February 15, 2013 at 07:15 AM EST
Ventas Reports 13 Percent Increase in 2012 Normalized FFO to $3.80 Per Diluted Share

Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) said today that normalized Funds From Operations (“FFO”) for the year ended December 31, 2012 increased 44 percent to $1.1 billion, from $777.0 million for the comparable 2011 period. Normalized FFO per diluted common share was $3.80 for the year ended December 31, 2012, a 13 percent increase from $3.37 for the comparable 2011 period. Weighted average diluted shares outstanding for the full year rose by 28 percent to 294.5 million, compared to 230.8 million in 2011.

The substantial growth in 2012 normalized FFO per diluted common share compared to 2011 is due primarily to the Company's $2.7 billion of investments in 2012 and the full-year benefit of the Company's 2011 acquisitions, including Nationwide Health Properties, Inc. (“NHP”) and the portfolio of senior living communities managed by Atria Senior Living, Inc. (“Atria”). Additionally, the Company benefited from excellent performance by its seniors housing communities managed by Atria and Sunrise Senior Living, LLC (“Sunrise”), rental increases from its triple-net lease portfolio and lower weighted average interest rates. These benefits were partially offset by higher debt balances, an increase in the Sunrise management fee, increases in general and administrative expenses, asset sales and loan repayments in 2011 and 2012 and an increase in weighted average diluted shares outstanding.

“Ventas had another outstanding year of internal and external growth, execution of our long-term strategy and performance, delivering over 22 percent total returns to shareholders and producing record cash flows,” Ventas Chairman and Chief Executive Officer Debra A. Cafaro said. “Working collaboratively, our team harnessed the power of our scale and platform to make $2.7 billion in accretive private pay investments, raise capital efficiently and manage our assets to drive strong growth in 2012. For more than a dozen years, Ventas has fulfilled its commitments with consistent superior performance and a strong financial profile, sustaining excellence throughout our Company,” she added.

Normalized FFO for the year ended December 31, 2012 excludes the net expense (totaling $95.7 million, or $0.32 per diluted share) from merger-related expenses and deal costs (including integration costs), loss on extinguishment of debt and amortization of other intangibles, partially offset by income tax benefit. Normalized FFO for the year ended December 31, 2011 excluded the net benefit (totaling $47.9 million, or $0.21 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.

Net income attributable to common stockholders for the year ended December 31, 2012 was $362.8 million, or $1.23 per diluted common share, including discontinued operations of $57.2 million. Net income attributable to common stockholders for the year ended December 31, 2011 was $364.5 million, or $1.58 per diluted common share, including discontinued operations of $1.4 million. This $1.7 million decrease in net income attributable to common stockholders in 2012 over the prior year is primarily the result of the receipt of net litigation proceeds totaling $202.3 million from HCP, Inc. (the “Litigation Proceeds”) in 2011 and higher depreciation in 2012, almost entirely offset by the growth experienced by the Company in 2012 and 2011, as described above. Excluding the Litigation Proceeds from 2011 results, 2012 net income attributable to common stockholders rose by 124 percent, or 76 percent per diluted share. The Company recognized a net gain of $97.6 million during 2012 from real estate activity, which gain is excluded from both normalized FFO and NAREIT FFO (as defined below).

FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), for the year ended December 31, 2012 increased 24 percent to $1.0 billion, from $824.9 million in the comparable 2011 period. This increase is due primarily to the factors described above for net income excluding the net impact of gains from real estate activity and depreciation.

NAREIT FFO per diluted common share for the year ended December 31, 2012 decreased 2.5 percent to $3.48, from $3.57 in 2011, due principally to the receipt of the Litigation Proceeds in 2011 and higher weighted average diluted shares outstanding in 2012. Excluding the Litigation Proceeds from 2011 results, 2012 FFO rose by 65 percent, or 29 percent per diluted share.

FOURTH QUARTER 2012

Fourth quarter 2012 normalized FFO increased 13 percent to $293.6 million, from $259.3 million for the comparable 2011 period. Normalized FFO per diluted common share was $0.99 for the quarter ended December 31, 2012, an increase of 11 percent from $0.89 for the comparable 2011 period. Weighted average diluted shares outstanding for the fourth quarter rose by two percent to 297.1 million, compared to 290.6 million in 2011.

Net income attributable to common stockholders for the quarter ended December 31, 2012 was $86.3 million, or $0.29 per diluted common share, including expense associated with discontinued operations of $11.7 million, compared with net income attributable to common stockholders for the quarter ended December 31, 2011 of $192.9 million, or $0.66 per diluted common share, including expense associated with discontinued operations of $0.6 million and the Litigation Proceeds of $116.9 million received in the fourth quarter of 2011.

NAREIT FFO for the quarter ended December 31, 2012 was $284.0 million, a decrease from $359.1 million in the comparable 2011 period. NAREIT FFO per diluted common share for the quarter ended December 31, 2012 decreased 23 percent to $0.96, from $1.24 in 2011. This decrease is primarily due to the receipt of $116.9 million in Litigation Proceeds in the fourth quarter of 2011 and higher weighted average diluted shares outstanding in 2012.

