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News Release: Ventas Reports 2021 First Quarter Results

May 07, 2021 06:55 AM Eastern Daylight Time

In March, the Company expanded its life science portfolio with its investment in two life science assets strategically located adjacent to Johns Hopkins Medical Campus for $272 million. The Class A portfolio, containing 454,000 square feet, is 96% leased with a weighted average lease term exceeding seven years. It is anchored by Johns Hopkins Medicine and has 80% excellent credit tenancy.

CHICAGO–(BUSINESS WIRE)–Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today reported results for the first quarter ended March 31, 2021.

“Our strong, diverse and high-quality portfolio delivered better than expected financial results in the first quarter, driven by outperformance in our Senior Housing Operating Portfolio (“SHOP”) and the reliable performance of our Office and Triple-Net (“NNN”) businesses,” said Debra A. Cafaro, Ventas Chairman and CEO.

“Most importantly, led by a 280 basis point increase in our U.S. communities, occupancy in SHOP improved by 190 basis points from pandemic lows in mid-March through the end of April. We have experienced dramatic benefits in resident health and safety from the broad and effective roll out of vaccines earlier in the first quarter. With leads continuing to gain traction, and all our communities open to new move-ins, March and April were the first two consecutive months since the onset of COVID-19 when move-ins exceeded both pre-pandemic levels and move-outs. This improvement, while still in its early stages, demonstrates resilient demographic demand for senior housing and the essential care and socialization available to residents in our communities. These factors provide the basis for the powerful upside that lies ahead in senior housing and for Ventas as an industry leader.

“We are optimistic about our ongoing initiatives to recycle capital to further enhance the quality of our portfolio, fund new investment opportunities and maintain financial strength and flexibility. The emerging momentum in SHOP, combined with our high-quality portfolio, leading operators and partners and experienced leadership, position Ventas to win the recovery,” Cafaro concluded.

First Quarter 2021 Results
(per share)

For the first quarter 2021, reported per share results were:

Quarter Ended March 31

2021

2020

$ Change

% Change

Net Income (Loss) Attributable to Common Stockholders

($0.15)

$1.26

($1.41)

(112%)

Nareit FFO Attributable to Common Stockholders (“Nareit FFO”)*

$0.67

$1.31

($0.64)

(49%)

Normalized FFO Attributable to Common Stockholders (“Normalized FFO”)*

$0.72

$0.97

($0.25)

(26%)

*

This is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release and our first quarter 2021 supplemental for additional information and a reconciliation to the most directly comparable GAAP measure.

First Quarter 2021 Property Results

1Q21 vs. 1Q20 (Quarterly Pools)
Year-Over-Year
Same-Store Cash Net Operating
Income (“NOI”)* Growth

Assets

% Change

SHOP1

389

(42.5%)

NNN

355

(12.7%)

Office

347

0.5%

Total Company

1,091

(20.2%)

1Q21 vs. 4Q20 (Sequential Pools)
Sequential
Same-Store Cash NOI* Growth

Assets

% Change

SHOP1

424

(21.4%)

NNN

357

(0.5%)

Office

352

0.8%

Total Company

1,133

(7.3%)

*

This is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release and our first quarter 2021 supplemental for additional information and a reconciliation to the most directly comparable GAAP measure.

1

Excluding the HHS Grants (described below) in all periods, Q1 2021 Same-Store SHOP Cash NOI sequential and year-over-year growth would have been (8.0%) and (50.4%), respectively. SHOP Same-Store Cash NOI includes grants received in 4Q20 and 1Q21 under the Provider Relief Fund administered by the Department of Health and Human Services (the “HHS Grants”). The HHS Grants are recorded as a contra expense within SHOP operating expenses. The Quarterly Pools include ~$13.2M in HHS Grants received in 1Q21. The Sequential Pools include ~$34.4M in HHS Grants received in 4Q20 and ~$13.2M in HHS Grants received in 1Q21.

