CHICAGO--(BUSINESS WIRE)--Ventas, Inc. (NYSE: VTR) today announced its results for the fourth quarter and full year ended December 31, 2017:
- Income from continuing operations per diluted common share for the full year 2017 grew 13 percent to $1.80 compared to the same period in 2016. For the fourth quarter 2017, income from continuing operations per diluted common share was $0.50.
- Normalized Funds From Operations (“FFO”) per diluted common share for the full year 2017 grew one percent to $4.16 compared to the same period in 2016. For the fourth quarter 2017, normalized FFO per diluted common share was $1.03.
- Reported FFO per diluted common share, as defined by the National Association of Real Estate Investment Trusts (“NAREIT FFO”), for the full year 2017 grew two percent to $4.22 compared to the same period in 2016. For the fourth quarter 2017, NAREIT FFO per diluted common share was $1.13.
- The Company recognized $717 million, or $2.00 per share, in gains on real estate disposals in 2017, which are included in net income but excluded from income from continuing operations, normalized FFO and NAREIT FFO.
The Ventas Advantage: Foundation for Lasting Excellence
“2017 was another excellent year for Ventas, as we generated record cash flow from operations and delivered normalized FFO per share and same-store property cash NOI growth at the high end of our expectations,” said Debra A. Cafaro, Ventas Chairman and Chief Executive Officer. “To further enhance our diverse portfolio, we made nearly $2 billion in value-creating investments, including significant expansion of our exciting university-based life science business, profitably disposed of almost $1 billion in assets and completed innovative deals with our leading operating partners.
“The Ventas Advantage has proven resilient through cycles for two decades. This success is founded on solid strategic vision, superior foresight and innovation, intelligent and timely capital allocation decisions, rigorous execution and a cohesive, expert team. As we enter 2018 - our Company’s 20th anniversary year - we are confident that we will continue our long track record of superior consistent performance as the industry leader.”
2017 Performance
- For the full year 2017, the Company’s normalized FFO per diluted common share year-over-year growth of one percent to $4.16 was principally due to accretive investments and improved property performance, partially offset by the impact of dispositions and loan repayments, higher rates on refinanced debt and lower profits and fees from beneficial transactions.
- For the full year 2017, the Company’s net cash provided by operating activities grew five percent to $1.44 billion compared to the same period in 2016.
- For the full year 2017, the Company’s same-store total portfolio (1,037 assets) cash net operating income (“NOI”) grew 2.5 percent compared to the same period in 2016, at the high end of previously disclosed guidance of 2 to 2.5 percent.
- For the fourth quarter 2017, the Company’s same-store total portfolio (1,068 assets) cash NOI grew 2 percent compared to the same period in 2016.
- Same-store cash NOI growth for the total portfolio and by segment for the full year and fourth quarter 2017 follows:
2017 Same-Store Cash NOI | ||||||
Full Year 2017 | Q4 2017 | |||||
Reported Growth | 10/27/17 Guidance | Reported Growth | ||||
Triple-Net | 3.7% | 3% ─ 3.5% | 4.2% | |||
SHOP | 1.3% | 0.5% ─ 1.5% | (0.1%) | |||
Office | 2.0% | 1.5% ─ 2% | 1.5% | |||
Total Company | 2.5% | 2% ─ 2.5% | 2.0% | |||
2017 and Recent Highlights
-
2017 New Investments: Ventas closed on $1.8 billion of
investments and new development and redevelopment project commitments,
including:
-
University-Based Life Science Growth: The Company made
acquisitions or development commitments approaching $400 million
with new and existing relationships to further scale its
institutional university-based life science business affiliated
with leading research universities and companies:
- New relationships included the Company’s acquisitions of high-quality life science and research properties affiliated with AA-rated Brown University (“Brown”) and AA-rated Virginia Commonwealth University.
- Ventas also grew with existing partners, including follow-on development projects with Brown and Washington University in St. Louis. Ventas has grown its overall life science footprint by 37 percent since its initial life science acquisition in September 2016.
- High-Quality Growth with Leading Seniors Housing Partners: Ventas acquired nearly $400 million in high-quality seniors housing communities principally located in coastal markets and also committed to over $275 million of attractive development and redevelopment projects, primarily with leading senior care providers Atria Senior Living (“Atria”) and Sunrise Senior Living. These development projects are all part of joint ventures with institutional capital partners.
- Scaling of Leading Health System Platform: Ventas invested in the growth of leading healthcare provider Ardent Health Services (“Ardent”) by funding Ardent’s acquisition of LHP Hospital Group through a $700 million term loan. Pro forma for the pending acquisition of East Texas Medical Center by Ardent and the University of Texas System, Ardent will be an over $4 billion in annual revenue private, for-profit provider operating 31 hospitals in 7 states with average market shares of nearly 40 percent and with valuable not-for-profit and academic medical center relationships.
-
University-Based Life Science Growth: The Company made
acquisitions or development commitments approaching $400 million
with new and existing relationships to further scale its
institutional university-based life science business affiliated
with leading research universities and companies:
- Profitable Capital Recycling: Ventas sold properties and received final repayments on loans receivable in 2017 for proceeds of over $900 million, with gains exceeding $700 million. The majority of proceeds consisted of the Company’s completed sales of its 36 skilled nursing facilities (“SNFs”) operated by Kindred Healthcare, Inc. (NYSE: KND) (“Kindred”) for proceeds of $700 million, representing a seven percent yield on cash rent and an eight percent GAAP yield. Ventas’s percentage of aggregate NOI received from SNFs is now only one percent.
- Focused Partnerships with Leading Platforms: Ventas’s operators and assets continue to be highly valued and sought after, as experienced investors made meaningful investments in its platforms. Ventas’s support positioned its operators for continued success and value creation, including: recapitalization of Atria in its growth-focused capital raise with Fremont Realty Group; establishment of a new strategic seniors housing relationship in Eclipse Senior Living, a newly-formed operator founded by a team of experienced senior living executives led by industry veteran Kai Hsiao; and support of Kindred’s pending acquisition by TPG, Welsh, Carson, Anderson & Stowe and Humana (NYSE: HUM), which will create a separate, operationally focused and financially strong company that will operate Ventas’s long-term acute care and inpatient rehabilitation facilities.
-
Outstanding Financial Strength and Liquidity: The Company’s
liquidity and financial flexibility remain strong, including:
- Net debt to Adjusted Pro Forma EBITDA of 5.7x at year-end 2017;
- Total indebtedness to gross asset value of 38 percent at year-end 2017;
- Exceptional fixed charge coverage of 4.6x at year-end 2017;
- Dividends for 2017 totaled $3.115 per share, representing a five percent year-over-year increase; and
- Excellent liquidity currently with over $2.7 billion of borrowing capacity under its revolving credit facilities and approximately $100 million of cash on hand.
-
Leadership in Environmental, Social and Governance (ESG) Matters: Ventas
accelerated its commitment to ESG matters and was recognized
repeatedly for its results and leadership, including:
- First time inclusion in the Dow Jones Sustainability™ North America Index, ranking in the top quartile of real estate companies in North America across a broad spectrum of ESG metrics;
- Recognition as NAREIT’s 2017 Health Care “Leader in the Light,” and first place ranking among the three listed healthcare real estate company participants in the 2017 GRESB real estate ESG assessment; and
- Being named a “Winning Company” in the 2020 Women on Boards Gender Diversity Index, which showcases Fortune 1000 Companies with 20 percent or greater women serving on their boards of directors. The Ventas Board of Directors is currently 30 percent female.
-
Company and Leadership Recognition
- Ventas was named one of Fortune’s “2018 World’s Most Admired Companies” in January 2018, the only healthcare REIT on this year’s list, recognizing the Company’s industry leadership, exemplary stewardship and world-class team.
- Ventas Chairman and Chief Executive Officer Debra A. Cafaro was again recognized as a top global CEO and a leader in the real estate and healthcare industries, including being named by: Forbes as one of the “World's 100 Most Powerful Women” for the second year; The Harvard Business Review as one of “The Best-Performing CEOs in the World” for the fourth consecutive year; and Modern Healthcare as one of the “100 Most Influential People in Healthcare.”
- In the Harvard Business Review’s ranking of “The Best-Performing CEOs,” Ventas’s financial performance ranked in the top four percent of all companies measured, listed at number 32 of almost 900 firms - highlighting the superior and consistent performance of Ventas over an 18-year period.
First Quarter Dividend
The Company’s Board of Directors declared a dividend for the first quarter 2018 of $0.79 per share, representing a two percent year-over-year increase. The dividend is payable in cash on April 12, 2018 to stockholders of record on April 2, 2018.
2018 Guidance
“Our 2018 forecast reflects our expectation that our high-quality diverse portfolio will continue to grow same-store cash NOI. It incorporates continued strategic actions to create shareholder value over the short and long-term, including $1.5 billion in asset dispositions, inclusive of a potential joint venture on an existing portfolio of senior housing assets and proceeds from the repayment of nearly $850 million of highly profitable loan investments. These disposition proceeds are expected to be redeployed into the repayment of debt, resulting in further improvement of our balance sheet, and investments in future growth in our attractive university-based life science business,” said Cafaro. “While these actions affect 2018 normalized FFO, we are confident they position us to seize opportunities and maintain our leading market position.”
