01—Abstract
Summary
Summary of the 10-K filed February 10, 2023. Cited figures are marked; the original filing is the authoritative source.
Ventas, Inc. (VTR) is a REIT operating at the intersection of healthcare and real estate, with approximately 1,300 properties as of December 31, 2022, across the United States, Canada and the United Kingdom.
The company runs three reportable segments: triple-net leased properties, senior housing operating portfolio (SHOP), and office operations. For 2022, total revenues were $4,129,193 thousanda, up from $3,828,007 thousand in 2021, and total NOI was $1,842,640 thousand, up 6.8% from $1,724,701 thousand. However, the company reported a net loss attributable to common stockholders of $(47,447) thousand for 2022, compared with net income of $49,008 thousand in 2021, driven largely by a $218.8 million gain on real estate dispositions in 2021 that did not recur at the same scale, along with higher interest expense and depreciation.
Normalized FFO attributable to common stockholders was $1,206,971 thousandb in 2022 versus $1,118,576 thousand in 2021, and the SHOP segment drove much of the NOI growth, with SHOP NOI rising 41.3% to $647,466 thousand, aided by the acquisition of over 100 independent living communities from New Senior Investment Inc. in September 2021 and higher government grants. The triple-net segment NOI declined 8.7% to $582,853 thousand, reflecting transitions of communities to the SHOP portfolio and sales. Liquidity was approximately $2.4 billion at year-end, and total outstanding debt principal was $12,361,244 thousand.
Management highlighted a $20.0 millionc allowance on the $486.1 million Santerre Mezzanine Loan, whose borrower's collateral performance has declined and whose maturity is June 9, 2023. The company's dividends totaled $1.80 per share in 2022, and management stated it intends to pay dividends greater than 100% of taxable income for 2023. Key risks flagged include tenant concentration among Brookdale Senior Living, Ardent and Kindred, rising interest rates on variable-rate debt, labor and inflationary cost pressures in senior housing, and the continuing effects of COVID-19 on occupancy and tenant finances.
02—Key points
Key Highlights
- Total revenues of $4,129,193 thousand in 2022, compared with $3,828,007 thousand in 2021.
- Total NOI of $1,842,640 thousand, up 6.8% from $1,724,701 thousand; SHOP NOI rose 41.3% to $647,466 thousand.
- Net loss attributable to common stockholders of $(47,447) thousand, versus net income of $49,008 thousand in 2021, reflecting lower gains on real estate dispositions ($7,780 thousand vs. $218,788 thousand).
- Normalized FFO attributable to common stockholders of $1,206,971 thousand, compared with $1,118,576 thousand in 2021.
- Triple-net leased properties NOI declined 8.7% to $582,853 thousand, primarily due to transitions to SHOP and dispositions.
- Total debt principal of $12,361,244 thousand at December 31, 2022, with a weighted average effective interest rate of 3.66% for 2022 and approximately $2.4 billion in liquidity.
- $20.0 million allowance recognized on the $486.1 million Santerre Mezzanine Loan, which matures June 9, 2023, with collateral performance under pressure.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 10, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $4.13B$3.83B | +7.9% |
| Operating Expenses | $4.22B$3.99B | +5.8% |
| Operating Income | -$40.93M$56.56M | −172.4% |
| Interest Expense | $467.56M$440.09M | +6.2% |
| Net Income | -$47.45M$49.01M | −196.8% |
| EPS (Basic) | $-0.12$0.13 | −192.3% |
| EPS (Diluted) | $-0.12$0.13 | −192.3% |
| Shares Outstanding (Basic) | 399.55M382.79M | +4.4% |
| Shares Outstanding (Diluted) | 403.45M386.30M | +4.4% |
05—Questions
Frequently Asked Questions
How did Ventas perform in 2022 compared with 2021?
Total revenues rose to $4,129,193 thousand from $3,828,007 thousand, and total NOI rose 6.8% to $1,842,640 thousand. The company swung to a net loss attributable to common stockholders of $(47,447) thousand, compared with net income of $49,008 thousand in 2021, mainly because 2021 included $218.8 million of gains on real estate dispositions versus $7.8 million in 2022.
What drove growth in the SHOP segment?
SHOP NOI increased 41.3% to $647,466 thousand, driven by acquisitions, primarily the acquisition of over 100 independent living communities from New Senior Investment Inc. in September 2021, positive occupancy and revenue trends, transitions of assets from triple-net leases, and higher government assistance received. Property-level operating expenses increased due to inflationary pressures on labor, utilities and food.
What is the status of the Santerre Mezzanine Loan?
Ventas holds a $486.1 million cash-pay mezzanine loan to Santerre Health Investors, on which it recognized a $20.0 million allowance as of December 31, 2022. The borrower remained current through January 2023 and is expected to remain current through February 2023, but collateral performance has declined significantly, and the loan's current maturity is June 9, 2023, subject to a final extension option.
What dividends did Ventas pay and what is the 2023 outlook?
During 2022, Ventas declared four dividends totaling $1.80 per share, including a fourth quarter dividend of $0.45 per share. The company stated it intends to pay dividends greater than 100% of its taxable income, after the use of any net operating loss carryforwards, for 2023.
How concentrated is Ventas's tenant and manager base?
Atria and Sunrise managed 553 senior housing communities as of December 31, 2022, and Atria represented 26.0% of consolidated real estate investments based on gross book value. Brookdale Senior Living, Ardent and Kindred leased 121, 30 and 29 properties, respectively, and together accounted for a significant portion of triple-net segment revenues and NOI.
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