Ventas(VTR) - 2022 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Presents Ventas, Inc.'s unaudited consolidated financial statements and management's discussion and analysis for the first quarter Item 1. Consolidated Financial Statements (Unaudited) Presents Ventas, Inc.'s unaudited consolidated financial statements for Q1 2022 and 2021, covering balance sheets, income, equity, and cash flow statements, with detailed notes Consolidated Balance Sheets Presents Ventas, Inc.'s consolidated balance sheets as of March 31, 2022, and December 31, 2021, detailing assets, liabilities, and equity | Metric | As of March 31, 2022 (in thousands) | As of December 31, 2021 (in thousands) | | :--------------------------------- | :----------------------------------- | :------------------------------------ | | Total Assets | $24,950,107 | $24,717,786 | | Total Liabilities | $13,843,732 | $13,491,743 | | Total Equity | $10,792,690 | $10,945,760 | - Net real estate property increased from $21,816,838 thousand at December 31, 2021, to $21,982,221 thousand at March 31, 2022[9] - Senior notes payable and other debt increased from $12,027,544 thousand at December 31, 2021, to $12,413,743 thousand at March 31, 2022[9] Consolidated Statements of Income Presents Ventas, Inc.'s consolidated statements of income for the three months ended March 31, 2022 and 2021 | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total Revenues | $1,017,554 | $910,291 | | Total Expenses | $979,638 | $965,819 | | Net Income (Loss) | $40,592 | $(55,398) | | Net Income (Loss) Attributable to Common Stockholders | $38,732 | $(57,209) | | Basic EPS | $0.10 | $(0.15) | | Diluted EPS | $0.10 | $(0.15) | - Total revenues increased by $107,263 thousand (11.8%) from $910,291 thousand in Q1 2021 to $1,017,554 thousand in Q1 2022[12] - The company swung from a net loss of $(55,398) thousand in Q1 2021 to a net income of $40,592 thousand in Q1 2022[12] Consolidated Statements of Comprehensive Income Presents Ventas, Inc.'s consolidated statements of comprehensive income for the three months ended March 31, 2022 and 2021 | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Income (Loss) | $40,592 | $(55,398) | | Total Other Comprehensive Income | $9,135 | $4,773 | | Comprehensive Income (Loss) | $49,727 | $(50,625) | | Comprehensive Income (Loss) Attributable to Common Stockholders | $43,955 | $(55,351) | - Total other comprehensive income increased significantly from $4,773 thousand in Q1 2021 to $9,135 thousand in Q1 2022, primarily due to unrealized gain on derivative instruments[14] Consolidated Statements of Equity Presents Ventas, Inc.'s consolidated statements of equity for the three months ended March 31, 2022 and 2021 | Metric | As of March 31, 2022 (in thousands) | As of January 1, 2022 (in thousands) | | :----------------------------------- | :---------------------------------- | :--------------------------------- | | Total Ventas Stockholders' Equity | $10,697,406 | $10,854,385 | | Total Equity | $10,792,690 | $10,945,760 | - Total Ventas stockholders' equity decreased by $156,979 thousand from January 1, 2022, to March 31, 2022, primarily due to dividends to common stockholders of $180,496 thousand and adjustment of redeemable OP unitholder interests[17] Consolidated Statements of Cash Flows Presents Ventas, Inc.'s consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net Cash Provided by Operating Activities | $274,553 | $237,593 | | Net Cash Used in Investing Activities | $(437,326) | $(102,612) | | Net Cash Provided by (Used in) Financing Activities | $165,382 | $(377,067) | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | $2,609 | $(242,086) | - Net cash provided by operating activities increased by $36,960 thousand (15.6%) YoY, driven by increased net operating income at senior housing communities and HHS grants[20][229] - Net cash used in investing activities significantly increased by $334,714 thousand YoY, primarily due to $349.2 million in acquisitions of MOBs, a behavioral health center, and a senior housing community[20][230] - Net cash provided by financing activities swung from a use of $(377,067) thousand in Q1 2021 to a provision of $165,382 thousand in Q1 2022, mainly due to debt repayment in 2021 and increased commercial paper borrowings in 2022[20][231] Notes to Consolidated Financial Statements Provides detailed explanations of Ventas, Inc.'s accounting policies, business segments, and financial instrument fair values NOTE 1—DESCRIPTION OF BUSINESS Describes Ventas, Inc.'s business as an S&P 500 REIT focused on healthcare real estate, its property portfolio, and operational segments - Ventas, Inc. is an S&P 500 REIT focused on healthcare real estate, including senior housing, medical office buildings (MOBs), life science, research and innovation centers, and hospitals[25] - As of March 31, 2022, the company owned or had investments in approximately 1,300 properties across the United States, Canada, and the United Kingdom[25] - Operations are divided into three reportable segments: triple-net leased properties, senior living operations (SHOP), and office operations[26] - The COVID-19 pandemic continues to impact the business, with $34.0 million and $13.6 million in Provider Relief Grants received in Q1 2022 and Q1 2021, respectively, recognized as a reduction in