Ventas expects 2018 income from continuing operations per share, NAREIT FFO per share, normalized FFO per share and same-store cash NOI growth to range as follows:
Full Year 2018 Range | ||||
Per Diluted Common Share | ||||
Low | High | |||
Income from Cont. Ops | $1.34 | ─ | $1.40 | |
NAREIT FFO | $3.80 | ─ | $3.89 | |
Normalized FFO | $3.95 | ─ | $4.05 | |
Full Year 2018 Projected Same- | ||||
Store Cash NOI Growth | ||||
Current Guidance | ||||
Low | High | |||
Triple-Net | 3% | ─ | 4% | |
SHOP | (4%) | ─ | (1%) | |
Office | 1.75% | ─ | 2.75% | |
Total Company | 0.5% | ─ | 2% | |
Substantially all of the expected normalized FFO change in 2018 compared to 2017 results from: (a) no material unannounced acquisitions included in 2018 guidance; (b) the impact of 2017 and 2018 disposition activity including i) the carryover impact of nearly $1 billion of late 2017 dispositions - principally comprised of $700 million in SNF dispositions at an eight percent GAAP yield - and related debt reduction and ii) $1.5 billion of additional capital recycling in 2018 at a GAAP rate of over eight percent, including joint ventures, loan repayments and other asset dispositions, the proceeds of which will be used principally to retire debt; and (c) proactive balance sheet management, including the expectation that the Company will refinance approximately $1 billion of debt during the year with longer-duration fixed rate debt, and increased interest expense from LIBOR increases. Debt retirement in 2018 is expected to further improve the Company’s net debt to Adjusted Pro Forma EBITDA ratio to approximately 5.5x by year-end 2018.
The Company’s guidance does include the funding of $425 million in future growth through high-quality development and redevelopment projects, mostly in Ventas’s attractive university-based life science and medical office businesses.
Ventas expects continued positive same-store cash NOI growth in 2018 for the Company’s total property portfolio. Total portfolio same-store cash NOI is expected to grow 0.5 to 2 percent, with strong Office and Triple-Net portfolio growth being largely offset by seniors housing operating portfolio (“SHOP”) performance. SHOP same-store cash NOI is expected to be lower in 2018 due to the cumulative impact of new seniors housing supply in certain markets and the full year occupancy impact of a severe flu season. Same-store NOI growth in 2018 as measured on a GAAP basis is expected at the guidance midpoint to be 100 basis points lower than same-store cash NOI growth for the total Company property portfolio, with the most pronounced differential in the Office segment.
No equity issuance is included in guidance. The 2018 outlook assumes approximately 360 million weighted average fully-diluted shares. A reconciliation of the Company’s guidance to the Company’s projected GAAP measures is included in this press release.
The Company’s guidance is based on a number of other assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.
Fourth Quarter and Full Year 2017 Conference Call
Ventas will hold a conference call to discuss this earnings release today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The dial-in number for the conference call is (844) 776-7841 (or +1 (661) 378-9542 for international callers). The participant passcode is “Ventas.” The conference call is being webcast live by NASDAQ OMX and can be accessed at the Company’s website at www.ventasreit.com. A replay of the webcast will be available following the call online, or by calling (855) 859-2056 (or +1 (404) 537-3406 for international callers), passcode 2283238, beginning at approximately 2:00 p.m. Eastern Time and will remain for 36 days.
Ventas, Inc., an S&P 500 company, is a leading real estate investment trust. Its diverse portfolio of more than 1,200 assets in the United States, Canada and the United Kingdom consists of seniors housing communities, medical office buildings, life science and innovation centers, inpatient rehabilitation and long-term acute care facilities, health systems and skilled nursing facilities. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. References to “Ventas” or the “Company” mean Ventas, Inc. and its consolidated subsidiaries unless otherwise expressly noted. More information about Ventas and Lillibridge can be found at www.ventasreit.com and www.lillibridge.com.
The Company routinely announces material information to investors and the marketplace using press releases, SEC filings, public conference calls, webcasts and the Company’s website at www.ventasreit.com/investor-relations. The information that the Company posts to its website may be deemed to be material. Accordingly, the Company encourages investors and others interested in the Company to routinely monitor and review the information that the Company posts on its website, in addition to following the Company’s press releases, SEC filings and public conference calls and webcasts. Supplemental information regarding the Company can be found on the Company’s website under the “Investor Relations” section or at www.ventasreit.com/investor-relations/annual-reports---supplemental-information. A comprehensive listing of the Company’s properties is available at www.ventasreit.com/our-portfolio/properties-by-stateprovince.
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company’s or its tenants’, operators’, borrowers’ or managers’ expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, merger or acquisition integration, growth opportunities, expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of management for future operations and statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ from the Company’s expectations. The Company does not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.
The Company’s actual future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s filings with the Securities and Exchange Commission. These factors include without limitation: (a) the ability and willingness of the Company’s tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with the Company, including, in some cases, their obligations to indemnify, defend and hold harmless the Company from and against various claims, litigation and liabilities; (b) the ability of the Company’s tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness; (c) the Company’s success in implementing its business strategy and the Company’s ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments; (d) macroeconomic conditions such as a disruption of or lack of access to the capital markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States of its obligations, and changes in the federal or state budgets resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates; (e) the nature and extent of future competition, including new construction in the markets in which the Company’s seniors housing communities and medical office buildings (“MOBs”) are located; (f) the extent and effect of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates; (g) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors; (h) the ability of the Company’s tenants, operators and managers, as applicable, to comply with laws, rules and regulations in the operation of the Company’s properties, to deliver high-quality services, to attract and retain qualified personnel and to attract residents and patients; (i) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and the effect of those changes on the Company’s revenues, earnings and funding sources; (j) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (k) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax and other considerations; (l) final determination of the Company’s taxable net income for the year ended December 31, 2017 and for the year ending December 31, 2018; (m) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases, the Company’s ability to reposition its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations, including indemnification obligations, the Company may incur in connection with the replacement of an existing tenant; (n) risks associated with the Company’s senior living operating portfolio, such as factors that can cause volatility in the Company’s operating income and earnings generated by those properties, including without limitation national and regional economic conditions, costs of food, materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results for those properties; (o) changes in exchange rates for any foreign currency in which the Company may, from time to time, conduct business; (p) year-over-year changes in the Consumer Price Index or the UK Retail Price Index and the effect of those changes on the rent escalators contained in the Company’s leases and the Company’s earnings; (q) the Company’s ability and the ability of its tenants, operators, borrowers and managers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers; (r) the impact of increased operating costs and uninsured professional liability claims on the Company’s liquidity, financial condition and results of operations or that of the Company’s tenants, operators, borrowers and managers, and the ability of the Company and the Company’s tenants, operators, borrowers and managers to accurately estimate the magnitude of those claims; (s) risks associated with the Company’s MOB portfolio and operations, including the Company’s ability to successfully design, develop and manage MOBs and to retain key personnel; (t) the ability of the hospitals on or near whose campuses the Company’s MOBs are located and their affiliated health systems to remain competitive and financially viable and to attract physicians and physician groups; (u) risks associated with the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (v) the Company’s ability to obtain the financial results expected from its development and redevelopment projects; (w) the impact of market or issuer events on the liquidity or value of the Company’s investments in marketable securities; (x) consolidation activity in the seniors housing and healthcare industries resulting in a change of control of, or a competitor’s investment in, one or more of the Company’s tenants, operators, borrowers or managers or significant changes in the senior management of the Company’s tenants, operators, borrowers or managers; (y) the impact of litigation or any financial, accounting, legal or regulatory issues that may affect the Company or its tenants, operators, borrowers or managers; and (z) changes in accounting principles, or their application or interpretation, and the Company’s ability to make estimates and the assumptions underlying the estimates, which could have an effect on the Company’s earnings.
