2004 Normalized FFO Rises 17 Percent to $1.80 Per Share;
2005 First Quarter Dividend Increases 11 Percent to $0.36 Per Share;
2004 Investment Activity Exceeds $400 Million
LOUISVILLE, KY (February 28, 2005) - Ventas, Inc. (NYSE:VTR) ("Ventas" or the "Company") said today that fourth quarter 2004 normalized Funds from Operations ("FFO") rose 24 percent to $40.1 million, compared with $32.3 million in the fourth quarter 2003. Normalized FFO per diluted share in the fourth quarter 2004 increased 18 percent to $0.47 from $0.40 per diluted share for the comparable 2003 period. In the fourth quarter ended December 31, 2004, the Company had 85.2 million weighted average diluted shares outstanding, compared to 81.2 million weighted average diluted shares outstanding a year earlier.
Normalized FFO per diluted share for the year ended December 31, 2004 was $1.80, a 17 percent increase from the year ended December 31, 2003 level of $1.54 per diluted share. Normalized FFO for 2004 grew 23 percent year-over-year, to $151.7 million in 2004 from $123.5 million in 2003.
Normalized FFO for all periods excludes the benefit of a $20.2 million reversal of a previously recorded contingent liability that increased operating income in the first quarter of 2003, a $9.0 million gain on sales of common stock of the Company's primary tenant, Kindred Healthcare, Inc. (NYSE: KND; "Kindred"), which the Company realized during the year ended December 31, 2003, and a $1.4 million loss on extinguishment of debt recognized during the third quarter of 2004 due to the Company's refinancing of its credit facility.
Results for the fourth quarter and full year benefited from the Company's accelerated investment activity and increased rent from its diversified portfolio of quality healthcare and senior housing assets.
Ventas also said that its Board of Directors voted to increase the Company's first quarter 2005 dividend to $0.36 per share, an increase of 11 percent from the quarterly 2004 dividend of $0.325. The Ventas first quarter dividend is payable April 5, 2005 to stockholders of record on March 24, 2005.
"Ventas delivered another excellent year of performance for its shareholders. In 2004, we again produced double-digit FFO growth. Our $400 million of accretive acquisitions added to our strong internal growth rate and diversified our tenant and asset base," Ventas Chairman, President and CEO Debra A. Cafaro said. "Ventas was the best performing REIT in the Morgan Stanley REIT Index (RMS) for the five year period ended December 31, 2004, with a compound annual total shareholder return of over 59 percent.
"We are beginning 2005 on a positive note by increasing our quarterly dividend 11 percent. This increase shares the benefits of our strong and reliable cash flow with our shareholders and indicates our confidence in our assets, our revenue stream and our industry," Cafaro said. "Looking ahead, we remain committed to managing the Company to deliver long-term shareholder value and superior risk adjusted return."
GAAP NET INCOME
Ventas reported fourth quarter 2004 net income of $46.7 million, or $0.55 per diluted share, after discontinued operations of $20.2 million, or $0.24 per diluted share. In the fourth quarter of 2003, Ventas reported net income of $77.1 million, or $0.96 per diluted share, after discontinued operations of $62.0 million, or $0.78 per diluted share. Net income was higher in the fourth quarter of 2003 due to larger gains on the sale of real estate, which were $55.0 million in the fourth quarter of 2003 compared to $19.4 million in the fourth quarter of 2004.
Net income for the year ended December 31, 2004 was $120.9 million, or $1.43 per diluted share, after discontinued operations of $20.7 million, or $0.24 per diluted share, compared with net income for the year ended December 31, 2003 of $162.8 million, or $2.03 per diluted share, after discontinued operations of $66.6 million, or $0.83 per diluted share. Net income was higher for the year ended December 31, 2003 due to larger gains on the sale of real estate, which were $51.8 million, $0.65 per diluted share, in 2003 compared to $19.4 million, $0.23 per diluted share, in 2004.
A breakdown of discontinued operations is included in a schedule attached to this Press Release.
