Ventas(VTR) - 2024 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Ventas, Inc.'s Q1 2024 unaudited financials show total assets at $24.67 billion, revenues at $1.20 billion, and a net loss of $14.3 million Consolidated Balance Sheet Summary (in thousands) | Balance Sheet Item | As of March 31, 2024 | As of December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $24,672,586 | $24,725,433 | | Net real estate property | $21,550,806 | $21,748,950 | | Cash and cash equivalents | $632,443 | $508,794 | | Total Liabilities | $14,928,709 | $14,878,392 | | Senior notes payable and other debt | $13,555,194 | $13,490,896 | | Total Equity | $9,458,833 | $9,544,405 | Consolidated Statements of Income Consolidated Statements of Income Summary (in thousands, except per share amounts) | Metric | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Total revenues | $1,199,914 | $1,077,245 | | Total expenses | $1,207,416 | $1,065,713 | | Net (loss) income | $(12,540) | $18,912 | | Net (loss) income attributable to common stockholders | $(14,312) | $17,517 | | Diluted EPS | $(0.04) | $0.04 | - Total revenues increased by 11.4% YoY, driven primarily by a 15.4% rise in Resident fees and services from the senior housing portfolio[11] - Total expenses grew by 13.3% YoY, led by higher property-level operating expenses for senior housing and increased interest expense[11] Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $266,448 | $242,817 | | Net cash used in investing activities | $(144,587) | $(56,280) | | Net cash provided by (used in) financing activities | $4,824 | $(162,107) | | Net increase in cash, cash equivalents and restricted cash | $126,685 | $24,430 | Notes to Consolidated Financial Statements Notes detail business structure, accounting policies, segment performance, tenant concentration, lease negotiations, and capital events NOI Contribution by Segment (Q1 2024) | Segment | Total NOI (in thousands) | Percentage of Total NOI | | :--- | :--- | :--- | | Senior housing operating portfolio (SHOP) | $203,483 | 40.4% | | Outpatient medical and research portfolio (OM&R) | $145,570 | 28.9% | | Triple-net leased properties | $151,630 | 30.1% | | Non-segment | $3,201 | 0.6% | - The company faces significant concentration risk, with properties managed by Atria and Sunrise, and leased to Brookdale, Ardent, and Kindred contributing approximately 19.0%, 6.1%, 7.4%, 6.7%, and 6.6% of total NOI, respectively, as of Q1 2024[37] - Kindred's option to renew the lease for 23 properties (Group 2), representing 5.3% of total annualized NOI, was extended to May 31, 2024; the portfolio's TTM performance did not exceed the lease rent[43][45][48] - Brookdale has an option to renew its master lease for 121 properties, expiring Dec 31, 2025, by providing notice between June 30, 2024, and November 30, 2024[51][53] - In Q1 2024, the company sold 1.8 million shares under its ATM program for gross proceeds of $78.7 million; an additional 0.3 million shares were sold in April 2024 for $14.9 million[123][125] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q1 2024 performance to strong SHOP segment growth, offset by increased interest expense, with robust liquidity Results of Operations Q1 2024 total NOI increased 8.2% to $503.9 million, driven by 21.3% SHOP NOI growth, but higher expenses led to a net loss NOI by Segment (in thousands) | Segment | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | SHOP | $203,483 | $167,771 | 21.3% | | Outpatient medical and research portfolio | $145,570 | $136,719 | 6.5% | | Triple-net leased properties | $151,630 | $145,943 | 3.9% | | Total NOI | $503,884 | $465,865 | 8.2% | - Same-store SHOP NOI increased 15.2% YoY, driven by a 240 basis point increase in average occupancy to 84.6% and a 4.7% increase in average monthly revenue per occupied room[181] - Interest expense increased by $21.9 million YoY due to higher debt balances (average of $13.6 billion vs $12.4 billion) and a higher weighted average effective interest rate (4.32% vs 4.04%)[192] - The company incurred $15.7 million in shareholder relations matters related to a proxy campaign for the 2024 annual meeting[198] Non-GAAP Financial Measures Normalized FFO attributable to common stockholders increased to $316.6 million in Q1 2024, driven by higher SHOP NOI, offset by interest expenses Normalized FFO Reconciliation Summary (in thousands) | Metric | Three Months Ended Mar 31, 2024 | Three Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net (loss) income attributable to common stockholders | $(14,312) | $17,517 | | Nareit FFO attributable to common stockholders | $292,904 | $294,408 | | Normalized FFO attributable to common stockholders | $316,573 | $296,871 | Liquidity and Capital Resources Ventas maintained $3.4 billion liquidity as of March 31, 2024, executing key capital activities including new senior notes and credit facility renewal - As of March 31, 2024, the company had $3.4 billion in liquidity, including availability under its revolving credit facility and cash on hand, with no commercial paper outstanding[161] - In February 2024, Ventas Canada issued C$650.0 million of 5.10% Senior Notes due 2029, using proceeds to repay a C$500.0 million term loan[228] - In April and May 2024, the company repaid $854.0 million of maturing senior notes[229] - In April 2024, the company entered into a new amended and restated $2.75 billion unsecured revolving credit facility, extending the maturity to April 2028[219] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate and foreign currency risk, with 94% of its $13.6 billion debt fixed-rate, limiting interest rate exposure Debt Composition as of March 31, 2024 (in thousands) | Debt Type | Balance | Percentage of Total | | :--- | :--- | :--- | | Fixed rate | $12,874,307 | 94.4% | | Variable rate | $757,706 | 5.6% | | Total | $13,632,013 | 100.0% | - A hypothetical 100 basis point increase in the weighted average interest rate on the $757.7 million of variable rate debt would increase annualized interest expense by approximately $7.6 million[264] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2024[267] PART II—OTHER INFORMATION Item 1. Legal Proceedings No new material legal proceedings or significant developments in previously reported legal proceedings occurred during the quarter - No new material legal proceedings were reported, and there were no material developments in existing proceedings[271] Item 1A. Risk Factors No significant new risk factors were identified in Q1 2024 compared to those disclosed in the 2023 Annual Report on Form 10-K - No significant new risk factors were disclosed in Q1 2024[272] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 242,820 shares at $45.89 per share to satisfy tax withholding for employee restricted stock awards Issuer Purchases of Equity Securities (Q1 2024) | Period | Number of Shares Repurchased | Average Price Per Share | | :--- | :--- | :--- | | January 2024 | 53,885 | $48.54 | | February 2024 | 161,933 | $45.50 | | March 2024 | 27,002 | $42.97 | | Total | 242,820 | $45.89 | - The repurchases represent shares withheld to pay taxes on the vesting of restricted stock and are not part of a publicly announced buyback plan[273] Item 5. Other Information Two executives adopted Rule 10b5-1 trading plans in March 2024 for share sales and potential exercise/sale of expiring options - On March 11, 2024, EVP Peter J. Bulgarelli adopted a Rule 10b5-1 trading plan for the sale of up to 22,500 shares[276] - On March 28, 2024, Chairman and CEO Debra A. Cafaro adopted a Rule 10b5-1 trading plan related to expiring options, covering the potential exercise and sale of up to 1,546,317 shares[277] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including indentures, amendments to sales agreements, and officer certifications