CONSOLIDATED BALANCE SHEETS | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||||||
Assets | ||||||||||||||||||||
Real estate investments: | ||||||||||||||||||||
Land and improvements | $ | 2,147,621 | $ | 2,121,214 | $ | 2,117,692 | $ | 2,123,266 | $ | 2,089,591 | ||||||||||
Buildings and improvements | 22,177,088 | 21,935,860 | 21,827,419 | 21,869,961 | 21,516,396 | |||||||||||||||
Construction in progress | 343,129 | 306,095 | 281,093 | 213,281 | 210,599 | |||||||||||||||
Acquired lease intangibles | 1,537,995 | 1,536,476 | 1,534,173 | 1,532,365 | 1,510,629 | |||||||||||||||
26,205,833 | 25,899,645 | 25,760,377 | 25,738,873 | 25,327,215 | ||||||||||||||||
Accumulated depreciation and amortization | (5,617,453 | ) | (5,434,772 | ) | (5,220,611 | ) | (5,123,144 | ) | (4,932,461 | ) | ||||||||||
Net real estate property | 20,588,380 | 20,464,873 | 20,539,766 | 20,615,729 | 20,394,754 | |||||||||||||||
Secured loans receivable and investments, net | 1,346,359 | 1,352,434 | 1,395,404 | 1,398,417 | 702,021 | |||||||||||||||
Investments in unconsolidated real estate entities | 123,639 | 117,185 | 119,794 | 108,976 | 95,921 | |||||||||||||||
Net real estate investments | 22,058,378 | 21,934,492 | 22,054,964 | 22,123,122 | 21,192,696 | |||||||||||||||
Cash and cash equivalents | 81,355 | 85,063 | 103,353 | 91,284 | 286,707 | |||||||||||||||
Escrow deposits and restricted cash | 106,898 | 76,522 | 68,343 | 92,175 | 80,647 | |||||||||||||||
Goodwill | 1,034,641 | 1,034,497 | 1,034,054 | 1,033,484 | 1,033,225 | |||||||||||||||
Assets held for sale | 100,324 | 68,926 | 89,569 | 61,983 | 54,961 | |||||||||||||||
Other assets | 572,945 | 540,295 | 505,475 | 517,283 | 518,364 | |||||||||||||||
Total assets | $ | 23,954,541 | $ | 23,739,795 | $ | 23,855,758 | $ | 23,919,331 | $ | 23,166,600 | ||||||||||
Liabilities and equity | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Senior notes payable and other debt | $ | 11,276,062 | $ | 11,424,145 | $ | 11,907,997 | $ | 11,943,733 | $ | 11,127,326 | ||||||||||
Accrued interest | 93,958 | 95,684 | 87,248 | 78,219 | 83,762 | |||||||||||||||
Accounts payable and other liabilities | 1,182,552 | 943,800 | 929,573 | 946,674 | 907,928 | |||||||||||||||
Liabilities related to assets held for sale | 61,202 | 9,837 | 9,812 | 1,389 | 1,462 | |||||||||||||||
Deferred income taxes | 250,092 | 296,272 | 296,822 | 294,057 | 316,641 | |||||||||||||||
Total liabilities | 12,863,866 | 12,769,738 | 13,231,452 | 13,264,072 | 12,437,119 | |||||||||||||||
Redeemable OP unitholder and noncontrolling interests | 158,490 | 171,813 | 182,154 | 171,384 | 200,728 | |||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Equity: | ||||||||||||||||||||
Ventas stockholders' equity: | ||||||||||||||||||||
Preferred stock, $1.00 par value; 10,000 shares authorized, unissued | — | — | — | — | — | |||||||||||||||
Common stock, $0.25 par value; 356,187; 356,163; |
89,029 | 89,023 | 89,016 | 88,698 | 88,514 | |||||||||||||||
Capital in excess of par value | 13,053,057 | 13,034,527 | 13,019,023 | 12,944,501 | 12,917,002 | |||||||||||||||
Accumulated other comprehensive loss | (35,120 | ) | (40,780 | ) | (45,035 | ) | (53,657 | ) | (57,534 | ) | ||||||||||
Retained earnings (deficit) | (2,240,698 | ) | (2,351,430 | ) | (2,688,946 | ) | (2,564,936 | ) | (2,487,695 | ) | ||||||||||
Treasury stock, 1; 0; 0; 0; and 1 shares at December 31, |
(42 | ) | — | — | — | (47 | ) | |||||||||||||
Total Ventas stockholders' equity | 10,866,226 | 10,731,340 | 10,374,058 | 10,414,606 | 10,460,240 | |||||||||||||||
Noncontrolling interests | 65,959 | 66,904 | 68,094 | 69,269 | 68,513 | |||||||||||||||
Total equity | 10,932,185 | 10,798,244 | 10,442,152 | 10,483,875 | 10,528,753 | |||||||||||||||
Total liabilities and equity | $ | 23,954,541 | $ | 23,739,795 | $ | 23,855,758 | $ | 23,919,331 | $ | 23,166,600 |
|
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CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
For the Three Months Ended | For the Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Rental income: | ||||||||||||||||
Triple-net leased | $ | 205,176 | $ | 210,804 | $ | 840,131 | $ | 845,834 | ||||||||
Office | 191,826 | 183,846 | 753,467 | 630,342 | ||||||||||||
397,002 | 394,650 | 1,593,598 | 1,476,176 | |||||||||||||
Resident fees and services | 457,101 | 456,919 | 1,843,232 | 1,847,306 | ||||||||||||
Office building and other services revenue | 3,896 | 4,064 | 13,677 | 21,070 | ||||||||||||
Income from loans and investments | 32,109 | 19,996 | 117,608 | 98,094 | ||||||||||||
Interest and other income | 5,180 | 84 | 6,034 | 876 | ||||||||||||
Total revenues | 895,288 | 875,713 | 3,574,149 | 3,443,522 | ||||||||||||
Expenses | ||||||||||||||||
Interest | 111,951 | 107,739 | 448,196 | 419,740 | ||||||||||||
Depreciation and amortization | 232,650 | 232,189 | 887,948 | 898,924 | ||||||||||||
Property-level operating expenses: | ||||||||||||||||
Senior living | 313,769 | 310,303 | 1,250,065 | 1,242,978 | ||||||||||||
Office | 58,279 | 55,165 | 233,007 | 191,784 | ||||||||||||
372,048 | 365,468 | 1,483,072 | 1,434,762 | |||||||||||||
Office building services costs | 1,683 | 1,034 | 3,391 | 7,311 | ||||||||||||
General, administrative and professional fees | 34,930 | 31,488 | 135,490 | 126,875 | ||||||||||||
(Gain) loss on extinguishment of debt, net | (102 | ) | (386 | ) | 754 | 2,779 | ||||||||||
Merger-related expenses and deal costs | 1,632 | (438 | ) | 10,535 | 24,635 | |||||||||||
Other | 3,986 | 1,087 | 20,052 | 9,988 | ||||||||||||
Total expenses | 758,778 | 738,181 | 2,989,438 | 2,925,014 | ||||||||||||
Income before unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interests | 136,510 | 137,532 | 584,711 | 518,508 | ||||||||||||
(Loss) income from unconsolidated entities | (4,355 | ) | 2,207 | (561 | ) | 4,358 | ||||||||||
Income tax benefit | 46,680 | 2,836 | 59,799 | 31,343 | ||||||||||||
Income from continuing operations | 178,835 | 142,575 | 643,949 | 554,209 | ||||||||||||
Discontinued operations | (15 | ) | (167 | ) | (110 | ) | (922 | ) | ||||||||
Gain on real estate dispositions | 214,985 | 66,424 | 717,273 | 98,203 | ||||||||||||
Net income | 393,805 | 208,832 | 1,361,112 | 651,490 | ||||||||||||
Net income attributable to noncontrolling interests | 1,251 | 1,195 | 4,642 | 2,259 | ||||||||||||
Net income attributable to common stockholders | $ | 392,554 | $ | 207,637 | $ | 1,356,470 | $ | 649,231 | ||||||||
Earnings per common share | ||||||||||||||||
Basic: | ||||||||||||||||
Income from continuing operations | $ | 0.50 | $ | 0.40 | $ | 1.81 | $ | 1.61 | ||||||||
Net income attributable to common stockholders | 1.10 | 0.59 | 3.82 | 1.88 | ||||||||||||
Diluted: | ||||||||||||||||
Income from continuing operations |
$ | 0.50 | $ | 0.40 | $ | 1.80 | $ | 1.59 | ||||||||
Net income attributable to common stockholders | 1.09 | 0.58 | 3.78 | 1.86 | ||||||||||||
Weighted average shares used in computing earnings per common share | ||||||||||||||||
Basic | 355,966 | 353,911 | 355,326 | 344,703 | ||||||||||||
Diluted | 359,184 | 357,435 | 358,566 | 348,390 | ||||||||||||
Dividends declared per common share | $ | 0.79 | $ | 0.775 | $ | 3.115 | $ | 2.965 |
QUARTERLY CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||
For the Quarters Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||||||
Revenues | ||||||||||||||||||||
Rental income: | ||||||||||||||||||||
Triple-net leased | $ | 205,176 | $ | 212,370 | $ | 213,258 | $ | 209,327 | $ | 210,804 | ||||||||||
Office | 191,826 | 189,506 | 186,240 | 185,895 | 183,846 | |||||||||||||||
397,002 | 401,876 | 399,498 | 395,222 | 394,650 | ||||||||||||||||
Resident fees and services | 457,101 | 461,700 | 460,243 | 464,188 | 456,919 | |||||||||||||||
Office building and other services revenue | 3,896 | 3,196 | 3,179 | 3,406 | 4,064 | |||||||||||||||