FOURTH QUARTER HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS
-- Between October 27 and December 31, 2004, Ventas purchased a combined
independent and assisted living facility for $38.5 million. The
221-unit facility is located in Framingham, Massachusetts. Initial
cash rent on this investment exceeds 9 percent.
-- Year to date, Ventas has invested an additional $49.0 million in
healthcare and senior housing assets. The initial cash yield on these
investments exceeds 9 percent. The investments consist of an acute
care hospital, one assisted living facility, three medical office
buildings and a first mortgage loan.
-- With these completed transactions, annualized rent from Kindred
represents approximately 76 percent of the Company's run rate total
revenue, assuming a full first quarter effect of all acquisitions.
Annualized rent from market rate, non-government reimbursed assets in
the Company's portfolio represents 16 percent of the Company's
annualized revenue on the same basis.
-- Assets leased to Kindred now represent 65 percent of the Company's
total real estate assets, measured on a gross book value basis.
-- Ventas said its acquisition pipeline remains active and that it
expects to continue to aggressively implement its strategic growth and
diversification plan in 2005.
-- Ventas recorded a gain of $19.4 million during the fourth quarter from
the sale of two hospitals to Kindred, which had previously leased
those facilities from Ventas.
-- As of December 31, 2004, Ventas's enterprise value exceeded
$3.1 billion.
-- In 2004, Ventas acquired more than $400 million of new healthcare and
senior housing assets.
-- The Company maintained a strong balance sheet at December 31, 2004,
with a fourth quarter pro forma annualized net debt-to-EBITDA ratio of
3.5 times.
-- Moody's recently re-affirmed the Company's debt rating at Ba3,
retaining its "positive" outlook.
-- Ventas delivered Total Shareholder Return (TSR) of 31 percent for
2004, compared with the healthcare REIT sector average and median of
22 percent.
-- The 225 skilled nursing facilities and hospitals leased by the Company
to Kindred produced EBITDAR to rent coverage of 1.8 times (after
management fees) for the trailing twelve month period ended
September 30, 2004 (the latest date available). Further information
detailing these rent coverages is contained on a schedule attached to
this Press Release.
-- On October 1, 2004, Medicare reimbursement for skilled nursing
facilities increased by 2.8 percent.
-- In the first quarter of 2005, CMS proposed a Medicare rate increase of
approximately 5.5 percent for long-term acute care hospitals.
-- Ventas expects to file its 2004 Form 10-K on or about March 1, 2005,
including unqualified management certifications and an unqualified
auditor opinion under section 404 of the Sarbanes-Oxley Act of 2002.
FOURTH QUARTER 2004 RESULTS
Rental revenue for the quarter ended December 31, 2004 was $61.3 million, of which $48.6 million resulted from leases with Kindred. Fourth quarter expenses totaled $35.7 million and included $12.9 million of depreciation expense and $17.8 million of interest expense. Interest expense for the 2004 fourth quarter included a $0.5 million non-cash expense for "swap ineffectiveness." Combined general and administrative expenses and professional fees totaled $4.1 million. Property-level operating expenses relating to the Company's medical office building portfolio for the period were $0.5 million.
FULL YEAR 2004 RESULTS
Rental revenue for the year ended December 31, 2004 was $232.9 million, of which $192.4 million resulted from leases with Kindred. Expenses for the year ended December 31, 2004 totaled $136.7 million and included $49.0 million of depreciation expense, $66.8 million of interest expense and $16.9 million of combined general and administrative expenses and professional fees. Property- level operating expenses for the period were $1.3 million.
VENTAS AFFIRMS 2005 NORMALIZED FFO GUIDANCE
Ventas affirmed its 2005 normalized FFO guidance between $1.89 and $1.93 per diluted share. The Company's normalized FFO guidance assumes that all of the Company's tenants and borrowers continue to meet all of their obligations to the Company. In addition, the Company's normalized FFO guidance (and related GAAP earnings projections) excludes gains and losses on the sales of assets and the impact of future acquisitions, divestitures and capital transactions. Its guidance also excludes the future impact of (a) any expense the Company records for non-cash "swap ineffectiveness," and (b) any expenses related to asset impairment, the write-off of unamortized deferred financing fees or additional costs, expenses or premiums incurred as a result of early debt retirement.
