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Ventas Reports 2016 Fourth Quarter And Full-Year Results

CHICAGO–Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) today announced earnings for the fourth quarter and full year ended December 31, 2016, driven by the Company’s high-quality healthcare, senior living and life science properties and accretive investments:
• Income from continuing operations per diluted common share for the full year 2016 grew 36 percent to $1.59 compared to the same period in 2015. The year-over-year increase was principally due to accretive investments, strong property performance, profits and fees from beneficial transactions and lower transaction costs. For the fourth quarter 2016, income from continuing operations per diluted common share was $0.40.
• Normalized Funds From Operations (“FFO”) for the full year 2016 grew 5 percent to $4.13 per diluted common share on a comparable basis (“Comparable”), which adjusts all prior periods for the effects of the successful spin-off of Care Capital Properties, Inc. (“CCP”) (NYSE: CCP) completed in August 2015. For the fourth quarter 2016, normalized FFO per diluted common share was $1.03.
• Reported FFO per diluted common share, as defined by the National Association of Real Estate Investment Trusts (“NAREIT FFO”), for the full year 2016 grew 1 percent to $4.13 compared to the same period in 2015. The 2015 period includes results through August 17, 2015 of the properties that were spun off to CCP. For the fourth quarter 2016, NAREIT FFO per diluted common share was $1.04.

Track Record of Excellence Continued

“Ventas extended its long track record of excellence and success in 2016, generating strong growth and income from a high-quality diverse portfolio while enhancing its financial strength,” said Chairman and Chief Executive Officer Debra A. Cafaro. “We also delivered 16 percent total shareholder return as our exciting investment in life science and innovation centers and strategic dispositions created additional value. We are confident that demand from an aging population combined with our productive and cohesive team, our leading operator partners and our attractive mix of healthcare, senior living and life science properties will sustain excellence over the long term.

“Looking ahead to 2017, we expect to deliver property cash flow growth, improve our portfolio mix as we substantially exit the skilled nursing business, accelerate our investment in future growth through attractive development and redevelopment projects, particularly in our life science and innovation platform, and enhance our financial strength. These steps will advance our position as the premier capital provider to leading healthcare and senior living providers and research institutions. The outstanding Ventas team is excited to continue its long track record of excellence in 2017 and beyond.”

Portfolio Performance
• For the year ended December 31, 2016, same-store cash net operating income (“NOI”) growth for the Company’s total portfolio (1,038 assets) was 2.7 percent compared to 2015, in-line with previous guidance of 2.5 to 3 percent. ◦ At a segment level for the full year 2016: the triple net leased portfolio same-store cash NOI grew 3.7 percent; the seniors housing operating portfolio (“SHOP”) grew 2.3 percent; and the medical office building (“MOB”) portfolio grew 1.3 percent, all consistent with previous guidance ranges.

• The Company’s fourth quarter 2016 same-store total portfolio (1,189 assets) cash NOI growth was 2.9 percent compared to the same period in 2015. ◦ At a segment level for the fourth quarter 2016: the triple net leased portfolio same-store cash NOI increased 4.5 percent; SHOP grew 1.1 percent; and the MOB portfolio rose 2.1 percent.
2016 and Fourth Quarter Highlights
• The Company invested approximately $1.6 billion in 2016, including its accretive acquisition of institutional-quality life science and innovation centers leased by leading research universities. Ventas also committed to funding more than $300 million of development and redevelopment projects, including attractive new ground-up life science developments.
• To fund investments and enhance the Company’s balance sheet and liquidity profile in 2016, Ventas raised approximately $1.3 billion in aggregate gross proceeds from the sale of 18.9 million shares of common stock at an average gross price of approximately $70 per share; and $850 million in long-term senior notes.
• The Company sold properties and received final repayment on loans receivable in 2016 for proceeds of approximately $620 million, ahead of previously-disclosed guidance of $500 million. Fourth quarter proceeds approached $350 million.
• The Company’s credit profile and financial health were outstanding at year end 2016, including: ◦ Net Debt to Adjusted Pro Forma EBITDA ratio of 5.7x, compared to 6.1x at year end 2015;
◦ 38 percent total indebtedness to gross asset value, an improvement of 4 percentage points year-over-year; and
◦ 4.8x fixed charge coverage, an improvement of 0.3x year-over-year.

