Ventas(VTR) - 2023 Q4 - Annual Report

PART I This part covers Ventas, Inc.'s business operations, risk factors, cybersecurity measures, property portfolio, and legal proceedings ITEM 1. Business Ventas, Inc. is an S&P 500 REIT focused on healthcare real estate, including senior housing, outpatient medical, research centers, hospitals, and other healthcare facilities across North America and the UK - Ventas, Inc. is an S&P 500 real estate investment trust (REIT) focused on delivering strong, sustainable shareholder returns by enabling exceptional environments that benefit a large and growing aging population. As of December 31, 2023, the company owned or had investments in approximately 1,400 properties[26] - The company operates through three reportable business segments: senior housing operating portfolio (SHOP), outpatient medical and research portfolio, and triple-net leased properties[28] 2023 Reportable Business Segments and Non-Segment Assets (NOI) | Segment | Total NOI (in thousands) | Percentage of Total NOI | Number of Properties | | :-------------------------------- | :----------------------- | :---------------------- | :------------------- | | Senior housing operating portfolio (SHOP) | $711,407 | 37% | 587 | | Outpatient medical and research portfolio | $576,932 | 30% | 437 | | Triple-net leased properties | $604,651 | 31% | 331 | | Non-segment | $32,177 | 2% | — | | Total | $1,925,167 | 100% | 1,355 | ITEM 1A. Risk Factors This section details the significant risks and uncertainties that could materially and adversely affect Ventas's business, financial condition, and results of operations - The company's business is subject to significant risks and uncertainties, including macroeconomic trends like rising labor costs, inflation, changes in exchange rates, and rising interest rates[136][138] - A substantial portion of Ventas's revenues and operating income is dependent on a limited number of tenants and managers, including Brookdale, Ardent, Kindred, Atria, and Sunrise, increasing concentration risk[156] - The company is highly dependent on access to capital markets, and limitations on this access could adversely affect its ability to meet debt obligations, make distributions to stockholders, or fund future investments[227] - Loss of REIT status would have significant adverse tax consequences, substantially reducing funds available for obligations, business strategy implementation, and stockholder distributions[260] ITEM 1B. Unresolved Staff Comments The company reported that there were no unresolved staff comments from the SEC - There are no unresolved staff comments[277] ITEM 1C. Cybersecurity Ventas views cybersecurity as a serious threat and has implemented risk management processes, including periodic reviews, third-party security monitoring, employee training, and data encryption - Ventas considers cybersecurity risk a serious threat and has implemented processes to mitigate risk and impact, including periodic reviews, third-party security firms, and employee training[278][279][280] - Cybersecurity risk management is integrated into the company's multi-disciplinary enterprise risk management (ERM) process, overseen by the ERM Committee and the Board of Directors[281][285] - The company has not identified any cybersecurity threats or incidents that have materially affected its business, but acknowledges that such incidents could disrupt operations or compromise data, as seen with a ransomware attack on business partner Ardent in November 2023[282][284] ITEM 2. Properties Ventas's property portfolio as of December 31, 2023, comprised approximately 1,400 properties, including senior housing, outpatient medical buildings, research centers, hospitals, and other healthcare facilities - As of December 31, 2023, Ventas owned or had investments in approximately 1,400 properties, including senior housing, outpatient medical buildings, research centers, hospitals, and other healthcare facilities[289] - The portfolio is geographically diversified across the United States, Canada, and the United Kingdom, with properties in California accounting for more than 10% of total continuing revenues and NOI[289] Geographic Diversification of Consolidated Portfolio (as of December 31, 2023) | Geographic Location | Senior Housing Communities ( of Properties / Units) | SNFs ( of Properties / Licensed Beds) | Outpatient Medical Buildings ( of Properties / Square Feet (1)) | Research Centers ( of Properties / Square Feet (1)) | IRFs and LTACs ( of Properties / Licensed Beds) | Other Healthcare Facilities ( of Properties / Licensed Beds) | | :-------------------- | :------------------------------------------------- | :----------------------------------- | :------------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------------- | | Total U.S. | 709 / 65,464 | 44 / 5,717 | 405 / 21,248 | 29 / 4,598 | 43 / 3,346 | 10 / 1,943 | | Canada | 83 / 15,822 | — / — | — / — | — / — | — / — | — / — | | United Kingdom | 12 / 776 | — / — | — / — | — / — | — / — | 3 / 121 | | Total | 804 / 82,062 | 44 / 5,717 | 405 / 21,248 | 29 / 4,598 | 43 / 3,346 | 13 / 2,064 | (1) Square Feet are in thousands - As of December 31, 2023, the company had $3.2 billion in aggregate principal mortgage loan indebtedness outstanding, secured by 140 properties[290] ITEM 3. Legal Proceedings Ventas is not a party to any material pending legal proceedings, nor is any of its