The Company's normalized FFO guidance is based on a number of other assumptions, which 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.
Reconciliation of the Company's normalized FFO guidance to the Company's projected GAAP earnings is provided on a schedule attached to this Press Release. The Company may from time to time update its publicly announced normalized FFO guidance, but it is not obligated to do so.
FOURTH QUARTER CONFERENCE CALL
Ventas will hold a conference call to discuss this earnings release on Tuesday, March 1, 2005, at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The conference call is being web cast by CCBN and can be accessed at the Ventas website at http://www.ventasreit.com or http://www.fulldisclosure.com . An online replay of the web cast will be available at approximately 12:00 p.m. Eastern Time and will be archived for thirty (30) days.
VENTAS OFFERS DRIP DISCOUNT OF ONE PERCENT
Ventas said today that, beginning in March 2005, it will offer a one percent discount on the purchase price of its stock to shareholders who reinvest their dividends and/or make optional cash purchases of Ventas common stock through the Company's Distribution Reinvestment and Stock Purchase Plan (DRIP). Previously, the discount offered on these reinvestments and cash purchases was two percent. The Company reserves the right to change or terminate its DRIP program.
For full details of the DRIP, please refer to the Company's Prospectus and the supplements thereto, which are available from the Plan Administrator, National City Bank, at 1-800-622-6757.
Ventas, Inc. is a leading healthcare real estate investment trust that owns 292 healthcare and senior housing assets in 39 states. Its properties include 41 hospitals, 201 skilled nursing facilities, 31 senior housing facilities, and 19 other healthcare assets. More information about Ventas can be found on its website at http://www.ventasreit.com .
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. All statements regarding Ventas, Inc.'s ("Ventas" or the "Company") and its subsidiaries' expected future financial position, results of operations, cash flows, funds from operations, dividends and dividend plans, financing plans, business strategy, budgets, projected costs, capital expenditures, competitive positions, growth opportunities, expected lease income, continued qualification as a real estate investment trust ("REIT"), plans and objectives of management for future operations and statements that include words such as "anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may," "could," "should," "will" and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and security holders must recognize that actual results may differ from the Company's expectations. The Company does not undertake a duty to update such forward-looking statements.
Actual future results and trends for the Company may differ materially depending on a variety of factors discussed in the Company's filings with the Securities and Exchange Commission (the "Commission"). Factors that may affect the plans or results of the Company include, without limitation, (a) the ability and willingness of Kindred Healthcare, Inc. ("Kindred") and certain of its affiliates to continue to meet and/or perform their obligations under their contractual arrangements with the Company and the Company's subsidiaries, including without limitation the lease agreements and various agreements entered into by the Company and Kindred at the time of the Company's spin off of Kindred on May 1, 1998 (the "1998 Spin Off"), as such agreements may have been amended and restated in connection with Kindred's emergence from bankruptcy on April 20, 2001, (b) the ability and willingness of Kindred to continue to meet and/or perform its obligation to indemnify and defend the Company for all litigation and other claims relating to the healthcare operations and other assets and liabilities transferred to Kindred in the 1998 Spin Off, (c) the ability of Kindred and the Company's other operators, tenants and borrowers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and duties under the leases and other agreements with the Company, and their existing credit agreements, (d) the Company's success in implementing its business strategy and the Company's ability to identify, underwrite, consummate and integrate diversifying acquisitions or investments, (e) the nature and extent of future competition, (f) the extent of future healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates, (g) increases in the cost of borrowing for the Company, (h) the ability of the Company's operators to deliver high quality care and to attract patients, (i) the results of litigation affecting the Company, (j) changes in general economic conditions and/or economic conditions in the markets in which the Company may, from time to time, compete, (k) the ability of the Company to pay down, refinance, restructure, and/or extend its indebtedness as it becomes due, (l) the movement of interest rates and the resulting impact on the value of and the accounting for the Company's interest rate swap agreement, (m) the ability and willingness of the Company to maintain its qualification as a REIT due to economic, market, legal, tax or other considerations, (n) final determination of the Company's taxable net income for the year ended December 31, 2004 and for the year ending December 31, 2005, (o) the ability and willingness of the Company's tenants to renew their leases with the Company upon expiration of the leases and the Company's ability to relet its properties on the same or better terms in the event such leases expire and are not renewed by the existing tenants, and (p) the impact on the liquidity, financial condition and results of operations of Kindred and the Company's other operators resulting from increased operating costs and uninsured liabilities for professional liability claims, and the ability of Kindred and the Company's other operators to accurately estimate the magnitude of such liabilities. Many of such factors are beyond the control of the Company and its management.
CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2004, September 30, 2004, June 30, 2004, March 31, 2004 and
December 31, 2003
(In thousands)
December 31, September 30, June 30, March 31, December 31,
2004 2004 2004 2004 2003
(Audited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Assets
Real estate
investments:
Land $147,327 $140,969 $136,634 $132,433 $104,300
Building and
improve-
ments 1,364,884 1,333,310 1,299,660 1,233,827 985,881
1,512,211 1,474,279 1,436,294 1,366,260 1,090,181
Accumulated
deprec-
iation (454,110) (444,859) (431,707) (419,664) (408,891)
Total net
real
estate
prop-
erty 1,058,101 1,029,420 1,004,587 946,596 681,290
Loan
receivable,
net 13,031 16,309 16,423 16,437 16,455
Total net
real
estate
invest-
ments 1,071,132 1,045,729 1,021,010 963,033 697,745
Cash and cash
equivalents 3,365 3,805 8,880 1,723 82,104
Escrow deposits
and restricted
cash 25,710 16,757 18,358 18,984 7,575
Deferred
financing
costs, net 13,550 11,738 11,423 12,443 13,465
Notes receivable
from employees 3,216 3,269 3,251 3,609 3,772
Other 9,962 10,047 10,081 7,527 8,189
Total
assets $1,126,935 $1,091,345 $1,073,003 $1,007,319 $812,850
Liabilities and
stockholders'
equity
Liabilities:
Senior Notes
payable and
other debt $843,178 $853,774 $851,675 $782,362 $ 640,562
Deferred
revenue 12,887 13,536 14,204 14,718 15,308
Interest rate
swap
agreements 16,550 21,133 18,251 32,041 27,868
Accrued
dividend 27,498 - - - 21,614
Accrued
interest 8,743 15,261 6,718 14,525 5,821
Accounts payable
and other
accrued
liabilities 27,461 27,074 22,133 19,386 14,968
Deferred income
taxes 30,394 30,394 30,394 30,394 30,394
Total
liabil-
ities 966,711 961,172 943,375 893,426 756,535
Commitments
and
contingencies
Stockholders'
equity:
Preferred stock,
10,000 shares
authorized,
unissued - - - - -
Common stock,
$0.25 par value;
authorized 180,000
shares; 85,131
shares issued at
December 31,
2004 21,283 21,233 21,190 21,157 20,652
Capital in
excess of
par value 208,903 204,393 201,482 199,945 162,466
Unearned
compensation
on restricted
stock (633) (968) (1,235) (1,339) (748)
Accumulated
other
comprehensive
loss (9,114) (13,588) (10,129) (23,341) (18,294)
Retained
earnings
(deficit) (45,297) (64,473) (62,377) (60,740) (56,790)
175,142 146,597 148,931 135,682 107,286
Treasury stock,
532 shares at
December 31,
2004 (14,918) (16,424) (19,303) (21,789) (50,971)
Total
stock-
holders'
equity 160,224 130,173 129,628 113,893 56,315
Total
liabil-
ities
and
stock-
holders'
equity $1,126,935 $1,091,345 $1,073,003 $1,007,319 $812,850
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 2004 and 2003
(In thousands, except per share amounts)
2004 2003
Revenues:
Rental income $232,911 $189,987
Interest income from loan receivable 2,958 3,036
Interest and other income 987 1,696
Total revenues 236,856 194,719
Expenses:
Property-level operating expenses 1,337 -
General, administrative and
professional fees 16,917 15,158
Reversal of contingent liability - (20,164)
Amortization of restricted stock grants 1,207 1,274
Depreciation 49,035 39,500
Net loss on swap breakage - 5,168
Interest 66,817 61,660
Loss on extinguishment of debt 1,370 84
Interest on United States Settlement - 4,943
Total expenses 136,683 107,623
Operating income 100,173 87,096
Gain on sale of Kindred common stock - 9,039
Income before discontinued operations 100,173 96,135
Discontinued operations 20,727 66,618
Net income $120,900 $162,753
Earnings per common share:
Basic:
Income before discontinued operations $1.20 $1.21
Net income $1.45 $2.05
Diluted:
Income before discontinued operations $1.19 $1.20
Net income $1.43 $2.03
Shares used in computing earnings
per common share:
