), $150 million in cash and the assumption or repayment of $1.6 billion of net debt. The transaction covers 118 private pay seniors housing communities and is expected to close in the first half of 2011, though completion is not assured.
How did the company's debt and liquidity position look at year-end 2010?
Total indebtedness was approximately $2.9 billion, with 5.3% of consolidated debt at variable rates. Unsecured revolving credit capacity was $1.0 billion, maturing April 26, 2012, with $956.8 million available. Cash and cash equivalents were $21.8 million. In February 2011 the company raised $300.0 million from a common stock offering.
What dividend did Ventas declare for 2011?
On February 16, 2011, the Board declared the first quarterly installment of the 2011 dividend of $0.575 per share, payable March 31, 2011 to stockholders of record on March 11, 2011. The company expects to distribute at least 100% of its 2011 taxable net income.
What is the status of the HCP litigation?
Ventas received a $101.6 million jury verdict against HCP, Inc. in September 2009 related to the Sunrise REIT acquisition. HCP appealed, and Ventas filed a cross-appeal seeking additional damages. Oral argument before the Sixth Circuit was scheduled for March 10, 2011, and a decision is expected in 2011, though the outcome and timing cannot be assured.
06—Continue