• The Company currently has over $2 billion of available liquidity.
• Ventas paid its shareholders dividends of $2.965 per share in 2016, with an attractive payout ratio.
• The Company demonstrated its commitment to excellence through strong corporate governance, Board of Directors (“Board”) refreshment, director independence and diversity. In 2016 the Board appointed Roxanne M. Martino and Walter C. Rakowich as Ventas directors and James D. Shelton as the Company’s independent presiding director.
• Ventas Chairman and Chief Executive Officer Debra A. Cafaro was recognized in 2016 as a top global CEO and a leader in the real estate and healthcare industries, including being named by: Forbes as one of the “World’s 100 Most Powerful Women” and first among “Top-Performing Women CEOs, Ranked by Total Return;” the Harvard Business Review as one of “The Best-Performing CEOs in the World,” one of only 30 CEOs named to the Harvard Business Review list for three consecutive years and one of only two women on 2016’s list; and Modern Healthcare as one of the “100 Most Influential People in Healthcare” for 2016, the third time Ms. Cafaro has received this recognition.

Recent Developments
• The Board declared a dividend for the first quarter 2017 of $0.775 per share, representing a 6 percent increase from the first quarter 2016. The dividend is payable in cash on March 31, 2017 to stockholders of record on March 7, 2017.
• The Company continues to expect to close on its $700 million loan commitment to fund Ardent Health Services’ (“Ardent’s”) acquisition of LHP Hospital Group (“LHP”) late in the first quarter of 2017, subject to customary regulatory reviews and approvals. Pro forma for the acquisition, Ardent’s leading hospital platform is expected to generate $3 billion in revenues in 6 states.
• In January 2017, the Company sold assets and received final repayment on loans receivable for proceeds of $88 million, primarily comprised of 5 seniors housing communities at a cap rate of 6 percent on a cash and GAAP basis.

2017 Guidance

Ventas expects 2017 income from continuing operations per diluted common share to range between $1.72 and $1.78. The Company expects normalized FFO per diluted common share to range between $4.12 and $4.18, in line with the Company’s preliminary outlook provided on January 10, 2017. NAREIT FFO per diluted common share is forecast to range between $4.10 and $4.19.

The Company expects full year 2017 cash NOI growth for the 1,163 assets in the full-year same-store pool to range from 1.5 to 2.5 percent, consistent with the Company’s previous outlook. Triple net same-store cash NOI is forecast to grow 2.5 to 3.5 percent driven by lease escalations; SHOP same-store cash NOI is forecast to grow 0 to 2 percent, led by assets in high barrier-to-entry locations; and MOB same-store cash NOI is forecast to grow 1 to 2 percent, supported by new leasing activity.

The Company expects to complete approximately $900 million in strategic dispositions in 2017 (of which $88 million have closed to date), including $700 million in proceeds in the second half of the year through the potential sale of 36 skilled nursing facilities owned by Ventas at a 7 percent cash yield and a gain of over $650 million. Disposition proceeds are expected to be redeployed at approximately the same rate into new 2017 investments approximating $1 billion, principally to scale the Company’s life science and acute care hospital platforms, including $700 million in secured debt financing to fund Ardent’s acquisition of LHP.

During 2017, the Company also expects to invest in future growth by funding approximately $300 million in development and redevelopment projects, including attractive new ground-up life science developments.

During 2017, the Company expects to refinance approximately $1 billion of current debt and lengthen the Company’s weighted average maturity schedule. The 2017 outlook assumes 358.5 million weighted average fully-diluted shares, with no new equity issuance in 2017.

Consistent with its practice, the Company’s guidance does not include any further material investments, dispositions or capital activity. A reconciliation of the Company’s guidance to the Company’s projected GAAP measures is included in this press release.

The Company’s guidance is based on a number of other assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.

Fourth Quarter and Full Year 2016 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 (844) 776-7841 (or (661) 378-9542 for international callers). The participant passcode is “Ventas.” The conference call is being webcast live by NASDAQ OMX and can be accessed at the Company’s website at www.ventasreit.com. A replay of the webcast will be available following the call online, or by calling (855) 859-2056 (or (404) 537-3406 for international callers), passcode 50587913, beginning at approximately 2:00 p.m. Eastern Time and will remain for 36 days.

Ventas, Inc., an S&P 500 company, is a leading real estate investment trust. Its diverse portfolio of approximately 1,300 assets in the United States, Canada and the United Kingdom consists of seniors housing communities, medical office buildings, life science and innovation centers, skilled nursing facilities, specialty hospitals and general acute care hospitals