October 26, 2012 at 07:03 AM EDT
Ventas Reports Nine Percent Increase in Third Quarter 2012 Normalized FFO to $0.96 Per Diluted Share

Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) said today that normalized Funds From Operations (“FFO”) for the quarter ended September 30, 2012 increased approximately twelve percent to $284.9 million, from $255.1 million for the comparable 2011 period. Normalized FFO per diluted common share was $0.96 for the quarter ended September 30, 2012, a nine percent increase from $0.88 for the comparable 2011 period. Weighted average diluted shares outstanding for the period rose by two percent to 297.4 million, compared to 290.8 million in the third quarter of 2011.

“Ventas is thriving because of our diversified, high performing portfolio and disciplined execution of our investment and asset management strategy,” Ventas Chairman and Chief Executive Officer Debra A. Cafaro said. “We achieved another quarter of outstanding results and have completed $1.7 billion in investments year to date. Our powerful business model and focused management team continue to deliver consistent strong growth in FFO and cash flow with a strong financial profile and well covered dividend. We are pleased to increase our full year earnings outlook.”

The third quarter’s growth is primarily due to the Company’s $1.7 billion year-to-date acquisitions, including its acquisition of Cogdell Spencer Inc. (“Cogdell”) and 16 private pay senior living communities from affiliates of Sunrise Senior Living, Inc. (NYSE: SRZ) (“Sunrise”). Additionally, Ventas benefited from excellent performance in the Company’s seniors housing operating communities managed by Sunrise and Atria Senior Living, Inc. (“Atria”); rental increases from the Company’s triple-net lease portfolio; and lower weighted average interest rates. These benefits were partially offset by increases in general and administrative expenses, higher debt balances, year-to-date asset sales and loan repayments, increases in the Sunrise management fee and an increase in weighted average diluted shares outstanding.

The Company also recognized a net gain of $17.0 million in the third quarter of 2012 from real estate activity, which gain is excluded from both normalized FFO and NAREIT FFO (as defined below).

Normalized FFO for the quarter ended September 30, 2012 excludes the net benefit (totaling $4.8 million, or $0.01 per diluted share) from income tax benefit and gain on extinguishment of debt, partially offset by merger-related expenses and deal costs (including integration costs), mark-to-market adjustment for derivatives and amortization of other intangibles. Normalized FFO for the quarter ended September 30, 2011 excluded the net benefit (totaling $9.2 million, or $0.03 per diluted share) from net litigation proceeds and income tax benefit, partially offset by merger-related expenses and deal costs (including integration costs), loss on extinguishment of debt, amortization of other intangibles and mark-to-market adjustment for derivatives.

Normalized FFO for the nine months ended September 30, 2012 was $826.6 million, or $2.82 per diluted common share, a 15 percent increase per diluted common share from $517.6 million, or $2.45 per diluted common share, for the comparable 2011 period. Normalized FFO for the nine months ended September 30, 2012 excludes the net expense (totaling $86.1 million, or $0.30 per diluted share) from loss on extinguishment of debt, merger-related expenses and deal costs (including integration costs), amortization of other intangibles and mark-to-market adjustment for derivatives, partially offset by income tax benefit.

Net income attributable to common stockholders for the quarter ended September 30, 2012 was $111.9 million, or $0.38 per diluted common share, including expense associated with discontinued operations of $3.4 million, compared with net income attributable to common stockholders for the quarter ended September 30, 2011 of $102.9 million, or $0.35 per diluted common share, including expense associated with discontinued operations of $0.2 million and net litigation proceeds of $85.3 million. This increase in net income attributable to common stockholders is primarily the result of the Company’s acquisitions, a net gain on real estate activity of $17.0 million, lower merger-related expenses and deal costs (including integration costs), a gain on extinguishment of debt and lower mark-to-market adjustment for derivatives, partially offset by higher general and administrative expenses and a lower income tax benefit in 2012.

Net income attributable to common stockholders for the nine months ended September 30, 2012 was $276.5 million, or $0.94 per diluted common share, including discontinued operations of $69.6 million, compared with net income attributable to common stockholders for the nine months ended September 30, 2011 of $171.5 million, or $0.81 per diluted common share, including discontinued operations of $2.0 million and net litigation proceeds of $85.3 million. This increase in net income attributable to common stockholders is primarily the result of the Company’s 2011 and 2012 acquisitions, a net gain on real estate activity of $95.8 million and lower merger-related expenses and deal costs (including integration costs), partially offset by higher general and administrative expenses, higher losses on extinguishment of debt and a lower income tax benefit in 2012.

FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), for the quarter ended September 30, 2012 increased ten percent to $289.7 million, from $264.2 million in the comparable 2011 period. NAREIT FFO per diluted common share for the quarter ended September 30, 2012 increased seven percent to $0.97, from $0.91 in 2011. This increase is primarily due to the factors described above for net income excluding the net impact of gains on real estate activity.

NAREIT FFO for the nine months ended September 30, 2012 increased 59 percent to $740.6 million, from $465.8 million in the comparable 2011 period. NAREIT FFO per diluted common share for the nine months ended September 30, 2011 increased 14 percent to $2.52, from $2.21 in 2011. This increase is primarily due to the factors described above for net income excluding the net impact of gains on real estate activity.

PRIVATE PAY SENIORS HOUSING OPERATING PORTFOLIO

Third Quarter 2012 Total Portfolio NOI and Same-Store Occupancy Rise

At September 30, 2012, the Company’s seniors housing operating portfolio included 95 private pay seniors housing communities managed by Sunrise and 117 private pay seniors housing communities managed by Atria. Total occupancy in these 212 communities increased sequentially 140 basis points to 90.4 percent and Net Operating Income (“NOI”) totaled $100.2 million after management fees and $118.3 million before management fees.

One hundred ninety-four of these private pay seniors housing communities were owned by the Company for the full third quarters of 2012 and 2011 (“same-store”). Same-store NOI before management fees for these communities increased 9.7 percent to $108.6 million in the third quarter of 2012 versus $99.0 million in the third quarter of 2011. Same-store NOI after management fees increased by 6.3 percent, from $86.9 million in the third quarter of 2011 to $92.3 million in the third quarter of 2012.

Per unit occupancy in the same-store communities rose 300 basis points to 90.6 percent in the third quarter of 2012 compared to the third quarter of 2011.