Income from loans and investments | 32,109 | 32,985 | 32,368 | 20,146 | 19,996 | |||||||||||||||
Interest and other income | 5,180 | 171 | 202 | 481 | 84 | |||||||||||||||
Total revenues | 895,288 | 899,928 | 895,490 | 883,443 | 875,713 | |||||||||||||||
Expenses | ||||||||||||||||||||
Interest | 111,951 | 113,869 | 113,572 | 108,804 | 107,739 | |||||||||||||||
Depreciation and amortization | 232,650 | 213,407 | 224,108 | 217,783 | 232,189 | |||||||||||||||
Property-level operating expenses: | ||||||||||||||||||||
Senior living | 313,769 | 315,598 | 308,625 | 312,073 | 310,303 | |||||||||||||||
Office | 58,279 | 60,609 | 57,205 | 56,914 | 55,165 | |||||||||||||||
372,048 | 376,207 | 365,830 | 368,987 | 365,468 | ||||||||||||||||
Office building services costs | 1,683 | 418 | 552 | 738 | 1,034 | |||||||||||||||
General, administrative and professional fees | 34,930 | 33,317 | 33,282 | 33,961 | 31,488 | |||||||||||||||
(Gain) loss on extinguishment of debt, net | (102 | ) | 511 | 36 | 309 | (386 | ) | |||||||||||||
Merger-related expenses and deal costs | 1,632 | 804 | 6,043 | 2,056 | (438 | ) | ||||||||||||||
Other | 3,986 | 13,030 | 1,848 | 1,188 | 1,087 | |||||||||||||||
Total expenses | 758,778 | 751,563 | 745,271 | 733,826 | 738,181 | |||||||||||||||
Income before unconsolidated entities, income taxes, discontinued operations, real estate dispositions and noncontrolling interests | 136,510 | 148,365 | 150,219 | 149,617 | 137,532 | |||||||||||||||
(Loss) income from unconsolidated entities | (4,355 | ) | 750 | (106 | ) | 3,150 | 2,207 | |||||||||||||
Income tax benefit | 46,680 | 7,815 | 2,159 | 3,145 | 2,836 | |||||||||||||||
Income from continuing operations | 178,835 | 156,930 | 152,272 | 155,912 | 142,575 | |||||||||||||||
Discontinued operations | (15 | ) | (19 | ) | (23 | ) | (53 | ) | (167 | ) | ||||||||||
Gain on real estate dispositions | 214,985 | 458,280 | 719 | 43,289 | 66,424 | |||||||||||||||
Net income | 393,805 | 615,191 | 152,968 | 199,148 | 208,832 | |||||||||||||||
Net income attributable to noncontrolling interests | 1,251 | 1,233 | 1,137 | 1,021 | 1,195 | |||||||||||||||
Net income attributable to common stockholders | $ | 392,554 | $ | 613,958 | $ | 151,831 | $ | 198,127 | $ | 207,637 | ||||||||||
Earnings per common share | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Income from continuing operations | $ | 0.50 | $ | 0.44 | $ | 0.43 | $ | 0.44 | $ | 0.40 | ||||||||||
Net income attributable to common stockholders | 1.10 | 1.72 | 0.43 | 0.56 | 0.59 | |||||||||||||||
Diluted: | ||||||||||||||||||||
Income from continuing operations | $ | 0.50 | $ | 0.44 | $ | 0.42 | $ | 0.44 | $ | 0.40 | ||||||||||
Net income attributable to common stockholders | 1.09 | 1.71 | 0.42 | 0.55 | 0.58 | |||||||||||||||
Weighted average shares used in computing earnings per common share | ||||||||||||||||||||
Basic | 355,966 | 355,929 | 355,024 | 354,410 | 353,911 | |||||||||||||||
Diluted | 359,184 | 359,333 | 358,311 | 357,572 | 357,435 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
For the Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 1,361,112 | $ | 651,490 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 887,948 | 898,924 | ||||||
Amortization of deferred revenue and lease intangibles, net | (20,537 | ) | (20,336 | ) | ||||
Other non-cash amortization | 16,058 | 10,357 | ||||||
Stock-based compensation | 26,543 | 20,958 | ||||||
Straight-lining of rental income, net | (23,134 | ) | (27,988 | ) | ||||
Loss on extinguishment of debt, net | 754 | 2,779 | ||||||
Gain on real estate dispositions | (717,273 | ) | (98,203 | ) | ||||
Gain on real estate loan investments | (124 | ) | (2,271 | ) | ||||
Income tax benefit | (63,599 | ) | (34,227 | ) | ||||
Loss (income) from unconsolidated entities | 3,588 | (4,358 | ) | |||||
Gain on re-measurement of equity interest upon acquisition, net | (3,027 | ) | — | |||||
Distributions from unconsolidated entities | 4,676 | 7,598 | ||||||
Other | 9,240 | (1,847 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in other assets | (15,854 | ) | 5,560 | |||||
Increase in accrued interest | 11,068 | 2,604 | ||||||
Decrease in accounts payable and other liabilities | (35,259 | ) | (38,699 | ) | ||||
Net cash provided by operating activities | 1,442,180 | 1,372,341 | ||||||
Cash flows from investing activities: | ||||||||
Net investment in real estate property | (380,232 | ) | (1,429,112 | ) | ||||
Investment in loans receivable and other | (748,119 | ) | (158,635 | ) | ||||
Proceeds from real estate disposals | 537,431 | 300,561 | ||||||
Proceeds from loans receivable | 101,097 | 320,082 | ||||||
Development project expenditures | (299,085 | ) | (143,647 | ) | ||||
Capital expenditures | (132,558 | ) | (117,456 | ) | ||||
Distributions from unconsolidated entities | 6,169 | — | ||||||
Investment in unconsolidated entities | (61,220 | ) | (6,436 | ) | ||||
Net cash used in investing activities | (976,517 | ) | (1,234,643 | ) | ||||
Cash flows from financing activities: | ||||||||
Net change in borrowings under revolving credit facilities | 384,783 | (35,637 | ) | |||||
Proceeds from debt | 1,111,649 | 893,218 | ||||||
Repayment of debt | (1,369,084 | ) | (1,022,113 | ) | ||||
Purchase of noncontrolling interests | (15,809 | ) | (2,846 | ) | ||||
Payment of deferred financing costs | (27,297 | ) | (6,555 | ) | ||||
Issuance of common stock, net | 73,596 | 1,286,680 | ||||||
Cash distribution to common stockholders | (827,285 | ) | (1,024,968 | ) | ||||
Cash distribution to redeemable OP unitholders | (5,677 | ) | (8,640 | ) | ||||
Contributions from noncontrolling interests | 4,402 | 7,326 | ||||||
Distributions to noncontrolling interests | (11,187 | ) | (6,879 | ) | ||||
Other | 10,582 | 17,252 | ||||||
Net cash (used in) provided by financing activities | (671,327 | ) | 96,838 | |||||
Net (decrease) increase in cash and cash equivalents | (205,664 | ) | 234,536 | |||||
Effect of foreign currency translation on cash and cash equivalents | 312 | (852 | ) | |||||
Cash and cash equivalents at beginning of period | 286,707 | 53,023 | ||||||
Cash and cash equivalents at end of period | $ | 81,355 | $ | 286,707 | ||||
Supplemental schedule of non-cash activities: | ||||||||
Assets acquired and liabilities assumed from acquisitions: | ||||||||
Real estate investments | $ | 425,906 | $ | 69,092 | ||||
Utilization of funds held for an Internal Revenue Code Section 1031 exchange | (286,748 | ) | (6,954 | ) | ||||
Other assets | (3,716 | ) | 90,037 | |||||
Debt | 75,231 | 47,641 | ||||||
Other liabilities | 70,878 | 72,636 | ||||||
Deferred income tax liability | (14,869 | ) | 9,381 | |||||
Noncontrolling interests | 4,202 | 22,517 | ||||||
Equity issued for redemption of OP and Class C units | 24,002 | 24,318 |
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
For the Quarters Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income | $ | 393,805 | $ | 615,191 | $ | 152,968 | $ | 199,148 | $ | 208,832 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 232,650 | 213,407 | 224,108 | 217,783 | 232,189 | |||||||||||||||
Amortization of deferred revenue and lease intangibles, net | (4,254 | ) | (5,434 | ) | (5,834 | ) | (5,015 | ) | (5,029 | ) | ||||||||||
Other non-cash amortization | 4,872 | 4,602 | 4,124 | 2,460 | 3,183 | |||||||||||||||
Stock-based compensation | 6,620 | 6,527 | 6,695 | 6,701 | 5,073 | |||||||||||||||
Straight-lining of rental income, net | (5,750 | ) | (6,229 | ) | (5,778 | ) | (5,377 | ) | (6,602 | ) | ||||||||||
(Gain) loss on extinguishment of debt, net | (102 | ) | 511 | 36 | 309 | (386 | ) | |||||||||||||
Gain on real estate dispositions | (214,985 | ) | (458,280 | ) | (719 | ) | (43,289 | ) | (66,424 | ) | ||||||||||
Gain on real estate loan investments | — | (120 | ) | (4 | ) | — | — | |||||||||||||