SHOP Latest Trends and First Quarter Sequential Same-Store Results (26% of Total Portfolio)

  • SHOP Latest Trends
    • Leading Indicators: Leading indicators and demand showed strength, with consistently improving trends through the end of April.
      • In April, leads, move-ins and move-outs were 104%, 110%, and 83%, respectively, of their pre-COVID-19 same period 2019 levels.
      • Move-ins during April totaled 1,880 residents, the highest number since June 2019.
    • Occupancy: Led by U.S. SHOP communities, which gained 280 basis points, approximate spot occupancy for the full SHOP first quarter sequential same-store portfolio at April 30 grew 190 basis points from the pandemic low in mid-March 2021 to 77.9%. Approximate spot month-end to month-end occupancy results are below:

      Oct-20

      Nov-20

      Dec-20

      Jan-21

      Feb-21

      Mar-21

      Apr-21

      Approximate Spot Occupancy

      79.8%

      79.0%

      78.0%

      76.9%

      76.6%

      77.2%

      77.9%

      Sequential Spot Occupancy Change

      (80bps)

      (100bps)

      (110bps)

      (30bps)

      60bps

      70bps

      • March and April showed positive spot occupancy gains, led by U.S. communities, which gained 80 and 120 basis points, respectively, driving the first two consecutive months of spot occupancy growth since the start of the pandemic.
      • March to April month-end approximate spot occupancy in the Company’s Canadian SHOP communities declined 30 basis points to 91.4% due to the continued prevalence of COVID-19 activity and regulatory protective measures currently in place in the most populous provinces.
    • Clinical Trends: Ventas has experienced a dramatic improvement in clinical conditions, from the most challenging period of the pandemic, which occurred early in the first quarter:
      • April was the best clinical month since the onset of the pandemic, with newly confirmed cases approximating one per day per 40,000 residents.
      • Over 97% of our communities either never had a confirmed COVID-19 resident case or have not experienced a confirmed COVID-19 resident case during the two weeks ended April 30.
      • 100% of our SHOP communities are open to new move-ins, and the vast majority have introduced expanded visitation and community activities to enhance resident lifestyle and promote safe socialization.
  • SHOP Sequential Same-Store Results: First Quarter 2021 Compared to Fourth Quarter 2020
  • Occupancy: Average occupancy in the first quarter of 76.5% declined sequentially by 260 basis points from the fourth quarter, substantially better than the midpoint of the previously communicated expectation of down 250 to 325 basis points. Net move-in trends improved in February and March, following significant occupancy declines earlier in the quarter as a result of challenging COVID-19 conditions across the nation in December and January.
  • NOI: Sequential same-store pool (424 assets) cash NOI decreased by 8% excluding the HHS Grants in both periods. Including the HHS Grants in both periods, sequential same-store cash NOI decreased by 21.4%. Operating expenses increased $18 million sequentially. Excluding the HHS Grants, operating expenses decreased $4 million sequentially due to lower COVID-19 costs driven by late quarter improving clinical trends.

Company, Office and NNN Sequential Same-Store Property Results: First Quarter 2021 Compared to Fourth Quarter 2020

  • Company Results
    • Company sequential same-store first quarter 2021 cash NOI declined 7.3%. Company sequential same-store cash NOI declined 2.2% excluding the impact of $34 million of HHS Grants in the fourth quarter 2020 and $13 million of HHS Grants in the first quarter 2021.
  • NNN Portfolio (37% of Total Portfolio)
    • NNN sequential same-store (357 assets) cash NOI was largely stable in the first quarter 2021. Substantially all expected first quarter and April 2021 rent was received from the Company’s NNN tenants.
  • Office Portfolio (32% of Total Portfolio)
    • Office sequential same-store pool (352 assets) cash NOI grew modestly by 0.8%. Steady performance was led by the Company’s Medical Office Building business. The Company received over 99% of first quarter 2021 rent from its Office tenants, a level consistent with reliable rent payments made by the Company’s tenants throughout the pandemic.

Select Investment Activity

  • In March, the Company expanded its life science portfolio with its investment in two life science assets strategically located adjacent to Johns Hopkins Medical Campus for $272 million.
    • The Class A portfolio, containing 454,000 square feet, is 96% leased with a weighted average lease term exceeding seven years. It is anchored by Johns Hopkins Medicine and has 80% excellent credit tenancy.
    • The Baltimore-D.C. market is the fourth ranked life science cluster in the United States.
    • The transaction establishes a relationship with Johns Hopkins Medicine’s leading global academic medicine and research.
  • Ventas has extended its successful track record of development with its partner Le Groupe Maurice with a robust pipeline and resilient demand. Two Le Groupe Maurice projects containing 775 units were delivered in the fourth quarter 2020, and reached 87% approximate spot occupancy as of April 30 with substantial leasing momentum. Three additional development projects are underway totaling $290 million in project costs and spanning 900 units, with one of these projects expected to be delivered in 2021.