THIRD QUARTER HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS

Portfolio, Performance and Balance Sheet Highlights

Investments and Dispositions

  • Since July 1, 2012, Ventas invested $420 million in various assets, including 36 high-quality medical office buildings (“MOBs”) in which the Company had a noncontrolling interest prior to the acquisition. These MOBs are approximately 90 percent leased and 100 percent on-campus or affiliated with AA-rated hospital systems.
  • The Company opened two 100 percent leased MOBs containing over 300,000 square feet.
  • Since July 1, 2012, Ventas disposed of assets and received loan proceeds totaling approximately $87 million.

Liquidity, Ratings and Balance Sheet

  • The Company issued and sold $275 million aggregate principal amount of 3.25 percent senior notes due 2022 in August 2012.
  • On October 25, 2012, the Company closed a new $180 million unsecured term loan (the “Term Loan”) that has a five-year maturity and is currently priced at 120 basis points over LIBOR.
  • During the quarter, the Company prepaid in full its $200 million unsecured term loan and repaid in full $73 million principal amount of the NHP 8.25 percent senior notes and $170 million in mortgage debt.
  • The Company currently has approximately $1.6 billion of borrowing capacity available under its unsecured revolving credit facility and approximately $63 million in cash and cash equivalents.
  • At September 30, 2012, the Company had $705 million of borrowings outstanding under its unsecured revolving credit facility, approximately $507 million of borrowings outstanding under its unsecured term loan facility, and $59 million of cash and cash equivalents.
  • The Company’s debt to total capitalization at September 30, 2012 was approximately 29 percent.
  • The Company’s net debt to Adjusted Pro Forma EBITDA (as defined herein) at September 30, 2012 was 5.0x.

Portfolio & Additional Information

  • In the third quarter, the Company paid a per share dividend of $0.62, which represents a normalized FFO payout ratio of 65 percent.
  • Same-store cash NOI growth from continuing operations for the Company’s total portfolio (1,222 assets) was 3.5 percent in the third quarter of 2012 as compared to the third quarter of 2011. The comparable 2011 period included the benefit to NOI of the 3.75 percent temporary Sunrise management fee; assuming a six percent 2011 Sunrise management fee, the growth rate was 4.4 percent.
  • The 197 skilled nursing facilities (“SNFs”) and long-term acute care hospitals (“LTACs”) master leased by the Company to Kindred Healthcare, Inc. (NYSE: KND) (“Kindred”) produced EBITDARM (earnings before interest, taxes, depreciation, amortization, rent and management fees) to actual cash rent coverage of 2.0x for the trailing twelve-month period ended June 30, 2012 (the latest date available).
  • Current aggregate annual rent for the 89 properties whose lease to Kindred expires on April 30, 2013 is $126 million, which the Company believes approximates market rent. Of those properties: Kindred has renewed or entered into a new lease with respect to 35 properties for aggregate annual rent commencing May 1, 2013 of $75 million; and the Company is continuing its comprehensive project to re-lease the remaining 54 properties to qualified healthcare operators.
  • On July 27, 2012, the Centers for Medicare & Medicaid Services (“CMS”) issued a notice updating Medicare reimbursement rates for skilled nursing facilities (“SNFs”) effective October 1, 2012 (fiscal year 2013). The notice increases the Medicare PPS standard federal payment rate to SNFs by 1.8 percent in fiscal 2013.
  • On August 31, 2012, CMS published its final rule updating Medicare reimbursement rates for long-term acute care hospitals (“LTACs”) for fiscal year 2013. The final rule increases the Medicare PPS standard federal payment rate to LTACs by 1.8 percent in fiscal 2013.
  • Supplemental information regarding the Company can be found on the Company’s website under the “Investor Relations” section or at www.ventasreit.com/investor-relations/financial-information/supplemental-information.

GUIDANCE RAISED FOR 2012 NORMALIZED FFO PER DILUTED SHARE TO $3.76 TO $3.78

Ventas currently expects its 2012 normalized FFO per diluted share to range between $3.76 and $3.78, improving its previously announced 2012 guidance (which included the accretive acquisition of Cogdell and certain other acquisitions) of between $3.70 and $3.74 per diluted share. Updated guidance reflects stronger than expected portfolio performance. For the full year, Ventas expects weighted average diluted shares outstanding to be approximately 295 million. The Company now expects 2012 NOI for its total Sunrise- and Atria-managed seniors housing operating portfolio, including assets acquired in 2012, to be between $383 million and $385 million, including discontinued operations.

In its improved outlook, the Company has also assumed approximately $56 million in additional asset sales and/or loan repayments. There can be no assurance regarding the timing, terms or closing of any of these events.

The Company’s normalized FFO guidance (and related GAAP earnings projections) for all periods assumes, with certain immaterial exceptions, that all of the Company’s tenants and borrowers continue to meet all of their obligations to the Company. In addition, the Company’s normalized FFO guidance excludes, other than as specifically stated, (a) net gains on the sales of real property assets, including gain on re-measurement of equity method investments, (b) merger-related costs and expenses, including amortization of intangibles and transition and integration expenses, and deal costs and expenses, (c) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of the Company’s debt, (d) the non-cash effect of income tax benefits or expenses and derivative transactions that have non-cash mark-to-market impacts on the Company’s income statement, (e) the impact of future acquisitions or divestitures (including pursuant to tenant options to purchase) and capital transactions, and (f) the financial impact of contingent consideration.

The Company’s guidance is based on a number of other assumptions, which are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.

A reconciliation of the Company’s guidance to the Company’s projected GAAP earnings is attached to this press release. The Company may from time to time update its publicly announced guidance, but it is not obligated to do so.

THIRD QUARTER CONFERENCE CALL

Ventas will hold a conference call to discuss this earnings release today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). The dial-in number for the conference call is (617) 847-8706. The participant passcode is “Ventas.” The conference call is being webcast live by Thomson Reuters and can be accessed at the Company’s website at www.ventasreit.com or www.earnings.com. A replay of the webcast will be available today online, or by calling (617) 801-6888, passcode 14049568, beginning at approximately 12:00 p.m. Eastern Time and will be archived for 28 days.