property-level operating expenses[30][32][34] NOTE 2—ACCOUNTING POLICIES Outlines the accounting principles and methods used in preparing Ventas, Inc.'s financial statements, including consolidation, fair value measurements, and revenue recognition - The financial statements are prepared in accordance with U.S. GAAP for interim financial information and SEC instructions to Form 10-Q[36] - The company consolidates wholly-owned subsidiaries and joint ventures where it exercises control, including certain Variable Interest Entities (VIEs) where it is the primary beneficiary[37][38][42] Total Assets and Liabilities of Consolidated VIEs (in thousands) | VIE Type | As of March 31, 2022 - Total Assets | As of March 31, 2022 - Total Liabilities | As of December 31, 2021 - Total Assets | As of December 31, 2021 - Total Liabilities | | :--------- | :---------------------------------- | :------------------------------------- | :------------------------------------- | :--------------------------------------- | | NHP/PMB L.P. | $752,970 | $250,825 | $749,834 | $251,352 | | Other identified VIEs | $3,970,582 | $1,570,662 | $3,949,294 | $1,556,136 | | Tax credit VIEs | $452,646 | $99,701 | $458,953 | $103,992 | - Investments in unconsolidated entities are accounted for using the equity method, with fair values estimated based on discounted cash flow models[44][45] - Redeemable OP Unitholder and Noncontrolling Interests are classified outside of permanent equity and valued at the greater of cost or redemption value[48][49][50] - Real estate acquisitions are generally accounted for as asset acquisitions, with costs allocated to tangible and intangible assets and liabilities based on estimated fair values[58] - Fair value measurements for financial instruments utilize a hierarchy of inputs (Level one, two, and three), with cash, escrow deposits, and derivative instruments primarily using Level two inputs, and certain loans/debt using Level two or three[67][68][70][76] - Long-lived and intangible assets are periodically evaluated for impairment, with losses recognized if expected future undiscounted cash flows are less than carrying value[72][73][74][75] - Rental income from triple-net and office leases is recognized on a straight-line basis, while resident fees and services are recognized monthly as provided[78][81] NOTE 3—CONCENTRATION OF CREDIT RISK Details Ventas, Inc.'s exposure to credit risk through its investment mix by asset type, tenant, and geographic location Investment Mix by Asset Type (Gross Book Value) | Asset Type | As of March 31, 2022 | | :----------------------------------- | :------------------- | | Senior housing communities | 67.0 % | | MOBs | 17.7 % | | Life science, research and innovation centers | 6.6 % | | Health systems | 4.9 % | | IRFs and LTACs | 1.5 % | | SNFs | 0.6 % | | Secured loans receivable and investments, net | 1.7 % | | Total | 100.0 % | Investment Mix by Tenant, Operator and Manager (Gross Book Value) | Tenant, Operator, Manager | As of March 31, 2022 | | :------------------------ | :------------------- | | Atria | 26.7 % | | Sunrise | 9.9 % | | Brookdale Senior Living | 7.7 % | | Le Groupe Maurice | 7.3 % | | Ardent | 5.3 % | | Kindred | 0.8 % | | All other | 42.3 % | | Total | 100.0 % | - Properties in California accounted for over 10% of total consolidated revenues and net operating income (NOI) for the three months ended March 31, 2022[88] Triple-Net Leased Properties Concentration Risk (Revenues & NOI) | Tenant | Q1 2022 Revenues | Q1 2021 Revenues | Q1 2022 NOI | Q1 2021 NOI | | :------------------ | :--------------- | :--------------- | :---------- | :---------- | | Brookdale Senior Living | 3.7 % | 4.1 % | 7.8 % | 8.8 % | | Ardent | 3.2 % | 3.5 % | 6.8 % | 7.5 % | | Kindred | 3.3 % | 3.6 % | 7.0 % | 7.8 % | - Kindred Healthcare, LLC's lease term for six LTACs ends April 30, 2023, with annual rent of $31.9 million for the 12 months ending March 31, 2022[91] - Ventas and Sunrise Senior Living entered into a revised management agreement for 92 communities, expiring May 31, 2035, with performance-based management and incentive fees[94] NOTE 4—ACQUISITIONS OF REAL ESTATE PROPERTY Summarizes Ventas, Inc.'s real estate acquisitions during Q1 2022 and subsequent periods - In Q1 2022, Ventas acquired 18 MOBs, one behavioral health center, and one senior housing community for an aggregate purchase price of $349.2 million[98] - Subsequent to March 31, 2022, the company acquired one research and innovation center in Philadelphia, Pennsylvania for $46.1 million[98] NOTE 5—DISPOSITIONS AND IMPAIRMENTS Details Ventas, Inc.'s property dispositions and impairment charges recognized during Q1 2022 - In Q1 2022, Ventas sold one vacant land parcel for $5.6 million, recognizing a gain of $2.2 million[100] Assets Held for Sale (in thousands) | Segment | Number of Properties (March 31, 2022) | Assets Held for Sale (March 31, 2022) | Liabilities Related to Assets Held for Sale (March 31, 2022) | | :-------------------- | :------------------------------------ | :------------------------------------ | :----------------------------------------------------------- | | Office Operations | 2 | $3,098 | $1,558 | | Senior Living Operations | 2 | $23,133 | $6,853 | | Total | 4 | $26,231 | $8,411 | - Impairments recognized were $14.3 million in Q1 2022, a