FIRST QUARTER DIVIDEND INCREASES EIGHT PERCENT TO $0.67 PER COMMON SHARE

Ventas also said today that its Board of Directors increased the Company's first quarter 2013 dividend by eight percent to $0.67 per share. The dividend is payable in cash on March 28, 2013 to stockholders of record on March 8, 2013.

“Sustained dividend growth is an important part of the consistent superior total returns we aim to provide our investors. We are pleased to increase our first quarter dividend by eight percent, which reflects our strong cash flow growth and our confidence in our business and our opportunities,” Cafaro said.

PRIVATE PAY SENIORS HOUSING OPERATING PORTFOLIO

Annual Total Portfolio NOI Exceeds $386 Million, Quarterly Same-Store NOI Grows 6.2 Percent and Occupancy Rises 360 Basis Points

At December 31, 2012, the Company's seniors housing operating portfolio included 125 private pay seniors housing communities managed by Atria and 95 private pay seniors housing communities managed by Sunrise. Net Operating Income (“NOI”) for this portfolio totaled $386.6 million after management fees and $455.8 million before management fees, including discontinued operations and recent acquisitions. Excluding results from seniors housing communities acquired in December and, therefore, not in the Company's previous NOI guidance of $383 million to $385 million, NOI for 2012 totaled $386.2 million.

One hundred ninety-four of these private pay seniors housing communities were owned by the Company for the full fourth quarters of 2012 and 2011 (“same-store”). Average unit occupancy in the same-store communities rose 360 basis points to 91.9 percent in the fourth quarter of 2012 compared to the fourth quarter of 2011.

NOI before management fees for these same-store communities increased 6.2 percent to $107.3 million in the fourth quarter of 2012, versus $101.0 million in the fourth quarter of 2011. Same-store NOI after management fees increased by 2.1 percent, from $88.8 million in the fourth quarter of 2011 to $90.6 million in the fourth quarter of 2012. The Sunrise management fee increased in 2012 to its contractual level.

2012 RECAP

Investments and Dispositions

  • Ventas closed $2.7 billion in investments during 2012, including Cogdell Spencer, Inc. and 16 private pay seniors housing communities managed by Sunrise. Excluding the Atria transaction described below, the current unlevered cash yield on these investments approximates eight percent. Private pay assets accounted for 97 percent of the investments. Fourth quarter investments totaling $1 billion included seniors housing assets, medical office buildings and secured loans.
  • Ventas acquired 100 percent of various private investment funds (the “Funds”) previously managed by Lazard Frères Real Estate Investors LLC or its affiliates. The acquired Funds now own, among other things, (a) a 34 percent interest in Atria and (b) 3.7 million shares of Ventas common stock. The total purchase price for these interests was approximately $242 million. The Atria management team now owns the remaining 66 percent of Atria. Ventas also extinguished its obligation related to the “Earnout,” a contingent performance-based payment, for an additional $44 million, which represented the discounted net present value of the Earnout on the Company's balance sheet.
  • During 2012, Ventas sold 43 properties and received final repayment on loans totaling $422 million in aggregate proceeds, including certain fees. The Company recognized a net gain of $81.0 million from these dispositions. In the fourth quarter, Ventas sold assets and received final repayment on loans totaling $120 million in aggregate proceeds and recognized a net gain.

Returns and Dividends

  • Ventas delivered total shareholder return (“TSR”) of 22.3 percent in 2012 and 25.1 percent compound annual TSR for the ten-year period ended December 31, 2012. Ventas TSR exceeded the RMS and S&P 500 Index in each of the trailing one-, three-, five- and ten-year periods.
  • Ventas paid an annual per share dividend of $2.48 in 2012, an eight percent increase over the prior year.

Liquidity, Capital Raising, Ratings and Balance Sheet

  • Ventas maintains investment grade ratings from all three nationally recognized rating agencies, and Moody's improved its outlook to “positive” in December 2012. Ventas's senior unsecured debt is currently rated BBB+ (stable) by Fitch, Baa2 (positive) by Moody's and BBB (stable) by Standard & Poor's.
  • Ventas issued and sold $2.6 billion aggregate principal amount of senior notes and term loan at a weighted average stated interest rate of 3.2 percent and a weighted average maturity at the time of issuance of 7.7 years and redeemed or repaid $780.4 million aggregate principal amount of its outstanding unsecured debt and $344.2 million of mortgage debt. The $2.6 billion includes the previously announced $700 million aggregate principal amount of 2.00 percent senior notes due 2018 and the $225 million aggregate principal amount of 3.25 percent senior notes due 2022 the Company issued in December 2012.
  • Ventas sold approximately 6 million shares of its common stock in an underwritten public offering and received proceeds of $342.5 million and ended the year with 291.9 million shares outstanding.
  • The Company's debt to total capitalization at December 31, 2012 was approximately 31 percent.
  • The Company's net debt to Adjusted Pro Forma EBITDA (as defined herein) at December 31, 2012 was 5.4x.
  • At December 31, 2012, the Company had $541 million of borrowings outstanding under its unsecured revolving credit facility and $68 million of cash and cash equivalents.

