01—Abstract
Summary
Summary of the 10-K filed February 12, 2016. Cited figures are marked; the original filing is the authoritative source.
Ventas, Inc. (VTR), a REIT with a highly diversified portfolio of seniors housing and healthcare properties in the United States, Canada and the United Kingdom, reported that as of December 31, 2015 it owned approximately 1,300 properties (including held-for-sale properties) and had four properties under development.
The company operates through three reportable segments: triple-net leased properties, senior living operations and MOB operations. Total revenues for 2015 were $3.29 billiona, net income attributable to common stockholders was $417.8 million, and diluted EPS was $1.25, compared with $475.8 million and $1.60 in 2014. Normalized FFO rose to $1.49 billion in 2015 from $1.33 billion in 2014, and dividends declared were $3.04 per share.
The year was shaped by major portfolio changes. The company acquired American Realty Capital Healthcare Trust (HCT) in January 2015, adding 152 properties, and completed the Ardent transaction in August 2015, recording its owned hospital and real estate investment at about $1.3 billionb. It also completed the spin-off of most of its post-acute/skilled nursing portfolio into Care Capital Properties, Inc. (CCP) in August 2015, which is presented as discontinued operations.
Total debt, as shown in the filing, was approximately $11.2 billionc at year-end, with variable-rate debt at 19.3% of consolidated debt. The filing highlights concentration risk: Brookdale Senior Living, Kindred and Ardent are significant triple-net tenants, and Atria and Sunrise manage a large share of senior living communities. The company also disclosed an ongoing SEC inquiry related to its former auditor Ernst & Young's independence, and it reported that its internal control over financial reporting was effective as of December 31, 2015.
02—Key points
Key Highlights
- Total revenues of $3,286.4 million in 2015, up from $2,776.8 million in 2014.
- Net income attributable to common stockholders of $417.8 million in 2015 versus $475.8 million in 2014; diluted EPS of $1.25 versus $1.60.
- Normalized FFO of $1,493.7 million in 2015, up from $1,330.0 million in 2014; dividends declared of $3.04 per share for 2015.
- Portfolio of approximately 1,300 properties at December 31, 2015, with three segments: triple-net leased properties, senior living operations and MOB operations.
- Completed the HCT acquisition (152 properties) in January 2015 and the Ardent transaction in August 2015, with the Ardent hospital investment recorded at about $1.3 billion.
- Spun off most of the post-acute/skilled nursing portfolio into Care Capital Properties, Inc. in August 2015; total debt of about $11.2 billion at year-end 2015.
- Concentration risk: Brookdale Senior Living, Kindred and Ardent are significant triple-net tenants, and Atria and Sunrise manage 268 communities, with the filing noting possible material adverse effects if any of them fail to meet obligations.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 12, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $3.29B$2.78B | +18.4% |
| Operating Expenses | $2.93B$2.43B | +21.0% |
| Operating Income | $389.54M$359.30M | +8.4% |
| Interest Expense | $367.11M$292.06M | +25.7% |
| Net Income | $417.84M$475.77M | −12.2% |
| EPS (Basic) | $1.26$1.62 | −22.2% |
| EPS (Diluted) | $1.25$1.60 | −21.9% |
| Shares Outstanding (Basic) | 330.31M294.18M | +12.3% |
| Shares Outstanding (Diluted) | 334.01M296.68M | +12.6% |
05—Questions
Frequently Asked Questions
How did Ventas's revenue and earnings change in 2015?
Total revenues rose to $3,286.4 million in 2015 from $2,776.8 million in 2014. Net income attributable to common stockholders fell to $417.8 million from $475.8 million, and diluted EPS declined to $1.25 from $1.60. The filing attributes the higher merger-related expenses, interest expense and depreciation to the year's acquisitions and the CCP Spin-Off.
What was the effect of the CCP Spin-Off?
In August 2015 Ventas spun off most of its post-acute/skilled nursing facility portfolio into Care Capital Properties, Inc. The results of the CCP properties are presented as discontinued operations for all periods. Shareholders received one CCP share for every four Ventas shares held on the August 10, 2015 record date.
How concentrated is the company's tenant base?
The filing says Brookdale Senior Living, Kindred and Ardent account for a significant portion of triple-net leased segment revenues and NOI, and Atria and Sunrise manage a substantial portion of senior living communities. Brookdale Senior Living, Kindred and Ardent together leased 140, 76 and 10 properties, respectively, as of December 31, 2015.
What is the company's debt position?
As of December 31, 2015, the company had approximately $11.2 billion of outstanding indebtedness. The filing reports that 19.3% of consolidated debt (excluding held-for-sale debt) was variable-rate, and it notes an effective interest rate of 3.6% for 2015 compared with 3.7% for 2014.
What pending regulatory or legal matters does the filing disclose?
The company disclosed that it voluntarily contacted the SEC in July 2014 about the determination by its former auditor, Ernst & Young LLP, that it was not independent, and that the matter is ongoing. It also disclosed litigation related to the HCT acquisition, with a Maryland state court settlement subject to a March 15, 2016 hearing.
06—Continue