Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated or except where the context otherwise requires, the terms “we,” “us,” “our,” “Company” and other similar terms in Item 2 of this Quarterly Report on Form 10-Q refer to Ventas, Inc. and its consolidated subsidiaries.

Cautionary Statements

Forward-Looking Statements

This Quarterly Report on Form 10-Q 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. These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and developments and other matters that are not historical facts. Forward-looking statements include, among other things, statements regarding our and our officers’ intent, belief or expectation as identified by the use of words such as “may,” “will,” “project,” “expect,” “believe,” “intend,” “anticipate,” “seek,” “target,” “forecast,” “plan,” “potential,” “opportunity,” “estimate,” “could,” “would,” “should” and other comparable and derivative terms or the negatives thereof.

Forward-looking statements are based on management’s beliefs as well as on a number of assumptions concerning future events. You should not put undue reliance on these forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors that could cause actual events or results to differ materially from those expressed or implied by the forward-looking statements. We do not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made. You are urged to carefully review the disclosures we make concerning risks and uncertainties that may affect our business and future financial performance, including those made below and in our filings with the Securities and Exchange Commission, such as in the sections titled “Cautionary Statements — Summary Risk Factors,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 and “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

Certain factors that could affect our future results and our ability to achieve our stated goals include, but are not limited to: (a) the impact of the ongoing COVID-19 pandemic and its extended consequences, including of any variants, on our revenue, level of profitability, liquidity and overall risk exposure and the implementation and impact of regulations related to the CARES Act and other stimulus legislation and any future COVID-19 relief measures; (b) our ability to achieve the anticipated benefits and synergies from, and effectively integrate, our acquisitions and investments, including our acquisition of New Senior Investment Group Inc.; (c) our exposure and the exposure of our tenants, managers and borrowers to complex healthcare and other regulation and the challenges and expense associated with complying with such regulation; (d) the potential for significant general and commercial claims, legal actions, regulatory proceedings or enforcement actions that could subject us or our tenants, managers or borrowers to increased operating costs and uninsured liabilities; (e) the impact of market and general economic conditions, including economic and financial market events, inflation, changes in interest rates and exchange rates, supply chain pressures, events that affect consumer confidence, our occupancy rates and resident fee revenues, and the actual and perceived state of the real estate markets, labor markets and public capital markets; (f) our ability, and the ability of our tenants, managers and borrowers, to navigate the trends impacting our or their businesses and the industries in which we or they operate; (g) the risk of bankruptcy, insolvency or financial deterioration of our tenants, managers, borrowers and other obligors which may, among other things, have an adverse impact on our financial results and result in recognition of impairments in our reserves, allowances or credit losses in connection therewith and the risk of our ability to foreclose successfully on the collateral securing our loans and other investments in the event of a borrower default; (h) our ability to identify and consummate future investments in or dispositions of healthcare assets and effectively manage our portfolio opportunities and our investments in co-investment vehicles, joint ventures and minority interests; (i) risks related to development, redevelopment and construction projects, including costs associated with inflation, rising interest rates, labor conditions and supply chain pressures; (j) our ability to attract and retain talented employees; (k) the limitations and significant requirements imposed upon our business as a result of our status as a REIT and the adverse consequences (including the possible loss of our status as a REIT) that would result if we are not able to comply; (l) the risk of changes in healthcare law or regulation or in tax laws, guidance and interpretations, particularly as applied to REITs, that could adversely affect us or our tenants, managers or borrowers; (m) increases in our borrowing costs as a result of becoming more leveraged, rising interest rates and the phasing out of LIBOR rates; (n) our reliance on third parties to operate a majority of our assets and our limited control and influence over such operations and results; (o) our dependency on a limited number of tenants and managers for a significant portion of our revenues and operating income; (p) the adequacy of insurance coverage provided by our policies and policies maintained by our tenants, managers or other counterparties; (q) the occurrence of cyber incidents that could disrupt our operations, result in the loss of confidential information or damage our business relationships and reputation; (r) the impact

of merger, acquisition and investment activity in the healthcare industry or otherwise affecting our tenants, managers or borrowers; (s) disruptions to the management and operations of our business and the uncertainties caused by activist investors; and (t) the risk of catastrophic or extreme weather and other natural events and the physical effects of climate change.

Note Regarding Third-Party Information

This Quarterly Report includes information that has been derived from SEC filings that has been provided to us by our tenants and managers or been derived from SEC filings or other publicly available information of our tenants and managers. We believe that such information is accurate and that the sources from which it has been obtained are reliable. However, we cannot guarantee the accuracy of such information and have not independently verified the assumptions on which such information is based.

Company Overview

Ventas, Inc., an S&P 500 company, is a real estate investment trust operating at the intersection of healthcare and real estate. We hold a highly diversified portfolio of senior housing communities, medical office buildings (“MOBs”), life science, research and innovation centers, hospitals and other healthcare facilities, which we generally refer to as “healthcare real estate,” located throughout the United States, Canada and the United Kingdom. As of September 30, 2022, we owned or had investments in approximately 1,300 properties (including properties classified as held for sale). Our company was originally founded in 1983 and is headquartered in Chicago, Illinois with additional corporate offices in Louisville, Kentucky and New York, New York.

We primarily invest in a diversified portfolio of healthcare real estate assets through wholly owned subsidiaries and other co-investment entities. We operate through three reportable business segments: triple-net leased properties, senior housing operating portfolio, which we also refer to as “SHOP” and is formerly known as senior living operations, and office operations. See our Consolidated Financial Statements and the related notes, including “Note 2 – Accounting Policies” and “Note 16 – Segment Information,” included in Item 1 of this Quarterly Report on Form 10-Q. Our senior housing communities are either subject to triple-net leases, in which case they are included in our triple-net leased properties reportable business segment, or operated by independent third-party managers, in which case they are included in our SHOP reportable business segment.

As of September 30, 2022, we leased a total of 331 properties (excluding properties within our office operations reportable business segment) to various healthcare operating companies under triple-net or absolute-net leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Our three largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”), Ardent Health Partners, LLC (together with its subsidiaries, “Ardent”) and Kindred Healthcare, LLC (together with its subsidiaries, “Kindred”) leased from us 121 properties, 30 properties and 29 properties, respectively, as of September 30, 2022.

As of September 30, 2022, pursuant to long-term management agreements, we engaged independent operators, such as Atria Senior Living, Inc. (together with its subsidiaries, including Holiday Retirement (“Holiday”), “Atria”) and Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”), to manage 558 senior housing communities for us.

Through our Lillibridge Healthcare Services, Inc. (“Lillibridge”) subsidiary and our ownership interest in PMB Real Estate Services LLC (“PMBRES”), we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and non-mortgage loans and other investments relating to senior housing and healthcare operators or properties.

We aim to enhance shareholder value by delivering consistent, superior total returns through a strategy of (1) generating reliable and growing cash flows, (2) maintaining a balanced, diversified portfolio of high-quality assets and (3) preserving our financial strength, flexibility and liquidity.

Our ability to access capital in a timely and cost-effective manner is critical to the success of our business strategy because it affects our ability to satisfy existing obligations, including the repayment of maturing indebtedness, and to make future investments. Factors such as general market conditions, interest rates, credit ratings on our securities, expectations of our potential future earnings and cash distributions, and the trading price of our common stock impact our access to and cost of external capital. For that reason, we generally attempt to match the long-term duration of our investments in real property with long-term financing through the issuance of shares of our common stock or the incurrence of long-term fixed rate debt.