significant decrease from $78.5 million in Q1 2021, primarily due to changes in intent to hold or expected future cash flows of properties[102] NOTE 6—LOANS RECEIVABLE AND INVESTMENTS Provides a breakdown of Ventas, Inc.'s loans receivable and investments, net, including their amortized cost, carrying amount, and fair value Loans Receivable and Investments, Net (in thousands) | Category | Amortized Cost (March 31, 2022) | Carrying Amount (March 31, 2022) | Fair Value (March 31, 2022) | | :----------------------------------- | :------------------------------ | :------------------------------- | :-------------------------- | | Secured/mortgage loans and other, net | $488,827 | $488,827 | $483,491 | | Government-sponsored pooled loan investments, net | $40,312 | $41,561 | $41,561 | | Non-mortgage loans receivable, net | $29,449 | $24,116 | $23,826 | | Total loans receivable and investments, net | $558,588 | $554,504 | $548,878 | - Net loans receivable and investments increased from $549.2 million at December 31, 2021, to $554.5 million at March 31, 2022[105] NOTE 7—INVESTMENTS IN UNCONSOLIDATED ENTITIES Outlines Ventas, Inc.'s investments in unconsolidated entities, accounted for using the equity method - Ventas reports investments in unconsolidated entities under the equity method, where it has significant influence but not control[106] Investments in Unconsolidated Real Estate Entities (in thousands) | Entity | Ownership (March 31, 2022) | Carrying Amount (March 31, 2022) | | :----------------------------------- | :------------------------- | :------------------------------- | | Ventas Life Science & Healthcare Real Estate Fund | 21.1% | $264,675 | | Pension Fund Joint Venture | 22.9% | $28,248 | | Research & Innovation Development Joint Venture | 51.1% | $244,115 | | Ventas Investment Management Platform | | $537,038 | | All other | 34.0%-50.0% | $4,876 | | Total investments in unconsolidated real estate entities | | $541,914 | - Total management fees earned from these services were $3.5 million in Q1 2022, up from $2.7 million in Q1 2021[110] - Ventas holds a 34% ownership interest in Atria and a 9.8% ownership interest in Ardent, both unconsolidated operating entities[111] NOTE 8—INTANGIBLES Presents a summary of Ventas, Inc.'s net intangible assets and liabilities, including their weighted average remaining amortization periods Net Intangible Assets (in thousands) | Category | Balance (March 31, 2022) | Weighted Average Remaining Amortization Period (Years) | | :----------------------------------- | :----------------------- | :----------------------------------------------------- | | Above-market lease intangibles | $129,118 | 5.8 | | In-place and other lease intangibles | $1,244,246 | 7.1 | | Goodwill | $1,045,663 | N/A | | Other intangibles | $34,536 | 6.3 | | Accumulated amortization | $(977,491) | N/A | | Net intangible assets | $1,476,072 | 7.0 | Net Intangible Liabilities (in thousands) | Category | Balance (March 31, 2022) | Weighted Average Remaining Amortization Period (Years) | | :----------------------------------- | :----------------------- | :----------------------------------------------------- | | Below-market lease intangibles | $334,347 | 9.5 | | Other lease intangibles | $13,498 | N/A | | Accumulated amortization | $(248,092) | N/A | | Purchase option intangibles | $3,568 | N/A | | Net intangible liabilities | $103,321 | 9.5 | - Net intangible assets decreased from $1,506,001 thousand at December 31, 2021, to $1,476,072 thousand at March 31, 2022[114] NOTE 9—OTHER ASSETS Provides a detailed breakdown of Ventas, Inc.'s other assets as of March 31, 2022, and December 31, 2021 Other Assets (in thousands) | Category | As of March 31, 2022 | As of December 31, 2021 | | :----------------------------------- | :------------------- | :---------------------- | | Straight-line rent receivables | $179,997 | $176,877 | | Non-mortgage loans receivable, net | $24,116 | $19,024 | | Stock warrants | $77,452 | $48,884 | | Other intangibles, net | $7,072 | $7,270 | | Investment in unconsolidated operating entities | $71,511 | $73,602 | | Other | $252,943 | $239,412 | | Total other assets | $613,091 | $565,069 | - Total other assets increased by $48,022 thousand from December 31, 2021, to March 31, 2022, primarily driven by an increase in stock warrants and other miscellaneous assets[116] - Stock warrants represent 16.3 million shares of Brookdale Senior Living common stock exercisable at $3.00 per share, with changes in fair value recognized in other expense[116] NOTE 10—SENIOR NOTES PAYABLE AND OTHER DEBT Details Ventas, Inc.'s senior notes payable and other debt, including changes, credit facilities, commercial paper, and maturity schedules Senior Notes Payable and Other Debt (in thousands) | Category | As of March 31, 2022 | As of December 31, 2021 | | :----------------------------------- | :------------------- | :---------------------- | | Senior notes payable and other debt | $12,413,743 | $12,027,544 | - Total senior notes payable and other debt increased by $386,199 thousand from December 31, 2021, to March 31, 2022[118] - The company has a $2.75 billion unsecured revolving credit facility maturing in January 2025, with $2.7 billion undrawn capacity as of March 31, 2022[121][122] - Ventas Realty has a commercial paper program with a maximum