Ventas(VTR) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) This section presents Ventas, Inc.'s unaudited consolidated financial statements, including balance sheets, statements of income, comprehensive income, equity, and cash flows, along with detailed notes explaining accounting policies, business segments, credit risk, acquisitions, dispositions, debt, and other financial instruments Consolidated Balance Sheets - Total assets increased by $288 million from December 31, 2024, to June 30, 2025, while total liabilities decreased by $493 million, leading to a $762.8 million increase in total equity[8] | Metric | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :--------------------------------- | :---------------------------------- | :----------------------------------- | | Total assets | $26,474,929 | $26,186,906 | | Total liabilities | $14,553,769 | $15,047,081 | | Total equity | $11,592,461 | $10,829,596 | Consolidated Statements of Income - For the six months ended June 30, 2025, total revenues increased by $378.07 million (15.7%) year-over-year, and net income attributable to common stockholders significantly increased by $110.06 million, resulting in a diluted EPS of $0.25, up from $0.01 in the prior year[10] | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total revenues | $1,420,893 | $1,200,980 | $2,778,967 | $2,400,894 | | Total expenses | $1,378,235 | $1,220,064 | $2,695,368 | $2,427,480 | | Net income | $71,462 | $21,168 | $119,818 | $8,628 | | Net income attributable to common stockholders | $68,264 | $19,387 | $115,132 | $5,075 | | Basic EPS attributable to common stockholders | $0.15 | $0.05 | $0.26 | $0.01 | | Diluted EPS attributable to common stockholders | $0.15 | $0.05 | $0.25 | $0.01 | Consolidated Statements of Comprehensive Income - For the six months ended June 30, 2025, comprehensive income attributable to common stockholders increased by $91.43 million (390.3%) year-over-year, primarily driven by higher net income[12] | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income | $71,462 | $21,168 | $119,818 | $8,628 | | Total other comprehensive income | $3,015 | $777 | $3,468 | $15,854 | | Comprehensive income | $74,477 | $21,945 | $123,286 | $24,482 | | Comprehensive income attributable to common stockholders | $66,531 | $21,532 | $114,854 | $23,423 | Consolidated Statements of Equity - Total Ventas stockholders' equity increased by $758.12 million from December 31, 2024, to June 30, 2025, primarily due to net income and issuance of common stock for stock plans, restricted stock grants and other, partially offset by dividends[19] | Metric | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Total Ventas stockholders' equity | $11,529,388 | $10,771,267 | | Noncontrolling interests | $63,073 | $58,329 | | Total equity | $11,592,461 | $10,829,596 | Consolidated Statements of Cash Flows - Net cash provided by operating activities increased by $194.16 million (32.2%) year-over-year for the six months ended June 30, 2025[22] - Net cash used in investing activities increased significantly by $676.78 million (164.5%) due to higher real estate investments[22][297][298] - Financing activities shifted from a net cash use to a net cash provision, increasing by $143.26 million (105.8%)[22][297][298][299] | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $796,482 | $602,320 | | Net cash used in investing activities | $(1,088,164) | $(411,387) | | Net cash provided by (used in) financing activities | $7,830 | $(135,427) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(283,852) | $55,506 | Notes to Consolidated Financial Statements NOTE 1—DESCRIPTION OF BUSINESS Ventas, Inc. is a REIT focused on healthcare real estate, including senior housing, medical buildings, research centers, and hospitals across North America and the UK. The company operates through three reportable segments: SHOP, OM&R, and NNN, with performance evaluated based on Net Operating Income (NOI) - Ventas, Inc. is a REIT with 1,395 properties as of June 30, 2025, serving a growing aging population[27] | Segment | NOI (Six Months Ended June 30, 2025, in thousands) | Percentage of Total NOI | Segment Properties | | :-------------------------------- | :------------------------------------------------- | :---------------------- | :------------------- | | Senior housing operating portfolio (SHOP) | $550,916 | 47.6% | 683 | | Outpatient medical and research portfolio (OM&R) | $292,528 | 25.3% | 415 | | Triple-net leased properties (NNN) | $301,322 | 26.0% | 259 | | Non-segment | $12,647 | 1.1% | n/a | | Total | $1,157,413 | 100.0% | 1,357 | NOTE 2—ACCOUNTING POLICIES This note outlines the company's adherence to GAAP for interim financial reporting, including the use of estimates and principles of consolidation. It also details recent accounting standards updates, such as ASU 2023-09 (Income Tax Disclosures), SEC Release No. 33-11275 (Climate-Related Disclosures), and ASU 2024-03 (Disaggregation of Income Statement Expenses), and their potential impact - ASU 2023-09 (Improvements to