Cash Flow Growth

  • Cash flows from operations totaled $992.8 million in 2012, an increase of 74 percent over the prior year, excluding the $202.3 million of Litigation Proceeds received in 2011. The Company generated approximately $195 million in cash flows from operations in 2012 after recurring capital expenditures and dividends. Weighted average diluted shares outstanding rose 28 percent year over year.
  • “Same-store” cash NOI growth for the Company's total portfolio (525 assets) was 4.4 percent in 2012 compared to 2011, excluding the Sunrise management fee in both periods.

PORTFOLIO, UPDATE ON RE-LEASING & ADDITIONAL INFORMATION

  • Ventas has now entered into lease renewals, new leases or sale contracts for all 89 licensed healthcare facilities currently leased by Kindred Healthcare, Inc. (NYSE: KND) (“Kindred”) whose lease term was up for renewal May 1, 2013. The Company expects 2013 cash revenue and NOI from these 89 assets to be $125 million, compared to 2012 rent for all 89 facilities of $125 million, consistent with Ventas's expectations. Of the 54 properties marketed by Ventas, 49 properties have been leased to seven qualified skilled nursing facility operators, and five assets are under contract for sale. Kindred has renewed or entered into a new lease for 35 properties. While definitive agreements have been executed for all 54 marketed properties and Ventas expects all transactions to be completed, and for operating transitions to occur, during the first half of 2013, these transactions and operating transitions remain subject to normal closing conditions, including regulatory approval. Accordingly, there can be no assurance that the transactions will be completed, that the expected operating transitions will occur or that projected revenue and/or NOI will be achieved by the Company. More information on these 2013 renewal assets is contained at www.ventasreit.com/investor-relations.
  • The 196 skilled nursing facilities (“SNFs”) and long-term acute care hospitals (“LTACs”) master leased by the Company to Kindred produced EBITDARM (earnings before interest, taxes, depreciation, amortization, rent and management fees) to actual cash rent coverage of 1.9x for the trailing 12-month period ended September 30, 2012 (the latest date available).
  • 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.

VENTAS ISSUES 2013 NORMALIZED FFO PER DILUTED SHARE GUIDANCE OF $3.99 TO $4.07

Ventas currently expects its 2013 normalized FFO per diluted share, excluding the impact of unannounced acquisitions, divestitures and capital transactions, to range between $3.99 and $4.07. The Company now expects 2013 NOI for its total Atria- and Sunrise-managed seniors housing operating portfolio to be between $430 million and $440 million, representing approximately five to eight percent same-store NOI growth.

The Company's guidance assumes first quarter investments approximating $100 million and dispositions and loan repayments approximating $300 million during the year. In addition, the guidance assumes $400 million of debt issuance.

Excluding non-cash items from normalized FFO (projected to be $0.12 per diluted share), computed consistent with prior periods, the midpoint of the Company's guidance range constitutes approximately nine percent per share growth in 2013. A reconciliation of the Company's guidance, and the non-cash items, to the Company's projected GAAP earnings is attached to this press release at page 12.

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, and (e) the impact of future unannounced acquisitions or divestitures (including pursuant to tenant options to purchase) and capital transactions.

The Company's guidance is based on a number of other assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that the Company will achieve these results. The Company may from time to time update its publicly announced guidance, but it is not obligated to do so.

FOURTH 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) 597-5380. 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 18439203, 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 ended December 31, 2012 and the year ending December 31, 2013; (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 escalators for two of the Company's master lease agreements 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 December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011
(In thousands, except per share amounts)
December 31,September 30,June 30,March 31,December 31,
20122012201220122011
Assets
Real estate investments:
Land and improvements $ 1,772,417 $ 1,754,826 $ 1,744,752 $ 1,616,947 $ 1,614,847
Buildings and improvements 16,920,821 16,552,534 16,181,392 15,329,730 15,337,919
Construction in progress 70,665 93,992 133,890 85,418 76,638
Acquired lease intangibles 981,704 965,500 920,116 799,136 800,858
19,745,607 19,366,852 18,980,150 17,831,231 17,830,262
Accumulated depreciation and amortization (2,634,075 ) (2,447,175 ) (2,256,197 ) (2,084,212 ) (1,916,530 )
Net real estate property 17,111,532 16,919,677 16,723,953 15,747,019 15,913,732
Secured loans receivable, net 635,002 215,775 213,193 222,218 212,577
Investments in unconsolidated entities 95,409 90,992 104,636 106,086 105,303
Net real estate investments 17,841,943 17,226,444 17,041,782 16,075,323 16,231,612
Cash and cash equivalents 67,908 58,530 52,803 53,224 45,807
Escrow deposits and restricted cash 105,913 76,908 114,883 114,420 76,590
Deferred financing costs, net 42,551 25,426 25,750 26,601 26,669
Other assets 921,685 1,053,591 987,043 919,391 891,232
Total assets $ 18,980,000 $ 18,440,899 $ 18,222,261 $ 17,188,959 $ 17,271,910
Liabilities and equity
Liabilities:
Senior notes payable and other debt $ 8,413,646 $ 7,494,774 $ 7,204,727 $ 6,430,364 $ 6,429,116
Accrued interest 47,565 56,326 47,842 58,041 37,694
Accounts payable and other liabilities 995,156 1,049,043 1,059,385 1,060,647 1,085,597
Deferred income taxes 259,715 265,116 271,066 271,408 260,722
Total liabilities 9,716,082 8,865,259 8,583,020 7,820,460 7,813,129
Redeemable OP unitholder and noncontrolling interests 174,555 113,908 116,635 106,264 102,837
Commitments and contingencies
Equity:
Ventas stockholders' equity:

