filings.toolsItem 1. CONSOLIDATED FINANCIAL STATEMENTS
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Item 1. CONSOLIDATED FINANCIAL STATEMENTS
VENTAS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts, unaudited)
| As of September 30, 2024 | As of December 31, 2023 | ||||||||||
| Assets | |||||||||||
| Real estate investments: | |||||||||||
| Land and improvements | $ | 2,638,649 | $ | 2,596,274 | |||||||
| Buildings and improvements | 27,626,929 | 27,201,381 | |||||||||
| Construction in progress | 362,189 | 368,143 | |||||||||
| Acquired lease intangibles | 1,460,883 | 1,448,146 | |||||||||
| Operating lease assets | 309,765 | 312,142 | |||||||||
| 32,398,415 | 31,926,086 | ||||||||||
| Accumulated depreciation and amortization | (10,888,157) | (10,177,136) | |||||||||
| Net real estate property | 21,510,258 | 21,748,950 | |||||||||
| Secured loans receivable and investments, net | 144,797 | 27,986 | |||||||||
| Investments in unconsolidated real estate entities | 622,996 | 598,206 | |||||||||
| Net real estate investments | 22,278,051 | 22,375,142 | |||||||||
| Cash and cash equivalents | 1,104,733 | 508,794 | |||||||||
| Escrow deposits and restricted cash | 60,964 | 54,668 | |||||||||
| Goodwill | 1,045,955 | 1,045,176 | |||||||||
| Assets held for sale | 50,637 | 56,489 | |||||||||
| Deferred income tax assets, net | 3,495 | 1,754 | |||||||||
| Other assets | 803,354 | 683,410 | |||||||||
| Total assets | $ | 25,347,189 | $ | 24,725,433 | |||||||
| Liabilities and equity | |||||||||||
| Liabilities: | |||||||||||
| Senior notes payable and other debt | $ | 13,668,871 | $ | 13,490,896 | |||||||
| Accrued interest | 113,753 | 117,403 | |||||||||
| Operating lease liabilities | 215,440 | 194,734 | |||||||||
| Accounts payable and other liabilities | 1,148,752 | 1,041,616 | |||||||||
| Liabilities related to assets held for sale | 5,252 | 9,243 | |||||||||
| Deferred income tax liabilities | 36,755 | 24,500 | |||||||||
| Total liabilities | 15,188,823 | 14,878,392 | |||||||||
| Redeemable OP unitholder and noncontrolling interests | 329,688 | 302,636 | |||||||||
| Commitments and contingencies | |||||||||||
| Equity: | |||||||||||
| Ventas stockholders’ equity: | |||||||||||
| Preferred stock, $1.00 par value; 10,000 shares authorized, unissued | — | — | |||||||||
| Common stock, $0.25 par value; 600,000 shares authorized, 419,267 and 402,380 shares outstanding at September 30, 2024 and December 31, 2023, respectively | 104,723 | 100,648 | |||||||||
| Capital in excess of par value | 16,466,182 | 15,650,734 | |||||||||
| Accumulated other comprehensive loss | (38,472) | (35,757) | |||||||||
| Retained earnings (deficit) | (6,748,224) | (6,213,803) | |||||||||
| Treasury stock, 3 and 279 shares issued at September 30, 2024 and December 31, 2023, respectively | (25,115) | (13,764) | |||||||||
| Total Ventas stockholders’ equity | 9,759,094 | 9,488,058 | |||||||||
| Noncontrolling interests | 69,584 | 56,347 | |||||||||
| Total equity | 9,828,678 | 9,544,405 | |||||||||
| Total liabilities and equity | $ | 25,347,189 | $ | 24,725,433 |
See accompanying notes.
VENTAS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts, unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Rental income: | |||||||||||||||||||||||
| Triple-net leased properties | $ | 155,349 | $ | 159,812 | $ | 464,651 | $ | 463,906 | |||||||||||||||
| Outpatient medical and research portfolio | 220,957 | 226,326 | 658,687 | 645,137 | |||||||||||||||||||
| 376,306 | 386,138 | 1,123,338 | 1,109,043 | ||||||||||||||||||||
| Resident fees and services | 845,532 | 754,417 | 2,476,436 | 2,184,024 | |||||||||||||||||||
| Third party capital management revenues | 4,392 | 5,315 | 13,020 | 13,488 | |||||||||||||||||||
| Income from loans and investments | 1,881 | 1,208 | 4,606 | 21,351 | |||||||||||||||||||
| Interest and other income | 8,204 | 2,754 | 19,809 | 5,529 | |||||||||||||||||||
| Total revenues | 1,236,315 | 1,149,832 | 3,637,209 | 3,333,435 | |||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Interest | 150,437 | 147,919 | 449,629 | 419,259 | |||||||||||||||||||
| Depreciation and amortization | 304,268 | 370,377 | 944,371 | 957,185 | |||||||||||||||||||
| Property-level operating expenses: | |||||||||||||||||||||||
| Senior housing | 631,550 | 573,715 | 1,844,730 | 1,658,047 | |||||||||||||||||||
| Outpatient medical and research portfolio | 77,479 | 78,915 | 224,703 | 217,999 | |||||||||||||||||||
| Triple-net leased properties | 4,379 | 3,847 | 11,623 | 11,180 | |||||||||||||||||||
| 713,408 | 656,477 | 2,081,056 | 1,887,226 | ||||||||||||||||||||
| Third party capital management expenses | 1,553 | 1,472 | 4,956 | 4,614 | |||||||||||||||||||
| General, administrative and professional fees | 35,092 | 33,297 | 121,556 | 112,494 | |||||||||||||||||||
| Loss (gain) on extinguishment of debt, net | — | 612 | 672 | (6,189) | |||||||||||||||||||
| Transaction, transition and restructuring costs | 8,580 | 7,125 | 16,143 | 11,580 | |||||||||||||||||||
| Recovery of allowance on loans receivable and investments, net | (56) | (66) | (166) | (20,195) | |||||||||||||||||||
| Gain on foreclosure of real estate | — | — | — | (29,127) | |||||||||||||||||||
| Shareholder relations matters | — | — | 15,751 | — | |||||||||||||||||||
| Other expense (income) | 3,935 | 9,432 | 10,729 | (765) | |||||||||||||||||||
| Total expenses | 1,217,217 | 1,226,645 | 3,644,697 | 3,336,082 | |||||||||||||||||||
| Income (loss) before unconsolidated entities, real estate dispositions, income taxes and noncontrolling interests | 19,098 | (76,813) | (7,488) | (2,647) | |||||||||||||||||||
| Income (loss) from unconsolidated entities | 4,629 | (5,119) | (5,406) | 20,512 | |||||||||||||||||||
| Gain on real estate dispositions | 271 | 10,711 | 50,282 | 22,317 | |||||||||||||||||||
| Income tax (expense) benefit | (3,002) | 1,662 | (7,764) | 14,237 | |||||||||||||||||||
| Net income (loss) | 20,996 | (69,559) | 29,624 | 54,419 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | 1,753 | 1,565 | 5,306 | 4,573 | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 19,243 | $ | (71,124) | $ | 24,318 | $ | 49,846 | |||||||||||||||
| Earnings per common share | |||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||
| Net income (loss) | $ | 0.05 | $ | (0.17) | $ | 0.07 | $ | 0.14 | |||||||||||||||
| Net income (loss) attributable to common stockholders | 0.05 | (0.18) | 0.06 | 0.12 | |||||||||||||||||||
| Diluted:1 | |||||||||||||||||||||||
| Net income (loss) | $ | 0.05 | $ | (0.17) | $ | 0.07 | $ | 0.13 | |||||||||||||||
| Net income (loss) attributable to common stockholders | 0.05 | (0.18) | 0.06 | 0.12 |
1 Potential common shares are not included in the computation of diluted earnings per share (“EPS”) when a net loss exists as the effect would be an antidilutive per share amount.
See accompanying notes.
VENTAS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net income (loss) | $ | 20,996 | $ | (69,559) | $ | 29,624 | $ | 54,419 | |||||||||||||||
| Other comprehensive (loss) income: | |||||||||||||||||||||||
| Foreign currency translation gain (loss) | 6,908 | (2,858) | 14,032 | 2,922 | |||||||||||||||||||
| Unrealized gain on available for sale securities | 869 | — | 147 | — | |||||||||||||||||||
| Unrealized (loss) gain on derivative instruments | (29,940) | 10,042 | (20,488) | 29,241 | |||||||||||||||||||
| Total other comprehensive (loss) income | (22,163) | 7,184 | (6,309) | 32,163 | |||||||||||||||||||
| Comprehensive (loss) income | (1,167) | (62,375) | 23,315 | 86,582 | |||||||||||||||||||
| Comprehensive income attributable to noncontrolling interests | 653 | 379 | 1,712 | 6,118 | |||||||||||||||||||
| Comprehensive (loss) income attributable to common stockholders | $ | (1,820) | $ | (62,754) | $ | 21,603 | $ | 80,464 |
See accompanying notes.