aggregate amount of $1.0 billion, with $636.9 million outstanding as of March 31, 2022[123] Debt Maturities as of March 31, 2022 (in thousands) | Year | Principal Amount Due at Maturity | Commercial Paper Notes | Scheduled Periodic Amortization | Total Maturities | | :--- | :------------------------------- | :--------------------- | :------------------------------ | :--------------- | | 2022 | $342,600 | $636,948 | $40,477 | $1,020,025 | | 2023 | $700,088 | — | $40,291 | $740,379 | | 2024 | $1,666,791 | — | $34,504 | $1,701,295 | | 2025 | $2,052,522 | $46,037 | $28,354 | $2,126,913 | | 2026 | $1,036,035 | — | $21,441 | $1,057,476 | | Thereafter | $5,713,952 | — | $117,836 | $5,831,788 | | Total | $11,511,988 | $682,985 | $282,903 | $12,477,876 | NOTE 11—FAIR VALUES OF FINANCIAL INSTRUMENTS Presents the carrying amounts and fair values of Ventas, Inc.'s financial instruments as of March 31, 2022, and December 31, 2021 Fair Values of Financial Instruments (in thousands) | Instrument | Carrying Amount (March 31, 2022) | Fair Value (March 31, 2022) | Carrying Amount (December 31, 2021) | Fair Value (December 31, 2021) | | :----------------------------------- | :------------------------------- | :-------------------------- | :---------------------------------- | :----------------------------- | | Cash and cash equivalents | $149,599 | $149,599 | $149,725 | $149,725 | | Escrow deposits and restricted cash | $49,848 | $49,848 | $46,872 | $46,872 | | Stock warrants | $77,452 | $77,452 | $48,884 | $48,884 | | Secured mortgage loans and other, net | $488,827 | $483,491 | $488,913 | $478,931 | | Non-mortgage loans receivable, net | $24,116 | $23,826 | $19,024 | $19,039 | | Government-sponsored pooled loan investments, net | $41,561 | $41,561 | $41,213 | $41,213 | | Derivative instruments (assets) | $10,410 | $10,410 | $1,128 | $1,128 | | Senior notes payable and other debt, gross | $12,477,876 | $12,518,899 | $12,093,138 | $12,891,937 | | Derivative instruments (liabilities) | $2,571 | $2,571 | $12,290 | $12,290 | | Redeemable OP Units | $217,225 | $217,225 | $182,112 | $182,112 | - The fair value of derivative instruments (assets) increased significantly from $1,128 thousand at December 31, 2021, to $10,410 thousand at March 31, 2022[128] - The fair value of senior notes payable and other debt, gross, decreased from $12,891,937 thousand at December 31, 2021, to $12,518,899 thousand at March 31, 2022, despite an increase in carrying amount[128] NOTE 12—COMMITMENTS AND CONTINGENCIES Discusses Ventas, Inc.'s involvement in various legal proceedings and management's assessment of their potential impact - Ventas is party to various lawsuits, investigations, claims, and other legal and regulatory proceedings arising in connection with its business[130] - Management believes the disposition of currently pending legal matters will not have a material adverse effect on the company, but significant financial resources may be expended to defend and resolve these matters[131] NOTE 13—INCOME TAXES Outlines Ventas, Inc.'s tax status as a REIT and the consolidated provision for income taxes for Q1 2022 and 2021 - Ventas has elected to be taxed as a REIT since 1999, with certain subsidiaries treated as taxable REIT subsidiaries (TRS) subject to federal, state, and foreign income taxes[133] - The consolidated provision for income taxes was a benefit of $4.5 million for Q1 2022, compared to an expense of $2.2 million for Q1 2021, primarily due to losses in TRS entities and a restructuring benefit[135] - Deferred tax liabilities for TRS entities totaled $52.8 million at March 31, 2022, down from $59.3 million at December 31, 2021[136] NOTE 14—STOCKHOLDERS' EQUITY Details Ventas, Inc.'s stockholders' equity, including its ATM equity offering program and accumulated other comprehensive loss - Ventas has an 'at-the-market' (ATM) equity offering program with $1.0 billion aggregate gross sales price of common stock available for issuance as of March 31, 2022; no issuances occurred in Q1 2022[138] Accumulated Other Comprehensive Loss (in thousands) | Category | As of March 31, 2022 | As of December 31, 2021 | | :----------------------------------- | :------------------- | :---------------------- | | Foreign currency translation loss | $(66,784) | $(56,227) | | Unrealized gain on available for sale securities | $1,249 | $1,836 | | Unrealized gain (loss) on derivative instruments | $6,239 | $(10,129) | | Total accumulated other comprehensive loss | $(59,296) | $(64,520) | - Total accumulated other comprehensive loss improved from $(64,520) thousand at December 31, 2021, to $(59,296) thousand at March 31, 2022, primarily due to an unrealized gain on derivative instruments[139] NOTE 15—EARNINGS PER SHARE Presents Ventas, Inc.'s basic and diluted earnings per share calculations for the three months ended March 31, 2022 and 2021 Earnings Per Share (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) attributable to common stockholders | $38,732 | $(57,209) | | Denominator for basic EPS—weighted average shares | 399,297 | 374,669 | | Denominator for diluted EPS—adjusted weighted average shares | 403,260 | 377,922 | | Basic EPS | $0.10 | $(0.15) | | Diluted EPS | $0.10 | $(0.15) | - Basic and diluted EPS improved from a loss of $(0.15) in Q1 2021 to a gain of $0.10 in Q1 2022[141] - Weighted