Income tax benefit | (47,980 | ) | (8,515 | ) | (2,959 | ) | (4,145 | ) | (3,395 | ) | ||||||||||
Loss (income) from unconsolidated entities | 4,355 | (750 | ) | 106 | (123 | ) | (2,207 | ) | ||||||||||||
Gain on re-measurement of equity interest upon acquisition, net | — | — | — | (3,027 | ) | — | ||||||||||||||
Distributions from unconsolidated entities | 767 | 775 | 754 | 2,380 | 2,024 | |||||||||||||||
Other | 1,801 | 6,091 | 696 | 652 | (772 | ) | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||
Decrease (increase) in other assets | 1,744 | (47,532 | ) | 33,648 | (3,714 | ) | 3,807 | |||||||||||||
(Decrease) increase in accrued interest | (1,620 | ) | 8,138 | 9,291 | (4,741 | ) | 12,657 | |||||||||||||
(Decrease) increase in accounts payable and other liabilities | (15,982 | ) | 20,601 | (15,607 | ) | (24,271 | ) | (16,755 | ) | |||||||||||
Net cash provided by operating activities | 355,941 | 348,983 | 401,525 | 335,731 | 366,195 | |||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Net investment in real estate property | (118,109 | ) | (22,625 | ) | (40,655 | ) | (198,843 | ) | (7,520 | ) | ||||||||||
Investment in loans receivable and other | (14,086 | ) | (15,800 | ) | (16,875 | ) | (701,358 | ) | (3,686 | ) | ||||||||||
Proceeds from real estate disposals | 5,294 | 512,567 | 19,570 | — | 237,000 | |||||||||||||||
Proceeds from loans receivable | 16,736 | 59,294 | 21,704 | 3,363 | 126,019 | |||||||||||||||
Development project expenditures | (88,662 | ) | (67,154 | ) | (56,817 | ) | (86,452 | ) | (49,249 | ) | ||||||||||
Capital expenditures | (49,171 | ) | (27,435 | ) | (32,117 | ) | (23,835 | ) | (42,160 | ) | ||||||||||
Distributions from unconsolidated entities | 353 | 5,816 | — | — | — | |||||||||||||||
Investment in unconsolidated entities | (18,821 | ) | (3,351 | ) | (12,108 | ) | (26,940 | ) | (261 | ) | ||||||||||
Net cash (used in) provided by investing activities | (266,466 | ) | 441,312 | (117,298 | ) | (1,034,065 | ) | 260,143 | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Net change in borrowings under revolving credit facilities | 45 | 20,282 | 341,634 | 22,822 | (82,365 | ) | ||||||||||||||
Proceeds from debt | 53,212 | 29,928 | 231,295 | 797,214 | 16,601 | |||||||||||||||
Repayment of debt | (143,559 | ) | (568,989 | ) | (636,040 | ) | (20,496 | ) | (105,608 | ) | ||||||||||
Purchase of noncontrolling interests | — | — | — | (15,809 | ) | (1,242 | ) | |||||||||||||
Payment of deferred financing costs | (871 | ) | (6,739 | ) | (13,303 | ) | (6,384 | ) | (408 | ) | ||||||||||
Issuance of common stock, net | — | — | 73,596 | — | 20,978 | |||||||||||||||
Cash distribution to common stockholders | — | (276,320 | ) | (275,597 | ) | (275,368 | ) | (274,566 | ) | |||||||||||
Cash distribution to redeemable OP unitholders | — | (1,957 | ) | (1,827 | ) | (1,893 | ) | (2,154 | ) | |||||||||||
Contributions from noncontrolling interests | — | 2,175 | 125 | 2,102 | 1,400 | |||||||||||||||
Distributions to noncontrolling interests | (1,939 | ) | (5,092 | ) | (1,746 | ) | (2,410 | ) | (1,758 | ) | ||||||||||
Other | 39 | 841 | 6,405 | 3,297 | 621 | |||||||||||||||
Net cash (used in) provided by financing activities | (93,073 | ) | (805,871 | ) | (275,458 | ) | 503,075 | (428,501 | ) | |||||||||||
Net (decrease) increase in cash and cash equivalents | (3,598 | ) | (15,576 | ) | 8,769 | (195,259 | ) | 197,837 | ||||||||||||
Effect of foreign currency translation on cash and cash equivalents | (110 | ) | (2,714 | ) | 3,300 | (164 | ) | (409 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 85,063 | 103,353 | 91,284 | 286,707 | 89,279 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 81,355 | $ | 85,063 | $ | 103,353 | $ | 91,284 | $ | 286,707 |
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
For the Quarters Ended | |||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
2017 | 2017 | 2017 | 2017 | 2016 | |||||||||||||||
Supplemental schedule of non-cash activities: | |||||||||||||||||||
Assets acquired and liabilities assumed from acquisitions: | |||||||||||||||||||
Real estate investments | $ | 219,135 | $ | 1,505 | $ | 16,347 | $ | 188,919 | $ | 9,426 | |||||||||
Utilization of funds held for an Internal Revenue Code Section 1031 exchange | (201,753 | ) | — | — | (84,995 | ) | — | ||||||||||||
Other assets | 1,830 | (1,450 | ) | (3,723 | ) | (373 | ) | 10,158 | |||||||||||
Debt | 10,602 | — | 12,167 | 52,462 | — | ||||||||||||||
Other liabilities | 6,788 | (1,664 | ) | (2,922 | ) | 68,676 | 12,190 | ||||||||||||
Deferred income tax liability | 1,247 | 64 | 3,384 | (19,564 | ) | 7,102 | |||||||||||||
Noncontrolling interests | 575 | 1,655 | (5 | ) | 1,977 | 292 | |||||||||||||
Equity issued for redemption of OP and Class C units | 1,308 | 335 | 288 | 22,071 | 1,348 |
NON-GAAP FINANCIAL MEASURES RECONCILIATION | |||||||||||||||||||||||||||||||
Funds From Operations (FFO) and Funds Available for Distribution (FAD)(1) | |||||||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||||||||||||||||
YOY | |||||||||||||||||||||||||||||||
2016 | 2017 | Growth | |||||||||||||||||||||||||||||
Q4 | FY | Q1 | Q2 | Q3 | Q4 | FY | '16-'17 | ||||||||||||||||||||||||
Income from continuing operations | $ | 142,575 | $ | 554,209 | $ | 155,912 | $ | 152,272 | $ | 156,930 | $ | 178,835 | $ | 643,949 | 16 | % | |||||||||||||||
Income from continuing operations per share | $ | 0.40 | $ | 1.59 | $ | 0.44 | $ | 0.42 | $ | 0.44 | $ | 0.50 | $ | 1.80 | 13 | % | |||||||||||||||
Discontinued operations | (167 | ) | (922 | ) | (53 | ) | (23 | ) | (19 | ) | (15 | ) | (110 | ) | |||||||||||||||||
Gain on real estate dispositions | 66,424 | 98,203 | 43,289 | 719 | 458,280 | 214,985 | 717,273 | ||||||||||||||||||||||||
Net income | 208,832 | 651,490 | 199,148 | 152,968 | 615,191 | 393,805 | 1,361,112 | ||||||||||||||||||||||||
Net income attributable to noncontrolling interests | 1,195 | 2,259 | 1,021 | 1,137 | 1,233 | 1,251 | 4,642 | ||||||||||||||||||||||||
Net income attributable to common stockholders | $ | 207,637 | $ | 649,231 | $ | 198,127 | $ | 151,831 | $ | 613,958 | $ | 392,554 | $ | 1,356,470 | 109 | % | |||||||||||||||
Net income attributable to common stockholders per share | $ | 0.58 | $ | 1.86 | $ | 0.55 | $ | 0.42 | $ | 1.71 | $ | 1.09 | $ | 3.78 | 103 | % | |||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||||
Depreciation and amortization on real estate assets |
230,353 | 891,985 | 215,961 | 222,347 | 211,784 | 230,996 | 881,088 | ||||||||||||||||||||||||
Depreciation on real estate assets related to noncontrolling interests | (2,031 | ) | (7,785 | ) | (1,995 | ) | (1,817 | ) | (1,911 | ) | (1,842 | ) | (7,565 | ) | |||||||||||||||||
Depreciation on real estate assets related to unconsolidated entities | 1,432 | 5,754 | 1,187 | 1,458 | 855 | 731 | 4,231 | ||||||||||||||||||||||||
Gain on re-measurement of equity interest upon acquisition, net | — | — | (3,027 | ) | — | — | — | (3,027 | ) | ||||||||||||||||||||||
Gain on real estate dispositions | (66,424 | ) | (98,203 | ) | (43,289 | ) | (719 | ) | (458,280 | ) | (214,985 | ) | (717,273 | ) | |||||||||||||||||
Gain on real estate dispositions related to noncontrolling interests | — | — | — | — | 18 | — | 18 | ||||||||||||||||||||||||
Loss (gain) on real estate dispositions related to unconsolidated entities | 56 | (439 | ) | 23 | (82 | ) | (986 | ) | (12 | ) | (1,057 | ) | |||||||||||||||||||
Discontinued operations: | |||||||||||||||||||||||||||||||
Loss on real estate dispositions | — | 1 | — | — | — | — | — | ||||||||||||||||||||||||
Subtotal: FFO add-backs | 163,386 | 791,313 | 168,860 | 221,187 | (248,520 | ) | 14,888 | 156,415 | |||||||||||||||||||||||
Subtotal: FFO add-backs per share | $ | 0.46 | $ | 2.27 | $ | 0.47 | $ | 0.62 | $ | (0.69 | ) | $ | 0.04 | $ | 0.44 | ||||||||||||||||