Ventas, Inc., an S&P 500 company, is a leading healthcare real estate investment trust. Its diverse portfolio of more than 1,400 assets in 47 states (including the District of Columbia) and two Canadian provinces consists of seniors housing communities, skilled nursing facilities, hospitals, medical office buildings and other properties. Through its Lillibridge subsidiary, Ventas provides management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. More information about Ventas and Lillibridge can be found at www.ventasreit.com and www.lillibridge.com.

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements regarding the Company’s or its tenants’, operators’, managers’ or borrowers’ expected future financial condition, results of operations, cash flows, funds from operations, dividends and dividend plans, financing opportunities and plans, capital markets transactions, business strategy, budgets, projected costs, operating metrics, capital expenditures, competitive positions, acquisitions, investment opportunities, dispositions, merger integration, growth opportunities, expected lease income, continued qualification as a real estate investment trust (“REIT”), plans and objectives of management for future operations and statements that include words such as “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “could,” “should,” “will” and other similar expressions are forward-looking statements. These forward-looking statements are inherently uncertain, and actual results may differ from the Company’s expectations. The Company does not undertake a duty to update these forward-looking statements, which speak only as of the date on which they are made.

The Company’s actual future results and trends may differ materially from expectations depending on a variety of factors discussed in the Company’s filings with the Securities and Exchange Commission. These factors include without limitation: (a) the ability and willingness of the Company’s tenants, operators, borrowers, managers and other third parties to satisfy their obligations under their respective contractual arrangements with the Company, including, in some cases, their obligations to indemnify, defend and hold harmless the Company from and against various claims, litigation and liabilities; (b) the ability of the Company’s tenants, operators, borrowers and managers to maintain the financial strength and liquidity necessary to satisfy their respective obligations and liabilities to third parties, including without limitation obligations under their existing credit facilities and other indebtedness; (c) the Company’s success in implementing its business strategy and the Company’s ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions and investments, including investments in different asset types and outside the United States; (d) macroeconomic conditions such as a disruption of or lack of access to the capital markets, changes in the debt rating on U.S. government securities, default or delay in payment by the United States of its obligations, and changes in the federal budget resulting in the reduction or nonpayment of Medicare or Medicaid reimbursement rates; (e) the nature and extent of future competition; (f) the extent of future or pending healthcare reform and regulation, including cost containment measures and changes in reimbursement policies, procedures and rates; (g) increases in the Company’s borrowing costs as a result of changes in interest rates and other factors; (h) the ability of the Company’s operators and managers, as applicable, to comply with laws, rules and regulations in the operation of the Company’s properties, to deliver high quality services, to attract and retain qualified personnel and to attract residents and patients; (i) changes in general economic conditions or economic conditions in the markets in which the Company may, from time to time, compete, and the effect of those changes on the Company’s revenues, earnings and funding sources; (j) the Company’s ability to pay down, refinance, restructure or extend its indebtedness as it becomes due; (k) the Company’s ability and willingness to maintain its qualification as a REIT due to economic, market, legal, tax or other considerations; (l) final determination of the Company’s taxable net income for the year ending December 31, 2012; (m) the ability and willingness of the Company’s tenants to renew their leases with the Company upon expiration of the leases, the Company’s ability to reposition its properties on the same or better terms in the event of nonrenewal or in the event the Company exercises its right to replace an existing tenant, and obligations, including indemnification obligations, the Company may incur in connection with the replacement of an existing tenant; (n) risks associated with the Company’s senior living operating portfolio, such as factors that can cause volatility in the Company’s operating income and earnings generated by those properties, including without limitation national and regional economic conditions, costs of food, materials, energy, labor and services, employee benefit costs, insurance costs and professional and general liability claims, and the timely delivery of accurate property-level financial results for those properties; (o) changes in U.S. and Canadian currency exchange rates; (p) year-over-year changes in the Consumer Price Index and the effect of those changes on the rent escalators contained in the Company’s leases, including the rent escalator for Master Lease 2 with Kindred, and the Company’s earnings; (q) the Company’s ability and the ability of its tenants, operators, borrowers and managers to obtain and maintain adequate property, liability and other insurance from reputable, financially stable providers; (r) the impact of increased operating costs and uninsured professional liability claims on the liquidity, financial condition and results of operations of the Company’s tenants, operators, borrowers and managers, and the ability of the Company’s tenants, operators, borrowers and managers to accurately estimate the magnitude of those claims; (s) risks associated with the Company’s MOB portfolio and operations, including the Company’s ability to successfully design, develop and manage MOBs, to accurately estimate its costs in fixed fee-for-service projects and to retain key personnel; (t) the ability of the hospitals on or near whose campuses the Company’s MOBs are located and their affiliated health systems to remain competitive and financially viable and to attract physicians and physician groups; (u) the Company’s ability to build, maintain and expand its relationships with existing and prospective hospital and health system clients; (v) risks associated with the Company’s investments in joint ventures and unconsolidated entities, including its lack of sole decision-making authority and its reliance on its joint venture partners’ financial condition; (w) the impact of market or issuer events on the liquidity or value of the Company’s investments in marketable securities; (x) merger and acquisition activity in the healthcare industry resulting in a change of control of one or more of our tenants, operators, borrowers or managers or significant changes in the senior management of our tenants, operators, borrowers or managers; and (y) the impact of litigation or any financial, accounting, legal or regulatory issues that may affect the Company or its tenants, operators, borrowers or managers. Many of these factors are beyond the control of the Company and its management.