property the subject of such proceedings, beyond what is disclosed in the Notes to Consolidated Financial Statements - The company is not a party to, nor is any of its property the subject of, any material pending legal proceedings, except as disclosed in Note 14 – Commitments and Contingencies[295] ITEM 4. Mine Safety Disclosures This item is not applicable to Ventas, Inc - This item is not applicable[296] PART II This part details Ventas's common equity market, shareholder matters, management's discussion and analysis of financial condition, and audited financial statements ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Ventas common stock is traded on the NYSE under the symbol 'VTR', with 402.5 million shares outstanding as of February 7, 2024 - Ventas common stock (VTR) is listed on the NYSE, with 402,461,579 shares outstanding as of February 7, 2024[5][299] - The company pays regular quarterly dividends to comply with REIT requirements, expecting to distribute at least 100% of its taxable net income for 2024[300] Common Stock Repurchases (Q4 2023) | | Number of Shares Repurchased | Average Price Per Share | | :-------------------------- | :--------------------------- | :---------------------- | | October 1 through October 31 | 854 | $42.59 | | November 1 through November 30 | 56 | $45.84 | | December 1 through December 31 | 1,951 | $46.76 | | Total | 2,861 | $45.50 | Cumulative Total Return (December 31, 2018 - December 31, 2023) | | 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | 12/31/2023 | | :-------------------- | :--------- | :--------- | :--------- | :--------- | :--------- | :--------- | | Ventas | $100 | $103 | $93 | $101 | $92 | $106 | | NYSE Composite Index | $100 | $126 | $135 | $163 | $148 | $168 | | Composite REIT Index | $100 | $128 | $121 | $169 | $127 | $141 | | S&P 500 Index | $100 | $131 | $156 | $200 | $164 | $207 | ITEM 6. [Reserved] This item is reserved and contains no information ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Ventas's financial condition and operational results, highlighting a 4.5% increase in total NOI for 2023, driven by strong performance in the SHOP segment - Ventas, Inc. is an S&P 500 REIT operating through three reportable business segments: senior housing operating portfolio (SHOP), outpatient medical and research portfolio, and triple-net leased properties[312] Total NOI by Segment (2023) | Segment | Total NOI (in thousands) | Percentage of Total NOI | Number of Properties | | :-------------------------------- | :----------------------- | :---------------------- | :------------------- | | Senior housing operating portfolio (SHOP) | $711,407 | 37% | 587 | | Outpatient medical and research portfolio | $576,932 | 30% | 437 | | Triple-net leased properties | $604,651 | 31% | 331 | | Non-segment | $32,177 | 2% | — | | Total | $1,925,167 | 100% | 1,355 | - Total NOI increased by $82.5 million (4.5%) from $1,842.6 million in 2022 to $1,925.2 million in 2023, primarily driven by the SHOP segment[354] - In 2023, the company sold 26 properties and two land parcels for $399.5 million, recognizing a gain of $62.1 million. It also acquired a Class A senior housing community for $36.0 million in January 2024[322][325][654] - Ventas maintained approximately $3.2 billion in liquidity as of December 31, 2023, and undertook significant debt activities including issuing $862.5 million in Exchangeable Senior Notes and repaying a $1 billion mortgage loan[323][325] ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk This section incorporates by reference the detailed discussion of market risk from 'Management's Discussion and Analysis of Financial Condition and Results of Operations—Asset/Liability Management' in Item 7 - The disclosures about market risk are incorporated by reference from the 'Asset/Liability Management' section within Item 7[480] ITEM 8. Financial Statements and Supplementary Data This item presents Ventas's audited consolidated financial statements for the years ended December 31, 2023, 2022, and 2021, including balance sheets, statements of income, comprehensive income, equity, and cash flows - The consolidated financial statements for the years ended December 31, 2023, 2022, and 2021 are presented, including balance sheets, statements of income, comprehensive income, equity, and cash flows[490] - Management concluded that internal control over financial reporting was effective as of December 31, 2023, a conclusion audited and confirmed by KPMG LLP[486][487][508] - Critical audit matters for the current period included the evaluation of the overall fair value and allocation of fair value for properties related to the equitization of the Santerre Mezzanine Loan, and the impairment assessment of senior housing operating portfolio real estate investments[494][495][500] Consolidated Balance Sheets (as of December 31, in thousands) | | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Assets | | | | Net real estate property | $21,748,950 | $21,160,450 | | Secured loans receivable and investments, net | $27,986 | $537,075 | | Investments in unconsolidated real estate entities | $598,206 | $579,949 | | Cash and cash equivalents | $508,794 | $122,564 | | Total assets | $24,725,433 | $24,157,840 | | Liabilities and equity | | | | Senior notes payable and other debt | $13,490,896 | $12,296,780 | | Total liabilities | $14,878,392 | $13,671,513 | | Total equity | $9,544,405 | $10,221,677 | | Total liabilities and equity | $24,725,433 | $24,157,840 | Consolidated Statements of Income (for the Years Ended December 31, in thousands) | | 2023 | 2022 | 2021 | | :-------------------------------------------------------------------------------- | :----------- | :----------- | :----------- | | Total revenues | $4,497,827 | $4,129,193 | $3,828,007 | | Total expenses | $4,613,408 | $4,223,330 | $3,990,392 | | Net (loss) income attributable to common stockholders | $(40,973) | $(47,447) | $49,008 | | Basic earnings per common share | $(0.10) | $(0.12) | $0.13 | | Diluted earnings per common share | $(0.10) | $(0.12) | $0.13 | Consolidated Statements of Cash Flows (for the Years Ended December 31, in thousands) | | 2023 | 2022 | 2021 | | :------------------------------------------ | :----------- | :----------- | :----------- | | Net cash provided by operating activities | $1,119,873 | $1,120,163 | $1,026,116 | | Net cash used in investing activities | $(184,664) | $(859,218) | $(724,140) | | Net cash used in financing activities | $(543,749) | $(283,928) | $(558,466) | | Cash, cash equivalents and restricted cash at end of year | $563,462 | $170,745 | $196,597 | ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Ventas reported no changes in or disagreements with its accountants on accounting and financial disclosure matters - There were no changes in or disagreements with accountants on accounting and financial disclosure[817] ITEM 9A. Controls and Procedures Management, with the participation of the CEO and CFO, evaluated the effectiveness of Ventas's disclosure controls and procedures as of December 31, 2023, concluding they were effective at a reasonable assurance level - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of December 31, 2023[818] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the fourth quarter of 2023[820] ITEM 9B. Other Information During the three months ended December 31, 2023, no directors or officers adopted, terminated, or modified any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q4 2023[821] ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Ventas reported that there are no disclosures required regarding foreign jurisdictions that prevent inspections - This item is not applicable[822] PART III This part incorporates by reference information on directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accountant fees from the company's 2024 Proxy Statement ITEM 10. Directors, Executive Officers and Corporate Governance The information for this item, covering directors, executive officers, and corporate governance, is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information regarding Directors, Executive Officers and Corporate Governance is incorporated by reference from the 2024 Annual Meeting of Stockholders Proxy Statement[825] ITEM 11. Executive Compensation The information for this item, pertaining to executive compensation, is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information regarding Executive Compensation is incorporated by reference from the 2024 Annual Meeting of Stockholders Proxy Statement[826] ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information for this item, concerning security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information regarding Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters is incorporated by reference from the 2024 Annual Meeting of Stockholders Proxy Statement[827] ITEM 13. Certain Relationships and Related Transactions, and Director Independence The information for this item, detailing certain relationships, related transactions, and director independence, is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information regarding Certain Relationships and Related Transactions, and Director Independence is incorporated by reference from the 2024 Annual Meeting of Stockholders Proxy Statement[828] ITEM 14. Principal Accountant Fees and Services The information for this item, regarding principal accountant fees and services, is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information regarding Principal Accountant Fees and Services is incorporated by reference from the 2024 Annual Meeting of Stockholders Proxy Statement[829] PART IV This part outlines the exhibits and financial statement schedules included in the report, confirming the absence of a Form 10-K Summary ITEM 15. Exhibits and Financial Statement Schedules This section lists all exhibits and financial statement schedules filed as part of the 10-K report, including financial statements, auditor reports, and various corporate documents - This item lists all financial statements and schedules included in Part II, Item 8, such as the Reports of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Income, Comprehensive Income, Equity, Cash Flows, and Notes to Consolidated Financial Statements[832] - It also includes Schedule III (Real Estate and Accumulated Depreciation) and Schedule IV (Mortgage Loans on Real Estate)[832] - A detailed table of exhibits is provided, including merger agreements, corporate governance documents, various debt indentures, and compensation plans, with many incorporated by reference from prior SEC filings[834][835][836][837][838][840][841][842] ITEM 16. Form 10-K Summary The company states that no Form 10-K Summary is included in this report - No Form 10-K Summary is provided in this report[843]