VENTAS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
For the Three Months Ended September 30, 2024 and 2023
(In thousands, except per share amounts, unaudited)
| For the Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | Common Stock Par Value | Capital in Excess of Par Value | Accumulated Other Comprehensive (Loss) Income | Retained Earnings (Deficit) | Treasury Stock | Total Ventas Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||
| Balance at July 1, 2024 | $ | 103,242 | $ | 16,135,972 | $ | (17,409) | $ | (6,577,395) | $ | (25,060) | $ | 9,619,350 | $ | 48,366 | $ | 9,667,716 | |||||||||||||||||||||||||||||||
| Net income | — | — | — | 19,243 | — | 19,243 | 1,753 | 20,996 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | (21,063) | — | — | (21,063) | (1,100) | (22,163) | |||||||||||||||||||||||||||||||||||||||
| Net change in noncontrolling interests | — | 2,229 | — | — | — | 2,229 | 20,565 | 22,794 | |||||||||||||||||||||||||||||||||||||||
| Dividends to common stockholders—$0.45 per share | — | 22 | — | (190,072) | — | (190,050) | — | (190,050) | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for stock plans, restricted stock grants and other | 1,481 | 373,553 | — | — | (55) | 374,979 | — | 374,979 | |||||||||||||||||||||||||||||||||||||||
| Adjust redeemable OP unitholder interests to current fair value | — | (45,594) | — | — | — | (45,594) | — | (45,594) | |||||||||||||||||||||||||||||||||||||||
| Redemption of OP Units | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | 104,723 | $ | 16,466,182 | $ | (38,472) | $ | (6,748,224) | $ | (25,115) | $ | 9,759,094 | $ | 69,584 | $ | 9,828,678 |
| For the Three Months Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock Par Value | Capital in Excess of Par Value | Accumulated Other Comprehensive (Loss) Income | Retained Earnings (Deficit) | Treasury Stock | Total Ventas Stockholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance at July 1, 2023 | $ | 100,206 | $ | 15,584,858 | $ | (14,552) | $ | (5,688,499) | $ | (13,631) | $ | 9,968,382 | $ | 60,062 | $ | 10,028,444 | |||||||||||||||||||||||||||||||
| Net (loss) income | — | — | — | (71,124) | — | (71,124) | 1,565 | (69,559) | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | 8,370 | — | — | 8,370 | (1,186) | 7,184 | |||||||||||||||||||||||||||||||||||||||
| Net change in noncontrolling interests | — | (6,637) | — | — | — | (6,637) | (3,881) | (10,518) | |||||||||||||||||||||||||||||||||||||||
| Dividends to common stockholders—$0.45 per share | — | 9 | — | (181,680) | — | (181,671) | — | (181,671) | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for stock plans, restricted stock grants and other | 441 | 87,998 | — | — | (3) | 88,436 | — | 88,436 | |||||||||||||||||||||||||||||||||||||||
| Adjust redeemable OP unitholder interests to current fair value | — | 11,785 | — | — | — | 11,785 | — | 11,785 | |||||||||||||||||||||||||||||||||||||||
| Redemption of OP Units | — | 18 | — | — | — | 18 | — | 18 | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2023 | $ | 100,647 | $ | 15,678,031 | $ | (6,182) | $ | (5,941,303) | $ | (13,634) | $ | 9,817,559 | $ | 56,560 | $ | 9,874,119 |
See accompanying notes.
VENTAS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
For the Nine Months Ended September 30, 2024 and 2023
(In thousands, except per share amounts, unaudited)
| For the Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| 2019 | Common Stock Par Value | Capital in Excess of Par Value | Accumulated Other Comprehensive (Loss) Income | Retained Earnings (Deficit) | Treasury Stock | Total Ventas Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2024 | $ | 100,648 | $ | 15,650,734 | $ | (35,757) | $ | (6,213,803) | $ | (13,764) | $ | 9,488,058 | $ | 56,347 | $ | 9,544,405 | |||||||||||||||||||||||||||||||
| Net income | — | — | — | 24,318 | — | 24,318 | 5,306 | 29,624 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | (2,715) | — | — | (2,715) | (3,594) | (6,309) | |||||||||||||||||||||||||||||||||||||||
| Net change in noncontrolling interests | — | (16,970) | — | — | — | (16,970) | 11,525 | (5,445) | |||||||||||||||||||||||||||||||||||||||
| Dividends to common stockholders—$1.35 per share | — | 55 | — | (558,739) | — | (558,684) | — | (558,684) | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for stock plans, restricted stock grants and other | 4,075 | 884,661 | — | — | (11,351) | 877,385 | — | 877,385 | |||||||||||||||||||||||||||||||||||||||
| Adjust redeemable OP unitholder interests to current fair value | — | (50,702) | — | — | — | (50,702) | — | (50,702) | |||||||||||||||||||||||||||||||||||||||
| Redemption of OP Units | — | (1,596) | — | — | — | (1,596) | — | (1,596) | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2024 | $ | 104,723 | $ | 16,466,182 | $ | (38,472) | $ | (6,748,224) | $ | (25,115) | $ | 9,759,094 | $ | 69,584 | $ | 9,828,678 |
| For the Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock Par Value | Capital in Excess of Par Value | Accumulated Other Comprehensive (Loss) Income | Retained Earnings (Deficit) | Treasury Stock | Total Ventas Stockholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2023 | $ | 99,912 | $ | 15,539,777 | $ | (36,800) | $ | (5,449,385) | $ | (536) | $ | 10,152,968 | $ | 68,709 | $ | 10,221,677 | |||||||||||||||||||||||||||||||
| Net income | — | — | — | 49,846 | — | 49,846 | 4,573 | 54,419 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | 30,618 | — | — | 30,618 | 1,545 | 32,163 | |||||||||||||||||||||||||||||||||||||||
| Net change in noncontrolling interests | — | (1,781) | — | — | — | (1,781) | (18,267) | (20,048) | |||||||||||||||||||||||||||||||||||||||
| Dividends to common stockholders—$1.35 per share | — | 19 | — | (541,764) | — | (541,745) | — | (541,745) | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for stock plans, restricted stock grants and other | 735 | 136,215 | — | — | (13,098) | 123,852 | — | 123,852 | |||||||||||||||||||||||||||||||||||||||
| Adjust redeemable OP unitholder interests to current fair value | — | 3,852 | — | — | — | 3,852 | — | 3,852 | |||||||||||||||||||||||||||||||||||||||
| Redemption of OP Units | — | (51) | — | — | — | (51) | — | (51) | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2023 | $ | 100,647 | $ | 15,678,031 | $ | (6,182) | $ | (5,941,303) | $ | (13,634) | $ | 9,817,559 | $ | 56,560 | $ | 9,874,119 |
See accompanying notes.
VENTAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
| For the Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 29,624 | $ | 54,419 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 944,371 | 957,185 | |||||||||
| Amortization of deferred revenue and lease intangibles, net | (41,194) | (44,543) | |||||||||
| Other non-cash amortization | 22,347 | 15,499 | |||||||||
| Recovery of allowance on loans receivable and investments, net | (166) | (20,195) | |||||||||
| Stock-based compensation | 26,344 | 25,298 | |||||||||
| Straight-lining of rental income | (6,469) | (4,425) | |||||||||
| Loss (gain) on extinguishment of debt, net | 672 | (6,189) | |||||||||
| Gain on real estate dispositions | (50,282) | (22,317) | |||||||||
| Income tax expense (benefit) | 2,535 | (19,230) | |||||||||
| Loss (gain) from unconsolidated entities | 5,406 | (20,512) | |||||||||
| Gain on foreclosure of real estate | — | (29,127) | |||||||||
| Distributions from unconsolidated entities | 13,639 | 12,953 | |||||||||
| Other | 681 | (15,777) | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Increase in other assets | (122,404) | (55,339) | |||||||||
| (Decrease) increase in accrued interest | (3,415) | 3,775 | |||||||||
| Increase in accounts payable and other liabilities | 134,295 | 9,314 | |||||||||
| Net cash provided by operating activities | 955,984 | 840,789 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Net investment in real estate property | (519,048) | (4,625) | |||||||||
| Investment in loans receivable | (120,695) | (883) | |||||||||
| Proceeds from real estate disposals | 275,396 | 167,296 | |||||||||
| Proceeds from loans receivable | 6,496 | 44,036 | |||||||||
| Proceeds from sale of interest in unconsolidated entities | — | 50,054 | |||||||||
| Net cash assumed in foreclosure of real estate | — | 11,615 | |||||||||
| Development project expenditures | (239,564) | (239,639) | |||||||||
| Capital expenditures | (194,035) | (160,369) | |||||||||
| Distributions from unconsolidated entities | 2,555 | 74,670 | |||||||||
| Investment in unconsolidated entities | (55,503) | (97,989) | |||||||||
| Insurance proceeds for property damage claims | 3,523 | 14,446 | |||||||||
| Net cash used in investing activities | (840,875) | (141,388) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Net change in borrowings under revolving credit facilities | (6,151) | 6,169 | |||||||||
| Net change in borrowings under commercial paper program | — | (402,354) | |||||||||
| Proceeds from debt | 1,805,446 | 2,404,069 | |||||||||
| Repayment of debt | (1,539,869) | (1,891,003) | |||||||||
| Purchase of noncontrolling interests | (11,064) | (110) | |||||||||
| Payment of deferred financing costs | (34,684) | (39,225) | |||||||||
| Issuance of common stock, net | 850,561 | 108,455 | |||||||||
| Cash distribution to common stockholders | (551,369) | (542,236) | |||||||||
| Cash distribution to redeemable OP unitholders | (4,545) | (4,642) | |||||||||
| Cash issued for redemption of OP Units | (2,087) | (845) | |||||||||
| Contributions from noncontrolling interests | 3,646 | 11,187 | |||||||||
| Distributions to noncontrolling interests | (14,140) | (20,867) | |||||||||
| Proceeds from stock option exercises | 10,483 | 1,736 | |||||||||
| Other | (17,208) | (8,628) | |||||||||
| Net cash provided by (used in) financing activities | 489,019 | (378,294) | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 604,128 | 321,107 | |||||||||
| Effect of foreign currency translation | (1,893) | (106) | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 563,462 | 170,745 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,165,697 | $ | 491,746 |
See accompanying notes.
VENTAS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands, unaudited)
| For the Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Supplemental schedule of non-cash activities: | |||||||||||
| Assets acquired and liabilities assumed from acquisitions and other: | |||||||||||
| Real estate investments | $ | 10,463 | $ | — | |||||||
| Other assets | 1,171 | 7,873 | |||||||||
| Other liabilities | 4,647 | 9,000 | |||||||||
| Deferred income tax liability | 6,988 | 12,382 | |||||||||
| Settlement of loan receivable | — | 486,082 | |||||||||
| Real estate received in settlement of loan receivable | — | 1,566,395 | |||||||||
| Assumption of debt related to real estate owned | — | 1,016,804 | |||||||||
See accompanying notes.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1—DESCRIPTION OF BUSINESS
Ventas, Inc., (together with its consolidated subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us,” “our,” “Company” and other similar terms) an S&P 500 company, is a real estate investment trust (“REIT”) focused on delivering strong, sustainable shareholder returns by enabling exceptional environments that benefit a large and growing aging population. We hold a portfolio that includes senior housing communities, outpatient medical buildings, research centers, hospitals and healthcare facilities located in North America and the United Kingdom. As of September 30, 2024, we owned or had investments in approximately 1,350 properties (including properties classified as held for sale and unconsolidated properties). Our company is headquartered in Chicago, Illinois with additional corporate offices in Louisville, Kentucky and New York, New York.