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

Common stock, $0.25 par value; 295,565, 295,534, 295,370, 289,027, and 288,823 shares issued at December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011, respectively

73,904 73,896 73,855 72,273 72,240
Capital in excess of par value 9,920,962 9,941,030 9,932,839 9,591,880 9,593,583
Accumulated other comprehensive income 23,354 23,626 21,404 23,926 22,062
Retained earnings (deficit) (777,927 ) (680,888 ) (609,487 ) (500,808 ) (412,181 )

Treasury stock, 3,699, 0, 0, 10 and 14 shares at December 31, 2012, September 30, 2012, June 30, 2012, March 31, 2012 and December 31, 2011, respectively

(221,165 ) (536 ) (747 )
Total Ventas stockholders' equity 9,019,128 9,357,664 9,418,611 9,186,735 9,274,957
Noncontrolling interest 70,235 104,068 103,995 75,500 80,987
Total equity 9,089,363 9,461,732 9,522,606 9,262,235 9,355,944
Total liabilities and equity $ 18,980,000 $ 18,440,899 $ 18,222,261 $ 17,188,959 $ 17,271,910

CONSOLIDATED STATEMENTS OF INCOME
For the three months and years ended December 31, 2012 and 2011
(In thousands, except per share amounts)
For the Three MonthsFor the Years
Ended December 31,Ended December 31,
2012201120122011
Revenues:
Rental income:
Triple-net leased $ 209,922 $ 204,169 $ 831,221 $ 637,294
Medical office buildings 108,951 60,008 362,839 166,161
318,873 264,177 1,194,060 803,455
Resident fees and services 322,533 277,992 1,229,479 868,095
Medical office building and other services revenue 3,950 10,421 20,741 36,471
Income from loans and investments 14,690 9,867 39,913 34,415
Interest and other income 665 688 1,106 1,217
Total revenues 660,711 563,145 2,485,299 1,743,653
Expenses:
Interest 76,700 67,443 293,401 229,346
Depreciation and amortization 187,754 161,439 725,981 447,664
Property-level operating expenses:
Senior living 223,115 188,790 843,190 590,151
Medical office buildings 39,684 20,018 126,152 57,042
262,799 208,808 969,342 647,193
Medical office building services costs 1,569 7,245 9,883 27,082
General, administrative and professional fees 23,022 23,527 98,801 74,537
(Gain) loss on extinguishment of debt, net (699 ) 2,393 37,640 27,604
Litigation proceeds, net (116,932 ) (202,259 )
Merger-related expenses and deal costs 13,617 22,317 63,183 153,923
Other 1,902 1,444 6,956 7,270
Total expenses 566,664 377,684 2,205,187 1,412,360

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

94,047 185,461 280,112 331,293
Income (loss) from unconsolidated entities 249 19 18,154 (52 )
Income tax benefit 3,555 7,622 6,282 30,660
Income from continuing operations 97,851 193,102 304,548 361,901
Discontinued operations (11,725 ) (605 ) 57,227 1,360
Net income 86,126 192,497 361,775 363,261
Net loss attributable to noncontrolling interest (141 ) (451 ) (1,025 ) (1,232 )
Net income attributable to common stockholders $ 86,267 $ 192,948 $ 362,800 $ 364,493
Earnings per common share:
Basic:

Income from continuing operations attributable to common stockholders

$ 0.33 $ 0.67 $ 1.04 $ 1.59
Discontinued operations (0.04 ) (0.00 ) 0.20 0.01
Net income attributable to common stockholders $ 0.29 $ 0.67 $ 1.24 $ 1.60
Diluted:

Income from continuing operations attributable to common stockholders

$ 0.33 $ 0.66 $ 1.04 $ 1.57
Discontinued operations (0.04 ) (0.00 ) 0.19 0.01
Net income attributable to common stockholders $ 0.29 $ 0.66 $ 1.23 $ 1.58
Weighted average shares used in computing earnings per common share:
Basic 294,704 287,793 292,064 228,453
Diluted 297,089 290,607 294,488 230,790
Dividends declared per common share $ 0.62 $ 0.575 $ 2.48 $ 2.30

QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
2012 Quarters2011 Fourth
FourthThirdSecondFirstQuarter
Revenues:
Rental income:
Triple-net leased $ 209,922 $ 209,666 $ 206,517 $ 205,116 $ 204,169
Medical office buildings 108,951 100,814 89,109 63,965 60,008
318,873 310,480 295,626 269,081 264,177
Resident fees and services 322,533 317,131 304,020 285,795 277,992
Medical office building and other services revenue 3,950 4,544 6,639 5,608 10,421
Income from loans and investments 14,690 9,035 8,152 8,036 9,867
Interest and other income 665 330 65 46 688
Total revenues 660,711 641,520 614,502 568,566 563,145
Expenses:
Interest 76,700 74,895 73,321 68,485 67,443
Depreciation and amortization 187,754 189,616 187,783 160,828 161,439
Property-level operating expenses:
Senior living 223,115 216,861 207,548 195,666 188,790
Medical office buildings 39,684 36,144 29,621 20,703 20,018
262,799 253,005 237,169 216,369 208,808
Medical office building services costs 1,569 1,487 3,839 2,988 7,245
General, administrative and professional fees 23,022 26,872 26,709 22,198 23,527
(Gain) loss on extinguishment of debt, net (699 ) (1,194 ) 9,989 29,544 2,393
Litigation proceeds, net (116,932 )
Merger-related expenses and deal costs 13,617 4,917 36,668 7,981 22,317
Other 1,902 1,968 1,510 1,576 1,444
Total expenses 566,664 551,566 576,988 509,969 377,684

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

94,047 89,954 37,514 58,597 185,461
Income from unconsolidated entities 249 17,074 514 317 19
Income tax benefit (expense) 3,555 8,886 5,179 (11,338 ) 7,622
Income from continuing operations 97,851 115,914 43,207 47,576 193,102
Discontinued operations (11,725 ) (4,093 ) 30,529 42,516 (605 )
Net income 86,126 111,821 73,736 90,092 192,497
Net loss attributable to noncontrolling interest (141 ) (61 ) (289 ) (534 ) (451 )
Net income attributable to common stockholders $ 86,267 $ 111,882 $ 74,025 $ 90,626 $ 192,948
Earnings per common share:
Basic:

Income from continuing operations attributable to common stockholders

$ 0.33 $ 0.39 $ 0.15 $ 0.16 $ 0.67
Discontinued operations (0.04 ) (0.01 ) 0.11 0.15 (0.00 )
Net income attributable to common stockholders $ 0.29 $ 0.38 $ 0.26 $ 0.31 $ 0.67
Diluted:

Income from continuing operations attributable to common stockholders

$ 0.33 $ 0.39 $ 0.15 $ 0.16 $ 0.66
Discontinued operations (0.04 ) (0.01 ) 0.10 0.15 (0.00 )
Net income attributable to common stockholders $ 0.29 $ 0.38 $ 0.25 $ 0.31 $ 0.66

Weighted average shares used in computing earnings per common share:

Basic 294,704 294,928 290,170 288,375 287,793
Diluted 297,089 297,407 292,592 290,813 290,607

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2012 and 2011
(In thousands)
20122011
Cash flows from operating activities:
Net income $ 361,775 $ 363,261
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued operations) 764,775 459,704
Amortization of deferred revenue and lease intangibles, net (17,118 ) (12,159 )
Other non-cash amortization (39,943 ) (13,163 )
Change in fair value of financial instruments 99 2,959
Stock-based compensation 20,784 19,346
Straight-lining of rental income, net (24,042 ) (14,885 )
Loss on extinguishment of debt, net 37,640 27,604
Gain on real estate dispositions, net (including amounts in discontinued operations) (80,952 )
Gain on real estate loan investments (5,230 ) (3,255 )
Gain on sale of marketable securities (733 )
Income tax benefit (including amounts in discontinued operations) (6,286 ) (31,137 )
(Income) loss from unconsolidated entities (1,509 ) 52
Gain on re-measurement of equity interest upon acquisition, net (16,645 )
Other 10,315 4,446
Changes in operating assets and liabilities:
Decrease in other assets 3,756 424
Increase (decrease) in accrued interest 9,969 (9,150 )
Decrease in accounts payable and other liabilities (24,572 ) (20,117 )
Net cash provided by operating activities 992,816 773,197
Cash flows from investing activities:
Net investment in real estate (1,453,065 ) (531,605 )
Purchase of private investment funds (276,419 )
Purchase of noncontrolling interest (3,934 ) (3,319 )
Investment in loans receivable (452,558 ) (628,133 )
Proceeds from real estate disposals 149,045 20,618
Proceeds from loans receivable 43,219 220,179
Proceeds from sale or maturity of marketable securities 37,500 23,050
Funds held in escrow for future development expenditures (28,050 )
Development project expenditures (114,002 ) (47,591 )
Capital expenditures (69,430 ) (50,473 )
Other (1,995 ) (165 )
Net cash used in investing activities (2,169,689 ) (997,439 )
Cash flows from financing activities:
Net change in borrowings under revolving credit facilities 84,938 537,452
Proceeds from debt 2,710,405 1,343,640
Repayment of debt (1,193,023 ) (1,388,962 )
Payment of deferred financing costs (23,770 ) (20,040 )
Issuance of common stock, net 342,469 299,847
Cash distribution to common stockholders (728,546 ) (521,046 )
Cash distribution to redeemable OP unitholders (4,446 ) (2,359 )
Purchases of redeemable OP units (4,601 ) (185 )
Distributions to noncontrolling interest (5,215 ) (2,556 )
Other 20,703 2,491
Net cash provided by financing activities 1,198,914 248,282
Net increase in cash and cash equivalents 22,041 24,040
Effect of foreign currency translation on cash and cash equivalents 60 (45 )
Cash and cash equivalents at beginning of period 45,807 21,812
Cash and cash equivalents at end of period $ 67,908 $ 45,807
Supplemental schedule of non-cash activities:
Assets and liabilities assumed from acquisitions:
Real estate investments $ 582,694 $ 10,973,093
Utilization of funds held for an Internal Revenue Code Section 1031 exchange (134,003 )
Other assets acquired 77,730 594,176
Debt assumed 412,825 3,651,089
Other liabilities 70,391 952,279
Deferred income tax liability 4,299 43,889
Redeemable OP unitholder interests 100,888
Noncontrolling interests 34,580 81,192
Equity issued 4,326 6,737,932
Debt transferred on the sale of assets 14,535

QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
2012 Quarters2011 Fourth
FourthThirdSecondFirstQuarter
Cash flows from operating activities:
Net income $ 86,126 $ 111,821 $ 73,736 $ 90,092 $ 192,497
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amounts in discontinued operations) 201,748 196,622 201,769 164,636 166,163
Amortization of deferred revenue and lease intangibles, net (4,153 ) (4,136 ) (3,669 ) (5,160 ) (4,701 )

Other non-cash amortization

(8,617 ) (10,141 ) (11,077 ) (10,108 ) (7,734 )
Change in fair value of financial instruments (52 ) 58 60 33 61
Stock-based compensation 4,255 5,443 6,252 4,834 5,750
Straight-lining of rental income, net (7,330 ) (6,242 ) (5,580 ) (4,890 ) (5,631 )
(Gain) loss on extinguishment of debt, net (699 ) (1,194 ) 9,989 29,544 2,393
Gain on real estate dispositions, net (including amounts in discontinued operations) (1,804 ) (357 ) (38,558 ) (40,233 )
(Gain) loss on real estate loan investments (5,789 ) 559

Income tax (benefit) expense (including amounts in discontinued operations)

(3,555 ) (8,870 ) (5,166 ) 11,305 (7,827 )
Income from unconsolidated entities (249 ) (429 ) (514 ) (317 ) (19 )
Gain on re-measurement of equity interest upon acquisition, net (16,645 )
Other 3,994 424 2,848 3,049 2,442
Changes in operating assets and liabilities:
Decrease (increase) in other assets 15,686 (12,791 ) (414 ) 1,275 27,433
(Decrease) increase in accrued interest (8,761 ) 8,471 (10,193 ) 20,452 (28,291 )
Increase (decrease) in accounts payable and other liabilities 12,697 (13,524 ) (3,635 ) (20,110 ) (13,240 )
Net cash provided by operating activities 283,497 248,510 215,848 244,961 329,296
Cash flows from investing activities:

Net investment in real estate property

(298,153 ) (255,508 ) (898,904 ) (500 ) (186,918 )
Purchase of private investment funds (276,419 )
Purchase of noncontrolling interest (3,934 )
Investment in loans receivable (422,035 ) (3,263 ) (4,787 ) (22,473 ) (8,274 )
Proceeds from sale or maturity of marketable securities 37,500
Proceeds from real estate disposals 73,900 66,298 8,847 5,657
Proceeds from loans receivable 8,402 1,594 15,979 17,244 81,245
Funds held in escrow for future development expenditures (28,050 )
Development project expenditures (23,883 ) (29,558 ) (29,287 ) (31,274 ) (24,358 )
Capital expenditures (27,160 ) (18,458 ) (13,793 ) (10,019 ) (21,815 )
Other 115 40 (13 ) (2,137 ) (52 )
Net cash used in investing activities (955,783 ) (238,855 ) (934,739 ) (40,312 ) (154,515 )
Cash flows from financing activities:
Net change in borrowings under revolving credit facilities (163,983 ) 337,575 293,744 (382,398 ) 103,452
Proceeds from debt 1,142,023 299,067 601,985 667,330 385,887
Repayment of debt (90,023 ) (457,278 ) (346,921 ) (298,801 ) (493,919 )
Payment of deferred financing costs (19,513 ) (1,277 ) (1,187 ) (1,793 ) (18,142 )
Issuance of common stock, net 342,469 (79 )
Cash distribution to common stockholders (183,306 ) (183,283 ) (182,704 ) (179,253 ) (166,114 )
Cash distribution to redeemable OP unitholders (1,088 ) (1,117 ) (1,129 ) (1,112 ) 1,679
Purchases of redeemable OP units (2,841 ) (1,149 ) (378 ) (233 ) (185 )
Distributions to noncontrolling interest (1,180 ) (1,128 ) (1,315 ) (1,592 ) (559 )
Other 1,573 4,621 13,944 565 1,472
Net cash provided by (used in) financing activities 681,662 (3,969 ) 718,508 (197,287 ) (186,508 )
Net increase (decrease) in cash and cash equivalents 9,376 5,686 (383 ) 7,362 (11,727 )
Effect of foreign currency translation on cash and cash equivalents 2 40 (37 ) 55 52
Cash and cash equivalents at beginning of period 58,530 52,804 53,224 45,807 57,482
Cash and cash equivalents at end of period $ 67,908 $ 58,530 $ 52,804 $ 53,224 $ 45,807
Supplemental schedule of non-cash activities:
Assets and liabilities assumed from acquisitions:
Real estate investments $ 84,939 $ 132,872 $ 310,002 $ 54,881 $ (61,527 )
Utilization of funds held for an Internal Revenue Code Section 1031 exchange (96,204 ) (37,799 )
Other assets acquired (22,159 ) 18,380 86,635 (5,126 ) 162,497
Debt assumed 44,923 117,539 232,629 17,734 142,863
Other liabilities 9,707 34,045 33,628 (6,989 ) (39,843 )
Deferred income tax liability (1,596 ) 5,895
Redeemable OP unitholder interests 458
Noncontrolling interests 8,150 1,264 28,281 (3,115 ) (2,510 )
Equity issued 4,326 2
Debt transferred on the sale of assets 14,535