Income Tax Disclosures) is effective for fiscal years beginning after December 15, 2024, requiring specific categories in rate reconciliation and additional information for significant reconciling items[39] - The SEC's climate-related disclosure rule (SEC Release No. 33-11275) is effective for annual reporting periods beginning in fiscal year 2025, though it is currently stayed and under judicial review[40] - ASU 2024-03 (Disaggregation of Income Statement Expenses) is effective for annual reporting periods beginning after December 15, 2026, requiring footnote disclosure of disaggregated income statement expenses[41] NOTE 3—CONCENTRATION OF CREDIT RISK Ventas is exposed to credit risk from tenants in its NNN and OM&R segments, as these tenants are obligated to pay rent and property-related expenses. The note summarizes the contribution of major tenants (Brookdale, Ardent, Kindred) to total revenues and NOI - All Brookdale and Kindred rent, and substantially all Ardent rent, is guaranteed by a corporate parent[46] | Tenant | Contribution as a Percentage of Total Revenues (Q2 2025) | Contribution as a Percentage of Total Revenues (Q2 2024) | Contribution as a Percentage of Total NOI (Q2 2025) | Contribution as a Percentage of Total NOI (Q2 2024) | | :------- | :------------------------------------------------------- | :------------------------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | | Brookdale | 2.8% | 3.1% | 6.8% | 7.2% | | Ardent | 2.7% | 3.1% | 6.5% | 7.3% | | Kindred | 2.5% | 2.8% | 5.9% | 6.6% | NOTE 4—ACQUISITIONS OF REAL ESTATE PROPERTY Ventas acquires healthcare properties to grow and diversify its portfolio. In the first half of 2025, the company acquired 23 senior housing communities, with additional acquisitions in July 2025 - During the six months ended June 30, 2025, Ventas Acquired 23 senior housing communities in its SHOP segment for an aggregate purchase price of $961.5 million[51] - In July 2025, Ventas Acquired an additional five senior housing communities in its SHOP segment for $147.7 million[51] NOTE 5—DISPOSITIONS, ASSETS HELD FOR SALE AND IMPAIRMENTS This note details the company's property dispositions, assets classified as held for sale, and real estate impairment charges recognized during the reporting periods - For the six months ended June 30, 2025, Ventas Sold one SHOP community and 10 NNN properties for $159.0 million, recognizing a $13.2 million gain[52] - In June 2025, a sales-type lease for 12 OM&R properties resulted in a $20.8 million gain on real estate disposition[54] - Real estate impairments for the six months ended June 30, 2025, totaled $57.2 million, primarily in SHOP ($26.0 million) and OM&R ($31.1 million), due to changes in intent to hold or expected future cash flows[56] | Segment | Properties Held for Sale (June 30, 2025) | Assets Held for Sale (June 30, 2025, in thousands) | Liabilities Related to Assets Held for Sale (June 30, 2025, in thousands) | | :------ | :--------------------------------------- | :------------------------------------------------- | :------------------------------------------------------------------------ | | SHOP | 4 | $41,608 | $2,852 | | OM&R | 3 | $7,328 | $401 | | NNN | 2 | $1,156 | $189 | | Total | 9 | $50,092 | $3,442 | NOTE 6—LOANS RECEIVABLE AND INVESTMENTS, NET This note provides a summary of Ventas's loans receivable and investments, categorized as secured loans receivable and non-mortgage loans receivable, which relate to senior housing and healthcare operators or properties - Total loans receivable and investments, net, increased by $31.57 million from December 31, 2024, to June 30, 2025[59] | Category | Carrying Amount as of June 30, 2025 (in thousands) | Carrying Amount as of December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Secured loans receivable and investments, net | $183,652 | $144,872 | | Non-mortgage loans receivable, net | $20,915 | $28,129 | | Total loans receivable and investments, net | $204,567 | $173,001 | NOTE 7—INVESTMENTS IN UNCONSOLIDATED ENTITIES Ventas holds equity method investments in unconsolidated real estate entities, including the Ventas Fund, and operating entities like Atria and Ardent, providing various services for fees - Management fees earned from unconsolidated real estate entities were $7.8 million for the six months ended June 30, 2025, up from $7.7 million in the prior year[63] - Ventas holds a 34% ownership interest in Atria and an approximately 6.7% ownership interest in Ardent[64][65] | Investment | Carrying Amount as of June 30, 2025 (in thousands) | Carrying Amount as of December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | | Ventas Fund | $274,774 | $267,202 | | Research & Innovation Development Joint Venture | $301,526 | $309,499 | | Total investments in unconsolidated real estate entities | $626,571 | $626,122 | NOTE 8—INTANGIBLES This note provides a summary of Ventas's intangible assets and liabilities, including above-market lease intangibles, in-place lease and other real estate intangibles, goodwill, and below-market