01—Abstract
Summary
Summary of the 10-K filed February 18, 2022. Cited figures are marked; the original filing is the authoritative source.
Ventas, Inc. (NYSE: VTR) is a real estate investment trust operating at the intersection of healthcare and real estate, with approximately 1,200 properties as of December 31, 2021 across the United States, Canada, and the United Kingdom.
The company operates three reportable segments: triple-net leased properties, senior living operations (SHOP), and office operations. Total revenues were $3.83 billiona in 2021 compared with $3.80 billion in 2020, while net income attributable to common stockholders fell to $49.0 million from $439.1 million, reflecting COVID-19 impacts on senior living operations, a $218.8 million gain on real estate dispositions in 2021 (versus $262.2 million in 2020), $219.4 million of impairments, and a $59.3 million loss on extinguishment of debt. Total segment NOI declined to $1.72 billion from $1.85 billion, with senior living operations NOI down to $458.3 million from $538.5 million, driven by lower occupancy and higher labor costs.
The company's largest 2021 transaction was the September acquisition of New Senior Investment Group Inc. for $2.3 billionb in an all-stock transaction, funded through about 13.3 million shares, the assumption of $482.5 million of mortgage debt and $1.1 billion of cash. Normalized FFO attributable to common stockholders was $1.12 billion in 2021 versus $1.25 billion in 2020, and dividends declared were $1.80 per share versus $2.1425 per share in 2020. At year-end, the company reported approximately $2.5 billion of liquidity, $12.1 billion of total debt principal, and $280.0 million of commercial paper outstanding.
Brookdale Senior Living, Ardent and Kindred remain the largest triple-net tenants, and Atria and Sunrise manage a significant share of the senior living portfolio. The filing also highlights ongoing risks including labor cost pressures, interest rate exposure on variable-rate debt, dependence on a limited number of tenants and managers, and the uncertain trajectory of the COVID-19 pandemic, which management stated it is not able at this time to estimate in full. KPMG LLP issued an unqualified opinion on the financial statements and on internal control over financial reporting.
02—Key points
Key Highlights
- Total revenues of $3.83 billion in 2021, up from $3.80 billion in 2020, while net income attributable to common stockholders declined to $49.0 million from $439.1 million.
- Total segment NOI fell to $1.72 billion from $1.85 billion, with senior living operations NOI down to $458.3 million from $538.5 million due to lower occupancy and higher labor costs.
- Completed the $2.3 billion all-stock acquisition of New Senior Investment Group Inc. in September 2021, funded with about 13.3 million shares, $482.5 million of assumed mortgage debt and $1.1 billion of cash.
- Normalized FFO attributable to common stockholders was $1.12 billion in 2021 versus $1.25 billion in 2020; dividends declared were $1.80 per share versus $2.1425 per share.
- Recognized a $218.8 million gain on real estate dispositions from the sale of 34 MOBs, eight triple-net leased properties and 23 senior housing communities for $859.7 million of aggregate consideration.
- Total debt principal of $12.1 billion at year-end, with approximately $2.5 billion of liquidity and $280.0 million of commercial paper outstanding.
- Recorded $219.4 million of real estate impairments in 2021, primarily tied to changes in intent to hold impaired assets, and a $59.3 million loss on extinguishment of debt.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 18, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $3.83B$3.80B | +0.9% |
| Operating Expenses | $3.99B$3.71B | +7.4% |
| Operating Income | $56.56M$441.19M | −87.2% |
| Interest Expense | $440.09M$469.54M | −6.3% |
| Net Income | $49.01M$439.15M | −88.8% |
| EPS (Basic) | $0.13$1.18 | −89.0% |
| EPS (Diluted) | $0.13$1.17 | −88.9% |
| Shares Outstanding (Basic) | 382.79M373.37M | +2.5% |
| Shares Outstanding (Diluted) | 386.30M376.50M | +2.6% |
05—Questions
Frequently Asked Questions
Why did net income attributable to common stockholders decline so sharply in 2021?
Net income attributable to common stockholders was $49.0 million in 2021 compared with $439.1 million in 2020. The filing attributes the decline mainly to lower segment NOI, a $152.9 million deferred tax benefit in 2020 that did not recur, higher depreciation and amortization including $219.4 million of impairments, a $59.3 million loss on extinguishment of debt, and $47.3 million of transaction expenses and deal costs, partially offset by the $218.8 million gain on real estate dispositions.
How did the COVID-19 pandemic affect the senior living operations segment?
Senior living operations NOI fell 14.9% to $458.3 million. Management cited lower occupancy, which averaged 78.5% in 2021 versus 81.7% in 2020, lower revenue per occupied room, and higher labor costs. Provider Relief Fund grants of $15.4 million were received in 2021 versus $35.1 million in 2020, and the company said grants are not expected to fully offset COVID-19 losses.
What was the New Senior acquisition and how was it financed?
Ventas acquired New Senior Investment Group Inc. on September 21, 2021 for a purchase price of $2.3 billion, adding over 100 independent living properties to its senior housing portfolio. It was funded through the issuance of about 13.3 million shares of common stock valued at $751.2 million, the assumption of $482.5 million of New Senior mortgage debt, and $1.1 billion of cash paid at closing.
How concentrated is the company's tenant and manager base?
Brookdale Senior Living, Ardent and Kindred were the three largest triple-net tenants, leasing 121, 12 and 31 properties respectively as of December 31, 2021. Atria and Sunrise managed 256 of the consolidated senior housing communities under long-term management agreements. Atria was 19.8% and Sunrise 10.0% of consolidated real estate investments based on gross book value, and the filing states these concentrations create credit risk.
What is the company's dividend policy and REIT distribution requirement?
The company declared four dividends totaling $1.80 per share in 2021, including a fourth-quarter dividend of $0.45 per share. As a REIT it must distribute at least 90% of REIT taxable income excluding net capital gain, and it stated it intends to pay dividends greater than 100% of taxable income, after net operating loss carryforwards, for 2022.
06—Continue