01—Abstract
Summary
Summary of the 10-K filed February 18, 2014. Cited figures are marked; the original filing is the authoritative source.
Ventas, Inc. (VTR) is a REIT with a highly diversified portfolio of seniors housing and healthcare properties across 46 states, the District of Columbia and two Canadian provinces.
As of December 31, 2013, it owned nearly 1,500 properties, leased 907 properties under triple-net leases, and engaged independent operators such as Atria and Sunrise to manage 239 seniors housing communities. The company operates three reportable segments: triple-net leased properties, senior living operations, and MOB operations. Total revenues were $2.81 billiona in 2013 versus $2.47 billion in 2012, and net income attributable to common stockholders was $453.5 million compared with $362.8 million.
Normalized FFO was $1.22 billionb, and net cash provided by operating activities was $1.19 billion. Growth and capital activity were significant in 2013. The company invested approximately $1.8 billion in seniors housing communities, MOBs, and loans, issued $1.6 billion of senior notes at a weighted average rate of 3.3%, and entered a new $3 billion unsecured credit facility.
It also established a $750 millionc at-the-market equity program under which it sold 2,069,200 shares for $141.5 million in net proceeds. Dividends declared were $2.735 per share, up from $2.48, and the first quarter 2014 dividend was declared at $0.725 per share. Total debt was approximately $9.4 billion at year end, with 18.7% of consolidated debt at variable rates.
Concentration risk remains important to investors. Brookdale Senior Living and Kindred are the two largest tenants, leasing 145 and 142 properties respectively, and the filing states that a failure by either to meet obligations could have a Material Adverse Effect.
Kindred's 2015 Renewal Assets were partly re-leased, with 60 skilled nursing facilities being repositioned and their lease expiration accelerated to September 30, 2014. Properties in California accounted for more than 10%d of total revenues and NOI, with California representing 13.3% of total NOI.
02—Key points
Key Highlights
- Total revenues of $2.81 billion in 2013, up from $2.47 billion in 2012; net income attributable to common stockholders of $453.5 million versus $362.8 million.
- Dividends declared of $2.735 per common share in 2013, an increase of more than 10% over the prior year; first quarter 2014 dividend declared at $0.725 per share.
- Invested approximately $1.8 billion in seniors housing communities, MOBs, and loans and other investments during 2013; cash flows from operations of approximately $1.2 billion, up more than 20% over 2012.
- Issued $1.6 billion of senior notes at a weighted average interest rate of 3.3% and a weighted average initial maturity of 13.6 years; entered a new $3 billion unsecured credit facility.
- Established a $750.0 million at-the-market equity program; sold 2,069,200 shares for $141.5 million in net proceeds through year end.
- Brookdale Senior Living (145 properties) and Kindred (142 properties) are the two largest tenants; Kindred re-leased 48 of 108 licensed healthcare assets at a higher rent of $95.9 million annually commencing October 1, 2014.
- Total debt of approximately $9.4 billion at December 31, 2013, with 18.7% of consolidated debt at variable rates; the filing notes a 100 basis point increase would raise 2014 interest expense by approximately $17.4 million.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 18, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $2.52B$2.47B | +1.9% |
| Operating Expenses | $2.15B$2.19B | −1.5% |
| Operating Income | $374.34M$308.81M | +21.2% |
| Interest Expense | $249.01M$288.72M | −13.8% |
| Net Income | $453.51M$362.80M | +25.0% |
| EPS (Basic) | $1.55$1.24 | +25.0% |
| EPS (Diluted) | $1.54$1.23 | +25.2% |
| Shares Outstanding (Basic) | 292.65M292.06M | +0.2% |
| Shares Outstanding (Diluted) | 295.11M294.49M | +0.2% |
05—Questions
Frequently Asked Questions
How much did Ventas grow its revenue and earnings in 2013?
Total revenues rose to $2,810,053 thousand (about $2.81 billion) in 2013 from $2,467,733 thousand in 2012. Net income attributable to common stockholders was $453,509 thousand, compared with $362,800 thousand in 2012. Diluted earnings per share were $1.54 versus $1.23.
What are the main concentration risks for investors?
Brookdale Senior Living and Kindred are the largest tenants, and the filing says that their failure, inability or unwillingness to satisfy obligations could have a Material Adverse Effect on the company. Atria and Sunrise, which manage 239 communities, also account for a significant portion of revenues and operating income. California accounted for more than 10% of total revenues and NOI, and 13.3% of total NOI.
What is the outlook for the Kindred lease expirations?
Kindred irrevocably renewed or transitioned 89 assets whose leases expired in Q2 2013. For the 2015 Renewal Assets, 48 of 108 properties were re-leased at a new annual rent of $95.9 million starting October 1, 2014, versus $138 million current rent for all 108. The remaining 60 skilled nursing facilities (Marketed Assets) are being re-leased or repositioned, with lease expiration accelerated to September 30, 2014. The company states the net effect will not materially impact results in 2014 or 2015, though it cannot assure the outcome.
How is Ventas funding its growth and what are its dividend plans?
In 2013 the company issued $1.6 billion of senior notes, entered a new $3 billion unsecured credit facility, and raised $141.5 million through its at-the-market program. Dividends declared were $2.735 per share for 2013. The company declared a first quarter 2014 dividend of $0.725 per share, payable March 28, 2014, and expects to distribute at least 100% of taxable net income, after NOL use, for 2014.
What is the company's debt position and key covenant status?
Total debt was approximately $9.4 billion at December 31, 2013, with 18.7% variable rate. The company stated it was in compliance with all covenants of its unsecured credit facility, senior notes and mortgage obligations as of December 31, 2013. Cash and cash equivalents were $94.8 million, and $1.6 billion of unused capacity was available under the unsecured revolving credit facility.
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