2022 Highlights

Continuing Impact of and Response to COVID-19 and Its Extended Consequences

During fiscal 2020 and 2021 and continuing into fiscal 2022, our business has been and is expected to continue to be impacted by COVID-19 and its extended consequences. The trajectory and future impact of COVID-19 remains highly uncertain. The extent of COVID-19’s continuing and ultimate effect on our operational and financial performance will depend on a variety of factors, including the impact of new variants of the virus and the effectiveness of available vaccines against those variants; ongoing clinical experience, which may differ considerably across governmental and regulatory bodies and regions and fluctuate over time; and on other future developments, including the ultimate duration, spread and intensity of the outbreak, the availability of testing, the extent to which governments impose, roll-back or re-impose preventative restrictions and the availability of ongoing government financial support to our business, tenants and operators. Due to these uncertainties, we are not able at this time to estimate the ultimate impact of COVID-19 on our business, results of operations, financial condition and cash flows.

Investments and Dispositions

*•*During the nine months ended September 30, 2022, we acquired 18 MOBs leased to affiliates of Ardent, one behavioral health center and one research and innovation center, all of which are reported within our office operations segment, and two senior housing communities, which are reported within our SHOP segment, for an aggregate purchase price of $445.9 million.

During the nine months ended September 30, 2022, we sold one vacant land parcel and one vacant office building for aggregate consideration of $12.5 million and recognized a net gain on the sales of these assets of $2.6 million.

Liquidity and Capital

As of September 30, 2022, we had approximately $2.5 billion in liquidity, including availability under our revolving credit facility and cash and cash equivalents on hand, net of $377.4 million borrowings outstanding under our commercial paper program.
In June 2022, we entered into a Credit and Guaranty Agreement (the “New Credit Agreement”) with Ventas Realty, as borrower. The New Credit Agreement replaces Ventas Realty’s previous $200.0 million unsecured term loan priced at LIBOR plus 0.90% that matured in 2023 with a new $500.0 million unsecured term loan that matures in 2027 and is initially priced at Term SOFR plus 0.95% based on Ventas Realty’s debt ratings.

Other Items

*•*During the three and nine months ended September 30, 2022, we received $20.2 million and $54.2 million, respectively, in grants in connection with our Phases 3 and 4 applications to the Provider Relief Fund administered by the U.S. Department of Health & Human Services (“HHS”) on behalf of the assisted living communities in our SHOP segment to partially mitigate losses attributable to COVID-19.

Concentration Risk

We use concentration ratios to identify, understand and evaluate the potential impact of economic downturns and other adverse events that may affect our asset types, geographic locations, business models, tenants, operators and managers. We evaluate concentration risk in terms of investment mix and operations mix. Investment mix measures the percentage of our investments that is concentrated in a specific asset type or that is operated or managed by a particular tenant, operator or manager. Operations mix measures the percentage of our operating results that is attributed to a particular tenant, operator or manager, geographic location or business model.

The following tables reflect our concentration risk as of and for the periods presented:


	As of September 30, 2022		As of December 31, 2021
Investment mix by asset type (1):
Senior housing communities	66.4	%	67.4	%
MOBs	18.0		17.1
Life science, research and innovation centers	6.9		6.7
Health systems	4.9		5.0
Inpatient rehabilitation facilities (“IRFs”) and long-term acute care facilities (“LTACs”)	1.5		1.5
Skilled nursing facilities (“SNFs”)	0.6		0.6
Secured loans receivable and investments, net	1.7		1.7
Total	100.0	%	100.0	%
Investment mix by tenant, operator and manager (1):
Atria (2)	26.7	%	27.0	%
Sunrise	9.8		10.0
Brookdale Senior Living	7.8		7.8
Le Groupe Maurice	6.8		7.3

Ardent	5.3		4.7
Kindred	0.8		1.0
All other	42.8		42.2
Total	100.0	%	100.0	%

(1)Ratios are based on the gross book value of consolidated real estate investments (excluding properties classified as held for sale) as of each reporting date.

(2)Includes assets managed by Holiday, which was acquired by Atria in July 2021.


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Operations mix by tenant and operator and business model:
Revenues (1):
SHOP	64.5	%	57.2	%	64.3	%	58.0	%
Brookdale Senior Living (2)	3.6		3.8		3.6		4.0
Kindred	3.3		3.5		3.3		3.6
Ardent	3.1		3.3		3.2		3.4
All others	25.5		32.2		25.6		31.0
Total	100.0	%	100.0	%	100.0	%	100.0	%
Net operating income (“NOI”):
SHOP	36.2	%	23.2	%	35.7	%	25.4	%
Brookdale Senior Living (2)	8.0		8.2		8.1		8.6
Kindred	7.4		7.5		7.3		7.7
Ardent	7.0		7.1		7.0		7.3
All others	41.4		54.0		41.9		51.0
Total	100.0	%	100.0	%	100.0	%	100.0	%
Operations mix by geographic location (3):
California	14.3	%	14.5	%	14.4	%	15.0	%
New York	7.5		7.5		7.5		7.7
Texas	6.7		5.9		6.6		6.0
Pennsylvania	5.3		4.5		5.2		4.6
North Carolina	4.2		3.9		4.4		4.0
All others	62.0		63.7		61.9		62.7
Total	100.0	%	100.0	%	100.0	%	100.0	%

(1)Total revenues include office building and other services revenue, revenue from loans and investments and interest and other income (including amounts related to assets classified as held for sale).

(2)Results exclude eight senior housing communities which are included in the SHOP reportable business segment.

(3)Ratios are based on total revenues (including amounts related to assets classified as held for sale) for each period presented.

See “Non-GAAP Financial Measures” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure and reconciliations of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI.

Triple-Net Lease Performance and Expirations

Although our lease expirations are staggered, the non-renewal of some or all of our triple-net leases that expire in any given year could have a material adverse effect on us. During the nine months ended September 30, 2022, we had no triple-net lease renewals or expirations without renewal that, in the aggregate, had a material impact on our financial condition or results of operations for that period.

Critical Accounting Policies and Estimates

Our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the SEC instructions to Form 10-Q and Article 10 of Regulation S-X. GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain.

Our 2021 Annual Report contains additional information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. There have been no material changes to these policies in 2022. Please refer to “Note 2 – Accounting Policies” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for information regarding recently adopted accounting standards.

Results of Operations

As of September 30, 2022, we operated through three reportable business segments: triple-net leased properties, SHOP and office operations. In our triple-net leased properties reportable business segment, we invest in and own senior housing and healthcare properties throughout the United States and the United Kingdom and lease those properties to healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses. In our SHOP reportable business segment, we invest in senior housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities. In our office operations reportable business segment, we primarily acquire, own, develop, lease and manage MOBs and life science, research and innovation centers throughout the United States. Information provided for “non-segment” includes income from loans and investments and other miscellaneous income and various corporate-level expenses not directly attributable to any of our three reportable business segments. Assets included in “non-segment” consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments, and miscellaneous accounts receivable.

Our chief operating decision makers evaluate performance of the combined properties in each reportable business segment and determine how to allocate resources to those segments, in significant part, based on net operating income (“NOI”) and related measures. For further information regarding our reportable business segments and a discussion of our definition of NOI, see “Note 16 – Segment Information” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. See “Non-GAAP Financial Measures” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure and reconciliations of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI.

