01—Abstract
Summary
Summary of the 10-K filed February 24, 2020. Cited figures are marked; the original filing is the authoritative source.
Ventas, Inc. (NYSE: VTR) is a REIT with a diversified portfolio of seniors housing, research and innovation, and healthcare properties in the United States, Canada and the United Kingdom.
As of December 31, 2019, it owned approximately 1,200 properties, operated through three reportable segments (triple-net leased properties, senior living operations and office operations), and reported total revenues of $3,872,750 thousanda and net income attributable to common stockholders of $433,016 thousand for 2019, compared with $409,467 thousand in 2018. Normalized FFO attributable to common stockholders was $1,423,047 thousand in 2019, versus $1,462,055 thousand in 2018, a decline the filing attributes primarily to a $12.3 million fee received in 2018 related to Kindred transactions and 2018 loan repayments and fees. Growth in 2019 was driven by the September 2019 LGM Acquisition, in which Ventas acquired an 87% interest in 34 Canadian seniors housing communities valued at $1.8 billion, and by $1.0 billion of net loans receivable and investments at year end.
Segment NOI rose to $2,051,239 thousandb from $2,029,620 thousand, with senior living operations and office operations contributing most of the increase. Total debt rose to $12,245,802 thousand, and the company issued $2.3 billion of senior notes with a 3.2% fixed coupon during 2019, along with equity sales of 15.4 million shares at an average gross price of $63.45. The filing highlights concentration and operating risk.
Brookdale Senior Living, Ardent and Kindred are the three largest triple-net tenants, Atria and Sunrise manage 260 consolidated communities under long-term agreements, and senior living operations accounted for 55.8%c of total revenues. Management concluded internal control over financial reporting was effective as of December 31, 2019, excluding the LGM operations, and KPMG LLP issued an unqualified opinion.
02—Key points
Key Highlights
- Total revenues of $3,872,750 thousand in 2019, up from $3,745,810 thousand in 2018.
- Net income attributable to common stockholders of $433,016 thousand in 2019, versus $409,467 thousand in 2018; diluted EPS of $1.17 compared with $1.14.
- Normalized FFO attributable to common stockholders of $1,423,047 thousand in 2019, down from $1,462,055 thousand in 2018.
- Acquired an 87% interest in 34 Canadian seniors housing communities valued at $1.8 billion (LGM Acquisition) in September 2019.
- Total debt of $12,245,802 thousand at December 31, 2019, with a weighted average effective interest rate of 3.8% for 2019; $2.3 billion of senior notes issued at a 3.2% fixed coupon.
- Three largest triple-net tenants (Brookdale Senior Living, Ardent and Kindred) and managers Atria and Sunrise (260 consolidated communities) represent significant concentration risk.
- Dividends declared of $3.17 per share for 2019, compared with $3.1625 per share in 2018.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 24, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $3.87B$3.75B | +3.4% |
| Operating Expenses | $3.51B$3.36B | +4.5% |
| Operating Income | $439.30M$415.99M | +5.6% |
| Interest Expense | $451.66M$442.50M | +2.1% |
| Net Income | $433.02M$409.47M | +5.8% |
| EPS (Basic) | $1.18$1.15 | +2.6% |
| EPS (Diluted) | $1.17$1.14 | +2.6% |
| Shares Outstanding (Basic) | 365.98M356.26M | +2.7% |
| Shares Outstanding (Diluted) | 369.89M359.30M | +2.9% |
05—Questions
Frequently Asked Questions
How did Ventas's earnings and FFO change in 2019?
Net income attributable to common stockholders rose to $433,016 thousand from $409,467 thousand. Normalized FFO attributable to common stockholders fell to $1,423,047 thousand from $1,462,055 thousand. The filing attributes the normalized FFO decline primarily to a $12.3 million fee received in 2018 related to Kindred transactions and to 2018 loan repayments and fees.
What was the largest investment Ventas made in 2019?
The LGM Acquisition, completed in September 2019, gave Ventas an 87% interest in 34 Canadian seniors housing communities (including five in-process developments) valued at $1.8 billion through an equity partnership with Le Groupe Maurice, which continues to manage the portfolio.
How concentrated is Ventas's tenant and operator base?
Brookdale Senior Living, Ardent and Kindred are the three largest triple-net tenants. Atria and Sunrise manage 260 consolidated seniors housing communities under long-term management agreements. Senior living operations accounted for 55.8% of 2019 total revenues and 31.1% of NOI, and the filing states that failure by any of these tenants or managers could have a Material Adverse Effect on the company.
How did Ventas manage its debt and capital in 2019?
Ventas repaid or redeemed $1.7 billion of senior notes, established a $1.0 billion unsecured commercial paper program (with $567.5 million outstanding at year end), and issued $2.3 billion of senior notes. It also sold 15.4 million shares at an average gross price of $63.45. Total debt was $12,245,802 thousand, and the company stated it was in compliance with all covenants at December 31, 2019.
What dividend did Ventas pay and what is its REIT distribution requirement?
Ventas declared dividends of $3.17 per common share for 2019. As a REIT, it must distribute at least 90% of REIT taxable income, and the filing states it expects to distribute at least 100% of taxable net income after net operating loss carryforwards for 2020.
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