Basic 83,491 79,340
Diluted 84,352 80,094
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2004 and 2003
(In thousands)
2004 2003
Cash flows from operating activities:
Net income $120,900 $162,753
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation (including discontinued
operations) 49,238 41,943
Amortization of deferred financing costs 3,895 4,095
Amortization of restricted stock grants 1,207 1,274
Reversal of contingent liability - (20,164)
Straight-lining of rental income (2,462) (108)
Gain on sale of Kindred common stock - (9,039)
Loss on extinguishment of debt 1,370 84
Gain on sale of real estate assets
(included in discontinued operations) (19,428) (51,781)
Loss on impairment of asset (included in
discontinued operations) - 845
Amortization of deferred revenue (2,577) (3,707)
Net loss on swap breakage - 5,168
Other (2,016) (212)
Changes in operating assets and liabilities:
(Increase) decrease in escrow deposits
and restricted cash (8,965) 12,378
Increase in other assets (102) (1,892)
Increase (decrease) in accrued interest 2,922 (1,416)
Increase (decrease) in accounts payable
and accrued and other liabilities 5,976 (2,855)
Net cash provided by
operating activities 149,958 137,366
Cash flows from investing activities:
Net investment in real estate property (323,729) -
Net proceeds from sale of real estate 21,100 139,164
Proceeds from sale of Kindred common stock - 20,223
Proceeds from loan receivable 3,580 205
Purchase of furniture and equipment (202) (258)
Decrease in notes receivable from employees 556 367
Net cash (used in) provided by
investing activities (298,695) 159,701
Cash flows from financing activities:
Net change in borrowings under revolving
credit facility 39,000 (59,900)
Issuance of Senior Notes 125,000 -
Purchase of Senior Notes - (37,366)
Repayment of debt (67,011) (7,247)
Payment of swap breakage fee - (8,575)
Payment on the United States Settlement - (46,647)
Payment of deferred financing costs (5,350) (40)
Issuance of common stock 64,206 -
Proceeds from stock option exercises 17,676 22,604
Cash dividends to stockholders (103,523) (80,247)
Net cash provided by (used in)
financing activities 69,998 (217,418)
Net (decrease) increase in cash and
cash equivalents (78,739) 79,649
Cash and cash equivalents at beginning
of period 82,104 2,455
Cash and cash equivalents at end of period $3,365 $82,104
Supplemental schedule of noncash activities:
Assets and liabilities assumed from
acquisitions:
Real estate investments $103,603 $-
Escrow deposits and restricted cash 9,170 -
Other assets acquired 206 -
Debt 105,627 -
Other liabilities assumed 7,352 -
SUPPLEMENTAL DATA
Funds from Operations
FFO and normalized FFO for the four quarters and year ended December 31,
2004 (in thousands, except per share amounts):
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
Net income $23,275 $25,654 $25,297 $46,674 $120,900
Adjustments:
Depreciation
on real
estate
assets 10,722 11,991 13,102 12,832 48,647
Other items:
Discontinued
operations:
Depreciation
on real
estate
assets 51 51 51 50 203
Gain on sale
of real
estate - - - (19,428) (19,428)
FFO 34,048 37,696 38,450 40,128 150,322
Loss on
extinguishment
of debt - - 1,370 - 1,370
Normalized
FFO $34,048 $37,696 $39,820 $40,128 $151,692
Per diluted share:
Net income $0.28 $0.30 $ 0.30 $0.55 $1.43
Adjustments:
Depreciation
on real
estate
assets 0.13 0.15 0.15 0.15 0.58
Other items:
Discontinued
operations:
Depreciation
on real
estate
assets - - - - -
Gain on sale
of real
estate - - - (0.23) (0.23)
FFO 0.41 0.45 0.45 0.47 1.78
Loss on
extinguishment
of debt - - 0.02 - 0.02
Normalized
FFO $0.41 $0.45 $ 0.47 $0.47 $ 1.80