Three Months Ended September 30, 2022 and 2021

The table below shows our results of operations for the three months ended September 30, 2022 and 2021 and the effect of changes in those results from period to period on our net income attributable to common stockholders (dollars in thousands):


	For the Three Months Ended September 30,				Increase (Decrease) to Net Income
	2022		2021		$		%
NOI:
SHOP	$	168,611	$	104,380	$	64,231	61.5	%
Office operations	135,316		137,622		(2,306)		(1.7)
Triple-net leased properties	146,359		178,111		(31,752)		(17.8)
Non-segment	14,925		31,698		(16,773)		(52.9)
Total NOI	465,211		451,811		13,400		3.0
Interest and other income	489		417		72		17.3
Interest expense	(119,413)		(108,816)		(10,597)		(9.7)
Depreciation and amortization	(301,481)		(313,596)		12,115		3.9
General, administrative and professional fees	(35,421)		(30,259)		(5,162)		(17.1)
Loss on extinguishment of debt, net	(574)		(29,792)		29,218		98.1
Transaction expenses and deal costs	(4,782)		(22,662)		17,880		78.9
Allowance on loans receivable and investments	63		60		3		5.0
Other	(9,162)		(33,673)		24,511		72.8
Loss before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests	(5,070)		(86,510)		81,440		94.1
Income from unconsolidated entities	1,970		2,772		(802)		(28.9)
Gain on real estate dispositions	136		150,292		(150,156)		(99.9)
Income tax benefit (expense)	6,027		(3,780)		9,807		nm
Income from continuing operations	3,063		62,774		(59,711)		(95.1)
Net income	3,063		62,774		(59,711)		(95.1)
Net income attributable to noncontrolling interests	1,807		2,094		287		13.7
Net income attributable to common stockholders	$	1,256	$	60,680	$	(59,424)	(97.9)

nm - not meaningful

NOI—Senior Housing Operating Portfolio

The following table summarizes results of operations in our SHOP reportable business segment, including assets sold or classified as held for sale as of September 30, 2022 (dollars in thousands):


	For the Three Months Ended September 30,				Increase (Decrease) to NOI
	2022		2021		$		%
NOI—SHOP:
Resident fees and services	$	668,583	$	558,039	$	110,544	19.8	%
Less: Property-level operating expenses	(499,972)		(453,659)		(46,313)		(10.2)
NOI	$	168,611	$	104,380	$	64,231	61.5


	Number of Properties at September 30,		Average Unit Occupancy for the Three Months Ended September 30,				Average Monthly Revenue Per Occupied Room for the Three Months Ended September 30,
	2022	2021	2022		2021		2022		2021
Total communities	549	542	81.3	%	79.6	%	$	4,399	$	4,556

Resident fees and services include all amounts earned from residents at our senior housing communities, such as rental fees related to resident leases, extended health care fees and other ancillary service income. Property-level operating expenses related to our SHOP reportable business segment include labor, food, utilities, marketing, management and other costs of operating the properties. For senior housing communities in our SHOP reportable business segment, occupancy generally reflects average operator-reported unit occupancy for the reporting period. Average monthly revenue per occupied room reflects average resident fees and services per operator-reported occupied unit for the reporting period.

The NOI increase in our SHOP reportable business segment for the three months ended September 30, 2022 compared to the same period in 2021 was driven by acquisitions, primarily the acquisition of over 100 independent living communities from New Senior in September 2021, positive trends in occupancy and revenue and higher HHS grants received, which are reflected as a reduction in property-level operating expenses, partially offset by higher operating expenses, driven by macro inflationary impacts on labor, utilities, repairs and maintenance and food costs. During the three months ended September 30, 2022, HHS grants received reduced property-level operating expenses by $20.2 million. No HHS grants were received during the same period in 2021.

The following table compares results of operations for our 320 same-store SHOP communities (dollars in thousands). See “Non-GAAP Financial Measures**—**NOI” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure regarding same-store NOI for each of our reportable business segments.


	For the Three Months Ended September 30,				Increase (Decrease) to NOI
	2022		2021		$		%
Same-Store NOI—SHOP:
Resident fees and services	$	490,162	$	451,043	$	39,119	8.7	%
Less: Property-level operating expenses	(351,818)		(346,529)		(5,289)		(1.5)
NOI	$	138,344	$	104,514	$	33,830	32.4


	Number of Properties at September 30,		Average Unit Occupancy for the Three Months Ended September 30,				Average Monthly Revenue Per Occupied Room for the Three Months Ended September 30,
	2022	2021	2022		2021		2022		2021
Same-store communities	320	320	84.7	%	82.1	%	$	4,829	$	4,582

The NOI increase in our same-store SHOP reportable business segment for the three months ended September 30, 2022 compared to the same period in 2021 was primarily driven by positive trends in occupancy and revenue as well as higher HHS funds received, partially offset by higher operating expenses, driven by macro inflationary impacts on labor, utilities, repairs and maintenance and food costs. During the three months ended September 30, 2022, HHS grants received reduced property-level operating expenses by $20.2 million.

NOI—Office Operations

The following table summarizes results of operations in our office operations reportable business segment, including assets sold or classified as held for sale as of September 30, 2022 (dollars in thousands). For properties in our office operations reportable business segment, occupancy generally reflects occupied square footage divided by net rentable square footage as of the end of the reporting period.


	For the Three Months Ended September 30,				(Decrease) Increase to NOI
	2022		2021		$		%
NOI—Office Operations:
Rental income	$	200,867	$	201,673	$	(806)	(0.4)	%
Office building and other services revenue	547		2,872		(2,325)		(81.0)
Total revenues	201,414		204,545		(3,131)		(1.5)
Less:
Property-level operating expenses	(66,098)		(66,401)		303		0.5
Office building and other services costs	—		(522)		522		100.0
NOI	$	135,316	$	137,622	$	(2,306)	(1.7)


	Number of Properties at September 30,		Occupancy at September 30,				Annualized Average Rent Per Occupied Square Foot for the Three Months Ended September 30,
	2022	2021	2022		2021		2022		2021
Total office buildings	361	348	89.7	%	90.5	%	$	36	$	35

The NOI decrease in office operations reportable business segment for the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to dispositions of non-core assets during 2021, partially offset by leasing activity, high tenant retention, favorable expense controls and acquisitions subsequent to September 30, 2021.

The following table compares results of operations for our 332 same-store office buildings (dollars in thousands):


	For the Three Months Ended September 30,				Increase (Decrease) to NOI
	2022		2021		$		%
Same-Store NOI—Office Operations:
Rental income	$	188,929	$	183,997	$	4,932	2.7	%
Less: Property-level operating expenses	(61,471)		(59,287)		(2,184)		(3.7)
NOI	$	127,458	$	124,710	$	2,748	2.2


	Number of Properties at September 30,		Occupancy at September 30,				Annualized Average Rent Per Occupied Square Foot for the Three Months Ended September 30,
	2022	2021	2022		2021		2022		2021
Same-store office buildings	332	332	91.5	%	91.1	%	$	37	$	36

The NOI increase in our same-store office operations reportable business segment for the three months ended September 30, 2022 compared to the same period in 2021 was primarily driven by strong retention and favorable expense controls.

