VENTAS REPORTS FIRST QUARTER 1999 RESULTS
VENTAS WILL NOT PAY DIVIDEND IN MAY
LOUISVILLE, Ky. (May 14, 1999) - Ventas, Inc. (NYSE:VTR) announced today the results of its operations for the first quarter of 1999.
RESULTS
Rental income for the first quarter was $56.4 million, including $55.5 million paid by Vencor, Inc. (NYSE: VC), its principal tenant. Net income for the three months ended March 31, 1999 was $20.3 million, or $0.30 per diluted share.
Funds from operations ("FFO") for the three months ended March 31, 1999 totaled $31.3 million, or $0.46 per diluted share. In calculating net income and FFO, the Company included in its expenses (and thus reduced net income and FFO) non-recurring employee severance costs of $1.3 million and additional legal and financial advisory expenses associated with evaluating the current situation with Vencor, including all agreements related thereto, and addressing alternatives related to the $275 million loan due October 30, 1999. Substantial legal and financial advisory expenses will continue to be incurred by the Company until a resolution of these matters is reached, although there can be no assurance that such a resolution will be reached. Ventas uses the National Association of Real Estate Trusts' (NAREIT) definition of FFO. NAREIT defines FFO as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.
As a result of a corporate reorganization effective April 30, 1998, for financial reporting purposes Ventas, Inc. is deemed to have commenced operations on May 1, 1998 and does not have comparable financial results for prior periods. Ventas anticipates that it will meet the requirements to qualify as a real estate investment trust (REIT) for federal income tax purposes for the tax year beginning January 1, 1999. Accordingly, no provision for income taxes has been made for the three months ended March 31, 1999.
LIQUIDITY
As of May 11, 1999, Ventas had cash and cash equivalents of $70.6 million and outstanding debt of $976.0 million. Ventas continues to evaluate options to pay off the remaining $275 million principal balance of the term loan due October 30, 1999. These options include a sale of certain assets, either directly or in part through a joint venture; a private equity placement; refinancing of the principal through conventional and/or commercial mortgage backed securities sources; and draws on its existing revolving credit facility, or a combination of the foregoing.
DIVIDEND
Ventas, Inc. also announced today that in order to preserve its current cash position, the Company will not declare or pay a dividend at this time. Ventas expects that it will once again pay a dividend when Vencor resolves the financial difficulties contributing to the uncertainties about Vencor's continuing ability to make rent payments to the Company. There can be no assurances that Vencor will resolve its financial difficulties and pay the rent due Ventas. The Company still intends to qualify as a REIT for the year ending December 31, 1999. Ventas is not required to distribute its taxable income in quarterly installments in order to qualify as a REIT. Ventas will continue to evaluate its dividend policy in light of future developments in Vencor's financial performance and ongoing discussions regarding a global restructuring of Vencor's capital structure.
"We remain committed to working with Vencor and its creditors toward a consensual restructuring of Vencor's capital structure, but believe it is important to maintain our cash position should Vencor's rent defaults continue," stated Debra A. Cafaro, President and Chief Executive Officer of Ventas. "We also acknowledge the importance of the dividend to our shareholders and intend to satisfy the requirements to qualify as a REIT."
Ventas, Inc. is a real estate company whose properties include 45 hospitals, 219 nursing centers, and eight personal care facilities in 36 states.
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act''), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act''). All statements regarding the Company's expected future financial position, results of operations, cash flows, financing plans, business strategy, expected lease income, plans and objectives of management for future operations and statements that include words such as "anticipate,'' "believe,'' "plan,'' "estimate,'' "expect,'' "intend,'' and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and stockholders must recognize that actual results may differ from the Company's expectations.
Factors that may affect the plans or results of the Company include, without limitation, (i) the ability of the Company's operators, primarily Vencor, Inc., to maintain the financial strength and liquidity necessary to satisfy their obligations and duties under leases and other agreements with the Company and their existing credit agreements, (ii) the extent of future healthcare reform and regulation, including cost containment measures and changes in reimbursement policies and procedures, (iii) increases in the cost of borrowing for the Company, (iv) the ability of the Company's operators to deliver high quality care and to attract patients, and (v) the ability of the Company to pay and/or refinance its indebtedness as it becomes due. Many of such factors are beyond the control of the Company and its management.
VENTAS, INC.