lease intangibles - Net intangible assets slightly decreased by $0.57 million, while net intangible liabilities decreased by $5.11 million from December 31, 2024, to June 30, 2025[68] | Category | Balance as of June 30, 2025 (in thousands) | Balance as of December 31, 2024 (in thousands) | | :--------------------------------- | :----------------------------------------- | :----------------------------------------- | | Acquired lease intangibles | $1,556,165 | $1,558,751 | | Goodwill | $1,046,384 | $1,044,915 | | Net intangible assets | $1,357,915 | $1,358,482 | | Net intangible liabilities | $70,085 | $75,197 | NOTE 9—OTHER ASSETS This note summarizes the components of Ventas's 'Other assets,' which include straight-line rent receivables, deferred lease costs, accounts receivable, investments in unconsolidated operating entities, and other items like stock warrants - Total Other assets decreased by $58.76 million from December 31, 2024, to June 30, 2025, primarily due to a decrease in accounts receivable and other assets, including the exercise and sale of Brookdale Warrants[71] | Category | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Straight-line rent receivables | $219,331 | $202,675 | | Deferred lease costs, net | $152,846 | $145,973 | | Accounts receivable, net | $72,400 | $108,138 | | Investment in unconsolidated operating entities | $99,827 | $95,623 | | Total Other assets | $733,902 | $792,663 | NOTE 10—SENIOR NOTES PAYABLE AND OTHER DEBT This note details Ventas's debt structure, including senior notes, credit facilities, commercial paper, and term loans. It also covers derivative instruments used for hedging interest rate risk and provides a schedule of debt maturities - Ventas repaid $450.0 million of 2.65% Senior Notes and $600.0 million of 3.50% Senior Notes in January and February 2025, respectively[89] - In June 2025, Ventas Realty issued $500.0 million of 5.10% Senior Notes due 2032[89] - As of June 30, 2025, Ventas had a $3.5 billion unsecured revolving credit facility with $1.4 million outstanding and $0.8 million restricted for letters of credit[77][79] - For the six months ended June 30, 2025, Ventas entered into $200.0 million notional amount of 10-year treasury locks to hedge interest rate risk on future debt issuances[99] | Debt Type | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Senior notes payable and other debt | $13,056,312 | $13,522,551 | | Maturity Year | Total Maturities (in thousands) | | :-------------- | :------------------------------ | | 2025 | $550,987 | | 2026 | $2,110,232 | | 2027 | $1,634,616 | | 2028 | $1,570,363 | | 2029 | $1,701,145 | | Thereafter | $5,587,531 | | Total | $13,154,874 | NOTE 11—FAIR VALUES OF FINANCIAL INSTRUMENTS This note provides an overview of fair value measurements for financial instruments, classifying them into Level 1, 2, and 3 hierarchies based on input observability. It summarizes the carrying amounts and fair values of assets and liabilities measured on a recurring or nonrecurring basis - Derivative instrument assets primarily consist of interest rate swaps (Level 2) and Scion Warrants (Level 3)[107] - Real estate impairment charges are generally measured using Level 3 inputs, based on company-specific assumptions about marketability, net operating income, and capitalization/discount rates[110] | Financial Instrument | Carrying Amount (June 30, 2025, in thousands) | Fair Value (June 30, 2025, in thousands) | | :--------------------------------- | :-------------------------------------------- | :--------------------------------------- | | Cash and cash equivalents | $614,200 | $614,200 | | Secured loans receivable and investments, net | $183,652 | $184,534 | | Senior notes payable and other debt, gross | $13,154,874 | $13,135,881 | | Derivative instruments (assets) | $22,286 | $22,286 | | Derivative instruments (liabilities) | $7,365 | $7,365 | NOTE 12—COMMITMENTS AND CONTINGENCIES Ventas is involved in various legal proceedings and may be contractually obligated to indemnify third parties. The company also provides guarantees and similar contingent obligations, none of which have triggered a liability as of June 30, 2025 - Management believes current legal proceedings will not have a material adverse effect on the company[112] - As of June 30, 2025, no triggering events related to guarantees, indemnities, or similar contingent obligations have occurred, so no contingent liability is recorded[116] NOTE 13—INCOME TAXES Ventas operates as a REIT, generally exempt from U.S. federal corporate income taxes on distributed income, but its Taxable REIT Subsidiaries (TRSs) are subject to federal, state, and foreign income taxes. The note details the income tax provision/benefit and factors influencing it - The six months ended June 30, 2025, saw an income tax benefit of $6.7 million, primarily due to the reversal of valuation allowances against net deferred tax assets of certain TRS entities[119] - The income tax expense for the three and six months ended June 30, 2024, was primarily due to the enactment