We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code (the “Code”), commencing with our taxable year ended December 31, 1999. Provided we qualify for taxation as a REIT, we generally will not be required to pay U.S. federal corporate income taxes on our REIT taxable income that is currently distributed to our stockholders. In order to maintain our qualification as a REIT, we must satisfy a number of highly technical requirements, which impact how we invest in, operate or manage our assets.
We operate through three reportable business segments: senior housing operating portfolio, which we also refer to as “SHOP,” outpatient medical and research portfolio, which we also refer to as “OM&R,” and triple-net leased properties, which we also refer to as “NNN.” Non-segment assets consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments and miscellaneous accounts receivable as well as investments in unconsolidated entities. Our investments in unconsolidated entities include investments made through our third-party institutional capital management business, Ventas Investment Management (“VIM”). Through VIM, we partner with third-party institutional investors to invest in real estate through various joint ventures and other co-investment vehicles where we are the sponsor or general partner, including our open-ended investment vehicle, the Ventas Life Science & Healthcare Real Estate Fund.
Our chief operating decision maker evaluates performance of the combined properties in each reportable segment and determines how to allocate resources to these segments based on net operating income (“NOI”) for each segment. See “Note 16 – Segment Information.” For a discussion of our definition of NOI and for a reconciliation of NOI to our net income attributable to common stockholders, as computed in accordance with U.S. generally accepted accounting principles (“GAAP”), see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.”
The following table summarizes information for our consolidated reportable business segments and non-segment assets for the nine months ended September 30, 2024 (dollars in thousands):
| Segment | Total NOI (1) | Percentage of Total NOI | Number of Consolidated Properties | |||||||||||||||||
| Senior housing operating portfolio (SHOP) | $ | 631,706 | 41.3 | % | 591 | |||||||||||||||
| Outpatient medical and research portfolio (OM&R) | 435,938 | 28.5 | % | 426 | ||||||||||||||||
| Triple-net leased properties (NNN) | 453,028 | 29.6 | % | 302 | ||||||||||||||||
| Non-segment (2) | 10,716 | 0.7 | % | — | ||||||||||||||||
| $ | 1,531,388 | 100 | % | 1,319 |
(1) “NOI” is defined as total revenues, less interest and other income, property-level operating expenses and third party capital management expenses. See “Non-GAAP Financial Measures” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure and a reconciliation of net income attributable to common stockholders, as computed in accordance with GAAP, to NOI.
(2) NOI for non-segment includes management fees and promote revenues, net of expenses related to our third-party institutional capital management business, income from loans and investments and corporate-level expenses not directly attributable to any of our three reportable business segments.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2—ACCOUNTING POLICIES
The accompanying Consolidated Financial Statements have been prepared in accordance with 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 Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement of results for the interim periods have been included. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The accompanying Consolidated Financial Statements and related notes should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”). Certain prior period amounts have been reclassified to conform to the current period presentation.
Accounting Estimates
The preparation of financial statements in accordance with 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 period. Actual results could differ from those estimates.
Principles of Consolidation
The accompanying Consolidated Financial Statements include our accounts and the accounts of our wholly-owned subsidiaries and the joint venture entities over which we exercise control. All intercompany transactions and balances have been eliminated in consolidation, and our net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.
GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). Substantially all of the assets of the VIEs are real estate investments and substantially all of the liabilities of the VIEs are mortgage loans. Assets of the consolidated VIEs can only be used to settle obligations of such VIEs. Liabilities of the consolidated VIEs represent claims against the specific assets of the VIEs. Unless otherwise required by an operating agreement, any mortgage loans of the consolidated VIEs are non-recourse to us. The table below summarizes the total assets and liabilities of our consolidated VIEs as reported on our Consolidated Balance Sheets (dollars in thousands):
| As of September 30, 2024 | As of December 31, 2023 | |||||||||||||||||||||||||
| Total Assets | Total Liabilities | Total Assets | Total Liabilities | |||||||||||||||||||||||
| NHP/PMB L.P. | $ | 750,258 | $ | 289,867 | $ | 759,817 | $ | 266,658 | ||||||||||||||||||
| Fonds Immobilier Groupe Maurice, S.E.C. | 1,899,604 | 1,177,864 | 1,971,410 | 1,204,619 | ||||||||||||||||||||||
| Other identified VIEs | 1,587,859 | 380,034 | 1,597,957 | 354,828 | ||||||||||||||||||||||
| Tax credit VIEs (1) | — | — | 29,746 | 4,024 |
(1) Balances as of September 30, 2024 reflect the completion of the tax credit structure unwinds.
Recent Accounting Standards
In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires incremental disclosures related to a public entity’s reportable segments. Required disclosures include, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items (which is the difference between segment revenue less segment expenses and less segment profit or loss) and a description of its composition, the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The standard also permits disclosure of more than one measure of segment profit. ASU 2023-07 is effective
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are finalizing our assessment of the impact of adopting ASU 2023-07 and expect to disclose additional expense details and the title of our CODM in our Form 10-K for the year ended December 31, 2024.
In December 2023, the FASB issued Accounting Standards Update 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities on an annual basis to (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We are evaluating the impact of adopting ASU 2023-09 on our Consolidated Financial Statements.
In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate Related Disclosures for Investors, which requires registrants to disclose climate-related information in registration statements and annual reports. The new rules would be effective for annual reporting periods beginning in fiscal year 2025. However, in April 2024, the SEC exercised its discretion to stay these rules pending the completion of judicial review of certain consolidated petitions with the United States Court of Appeals for the Eighth Circuit in connection with these rules. We are evaluating the impact of this rule on our Consolidated Financial Statements.
NOTE 3—CONCENTRATION OF CREDIT RISK
We use total revenues and total NOI in assessing our concentration of credit risk. See “Non-GAAP Financial Measures” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure and a reconciliation of net income attributable to common stockholders, as computed in accordance with GAAP, to total NOI.
We are exposed to the credit risk of our tenants in our NNN and OM&R segments because those tenants are obligated to pay us rent and, in certain instances pay or reimburse us for some or all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Because we engage independent managers to manage the properties in our SHOP segment in exchange for a management fee, we are not directly exposed to their credit risk in the same manner or to the same extent as the tenants in our NNN and OM&R segments.
The following table summarizes certain information about our credit risk concentration for our NNN and OM&R segments for the three months ended September 30, 2024:
| For the Three Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Revenues: (1) | |||||||||||
| Brookdale (2) | 3.1 | % | 3.3 | % | |||||||
| Ardent (3) | 2.8 | 2.9 | |||||||||
| Kindred | 2.8 | 2.9 | |||||||||
| All others | 22.9 | 25.2 | |||||||||
| Net operating income (“NOI”): | |||||||||||
| Brookdale (2) | 7.3 | % | 7.6 | % | |||||||
| Ardent (3) | 6.7 | 6.8 | |||||||||
| Kindred | 6.8 | 6.8 | |||||||||
| All others | 37.5 | 41.9 |
(1)Represents percentage of total revenues which include third party capital management revenues, income from loans and investments and interest and other income.
(2)Results exclude 9 senior housing communities which are included in our SHOP segment.
(3)Results exclude 19 outpatient medical buildings included in “All others.”
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 4—ACQUISITIONS OF REAL ESTATE PROPERTY
We acquire and invest in senior housing, outpatient medical buildings, research centers and other healthcare properties primarily to achieve an expected yield on our investment, to grow and diversify our portfolio and revenue base, and to reduce our dependence on any single tenant, operator or manager, geographic location, asset type, business model or revenue source. Each of our acquisitions disclosed below was accounted for as an asset acquisition.
2024 Acquisitions
During the nine months ended September 30, 2024, we acquired 11 senior housing communities reported within our SHOP segment and five long term acute care hospitals (“LTACs”) reported within our triple-net leased properties segment for an aggregate purchase price of $516.1 million.
In October 2024, we acquired 25 senior housing communities reported within our SHOP segment for $923.0 million.
NOTE 5—DISPOSITIONS AND IMPAIRMENTS
2024 Activity
During the nine months ended September 30, 2024, we sold 17 senior housing communities, 12 outpatient medical buildings (one of which was vacant) and 23 triple-net leased properties for aggregate consideration of $261.4 million and recognized $50.3 million in gain on real estate dispositions in our Consolidated Statements of Income.
In October 2024, we sold two senior housing communities and part of a research building for aggregate consideration of $39.2 million.
Assets Held for Sale
The table below summarizes our real estate assets classified as held for sale including the amounts reported on our Consolidated Balance Sheets (dollars in thousands):
| As of September 30, 2024 | As of December 31, 2023 | |||||||||||||||||||||||||||||||||||||
| Number of Properties Held for Sale | Assets Held for Sale | Liabilities Related to Assets Held for Sale | Number of Properties Held for Sale | Assets Held for Sale | Liabilities Related to Assets Held for Sale | |||||||||||||||||||||||||||||||||
| SHOP | 3 | $ | 26,938 | $ | 3,755 | 13 | $ | 48,173 | $ | 6,419 | ||||||||||||||||||||||||||||
| Outpatient medical and research portfolio (1) | — | 21,568 | 1,497 | 3 | 5,431 | 2,643 | ||||||||||||||||||||||||||||||||
| Triple-net leased properties | 1 | 2,131 | — | 1 | 2,885 | 181 | ||||||||||||||||||||||||||||||||
| Total | 4 | $ | 50,637 | $ | 5,252 | 17 | $ | 56,489 | $ | 9,243 |
(1)The balances as of September 30, 2024 relate to a partial sale of a building, as such, no property count is allocated.
