01—Abstract
Summary
Summary of the 10-K filed February 15, 2024. Cited figures are marked; the original filing is the authoritative source.
Ventas, Inc. (NYSE: VTR) is a healthcare REIT that reported 2023 total NOI of $1.93 billiona across three reportable segments: senior housing operating portfolio (SHOP) at $711.4 million, outpatient medical and research at $576.9 million, and triple-net leased properties at $604.7 million.
The portfolio comprises approximately 1,400 properties as of December 31, 2023, located primarily in North America and the United Kingdom. Total revenues rose to $4.50 billionb in 2023 from $4.13 billion in 2022, driven largely by resident fees and services in the SHOP segment, but the company still reported a net loss attributable to common stockholders of $40.97 million, compared with a net loss of $47.45 million in 2022. Normalized FFO attributable to common stockholders was $1.21 billion in 2023, versus $1.21 billion in 2022, which included $54.2 million of HHS grants that did not recur in 2023.
Management attributes the improvement excluding those grants to higher SHOP NOI from occupancy and revenue-per-occupied-room gains, partially offset by higher operating expenses and interest expense. The GAAP weighted average effective interest rate rose to 4.23% from 3.66%, and interest expense increased $106.6 millionc year over year. Total debt was $13.57 billion at December 31, 2023, and the company reported about $3.2 billion of liquidity.
Concentration remains a key consideration. Atria Senior Living manages properties contributing 20.1%d of total NOI, and Brookdale, Ardent and Kindred contribute 7.7%, 6.9% and 6.9%, respectively.
The Kindred lease expires in April 2025 for Group 2, and the Brookdale lease expires December 31, 2025, with renewal decisions due in 2024. An activist investor nominated three director candidates in January 2024 for the 2024 annual meeting.
02—Key points
Key Highlights
- Total NOI of $1.93 billion for 2023, up 4.5% from $1.84 billion in 2022, with SHOP NOI up 9.9% to $711.4 million.
- Net loss attributable to common stockholders narrowed to $40.97 million in 2023 from $47.45 million in 2022.
- Normalized FFO attributable to common stockholders was $1.21 billion in 2023, compared with $1.21 billion in 2022, which included $54.2 million of HHS grants.
- Same-store SHOP occupancy rose to 83.3% from 82.1%, and same-store SHOP NOI increased 8.7% to $626.1 million.
- Total debt of $13.57 billion at a weighted average effective rate of 4.23% for 2023, up from 3.66% in 2022, with interest expense up $106.6 million.
- Concentration exposure: Atria contributes 20.1% of total NOI, and Brookdale, Ardent and Kindred together contribute 21.5%, with Kindred Group 2 and Brookdale leases expiring in 2025.
- Declared dividends totaling $1.80 per share for 2023, with the Board expecting distributions above 100% of 2024 taxable income.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 15, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $4.50B$4.13B | +8.9% |
| Operating Expenses | $4.61B$4.22B | +9.2% |
| Interest Expense | $574.11M$467.56M | +22.8% |
| Net Income | -$40.97M-$47.45M | +13.6% |
| EPS (Basic) | $-0.10$-0.12 | +16.7% |
| EPS (Diluted) | $-0.10$-0.12 | +16.7% |
| Shares Outstanding (Basic) | 401.81M399.55M | +0.6% |
| Shares Outstanding (Diluted) | 405.67M403.45M | +0.5% |
05—Questions
Frequently Asked Questions
How did Ventas perform financially in 2023?
Total revenues increased to $4.50 billion from $4.13 billion, and total NOI rose 4.5% to $1.93 billion. The company still reported a net loss attributable to common stockholders of $40.97 million, an improvement from a $47.45 million loss in 2022. Normalized FFO was $1.21 billion, roughly flat year over year, with 2022 including $54.2 million of HHS grants.
What drove growth in the senior housing (SHOP) segment?
The filing attributes SHOP NOI growth to gains in occupancy and revenue per occupied room, communities converted from the triple-net segment, and properties acquired through the Santerre Mezzanine Loan equitization. Same-store average unit occupancy rose to 83.3% from 82.1%, and average monthly revenue per occupied room increased to $4,750 from $4,475. These gains were partially offset by higher operating expenses, including labor inflation.
What are the main tenant and operator concentration risks?
Atria Senior Living manages properties contributing 20.1% of total NOI, and Sunrise contributes 4.5%. Triple-net tenants Brookdale (7.7%), Ardent (6.9%) and Kindred (6.9%) also represent significant NOI shares. The Kindred Group 2 lease expires April 30, 2025, and the Brookdale lease expires December 31, 2025. The filing notes that Kindred's financial performance has declined since the pandemic, increasing renewal risk.
How is the company's debt and interest-rate exposure positioned?
Total debt was $13.57 billion at December 31, 2023, of which $12.46 billion was fixed rate. Interest expense rose to $574.1 million, and the GAAP weighted average effective interest rate increased to 4.23% from 3.66%. The filing estimates that a 100 basis point increase in rates on the $1.1 billion of variable rate debt would raise annual interest expense by about $11.1 million. The company reported approximately $3.2 billion of liquidity.
What were the notable events and legal or cybersecurity matters in 2023?
Ventas sold 26 properties and two land parcels for $399.5 million, recognizing a $62.1 million gain on dispositions. It equitized the Santerre Mezzanine Loan, recognizing a $29.1 million gain on foreclosure. Tenant Ardent suffered a ransomware attack in November 2023 that disrupted its operations. The HHS Office of Inspector General is auditing two of the company's Provider Relief Fund applications. The company stated it had not identified any cybersecurity incidents that materially affected it.
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