average shares for diluted EPS increased from 377,922 thousand in Q1 2021 to 403,260 thousand in Q1 2022, partly due to OP unitholder interests[141] NOTE 16—SEGMENT INFORMATION Provides financial information by Ventas, Inc.'s reportable business segments: triple-net leased properties, senior living operations (SHOP), and office operations - Ventas operates through three reportable business segments: triple-net leased properties, senior living operations (SHOP), and office operations[142] - Segment performance is evaluated based on segment Net Operating Income (NOI), which excludes interest expense, depreciation, amortization, and corporate-level expenses[143][146] Segment NOI for Three Months Ended March 31, 2022 (in thousands) | Segment | Total Revenues | Segment NOI | | :-------------------- | :------------- | :---------- | | Triple-Net Leased Properties | $151,561 | $147,553 | | Senior Living Operations | $651,121 | $175,591 | | Office Operations | $201,157 | $137,974 | | Non-Segment | $13,715 | $11,866 | | Total | $1,017,554 | $472,984 | Segment NOI for Three Months Ended March 31, 2021 (in thousands) | Segment | Total Revenues | Segment NOI | | :-------------------- | :------------- | :---------- | | Triple-Net Leased Properties | $159,885 | $155,060 | | Senior Living Operations | $528,650 | $110,821 | | Office Operations | $199,800 | $135,236 | | Non-Segment | $21,956 | $21,615 | | Total | $910,291 | $422,732 | Capital Expenditures by Segment (in thousands) | Segment | Q1 2022 Capital Expenditures | Q1 2021 Capital Expenditures | | :-------------------- | :--------------------------- | :--------------------------- | | Triple-Net Leased Properties | $634 | $8,218 | | Senior Living Operations | $143,403 | $48,717 | | Office Operations | $274,074 | $31,547 | | Total | $418,111 | $88,482 | - Total capital expenditures increased significantly from $88,482 thousand in Q1 2021 to $418,111 thousand in Q1 2022, primarily driven by investments in Office Operations and Senior Living Operations[149] Revenues by Geographic Location (in thousands) | Country | Q1 2022 Revenues | Q1 2021 Revenues | | :-------------- | :--------------- | :--------------- | | United States | $897,933 | $797,768 | | Canada | $112,144 | $105,033 | | United Kingdom | $7,477 | $7,490 | | Total Revenues | $1,017,554 | $910,291 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's analysis of Ventas, Inc.'s Q1 2022 financial condition and results, covering business, risk, segment performance, non-GAAP measures, and liquidity Company Overview Describes Ventas, Inc.'s business as an S&P 500 REIT specializing in a diversified portfolio of healthcare real estate and its strategic goals - Ventas, Inc. is an S&P 500 REIT specializing in a diversified portfolio of healthcare real estate, including senior housing, MOBs, and life science centers, with approximately 1,300 properties across the US, Canada, and UK[156] - The company operates through three segments: triple-net leased properties, senior living operations (SHOP), and office operations[157] - Key strategic goals include generating reliable cash flows, maintaining a diversified portfolio, and preserving financial strength, flexibility, and liquidity[161] First Quarter 2022 Highlights Summarizes Ventas, Inc.'s key operational and financial achievements during the first quarter of 2022 - Acquired 18 MOBs, one behavioral health center, and one senior housing community for $349.2 million in Q1 2022, and one research and innovation center for $46.1 million in April 2022[166] - Sold one vacant land parcel for $5.6 million, recognizing a $2.2 million gain[166] - Received $34.0 million in Provider Relief Fund grants in Q1 2022 to mitigate COVID-19 related losses in senior living operations[166] - Entered into a revised management agreement with Sunrise for 92 communities, extending the term to May 31, 2035, with performance-based fees and termination rights[166] Concentration Risk Analyzes Ventas, Inc.'s investment and operations mix by asset type, tenant/operator, and geographic location, highlighting potential risks Investment Mix by Asset Type (Gross Book Value) | Asset Type | As of March 31, 2022 | | :----------------------------------- | :------------------- | | Senior housing communities | 67.0 % | | MOBs | 17.7 % | | Life science, research and innovation centers | 6.6 % | | Health systems | 4.9 % | | IRFs and LTACs | 1.5 % | | Skilled nursing facilities ("SNFs") | 0.6 % | | Secured loans receivable and investments, net | 1.7 % | | Total | 100.0 % | Operations Mix by Tenant and Operator and Business Model (Revenues) | Category | Q1 2022 Revenues | Q1 2021 Revenues | | :----------------------------------- | :--------------- | :--------------- | | Senior living operations | 64.0 % | 58.3 % | | Brookdale Senior Living | 3.7 % | 4.1 % | | Kindred | 3.3 % | 3.6 % | | Ardent | 3.2 % | 3.5 % | | All others | 25.8 % | 30.5 % | | Total | 100.0 % | 100.0 % | Operations Mix by Geographic Location (Revenues) | Geographic Location | Q1 2022 Revenues | Q1 2021 Revenues | | :------------------ | :--------------- | :--------------- | | California | 15.0 % | 15.4 % | | New York | 7.4 % | 7.7 % | | Texas | 6.6 % | 6.0 % | | Pennsylvania | 4.8 % | 4.6 % | | North Carolina | 4.4 % | 3.7 % | | All others | 61.8 % | 62.6 % | | Total | 100.0 % | 100.0 % | Critical Accounting Policies and Estimates Discusses the significant accounting policies and estimates that require management's judgment in preparing Ventas, Inc.'s financial statements - Financial statements are prepared under U.S. GAAP, requiring management to make estimates and assumptions about future events, which are periodically reevaluated[172] - No material changes to critical accounting policies occurred in 2022[173] Results of Operations Analyzes Ventas, Inc.'s financial performance for the three months ended March 31, 2022, compared to the same period in 2021, by segment and company-wide Three Months Ended March 31, 2022 and 2021 Summarizes key financial results for Ventas, Inc. for the three months ended March 31, 2022 and 2021 Key Financial Results (in thousands) | Metric | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :----------------------------------- | :------ | :------ | :--------- | :--------- | | Total segment NOI | $472,984 | $422,732 | $50,252 | 11.9 % | | Net income (loss) attributable to common stockholders | $38,732 | $(57,209) | $95,941 | nm | - Total segment NOI increased by 11.9% YoY, primarily driven by senior living operations[177] - Net income attributable to common stockholders significantly improved, swinging from a loss of $(57,209) thousand in Q1 2021 to a gain of $38,732 thousand in Q1 2022[177] Segment NOI—Triple-Net Leased Properties Analyzes the Net Operating Income (NOI) performance of Ventas, Inc.'s triple-net leased properties segment Triple-Net Leased Properties Segment NOI (in thousands) | Metric | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :----------------------------------- | :------ | :------ | :--------- | :--------- | | Rental income | $151,561 | $159,885 | $(8,324) | (5.2)% | | Property-level operating expenses | $(4,008) | $(4,825) | $817 | 16.9 % | | Segment NOI | $147,553 | $155,060 | $(7,507) | (4.8)% | - Segment NOI for triple-net leased properties decreased by 4.8% YoY, mainly due to rental income from properties transitioned or sold, partially offset by an acquisition[179] Average Occupancy for Triple-Net Leased Properties | Property Type | Q4 2021 Average Occupancy | Q4 2020 Average Occupancy | | :-------------------- | :------------------------ | :------------------------ | | Senior housing communities | 75.2% | 79.2% | | SNFs | 79.5% | 79.7% | | IRFs and LTACs | 57.0% | 57.2% | - Same-store segment NOI for triple-net leased properties was flat YoY, with contractual escalators offset by reduced payments from select senior housing tenants due to pandemic impacts[183] Segment NOI—Senior Living Operations Analyzes the Net Operating Income (NOI) performance of Ventas, Inc.'s senior living operations (SHOP) segment Senior Living Operations Segment NOI (in thousands) | Metric | Q1 2022 | Q1 2021 | Increase (Decrease) ($) | Increase (Decrease) (%) | | :----------------------------------- | :------ | :------ | :---------------------- | :---------------------- | | Resident fees and services | $651,121 | $528,650 | $122,471 | 23.2 % | | Property-level operating expenses | $(475,530) | $(417,829) | $(57,701) | (13.8)% | | Segment NOI | $175,591 | $110,821 | $64,770 | 58.4 % | - Segment NOI for senior living operations increased by 58.4% YoY, driven by the acquisition of over 100 independent living communities from New Senior, increased occupancy, and higher HHS grants[186] Senior Living Operations Occupancy and Revenue Per Occupied Room | Metric | Q1 2022 | Q1 2021 | | :----------------------------------- | :------ | :------ | | Average Unit Occupancy | 80.0 % | 76.3 % | | Average Monthly Revenue Per Occupied Room | $4,373 | $4,649 | - Same-store senior living operations NOI increased by 25.8% YoY, benefiting from increased occupancy (83.0% in Q1 2022 vs. 78.8% in Q1 2021) and revenue per occupied room ($4,821 in Q1 2022 vs. $4,625 in Q1 2021), along with higher HHS grants[187] Segment NOI—Office Operations Analyzes the Net Operating Income (NOI) performance of Ventas, Inc.'s office operations segment Office Operations Segment NOI (in thousands) | Metric | Q1 2022 | Q1 2021 | Increase (Decrease) ($) | Increase (Decrease) (%) | | :----------------------------------- | :------ | :------ | :---------------------- | :---------------------- | | Total revenues | $201,157 | $199,800 | $1,357 | 0.7 % | | Property-level operating expenses | $(63,183) | $(63,946) | $763 | 1.2 % | | Office building and other services costs | — | $(618) | $618 | 100.0 % | | Segment NOI | $137,974 | $135,236 | $2,738 | 2.0 % | - Segment NOI for office operations increased by 2.0% YoY, driven by successful new leasing, sustained tenant retention, improved parking revenues, and recent acquisitions[190] Office Operations Occupancy and Rent Per Occupied Square Foot | Metric | Q1 2022 | Q1 2021 | | :----------------------------------- | :------ | :------ | | Occupancy | 90.5 % | 89.3 % | | Annualized Average Rent Per Occupied Square Foot | $36 | $34 | - Same-store office operations NOI increased by 7.1% YoY, attributed to contractual rent escalators, new leasing, tenant retention, and improved parking income[191] NOI—Non-Segment Analyzes the Net Operating Income (NOI) performance of Ventas, Inc.'s non-segment operations - Non-segment NOI decreased by $9.7 million YoY, primarily due to lower income from loans receivable