Funds From Operations (FFO) Reconciliation Including Non-Cash Items1

Year-Over-Year

Tentative Estimates
Preliminary and
Subject to Change

Year-Over-Year

2011

2012GrowthFY2013 - Guidance

Growth2

Q4FYQ1Q2Q3Q4FY'11-'12LowHigh'12-'13E
Net income attributable to common stockholders $ 192,948 $364,493 $ 90,626 $ 74,025 $ 111,882 $ 86,267 $362,800$389,013$466,182

Net income attributable to common stockholders per share

$0.66$1.58$0.31$0.25$0.38$0.29$1.23$1.32$1.59
Adjustments:
Depreciation and amortization on real estate assets 160,805 445,237 159,926 186,782 188,364 186,486 721,558733,848723,848

Depreciation on real estate assets related to noncontrolling interest

(1,744 ) (3,471) (1,511 ) (2,336 ) (2,221 ) (2,435 ) (8,503)(8,768)(10,768)

Depreciation on real estate assets related to unconsolidated entities

2,339 6,552 2,175 2,131 1,700 1,510 7,5165,7714,771

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

- - - - (16,645 ) - (16,645)--
Discontinued operations:

Gain on real estate dispositions, net

- - (40,233 ) (38,558 ) (357 ) (1,804 ) (80,952)6,783783
Depreciation and amortization on real estate assets 4,724 12,040 3,808 13,986 7,006 13,993 38,7939,4319,431

Subtotal: Funds From Operations add-backs

166,124 460,358 124,165 162,005 177,847 197,750

661,767

747,065728,065

Subtotal: Funds From Operations add-backs per share

$0.57$1.99$0.43$0.55$0.60$0.67$2.25$2.54$2.48

Funds From Operations

$

359,072

$

824,851

$

214,791

$

236,030 $ 289,729 $ 284,017 $1,024,567

24

%

$

1,136,078$1,194,247

14

%

Funds From Operations per share

$1.23$3.57$0.74$0.81$0.97$0.96$3.48

(3

)%

$3.87$4.0714%
Adjustments:
Merger-related expenses and deal costs 22,317 153,923 7,981 36,668 4,917 13,617 63,18320,675-

Income tax (benefit) expense

(7,827 ) (31,137) 11,305 (5,166 ) (8,870 ) (3,555 ) (6,286)8,5005,500

Loss (gain) on extinguishment of debt, net

2,393 27,604 29,544 9,989 (1,194 ) (699 ) 37,6405,000(5,000)
Litigation proceeds, net (116,932 ) (202,259) - - - - ---
Change in fair value of financial instruments 61 2,959 33 60 58 (52 ) 99--
Amortization of other intangibles 255 1,022 256 255 256 255 1,0221,522522

Subtotal: Normalized Funds From Operations add-backs

(99,733 ) (47,888) 49,119 41,806 (4,833 ) 9,566

95,658

35,6971,022

Subtotal: Normalized Funds From Operations add-backs per share

$

(0.34

)

$

(0.21

)$0.17$0.14

$

(0.02

)$0.03$0.32$0.12$0.00

Normalized Funds From Operations

$

259,339

$

776,963

$

263,910

$

277,836

$

284,896

$

293,583

$

1,120,225

44

%

$1,171,775$1,195,270

6

%

Normalized Funds From Operations per share

$0.89$3.37$0.91$0.95$0.96$0.99$3.8013%$3.99$4.076%

Non-cash items included in Normalized FFO:

Amortization of deferred revenue and lease intangibles, net

(4,701 ) (12,159) (5,160 ) (3,669 ) (4,136 ) (4,153 ) (17,118)(16,290)(16,290)

Other non-cash amortization, including fair market value of debt

(7,734 ) (13,163) (10,108 ) (11,077 ) (10,141 ) (8,617 ) (39,943)(19,055)(19,055)
Stock-based compensation 5,750 19,346 4,834 6,252 5,443 4,255 20,78419,46019,460
Straight-lining of rental income, net (5,631 ) (14,885) (4,890 ) (5,580 ) (6,242 ) (7,330 ) (24,042)(19,758)(19,758)

Subtotal: non-cash items included in Normalized FFO

(12,316 ) (20,861) (15,324 ) (14,073 ) (15,076 ) (15,846 )

(60,318

)

(35,642)(35,642)

Subtotal: non-cash items included in Normalized FFO per share

$

(0.04

)