Leadership and Recognition

  • Ventas was named a 2021 ENERGY STAR® Partner of the Year by the U.S. Environmental Protection Agency and the U.S. Department of Energy for the first time. The award recognizes the Company’s energy efficiency achievements across its portfolio.
  • The Company was the leading owner of ENERGY STAR® certified Senior Housing communities for the second consecutive year in 2020, earning 70% of the total certifications awarded in the space with 102 certified Senior Housing communities representing nine million square feet.
  • These energy initiatives reflect both Ventas capital investment in energy efficiency, such as LED lighting, and the efficient daily operations of our operating partners, which provide the community residents and staff with a more comfortable living and working environment while minimizing environmental impacts.
  • The Science Based Targets initiative has confirmed that Ventas’s ambitious new emissions reduction targets are consistent with levels required to meet the goals of the Paris Agreement.

Financial Strength & Liquidity

  • As of May 5, 2021, the Company has robust liquidity of $2.7 billion, including $2.7 billion of undrawn revolver capacity, $0.2 billion in cash and cash equivalents on hand, and $0.2 billion in commercial paper outstanding.
  • Ventas’s Net Debt to Adjusted Pro Forma EBITDA ratio was 7.1x and Total Indebtedness to Gross Asset Value was 37% for the first quarter 2021.
  • On March 15, 2021, Ventas fully repaid $400 million in outstanding aggregate principal amount of its 3.10% senior notes due January 2023, principally using cash on hand.

First Quarter Dividend

The Company paid its first quarter 2021 dividend of $0.45 per share on April 14, 2021 to stockholders of record on April 1, 2021.

Second Quarter 2021 Guidance

The Company currently expects to report second quarter 2021 Net Income (Loss) Attributable to Common Stockholders, Nareit FFO and Normalized FFO within the following per share ranges:

2Q21 Guidance

Per Share

Low

High

Net Income (Loss) Attributable to Common Stockholders

$0.00

$0.07

Nareit FFO*

$0.67

$0.70

Normalized FFO*

$0.67

$0.71

*

This is a non-GAAP financial measure. Refer to the Non-GAAP Financial Measures Reconciliation tables at the end of this press release and our first quarter 2021 supplemental for additional information and a reconciliation to the most directly comparable GAAP measure

The trajectory and future impact of the COVID-19 pandemic remain highly uncertain and can change rapidly, although emerging positive SHOP trends in the United States, if sustained, would improve performance over time. The extent of the pandemic’s continuing and ultimate effect on our operational and financial performance will depend on a variety of factors. Accordingly, the Company is providing its expectations only for the quarter ending June 30, 2021.

Driven by growth in SHOP, the Company’s second quarter Normalized FFO guidance midpoint of $0.69 per share represents a modest increase versus the first quarter when excluding the four cents per share of HHS Grants received in first quarter 2021. Key assumptions underlying the second quarter 2021 guidance include, among other things:

  • Approximate spot occupancy in the Company’s sequential same-store SHOP business (434 assets) is assumed to increase by 150 to 250 basis points from March 31, 2021 through June 30, 2021. At the midpoint of this range, SHOP sequential same-store NOI and revenue are expected to increase modestly, and expenses are expected to be stable (in each case, excluding the impact of HHS Grants in all periods). Sequentially, customary operating expenses are expected to increase due to increased occupancy, activity levels in the communities and an additional day in the quarter, but COVID-19 costs should decrease.
  • No HHS Grants are assumed to be received in Senior Housing in the second quarter.

2021 G&A and Key Capital Activities Expectations

  • Ventas expects to recycle capital through approximately $1.0 billion in property dispositions across asset classes in the second half of 2021. These actions will further enhance the Company’s portfolio quality, augment financial strength and flexibility and fund new investments, including capital expenditures of $0.5 billion, principally in the Office segment and with Le Groupe Maurice.
  • The Company continues to expect full year 2021 general and administrative expenses to range from approximately $135 million to $140 million.

A presentation outlining the Company’s first quarter results and business update is posted to the Events & Presentations section of Ventas’s website at ir.ventasreit.com/events-and-presentations.

First Quarter 2021 Results Conference Call

Ventas will hold a conference call to discuss this earnings release today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time).