FFO (NAREIT) attributable to common stockholders | $ | 371,023 | $ | 1,440,544 | $ | 366,987 | $ | 373,018 | $ | 365,438 | $ | 407,442 | $ | 1,512,885 | 5 | % | |||||||||||||||
FFO (NAREIT) attributable to common stockholders per share | $ | 1.04 | $ | 4.13 | $ | 1.03 | $ | 1.04 | $ | 1.02 | $ | 1.13 | $ | 4.22 | 2 | % | |||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||||
Change in fair value of financial instruments | 134 | 62 | 23 | (153 | ) | 8 | 81 | (41 | ) | ||||||||||||||||||||||
Non-cash income tax benefit | (3,395 | ) | (34,227 | ) | (4,145 | ) | (2,959 | ) | (8,515 | ) | (6,768 | ) | (22,387 | ) | |||||||||||||||||
Impact of tax reform | — | — | — | — | — | (36,539 | ) | (36,539 | ) | ||||||||||||||||||||||
(Gain) loss on extinguishment of debt, net | (386 | ) | 2,779 | 403 | 47 | 486 | (97 | ) | 839 | ||||||||||||||||||||||
(Gain) loss on non-real estate dispositions related to unconsolidated entities | — | (557 | ) | 4 | (16 | ) | (22 | ) | (5 | ) | (39 | ) | |||||||||||||||||||
Merger-related expenses, deal costs and re-audit costs | (479 | ) | 28,290 | 3,129 | 7,036 | 2,741 | 1,917 | 14,823 | |||||||||||||||||||||||
Amortization of other intangibles | 438 | 1,752 | 438 | 365 | 328 | 327 | 1,458 | ||||||||||||||||||||||||
Other items related to unconsolidated entities | — | — | 212 | 280 | 1,207 | 1,489 | 3,188 | ||||||||||||||||||||||||
Non-cash impact of changes to equity plan | — | — | 999 | 1,711 | 1,372 | 1,371 | 5,453 | ||||||||||||||||||||||||
Natural disaster expenses (recoveries), net | — | — | — | — | 9,810 | 1,791 | 11,601 | ||||||||||||||||||||||||
Subtotal: normalized FFO add-backs | (3,688 | ) | (1,901 | ) | 1,063 | 6,311 | 7,415 | (36,433 | ) | (21,644 | ) | ||||||||||||||||||||
Subtotal: normalized FFO add-backs per share | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.00 | $ | 0.02 | $ | 0.02 | $ | (0.10 | ) | $ | (0.06 | ) | |||||||||||||
Normalized FFO attributable to common stockholders | $ | 367,335 | $ | 1,438,643 | $ | 368,050 | $ | 379,329 | $ | 372,853 | $ | 371,009 | $ | 1,491,241 | 4 | % | |||||||||||||||
Normalized FFO attributable to common stockholders per share | $ | 1.03 | $ | 4.13 | $ | 1.03 | $ | 1.06 | $ | 1.04 | $ | 1.03 | $ | 4.16 | 1 | % | |||||||||||||||
Non-cash items included in normalized FFO: | |||||||||||||||||||||||||||||||
Amortization of deferred revenue and lease intangibles, net | (5,029 | ) | (20,336 | ) | (5,015 | ) | (5,834 | ) | (5,434 | ) | (4,254 | ) | (20,537 | ) | |||||||||||||||||
Other non-cash amortization, including fair market value of debt | 3,183 | 10,357 | 2,460 | 4,124 | 4,602 | 4,872 | 16,058 | ||||||||||||||||||||||||
Stock-based compensation | 5,073 | 20,958 | 5,702 | 4,984 | 5,155 | 5,249 | 21,090 | ||||||||||||||||||||||||
Straight-lining of rental income, net | (6,602 | ) | (27,988 | ) | (5,377 | ) | (5,778 | ) | (6,229 | ) | (5,750 | ) | (23,134 | ) | |||||||||||||||||
Subtotal: non-cash items included in normalized FFO | (3,375 | ) | (17,009 | ) | (2,230 | ) | (2,504 | ) | (1,906 | ) | 117 | (6,523 | ) | ||||||||||||||||||
Capital expenditures | (44,540 | ) | (124,621 | ) | (24,919 | ) | (33,148 | ) | (30,899 | ) | (49,812 | ) | (138,778 | ) | |||||||||||||||||
Normalized FAD attributable to common stockholders | $ | 319,420 | $ | 1,297,013 | $ | 340,901 | $ | 343,677 | $ | 340,048 | $ | 321,314 | $ | 1,345,940 | 4 | % | |||||||||||||||
Merger-related expenses, deal costs and re-audit costs | 479 | (28,290 | ) | (3,129 | ) | (7,036 | ) | (2,741 | ) | (1,917 | ) | (14,823 | ) | ||||||||||||||||||
Other items related to unconsolidated entities | — | — | (212 | ) | (280 | ) | (1,207 | ) | (1,489 | ) | (3,188 | ) | |||||||||||||||||||
FAD attributable to common stockholders | $ | 319,899 | $ | 1,268,723 | $ | 337,560 | $ | 336,361 | $ | 336,100 | $ | 317,908 | $ | 1,327,929 | 5 | % | |||||||||||||||
Weighted average diluted shares | 357,435 | 348,390 | 357,572 | 358,311 | 359,333 | 359,184 | 358,566 | ||||||||||||||||||||||||
1 Per share quarterly amounts may not add to annual per share amounts due to material changes in the Company’s weighted average diluted share count, if any. | |||||||||||||||||||||||||||||||
Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. However, since real estate values historically have risen or fallen with market conditions, many industry investors deem presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For that reason, the Company considers FFO, normalized FFO, FAD and normalized FAD to be appropriate supplemental measures of operating performance of an equity REIT. In particular, the Company believes that normalized FFO is useful because it allows investors, analysts and Company management to compare the Company’s operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by non-recurring items and other non-operational events such as transactions and litigation. In some cases, the Company provides information about identified non-cash components of FFO and normalized FFO because it allows investors, analysts and Company management to assess the impact of those items on the Company’s financial results.
The Company uses the National Association of Real Estate Investment Trusts (“NAREIT”) definition of FFO. NAREIT defines FFO as net income attributable to common stockholders (computed in accordance with GAAP), excluding gains or losses from sales of real estate property, including gains or losses on re-measurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. The Company defines normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) merger-related costs and expenses, including amortization of intangibles, transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to acquisition lawsuits; (b) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of the Company’s debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to the Company’s executive equity compensation plan and derivative transactions that have non-cash mark-to-market impacts on the Company’s income statement; (d) the financial impact of contingent consideration, severance-related costs and charitable donations made to the Ventas Charitable Foundation; (e) gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments; (f) gains and losses on non-real estate dispositions and other unusual items related to unconsolidated entities; (g) expenses related to the re-audit and re-review in 2014 of the Company’s historical financial statements and related matters; and (h) net expenses or recoveries related to natural disasters. Normalized FAD represents normalized FFO excluding non-cash components, which include straight-line rental adjustments, and deducting capital expenditures, including certain tenant allowances and leasing commissions. FAD represents normalized FAD after subtracting merger-related expenses, deal costs and re-audit costs and other unusual items related to unconsolidated entities.
FFO, normalized FFO, FAD and normalized FAD presented herein may not be comparable to those presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO, normalized FFO, FAD and normalized FAD should not be considered as alternatives to net income or income from continuing operations (both determined in accordance with GAAP) as indicators of the Company’s financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company’s liquidity, nor are they necessarily indicative of sufficient cash flow to fund all of the Company’s needs. The Company believes that income from continuing operations is the most comparable GAAP measure because it provides insight into the Company’s continuing operations. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO, normalized FFO, FAD and normalized FAD should be examined in conjunction with net income and income from continuing operations as presented elsewhere herein.