Projected FFO per diluted share for the year ending December 31, 2005:
GUIDANCE
December 31, 2005
Net income $1.25 - $1.28
Adjustments:
Depreciation on real estate assets 0.64 - 0.65
FFO $1.89 - $1.93
Normalized FFO $1.89 - $1.93
Historical cost accounting for real estate assets implicitly assumes that
the value of real estate assets diminishes predictably over time. Since
real estate values instead have historically risen or fallen with market
conditions, many industry investors have considered presentations of
operating results for real estate companies that use historical cost
accounting to be insufficient by themselves. To overcome this problem,
the Company considers FFO an appropriate measure of performance of an
equity REIT and uses the National Association of Real Estate Investment
Trusts ("NAREIT") definition of FFO. NAREIT defines FFO as net income,
computed in accordance with accounting principles generally accepted in
the United States ("GAAP"), excluding gains (or losses) from sales of
property, plus real estate depreciation and amortization and after
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect FFO on the same basis.
FFO presented herein is not necessarily comparable to FFO presented by
other real estate companies due to the fact that not all real estate
companies use the same definition. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP), as an
indicator of the Company's financial performance, as an alternative to
cash flow from operating activities (determined in accordance with GAAP)
or as a measure of the Company's liquidity, nor is FFO necessarily
indicative of sufficient cash flow to fund all of the Company's needs. The
Company believes that in order to facilitate a clear understanding of the
consolidated historical operating results of the Company, FFO should be
examined in conjunction with net income as presented elsewhere in this
Press Release.
Pro Forma Net Debt to EBITDA
The following pro forma information considers the effect on net income,
interest and depreciation as if the Company had consummated the
acquisition of two properties and the sale of two properties during the
fourth quarter 2004 as of the beginning of the three month period ended
December 31, 2004. The following table illustrates net debt to pro forma
earnings before interest, income taxes, depreciation and amortization
("EBITDA") for the three months ended December 31, 2004 (dollars in
thousands):
Three Months Ended
December 31,
2004
Pro forma net income $26,714
Add back:
Pro forma interest 18,197
Pro forma depreciation 13,103
Amortization of restricted stock grants 336
Pro forma EBITDA $58,350
Pro forma annualized EBITDA $233,400
Debt $843,178
Cash (3,365)
Restricted cash pertaining to debt (6,896)
Escrow deposits pertaining to Section 1031
Exchange (9,500)
Net debt $823,417
Net debt to pro forma annualized EBITDA 3.5x
The Company considers EBITDA a profitability measure which indicates the
Company's ability to service debt. The Company considers the Net Debt to
EBITDA ratio a useful measure to evaluate the Company's ability to pay its
indebtedness. EBITDA presented herein is not necessarily comparable to
EBITDA presented by other companies due to the fact that not all companies
use the same definition. EBITDA should not be considered as an
alternative to net income (determined in accordance with GAAP), as an
indicator of the Company's financial performance, as an alternative to
cash flow from operating activities (determined in accordance with GAAP),
as a measure of the Company's liquidity, nor is EBITDA necessarily
indicative of sufficient cash flow to fund all of the Company's needs.