investments as a result of repayments in 2021[192] Company Results Provides an overview of Ventas, Inc.'s overall financial results, including interest expense, depreciation, and other income/expenses - Interest expense was relatively flat YoY, with an increase from higher debt balance and lower capitalized interest offset by a lower interest rate (3.49% in Q1 2022 vs. 3.62% in Q1 2021)[193] - Depreciation and amortization decreased by $25.1 million YoY, mainly due to $78.5 million in impairments recognized in Q1 2021, partially offset by $41.9 million depreciation on New Senior assets and $14.3 million impairments in Q1 2022[194] - General, administrative and professional fees increased by $2.7 million YoY, due to New Senior's overhead and a return to a more normalized business environment[195] - Loss on extinguishment of debt decreased by $27.1 million YoY, as Q1 2021 included a make-whole redemption of $400.0 million senior notes[196] - Transaction expenses and deal costs increased by $15.4 million YoY, primarily due to $12.0 million in stockholder relations matters and operator transition costs[197] - Allowance on loans receivable and investments decreased by $8.8 million YoY, due to a change in credit loss estimates and corresponding allowance reversal in Q1 2021[198] - Other income increased by $17.8 million YoY, driven by $8.6 million in insurance proceeds and a $7.6 million unrealized gain on stock warrants[199] - Loss from unconsolidated entities increased by $4.0 million YoY, due to Ventas's share of increased net losses from investees[200] - Income tax benefit of $4.5 million in Q1 2022 compared to an expense of $2.2 million in Q1 2021, primarily due to TRS operating losses and a tax credit structure unwind benefit[202] Non-GAAP Financial Measures Explains Ventas, Inc.'s use of non-GAAP financial measures like FFO, Normalized FFO, and NOI to provide additional insights into operating performance - Ventas uses non-GAAP financial measures like Funds From Operations (FFO) and Normalized FFO to supplement GAAP measures, providing insights into operating performance and comparability across periods and companies[203][205] - FFO is defined by Nareit as net income attributable to common stockholders, excluding gains/losses from real estate sales, impairment losses, and real estate depreciation/amortization, with adjustments for unconsolidated entities[206] - Normalized FFO further excludes specific recurring and non-recurring items such as transaction costs, debt extinguishment impacts, non-cash tax effects, and changes in fair value of financial instruments[206][207] FFO and Normalized FFO Attributable to Common Stockholders (in thousands) | Metric | Q1 2022 | Q1 2021 | | :----------------------------------- | :------ | :------ | | FFO attributable to common stockholders | $327,213 | $252,527 | | Normalized FFO attributable to common stockholders | $316,655 | $270,477 | - Normalized FFO increased by $46,178 thousand (17.1%) YoY, primarily due to increased net operating income in senior housing communities, improved occupancy, higher revenue per occupied room, acquisitions, and higher HHS grants, partially offset by lower interest income on loan investments[208] - NOI is defined as total revenues less interest and other income, property-level operating expenses, and office building and other services costs, used to assess unlevered property-level operating results[210] Reconciliation of Net Income to NOI (in thousands) | Metric | Q1 2022 | Q1 2021 | | :----------------------------------- | :------ | :------ | | Net income (loss) attributable to common stockholders | $38,732 | $(57,209) | | NOI | $472,984 | $422,732 | Liquidity and Capital Resources Discusses Ventas, Inc.'s principal liquidity sources, capital needs, credit facilities, and cash flow activities - Principal liquidity sources include cash flows from operations, debt and equity issuances, unsecured revolving credit facility borrowings, and asset sales[215] - Key liquidity needs for the next 12 months include funding operating expenses, debt service, debt repayment, acquisitions, development, capital expenditures, and REIT distributions[216] - The company has a $2.75 billion unsecured revolving credit facility with $2.7 billion undrawn capacity and a $1.0 billion commercial paper program with $636.9 million outstanding as of March 31, 2022[219][220][221] - Ventas declared a dividend of $0.45 per share for Q1 2022 and intends to pay dividends greater than 100% of its taxable income to maintain REIT qualification[226][227] Cash Flows Summary (in thousands) | Metric | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :----------------------------------- | :------ | :------ | :--------- | :--------- | | Net cash provided by operating activities | $274,553 | $237,593 | $36,960 | 15.6 % | | Net cash used in investing activities | $(437,326) | $(102,612) | $(334,714) | nm | | Net cash provided by (used in) financing activities | $165,382 | $(377,067) | $542,449 | 143.9 % | - Cash flows from operating activities increased by $37.0 million YoY, driven by increased NOI in senior housing and HHS grants[229] - Cash flows from investing activities decreased by $334.7 million YoY, primarily due to $349.2 million in acquisitions[230] - Cash flows from financing activities increased by $542.4 