Real Estate Impairments
We recognized impairments of $17.3 million and $72.7 million for the three months ended September 30, 2024 and 2023, respectively, and $67.6 million and $92.0 million for the nine months ended September 30, 2024 and 2023 respectively, which are recorded primarily as a component of depreciation and amortization in our Consolidated Statements of Income. The impairments recorded were primarily a result of a change in our intent to hold or a change in the expected future cash flows of the impaired assets.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 6—LOANS RECEIVABLE AND INVESTMENTS
As of September 30, 2024 and December 31, 2023, we held $168.6 million and $54.1 million, respectively, of loans receivable and investments, net of allowance, relating to senior housing and healthcare operators or properties. The following is a summary of our loans receivable and investments, net, including amortized cost, fair value and unrealized gains or losses on available for sale investments, if applicable (dollars in thousands):
| Amortized Cost | Allowance | Carrying Amount | Fair Value | ||||||||||||||||||||||||||
| As of September 30, 2024: | |||||||||||||||||||||||||||||
| Secured/mortgage loans and other, net (1) | $ | 144,797 | $ | — | $ | 144,797 | $ | 145,905 | |||||||||||||||||||||
| Non-mortgage loans receivable, net (2) | 27,564 | (3,810) | 23,754 | 22,895 | |||||||||||||||||||||||||
| Total loans receivable and investments, net | $ | 172,361 | $ | (3,810) | $ | 168,551 | $ | 168,800 | |||||||||||||||||||||
| As of December 31, 2023: | |||||||||||||||||||||||||||||
| Secured/mortgage loans and other, net (1) | $ | 27,986 | $ | — | $ | 27,986 | $ | 27,947 | |||||||||||||||||||||
| Non-mortgage loans receivable, net (2) | 30,128 | (3,976) | 26,152 | 25,200 | |||||||||||||||||||||||||
| Total loans receivable and investments, net | $ | 58,114 | $ | (3,976) | $ | 54,138 | $ | 53,147 |
(1)Investments have contractual maturities ranging from 2024 to 2027.
(2)Included in other assets on our Consolidated Balance Sheets.
In September 2024, we provided new secured debt financing of $109.0 million to the owner of a senior housing property, secured by the asset and with additional credit support. The loan provides us with a right of first offer to purchase the asset on certain terms and conditions. The loan has a 3-year term and bears interest at a floating rate based on one-month SOFR, subject to a floor of 4.50%, plus a spread of 5.75%, increasing to 6.00% commencing on the first-year anniversary of the loan.
NOTE 7—INVESTMENTS IN UNCONSOLIDATED ENTITIES
We report investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence under the equity method of accounting. Our investments in unconsolidated entities include investments in both real estate entities and operating entities as described further below.
Investments in Unconsolidated Real Estate Entities
Below is a summary of our investments in unconsolidated real estate entities, including through VIM, as of September 30, 2024 and December 31, 2023, respectively (dollars in thousands):
| Ownership as of (1) | Carrying Amount as of | |||||||||||||||||||||||||
| September 30, 2024 | December 31, 2023 | September 30, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Investments in unconsolidated real estate entities: | ||||||||||||||||||||||||||
| Ventas Life Science & Healthcare Real Estate Fund | 20.0% | 20.1% | $ | 269,694 | $ | 264,442 | ||||||||||||||||||||
| Pension Fund Joint Venture | 25.0% | 25.0% | 15,511 | 22,169 | ||||||||||||||||||||||
| Research & Innovation Development Joint Venture | 53.0% | 53.0% | 300,694 | 275,829 | ||||||||||||||||||||||
| Ventas Investment Management platform | 585,899 | 562,440 | ||||||||||||||||||||||||
| Atrium Health & Wake Forest Joint Venture | 48.5% | 48.5% | 36,487 | 35,137 | ||||||||||||||||||||||
| All other (2) | 34.0%-37.5% | 34.0%-37.5% | 610 | 629 | ||||||||||||||||||||||
| Total investments in unconsolidated real estate entities | $ | 622,996 | $ | 598,206 |
(1) The entities in which we have an ownership interest may have less than a 100% interest in the underlying real estate. The ownership percentages in the table reflect our interest in the entities. Joint venture members, including us in some instances, have equity participation rights based on the underlying performance of the investments, which could result in non pro rata distributions.
(2) Includes investments in parking structures and other de minimis investments in unconsolidated real estate entities.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We provide various services to our unconsolidated real estate entities in exchange for fees and reimbursements. Total management fees earned in connection with these services were $4.0 million and $3.6 million for the three months ended September 30, 2024 and 2023, respectively, and $11.7 million and $10.9 million for the nine months ended September 30, 2024 and 2023, respectively. Such amounts, along with any promote revenue, are included in third party capital management revenues in our Consolidated Statements of Income.
Investments in Unconsolidated Operating Entities
We own investments in unconsolidated operating entities such as Ardent and Atria, which are included within other assets on our Consolidated Balance Sheets.
As of September 30, 2024, we held a 34% ownership interest in Atria, which entitles us to customary minority rights and protections, including the right to appoint two members to the Atria Board of Directors.
As of September 30, 2024, we held an approximately 6.7% ownership interest in Ardent. One of our executive officers is currently a member of the Ardent Board of Directors. Going forward, we have the right (but not the obligation) to nominate one member of the Ardent Board of Directors for so long as we beneficially own 4% or more of the total voting power of the outstanding common stock of Ardent, pursuant to our nomination agreement with Ardent. Following Ardent’s initial public offering, which was consummated in July 2024, our equity stake in Ardent decreased from the issuance of primary shares from 7.5% to approximately 6.7%, which resulted in a gain of $8.7 million for the three and nine months ended September 30, 2024, which is included in income (loss) from unconsolidated entities in our Consolidated Statements of Income.
NOTE 8—INTANGIBLES
The following is a summary of our intangibles (dollars in thousands):
| As of September 30, 2024 | As of December 31, 2023 | ||||||||||||||||||||||
| Balance | Weighted Average Remaining Amortization Period in Years | Balance | Weighted Average Remaining Amortization Period in Years | ||||||||||||||||||||
| Intangible assets: | |||||||||||||||||||||||
| Above-market lease intangibles (1) | $ | 124,597 | 4.4 | $ | 130,371 | 4.8 | |||||||||||||||||
| In-place and other lease intangibles (2) | 1,336,286 | 10.1 | 1,317,775 | 8.3 | |||||||||||||||||||
| Goodwill | 1,045,955 | N/A | 1,045,176 | N/A | |||||||||||||||||||
| Other intangibles (2) | 34,406 | 4.2 | 34,440 | 4.8 | |||||||||||||||||||
| Accumulated amortization | (1,271,375) | N/A | (1,189,817) | N/A | |||||||||||||||||||
| Net intangible assets | $ | 1,269,869 | 9.5 | $ | 1,337,945 | 8.0 | |||||||||||||||||
| Intangible liabilities: | |||||||||||||||||||||||
| Below-market lease intangibles (1) | $ | 265,274 | 7.7 | $ | 306,499 | 8.1 | |||||||||||||||||
| Other lease intangibles | 13,498 | N/A | 13,498 | N/A | |||||||||||||||||||
| Accumulated amortization | (208,949) | N/A | (241,600) | N/A | |||||||||||||||||||
| Purchase option intangibles | 3,568 | N/A | 3,568 | N/A | |||||||||||||||||||
| Net intangible liabilities | $ | 73,391 | 7.7 | $ | 81,965 | 8.1 |
(1) Amortization of above- and below-market lease intangibles is recorded as a decrease and an increase to revenues, respectively, in our Consolidated Statements of Income.
(2) Amortization of intangibles is recorded in depreciation and amortization in our Consolidated Statements of Income.
N/A—Not Applicable
Above-market lease intangibles and in-place and other lease intangibles are included in acquired lease intangibles within real estate investments on our Consolidated Balance Sheets. Other intangibles (including non-compete agreements, trade
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
names and trademarks) are included in other assets on our Consolidated Balance Sheets. Net intangible liabilities are included in accounts payable and other liabilities on our Consolidated Balance Sheets.
NOTE 9—OTHER ASSETS
The following is a summary of our other assets (dollars in thousands):
| As of September 30, 2024 | As of December 31, 2023 | ||||||||||
| Straight-line rent receivables | $ | 203,237 | $ | 194,108 | |||||||
| Deferred lease costs, net | 139,537 | 118,556 | |||||||||
| Investment in unconsolidated operating entities | 88,344 | 80,312 | |||||||||
| Stock warrants | 65,377 | 59,281 | |||||||||
| Non-mortgage loans receivable, net | 23,754 | 26,152 | |||||||||
| Other intangibles, net | 4,953 | 5,584 | |||||||||
| Other | 278,152 | 199,417 | |||||||||
| Total other assets | $ | 803,354 | $ | 683,410 |
In the above table, stock warrants as of September 30, 2024 represent: (1) warrants exercisable at any time prior to December 31, 2025, in whole or in part, for 12.6 million shares of Brookdale Senior Living, Inc. common stock (“Brookdale Common Stock”) at an exercise price of $3.00 per share (the “Brookdale Warrants”), and (2) warrants exercisable at any time prior to September 13, 2034 for 9.9% of the common equity of a parent company of Kindred Healthcare, LLC (“Kindred”) exercisable at the pre-transaction value of such common equity (the “Scion Warrants”). We received the Scion Warrants in September 2024 as part of the consideration for a lease amendment that we entered into with Kindred and its parent companies, ScionHealth.
During the nine months ended September 30, 2024, we exercised Brookdale Warrants for 3.7 million shares of Brookdale Common Stock on a cashless basis, resulting in our receipt of 2.1 million shares of Brookdale Common Stock (net of the $3.00 exercise price), which we sold for net cash proceeds of approximately $14.0 million (recorded within operating cash flows in our Consolidated Statements of Cash Flows).