The Company believes that in order to facilitate a clear understanding of
the consolidated historical operating results of the Company, EBITDA
should be examined in conjunction with net income as presented elsewhere
in this Press Release.
Ventas, Inc.
2004 QUARTERLY STATEMENTS OF INCOME
(in thousands, except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
Revenues:
Rental
income $52,906 $58,368 $60,310 $61,327 $232,911
Interest
income
from loan
receivable 756 755 763 684 2,958
Interest and
other income 281 302 189 215 987
Total
revenues 53,943 59,425 61,262 62,226 236,856
Expenses:
Property-level
operating
expenses 207 290 372 468 1,337
General,
administrative
and professional
fees 4,338 4,416 4,047 4,116 16,917
Amortization of
restricted
stock grants 271 279 321 336 1,207
Depreciation 10,807 12,085 13,204 12,939 49,035
Interest 15,229 16,891 16,848 17,849 66,817
Loss on
extinguishment
of debt - - 1,370 - 1,370
Total
expenses 30,852 33,961 36,162 35,708 136,683
Operating
income 23,091 25,464 25,100 26,518 100,173
Discontinued
operations 184 190 197 20,156 20,727
Net income $ 23,275 $25,654 $25,297 $46,674 $120,900
Weighted
average number
of shares
outstanding,
basic 81,703 83,820 84,073 84,532 83,491
Weighted
average number
of shares
outstanding,
diluted 82,760 84,565 84,889 85,180 84,352
Earnings per
common share:
Basic:
Income
before
discontinued
operations $0.28 $0.30 $0.30 $0.32 $1.20
Discontinued
operations 0.00 0.01 0.00 0.24 0.25
Net
income $0.28 $0.31 $0.30 $0.56 $1.45
Diluted:
Income
before
discontinued
operations $0.28 $0.30 $0.30 $0.31 $1.19
Discontinued
operations 0.00 0.00 0.00 0.24 0.24
Net
income $0.28 $0.30 $0.30 $0.55 $1.43
Discontinued
Operations
Revenues $334 $342 $346 $370 $1,392
Interest and
other income - - - 500 500
Interest 99 101 98 92 390
Depreciation 51 51 51 50 203
Income before
gain on sale
of real
estate 184 190 197 728 1,299
Gain on sale
of real
estate - - - 19,428 19,428
Discontinued
oper-
ations $184 $190 $197 $20,156 $20,727
Ventas, Inc.
2003 QUARTERLY STATEMENTS OF INCOME
(in thousands, except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
Revenues:
Rental
income $45,479 $46,413 $49,021 $49,074 $189,987
Interest
income from
loan
receivable 747 758 766 765 3,036
Interest and
other income 492 553 280 371 1,696
Total
revenues 46,718 47,724 50,067 50,210 194,719
Expenses:
General,
administrative
and
professional
fees 3,900 3,782 3,552 3,924 15,158
Reversal of
contingent
liability (20,164) - - - (20,164)
Amortization of
restricted
stock grants 291 310 309 364 1,274
Depreciation 9,873 9,870 9,897 9,860 39,500
Net loss on
swap breakage - - - 5,168 5,168
Interest 15,830 15,925 14,209 15,696 61,660
Loss on
extinguishment
of debt - - - 84 84
Interest on
United States
Settlement 1,182 3,761 - - 4,943
Total
expenses 10,912 33,648 27,967 35,096 107,623
Operating
income 35,806 14,076 22,100 15,114 87,096
Gain on sale of
Kindred
common stock - 922 8,117 - 9,039
Income before
discontinued
operations 35,806 14,998 30,217 15,114 96,135
Discontinued
operations 1,482 1,131 1,995 62,010 66,618
Net
income $ 37,288 $16,129 $32,212 $77,124 $162,753
Weighted
average
number of
shares
outstanding,
basic 78,834 78,935 79,389 80,187 79,340
Weighted
average
number of
shares
outstanding,
diluted 79,296 79,575 80,258 81,232 80,094
Earnings per
common share:
Basic:
Income
