01—Abstract
Summary
Summary of the 10-K filed February 22, 2012. Cited figures are marked; the original filing is the authoritative source.
Ventas, Inc. (NYSE: VTR) is a REIT with a geographically diverse portfolio of seniors housing and healthcare properties across the United States and Canada.
As of December 31, 2011, it owned 1,378 properties in 46 states, the District of Columbia and two Canadian provinces, including 678 seniors housing communities, 396 skilled nursing facilities, 47 hospitals, 249 MOBs and eight personal care facilities. The company operates through three segments: triple-net leased properties, senior living operations and MOB operations. Total assets were $17.27 billiona at year-end 2011, up from $5.76 billion in 2010, reflecting the NHP acquisition in July 2011 (issuing 99.8 million shares, valued at $5.4 billion) and the ASLG acquisition in May 2011.
Revenue rose to $1.76 billionb in 2011 from $1.01 billion in 2010, and net income attributable to common stockholders was $364.5 million versus $246.2 million. Results were helped by $202.3 million of net litigation proceeds from the HCP lawsuit, while merger-related expenses and deal costs rose to $153.9 million. Dividends declared were $2.30 per share in 2011, compared with $2.14 in 2010, and the Board declared a first-quarter 2012 dividend of $0.62 per share.
Total debt (senior notes payable and other debt) reached $6.43 billionc, and the company completed a $600.0 million 4.25% senior notes offering in February 2012. Investors should note concentration and lease-rollover risk. Kindred and Brookdale Senior Living are significant triple-net tenants, with Kindred providing 14.3% of 2011 revenues and Brookdale 8.2%.
Ten Kindred renewal groups covering 89 properties expire April 30, 2013 unless renewed, and Atria and Sunrise manage 197 to 200 senior living communities. The company also disclosed a pending $760 million to $770 milliond acquisition of Cogdell Spencer, expected to close in the second quarter of 2012.
02—Key points
Key Highlights
- Total assets more than tripled to $17.27 billion at December 31, 2011, from $5.76 billion, driven by the NHP and ASLG acquisitions.
- Total revenues rose to $1.76 billion in 2011 from $1.01 billion in 2010; net income attributable to common stockholders was $364.5 million versus $246.2 million.
- Net litigation proceeds of $202.3 million from the HCP lawsuit contributed to 2011 results, while merger-related expenses and deal costs were $153.9 million.
- Dividends declared per common share were $2.30 for 2011, up from $2.14 in 2010; a $0.62 first-quarter 2012 dividend was declared on February 15, 2012.
- Senior notes payable and other debt was $6.43 billion at year-end 2011; the company issued $600.0 million of 4.25% senior notes due 2022 in February 2012.
- Kindred (14.3% of revenues) and Brookdale Senior Living (8.2%) are significant triple-net tenants, and ten Kindred renewal groups covering 89 properties expire April 30, 2013 unless renewed.
- The company agreed to acquire Cogdell Spencer Inc. and its 72 MOBs in an all-cash transaction, with an expected investment of $760 million to $770 million.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 22, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $1.73B$1.00B | +73.1% |
| Operating Expenses | $1.40B$777.76M | +80.2% |
| Operating Income | $362.31M$213.44M | +69.7% |
| Interest Expense | $223.80M$172.47M | +29.8% |
| Net Income | $364.49M$246.17M | +48.1% |
| EPS (Basic) | $1.60$1.57 | +1.9% |
| EPS (Diluted) | $1.58$1.56 | +1.3% |
| Shares Outstanding (Basic) | 228.45M156.61M | +45.9% |
| Shares Outstanding (Diluted) | 230.79M157.66M | +46.4% |
05—Questions
Frequently Asked Questions
What did the NHP and ASLG acquisitions add to Ventas's portfolio?
The NHP acquisition in July 2011 was a stock-for-stock transaction that added 643 seniors housing and healthcare properties, with 99,849,106 shares issued to NHP stockholders valued at $5.4 billion. The ASLG acquisition in May 2011 added 117 seniors housing communities and one land parcel to the senior living operating portfolio, with 24,958,543 shares issued to the sellers valued at $1.38 billion.
How much of Ventas's revenue depends on Kindred and Brookdale Senior Living?
For the year ended December 31, 2011, Kindred accounted for approximately 14.3% of total revenues and 23.2% of total NOI, and Brookdale Senior Living accounted for approximately 8.2% of total revenues and 13.4% of total NOI, including discontinued operations. The filing notes that an inability by either tenant to meet its obligations could have a material adverse effect on the company.
What lease expirations should investors watch?
Ten Kindred renewal groups covering 89 properties have a current lease term expiring April 30, 2013, unless Kindred provides renewal notices by April 30, 2012. In November 2011, Kindred gave renewal notices for 16 properties in two renewal groups, and the company initiated a fair market rental reset process for certain of them. The remaining eight renewal groups (73 properties) represent approximately $99 million of current annual base rent.
How is Ventas financing its growth and what are its debt maturities?
In 2011 Ventas issued $700.0 million of 4.750% senior notes due 2021, a $500.0 million unsecured term loan facility and expanded its unsecured revolving credit facility to $2.0 billion. As of December 31, 2011, the company had $455.6 million drawn on the revolver and $1.54 billion of available capacity. Total maturities for 2012 were $319.3 million, including the 9% and 8 1/4% senior notes due 2012. In February 2012 it also redeemed the $200.0 million 6 1/2% senior notes due 2016.
What is the status of the pending Cogdell Spencer acquisition?
Ventas signed a definitive agreement in December 2011 to acquire Cogdell Spencer Inc. and its 72 MOBs in an all-cash transaction, with the investment, including Ventas's share of debt, expected to be $760 million to $770 million before transaction expenses. Completion is subject to Cogdell stockholder approval, the sale of Cogdell's design-build and development business and other customary conditions, and the company expects closing in the second quarter of 2012 without assurance on timing.
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