of Bill C-59 in Canada, limiting interest expense deductions for Canadian entities[119] | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Consolidated provision for income taxes | $(3,874) | $(7,766) | $6,683 | $(4,762) | NOTE 14—STOCKHOLDERS' EQUITY This note outlines changes in stockholders' equity, including the At-The-Market (ATM) offering program for common stock sales, an increase in authorized common stock, and the components of accumulated other comprehensive loss - In June 2025, the ATM Sales Agreement was amended, increasing the aggregate gross sales price of common stock available for issuance to $2.25 billion, with $2.0 billion remaining available as of June 30, 2025[123] - During the six months ended June 30, 2025, Ventas entered into equity forward sales agreements for 22.8 million shares, generating gross proceeds of $1.5 billion, and settled 16.4 million shares for $1.1 billion net cash proceeds[125] - In May 2025, stockholders approved an increase in authorized common stock from 600 million to 1.2 billion shares[128] | Component | As of June 30, 2025 (in thousands) | As of December 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------------- | :--------------------------------- | | Foreign currency translation loss | $(28,622) | $(34,341) | | Unrealized loss on available for sale securities | $(1,500) | $(2,118) | | Unrealized (loss) gain on derivative instruments | $(3,682) | $2,933 | | Total Accumulated other comprehensive loss | $(33,804) | $(33,526) | NOTE 15—EARNINGS PER SHARE This note provides the calculation of basic and diluted earnings per share (EPS) for common stockholders, detailing the numerator (net income attributable to common stockholders) and denominator (weighted average shares outstanding, adjusted for dilutive securities) - The dilutive effect of Exchangeable Notes was included in the computation of diluted EPS for the three and six months ended June 30, 2025, but was antidilutive in the prior year periods[133] | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders | $68,264 (in thousands) | $19,387 (in thousands) | $115,132 (in thousands) | $5,075 (in thousands) | | Basic EPS attributable to common stockholders | $0.15 | $0.05 | $0.26 | $0.01 | | Diluted EPS attributable to common stockholders | $0.15 | $0.05 | $0.25 | $0.01 | | Weighted average shares (basic) | 452,583 (in thousands) | 408,097 (in thousands) | 446,314 (in thousands) | 405,747 (in thousands) | | Weighted average shares (diluted) | 459,088 (in thousands) | 411,823 (in thousands) | 453,000 (in thousands) | 409,472 (in thousands) | NOTE 16—SEGMENT INFORMATION Ventas operates through three reportable business segments: Senior Housing Operating Portfolio (SHOP), Outpatient Medical and Research Portfolio (OM&R), and Triple-Net Leased Properties (NNN). The Chief Operating Decision Maker (CODM) evaluates segment performance and allocates resources based on Net Operating Income (NOI) - SHOP segment NOI increased by 33.7% for Q2 2025 and 31.9% for YTD Q2 2025, driven by revenue growth from increased occupancy and revenue per occupied room, and net acquisitions[195][222] - OM&R segment NOI increased marginally by 0.1% for Q2 2025 and 0.2% for YTD Q2 2025, primarily due to new leasing activity and high tenant retention[199][227] - NNN segment NOI decreased by 1.1% for Q2 2025 and 0.2% for YTD Q2 2025, mainly due to properties converting to SHOP and dispositions, partially offset by acquisitions and contractual rent escalators[202][229] | Segment | Total Revenues (Q2 2025, in thousands) | NOI (Q2 2025, in thousands) | Total Revenues (YTD Q2 2025, in thousands) | NOI (YTD Q2 2025, in thousands) | | :-------------------------------- | :------------------------------------- | :-------------------------- | :----------------------------------------- | :------------------------------ | | SHOP | $1,032,714 | $286,412 | $2,001,618 | $550,916 | | OM&R | $221,487 | $146,486 | $443,486 | $292,528 | | NNN | $152,702 | $148,736 | $308,815 | $301,322 | | Non-Segment | $13,990 | $6,492 | $25,048 | $12,647 | | Total | $1,420,893 | $588,126 | $2,778,967 | $1,157,413 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Ventas, Inc.'s financial condition and results of operations, including an overview of the company, business strategy, market trends, 2025 highlights, new legislation impacts, critical accounting policies, and detailed analysis of financial performance for the three and six months ended June 30, 2025 and 2024 Cautionary Statements This section highlights that the report contains forward-looking statements subject to various uncertainties and factors that could cause actual results to differ materially. It advises careful review of risks and uncertainties affecting the business and future financial performance - Forward-looking statements are based on management's beliefs and assumptions, but actual events or results could differ materially due to numerous uncertainties and factors[156] - Key risk factors include exposure to evolving governmental policies, macroeconomic