before
discontinued
operations $0.45 $0.19 $0.38 $0.19 $1.21
Discontinued
operations 0.02 0.01 0.03 0.78 0.84
Net
income $0.47 $0.20 $0.41 $0.97 $2.05
Diluted:
Income
before
discontinued
operations $0.45 $0.19 $0.38 $0.18 $1.20
Discontinued
operations 0.02 0.01 0.02 0.78 0.83
Net
income $0.47 $0.20 $0.40 $0.96 $2.03
Discontinued
Operations
Revenues $3,705 $4,487 $1,595 $1,723 $11,510
Interest and
other income - 4,116 - 6,000 10,116
Interest 1,295 1,290 479 437 3,501
Depreciation 928 928 341 246 2,443
Loss on
impairment of
asset held
for sale - - 845 - 845
Income (loss)
before gain
(loss) on sale
of real
estate 1,482 6,385 (70) 7,040 14,837
Gain (loss)
on sale of
real estate - (5,254) 2,065 54,970 51,781
Discontinued
operations $1,482 $1,131 $1,995 $62,010 $66,618
Portfolio of Properties
The following information provides an overview of the Company's portfolio
of healthcare properties as of and for the year ended December 31, 2004
(dollars in thousands):
As of and for the Year Ended December 31, 2004
Portfolio
by Type # of # of Percent of Total # of
Properties Beds/Units Revenue Revenues(1) States
Healthcare
properties:
Skilled nursing
facilities 201 25,532 $135,854 57.4% 31
Hospitals 40 3,557 70,517 29.8% 19
Senior housing
facilities 30 3,684 22,364 9.4% 13
Other facilities 16 122 4,176 1.7% 4
Total 287 32,895 $232,911 98.3% 39
Other real
estate
investments:
Loan receivable 25 1,983 $2,958
(1) The remainder of our total revenues is interest income from loan
receivable and interest and other income.
Kindred Coverage Ratios
The following is based on data provided by Kindred to the Company or
obtained from Kindred's public filings. This information reflects
Kindred's EBITDARM and EBITDAR coverage by Master Lease:
TTM (1) TTM (1)
EBITDARM EBITDAR
Master Lease Coverage (2) Coverage (3)
1 2.9 2.3
2 2.6 2.0
3 2.1 1.5
4 1.9 1.3
5 1.9 1.4
Portfolio 2.4 1.8
(1) Trailing Twelve Months EBITDARM and EBITDAR for the period ended
September 30, 2004 (the latest available data provided by Kindred) to
the Company's Trailing Twelve Months cash rental revenue.
(2) Coverage reflects the ratio of Kindred's EBITDARM to rent. EBITDARM
is defined as earnings before interest, income taxes, depreciation,
amortization, rent and management fees. In the calculation of Trailing
Twelve Months EBITDARM, intercompany profit pertaining to services
provided by Kindred's PeopleFirst Rehabilitation and Pharmacy
Divisions for the nine months ended September 30, 2004 has been
eliminated from purchased ancillary expenses within the Ventas
portfolio.
(3) Coverage reflects the ratio of Kindred's EBITDAR to rent. EBITDAR is
defined as earnings before interest, income taxes, depreciation,
amortization and rent but after deducting a five percent management
fee. In the calculation of Trailing Twelve Months EBITDAR,
intercompany profit pertaining to Kindred's PeopleFirst Rehabilitation
and Pharmacy Divisions for the nine months ended September 30, 2004
has been eliminated from purchased ancillary expenses within the
Ventas portfolio.
Scheduled Maturities of Borrowing Arrangements
The Company's indebtedness has the following maturities as of December 31,
2004 (in thousands):
2005 $4,793
2006 215,752
2007 40,884
2008 2,019
2009 206,440
Thereafter 373,290
Total $843,178
- END -
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