The dial-in number for the conference call is (833) 979-2853 (or +1 (236) 714-2928 for international callers), and the participant passcode is “Ventas.” A live webcast can be accessed from ir.ventasreit.com.

A telephonic replay will be available at (800) 585-8367 (or +1 (416) 621-4642 for international callers), passcode 3698322, beginning on May 7, 2021, at approximately 1:00 p.m. Eastern Time and will remain available for 30 days. The webcast replay will be posted in the Investor Relations section of www.ventasreit.com.

About Ventas

Ventas, an S&P 500 company, operates at the intersection of two powerful and dynamic industries – healthcare and real estate. As one of the world’s foremost Real Estate Investment Trusts (REIT), we use the power of capital to unlock the value of real estate, partnering with leading care providers, developers, research and medical institutions, innovators and healthcare organizations whose success is buoyed by the demographic tailwind of an aging population. For more than twenty years, Ventas has followed a successful strategy that endures: combining a high-quality diversified portfolio of properties and capital sources to manage through cycles, working with industry leading partners, and a collaborative and experienced team focused on producing consistent growing cash flows and superior returns on a strong balance sheet, ultimately rewarding Ventas stakeholders. As of March 31, 2021, Ventas owned or had investments in approximately 1,200 properties.

Non-GAAP Financial Measures

This press release includes certain financial performance measures not defined by generally accepted accounting principles in the Unites States (“GAAP”). Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in this press release. We believe such measures provide investors with additional information concerning our operating performance and a basis to compare our performance with the performance of other REITs. Our definitions and calculations of these non-GAAP measures may not be the same as similar measures reported by other REITs.

These non-GAAP financial measures should not be considered as alternatives to net income attributable to common stockholders (determined in accordance with GAAP) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.

Cautionary Statements

Certain of the information contained herein, including intra-quarter operating information and number of confirmed cases of COVID-19, has been provided by our operators and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot assure you of its accuracy.

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments and other matters that are not historical facts. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,” “plan,” “potential,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof.

Forward-looking statements are based on management’s beliefs as well as on a number of assumptions concerning future events. You should not put undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. You are urged to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance in our filings with the Securities and Exchange Commission, including those made in the “Risk Factors” section and “Management’s Discussion & Analysis of Financial Condition and Results of Operations” section of our most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.

Certain factors that could affect our future results and our ability to achieve our stated goals include, but are not limited to: (a) the impact of the ongoing COVID-19 pandemic on our revenue, level of profitability, liquidity and overall risk exposure and the implementation and impact of regulations related to the CARES Act and other stimulus legislation and any future COVID-19 relief measures; (b) our exposure and the exposure of our tenants, borrowers and managers to complex healthcare and other regulation and the challenges and expense associated with complying with such regulation; (c) the potential for significant general and commercial claims, legal actions, regulatory proceedings or enforcement actions that could subject us or our tenants, borrowers or managers to increased operating costs and uninsured liabilities; (d) the impact of market and general economic conditions, including economic and financial market events, or events that affect consumer confidence, our occupancy rates and resident fee revenues, and the actual and perceived state of the real estate markets, labor markets and public capital markets; (e) our ability, and the ability of our tenants, borrowers and managers, to navigate the trends impacting our or their businesses and the industries in which we or they operate; (f) the risk of bankruptcy, insolvency or financial deterioration of our tenants, borrowers, managers and other obligors and our ability to foreclose successfully on the collateral securing our loans and other investments in the event of a borrower default; (g) our ability to identify and consummate future investments in or dispositions of healthcare assets and effectively manage our portfolio opportunities and our investments in co-investment vehicles; (h) our ability to attract and retain talented employees; (i) the limitations and significant requirements imposed upon our business as a result of our status as a REIT and the adverse consequences (including the possible loss of our status as a REIT) that would result if we are not able to comply; (j) the risk of changes in healthcare law or regulation or in tax laws, guidance and interpretations, particularly as applied to REITs, that could adversely affect us or our tenants, borrowers or managers; (k) increases in the Company’s borrowing costs as a result of becoming more leveraged or as a result of changes in interest rates and phasing out of LIBOR rates; (l) our reliance on third parties to operate a majority of our assets and our limited control and influence over such operations and results; (m) our dependency on a limited number of tenants and managers for a significant portion of our revenues and operating income; (n) the adequacy of insurance coverage provided by our policies and policies maintained by our tenants, managers or other counterparties; (o) the occurrence of cyber incidents that could disrupt our operations, result in the loss of confidential information or damage our business relationships and reputation; (p) the impact of merger, acquisition and investment activity in the healthcare industry or otherwise affecting our tenants, borrowers or managers; and (q) the risk of catastrophic or extreme weather and other natural events and the physical effects of climate change.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(unaudited)