Condensed Consolidated Statement of Income
(Unaudited)
(In thousands, except per share amounts)
Three Months
Ended
March 31, 1999
Revenues:
Rental income $ 56,436
Interest and other income 197
----------
Total revenues 56,633
Expenses:
General and administrative 2,551
Non-recurring employee severance costs 1,272
Depreciation on real estate investments 10,944
Interest on bank credit facility and other debt 18,065
Net payments on interest rate swap agreement 1,593
Amortization of restricted stock grants 652
Amortization of deferred financing costs 1,218
---------
Total expenses 36,295
---------
Net Income $ 20,338
==========
Net income per common share:
Basic $ 0.30
Diluted $ 0.30
Funds from operations $ 31,282
Funds from operations per common share:
Basic $ 0.46
Diluted $ 0.46
Shares used in computing earnings and funds from operations
per common share:
Basic 67,691
Diluted 67,956
VENTAS, INC.
Condensed Consolidated Balance Sheet
(In thousands)
March 31, December 31,
1999 1998
ASSETS (Unaudited) (Note)
Real estate properties:
Land $ 120,928 $ 120,928
Buildings and improvements 1,065,037 1,065,037
----------- ----------
1,185,965 1,185,965
Accumulated depreciation (257,453) (246,509)
----------- ----------
928,512 939,456
Cash and cash equivalents 58,497 338
Deferred financing costs 7,598 8,816
Due from Vencor, Inc. - 6,967
Advances to employees 4,027 4,027
Other 864 102
----------- ---------
$ 999,498 $ 959,706
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Liabilities:
Bank credit facility and other debt $ 976,889 $ 931,127
Accrued salaries, wages and
other compensation 1,920 552
Accrued interest 2,035 3,556
Other accrued liabilities 2,656 2,974
Deferred incomes taxes 30,506 30,506
----------- ---------
1,014,006 968,715
Stockholders' equity (deficit):
Common stock, par value 18,402 18,402
Capital in excess of par value 140,173 140,103
Unearned compensation on
restricted stock (3,154) (1,962)
Accumulated deficit (15,788) (9,637)
---------- ---------
139,633 146,906
Treasury stock (154,141) (155,915)
---------- ---------
(14,508) (9,009)
---------- ---------
$ 999,498 $ 959,706
========== =========
Note - The balance sheet at December 31, 1998, has been
derived from audited consolidated financial statements
at that date but does not include all of the
information and footnotes required by generally
accepted accounting principles for complete financial
statements - refer to financial statements and related
notes and additional disclosures included in the Ventas
annual report on Form 10-K.
VENTAS, INC.
QUARTERLY FINANCIAL SUPPLEMENT-FIRST QUARTER 1999
(Unaudited)
Portfolio Overview
1st Quarter
# of # of Beds/ Revenue
Portfolio by Type Properties Units ($000) Percentage
Skilled Nursing Facilities 219 28,492 $ 33,693 59.7 %
Personal Care Facilities 8 136 183 0.3
Hospitals 45 4,194 22,560 40.0
---- ------ -------- -------
Total 272 32,822 $ 56,436 100.0 %
==== ====== ======== =======
Investment Investment
($000) Percentage Per Bed
Skilled Nursing Facilities $ 834,052 70.3 % $ 29,273
Personal Care Facilities 7,133 0.6 52,448
Hospitals 344,780 29.1 82,207
--------- ------ --------
Total $ 1,185,965 100.0 % $ 36,133
========= ====== ========
1st Quarter
Revenue
Portfolio by Operator/Tenant ($000) Percentage
Vencor $ 55,540 98.4 %
Other 896 1.6
--------- --------
Total $ 56,436 100.0 %
========= =========
VENTAS, INC.
QUARTERLY FINANCIAL SUPPLEMENT-FIRST QUARTER 1999 (Continued)
(Unaudited)
1st Quarter
Revenue
Portfolio by State ($000) Percentage
------------
1 Florida $ 5,465 9.7 %
2 Massachusetts 4,630 8.2
3 California 4,144 7.3
4 North Carolina 3,856 6.8
5 Indiana 3,818 6.8
6 Wisconsin 3,495 6.2
7 Illinois 2,980 5.3
8 Kentucky 2,859 5.1
9 Texas 2,859 5.1
10 Ohio 2,138 3.8
Other (26 states) 20,192 35.7
--------- -----------
$ 56,436 100.0 %
========= ===========
Certificate of Need States Revenue Percentage
SNFs Hospitals
States with CON Requirement 73.3 % 58.1 %
States without CON Requirement 26.7 41.9
--------- ---------
100.0 % 100.0 %
========= =========
Annual
Revenue
Renewal Information (**) ($000) Percentage
1999 $ - 0.0 %
2000 - 0.0
2001 462 0.2
2002 - 0.0
2003 592 0.3
Thereafter 224,687 99.5
-------- ---------
$ 225,741 100.0 %
======== =========
(**) Excludes future rent escalations.
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