The Brookdale Warrants and the Scion Warrants are measured at fair value with changes in fair value being recognized within other expense (income) in our Consolidated Statements of Income.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 10—SENIOR NOTES PAYABLE AND OTHER DEBT
The following is a summary of our senior notes payable and other debt (dollars in thousands):
| As of September 30, 2024 | As of December 31, 2023 | ||||||||||||||||
| Unsecured revolving credit facility (1)(2) | $ | 7,922 | $ | 14,006 | |||||||||||||
| Commercial paper notes | — | — | |||||||||||||||
| 3.50% Senior Notes due 2024 | — | 400,000 | |||||||||||||||
| 3.75% Senior Notes due 2024 | — | 400,000 | |||||||||||||||
| 4.125% Senior Notes, Series B due 2024 (2) | — | 123,256 | |||||||||||||||
| 2.80% Senior Notes, Series E due 2024 (2) | — | 55,143 | |||||||||||||||
| Unsecured term loan due 2025 (2) | — | 377,501 | |||||||||||||||
| 2.65% Senior Notes due 2025 | 450,000 | 450,000 | |||||||||||||||
| 3.50% Senior Notes due 2025 | 600,000 | 600,000 | |||||||||||||||
| 4.125% Senior Notes due 2026 | 500,000 | 500,000 | |||||||||||||||
| 3.75% Exchangeable Senior Notes due 2026 | 862,500 | 862,500 | |||||||||||||||
| 3.25% Senior Notes due 2026 | 450,000 | 450,000 | |||||||||||||||
| Unsecured term loan due February 2027 | 200,000 | 200,000 | |||||||||||||||
| Unsecured term loan due June 2027 | 500,000 | 500,000 | |||||||||||||||
| 2.45% Senior Notes, Series G due 2027 (2) | 351,227 | 358,626 | |||||||||||||||
| 3.85% Senior Notes due 2027 | 400,000 | 400,000 | |||||||||||||||
| 4.00% Senior Notes due 2028 | 650,000 | 650,000 | |||||||||||||||
| 5.398% Senior Notes, Series I due 2028 (2) | 443,656 | 453,001 | |||||||||||||||
| 4.40% Senior Notes due 2029 | 750,000 | 750,000 | |||||||||||||||
| 5.10% Senior Notes, Series J due 2029 (2) | 480,627 | — | |||||||||||||||
| 3.00% Senior Notes due 2030 | 650,000 | 650,000 | |||||||||||||||
| 4.75% Senior Notes due 2030 | 500,000 | 500,000 | |||||||||||||||
| 2.50% Senior Notes due 2031 | 500,000 | 500,000 | |||||||||||||||
| 3.30% Senior Notes, Series H due 2031 (2) | 221,828 | 226,501 | |||||||||||||||
| 5.625% Senior Note due 2034 | 500,000 | — | |||||||||||||||
| 5.00% Senior Notes due 2035 | 550,000 | — | |||||||||||||||
| 6.90% Senior Notes due 2037 (3) | 52,400 | 52,400 | |||||||||||||||
| 6.59% Senior Notes due 2038 (3) | 21,413 | 21,413 | |||||||||||||||
| 5.70% Senior Notes due 2043 | 300,000 | 300,000 | |||||||||||||||
| 4.375% Senior Notes due 2045 | 300,000 | 300,000 | |||||||||||||||
| 4.875% Senior Notes due 2049 | 300,000 | 300,000 | |||||||||||||||
| Mortgage loans and other | 3,230,447 | 3,174,251 | |||||||||||||||
| Total | 13,772,020 | 13,568,598 | |||||||||||||||
| Deferred financing costs, net | (98,717) | (84,034) | |||||||||||||||
| Unamortized fair value adjustment | 12,086 | 17,081 | |||||||||||||||
| Unamortized discounts | (16,518) | (10,749) | |||||||||||||||
| Senior notes payable and other debt | $ | 13,668,871 | $ | 13,490,896 |
(1)As of September 30, 2024 and December 31, 2023, aggregate Canadian Dollar borrowings of C$8.0 million ($5.9 million) and zero were outstanding. As of September 30, 2024 and December 31, 2023, aggregate British Pound borrowings of £1.5 million ($2.0 million) and £11.0 million ($14.0 million) were outstanding, respectively.
(2)British Pound and Canadian Dollar debt obligations shown in US Dollars.
(3)Our 6.90% Senior Notes due 2037 are subject to repurchase at the option of the holders, at par, on October 1, 2027, and our 6.59% Senior Notes due 2038 are subject to repurchase at the option of the holders, at par, on July 7, 2028.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Credit Facilities, Commercial Paper, Unsecured Term Loans and Letters of Credit
As of September 30, 2024, we have a $2.75 billion unsecured revolving credit facility priced at SOFR plus 0.10% (“Adjusted SOFR”) plus 0.775% which is subject to adjustment based on the Company’s debt ratings. Our unsecured revolving credit facility matures in April 2028, and may be extended at our option, subject to the satisfaction of certain conditions, for two additional periods of six months each. The revolving 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.
Our unsecured revolving credit facility imposes certain customary restrictions on us, including restrictions pertaining to: (i) liens; (ii) investments; (iii) the incurrence of additional indebtedness; (iv) mergers and dissolutions; (v) certain dividend, distribution and other payments; (vi) permitted businesses; (vii) transactions with affiliates; and (viii) the maintenance of certain consolidated total leverage, secured debt leverage, unsecured debt leverage and fixed charge coverage ratios and minimum consolidated adjusted net worth, and contains customary events of default.
As of September 30, 2024, we had $2.74 billion of undrawn capacity under our unsecured revolving credit facility with $7.9 million outstanding and an additional $0.8 million restricted to support outstanding letters of credit. We use our unsecured revolving credit facility to support our commercial paper program and for general corporate purposes.
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, 2024, we had no borrowings outstanding under our commercial paper program.
Ventas Realty has a $500.0 million unsecured term loan priced at Adjusted SOFR plus 0.85%, which is subject to adjustment based on Ventas Realty’s debt ratings. This term loan is fully and unconditionally guaranteed by Ventas, Inc. It matures in June 2027 and includes an accordion feature that permits Ventas Realty to increase the 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.
Ventas Realty has a $200.0 million unsecured term loan priced at Adjusted SOFR plus 0.85%, which is subject to adjustment based on Ventas Realty’s debt ratings. This term loan is fully and unconditionally guaranteed by Ventas, Inc. It matures in February 2027 and includes an accordion feature that permits Ventas Realty to increase the aggregate borrowings thereunder to up to $500.0 million, subject to the satisfaction of certain conditions, including the receipt of additional commitments for such increase.
During the nine months ended September 30, 2024, we repaid a C$500.0 million ($369.4 million) unsecured term loan facility priced at Canadian Dollar Offered Rate (“CDOR”) plus 0.90% that would otherwise have matured in January 2025.
As of September 30, 2024, our $100.0 million uncommitted line for standby letters of credit had an outstanding balance of $15.4 million. The agreement governing the line contains certain customary covenants and, under its terms, we are required to pay a commission on each outstanding letter of credit at a fixed rate.
Exchangeable Senior Notes
In June 2023, Ventas Realty issued $862.5 million aggregate principal amount of its 3.75% Exchangeable Senior Notes due 2026 (the “Exchangeable Notes”) in a private placement. The Exchangeable Notes are senior, unsecured obligations of Ventas Realty and are fully and unconditionally guaranteed on an unsecured and unsubordinated basis by Ventas, Inc. The Exchangeable Notes bear interest at a rate of 3.75% per year, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2023. The Exchangeable Notes mature on June 1, 2026, unless earlier exchanged, redeemed or repurchased. As of September 30, 2024, we had $862.5 million aggregate principal amount of the Exchangeable Notes outstanding. During the three and nine months ended September 30, 2024, we recognized approximately $8.1 million and $24.3 million respectively, of contractual interest expense and amortization of issuance costs of $1.7 million and $5.1 million, respectively, related to the Exchangeable Notes. Unamortized issuance costs of $12.0 million as of September 30, 2024 were recorded as an offset to senior notes payable and other debt on our Consolidated Balance Sheet.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Exchangeable Notes are exchangeable at an initial exchange rate of 18.2460 shares of our common stock per $1,000 principal amount of Exchangeable Notes (equivalent to an initial exchange price of approximately $54.81 per share of common stock). The initial exchange rate is subject to adjustment, including in the event of the payment of a quarterly dividend in excess of $0.45 per share, but will not be adjusted for any accrued and unpaid interest. Upon exchange of the Exchangeable Notes, Ventas Realty will pay cash up to the aggregate principal amount of the Exchangeable Notes to be exchanged and pay or deliver (or cause to be delivered), as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at Ventas Realty’s election, in respect of the remainder, if any, of its exchange obligation in excess of the aggregate principal amount of the Exchangeable Notes being exchanged. Prior to the close of business on the business day immediately preceding March 1, 2026, the Exchangeable Notes will be exchangeable at the option of the noteholders only upon the satisfaction of specified conditions and during certain periods described in the indenture governing the Exchangeable Notes. On or after March 1, 2026, until the close of business on the business day immediately preceding the maturity date, the Exchangeable Notes will be exchangeable at the option of the noteholders at any time regardless of these conditions or periods.
We have evaluated and concluded that the exchange options embedded in our exchangeable senior notes are eligible for the entity’s own equity scope exception from ASC 815 and therefore, do not need to be bifurcated. Accordingly, we record our exchangeable senior notes as liabilities (included in senior notes payable and other debt on our Consolidated Balance Sheets).
Senior Notes
In February 2024, Ventas Canada Finance Limited (“Ventas Canada”) issued and sold C$650.0 million ($478.3 million) aggregate principal amount of 5.10% Senior Notes, Series J due 2029 in a private placement. The proceeds were primarily used to repay a C$500.0 million ($369.4 million) unsecured term loan facility due 2025.
In April and May 2024, we repaid $800.0 million senior notes consisting of $400.0 million aggregate principal amount of 3.50% Senior Notes due 2024 and $400.0 million aggregate principal amount of 3.75% Senior Notes due 2024 at maturity primarily with cash on hand and through our commercial paper program.
In April 2024, we repaid C$73.0 million ($53.4 million) aggregate principal amount of 2.80% Senior Notes, Series E due 2024 at maturity with cash on hand.
In May 2024, Ventas Realty issued and sold $500.0 million aggregate principal amount of 5.625% Senior Notes due 2034 in a registered public offering. The proceeds were primarily used to repay balances outstanding under our commercial paper program.
In September 2024, Ventas Realty issued and sold $550.0 million aggregate principal amount of 5.00% Senior Notes due 2035 in a registered public offering. We intend to use the proceeds for general corporate purposes, which may include funding of acquisitions or the repayment of other indebtedness.
In September 2024, we repaid C$163.3 million ($120.8 million) aggregate principal amount of 4.125% Senior Notes due 2024 at maturity with cash on hand.