million YoY, mainly due to the Q1 2021 redemption of $400.0 million senior notes and increased commercial paper borrowings in Q1 2022[231] - As of March 31, 2022, Ventas had 15 properties under development, including six owned by an unconsolidated real estate entity[234] Guarantor and Issuer Financial Information Provides condensed consolidating financial information for Ventas, Inc. and its guarantor and issuer subsidiaries - Ventas, Inc. fully and unconditionally guarantees senior notes issued by its 100% owned subsidiaries, Ventas Realty and Ventas Canada Finance Limited[236][237] Guarantor and Issuer Balance Sheet Information (in thousands) | Category | Guarantor (March 31, 2022) | Issuer (March 31, 2022) | | :----------------------------------- | :------------------------- | :---------------------- | | Total assets | $17,922,405 | $3,155,639 | | Total liabilities | $11,537,000 | $4,133,468 | | Total equity (deficit) | $6,288,759 | $(977,829) | Guarantor and Issuer Statement of Income Information (in thousands) | Metric | Guarantor (Q1 2022) | Issuer (Q1 2022) | | :----------------------------------- | :------------------ | :--------------- | | Total revenues | $46,321 | $36,683 | | Net income (loss) attributable to common stockholders | $38,732 | $(40,293) | Item 3. Quantitative and Qualitative Disclosures About Market Risk Discusses Ventas, Inc.'s market risk exposure from interest rate and foreign currency fluctuations, and mitigation strategies - Ventas is exposed to market risk from changes in interest rates on variable rate debt (revolving credit facility, term loans, floating rate mortgages) and foreign currency exchange rates[246][254] - The fair value of fixed rate debt is sensitive to market interest rate changes; a hypothetical 100 basis point increase in interest rates would decrease the fair value of fixed rate debt by approximately $526.29 million as of March 31, 2022[248][249] Debt Composition (in thousands) | Category | Balance (March 31, 2022) | Percentage of Total Debt (March 31, 2022) | Weighted Average Interest Rate (March 31, 2022) | | :----------------------------------- | :----------------------- | :---------------------------------------- | :---------------------------------------------- | | Fixed rate debt | $11,065,729 | 88.7 % | 3.7 % | | Variable rate debt | $1,412,147 | 11.3 % | 1.4 % | | Total | $12,477,876 | 100.0 % | 3.4 % | - A hypothetical 100 basis point increase in the weighted average interest rate on variable rate debt would increase annualized interest expense by approximately $13.5 million, or $0.03 per diluted common share[252] - Foreign currency exchange rate fluctuations are mitigated through hedging, with a less than $0.01 per share impact on Normalized FFO for a one standard deviation change in exchange rates[254] Item 4. Controls and Procedures Management concluded Ventas, Inc.'s disclosure controls were effective as of March 31, 2022, with no material changes in internal controls during Q1 2022 - Disclosure controls and procedures were deemed effective at a reasonable assurance level as of March 31, 2022[255] - No material changes in internal controls over financial reporting occurred during Q1 2022[256] PART II—OTHER INFORMATION Presents other information for Ventas, Inc., including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings Incorporates legal proceedings information from Note 12, confirming no new material developments since the 2021 Annual Report - Information on legal proceedings is incorporated from Note 12, which states that management believes current lawsuits, investigations, and claims will not have a material adverse effect[131][259] - No new material legal proceedings or material developments in previously reported legal proceedings occurred since the 2021 Annual Report[259] Item 1A. Risk Factors Supplements 2021 Annual Report risk factors, highlighting potential adverse impacts of activist investors on business, management, and stock price - The section updates risk factors from the 2021 Annual Report, emphasizing that activist investors could lead to substantial costs, divert management's attention, and negatively affect business, reputation, and stock price volatility[260][261] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details Q1 2022 common stock repurchases, primarily for tax withholding on restricted stock vesting, with no public repurchase plan - Ventas does not have a publicly announced share repurchase plan[262] Issuer Purchases of Equity Securities (Q1 2022) | Period | Number of Shares Repurchased | Average Price Per Share | | :------------------------ | :--------------------------- | :---------------------- | | January 1 through January 31 | 46,170 | $51.87 | | February 1 through February 28 | 27,227 | $51.37 | | March 1 through March 31 | 44,310 | $56.28 | | Total | 117,707 | $53.41 | - Repurchases represent shares withheld to pay taxes on the vesting of restricted stock granted to employees[263] Item 5. Other Information No other information to report Item 6. Exhibits Lists all exhibits filed with Form 10-Q, including guarantor lists, CEO/CFO certifications, and XBRL financial statements - Exhibits include a list of guarantors and issuers, certifications from the CEO and CFO (Rule 13a-14(a) and 18 U.S.C. § 1350), and XBRL formatted financial statements[265]