March 31,

December 31,

September 30,

June 30,

March 31,

2021

2020

2020

2020

2020

Assets

Real estate investments:

Land and improvements

$

2,235,773

$

2,261,415

$

2,268,583

$

2,258,699

$

2,246,245

Buildings and improvements

24,250,630

24,323,279

24,196,730

23,964,691

23,826,989

Construction in progress

310,547

265,748

567,052

496,349

505,648

Acquired lease intangibles

1,212,263

1,230,886

1,246,312

1,242,414

1,243,571

Operating lease assets

343,072

346,372

386,946

389,302

391,908

28,352,285

28,427,700

28,665,623

28,351,455

28,214,361

Accumulated depreciation and amortization

(8,030,524

)

(7,877,665

)

(7,687,211

)

(7,453,251

)

(7,241,597

)

Net real estate property

20,321,761

20,550,035

20,978,412

20,898,204

20,972,764

Secured loans receivable and investments, net

615,037

605,567

604,452

681,831

623,716

Investments in unconsolidated real estate entities

471,243

443,688

162,860

166,039

165,745

Net real estate investments

21,408,041

21,599,290

21,745,724

21,746,074

21,762,225

Cash and cash equivalents

169,661

413,327

588,343

992,824

2,848,115

Escrow deposits and restricted cash

40,551

38,313

40,147

36,312

38,144

Goodwill

1,051,780

1,051,650

1,050,742

1,050,115

1,050,137

Assets held for sale

59,860

9,608

15,748

76,021

69,199

Deferred income tax assets, net

11,610

9,987

304

304

47,495

Other assets

810,760

807,229

779,475

687,738

802,513

Total assets

$

23,552,263

$

23,929,404

$

24,220,483

$

24,589,388

$

26,617,828

Liabilities and equity

Liabilities:

Senior notes payable and other debt

$

11,759,299

$

11,895,412

$

12,047,919

$

12,530,036

$

14,172,279

Accrued interest

91,390

111,444

97,828

117,687

87,245

Operating lease liabilities

206,426

209,917

247,255

248,912

250,357

Accounts payable and other liabilities

1,109,279

1,133,066

1,234,933

998,446

1,141,551

Liabilities related to assets held for sale

3,853

3,246

1,987

5,514

4,765

Deferred income tax liabilities

65,777

62,638

53,711

56,963

47,533

Total liabilities

13,236,024

13,415,723

13,683,633

13,957,558

15,703,730

Redeemable OP unitholder and noncontrolling interests

244,619

235,490

249,143

231,920

197,701

Commitments and contingencies

Equity:

Ventas stockholders’ equity:

Preferred stock, $1.00 par value; 10,000 shares authorized, unissued

Common stock, $0.25 par value; 375,068; 374,609; 373,940; 373,113; and

373,094; shares issued at March 31, 2021, December 31, 2020, September 30, 2020,

June 30, 2020, and March 31, 2020, respectively

93,750

93,635

93,467

93,261

93,256

Capital in excess of par value

14,186,692

14,171,262

14,142,349

14,118,119

14,135,657

Accumulated other comprehensive loss

(52,497

)

(54,354

)

(65,042

)

(82,761

)

(103,408

)

Retained earnings (deficit)

(4,257,001

)

(4,030,376

)

(3,972,647

)

(3,816,460

)

(3,491,696

)

Treasury stock, 14; 0; 33; 24; and 22 shares at March 31, 2021, December 31, 2020,

September 30, 2020, June 30, 2020, and March 31, 2020, respectively

(789

)

(1,275

)

(947

)

(867

)

Total Ventas stockholders’ equity

9,970,155

10,180,167

10,196,852

10,311,212

10,632,942

Noncontrolling interests

101,465

98,024

90,855

88,698

83,455

Total equity

10,071,620

10,278,191

10,287,707

10,399,910

10,716,397

Total liabilities and equity

$

23,552,263

$

23,929,404

$

24,220,483

$

24,589,388

$

26,617,828

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(unaudited)

For the Three Months Ended

March 31,

2021

2020

Revenues

Rental income:

Triple-net leased

$

159,885

$

194,862

Office

197,455

208,395

357,340

403,257

Resident fees and services

528,650

576,770

Office building and other services revenue

4,950

3,128

Income from loans and investments

19,010

24,046

Interest and other income

341

4,853

Total revenues

910,291

1,012,054

Expenses

Interest

110,767

116,696

Depreciation and amortization

314,148

248,837

Property-level operating expenses:

Senior living

417,829

410,131

Office

63,946

64,506

Triple-net leased

4,825

6,331

486,600

480,968

Office building services costs

618

727

General, administrative and professional fees

40,309

40,460

Loss on extinguishment of debt, net

27,090

Merger-related expenses and deal costs

4,617

8,218

Allowance on loans receivable and investments

(8,902

)

Other

(9,428

)

5,783

Total expenses

965,819

901,689

(Loss) income before unconsolidated entities, real estate dispositions,

income taxes and noncontrolling interests

(55,528

)

110,365

Loss from unconsolidated entities

(250

)

(10,876

)

Gain on real estate dispositions

2,533

226,225

Income tax (expense) benefit

(2,153

)

149,016

(Loss) income from continuing operations

(55,398

)

474,730

Net (loss) income

(55,398

)

474,730

Net income attributable to noncontrolling interests

1,811

1,613

Net (loss) income attributable to common stockholders

$

(57,209

)

$

473,117

Earnings per common share

Basic:

(Loss) income from continuing operations

$

(0.15

)

$

1.27

Net (loss) income attributable to common stockholders

(0.15

)

1.27

Diluted:1

(Loss) income from continuing operations

$

(0.15

)

$

1.26

Net (loss) income attributable to common stockholders

(0.15

)

1.26

Weighted average shares used in computing earnings per common share

Basic

374,669

372,829

Diluted

377,922

375,997

1

Potential common shares are not included in the computation of diluted earnings per share when a loss from continuing operations exists as the effect would be an antidilutive per share amount.

QUARTERLY CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(unaudited)

For the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2021

2020

2020

2020

2020

Revenues

Rental income:

Triple-net leased

$

159,885

$

168,027

$

156,136

$

176,240

$

194,862

Office

197,455

199,931

198,376

192,925

208,395

357,340

367,958

354,512

369,165

403,257

Resident fees and services

528,650

529,739

541,322

549,329

576,770

Office building and other services revenue

4,950

4,522

3,868

3,673

3,128

Income from loans and investments

19,010

18,302

18,666

19,491

24,046

Interest and other income

341

644

572

1,540

4,853

Total revenues

910,291

921,165

918,940

943,198

1,012,054

Expenses

Interest

110,767

114,208

115,505

123,132

116,696

Depreciation and amortization

314,148

261,966

249,366

349,594

248,837

Property-level operating expenses:

Senior living

417,829

393,309

422,653

432,578

410,131

Office

63,946

64,420

66,934

60,752

64,506

Triple-net leased

4,825

5,156

5,398

5,275

6,331

486,600

462,885

494,985

498,605

480,968

Office building services costs

618

488

557

543

727

General, administrative and professional fees

40,309

29,537

32,081

28,080

40,460

Loss on extinguishment of debt, net

27,090

3,405

7,386

Merger-related expenses and deal costs

4,617

3,683

11,325

6,586

8,218

Allowance on loans receivable and

investments

(8,902

)

(10,416

)

4,999

29,655

Other

(9,428

)

(16,043

)

5,681

5,286

5,783

Total expenses

965,819

849,713

921,885

1,041,481

901,689

(Loss) income before unconsolidated entities, real estate dispositions, income

taxes and noncontrolling interests

(55,528

)

71,452

(2,945

)

(98,283

)

110,365

(Loss) income from unconsolidated entities

(250

)

17,705

865

(5,850

)

(10,876

)

Gain on real estate dispositions

2,533

22,117

12,622

1,254

226,225

Income tax (expense) benefit

(2,153

)

679

3,195

(56,356

)

149,016

(Loss) income from continuing operations

(55,398

)

111,953

13,737

(159,235

)

474,730

Net (loss) income

(55,398

)

111,953

13,737

(159,235

)

474,730

Net income (loss) attributable to noncontrolling interests

1,811

1,502

986

(2,065

)

1,613

Net (loss) income attributable to common stockholders

$

(57,209

)