Mortgages
In February 2024, we entered into a C$52.8 million ($39.1 million) fixed rate mortgage loan, which accrues interest at 4.644%, matures in 2029 and is secured by one senior housing community in Canada.
In April 2024, we entered into an aggregate C$103.0 million ($75.5 million) fixed rate mortgage loans, which accrue interest at a blended rate of 4.90%, mature in 2029 and are secured by two senior housing communities in Canada.
In May 2024, we entered into a $52.3 million fixed rate mortgage loan, which accrues interest at 6.02%, matures in 2034 and is secured by one outpatient medical building in California.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Scheduled Maturities of Borrowing Arrangements and Other Provisions
As of September 30, 2024, our indebtedness had the following maturities (dollars in thousands):
| Principal Amount Due at Maturity | Unsecured Revolving Credit Facility and Commercial Paper Notes | Scheduled Periodic Amortization | Total Maturities | ||||||||||||||||||||
| 2024 | $ | 42,528 | $ | — | $ | 14,484 | $ | 57,012 | |||||||||||||||
| 2025 | 1,772,771 | — | 49,211 | 1,821,982 | |||||||||||||||||||
| 2026 | 2,034,264 | — | 43,140 | 2,077,404 | |||||||||||||||||||
| 2027 | 1,574,590 | — | 43,318 | 1,617,908 | |||||||||||||||||||
| 2028 | 1,485,324 | 7,922 | 36,295 | 1,529,541 | |||||||||||||||||||
| Thereafter | 6,537,767 | — | 130,406 | 6,668,173 | |||||||||||||||||||
| Total maturities | $ | 13,447,244 | $ | 7,922 | $ | 316,854 | $ | 13,772,020 |
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.
We do not use derivative instruments for trading or speculative purposes, and we have a policy of entering into contracts only with major financial institutions based upon their credit ratings and other factors. When considered together with the underlying exposure that the derivative is designed to hedge, we do not expect that the use of derivatives in this manner would have any material adverse effect on our future financial condition or results of operations.
Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized over the life of the related debt and recorded in interest expense in the Consolidated Statements of Income.
As of September 30, 2024, our variable rate debt obligations of $0.8 billion reflect, in part, the effect of $142.3 million notional amount of interest rate swaps with maturities in March 2027, that effectively convert fixed rate debt to variable rate debt.
As of September 30, 2024, our fixed rate debt obligations of $13.0 billion reflect, in part, the effect of $526.7 million and C$639.8 million notional amount of interest rate swaps with maturities ranging from February 2025 to April 2031, in each case, that effectively convert variable rate debt to fixed rate debt.
2024 Activity
From June through September 2024, we entered into an aggregate $350.0 million treasury locks to hedge interest rate risk on future debt issuances. In September 2024, we terminated the treasury locks in conjunction with the issuance of the $550.0 million aggregate principal amount of 5.00% Senior Notes due 2035.
NOTE 11—FAIR VALUES OF FINANCIAL INSTRUMENTS
Overview
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that financial assets and liabilities carried at fair value be classified and disclosed in one of the following categories:
- Level 1: Fair value calculated based on unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
-
Level 2: Fair value calculated using inputs other than quoted prices included in level one that are directly or indirectly observable for the asset or liability. Level two inputs may include quoted prices for similar assets and liabilities in active markets and other inputs for the asset or liability that are observable at commonly quoted intervals, such as interest rates, foreign exchange rates and yield curves.
-
Level 3: Fair value calculated using unobservable inputs for the asset or liability, which typically are based on our own assumptions, because there is little, if any, related market activity.
The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. Accordingly, the estimates presented are not necessarily indicative of the amounts we would realize in a current market exchange or transaction.
Financial Instruments Measured at Fair Value
The table below summarizes the carrying amounts and fair values of our financial instruments either recorded or disclosed on a recurring basis (dollars in thousands):
| As of September 30, 2024 | As of December 31, 2023 | ||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash and cash equivalents (1) | $ | 1,104,733 | $ | 1,104,733 | $ | 508,794 | $ | 508,794 | |||||||||||||||
| Escrow deposits and restricted cash (1) | 60,964 | 60,964 | 54,668 | 54,668 | |||||||||||||||||||
| Stock warrants (3)(4)(5) | 65,377 | 65,377 | 59,281 | 59,281 | |||||||||||||||||||
| Secured mortgage loans and other, net (3)(4) | 144,797 | 145,905 | 27,986 | 27,947 | |||||||||||||||||||
| Non-mortgage loans receivable, net (3)(4)(5) | 23,754 | 22,895 | 26,152 | 25,200 | |||||||||||||||||||
| Derivative instruments (3)(5) | 9,836 | 9,836 | 19,782 | 19,782 | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Senior notes payable and other debt, gross (3)(4) | 13,772,020 | 13,854,034 | 13,568,598 | 13,104,091 | |||||||||||||||||||
| Derivative instruments (3)(6) | 6,958 | 6,958 | 2,525 | 2,525 | |||||||||||||||||||
| Redeemable OP Units (2) | 219,017 | 219,017 | 173,452 | 173,452 |
(1)The carrying amount approximates fair value due to the short maturity of these instruments.
(2)Level 1 within fair value hierarchy.
(3)Level 2 within fair value hierarchy.
(4)Level 3 within fair value hierarchy.
(5)Included in other assets on our Consolidated Balance Sheets.
(6)Included in accounts payable and other liabilities on our Consolidated Balance Sheets.
Items Measured at Fair Value on a Recurring Basis
In the above table, stock warrants consist of the Brookdale Warrants and the Scion Warrants. The Brookdale Warrants represent an interest in a publicly-traded entity and their fair value is based on Level 2 inputs that are obtained from public sources such as equity spot price, dividend yield, volatility and risk-free rate.
The Scion Warrants represent a financial interest in a private entity whose fair value is based on Level 3 inputs that reflect significant assumptions including underlying enterprise value, market volatility, duration, dividend rate and risk-free rate. Changes in one or more of these inputs could impact the fair value determination. During the three and nine months ended September 30, 2024, there has been no realized or unrealized gains or losses recognized for these warrants. There has been no transfer into or out of Level 3 financial instruments during the periods presented.
Other Items Measured at Fair Value on a Nonrecurring Basis
Real estate recorded as held for sale and any associated real estate impairment recorded due to the shortening of the expected hold period due to our change in intent to hold the asset (see “Note 5 – Dispositions and Impairments”) are measured
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
at fair value on a nonrecurring basis. We estimate the fair value of assets held for sale and any associated impairment charges based primarily on current sales price expectations, which reside within Level 2 of the fair value hierarchy.
Real estate impairment charges recorded due to our evaluation of recoverability when events or changes in circumstances indicate the carrying amount may not be recoverable are based on company-specific inputs and our assumptions about the marketability of the properties as observable inputs are not available. As such, we have determined that these fair value measurements generally reside within Level 3 of the fair value hierarchy. We estimate the fair value of real estate deemed to not be recoverable using the cost or income approach and unobservable data such as net operating income and estimated capitalization and discount rates, and giving consideration to local and national industry market data including comparable sales.
NOTE 12—COMMITMENTS AND CONTINGENCIES
From time to time, we are party to various lawsuits, investigations, claims and other legal and regulatory proceedings arising in connection with our business. In certain circumstances, regardless of whether we are a named party in a lawsuit, investigation, claim or other legal or regulatory proceeding, we may be contractually obligated to indemnify, defend and hold harmless our tenants, operators, managers or other third parties against, or may otherwise be responsible for, such actions, proceedings or claims. These claims may include, among other things, professional liability and general liability claims, commercial liability claims, unfair business practices claims and employment claims, as well as regulatory proceedings and government investigations, including proceedings related to our senior housing operating portfolio, where we are typically the holder of the applicable healthcare license. These claims may not be fully insured and some may allege large damage amounts.
It is the opinion of management, that the disposition of any such lawsuits, investigations, claims and other legal and regulatory proceedings that are currently pending will not, individually or in the aggregate, have a material adverse effect on us. However, regardless of the merits of a particular action, investigation or claim, we may be forced to expend significant financial resources to defend and resolve these matters. We are unable to predict the ultimate outcome of these lawsuits, investigations, claims and other legal and regulatory proceedings, and if management’s assessment of our liability with respect thereto is incorrect, such actions, investigations and claims could have a material adverse effect on us.
From time to time, on behalf of ourselves or on behalf of our unconsolidated entities, we have agreed, and may in the future agree, to provide guarantees, indemnities or other similar contingent obligations to third parties. Such agreements may include, without limitation: (1) guarantees of all or a portion of the principal, interest and other amounts due under mortgage debt or other borrowings, (2) customary nonrecourse carve-out guarantees provided in connection with mortgage or other borrowings, (3) customary indemnifications of lenders for potential environmental liabilities, (4) completion guarantees provided to lenders, tenants, ground lessors or other third parties for the completion of development and redevelopment projects, (5) guarantees of payment of contingent tax obligations to tax credit investors who have purchased historic, new market and other tax credits from us or our unconsolidated entities, (6) guarantees of ground rent and other payment of ground rent and other obligations to ground lessors and (7) indemnities and other guarantees required in connection with the procurement of performance and surety bonds and standby letters of credit.
As of September 30, 2024, no triggering events relating to our guarantees, indemnities or similar contingent obligations have occurred. Accordingly, no contingent liability is recorded in our Consolidated Balance Sheet.
NOTE 13—INCOME TAXES
We have elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code of 1986, as amended, for every year beginning with the year ended December 31, 1999. We have also elected for certain of our subsidiaries to be treated as taxable REIT subsidiaries (“TRS” or “TRS entities”), which are subject to federal, state and foreign income taxes. All entities other than the TRS entities are collectively referred to as the “REIT” within this note. Certain REIT entities are subject to foreign income tax.