NOI—Triple-Net Leased Properties

The following table summarizes results of operations in our triple-net leased properties reportable business segment, including assets sold or classified as held for sale as of September 30, 2022 (dollars in thousands):


	For the Three Months Ended September 30,				Decrease to NOI
	2022		2021		$		%
NOI—Triple-Net Leased Properties:
Rental income	$	150,115	$	181,379	$	(31,264)	(17.2)	%
Less: Property-level operating expenses	(3,756)		(3,268)		(488)		(14.9)
NOI	$	146,359	$	178,111	$	(31,752)	(17.8)

In our triple-net leased properties reportable business segment, our revenues generally consist of fixed rental amounts (subject to contractual escalations) received from our tenants in accordance with the applicable lease terms. We report revenues and property-level operating expenses within our triple-net leased properties reportable business segment for real estate tax and insurance expenses that are paid from escrows collected from our tenants.

The NOI decrease in our triple-net leased properties for the three months ended September 30, 2022 compared to the same period in 2021 was primarily driven by rental income from communities that were transitioned to our senior housing operating portfolio or sold prior to the third quarter of 2022.

Occupancy rates may affect the profitability of our tenants’ operations. For senior housing communities and post-acute properties in our triple-net leased properties reportable business segment, occupancy generally reflects average operator-reported unit and bed occupancy, respectively, for the reporting period. Because triple-net financials are delivered to us following the reporting period, occupancy is reported in arrears. The following table sets forth average continuing occupancy rates for the second quarter of 2022 and 2021 related to the triple-net leased properties we owned at September 30, 2022 and 2021, respectively. The table excludes non-stabilized properties, properties owned through investments in unconsolidated real estate entities, certain properties for which we do not receive occupancy information and properties acquired or properties that transitioned operators for which we do not have a full quarter of occupancy results.


	Number of Properties Owned at September 30, 2022	Average Occupancy for the Three Months Ended June 30, 2022	Number of Properties Owned at September 30, 2021	Average Occupancy for the Three Months Ended June 30, 2021
Senior housing communities	260	76.3%	268	74.5%
SNFs	16	83.1	16	75.2
IRFs and LTACs	36	55.4	36	59.3

The following table compares results of operations for our 330 same-store triple-net leased properties (dollars in thousands):


	For the Three Months Ended September 30,				Increase (Decrease) to NOI
	2022		2021		$		%
Same-Store NOI—Triple-Net Leased Properties:
Rental income	$	147,999	$	147,816	$	183	0.1	%
Less: Property-level operating expenses	(3,616)		(2,833)		(783)		(27.6)
NOI	$	144,383	$	144,983	$	(600)	(0.4)

NOI in our same-store triple-net leased portfolio for the three months ended September 30, 2022 compared to the same period in 2021 was relatively flat.

NOI—Non-Segment

Information provided for non-segment NOI includes income from loans and investments and other miscellaneous income not directly attributable to any of our three reportable business segments. The $16.8 million decrease in non-segment NOI for the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to reduced interest income from a lower balance of loans receivable investments due to the redemption of Ardent’s senior notes and payoff of certain notes in 2021.

Company Results

Interest Expense

The $10.6 million increase in interest expense for the three months ended September 30, 2022 compared to the same period in 2021 was due to an increase of $6.6 million due to higher debt balances, an increase of $3.3 million due to a higher effective interest rate and an increase of $0.7 million due to lower capitalized interest. Our weighted average debt outstanding was $12.4 billion and $11.7 billion for the three months ended September 30, 2022 and 2021, respectively. Our weighted average effective interest rate was 3.72% and 3.61% for the three months ended September 30, 2022 and 2021, respectively. Capitalized interest was $2.0 million and $2.7 million for the three months ended September 30, 2022 and 2021, respectively.

Depreciation and Amortization

The $12.1 million decrease in depreciation and amortization expense for the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to a net decrease of $50.6 million in impairments recognized in the third quarter of 2022 as compared to the same period in 2021, partially offset by an increase of $41.7 million of depreciation on assets acquired from New Senior Investment Group Inc. (“New Senior”).

General, Administrative and Professional Fees

The $5.2 million increase in general, administrative and professional fees for the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to increased professional fees and the return to a more normalized business environment.

Loss on Extinguishment of Debt, Net

The $29.2 million decrease in loss on extinguishment of debt, net for the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to the $29.1 million loss recognized in 2021 in connection with the redemptions of approximately $700 million of senior notes due in 2022 and 2023.

Transaction Expenses and Deal Costs

The $17.9 million decrease in transaction expenses and deal costs for the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to higher costs in 2021 related to operator transitions.

Allowance on Loans Receivable and Investments

Allowance on loans receivable and investments was relatively flat for the three months ended September 30, 2022 compared to the same period in 2021.

Other

The $24.5 million decrease in other expense for the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to a decrease of $24.0 million in unrealized loss on stock warrants received in connection with the Brookdale Senior Living lease modification in the third quarter of 2020. As of September 30, 2022, the fair value of the stock warrants was $38.2 million, which was $10.1 million higher than the value at the grant date.

Income from Unconsolidated Entities

The $0.8 million decrease in income from unconsolidated entities for the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to our share of lower net income from our unconsolidated entities.

Gain on Real Estate Dispositions

The $150.2 million decrease in gain on real estate dispositions for the three months ended September 30, 2022 compared to the same period in 2021 was primarily due to the dispositions of 14 medical office buildings and one triple-net leased property that resulted in gains on sale of real estate of $148.8 million recognized during the third quarter of 2021.

Income Tax Benefit (Expense)

The $6.0 million of income tax benefit for the three months ended September 30, 2022 was primarily due to operating losses at certain of our TRS entities. The $3.8 million of income tax expense for the three months ended September 30, 2021 was primarily due to a $3.7 million deferred tax expense related to the release of certain residual tax effects from marketable debt securities.

Nine Months Ended September 30, 2022 and 2021

The table below shows our results of operations for the nine months ended September 30, 2022 and 2021 and the effect of changes in those results from period to period on our net income attributable to common stockholders (dollars in thousands):


	For the Nine Months Ended September 30,				Increase (Decrease) to Net Income
	2022		2021		$		%
NOI:
SHOP	$	494,812	$	326,340	$	168,472	51.6	%
Office operations	409,873		410,177		(304)		(0.1)
Triple-net leased properties	439,724		487,962		(48,238)		(9.9)
Non-segment	39,789		73,820		(34,031)		(46.1)
Total NOI	1,384,198		1,298,299		85,899		6.6
Interest and other income	2,191		1,343		848		63.1
Interest expense	(344,158)		(329,634)		(14,524)		(4.4)
Depreciation and amortization	(873,620)		(878,444)		4,824		0.5
General, administrative and professional fees	(111,334)		(101,156)		(10,178)		(10.1)
Loss on extinguishment of debt, net	(581)		(56,808)		56,227		99.0
Transaction expenses and deal costs	(37,852)		(28,000)		(9,852)		(35.2)
Allowance on loans receivable and investments	179		9,021		(8,842)		(98.0)
Other	(30,088)		(10,755)		(19,333)		nm
Loss before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests	(11,065)		(96,134)		85,069		88.5
(Loss) income from unconsolidated entities	(3,346)		7,289		(10,635)		(145.9)
Gain on real estate dispositions	2,557		194,083		(191,526)		(98.7)
Income tax benefit (expense)	14,307		(9,574)		23,881		nm
Income from continuing operations	2,453		95,664		(93,211)		(97.4)
Net income	2,453		95,664		(93,211)		(97.4)
Net income attributable to noncontrolling interests	4,881		5,802		921		15.9
Net (loss) income attributable to common stockholders	$	(2,428)	$	89,862	$	(92,290)	(102.7)

nm - not meaningful

NOI—Senior Housing Operating Portfolio

The following table summarizes results of operations in our SHOP reportable business segment, including assets sold or classified as held for sale as of September 30, 2022 (dollars in thousands):