CONSOLIDATED BALANCE SHEETS
As of September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011
(In thousands, except per share amounts)
September 30,June 30,March 31,December 31,September 30,
20122012201220112011
Assets
Real estate investments:
Land and improvements $ 1,754,826 $ 1,744,752 $ 1,616,947 $ 1,614,847 $ 1,584,842
Buildings and improvements 16,552,534 16,181,392 15,329,730 15,337,919 15,289,744
Construction in progress 93,992 133,890 85,418 76,638 60,978
Acquired lease intangibles 965,500 920,116 799,136 800,858 821,613
19,366,852 18,980,150 17,831,231 17,830,262 17,757,177
Accumulated depreciation and amortization (2,447,175 ) (2,256,197 ) (2,084,212 ) (1,916,530 ) (1,761,135 )
Net real estate property 16,919,677 16,723,953 15,747,019 15,913,732 15,996,042
Secured loans receivable, net 215,775 213,193 222,218 212,577 302,264
Investments in unconsolidated entities 90,992 104,636 106,086 105,303 119,322
Net real estate investments 17,226,444 17,041,782 16,075,323 16,231,612 16,417,628
Cash and cash equivalents 58,530 52,803 53,224 45,807 57,482
Escrow deposits and restricted cash 76,908 114,883 114,420 76,590 84,783
Deferred financing costs, net 25,426 25,750 26,601 26,669 12,424
Other assets 1,053,591 987,043 919,391 891,232 633,453
Total assets $ 18,440,899 $ 18,222,261 $ 17,188,959 $ 17,271,910 $ 17,205,770
Liabilities and equity
Liabilities:
Senior notes payable and other debt $ 7,494,774 $ 7,204,727 $ 6,430,364 $ 6,429,116 $ 6,313,141
Accrued interest 56,326 47,842 58,041 37,694 65,985
Accounts payable and other liabilities 1,049,043 1,059,385 1,060,647 1,085,597 1,128,706
Deferred income taxes 265,116 271,066 271,408 260,722 274,852

Total liabilities

8,865,259 8,583,020 7,820,460 7,813,129 7,782,684
Redeemable OP unitholder interests 113,908 116,635 106,264 102,837 92,817
Commitments and contingencies
Equity:
Ventas stockholders' equity:

Preferred stock, $1.00 par value; 10,000 shares authorized, unissued

- - - - -

Common stock, $0.25 par value; 295,534, 295,370, 289,027, 288,823 and 287,962 shares issued at September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011, respectively

73,896 73,855 72,273 72,240 72,025
Capital in excess of par value 9,941,030 9,932,839 9,591,880 9,593,583 9,595,495
Accumulated other comprehensive income 23,626 21,404 23,926 22,062 19,237
Retained earnings (deficit) (680,888 ) (609,487 ) (500,808 ) (412,181 ) (439,015 )

Treasury stock, 0, 0, 10, 14 and 37 shares at September 30, 2012, June 30, 2012, March 31, 2012, December 31, 2011 and September 30, 2011, respectively

- - (536 ) (747 ) (1,980 )
Total Ventas stockholders' equity 9,357,664 9,418,611 9,186,735 9,274,957 9,245,762
Noncontrolling interest 104,068 103,995 75,500 80,987 84,507
Total equity 9,461,732 9,522,606 9,262,235 9,355,944 9,330,269
Total liabilities and equity $ 18,440,899 $ 18,222,261 $ 17,188,959 $ 17,271,910 $ 17,205,770

CONSOLIDATED STATEMENTS OF INCOME
For the three and nine months ended September 30, 2012 and 2011
(In thousands, except per share amounts)
For the Three MonthsFor the Nine Months
Ended September 30,Ended September 30,
2012201120122011
Revenues:
Rental income:
Triple-net leased $ 210,096 $ 203,209 $ 622,702 $ 433,980
Medical office buildings 100,814 58,159 253,890 106,153
310,910 261,368 876,592 540,133
Resident fees and services 317,131 274,294 906,946 590,103
Medical office building and other services revenue 4,544 9,271 16,791 26,050
Income from loans and investments 9,035 10,072 25,223 24,548
Interest and other income 330 373 441 529
Total revenues 641,950 555,378 1,825,993 1,181,363
Expenses:
Interest 75,139 69,518 217,475 162,348
Depreciation and amortization 189,908 156,593 538,946 286,663
Property-level operating expenses:
Senior living 216,861 187,356 620,075 401,361
Medical office buildings 36,144 20,071 86,469 37,025
253,005 207,427 706,544 438,386
Medical office building services costs 1,487 6,347 8,314 19,837
General, administrative and professional fees 26,872 20,624 75,779 51,010
(Gain) loss on extinguishment of debt (1,194 ) 8,685 38,339 25,211
Litigation proceeds, net - (85,327 ) - (85,327 )
Merger-related expenses and deal costs 4,917 69,350 49,566 131,606
Other 2,508 13,882 5,594 5,827
Total expenses 552,642 467,099 1,640,557 1,035,561

Income before income/loss from unconsolidated entities, income taxes, discontinued operations and noncontrolling interest

89,308 88,279 185,436 145,802
Income (loss) from unconsolidated entities 17,074 182 17,905 (71 )
Income tax benefit 8,886 13,732 2,727 23,039
Income from continuing operations 115,268 102,193 206,068 168,770
Discontinued operations (3,447 ) (209 ) 69,581 1,994
Net income 111,821 101,984 275,649 170,764
Net loss attributable to noncontrolling interest (61 ) (901 ) (884 ) (781 )
Net income attributable to common stockholders $ 111,882 $ 102,885 $ 276,533 $ 171,545
Earnings per common share:
Basic:

Income from continuing operations attributable to common stockholders

$ 0.39 $ 0.36 $ 0.71 $ 0.81
Discontinued operations (0.01 ) (0.00 ) 0.24 0.01
Net income attributable to common stockholders $ 0.38 $ 0.36 $ 0.95 $ 0.82
Diluted:

Income from continuing operations attributable to common stockholders

$ 0.39 $ 0.35 $ 0.70 $ 0.80
Discontinued operations (0.01 ) (0.00 ) 0.24 0.01
Net income attributable to common stockholders $ 0.38 $ 0.35 $ 0.94 $ 0.81
Weighted average shares used in computing earnings per common share:
Basic 294,928 287,365 291,177 208,470
Diluted 297,407 290,794 293,622 210,850
Dividends declared per common share $ 0.62

$ 0.4486

$ 1.86 $ 1.725

QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
2012 Quarters2011 Quarters
ThirdSecondFirstFourthThird
Revenues:
Rental income:
Triple-net leased $ 210,096 $ 206,827 $ 205,779 $ 204,765 $ 203,209
Medical office buildings 100,814 89,111 63,965 60,008 58,159
310,910 295,938 269,744 264,773 261,368
Resident fees and services 317,131 304,020 285,795 277,992 274,294
Medical office building and other services revenue 4,544 6,639 5,608 10,421 9,271
Income from loans and investments 9,035 8,152 8,036 9,867 10,072
Interest and other income 330 64 47 688 373
Total revenues 641,950 614,813 569,230 563,741 555,378
Expenses:
Interest 75,139 73,582 68,754 67,828 69,518
Depreciation and amortization 189,908 187,835 161,203 161,770 156,593
Property-level operating expenses:
Senior living 216,861 207,548 195,666 188,790 187,356
Medical office buildings 36,144 29,621 20,704 20,019 20,071
253,005 237,169 216,370 208,809 207,427
Medical office building services costs 1,487 3,839 2,988 7,245 6,347
General, administrative and professional fees 26,872 26,710 22,197 23,527 20,624
(Gain) loss on extinguishment of debt (1,194 ) 9,989 29,544 2,393 8,685
Litigation proceeds, net - - - (116,932 ) (85,327 )
Merger-related expenses and deal costs 4,917 36,668 7,981 22,317 69,350
Other 2,508 1,510 1,576 1,443 13,882
Total expenses 552,642 577,302 510,613 378,400 467,099