Although the TRS entities and certain other foreign entities have paid minimal federal, state and foreign income taxes for the nine months ended September 30, 2024, their income tax liabilities may increase in future periods as we exhaust net operating loss (“NOL”) carryforwards and as our operations grow. Such increases could be significant.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Our consolidated provision for income taxes for the three months ended September 30, 2024 and 2023 was an expense of $3.0 million and a benefit of $1.7 million, respectively. Our consolidated provision for income taxes for the nine months ended September 30, 2024 and 2023 was an expense of $7.8 million and a benefit of $14.2 million, respectively. The income tax expense for the three and nine months ended September 30, 2024 is primarily due to the enactment of Bill C-59 in Canada, which limits the amount of interest expense we can deduct with respect to our Canadian entities. Bill C-59 is retrospectively applied to October 1, 2023 and the cumulative effect tax of such interest limitation was recognized in the second quarter of 2024. The impact of the interest limitation was partially offset by reversal of valuation allowances recorded against the net deferred tax assets of certain of our TRS entities and losses in certain of our TRS entities. The income tax benefit for the three and nine months ended September 30, 2023 was primarily due to losses in certain of our TRS entities as well as an $8.0 million benefit from internal restructurings of our U.S. TRS entities.
Each TRS is a tax paying component for purposes of classifying deferred tax assets and liabilities. Deferred tax liabilities with respect to our TRS entities totaled $36.8 million and $24.5 million as of September 30, 2024 and December 31, 2023, respectively, and related primarily to differences between the financial reporting and tax bases of fixed and intangible assets, net of loss carryforwards. Deferred tax assets with respect to our TRS entities totaled $3.5 million and $1.8 million as of September 30, 2024 and December 31, 2023, respectively, and related primarily to loss carryforwards.
Generally, we are subject to audit under the statute of limitations by the Internal Revenue Service for the year ended December 31, 2020 and subsequent years and are subject to audit by state taxing authorities for the year ended December 31, 2019 and subsequent years. We are subject to audit generally under the statutes of limitation by the Canada Revenue Agency and provincial authorities with respect to the Canadian entities for the year ended December 31, 2020 and subsequent years. We are subject to audit in the United Kingdom generally for periods ended in and subsequent to 2022.
NOTE 14—STOCKHOLDERS' EQUITY
Capital Stock
In September 2024, we entered into an “at-the-market” equity offering program (“2024 ATM Program”), which provides for the sale, from time to time, of up to $2.0 billion aggregate gross sales price of shares of our common stock. In connection with our entry into the 2024 ATM Program, we terminated our prior “at-the-market” equity offering program (together with the 2024 ATM Program, the “ATM Programs”) under the ATM Sales Agreement dated November 8, 2021 and amended February 20, 2024, pursuant to which we previously, from time to time, could sell up to $1.0 billion aggregate gross sales price of shares of our common stock. The ATM Programs have allowed us to enter into forward sales agreements, discussed below. By utilizing a forward sales agreement, we can secure a share price on the sale of shares of our common stock at or shortly after the time the forward sales agreement becomes effective, while postponing the receipt of proceeds from the sale of shares until a future date.
As of September 30, 2024, the remaining amount available under our 2024 ATM Program for future sales of our common stock was $1.9 billion.
ATM Share Issuances
During the three months ended September 30, 2024, we issued 5.9 million shares of our common stock under our ATM Programs for gross proceeds of $362.6 million, representing an average price of $61.22 per share, of which 4.5 million shares and $282.0 million of gross proceeds were issued and settled via forward sales agreements. During the nine months ended September 30, 2024, we issued 16.4 million shares of our common stock under our ATM Programs for gross proceeds of $862.0 million, representing an average price of $52.70 per share, of which 4.5 million shares and $282.0 million of gross proceeds were issued and settled via forward sales agreements.
Forward Sales Agreements
Forward sales agreements generally have a maturity of one to two years. At any time during the term of a forward sale agreement, we may settle that forward sales agreement by delivery of physical shares of our common stock to the forward purchaser or, at our election, subject to certain exceptions, we may settle in cash or by net share settlement. The forward sales price we expect to receive upon settlement of outstanding forward sales agreements will be the initial forward price, net of commissions, established on or shortly after the effective date of the relevant forward sales agreement, subject to adjustments for accrued interest, the forward purchasers’ stock borrowing costs in excess of a certain threshold specified in the forward sales
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
agreement, and certain fixed price reductions for expected dividends on our common stock during the term of the forward sales agreement. Our unsettled forward sales agreements are accounted for as equity instruments.
As of September 30, 2024, we have unsettled forward sales agreements for 2.6 million shares or approximately $158.6 million in gross proceeds with varying maturity dates through December 2025.
In October 2024, we entered into additional unsettled forward sales agreements for 0.8 million shares or approximately $51.0 million in gross proceeds with varying maturity dates through December 2025.
Accumulated Other Comprehensive Loss
The following is a summary of our accumulated other comprehensive loss (dollars in thousands):
| As of September 30, 2024 | As of December 31, 2023 | ||||||||||
| Foreign currency translation loss | $ | (40,457) | $ | (56,596) | |||||||
| Unrealized loss on available for sale securities | (1,109) | (1,256) | |||||||||
| Unrealized gain on derivative instruments | 3,094 | 22,095 | |||||||||
| Total accumulated other comprehensive loss | $ | (38,472) | $ | (35,757) |
NOTE 15—EARNINGS PER SHARE
The following table shows the amounts used in computing our basic and diluted earnings per share (in thousands, except per share amounts):
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Numerator for basic and diluted earnings per share: | |||||||||||||||||||||||
| Net income (loss) | 20,996 | (69,559) | 29,624 | 54,419 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | 1,753 | 1,565 | 5,306 | 4,573 | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 19,243 | $ | (71,124) | $ | 24,318 | $ | 49,846 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Denominator for basic earnings per share—weighted average shares | 414,599 | 402,859 | 408,691 | 401,424 | |||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Restricted stock awards | 476 | 327 | 340 | 268 | |||||||||||||||||||
| OP unitholder interests | 3,415 | 3,469 | 3,427 | 3,474 | |||||||||||||||||||
| Exchangeable Notes | 964 | — | 321 | — | |||||||||||||||||||
| Forward sales agreements | 19 | — | 7 | — | |||||||||||||||||||
| Denominator for diluted earnings per share—adjusted weighted average shares | 419,474 | 406,655 | 412,785 | 405,166 | |||||||||||||||||||
| Basic earnings per share: | |||||||||||||||||||||||
| Net income (loss) | $ | 0.05 | $ | (0.17) | $ | 0.07 | $ | 0.14 | |||||||||||||||
| Net income (loss) attributable to common stockholders | 0.05 | (0.18) | 0.06 | 0.12 | |||||||||||||||||||
| Diluted earnings per share: (1) | |||||||||||||||||||||||
| Net income (loss) | $ | 0.05 | $ | (0.17) | $ | 0.07 | $ | 0.13 | |||||||||||||||
| Net income (loss) attributable to common stockholders | 0.05 | (0.18) | 0.06 | 0.12 |
(1) Potential common shares are not included in the computation of diluted earnings per share when a net loss exists as the effect would be an antidilutive per share amount.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The dilutive effect of our Exchangeable Notes is calculated using the if-converted method in accordance with ASU 2020-06. We are required, pursuant to the indenture governing the Exchangeable Notes, to settle the aggregate principal amount of the Exchangeable Notes in cash and may elect to settle any remaining exchange obligation (i.e., the stock price in excess of the exchange obligation) in cash, shares of our common stock, or a combination thereof. Under the if-converted method, we include the number of shares required to satisfy the exchange obligation, assuming all the Exchangeable Notes are exchanged. The average closing price of our common stock for the three and nine months ended September 30, 2024 and 2023 is used as the basis for determining the dilutive effect on earnings per share. The Exchangeable Notes were not included in the computation of diluted earnings per share for the three and nine months ended September 30, 2023 as they were antidilutive.
Our unsettled forward sales agreements do not impact basic earnings per share. We apply the treasury stock method to our unsettled forward sales agreements to determine their dilutive effect, if any. See “Note 14 – Stockholders' Equity.”
NOTE 16—SEGMENT INFORMATION
As of September 30, 2024, we operated through three reportable business segments: SHOP, outpatient medical and research portfolio and triple-net leased properties. In our SHOP segment, we invest in senior housing communities throughout the United States and Canada and engage operators to operate those communities. In our outpatient medical and research portfolio segment, we primarily acquire, own, develop, lease and manage outpatient medical buildings and research centers throughout the United States. In our triple-net leased properties segment, we invest in and own senior housing communities, skilled nursing facilities (“SNFs”), long term acute care hospitals (“LTACs”), freestanding inpatient rehabilitation facilities (“IRFs”) and other healthcare facilities throughout the United States and the United Kingdom and lease those properties to tenants 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. Information provided for “non-segment” includes management fees and promote revenues, net of expenses related to our third-party institutional capital management business, income from loans and investments and various corporate-level expenses not directly attributable to any of our three reportable business segments. Non-segment assets consist primarily of corporate assets, including cash, restricted cash, loans receivable and investments and miscellaneous accounts receivable as well as investments in unconsolidated entities. Our investments in unconsolidated entities include investments made through our third-party institutional capital management business, Ventas Investment Management (“VIM”).
Our chief operating decision maker evaluates performance of the combined properties in each reportable business segment and determines how to allocate resources to those segments based on NOI for each segment. We define NOI as total revenues, less interest and other income, property-level operating expenses and third party capital management expenses. We consider NOI useful because it allows investors, analysts and our management to measure unlevered property-level operating results and to compare our operating results to the operating results of other real estate companies between periods on a consistent basis. In order to facilitate a clear understanding of our historical consolidated operating results, NOI should be examined 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. 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.
Interest expense, depreciation and amortization, general, administrative and professional fees, income tax expense and other non-property-specific revenues and expenses are not allocated to individual reportable business segments for purposes of assessing segment performance. There are no intersegment sales or transfers.