	For the Nine Months Ended September 30,				Increase (Decrease) to NOI
	2022		2021		$		%
NOI—SHOP:
Resident fees and services	$	1,977,760	$	1,622,641	$	355,119	21.9	%
Less: Property-level operating expenses	(1,482,948)		(1,296,301)		(186,647)		(14.4)
NOI	$	494,812	$	326,340	$	168,472	51.6


	Number of Properties at September 30,		Average Unit Occupancy For the Nine Months Ended September 30,				Average Monthly Revenue Per Occupied Room For the Nine Months Ended September 30,
	2022	2021	2022		2021		2022		2021
Total communities	549	542	80.6	%	77.8	%	$	4,386	$	4,611

The NOI increase in our SHOP reportable business segment for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily driven by acquisitions, primarily the acquisition of over 100 independent living communities from New Senior in September 2021, positive trends in occupancy and higher HHS grants received, which are reflected as a reduction in property-level operating expenses, partially offset by higher operating expenses. During the nine months ended September 30, 2022 and 2021, HHS grants received reduced property-level operating expenses by $54.2 million and $13.6 million, respectively.

The following table compares results of operations for our 319 same-store SHOP communities (dollars in thousands):


	For the Nine Months Ended September 30,				Increase (Decrease) to NOI
	2022		2021		$		%
Same-Store NOI—SHOP:
Resident fees and services	$	1,446,875	$	1,320,954	$	125,921	9.5	%
Less: Property-level operating expenses	(1,058,222)		(1,003,008)		(55,214)		(5.5)
NOI	$	388,653	$	317,946	$	70,707	22.2


	Number of Properties at September 30,		Average Unit Occupancy For the Nine Months Ended September 30,				Average Monthly Revenue Per Occupied Room For the Nine Months Ended September 30,
	2022	2021	2022		2021		2022		2021
Same-store communities	319	319	83.7	%	80.1	%	$	4,854	$	4,627

The NOI increase in our same-store SHOP reportable business segment for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily driven by positive trends in occupancy and revenue as well as higher HHS grants received, which are reflected as a reduction in property-level operating expenses, partially offset by higher operating expenses, driven by macro inflationary impacts on labor, utilities, repairs and maintenance and food costs. During the nine months ended September 30, 2022 and 2021, HHS grants received reduced property-level operating expenses by $42.3 million and $7.5 million, respectively.

NOI—Office Operations


	For the Nine Months Ended September 30,				Increase (Decrease) to NOI
	2022		2021		$		%
NOI—Office Operations:
Rental income	$	600,648	$	599,516	$	1,132	0.2	%
Office building and other services revenue	1,834		7,756		(5,922)		(76.4)
Total revenues	602,482		607,272		(4,790)		(0.8)
Less:
Property-level operating expenses	(192,609)		(195,297)		2,688		1.4
Office building and other services costs	—		(1,798)		1,798		100.0
NOI	$	409,873	$	410,177	$	(304)	(0.1)


	Number of Properties at September 30,		Occupancy at September 30,				Annualized Average Rent Per Occupied Square Foot For the Nine Months Ended September 30,
	2022	2021	2022		2021		2022		2021
Total office buildings	361	348	89.7	%	90.5	%	$	36	$	34

The NOI decrease in our office operations reportable business segment for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily due to dispositions of non-core assets during 2021, partially offset by high tenant retention, leasing activity, acquisitions subsequent to September 30, 2021 and favorable expense controls.

The following table compares results of operations for our 331 same-store office buildings (dollars in thousands):


	For the Nine Months Ended September 30,				Increase (Decrease) to NOI
	2022		2021		$		%
Same-Store NOI—Office Operations:
Rental income	$	562,152	$	542,183	$	19,969	3.7	%
Less: Property-level operating expenses	(179,420)		(172,300)		(7,120)		(4.1)
NOI	$	382,732	$	369,883	$	12,849	3.5


	Number of Properties at September 30,		Occupancy at September 30,				Annualized Average Rent Per Occupied Square Foot For the Nine Months Ended September 30,
	2022	2021	2022		2021		2022		2021
Same-store office buildings	331	331	91.8	%	91.5	%	$	36	$	35

The NOI increase in our same-store office operations reportable business segment for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily due to leasing activity, high tenant retention, improved parking income and favorable expense controls.

NOI—Triple-Net Leased Properties


	For the Nine Months Ended September 30,				(Decrease) Increase to NOI
	2022		2021		$		%
NOI—Triple-Net Leased Properties:
Rental income	$	451,073	$	500,487	$	(49,414)	(9.9)	%
Less: Property-level operating expenses	(11,349)		(12,525)		1,176		9.4
NOI	$	439,724	$	487,962	$	(48,238)	(9.9)

The NOI decrease in our triple-net leased properties for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily driven by a reduction in rental income from communities that were transitioned to our senior housing operating portfolio or sold prior to the third quarter of 2022 and prior lease resolutions with tenants who were materially affected by the COVID-19 pandemic.

The following table compares results of operations for our 330 same-store triple-net leased properties (dollars in thousands):


	For the Nine Months Ended September 30,				Decrease to NOI
	2022		2021		$		%
Same-Store NOI—Triple-Net Leased Properties:
Rental income	$	444,686	$	445,180	$	(494)	(0.1)	%
Less: Property-level operating expenses	(10,769)		(10,055)		(714)		(7.1)
NOI	$	433,917	$	435,125	$	(1,208)	(0.3)

NOI in our same-store triple-net leased properties reportable business segment for the nine months ended September 30, 2022 compared to the same period in 2021 was relatively flat.

NOI—Non-Segment

The $34.0 million decrease in non-segment NOI for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily due to reduced interest income from a lower balance of loans receivable investments due to the redemption of Ardent’s senior notes, payoff of certain notes and sale of marketable debt securities in 2021.

Company Results

Interest Expense

The $14.5 million increase in interest expense for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily due to an increase of $14.6 million due to higher debt balances and an increase of $1.3 million due to lower capitalized interest, partially offset by a decrease of $1.8 million due to a lower effective interest rate. Our weighted average debt outstanding was $12.4 billion and $11.9 billion for the nine months ended September 30, 2022 and 2021, respectively. Our weighted average effective interest rate was 3.58% and 3.60% for the nine months ended September 30, 2022 and 2021, respectively. Capitalized interest for the nine months ended September 30, 2022 and 2021 was $7.2 million and $8.5 million, respectively.

Depreciation and Amortization

Depreciation and amortization expense was relatively flat for the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to decreased impairments recorded relating to properties that were sold or classified as held for sale, partially offset by increased depreciation on assets acquired primarily from New Senior.

General, Administrative and Professional Fees

The $10.2 million increase in general, administrative and professional fees was primarily due to the return to a more normalized business environment and the inclusion of a portion of New Senior’s overhead.

Loss on Extinguishment of Debt, Net

The $56.2 million decrease in loss on extinguishment of debt, net for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily due to $56.8 million of losses recognized during 2021 in connection with the redemptions of $1.1 billion of senior notes due in 2022 and 2023.

Transaction Expenses and Deal Costs

The $9.9 million increase in transaction expenses and deal costs was primarily attributable to $20.5 million incurred in connection with stockholder relations matters in 2022, partially offset by $15.2 million increased costs associated with operator transitions in 2021.