Income before income from unconsolidated entities, income taxes, discontinued operations and noncontrolling interest

89,308 37,511 58,617 185,341 88,279
Income from unconsolidated entities 17,074 514 317 19 182
Income tax benefit (expense) 8,886 5,179 (11,338 ) 7,622 13,732
Income from continuing operations 115,268 43,204 47,596 192,982 102,193
Discontinued operations (3,447 ) 30,532 42,496 (485 ) (209 )
Net income 111,821 73,736 90,092 192,497 101,984
Net loss attributable to noncontrolling interest (61 ) (289 ) (534 ) (451 ) (901 )
Net income attributable to common stockholders $ 111,882 $ 74,025 $ 90,626 $ 192,948 $ 102,885
Earnings per common share:
Basic:
Income from continuing operations attributable to common stockholders $ 0.39 $ 0.15 $ 0.16 $ 0.67 $ 0.36
Discontinued operations (0.01 ) 0.11 0.15 (0.00 ) (0.00 )
Net income attributable to common stockholders $ 0.38 $ 0.26 $ 0.31 $ 0.67 $ 0.36
Diluted:
Income from continuing operations attributable to common stockholders $ 0.39 $ 0.15 $ 0.16 $ 0.66 $ 0.35
Discontinued operations (0.01 ) 0.10 0.15 (0.00 ) (0.00 )
Net income attributable to common stockholders $ 0.38 $ 0.25 $ 0.31 $ 0.66 $ 0.35
Weighted average shares used in computing earnings per common share:
Basic 294,928 290,170 288,375 287,793 287,365
Diluted 297,407 292,592 290,813 290,607 290,794
Dividends declared per common share $ 0.62 $ 0.62 $ 0.62 $ 0.575 $ 0.4486

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2012 and 2011
(In thousands)
20122011
Cash flows from operating activities:
Net income $ 275,649 $ 170,764
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued operations) 563,027 293,541
Amortization of deferred revenue and lease intangibles, net (12,965 ) (7,458 )
Other non-cash amortization (31,326 ) (5,429 )
Change in fair value of financial instruments 151 2,898
Stock-based compensation 16,529 13,596
Straight-lining of rental income, net (16,712 ) (9,254 )
Loss on extinguishment of debt 38,339 25,211
Gain on real estate dispositions, net (79,148 ) -
Loss (gain) on real estate loan investments 559 (3,255 )
Gain on sale of marketable securities - (733 )
Income tax benefit (including amounts in discontinued operations) (2,731 ) (23,310 )
(Income) loss from unconsolidated entities (1,260 ) 71
Gain on re-measurement of equity interest upon acquisition, net (16,645 ) -
Other 6,321 2,004
Changes in operating assets and liabilities:
Increase in other assets (11,930 ) (27,009 )
Increase in accrued interest 18,730 19,141
Decrease in accounts payable and other liabilities (37,269 ) (6,877 )
Net cash provided by operating activities 709,319 443,901
Cash flows from investing activities:
Net investment in real estate property (1,154,912 ) (344,687 )
Purchase of noncontrolling interest (3,934 ) (3,319 )
Investment in loans receivable (30,523 ) (619,859 )
Proceeds from real estate disposals 75,145 14,961
Proceeds from loans receivable 34,817 138,934
Proceeds from sale of marketable securities - 23,050
Development project expenditures (90,119 ) (23,233 )
Capital expenditures (42,270 ) (28,658 )
Other (2,110 ) (113 )
Net cash used in investing activities (1,213,906 ) (842,924 )
Cash flows from financing activities:
Net change in borrowings under revolving credit facilities 248,921 434,000
Proceeds from debt 1,568,382 957,753
Repayment of debt (1,103,000 ) (895,043 )
Payment of deferred financing costs (4,257 ) (1,898 )
Issuance of common stock, net 342,469 299,926
Cash distribution to common stockholders (545,240 ) (354,932 )
Cash distribution to redeemable OP unitholders (3,358 ) (4,038 )
Purchases of redeemable OP units (1,760 ) -
Distributions to noncontrolling interest (4,035 ) (1,997 )
Other 19,130 1,019
Net cash provided by financing activities 517,252 434,790
Net increase in cash and cash equivalents 12,665 35,767
Effect of foreign currency translation on cash and cash equivalents 58 (97 )
Cash and cash equivalents at beginning of period 45,807 21,812
Cash and cash equivalents at end of period $ 58,530 $ 57,482
Supplemental schedule of non-cash activities:
Assets and liabilities assumed from acquisitions:
Real estate investments $ 497,755 $ 11,034,620
Utilization of escrow funds held for an Internal Revenue Code Section 1031 exchange (134,003 ) -
Other assets acquired 99,889 431,679
Debt assumed 367,902 3,508,226
Other liabilities 60,684 992,122
Deferred income tax liability 4,299 43,889
Redeemable OP unitholder interests - 100,430
Noncontrolling interests 26,430 83,702
Equity issued 4,326 6,737,930

QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
2012 Quarters2011 Quarters
ThirdSecondFirstFourthThird
Cash flows from operating activities:
Net income $ 111,821 $ 73,736 $ 90,092 $ 192,497 $ 101,984
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued operations) 196,622 201,769 164,636 166,163 161,027
Amortization of deferred revenue and lease intangibles, net (4,136 ) (3,669 ) (5,160 ) (4,701 ) (5,908 )
Other non-cash amortization (10,141 ) (11,077 ) (10,108 ) (7,734 ) (8,568 )
Change in fair value of financial instruments 58 60 33 61 11,785
Stock-based compensation 5,443 6,252 4,834 5,750 5,228
Straight-lining of rental income, net (6,242 ) (5,580 ) (4,890 ) (5,631 ) (5,505 )
(Gain) loss on extinguishment of debt (1,194 ) 9,989 29,544 2,393 8,685
Gain on real estate dispositions, net (357 ) (38,558 ) (40,233 ) - -
Loss on real estate loan investments - - 559 - -
Income tax (benefit) expense (including amounts in discontinued operations) (8,870 ) (5,166 ) 11,305 (7,827 ) (13,906 )
Income from unconsolidated entities (429 ) (514 ) (317 ) (19 ) (182 )
Gain on re-measurement of equity interest upon acquisition, net (16,645 ) - - - -
Other 424 2,848 3,049 2,442 1,315
Changes in operating assets and liabilities:
(Increase) decrease in other assets (12,791 ) (414 ) 1,275 27,433 (17,069 )
Increase (decrease) in accrued interest 8,471 (10,193 ) 20,452 (28,291 ) 15,133
(Decrease) increase in accounts payable and other liabilities (13,524 ) (3,635 ) (20,110 ) (13,240 ) 3,582
Net cash provided by operating activities 248,510 215,848 244,961 329,296 257,601
Cash flows from investing activities:
Net investment in real estate property (255,508 ) (898,904 ) (500 ) (186,918 ) (80,223 )
Purchase of noncontrolling interest - (3,934 ) - - -
Investment in loans receivable (3,263 ) (4,787 ) (22,473 ) (8,274 ) (6,934 )
Proceeds from real estate disposals 66,298 - 8,847 5,657 14,961
Proceeds from loans receivable 1,594 15,979 17,244 81,245 6,571
Development project expenditures (29,558 ) (29,287 ) (31,274 ) (24,358 ) (17,546 )
Capital expenditures (18,458 ) (13,793 ) (10,019 ) (21,815 ) (15,109 )
Other 40 (13 ) (2,137 ) (52 ) (38 )
Net cash used in investing activities (238,855 ) (934,739 ) (40,312 ) (154,515 ) (98,318 )
Cash flows from financing activities:
Net change in borrowings under revolving credit facilities 337,575 293,744 (382,398 ) 103,452 334,500
Proceeds from debt 299,067 601,985 667,330 385,887 253,642
Repayment of debt (457,278 ) (346,921 ) (298,801 ) (493,919 ) (557,616 )
Payment of deferred financing costs (1,277 ) (1,187 ) (1,793 ) (18,142 ) (535 )
Issuance of common stock, net - 342,469 - (79 ) -
Cash distribution to common stockholders (183,283 ) (182,704 ) (179,253 ) (166,114 ) (152,983 )
Cash distribution to redeemable OP unitholders (1,117 ) (1,129 ) (1,112 ) 1,679 (4,038 )
Purchases of redeemable OP units (1,149 ) (378 ) (233 ) (185 ) -
Distributions to noncontrolling interest (1,128 ) (1,315 ) (1,592 ) (559 ) (1,381 )
Other 4,621 13,944 565 1,472 106
Net cash (used in) provided by financing activities (3,969 ) 718,508 (197,287 ) (186,508 ) (128,305 )
Net increase (decrease) in cash and cash equivalents 5,686 (383 ) 7,362 (11,727 ) 30,978
Effect of foreign currency translation on cash and cash equivalents 40 (37 ) 55 52 (198 )
Cash and cash equivalents at beginning of period 52,804 53,224 45,807 57,482 26,702
Cash and cash equivalents at end of period $ 58,530 $ 52,804 $ 53,224 $ 45,807 $ 57,482
Supplemental schedule of non-cash activities:
Assets and liabilities assumed from acquisitions:
Real estate investments $ 132,872 $ 310,002 $ 54,881 $ (61,527 ) $ 7,893,696
Utilization of escrow funds held for an Internal Revenue Code Section 1031 exchange - (96,204 ) (37,799 ) - -
Other assets acquired 18,380 86,635 (5,126 ) 162,497 320,957
Debt assumed 117,539 232,629 17,734 142,863 1,886,585
Other liabilities 34,045 33,628 (6,989 ) (39,843 ) 791,160
Deferred income tax liability (1,596 ) 5,895 - - (4,198 )
Redeemable OP unitholder interests - - - 458 100,430
Noncontrolling interests 1,264 28,281 (3,115 ) (2,510 ) 83,702
Equity issued - - 4,326 2 5,356,974

QUARTERLY FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FFO
(In thousands, except per share amounts)
2012 Quarters2011 Quarters
ThirdSecondFirstFourthThird
Net income attributable to common stockholders $ 111,882 $ 74,025 $ 90,626 $ 192,948 $ 102,885
Adjustments:
Depreciation and amortization on real estate assets 188,656 186,834 160,301 161,136 155,969

Depreciation on real estate assets related to noncontrolling interest

(2,221 ) (2,336 ) (1,511 ) (1,744 ) (1,313 )

Depreciation on real estate assets related to unconsolidated entities

1,700 2,131 2,175 2,339 2,247

Gain on re-measurement of equity interest upon acquisition, net

(16,645 ) - - - -
Discontinued operations:
Gain on real estate dispositions, net (357 ) (38,558 ) (40,233 ) - -
Depreciation and amortization on real estate assets 6,714 13,934 3,433 4,393 4,434
FFO 289,729 236,030 214,791 359,072 264,222
Merger-related expenses and deal costs 4,917 36,668 7,981 22,317 69,350
Litigation proceeds, net - - - (116,932 ) (85,327 )
(Gain) loss on extinguishment of debt (1,194 ) 9,989 29,544 2,393 8,685
Income tax (benefit) expense (8,870 ) (5,166 ) 11,305 (7,827 ) (13,904 )
Change in fair value of financial instruments 58 60 33 61 11,785
Amortization of other intangibles 256 255 256 255 256
Normalized FFO $ 284,896 $ 277,836 $ 263,910 $ 259,339 $ 255,067
Per diluted share (1):
Net income attributable to common stockholders $ 0.38 $ 0.25 $ 0.31 $ 0.66 $ 0.35
Adjustments:
Depreciation and amortization on real estate assets 0.63 0.64 0.55 0.55 0.54