conditions (inflation, interest rates), potential legal actions, reliance on third-party managers, access to capital markets, and ability to navigate industry trends[157] Company Overview Ventas, Inc. is a REIT specializing in healthcare real estate, including senior housing, medical buildings, and research centers across North America and the UK. It operates through SHOP, OM&R, and NNN segments, with performance evaluated by NOI - Ventas owns or has investments in 1,395 properties as of June 30, 2025, with 1,357 in reportable segments and 38 in unconsolidated entities[160] - The company maintains REIT status, which generally exempts it from U.S. federal corporate income taxes on distributed taxable income[161] | Segment | Total NOI (Six Months Ended June 30, 2025, in thousands) | Percentage of Total NOI | | :-------------------------------- | :------------------------------------------------- | :---------------------- | | Senior housing operating portfolio (SHOP) | $550,916 | 47.6% | | Outpatient medical and research portfolio (OM&R) | $292,528 | 25.3% | | Triple-net leased properties (NNN) | $301,322 | 26.0% | | Non-segment | $12,647 | 1.1% | | Total | $1,157,413 | 100.0% | Business Strategy Ventas's enduring strategy focuses on delivering shareholder value by enabling exceptional environments for the aging population. Key objectives include profitable organic growth in senior housing, value-creating external growth, strong execution across its portfolio, and maintaining financial strength - The strategy aims for consistent, superior total returns through profitable organic growth in senior housing, value-creating external growth, strong execution, and maintaining financial strength, flexibility, and liquidity[166] - The objective is to generate reliable and growing cash flows to support regular cash dividends and increase stockholder value[167] Market Trends Ventas's operations are influenced by economic and market conditions. The senior housing sector is expected to benefit from strong supply/demand fundamentals, including robust demand growth and low projected supply growth. Broader macroeconomic factors like interest rates and inflation also impact business performance - Senior housing is expected to benefit from strong supply/demand fundamentals, characterized by robust projected demand growth and low projected supply growth[168] - Business performance and growth are dependent on the broader macroeconomic environment, including consumer sentiment, interest rates, inflation, and GDP growth[168] 2025 Highlights Key highlights for 2025 include significant acquisitions in senior housing, strategic dispositions, enhanced liquidity through an increased revolving credit facility, repayment of senior notes, and active equity offerings - Acquired 23 senior housing communities for $961.5 million during the six months ended June 30, 2025, and an additional five senior housing communities for $147.7 million in July 2025[172] - Sold one senior housing community and 10 NNN properties for $159.0 million, recognizing a $13.2 million gain, and a sales-type lease for 12 OM&R properties resulted in a $20.8 million gain[172] - Achieved $4.7 billion in liquidity as of June 30, 2025, including $3.5 billion availability under the unsecured revolving credit facility (increased from $2.75 billion in April 2025)[172] - Repaid $1.05 billion in senior notes due 2025 and issued $500.0 million of 5.10% Senior Notes due 2032[178] - Entered into equity forward sales agreements for 24.1 million shares with gross proceeds of $1.6 billion year-to-date through July 30, 2025[179] - Stockholders approved an increase in authorized common stock from 600 million to 1.2 billion shares in May 2025[179] New Legislation The recently signed H.R. 1 Bill includes provisions impacting REITs and their investors, such as the permanent extension of the 20% deduction for qualified REIT dividends, an increased asset test limit for TRSs, and a change to the interest deduction limit calculation - H.R. 1 permanently extended the 20% deduction for 'qualified REIT dividends' for individual and non-corporate stockholders[178] - The Bill increased the percentage limit under the REIT asset test applicable to TRSs from 20% to 25% for taxable years beginning after December 31, 2025[178] - The 30% interest deduction limit under Section 163(j) of the Code will apply to Ventas by excluding depreciation, amortization, and depletion from 'adjusted taxable income' (EBITDA-based) for taxable years beginning after December 31, 2024[181] Critical Accounting Policies and Estimates The financial statements are prepared in accordance with GAAP, requiring management to make estimates and assumptions that affect reported amounts. These estimates are periodically reevaluated, and no material changes to critical accounting policies have occurred in 2025 - Preparation of financial statements requires estimates and assumptions regarding future events, which are based on experience and deemed reasonable under the circumstances[183] - No material changes to