$

110,451

$

12,751

$

(157,170

)

$

473,117

Earnings per common share

Basic:

(Loss) income from continuing operations

$

(0.15

)

$

0.30

$

0.04

$

(0.43

)

$

1.27

Net (loss) income attributable to common stockholders

(0.15

)

0.29

0.03

(0.42

)

1.27

Diluted:1

(Loss) income from continuing operations

$

(0.15

)

$

0.30

$

0.04

$

(0.43

)

$

1.26

Net (loss) income attributable to common stockholders

(0.15

)

0.29

0.03

(0.42

)

1.26

Weighted average shares used in computing earnings per common share

Basic

374,669

374,473

373,177

372,982

372,829

Diluted

377,922

377,696

376,295

376,024

375,997

1

Potential common shares are not included in the computation of diluted earnings per share when a loss from continuing operations exists as the effect would be an antidilutive per share amount.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

For the Three Months

Ended March 31,

2021

2020

Cash flows from operating activities:

Net (loss) income

$

(55,398

)

$

474,730

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

314,148

248,837

Amortization of deferred revenue and lease intangibles, net

(14,766

)

(2,973

)

Other non-cash amortization

5,272

3,851

Allowance on loans receivable and investments

(8,902

)

Stock-based compensation

16,072

10,514

Straight-lining of rental income

(3,863

)

(6,788

)

Loss on extinguishment of debt, net

27,090

Gain on real estate dispositions

(2,533

)

(226,225

)

Gain on real estate loan investments

(74

)

(167

)

Income tax expense (benefit)

503

(150,273

)

Loss from unconsolidated entities

250

10,876

Distributions from unconsolidated entities

3,897

1,600

Other

(14,379

)

3,805

Changes in operating assets and liabilities:

Increase in other assets

(5,100

)

(13,768

)

Decrease in accrued interest

(20,234

)

(23,032

)

Decrease in accounts payable and other liabilities

(4,390

)

(16,535

)

Net cash provided by operating activities

237,593

314,452

Cash flows from investing activities:

Net investment in real estate property

(210

)

(79,539

)

Investment in loans receivable

(186

)

(1,051

)

Proceeds from real estate disposals

8,083

625,439

Proceeds from loans receivable

16,419

99,117

Development project expenditures

(58,598

)

(94,229

)

Capital expenditures

(29,674

)

(26,789

)

Investment in unconsolidated entities

(38,452

)

(5,809

)

Insurance proceeds for property damage claims

6

42

Net cash (used in) provided by investing activities

(102,612

)

517,181

Cash flows from financing activities:

Net change in borrowings under revolving credit facilities

5,144

2,762,153

Net change in borrowings under commercial paper program

214,978

(565,524

)

Proceeds from debt

31,157

82,759

Repayment of debt

(445,050

)

(62,973

)

Payment of deferred financing costs

(17,343

)

(1,963

)

Issuance of common stock, net

11,075

Cash distribution to common stockholders

(168,763

)

(296,304

)

Cash distribution to redeemable OP unitholders

(1,842

)

(2,325

)

Cash issued for redemption of OP Units

(25

)

(570

)

Contributions from noncontrolling interests

5

155

Distributions to noncontrolling interests

(2,653

)

(2,543

)

Proceeds from stock option exercises

2,106

3,389

Other

(5,856

)

(4,954

)

Net cash (used in) provided by financing activities

(377,067

)

1,911,300

Net (decrease) increase in cash, cash equivalents and restricted cash

(242,086

)

2,742,933

Effect of foreign currency translation

658

(2,776

)

Cash, cash equivalents and restricted cash at beginning of period

451,640

146,102

Cash, cash equivalents and restricted cash at end of period

$

210,212

$

2,886,259

Supplemental schedule of non-cash activities:

Assets acquired and liabilities assumed from acquisitions and other:

Real estate investments

$

468

$

533

Other assets

56

Other liabilities

398

Noncontrolling interests

468

191

QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

For the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2021

2020

2020

2020

2020

Cash flows from operating activities:

Net (loss) income

$

(55,398)

$

111,953

$

13,737

$

(159,235)

$

474,730

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

314,148

261,966

249,366

349,594

248,837

Amortization of deferred revenue and lease intangibles, net

(14,766)

(15,513)

(19,009)

(3,361)

(2,973)

Other non-cash amortization

5,272

5,508

5,558

5,802

3,851

Allowance on loans receivable and investments

(8,902)