Allowance on Loans Receivable and Investments

The $8.8 million decrease in allowance on loans receivable and investments was primarily due to the reversal of a previously recorded credit loss in the first quarter of 2021 as a result of successful collections.

Other

The $19.3 million increase in other expense was primarily due to an increase of $29.5 million in unrealized loss on the stock warrants received in connection with the Brookdale Senior Living lease modification in the third quarter of 2020, partially offset by $7.9 million of additional expenses in 2021 relating to natural disaster events. As of September 30, 2022, the fair value of the stock warrants was $38.2 million, which was $10.1 million higher than the value at the grant date.

(Loss) Income from Unconsolidated Entities

The $10.6 million change in (loss) income from unconsolidated entities for the nine months ended September 30, 2022 compared to the same period in 2021 was primarily due to our share of increased net loss from our unconsolidated entities.

Gain on Real Estate Dispositions

The $191.5 million decrease in gain on real estate dispositions was primarily due to $194.1 million in gains during 2021 for the sale of 33 properties, partially offset by the net gain of $2.6 million in 2022 for the sale of a vacant land parcel and a vacant office building.

Income Tax Benefit (Expense)

The $14.3 million of income tax benefit for the nine months ended September 30, 2022 was primarily due to losses in certain of our TRS entities and a $2.0 million benefit from an internal restructuring of a U.S. taxable REIT subsidiary. The $9.6 million of income tax expense for the same period in 2021 was primarily due to a $3.7 million deferred tax expense related to the release of certain residual tax effects from marketable debt securities, a $2.9 million net deferred tax expense related to an internal restructuring of certain U.S. taxable REIT subsidiaries, and a $3.4 million deferred tax expense related to the revaluation of certain deferred tax liabilities as a result of enacted tax rate changes in the United Kingdom.

Non-GAAP Financial Measures

We consider certain non-GAAP financial measures to be useful supplemental measures of our operating performance. A non-GAAP financial measure is a measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are not so excluded from or included in the most directly comparable measure calculated and presented in accordance with U.S. GAAP. Described below are the non-GAAP financial measures used by management to evaluate our operating performance and that we consider most useful to investors, together with reconciliations of these measures to the most directly comparable GAAP measures.

The non-GAAP financial measures we present in this Quarterly Report on Form 10-Q 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. You should not consider these measures as alternatives to net income attributable to common stockholders (determined in accordance with GAAP) as indicators of our financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of our liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. In order to facilitate a clear understanding of our consolidated historical operating results, you should examine these measures in conjunction with net income attributable to common stockholders as presented in our Consolidated Financial Statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q.

Funds From Operations and Normalized Funds From Operations Attributable to Common Stockholders

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, we consider Funds From Operations attributable to common stockholders (“FFO”) and Normalized FFO to be appropriate supplemental measures of operating performance of an equity REIT. We believe that the presentation of FFO, combined with the presentation of required GAAP financial measures, has improved the understanding of operating results of REITs among the investing public and has helped make comparisons of REIT operating results more meaningful. Management generally considers FFO to be a useful measure for understanding and comparing our operating results because, by excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment losses on depreciable real estate and real estate asset depreciation and amortization (which can differ across owners of similar assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a company’s real estate across reporting periods and to the operating performance of other companies. We believe that Normalized FFO is useful because it allows investors, analysts and our management to compare our operating performance to the operating performance of other real estate companies across 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, we provide information about identified non-cash components of FFO and Normalized FFO because it allows investors, analysts and our management to assess the impact of those items on our financial results.

We use 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 gain (or loss) 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 entities and noncontrolling interests. Adjustments for unconsolidated entities and noncontrolling interests will be calculated to reflect FFO on the same basis. We define Normalized FFO as Nareit FFO excluding the following income and expense items, without duplication: (a) transaction expenses and deal costs, including transaction, integration and severance-related costs and expenses, and amortization of intangibles, in each case net of noncontrolling interests’ share of these items and including Ventas’ share of these items from unconsolidated entities; (b) the impact of 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 our debt; (c) the non-cash effect of income tax benefits or expenses, the non-cash impact of changes to our executive equity compensation plan, derivative transactions that have non-cash mark-to-market impacts on our Consolidated Statements of Income and non-cash charges related to leases; (d) the financial impact of contingent consideration; (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 items related to unconsolidated entities; (g) net expenses or recoveries related to materially disruptive events; and (h) other items set forth in the Normalized FFO reconciliation included herein.

The following table summarizes our FFO and Normalized FFO for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands). The increase in Normalized FFO for the nine months ended September 30, 2022 over the same period in 2021 is primarily due to increased net operating income at our senior housing communities as a result of improved occupancy, acquisitions since the second quarter of 2021, including the acquisition of over 100 independent living communities from New Senior, and higher HHS grants received, partially offset by lower interest income on loan investments.


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net income (loss) attributable to common stockholders	$	1,256	$	60,680	$	(2,428)	$	89,862
Adjustments:
Depreciation and amortization on real estate assets	300,796		312,524		871,212		874,920
Depreciation on real estate assets related to noncontrolling interests	(4,315)		(4,641)		(13,099)		(13,937)
Depreciation on real estate assets related to unconsolidated entities	8,980		4,474		23,866		13,107
Gain on real estate dispositions	(136)		(150,292)		(2,557)		(194,083)
Gain on real estate dispositions related to noncontrolling interests	21		232		38		225
Gain on real estate dispositions and other related to unconsolidated entities	(2,388)		—		(2,689)		—

Nareit FFO attributable to common stockholders	304,214		222,977		874,343		770,094
Adjustments:
Change in fair value of financial instruments	415		25,451		8,371		(18,768)
Non-cash income tax (benefit) expense	(5,777)		2,146		(16,961)		4,656
Loss on extinguishment of debt, net of noncontrolling interests and including Ventas’ share attributable to unconsolidated entities	574		34,654		581		61,670
Gain on transactions related to unconsolidated entities	—		(8,808)		(3)		(8,839)
Transaction expenses and deal costs, net of noncontrolling interests and including Ventas’ share attributable to unconsolidated entities	6,551		25,531		42,866		32,660
Amortization of other intangibles including Ventas’ share attributable to unconsolidated entities	268		(22,085)		804		(21,853)
Other items related to unconsolidated entities	170		987		(984)		1,131
Non-cash impact of changes to equity plan	(2,565)		(2,359)		2,252		4,084
Materially disruptive events, net including Ventas’ share attributable to unconsolidated entities	1,982		1,552		347		9,807


Allowance on loan investments, net of noncontrolling interests	(61)		(58)		(175)		(9,015)
Normalized FFO attributable to common stockholders	$	305,771	$	279,988	$911,441		$825,627

NOI

We also consider NOI an important supplemental measure because it allows investors, analysts and our management to assess our unlevered property-level operating results and to compare our operating results with those of other real estate companies and between periods on a consistent basis. We define NOI as total revenues, less interest and other income, property-level operating expenses and office building and other services costs.