critical accounting policies have occurred in 2025[184] Recent Accounting Standards This section discusses recent FASB and SEC accounting updates, including ASU 2023-09 (Income Tax Disclosures), SEC Release No. 33-11275 (Climate-Related Disclosures), and ASU 2024-03 (Disaggregation of Income Statement Expenses), and their effective dates and potential impacts on the company's financial statements - ASU 2023-09 (Income Tax Disclosures) is effective for fiscal years beginning after December 15, 2024, and Ventas is evaluating its impact[185] - The SEC's climate-related disclosure rule (SEC Release No. 33-11275) is effective for annual reporting periods beginning in fiscal year 2025, but its implementation is currently stayed due to legal challenges[186] - ASU 2024-03 (Disaggregation of Income Statement Expenses) is effective for annual reporting periods beginning after December 15, 2026, and Ventas is evaluating its impact[187][188] Results of Operations This section provides a detailed analysis of Ventas's financial performance for the three and six months ended June 30, 2025, compared to the same periods in 2024, broken down by business segment (SHOP, OM&R, NNN, and Non-segment) and corporate results Three Months Ended June 30, 2025 and 2024 For the three months ended June 30, 2025, Ventas reported a significant increase in net income attributable to common stockholders, driven by strong SHOP segment NOI growth and improved performance from unconsolidated entities, despite higher corporate expenses - Same-Store SHOP NOI increased by 13.3% for Q2 2025, driven by higher average occupancy (87.6% vs. 85.2%) and revenue per occupied room ($5,261 vs. $4,998)[197] - Same-Store OM&R NOI increased by 1.0% for Q2 2025, primarily due to higher average occupancy (89.9% vs. 89.6%) and new leasing activity[200] - Same-Store NNN NOI increased by 2.3% for Q2 2025, mainly due to a net increase in contractual rent escalators and timing of rent collection[204][205] | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Increase (Decrease) to Net Income (in thousands) | % Change | | :-------------------------------------------------------------------------------- | :--------------------- | :--------------------- | :----------------------------------------------- | :------- | | Net income attributable to common stockholders | $68,264 | $19,387 | $48,877 | nm | | Total NOI | $588,126 | $514,354 | $73,772 | 14.3% | | SHOP NOI | $286,412 | $214,241 | $72,171 | 33.7% | | OM&R NOI | $146,486 | $146,273 | $213 | 0.1% | | NNN NOI | $148,736 | $150,428 | $(1,692) | (1.1%) | | Non-segment NOI | $6,492 | $3,412 | $3,080 | 90.3% | | Interest expense | $(150,298) | $(149,259) | $(1,039) | (0.7%) | | Depreciation and amortization | $(347,719) | $(339,848) | $(7,871) | (2.3%) | | General, administrative and professional fees | $(42,856) | $(37,727) | $(5,129) | (13.6%) | | Gain on real estate dispositions | $33,816 | $49,670 | $(15,854) | (31.9%) | | Income tax expense | $(3,874) | $(7,766) | $3,892 | 50.1% | Six Months Ended June 30, 2025 and 2024 For the six months ended June 30, 2025, Ventas experienced a substantial increase in net income attributable to common stockholders, primarily from robust SHOP segment growth and a shift to an income tax benefit, despite higher depreciation and administrative costs - Same-Store SHOP NOI increased by 14.2% for YTD Q2 2025, driven by higher average occupancy (87.5% vs. 84.8%) and revenue per occupied room ($5,229 vs. $4,997)[224] - Same-Store OM&R NOI increased by 1.4% for YTD Q2 2025, primarily due to higher average occupancy (89.9% vs. 89.7%) and new leasing activity[228] - Same-Store NNN NOI increased by 2.0% for YTD Q2 2025, mainly due to a net increase in contractual rent escalators and timing of rent collection[230] | Metric | YTD Q2 2025 (in thousands) | YTD Q2 2024 (in thousands) | Increase (Decrease) to Net Income (in thousands) | % Change | | :-------------------------------------------------------------------------------- | :------------------------- | :------------------------- | :----------------------------------------------- | :------- | | Net income attributable to common stockholders | $115,132 | $5,075 | $110,057 | nm | | Total NOI | $1,157,413 | $1,018,238 | $139,175 | 13.7% | | SHOP NOI | $550,916 | $417,724 | $133,192 | 31.9% | | OM&R NOI | $292,528 | $291,842 | $686 | 0.2% | | NNN NOI | $301,322 | $302,058 | $(736) | (0.2%) | | Non-segment NOI | $12,647 | $6,614 | $6,033 | 91.2% | | Interest expense | $(299,654) | $(299,192) | $(462) | (0.2%) | | Depreciation and amortization | $(669,244) | $(640,103) | $(29,141) | (4.6%) | | General, administrative and professional fees | $(96,005) | $(86,464) | $(9,541) | (11.0%) | | Gain on real estate dispositions | $33,985 | $50,011 | $(16,026) | (32.0%) | | Income tax benefit (expense) | $6,683 | $(4,762) | $11,445 | nm | Non-GAAP Financial Measures This section presents non-GAAP financial measures, including Nareit Funds From Operations (FFO) and Normalized FFO attributable to common stockholders, and Net Operating