(10,416)

4,999

29,655

Stock-based compensation

16,072

4,165

5,765

1,043

10,514

Straight-lining of rental income

(3,863)

(4,052)

15,635

98,287

(6,788)

Loss on extinguishment of debt, net

27,090

3,405

7,386

Gain on real estate dispositions

(2,533)

(22,117)

(12,622)

(1,254)

(226,225)

Gain on real estate loan investments

(74)

(167)

Income tax expense (benefit)

503

(2,283)

(4,575)

55,146

(150,273)

Loss (income) from unconsolidated entities

250

(17,701)

(865)

5,858

10,876

Distributions from unconsolidated entities

3,897

1,960

1,360

1,600

Other

(14,379)

(16,394)

2,859

8,951

3,805

Changes in operating assets and liabilities:

(Increase) decrease in other assets

(5,100)

(5)

(55,765)

1,305

(13,768)

(Decrease) increase in accrued interest

(20,234)

13,251

(20,069)

30,126

(23,032)

(Decrease) increase in accounts payable and other liabilities

(4,390)

(17,964)

240,642

(16,358)

(16,535)

Net cash provided by operating activities

237,593

295,763

434,402

405,559

314,452

Cash flows from investing activities:

Net investment in real estate property

(210)

(1,023)

(156)

2,070

(79,539)

Investment in loans receivable

(186)

(2,016)

(45,857)

(66,239)

(1,051)

Proceeds from real estate disposals

8,083

361,753

54,800

2,365

625,439

Proceeds from loans receivable

16,419

12,045

191

7,658

99,117

Development project expenditures

(58,598)

(70,446)

(129,569)

(86,169)

(94,229)

Capital expenditures

(29,674)

(53,827)

(40,888)

(26,730)

(26,789)

Investment in unconsolidated entities

(38,452)

(278,990)

33

(2,056)

(5,809)

Insurance proceeds (expense) for property damage claims

6

174

(9)

42

Net cash (used in) provided by investing activities

(102,612)

(32,330)

(161,455)

(169,101)

517,181

Cash flows from financing activities:

Net change in borrowings under revolving credit facilities

5,144

(14,724)

(539,560)

(2,296,737)

2,762,153

Net change in borrowings under commercial paper program

214,978

(565,524)

Proceeds from debt

31,157

75,741

17,024

557,774

82,759

Repayment of debt

(445,050)

(352,011)

(16,227)

(48,328)

(62,973)

Purchase of noncontrolling interests

(8,239)

Payment of deferred financing costs

(17,343)

(815)

(15)

(5,586)

(1,963)

Issuance of common stock, net

11,075

18,967

36,395

Cash distribution to common stockholders

(168,763)

(168,446)

(168,078)

(295,981)

(296,304)

Cash distribution to redeemable OP unitholders

(1,842)

(1,329)

(1,326)

(2,303)

(2,325)

Cash issued for redemption of OP Units

(25)

(5)

(570)

Contributions from noncontrolling interests

5

176

792

191

155

Distributions to noncontrolling interests

(2,653)

(3,280)

(3,373)

(3,750)

(2,543)

Proceeds from stock option exercises

2,106

11,585

129

3,389

Other

(5,856)

53

(98)

63

(4,954)

Net cash (used in) provided by financing activities

(377,067)

(442,322)

(674,471)

(2,094,528)

1,911,300

Net (decrease) increase in cash, cash equivalents and restricted cash

(242,086)

(178,889)

(401,524)

(1,858,070)

2,742,933

Effect of foreign currency translation

658

2,039

878

947

(2,776)

Cash, cash equivalents and restricted cash at beginning of period

451,640

628,490

1,029,136

2,886,259

146,102

Cash, cash equivalents and restricted cash at end of period

$

210,212

$

451,640

$

628,490

$

1,029,136

$

2,886,259

QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(In thousands)

(unaudited)

For the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2021

2020

2020

2020

2020

Supplemental schedule of non-cash activities:

Assets acquired and liabilities assumed from acquisitions and other:

Real estate investments

$

468

$

1,000

$

92,373

$

76,578

$

533

Other assets

610

558

56

Debt

55,368

Other liabilities

610

1,699

398

Deferred income tax liability

337

Noncontrolling interests

468

20,068

191

Contacts

Sarah Whitford
(877) 4-VENTAS

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