NON-GAAP FINANCIAL MEASURES RECONCILIATION | ||||||||||||
EPS, FFO and FAD Guidance Attributable to Common Stockholders 1,2 |
||||||||||||
(Dollars in millions, except per share amounts) | ||||||||||||
Tentative / Preliminary and Subject to Change | ||||||||||||
FY2018 - Guidance | FY2018 - Per Share | |||||||||||
Low | High | Low | High | |||||||||
Income from Continuing Operations | $484 | $505 | $1.34 | $1.40 | ||||||||
Gain on Real Estate Dispositions | 280 | 310 | 0.78 | 0.86 | ||||||||
Other Adjustments 3 | (4 | ) | (6 | ) | (0.01 | ) | (0.02 | ) | ||||
Net Income Attributable to Common Stockholders | $760 | $809 | $2.11 | $2.25 | ||||||||
Depreciation and Amortization Adjustments | 887 | 900 | 2.46 | 2.50 | ||||||||
Gain on Real Estate Dispositions | (280 | ) | (310 | ) | (0.78 | ) | (0.86 | ) | ||||
Other Adjustments 3 | — | — | — | — | ||||||||
FFO (NAREIT) Attributable to Common Stockholders | $1,367 | $1,399 | $3.80 | $3.89 | ||||||||
Merger-Related Expenses, Deal Costs and Re-Audit Costs | 13 | 8 | 0.04 | 0.02 | ||||||||
(Gain) Loss on Extinguishment of Debt, Net | 45 | 63 | 0.12 | 0.18 | ||||||||
Other Adjustments 3 | (3 | ) | (12 | ) | (0.01 | ) | (0.03 | ) | ||||
Normalized FFO Attributable to Common Stockholders | $1,422 | $1,458 | $3.95 | $4.05 | ||||||||
% Year-Over-Year Growth | (5 | )% | (3 | )% | ||||||||
Non-Cash Items Included in Normalized FFO | 19 | 17 | ||||||||||
Capital Expenditures | (138 | ) | (148 | ) | ||||||||
Normalized FAD Attributable to Common Stockholders | $1,303 | $1,327 | ||||||||||
Merger-Related Expense, Deal Costs and Re-Audit Costs | (13 | ) | (8 | ) | ||||||||
Other Adjustments 3 | (4 | ) | (2 | ) | ||||||||
FAD Attributable to Common Stockholders | $1,286 | $1,317 | ||||||||||
Weighted Average Diluted Shares (in millions) | 360 | 360 |
1 |
The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company’s expectations depending on factors discussed in the Company’s filings with the Securities and Exchange Commission. | |
2 |
Per share quarterly amounts may not add to annual per share amounts due to changes in the Company's weighted average diluted share count, if any. | |
3 |
See table titled “Funds From Operations (FFO) and Funds Available for Distribution (FAD)” for detailed breakout of adjustments for each respective category. |
NON-GAAP FINANCIAL MEASURES RECONCILIATION |
Net Debt to Adjusted Pro Forma EBITDA |
(Dollars in thousands) |
The following table illustrates net debt to pro forma earnings, which includes amounts in discontinued operations, before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding gains or losses on extinguishment of debt, consolidated joint venture partners’ share of EBITDA, merger-related expenses and deal costs, expenses related to the re-audit and re-review in 2014 of the Company’s historical financial statements, net gains or losses on real estate activity, gains or losses on re-measurement of equity interest upon acquisition, changes in the fair value of financial instruments, unrealized foreign currency gains or losses and net expenses or recoveries related to natural disasters, and including the Company’s share of EBITDA from unconsolidated entities and adjustments for other immaterial or identified items (“Adjusted EBITDA”).
The following information considers the pro forma effect on Adjusted EBITDA of the Company’s activity during the three months ended December 31, 2017, as if the transactions had been consummated as of the beginning of the period (“Adjusted Pro Forma EBITDA”).
The Company believes that net debt, Adjusted Pro Forma EBITDA and net debt to Adjusted Pro Forma EBITDA are useful to investors, analysts and Company management because they allow the comparison of the Company’s credit strength between periods and to other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual credit quality.
Income from continuing operations | $ | 178,835 | ||
Discontinued operations | (15 | ) | ||
Gain on real estate dispositions | 214,985 | |||
Net income | 393,805 | |||
Net income attributable to noncontrolling interests | 1,251 | |||
Net income attributable to common stockholders | 392,554 | |||
Adjustments: | ||||
Interest | 111,951 | |||
Gain on extinguishment of debt, net | (102 | ) | ||
Taxes (including tax amounts in general, administrative and professional fees) | (45,678 | ) | ||
Depreciation and amortization | 232,650 | |||
Non-cash stock-based compensation expense | 6,620 | |||
Merger-related expenses, deal costs and re-audit costs | 1,652 | |||
Net income (loss) attributable to noncontrolling interests, net of consolidated joint venture partners’ share of EBITDA | (3,187 | ) | ||
(Income) loss from unconsolidated entities, net of Ventas share of EBITDA from unconsolidated entities | 11,422 | |||
Gain on real estate dispositions | (214,985 | ) | ||
Unrealized foreign currency losses | 287 | |||
Change in fair value of financial instruments | 81 | |||
Natural disaster expenses (recoveries), net | 1,791 | |||
Adjusted EBITDA | 495,056 | |||
Pro forma adjustments for current period activity | (1,195 | ) | ||
Adjusted Pro Forma EBITDA | $ | 493,861 | ||
Adjusted Pro Forma EBITDA annualized | $ | 1,975,444 | ||
As of December 31, 2017: | ||||
Total debt | $ | 11,276,062 | ||
Debt on held for sale assets | 59,221 | |||
Cash | (81,355 | ) | ||
Restricted cash pertaining to debt | (70,753 | ) | ||
Consolidated joint venture partners’ share of debt | (76,668 | ) | ||
Ventas share of debt from unconsolidated entities | 90,257 | |||
Net debt | $ | 11,196,764 | ||
Net debt to Adjusted Pro Forma EBITDA | 5.7 | x |
NON-GAAP FINANCIAL MEASURES RECONCILIATION |
Net Operating Income (NOI) and Same-Store Cash NOI by Segment |
(Dollars in thousands) |
The Company considers NOI and same-store cash NOI as important supplemental measures because they allow investors, analysts and the Company’s management to assess its unlevered property-level operating results and to compare its operating results with those of other real estate companies and between periods on a consistent basis. The Company defines NOI as total revenues, less interest and other income, property-level operating expenses and office building services costs. In the case of NOI, cash receipts may differ due to straight-line recognition of certain rental income and the application of other GAAP policies. The Company believes that income from continuing operations is the most comparable GAAP measure for both NOI and same-store cash NOI because it provides insight into the Company’s continuing operations. The Company defines same-store as properties owned, consolidated, operational and reported under a consistent business model for the full period in both comparison periods, and excluding assets intended for disposition and for SHOP, those properties that transitioned operators after the start of the prior comparison period. To normalize for exchange rate movements, all same-store cash NOI measures assume constant exchange rates across comparable periods, using the following methodology: the current period’s results are shown in actual reported USD, while prior comparison period’s results are adjusted and converted to USD based on the average exchange rate for the current period.
Triple-Net Leased Properties | Senior Living Operations | Office Operations | All Other | Total | ||||||||||||||||
For the Three Months Ended December 31, 2017 | ||||||||||||||||||||
Income from continuing operations | $ | 178,835 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||
Interest and other income | (5,180 | ) | ||||||||||||||||||
Interest | 111,951 | |||||||||||||||||||
Depreciation and amortization | 232,650 | |||||||||||||||||||
General, administrative and professional fees | 34,930 | |||||||||||||||||||
Gain on extinguishment of debt, net | (102 | ) | ||||||||||||||||||
Merger-related expenses and deal costs | 1,632 | |||||||||||||||||||
Other | 3,986 | |||||||||||||||||||
Loss from unconsolidated entities | 4,355 | |||||||||||||||||||
Income tax benefit | (46,680 | ) | ||||||||||||||||||
Reported Segment NOI | $ | 206,301 | $ | 143,332 | $ | 134,014 | $ | 32,730 | 516,377 | |||||||||||
Adjustments: | ||||||||||||||||||||
Normalizing adjustment for technology costs | — | 310 | — | — | 310 | |||||||||||||||
NOI not included in same-store | (28,931 | ) | (3,444 | ) | (8,116 | ) | — | (40,491 | ) | |||||||||||
Straight-lining of rental income | (608 | ) | — | (5,142 | ) | — | (5,750 | ) | ||||||||||||
Non-cash rental income | (3,007 | ) | — | (351 | ) | — | (3,358 | ) | ||||||||||||
Non-segment NOI | — | — | — | (32,730 | ) | (32,730 | ) | |||||||||||||
(32,546 | ) | (3,134 | ) | (13,609 | ) | (32,730 | ) | (82,019 | ) | |||||||||||
Same-Store cash NOI (Constant Currency) | $ | 173,755 | $ | 140,198 | $ | 120,405 | $ | — | $ | 434,358 | ||||||||||
Percentage increase | 4.2 | % | (0.1 | )% | 1.5 | % | 2.0 | % | ||||||||||||