Income (NOI), which management uses to evaluate operating performance and provide investors with supplemental insights into the company's real estate operations Nareit Funds From Operations and Normalized Funds From Operations Attributable to Common Stockholders FFO and Normalized FFO are key supplemental measures for REITs, excluding real estate depreciation, amortization, and gains/losses on sales, to provide a clearer view of operating performance. Normalized FFO further adjusts for non-recurring or non-cash items - FFO is defined by Nareit as net income attributable to common stockholders, excluding gains/losses from real estate sales, impairment write-downs, and adding back real estate depreciation and amortization, with adjustments for unconsolidated entities and noncontrolling interests[247] - Normalized FFO further excludes items like gains/losses on derivatives, non-cash income tax impacts, debt extinguishment gains/losses, transaction costs, and other normalizing items[247] | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YTD Q2 2025 (in thousands) | YTD Q2 2024 (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | :------------------------- | :------------------------- | | Nareit FFO attributable to common stockholders | $395,343 | $317,192 | $774,102 | $610,096 | | Normalized FFO attributable to common stockholders | $400,143 | $329,119 | $776,865 | $645,694 | NOI Net Operating Income (NOI) is a non-GAAP measure used to assess unlevered property-level operating results and compare performance across periods. It is defined as total revenues less interest and other income, property-level operating expenses, and third-party capital management expenses - NOI is considered an important supplemental measure for assessing unlevered property-level operating results and comparing performance consistently across periods[250] - Same-Store NOI includes properties owned, consolidated, and operational for the full comparison periods, with specific criteria for including newly acquired, developed, or transitioned properties[252] | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YTD Q2 2025 (in thousands) | YTD Q2 2024 (in thousands) | | :----- | :--------------------- | :--------------------- | :------------------------- | :------------------------- | | NOI | $588,126 | $514,354 | $1,157,413 | $1,018,238 | Concentration Risk Ventas evaluates concentration risk by analyzing its investment mix (by asset type) and operations mix (by manager/tenant and geographic location) to understand potential impacts of economic downturns or adverse events | Asset Type | Investment Mix (June 30, 2025) | Investment Mix (December 31, 2024) | | :--------------------------------- | :----------------------------- | :--------------------------------- | | Senior housing communities | 68.3% | 67.3% | | Outpatient medical buildings | 19.0% | 19.7% | | Research centers | 5.7% | 5.3% | | Other healthcare facilities | 4.4% | 4.5% | | IRFs and LTACs | 1.9% | 2.0% | | Skilled nursing facilities (SNFs) | 0.7% | 1.2% | Triple-Net Lease Performance and Expirations This section discusses the risks associated with triple-net leases, including tenant defaults and non-renewals, and provides a summary of lease expirations for OM&R and NNN segments over the next decade and beyond - Tenant failures or non-renewals of triple-net leases could adversely affect Ventas, as repositioning properties on favorable terms may be challenging[259] - During the six months ended June 30, 2025, there were no material triple-net lease renewals or expirations without renewal[259] | Expiration Year | OM&R Annualized Base Rent (in thousands) | NNN Annualized Base Rent (in thousands) | % of Total OM&R and NNN Annualized Base Rent | | :-------------- | :--------------------------------------- | :-------------------------------------- | :------------------------------------------- | | 2025 | $38,484 | $66,308 | 9% | | 2026 | $62,345 | $40,556 | 9% | | 2027 | $87,855 | $10,518 | 9% | | 2028 | $71,142 | $46,571 | 10% | | 2029 | $74,117 | $11,870 | 8% | | 2030 | $58,713 | $87,115 | 13% | | Thereafter | $58,019 | $208,710 | 23% | Liquidity and Capital Resources Ventas's liquidity is primarily derived from cash flows from operations, debt and equity issuances, and credit facilities. The company's principal liquidity needs include funding operating expenses, debt service, acquisitions, and capital expenditures, which are expected to be met through a combination of internal and external capital sources - Principal liquidity sources include cash flows from operations, proceeds from debt and equity issuances, borrowings under credit facilities, and asset sales[263] - Key liquidity needs for the next 12 months include funding operating expenses, debt service, acquisitions, development, capital expenditures, and stockholder distributions[264] - As of June 30, 2025, the $3.5 billion unsecured revolving credit facility had $1.4 million outstanding and $0.8 million restricted for letters of credit[267] - Ventas Realty has $862.5 million in 