Depreciation on real estate assets related to noncontrolling interest

(0.01 ) (0.01 ) (0.01 ) (0.01 ) (0.00 )

Depreciation on real estate assets related to unconsolidated entities

0.01 0.01 0.01 0.01 0.01

Gain on re-measurement of equity interest upon acquisition, net

(0.06 ) - - - -
Discontinued operations:
Gain on real estate dispositions, net (0.00 ) (0.13 ) (0.14 ) - -
Depreciation and amortization on real estate assets 0.02 0.05 0.01 0.02 0.02
FFO 0.97 0.81 0.74 1.24 0.91
Merger-related expenses and deal costs 0.02 0.13 0.03 0.08 0.24
Litigation proceeds, net - - - (0.40 ) (0.29 )
(Gain) loss on extinguishment of debt (0.00 ) 0.03 0.10 0.01 0.03
Income tax (benefit) expense (0.03 ) (0.02 ) 0.04 (0.03 ) (0.05 )
Change in fair value of financial instruments 0.00 0.00 0.00 0.00 0.04
Amortization of other intangibles 0.00 0.00 0.00 0.00 0.00
Normalized FFO $ 0.96 $ 0.95 $ 0.91 $ 0.89 $ 0.88
(1) Per share amounts may not add due to rounding.

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. To overcome this problem, the Company considers FFO and normalized FFO appropriate measures of operating performance of an equity REIT. Moreover, the Company believes that normalized FFO provides useful information because it allows investors, analysts and Company management to compare the Company’s operating performance to the operating performance of other real estate companies and between periods on a consistent basis without having to account for differences caused by unanticipated items such as transactions and litigation. The Company uses the NAREIT definition of FFO. NAREIT defines FFO as net income, computed in accordance with GAAP, excluding net gains from sales of real estate property, including gain on re-measurement of equity method investments, and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. The Company defines normalized FFO as FFO excluding the following income and expense items (which may be recurring in nature): (a) net gains on real estate activity, (b) merger-related costs and expenses, including amortization of intangibles and transition and integration expenses, and deal costs and expenses, including expenses and recoveries relating to the Company’s lawsuit against HCP, Inc., (c) the impact of any expenses related to asset impairment and valuation allowances, the write-off of unamortized deferred financing fees, or additional costs, expenses, discounts, make-whole payments, penalties or premiums incurred as a result of early retirement or payment of the Company’s debt, (d) the non-cash effect of income tax benefits or expenses, (e) the impact of future acquisitions or divestitures (including pursuant to tenant options to purchase) and capital transactions, (f) the financial impact of contingent consideration, (g) charitable donations made to the Ventas Charitable Foundation, and (h) gains and losses for non-operational foreign currency hedge agreements and changes in the fair value of financial instruments.

FFO and normalized FFO presented herein are not necessarily identical to FFO and normalized FFO presented by other real estate companies due to the fact that not all real estate companies use the same definitions. FFO and normalized FFO should not be considered as alternatives to net income (determined in accordance with GAAP) as indicators of the Company’s financial performance or as alternatives to cash flow from operating activities (determined in accordance with GAAP) as measures of the Company’s liquidity, nor are FFO and normalized FFO necessarily indicative of sufficient cash flow to fund all of the Company’s needs. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO and normalized FFO should be examined in conjunction with net income as presented elsewhere herein.

NORMALIZED FFO GUIDANCE FOR THE YEAR ENDING DECEMBER 31, 2012

The following table illustrates the Company’s normalized FFO per diluted common share guidance for the year ending December 31, 2012:

UPDATED GUIDANCEPRIOR GUIDANCE
For the YearFor the Year
EndingEnding
December 31, 2012December 31, 2012
Net income attributable to common stockholders $

1.19

- $

1.31

$ 1.08 - $ 1.28
Adjustments:

Depreciation and amortization on real estate assets, depreciation related to noncontrolling interest and gain on real estate activity, net

2.23 - 2.20 2.26 - 2.18
FFO

3.42

-

3.51

3.34 - 3.46
Adjustments:

Income tax benefit/expense, gain/loss on extinguishment of debt, amortization of intangibles, merger-related expenses, integration expenses and deal costs and other

0.34

- 0.27 0.36 - 0.28
Normalized FFO$

3.76

-$

3.78

$3.70-$3.74

Net Debt to Adjusted Pro Forma EBITDA

The following information considers the pro forma effect on net income, interest and depreciation of the Company’s investments and other capital transactions that were completed during the three months ended September 30, 2012, as if the transactions had been consummated as of the beginning of the period. The following table illustrates net debt to pro forma earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding gain on extinguishment of debt, merger-related expenses and deal costs, net gains on real estate activity and changes in the fair value of financial instruments (including amounts in discontinued operations) (“Adjusted Pro Forma EBITDA”) (dollars in thousands):

Net income attributable to common stockholders $ 111,882

Pro forma adjustments for current period investments, capital transactions and dispositions

(1,967 )

Pro forma net income for the three months ended September 30, 2012

109,915

Add back:
Pro forma interest (including discontinued operations) 75,372
Pro forma depreciation and amortization (including discontinued operations) 199,030
Stock-based compensation 5,443

Gain on extinguishment of debt

(1,194 )
Gain on real estate dispositions, net (357 )
Gain on re-measurement of equity interest upon acquisition, net (16,645 )
Income tax benefit (including discontinued operations) (8,870 )
Change in fair value of financial instruments 58
Other taxes 1,006
Merger-related expenses and deal costs 4,917
Adjusted Pro Forma EBITDA $ 368,675
Adjusted Pro Forma EBITDA annualized $ 1,474,700
As of September 30, 2012:
Debt $ 7,494,774
Cash, including cash escrows pertaining to debt (74,392 )
Net debt $ 7,420,382
Net debt to Adjusted Pro Forma EBITDA 5.0 x