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Summary information by reportable business segment is as follows (dollars in thousands):
| For the Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||
| SHOP | OM&R | NNN | Non-Segment | Total | |||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Rental income | $ | — | $ | 220,957 | $ | 155,349 | $ | — | $ | 376,306 | |||||||||||||||||||
| Resident fees and services | 845,532 | — | — | — | 845,532 | ||||||||||||||||||||||||
| Third party capital management revenues | — | 618 | — | 3,774 | 4,392 | ||||||||||||||||||||||||
| Income from loans and investments | — | — | — | 1,881 | 1,881 | ||||||||||||||||||||||||
| Interest and other income | — | — | — | 8,204 | 8,204 | ||||||||||||||||||||||||
| Total revenues | $ | 845,532 | $ | 221,575 | $ | 155,349 | $ | 13,859 | $ | 1,236,315 | |||||||||||||||||||
| Total revenues | $ | 845,532 | $ | 221,575 | $ | 155,349 | $ | 13,859 | $ | 1,236,315 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Interest and other income | — | — | — | 8,204 | 8,204 | ||||||||||||||||||||||||
| Property-level operating expenses | 631,550 | 77,479 | 4,379 | — | 713,408 | ||||||||||||||||||||||||
| Third party capital management expenses | — | — | — | 1,553 | 1,553 | ||||||||||||||||||||||||
| NOI | $ | 213,982 | $ | 144,096 | $ | 150,970 | $ | 4,102 | 513,150 | ||||||||||||||||||||
| Interest and other income | 8,204 | ||||||||||||||||||||||||||||
| Interest expense | (150,437) | ||||||||||||||||||||||||||||
| Depreciation and amortization | (304,268) | ||||||||||||||||||||||||||||
| General, administrative and professional fees | (35,092) | ||||||||||||||||||||||||||||
| Transaction, transition and restructuring costs | (8,580) | ||||||||||||||||||||||||||||
| Recovery of allowance on loans receivable and investments, net | 56 | ||||||||||||||||||||||||||||
| Other expense | (3,935) | ||||||||||||||||||||||||||||
| Income from unconsolidated entities | 4,629 | ||||||||||||||||||||||||||||
| Gain on real estate dispositions | 271 | ||||||||||||||||||||||||||||
| Income tax expense | (3,002) | ||||||||||||||||||||||||||||
| Net income | 20,996 | ||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 1,753 | ||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | 19,243 |
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| For the Three Months Ended September 30, 2023 | |||||||||||||||||||||||||||||
| SHOP | OM&R | NNN | Non-Segment | Total | |||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Rental income | $ | — | $ | 226,326 | $ | 159,812 | $ | — | $ | 386,138 | |||||||||||||||||||
| Resident fees and services | 754,417 | — | — | — | 754,417 | ||||||||||||||||||||||||
| Third party capital management revenues | — | 662 | — | 4,653 | 5,315 | ||||||||||||||||||||||||
| Income from loans and investments | — | — | — | 1,208 | 1,208 | ||||||||||||||||||||||||
| Interest and other income | — | — | — | 2,754 | 2,754 | ||||||||||||||||||||||||
| Total revenues | $ | 754,417 | $ | 226,988 | $ | 159,812 | $ | 8,615 | $ | 1,149,832 | |||||||||||||||||||
| Total revenues | $ | 754,417 | $ | 226,988 | $ | 159,812 | $ | 8,615 | $ | 1,149,832 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Interest and other income | — | — | — | 2,754 | 2,754 | ||||||||||||||||||||||||
| Property-level operating expenses | 573,715 | 78,915 | 3,847 | — | 656,477 | ||||||||||||||||||||||||
| Third party capital management expenses | — | — | — | 1,472 | 1,472 | ||||||||||||||||||||||||
| NOI | $ | 180,702 | $ | 148,073 | $ | 155,965 | $ | 4,389 | 489,129 | ||||||||||||||||||||
| Interest and other income | 2,754 | ||||||||||||||||||||||||||||
| Interest expense | (147,919) | ||||||||||||||||||||||||||||
| Depreciation and amortization | (370,377) | ||||||||||||||||||||||||||||
| General, administrative and professional fees | (33,297) | ||||||||||||||||||||||||||||
| Loss on extinguishment of debt, net | (612) | ||||||||||||||||||||||||||||
| Transaction, transition and restructuring costs | (7,125) | ||||||||||||||||||||||||||||
| Recovery of allowance on loans receivable and investments, net | 66 | ||||||||||||||||||||||||||||
| Other expense | (9,432) | ||||||||||||||||||||||||||||
| Loss from unconsolidated entities | (5,119) | ||||||||||||||||||||||||||||
| Gain on real estate dispositions | 10,711 | ||||||||||||||||||||||||||||
| Income tax benefit | 1,662 | ||||||||||||||||||||||||||||
| Net loss | (69,559) | ||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 1,565 | ||||||||||||||||||||||||||||
| Net loss attributable to common stockholders | $ | (71,124) |
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| For the Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||
| SHOP | OM&R | NNN | Non-Segment | Total | |||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Rental income | $ | — | $ | 658,687 | $ | 464,651 | $ | — | $ | 1,123,338 | |||||||||||||||||||
| Resident fees and services | 2,476,436 | — | — | — | 2,476,436 | ||||||||||||||||||||||||
| Third party capital management revenues | — | 1,954 | — | 11,066 | 13,020 | ||||||||||||||||||||||||
| Income from loans and investments | — | — | — | 4,606 | 4,606 | ||||||||||||||||||||||||
| Interest and other income | — | — | — | 19,809 | 19,809 | ||||||||||||||||||||||||
| Total revenues | $ | 2,476,436 | $ | 660,641 | $ | 464,651 | $ | 35,481 | $ | 3,637,209 | |||||||||||||||||||
| Total revenues | $ | 2,476,436 | $ | 660,641 | $ | 464,651 | $ | 35,481 | $ | 3,637,209 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Interest and other income | — | — | — | 19,809 | 19,809 | ||||||||||||||||||||||||
| Property-level operating expenses | 1,844,730 | 224,703 | 11,623 | — | 2,081,056 | ||||||||||||||||||||||||
| Third party capital management expenses | — | — | — | 4,956 | 4,956 | ||||||||||||||||||||||||
| NOI | $ | 631,706 | $ | 435,938 | $ | 453,028 | $ | 10,716 | 1,531,388 | ||||||||||||||||||||
| Interest and other income | 19,809 | ||||||||||||||||||||||||||||
| Interest expense | (449,629) | ||||||||||||||||||||||||||||
| Depreciation and amortization | (944,371) | ||||||||||||||||||||||||||||
| General, administrative and professional fees | (121,556) | ||||||||||||||||||||||||||||
| Loss on extinguishment of debt, net | (672) | ||||||||||||||||||||||||||||
| Transaction, transition and restructuring costs | (16,143) | ||||||||||||||||||||||||||||
| Recovery of allowance on loans receivable and investments, net | 166 | ||||||||||||||||||||||||||||
| Shareholder relations matters | (15,751) | ||||||||||||||||||||||||||||
| Other expense | (10,729) | ||||||||||||||||||||||||||||
| Loss from unconsolidated entities | (5,406) | ||||||||||||||||||||||||||||
| Gain on real estate dispositions | 50,282 | ||||||||||||||||||||||||||||
| Income tax expense | (7,764) | ||||||||||||||||||||||||||||
| Net income | 29,624 | ||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 5,306 | ||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | 24,318 |
VENTAS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| For the Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||||||
| SHOP | OM&R | NNN | Non-Segment | Total | |||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Rental income | $ | — | $ | 645,137 | $ | 463,906 | $ | — | $ | 1,109,043 | |||||||||||||||||||
| Resident fees and services | 2,184,024 | — | — | — | 2,184,024 | ||||||||||||||||||||||||
| Third party capital management revenues | — | 1,849 | — | 11,639 | 13,488 | ||||||||||||||||||||||||
| Income from loans and investments | — | — | — | 21,351 | 21,351 | ||||||||||||||||||||||||
| Interest and other income | — | — | — | 5,529 | 5,529 | ||||||||||||||||||||||||
| Total revenues | $ | 2,184,024 | $ | 646,986 | $ | 463,906 | $ | 38,519 | $ | 3,333,435 | |||||||||||||||||||
| Total revenues | $ | 2,184,024 | $ | 646,986 | $ | 463,906 | $ | 38,519 | $ | 3,333,435 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||
| Interest and other income | — | — | — | 5,529 | 5,529 | ||||||||||||||||||||||||
| Property-level operating expenses | 1,658,047 | 217,999 | 11,180 | — | 1,887,226 | ||||||||||||||||||||||||
| Third party capital management expenses | — | — | — | 4,614 | 4,614 | ||||||||||||||||||||||||
| NOI | $ | 525,977 | $ | 428,987 | $ | 452,726 | $ | 28,376 | 1,436,066 | ||||||||||||||||||||
| Interest and other income | 5,529 | ||||||||||||||||||||||||||||
| Interest expense | (419,259) | ||||||||||||||||||||||||||||
| Depreciation and amortization | (957,185) | ||||||||||||||||||||||||||||
| General, administrative and professional fees | (112,494) | ||||||||||||||||||||||||||||
| Gain on extinguishment of debt, net | 6,189 | ||||||||||||||||||||||||||||
| Transaction, transition and restructuring costs | (11,580) | ||||||||||||||||||||||||||||
| Recovery of allowance on loans receivable and investments, net | 20,195 | ||||||||||||||||||||||||||||
| Gain on foreclosure of real estate | 29,127 | ||||||||||||||||||||||||||||
| Other income | 765 | ||||||||||||||||||||||||||||
| Income from unconsolidated entities | 20,512 | ||||||||||||||||||||||||||||
| Gain on real estate dispositions | 22,317 | ||||||||||||||||||||||||||||
| Income tax benefit | 14,237 | ||||||||||||||||||||||||||||
| Net income | 54,419 | ||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 4,573 | ||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | 49,846 |
Assets by reportable business segment are as follows (dollars in thousands):
| As of September 30, 2024 | As of December 31, 2023 | ||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| SHOP | $ | 12,854,462 | 50.7 | % | $ | 12,864,029 | 52.0 | % | |||||||||||||||
| Outpatient medical and research portfolio | 6,879,036 | 27.1 | 6,943,446 | 28.1 | |||||||||||||||||||
| Triple-net leased properties | 4,022,354 | 15.9 | 4,120,691 | 16.7 | |||||||||||||||||||
| Non-segment | 1,591,337 | 6.3 | 797,267 | 3.2 | |||||||||||||||||||
| Total assets | $ | 25,347,189 | 100.0 | % | $ | 24,725,433 | 100.0 | % |
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