The following table sets forth a reconciliation of net income attributable to common stockholders to NOI (dollars in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2022		2021		2022		2021
Net income (loss) attributable to common stockholders	$	1,256	$	60,680	$	(2,428)	$	89,862
Adjustments:
Interest and other income	(489)		(417)		(2,191)		(1,343)
Interest expense	119,413		108,816		344,158		329,634
Depreciation and amortization	301,481		313,596		873,620		878,444
General, administrative and professional fees	35,421		30,259		111,334		101,156
Loss on extinguishment of debt, net	574		29,792		581		56,808
Transaction expenses and deal costs	4,782		22,662		37,852		28,000
Allowance on loans receivable and investments	(63)		(60)		(179)		(9,021)
Other	9,162		33,673		30,088		10,755
Net income attributable to noncontrolling interests	1,807		2,094		4,881		5,802
(Income) loss from unconsolidated entities	(1,970)		(2,772)		3,346		(7,289)
Income tax (benefit) expense	(6,027)		3,780		(14,307)		9,574
Gain on real estate dispositions	(136)		(150,292)		(2,557)		(194,083)
NOI	$	465,211	$	451,811	$	1,384,198	$	1,298,299

See “Results of Operations” for discussions regarding both NOI and same-store NOI. We define same-store as properties owned, consolidated and operational for the full period in both comparison periods and that are not otherwise excluded; provided, however, that we may include selected properties that otherwise meet the same-store criteria if they are included in substantially all of, but not a full, period for one or both of the comparison periods, and in our judgment such inclusion provides a more meaningful presentation of our segment performance.

Newly acquired development properties and recently developed or redeveloped properties in our SHOP reportable business segment will be included in same-store once they are stabilized for the full period in both periods presented. These properties are considered stabilized upon the earlier of (a) the achievement of 80% sustained occupancy or (b) 24 months from the date of acquisition or substantial completion of work. Recently developed or redeveloped properties in our office operations and triple-net leased properties reportable business segments will be included in same-store once substantial completion of work has occurred for the full period in both periods presented. Our senior housing operating portfolio and triple-net leased properties that have undergone operator or business model transitions will be included in same-store once operating under consistent operating structures for the full period in both periods presented.

Properties are excluded from same-store if they are: (i) sold, classified as held for sale or properties whose operations were classified as discontinued operations in accordance with GAAP; (ii) impacted by materially disruptive events such as flood or fire; (iii) for SHOP, those properties that are currently undergoing a materially disruptive redevelopment; (iv) for our office operations and triple-net leased properties reportable business segments, those properties for which management has an intention to institute, or has instituted, a redevelopment plan because the properties may require major property-level expenditures to maximize value, increase NOI, or maintain a market-competitive position and/or achieve property stabilization, most commonly as the result of an expected or actual material change in occupancy or NOI; or (v) for SHOP and triple-net leased properties reportable business segments, those properties that are scheduled to undergo operator or business model transitions, or have transitioned operators or business models after the start of the prior comparison period.

To eliminate the impact of exchange rate movements, all portfolio performance-based disclosures 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.

Liquidity and Capital Resources

Our principal sources of liquidity are cash flows from operations, proceeds from the issuance of debt and equity securities, borrowings under our unsecured revolving credit facility and commercial paper program, and proceeds from asset sales.

For the next 12 months, our principal liquidity needs are to: (i) fund operating expenses; (ii) meet our debt service requirements; (iii) repay maturing mortgage and other debt; (iv) fund acquisitions, investments and commitments and any development and redevelopment activities; (v) fund capital expenditures; and (vi) make distributions to our stockholders and unitholders, as required for us to continue to qualify as a REIT. Depending upon the availability of external capital, we believe our liquidity is sufficient to fund these uses of cash. We expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our revolving credit facilities and commercial paper program. However, an inability to access liquidity through multiple capital sources concurrently could have a material adverse effect on us.

Our material contractual obligations arising in the normal course of business primarily consist of long-term debt and related interest payments, and operating obligations which include ground lease obligations. During the nine months ended September 30, 2022, there were no significant changes to our contractual obligations from those disclosed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report. See “Note 10 – Senior Notes Payable And Other Debt” of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information regarding our significant debt activities.

While decreased revenue and net operating income as a result of COVID-19 could lead to downgrades of our short- or long-term credit ratings and therefore adversely impact our cost of borrowing, we currently believe we will continue to have access to one or more debt markets during the duration of COVID-19 and could seek to enter into secured debt financings or issue debt and equity securities to satisfy our liquidity needs, although no assurances can be made in this regard.

Credit Facilities, Commercial Paper and Unsecured Term Loans

We have a $2.75 billion unsecured revolving credit facility initially priced at LIBOR plus 0.825% based on the Company’s debt rating. The unsecured revolving credit facility matures in January 2025, but may be extended at our option, subject to the satisfaction of certain conditions, for two additional periods of six months each. The credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $3.75 billion, subject to the satisfaction of certain conditions, including the receipt of additional commitments for such increase.

As of September 30, 2022, we had $2.7 billion of undrawn capacity on our unsecured revolving credit facility with $31.1 million borrowings outstanding and an additional $15.6 million restricted to support outstanding letters of credit. We limit our use of the unsecured revolving credit facility, to the extent necessary, to support our commercial paper program when commercial paper notes are outstanding.

Our wholly owned subsidiary, Ventas Realty, Limited Partnership (“Ventas Realty”), may issue from time to time unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $1.0 billion. The notes are sold under customary terms in the U.S. commercial paper note market and are ranked pari passu with all of Ventas Realty’s other unsecured senior indebtedness. The notes are fully and unconditionally guaranteed by Ventas, Inc. As of September 30, 2022, we had $377.4 million in borrowings outstanding under our commercial paper program.

In June 2022, we entered into a Credit and Guaranty Agreement (the “New Credit Agreement”) with Ventas Realty, as borrower. The New Credit Agreement replaces Ventas Realty’s previous $200.0 million unsecured term loan priced at LIBOR plus 0.90% that matured in 2023 with a new $500.0 million unsecured term loan that matures in 2027 and is initially priced at Term SOFR plus 0.95% based on Ventas Realty’s debt ratings. The New Credit Agreement also includes an accordion feature that permits us to increase our aggregate borrowings thereunder to up to $1.25 billion, subject to the satisfaction of certain conditions, including the receipt of additional commitments for such increase.

As of September 30, 2022, we had a C$500.0 million unsecured term loan facility priced at Canadian Dollar Offered Rate (“CDOR”) plus 0.90% that matures in 2025.

Senior Notes

We may, from time to time, seek to retire or purchase our outstanding senior notes for cash or in exchange for equity securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, prospects for capital and other factors. The amounts involved may be material.

Equity Offerings

We participate in an “at-the-market” equity offering program (“ATM program”), pursuant to which we may, from time to time, sell up to $1.0 billion aggregate gross sales price of shares of our common stock. There were no issuances under the ATM program for the nine months ended September 30, 2022. As of September 30, 2022, $1.0 billion aggregate gross sales price of shares of our common stock remains available for issuance under the ATM program.

Derivatives and Hedging

In the normal course of our business, interest rate fluctuations affect future cash flows under our variable rate debt obligations, loans receivable and marketable debt securities, and foreign currency exchange rate fluctuations affect our operating results. We follow established risk management policies and procedures, including the use of derivative instruments, to mitigate the impact of these risks.

Dividends

During the nine months ended September 30, 2022, we declared a dividend of $0.45 per share of our common stock in each of the first, second and third quarter. In order to continue to qualify as a REIT, we must make annual distributions to our stockholders of at least 90% of our REIT taxable income (excluding net capital gain). In addition, we will be subject to income tax at the regular corporate rate to the extent we distribute less than 100% of our REIT taxable income, including any net capital gains. We intend to pay dividends greater than 100% of our taxable income, after the use of any net operating loss carryforwards, for 2022.