Non-GAAP Financial Measures Reconciliation
(In thousands, except per share amounts)
For the Nine Months
Ended September 30,
20122011
Net income attributable to common stockholders $ 276,533 $ 171,545
Adjustments:
Depreciation and amortization on real estate assets 535,791 284,870
Depreciation on real estate assets related to noncontrolling interest (6,068 ) (1,727 )
Depreciation on real estate assets related to unconsolidated entities 6,006 4,213
Gain on re-measurement of equity interest upon acquisition, net (16,645 ) -
Discontinued operations:
Gain on real estate dispositions, net (79,148 ) -
Depreciation and amortization on real estate assets 24,081 6,878
FFO 740,550 465,779
Merger-related expenses and deal costs 49,566 131,606
Litigation proceeds, net - (85,327 )
Loss on extinguishment of debt 38,339 25,211
Income tax benefit (2,731 ) (23,310 )
Change in fair value of financial instruments 151 2,898
Amortization of other intangibles 767 767
Normalized FFO $ 826,642 $ 517,624
Per diluted share (1):
Net income attributable to common stockholders $ 0.94 $ 0.81
Adjustments:
Depreciation and amortization on real estate assets 1.82 1.35
Depreciation on real estate assets related to noncontrolling interest (0.02 ) (0.01 )
Depreciation on real estate assets related to unconsolidated entities 0.02 0.02

Gain on re-measurement of equity interest upon acquisition, net

(0.06 ) -
Discontinued operations:
Gain on real estate dispositions, net (0.27 ) -
Depreciation and amortization on real estate assets 0.08 0.03
FFO 2.52 2.21
Merger-related expenses and deal costs 0.17 0.62
Litigation proceeds, net - (0.40 )
Loss on extinguishment of debt 0.13 0.12
Income tax expense benefit (0.01 ) (0.11 )
Change in fair value of financial instruments 0.00 0.01
Amortization of other intangibles 0.00 0.00
Normalized FFO $ 2.82 $ 2.45
(1) Per share amounts may not add due to rounding.

Non-GAAP Financial Measures Reconciliation
NOI Reconciliation by Segment
(In thousands)
2012 Quarters2011 Quarters
ThirdSecondFirstFourthThird
Revenues
Triple-Net
Triple-Net Rental Income $ 210,096 $ 206,827 $ 205,779 $ 204,765 $ 203,209
Medical Office Buildings
Medical Office - Stabilized 92,458 80,335 56,251 53,826 51,992
Medical Office - Lease up 8,356 8,775 7,714 6,182 6,167
Total Medical Office Buildings - Rental Income 100,814 89,110 63,965 60,008 58,159
Total Rental Income 310,910 295,937 269,744 264,773 261,368
Medical Office Building Services Revenue 3,434 5,529 4,499 9,313 8,162
Total Medical Office Buildings - Revenue 104,248 94,639 68,464 69,321 66,321
Triple-Net Services Revenue 1,110 1,110 1,109 1,108 1,109
Total Medical Office Building and Other Services Revenue 4,544 6,639 5,608 10,421 9,271
Seniors Housing Operating
Seniors Housing - Stabilized 296,508 283,214 271,396 264,860 265,649
Seniors Housing - Lease up 19,311 19,491 13,078 11,866 7,410
Seniors Housing - Other 1,312 1,315 1,321 1,266 1,235
Total Resident Fees and Services 317,131 304,020 285,795 277,992 274,294
Non-Segment Income from Loans and Investments 9,035 8,152 8,036 9,867 10,072
Total Revenues, excluding Interest and Other Income 641,620 614,748 569,183 563,053 555,005
Property-Level Operating Expenses
Medical Office Buildings
Medical Office - Stabilized 32,981 26,401 17,845 17,649 17,645
Medical Office - Lease up 3,163 3,220 2,859 2,370 2,426
Total Medical Office Buildings 36,144 29,621 20,704 20,019 20,071
Seniors Housing Operating
Seniors Housing - Stabilized 202,045 192,640 184,748 177,890 179,983
Seniors Housing - Lease up 13,631 13,786 9,795 9,803 6,218
Seniors Housing - Other 1,185 1,122 1,123 1,097 1,155
Total Seniors Housing 216,861 207,548 195,666 188,790 187,356
Total Property-Level Operating Expenses 253,005 237,169 216,370 208,809 207,427
Medical Office Building Services Costs 1,487 3,839 2,988 7,245 6,347
Net Operating Income
Triple-Net
Triple-Net Properties 210,096 206,827 205,779 204,765 203,209
Triple-Net Services Revenue 1,110 1,110 1,109 1,108 1,109
Total Triple-Net 211,206 207,937 206,888 205,873 204,318
Medical Office Buildings
Medical Office - Stabilized 59,477 53,934 38,406 36,177 34,347
Medical Office - Lease up 5,193 5,555 4,855 3,812 3,741
Medical Office Buildings Services 1,947 1,690 1,511 2,068 1,815
Total Medical Office Buildings 66,617 61,179 44,772 42,057 39,903
Seniors Housing Operating
Seniors Housing - Stabilized 94,463 90,574 86,648 86,970 85,666
Seniors Housing - Lease up 5,680 5,705 3,283 2,063 1,192
Seniors Housing - Other 127 193 198 169 80
Total Seniors Housing 100,270 96,472 90,129 89,202 86,938
Non-Segment 9,035 8,152 8,036 9,867 10,072
Net Operating Income$387,128$373,740$349,825$346,999$341,231
Note: Amounts above are adjusted to exclude discontinued operations for all periods presented.

Non-GAAP Financial Measures Reconciliation

Same-Store NOI Reconciliation

(Dollars in thousands)
For the Three Months Ended
September 30,
20122011
Net Operating Income$387,128$341,231
Less:

NOI Not Included in Same-Store

49,335 13,037
Straight-Lining of Rental Income 4,270 5,412
Non-Cash Rental Income 4,299 4,764
57,904 23,213
Same-Store Cash NOI $ 329,224 $ 318,018
Percentage Increase 3.5 %
Same-Store Cash NOI $ 329,224 $ 318,018

Pro Forma NOI with Management Fee Adjustment

- (2,646 )

Same-Store NOI with Management Fee Adjustment

$ 329,224 $ 315,372
Percentage Increase 4.4 %

The Company believes that NOI and same-store NOI provide useful information because those disclosures allow investors, analysts and Company management to measure unlevered property-level operating results and to compare the Company’s operating results to the operating results of other real estate companies and between periods on a consistent basis. Those terms are commonly used in evaluating results of real estate companies. The Company defines NOI as total revenues, excluding interest and other income, less property-level operating expenses and medical office building services costs (including amounts in discontinued operations).

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Contacts:

Ventas, Inc.
Lori B. Wittman
(877) 4-VENTAS
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