3.75% Exchangeable Senior Notes due 2026 outstanding, exchangeable at $54.76 per share[272][274] - During the six months ended June 30, 2025, net cash provided by operating activities increased by $194.2 million, while net cash used in investing activities increased by $676.8 million due to higher real estate investments[297][298] - Financing activities shifted from a net cash use in 2024 to a net cash provision in 2025, primarily due to a $573.0 million increase in common stock issuances, partially offset by a $427.5 million net decrease in debt[299] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses Ventas's exposure to market risks, primarily related to changes in interest rates and foreign currency exchange rates. It details the company's debt structure, weighted average interest rates, and sensitivity analysis for interest rate fluctuations - Ventas is primarily exposed to market risk from changes in interest rates on variable rate debt and foreign currency exchange rates due to Canadian and UK operations[307][315] - A hypothetical 100 basis point increase in the weighted average interest rate on variable rate debt would increase annualized interest expense by approximately $12.2 million, or $0.03 per diluted common share[311] - The fair value of fixed rate debt is sensitive to market interest rate changes, but these changes do not affect current interest expense until maturity or refinancing[313] | Debt Type | Balance (June 30, 2025, in thousands) | Percentage of Total Debt (June 30, 2025) | Weighted Average Interest Rate (June 30, 2025) | | :--------------------------------- | :------------------------------------ | :--------------------------------------- | :--------------------------------------------- | | Fixed rate debt | $11,933,875 | 90.8% | 4.2% (Senior notes/Exchangeable senior notes) | | Variable rate debt | $1,220,999 | 9.2% | 5.0% (Unsecured revolving credit facility) | | Total | $13,154,874 | 100.0% | 4.3% | Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of Ventas's disclosure controls and procedures as of June 30, 2025, concluding they were effective. There were no material changes in internal control over financial reporting during the second quarter of 2025 - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of June 30, 2025[316] - No material changes in internal controls over financial reporting occurred during the second quarter of 2025[317] PART II—OTHER INFORMATION Item 1. Legal Proceedings This section incorporates by reference the information on commitments and contingencies from Note 12 of the Consolidated Financial Statements, stating that there have been no new material legal proceedings or developments since the 2024 Annual Report - No new material legal proceedings or material developments in reported legal proceedings occurred in the second quarter of 2025[319] Item 1A. Risk Factors This section states that there were no significant new risk factors identified in the second quarter of 2025 beyond those disclosed in the 2024 Annual Report - No significant new risk factors were identified in the second quarter of 2025 compared to the 2024 Annual Report[320] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section summarizes the issuer's purchases of equity securities during the quarter ended June 30, 2025, which primarily represent shares withheld to cover taxes on vesting restricted stock and stock option exercises - Repurchases represent shares withheld to pay taxes on the vesting of restricted stock and restricted stock units, and/or to pay taxes on the exercise price of stock options[321] | Period | Number of Shares Repurchased | Average Price Per Share | | :-------------------- | :--------------------------- | :---------------------- | | April 1 through April 30 | 24,054 | $65.56 | | May 1 through May 31 | 508 | $66.43 | | June 1 through June 30 | 1,086 | $64.28 | | Total | 25,648 | $65.52 | Item 3. Defaults Upon Senior Securities This item is marked as not applicable, indicating no defaults upon senior securities during the reporting period - This item is not applicable, indicating no defaults upon senior securities[322] Item 4. Mine Safety Disclosures This item is marked as not applicable, as the company does not have operations requiring mine safety disclosures - This item is not applicable[323] Item 5. Other Information This section states that during the three months ended June 30, 2025, none of the company's directors or officers adopted, terminated, or modified any Rule 10b5-1 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 the three months ended June 30, 2025[324] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including the Restated Certificate of Incorporation, Supplemental Indenture, certifications, and XBRL data - Exhibits include the Restated Certificate of Incorporation, Tenth Supplemental Indenture, List of Guarantors and Issuers of Guaranteed Securities, and various certifications (31.1, 31.2, 32.1, 32.2)[327] - The report includes XBRL formatted financial statements and a Cover Page Interactive Data File[327]