We expect that our cash flows will exceed our REIT taxable income due to depreciation and other non-cash deductions in computing REIT taxable income and that we will be able to satisfy the 90% distribution requirement. However, from time to time, we may not have sufficient cash on hand or other liquid assets to meet this requirement or we may decide to retain cash or distribute such greater amount as may be necessary to avoid income and excise taxation. If we do not have sufficient cash on hand or other liquid assets to enable us to satisfy the 90% distribution requirement, or if we desire to retain cash, we may borrow funds, issue additional equity securities, pay taxable stock dividends, if possible, distribute other property or securities or engage in a transaction intended to enable us to meet the REIT distribution requirements or any combination of the foregoing.

Cash Flows

The following table sets forth our sources and uses of cash flows for the nine months ended September 30, 2022 and 2021 (dollars in thousands):


	For the Nine Months Ended September 30,				(Decrease) Increase to Cash
	2022		2021		$		%
Cash, cash equivalents and restricted cash at beginning of period	$	196,597	$	451,640	$	(255,043)	(56.5)%
Net cash provided by operating activities	852,910		760,315		92,595		12.2
Net cash used in investing activities	(725,321)		(716,343)		(8,978)		(1.3)
Net cash used in financing activities	(124,956)		(299,612)		174,656		58.3
Effect of foreign currency translation	(3,592)		522		(4,114)		nm
Cash, cash equivalents and restricted cash at end of period	$	195,638	$	196,522	$	(884)	(0.4)

nm - not meaningful

Cash Flows from Operating Activities

Cash flows from operating activities increased $92.6 million during the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to increased net operating income at our senior housing communities as a result of improved occupancy, HHS grants received and acquisitions including the acquisition of over 100 independent living communities from New Senior, partially offset by decreased net operating income at our triple-net leased properties as a result of a reduction in rental income from communities that were transitioned to our senior housing operating portfolio or sold prior to the third quarter of 2022.

Cash Flows from Investing Activities

Cash flows from investing activities decreased $9.0 million during the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to decreased proceeds from real estate dispositions and fewer proceeds received from the repayment of loans receivable, partially offset by decreased acquisitions and lower development project expenditures in 2022.

Cash Flows from Financing Activities

Cash flows from financing activities increased $174.7 million during the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to the 2021 redemptions of $1.1 billion of senior notes due in 2022 and 2023, partially offset by the 2021 issuance of 10.9 million shares of common stock through our ATM equity offering program and decreased borrowings under our commercial paper program in 2022.

Capital Expenditures

The terms of our triple-net leases generally obligate our tenants to pay all capital expenditures necessary to maintain and improve our triple-net leased properties. However, from time to time, we may fund the capital expenditures for our triple-net leased properties through loans or advances to the tenants, which may increase the amount of rent payable with respect to the properties in certain cases. We may also fund capital expenditures for which we may become responsible upon expiration of our triple-net leases or in the event that our tenants are unable or unwilling to meet their obligations under those leases. We also expect to fund capital expenditures related to our SHOP and office operations reportable business segments with the cash flows from the properties or through additional borrowings. We expect that these liquidity needs generally will be satisfied by a combination of the following: cash flows from operations, cash on hand, debt assumptions and financings (including secured financings), issuances of debt and equity securities, dispositions of assets (in whole or in part through joint venture arrangements with third parties) and borrowings under our revolving credit facilities.

To the extent that unanticipated capital expenditure needs arise or significant borrowings are required, our liquidity may be affected adversely. Our ability to borrow additional funds may be restricted in certain circumstances by the terms of the instruments governing our outstanding indebtedness.

We are party to certain agreements that obligate us to develop senior housing or healthcare properties funded through capital that we and, in certain circumstances, our joint venture partners provide. As of September 30, 2022, we had 15 properties under development pursuant to these agreements, including six properties that are owned by an unconsolidated real estate entity. In addition, from time to time, we engage in redevelopment projects with respect to our existing senior housing communities to maximize the value, increase NOI, maintain a market-competitive position, achieve property stabilization or change the primary use of the property.

Off-Balance Sheet Arrangements

We own interests in certain unconsolidated entities as described in “Note 7 – Investments In Unconsolidated Entities.” Except in limited circumstances, our risk of loss is limited to our investment in the joint venture and any outstanding loans receivable. In addition, we have certain properties which serve as collateral for debt that is owed by a previous owner of certain of our facilities, as described under “Note 10 – Senior Notes Payable And Other Debt” to the Consolidated Financial Statements. Our risk of loss for these certain properties is limited to the outstanding debt balance plus penalties, if any. Further, we use financial derivative instruments to hedge interest rate and foreign currency exchange rate exposure. Finally, at September 30, 2022, we had $15.6 million outstanding letters of credit obligations. We have no other material off-balance sheet arrangements that we expect would materially affect our liquidity and capital resources except those described above.

Guarantor and Issuer Financial Information

Ventas, Inc. has fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100% owned subsidiary, Ventas Realty. None of our other subsidiaries is obligated with respect to Ventas Realty’s outstanding senior notes.

Ventas, Inc. has also fully and unconditionally guaranteed the obligation to pay principal and interest with respect to the outstanding senior notes issued by our 100% owned subsidiary, Ventas Canada Finance Limited (“Ventas Canada”). None of our other subsidiaries is obligated with respect to Ventas Canada’s outstanding senior notes, all of which were issued on a private placement basis in Canada.

Under certain circumstances, contractual and legal restrictions, including those contained in the instruments governing our subsidiaries’ outstanding mortgage indebtedness, may restrict our ability to obtain cash from our subsidiaries for the purpose of meeting our debt service obligations, including our payment guarantees with respect to Ventas Realty’s and Ventas Canada’s senior notes.

The following summarizes our guarantor and issuer balance sheet and statement of income information as of September 30, 2022 and December 31, 2021 and for the nine months ended September 30, 2022 and the year ended December 31, 2021 (in thousands).

Balance Sheet Information


	As of September 30, 2022
	Guarantor		Issuer
Assets
Investment in and advances to affiliates	$	17,689,343	$	3,045,738
Total assets	17,788,139		3,158,274
Liabilities and equity
Intercompany loans	11,561,972		(3,822,831)
Total liabilities	11,781,799		4,216,515
Redeemable OP unitholder and noncontrolling interests	106,070		—
Total equity (deficit)	5,900,270		(1,058,241)
Total liabilities and equity	17,788,139		3,158,274


	As of December 31, 2021
	Guarantor		Issuer
Assets
Investment in and advances to affiliates	$	17,448,874	$	3,045,738




Total assets	17,561,305		3,156,840
Liabilities and equity
Intercompany loans	10,742,915		(3,563,060)
Total liabilities	10,972,521		4,097,362
Redeemable OP unitholder and noncontrolling interests	98,356		—
Total equity (deficit)	6,490,428		(940,522)
Total liabilities and equity	17,561,305		3,156,840

Statement of Income Information


	For the Nine Months Ended September 30, 2022
	Guarantor		Issuer
Equity earnings in affiliates	$	71,232	$	—
Total revenues	76,951		111,694
Loss before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests	(894)		(125,368)
Net loss	(2,428)		(125,368)
Net loss attributable to common stockholders	(2,428)		(125,368)


	For the Year Ended December 31, 2021
	Guarantor		Issuer
Equity earnings in affiliates	$	133,143	$	—
Total revenues	137,348		158,255
Income (loss) before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests	49,694		(215,773)
Net income (loss)	49,008		(215,777)
Net income (loss) attributable to common stockholders	49,008		(215,777)

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