For the Three Months Ended December 31, 2016 | ||||||||||||||||||||
Income from continuing operations | $ | 142,575 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||
Interest and other income | (84 | ) | ||||||||||||||||||
Interest | 107,739 | |||||||||||||||||||
Depreciation and amortization | 232,189 | |||||||||||||||||||
General, administrative and professional fees | 31,488 | |||||||||||||||||||
Gain on extinguishment of debt, net | (386 | ) | ||||||||||||||||||
Merger-related expenses and deal costs | (438 | ) | ||||||||||||||||||
Other | 1,087 | |||||||||||||||||||
Income from unconsolidated entities | (2,207 | ) | ||||||||||||||||||
Income tax benefit | (2,836 | ) | ||||||||||||||||||
Reported Segment NOI | $ | 212,049 | $ |
146,616 |
$ | 130,120 | $ | 20,342 | 509,127 | |||||||||||
Adjustments: | ||||||||||||||||||||
NOI not included in same-store | (39,013 | ) | (7,099 | ) | (6,547 | ) | — |
(52,659 |
) | |||||||||||
Straight-lining of rental income | (1,774 | ) | — | (4,828 | ) | — | (6,602 | ) | ||||||||||||
Non-cash rental income | (4,782 | ) | — | (131 | ) | — | (4,913 | ) | ||||||||||||
Non-segment NOI | — | — | — |
(20,342 |
) |
|
|
(20,342 | ) | |||||||||||
NOI impact from change in FX | 330 | 854 | — | — | 1,184 | |||||||||||||||
(45,239 | ) | (6,245 | ) | (11,506 | ) | (20,342 | ) | (83,332 | ) | |||||||||||
Same-Store cash NOI (Constant Currency) | $ | 166,810 | $ | 140,371 | $ | 118,614 | $ | — |
$ |
425,795 |
||||||||||
Triple-Net Leased Properties | Senior Living Operations | Office Operations | All Other | Total | ||||||||||||||||||
For the Twelve Months Ended December 31, 2017 | ||||||||||||||||||||||
Income from continuing operations | $ | 643,949 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||
Interest and other income | (6,034 | ) | ||||||||||||||||||||
Interest | 448,196 | |||||||||||||||||||||
Depreciation and amortization | 887,948 | |||||||||||||||||||||
General, administrative and professional fees | 135,490 | |||||||||||||||||||||
Loss on extinguishment of debt, net | 754 | |||||||||||||||||||||
Merger-related expenses and deal costs | 10,535 | |||||||||||||||||||||
Other | 20,052 | |||||||||||||||||||||
Loss from unconsolidated entities | 561 | |||||||||||||||||||||
Income tax benefit | (59,799 | ) | ||||||||||||||||||||
Reported Segment NOI | $ | 844,711 | $ | 593,167 | $ | 524,566 | $ | 119,208 | 2,081,652 | |||||||||||||
Adjustments: | ||||||||||||||||||||||
Normalizing adjustment for technology costs | — | 3,375 | — | — | 3,375 | |||||||||||||||||
NOI not included in same-store | (142,448 | ) | (32,574 | ) | (125,974 | ) | — | (300,996 | ) | |||||||||||||
Straight-lining of rental income | (3,612 | ) | — | (19,521 | ) | — | (23,133 | ) | ||||||||||||||
Non-cash rental income | (16,758 | ) | — | (942 | ) | — | (17,700 | ) | ||||||||||||||
Non-segment NOI | — | — | — | (119,208 | ) | (119,208 | ) | |||||||||||||||
(162,818 | ) | (29,199 | ) | (146,437 | ) | (119,208 | ) | (457,662 | ) | |||||||||||||
Same-Store cash NOI (Constant Currency) | $ | 681,893 | $ | 563,968 | $ | 378,129 | $ | — | $ | 1,623,990 | ||||||||||||
Percentage increase | 3.7 | % | 1.3 | % | 2.0 | % | 2.5 | % | ||||||||||||||
For the Twelve Months Ended December 31, 2016 | ||||||||||||||||||||||
Income from continuing operations | $ | 554,209 | ||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||
Interest and other income | (876 | ) | ||||||||||||||||||||
Interest | 419,740 | |||||||||||||||||||||
Depreciation and amortization | 898,924 | |||||||||||||||||||||
General, administrative and professional fees | 126,875 | |||||||||||||||||||||
Loss on extinguishment of debt, net | 2,779 | |||||||||||||||||||||
Merger-related expenses and deal costs | 24,635 | |||||||||||||||||||||
Other | 9,988 | |||||||||||||||||||||
Income from unconsolidated entities | (4,358 | ) | ||||||||||||||||||||
Income tax benefit | (31,343 | ) | ||||||||||||||||||||
Reported Segment NOI | $ | 850,755 | $ | 604,328 | $ | 444,276 | $ | 101,214 | 2,000,573 | |||||||||||||
Adjustments: | ||||||||||||||||||||||
Modification fee | 2,720 | — | — | — | 2,720 | |||||||||||||||||
NOI not included in same-store | (158,884 | ) | (49,128 | ) | (63,015 | ) | — | (271,027 | ) | |||||||||||||
Straight-lining of rental income | (15,411 | ) | — | (12,577 | ) | — | (27,988 | ) | ||||||||||||||
Non-cash rental income | (20,288 | ) | — | 1,905 | — | (18,383 | ) | |||||||||||||||
Non-segment NOI | — | — | — | (101,214 | ) | (101,214 | ) | |||||||||||||||
NOI impact from change in FX | (1,037 | ) | 1,293 | — | — | 256 | ||||||||||||||||
(192,900 | ) | (47,835 | ) | (73,687 | ) | (101,214 | ) | (415,636 | ) | |||||||||||||
Same-Store cash NOI (Constant Currency) | $ | 657,855 | $ | 556,493 | $ | 370,589 | $ | — | $ | 1,584,937 | ||||||||||||
NON-GAAP FINANCIAL MEASURES RECONCILIATION | ||||||||||||||||||||
NOI and Same-Store Cash NOI by Segment Guidance 1,2 |
||||||||||||||||||||
(Dollars in millions, except per share amounts) | ||||||||||||||||||||
FY2018 - Guidance | ||||||||||||||||||||
Tentative / Preliminary and Subject to Change | ||||||||||||||||||||
NNN | SHOP | Office | Non-Segment | Total | ||||||||||||||||
High End | ||||||||||||||||||||
Income from Continuing Operations | $ | 505 | ||||||||||||||||||
Depreciation and Amortization3 | 881 | |||||||||||||||||||
Interest Expense, G&A, Other Income and Expenses4 | 615 | |||||||||||||||||||
Reported Segment NOI5 | $ | 762 | $ | 591 | $ | 538 | $ | 109 | 2,001 | |||||||||||
Normalizing Adjustment for Technology Costs6 | — | 1 | — | — | 1 | |||||||||||||||
Non-Cash and Non-Same-Store Adjustments | (49 | ) | (24 | ) | (82 | ) | (109 | ) | (264 | ) | ||||||||||
Same-Store Cash NOI5 | 713 | 568 | 456 | — | 1,738 | |||||||||||||||
Percentage Increase | 4.0 | % | (1.0 | )% | 2.75 | % | NM | 2.0 | % | |||||||||||
Modification Fees | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Adjusted Same-Store Cash NOI5 | $ | 713 | $ | 568 | $ | 455 | $ | — | $ | 1,737 | ||||||||||
Adjusted Percentage Increase | 4.0 | % | (1.0 | )% | 2.6 | % | NM | 2.0 | % | |||||||||||
Low End | ||||||||||||||||||||
Income from Continuing Operations | $ | 484 | ||||||||||||||||||
Depreciation and Amortization3 | 861 | |||||||||||||||||||
Interest Expense, G&A, Other Income and Expenses4 | 615 | |||||||||||||||||||
Reported Segment NOI5 | $ | 755 | $ | 574 | $ | 533 | $ | 94 | 1,960 | |||||||||||
Normalizing Adjustment for Technology Costs6 | — | 1 | — | — | 1 | |||||||||||||||
Non-Cash and Non-Same-Store Adjustments | (49 | ) | (24 | ) | (81 | ) | (94 | ) | (248 | ) | ||||||||||
Same-Store Cash NOI5 | 706 | 551 | 452 | — | 1,713 | |||||||||||||||
Percentage Increase | 3.0 | % | (4.0 | )% | 1.75 | % | NM | 0.5 | % | |||||||||||
Modification Fees | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Adjusted Same-Store Cash NOI5 | $ | 706 | $ | 551 | $ | 451 | $ | — | $ | 1,712 | ||||||||||
Adjusted Percentage Increase | 3.0 | % | (4.0 | )% | 1.6 | % | NM | 0.5 | % | |||||||||||
Prior Year | ||||||||||||||||||||
Income from Continuing Operations | $ | 644 | ||||||||||||||||||
Depreciation and Amortization3 | 888 | |||||||||||||||||||
Interest Expense, G&A, Other Income and Expenses4 | 550 | |||||||||||||||||||
Reported Segment NOI | $ | 845 | $ | 593 | $ | 525 | $ | 119 | 2,082 | |||||||||||
Normalizing Adjustment for Technology Costs6 | — | 3 | — | — | 3 | |||||||||||||||
Non-Cash and Non-Same-Store Adjustments | (161 | ) | (25 | ) | (81 | ) | (119 | ) | (386 | ) | ||||||||||
NOI Impact from Change in FX | 2 | 3 | — | — | 5 | |||||||||||||||
Same-Store Cash NOI | 686 | 574 | 444 | — | 1,704 | |||||||||||||||
Modification Fees | — | — | — | — | — | |||||||||||||||
Adjusted Same-Store Cash NOI | $ | 686 | $ | 574 | $ | 444 | $ | — | $ | 1,704 | ||||||||||
2018 | ||||||||||||||||||||
GBP (£) to USD ($) | 1.40 | |||||||||||||||||||
USD ($) to CAD (C$) | 1.25 |
1 |
The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. Actual results may differ materially from the Company’s expectations depending on factors discussed in the Company’s filings with the Securities and Exchange Commission. | |
2 |
See tables titled “Net Operating Income (NOI) and Same-Store Cash NOI by Segment” for the three and twelve months ended December 31, 2017 for a detailed breakout of adjustments for each respective category. | |
3 |
Includes real estate depreciation and amortization, corporate depreciation and amortization and amortization of other intangibles. | |
4 |
Includes interest expense, general and administrative expenses (including stock-based compensation), loss on extinguishment of debt, merger-related expenses and deal costs, income from unconsolidated entities, income tax benefit, and other income and expenses. | |
5 |
Totals may not add across due to minor corporate-level adjustments and rounding. | |
6 |
Represents costs expensed by one operator related to implementation of new software. |