$

(0.09

)

$

(0.05

)

$

(0.05

)

$

(0.05

)

$

(0.05

)

$

(0.20

)

$

(0.12

)

$

(0.12

)

Normalized FFO, excluding non-cash items

$ 247,023

$

756,102

$ 248,586 $ 263,763 $ 269,820 $ 277,737

$

1,059,907

40

%

$1,136,133$1,159,627 8 %

Normalized FFO, excluding non-cash items per share

$0.85$3.28$0.85$0.90$0.91$0.93$3.6010%$3.87$3.959%
Weighted average diluted shares 290,813 230,790 290,813 292,592 297,407 297,089 294,488293,678293,678

1 In thousands, except per share amounts. Totals and per share amounts may not add due to rounding. Per share quarterly amounts may not add to annual per share amounts due to material changes in the Company's weighted average diluted share count, if any.

2 2012-2013 growth assumes the midpoint of 2013 Guidance.

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 gains (or losses) 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 may not be 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.

Non-GAAP Financial Measures Reconciliation
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 December 31, 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 $ 86,267

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

(1,567 )
Pro forma net income for the three months ended December 31, 2012 84,700
Add back:
Pro forma interest (including discontinued operations) 82,423
Pro forma depreciation and amortization (including discontinued operations) 203,502
Stock-based compensation 4,255
Gain on extinguishment of debt, net (699 )
Gain on real estate dispositions, net (1,804 )
Income tax benefit (including discontinued operations) (3,555 )
Change in fair value of financial instruments (52 )
Other taxes 790
Merger-related expenses and deal costs 13,617
Adjusted Pro Forma EBITDA $ 383,177
Adjusted Pro Forma EBITDA annualized $ 1,532,708
As of December 31, 2012:
Debt $ 8,413,646
Cash, including cash escrows pertaining to debt (111,635 )
Net debt $ 8,302,011
Net debt to Adjusted Pro Forma EBITDA 5.4x

Non-GAAP Financial Measures Reconciliation
NOI Reconciliation by Segment
(In thousands)
2012 Quarters2011 Fourth
FourthThirdSecondFirstQuarter
Revenues
Triple-Net
Triple-Net Rental Income $ 209,922 $ 209,666 $ 206,517 $ 205,116 $ 204,169
Medical Office Buildings
Medical Office - Stabilized 100,027 92,458 80,335 56,251 53,826
Medical Office - Lease up 8,924 8,356 8,774 7,714 6,182
Total Medical Office Buildings - Rental Income 108,951 100,814 89,109 63,965 60,008
Total Rental Income 318,873 310,480 295,626 269,081 264,177
Medical Office Building Services Revenue 2,840 3,434 5,529 4,499 9,313
Total Medical Office Buildings - Revenue 111,791 104,248 94,638 68,464 69,321
Triple-Net Services Revenue 1,110 1,110 1,110 1,109 1,108
Total Medical Office Building and Other Services Revenue 3,950 4,544 6,639 5,608 10,421
Seniors Housing Operating
Seniors Housing - Stabilized 309,252 296,508 283,214 271,396 264,860
Seniors Housing - Lease up 11,940 19,311 19,491 13,078 11,866
Seniors Housing - Other 1,341 1,312 1,315 1,321 1,266
Total Resident Fees and Services 322,533 317,131 304,020 285,795 277,992
Non-Segment Income from Loans and Investments 14,690 9,035 8,152 8,036 9,867
Total Revenues, excluding Interest and Other Income 660,046 641,190 614,437 568,520 562,457
Property-Level Operating Expenses
Medical Office Buildings
Medical Office - Stabilized 36,360 32,981 26,401 17,845 17,649
Medical Office - Lease up 3,324 3,163 3,220 2,858 2,369
Total Medical Office Buildings 39,684 36,144 29,621 20,703 20,018
Seniors Housing Operating
Seniors Housing - Stabilized 212,781 202,045 192,640 184,748 177,890
Seniors Housing - Lease up 9,191 13,631 13,786 9,795 9,803
Seniors Housing - Other 1,143 1,185 1,122 1,123 1,097
Total Seniors Housing 223,115 216,861 207,548 195,666 188,790
Total Property-Level Operating Expenses 262,799 253,005 237,169 216,369 208,808
Medical Office Building Services Costs 1,569 1,487 3,839 2,988 7,245
Net Operating Income
Triple-Net
Triple-Net Properties 209,922 209,666 206,517 205,116 204,169
Triple-Net Services Revenue 1,110 1,110 1,110 1,109 1,108
Total Triple-Net 211,032 210,776 207,627 206,225 205,277
Medical Office Buildings
Medical Office - Stabilized 63,667 59,477 53,934 38,406 36,177
Medical Office - Lease up 5,600 5,193 5,554 4,856 3,813
Medical Office Buildings Services 1,271 1,947 1,690 1,511 2,068
Total Medical Office Buildings 70,538 66,617 61,178 44,773 42,058
Seniors Housing Operating
Seniors Housing - Stabilized 96,471 94,463 90,574 86,648 86,970
Seniors Housing - Lease up 2,749 5,680 5,705 3,283 2,063
Seniors Housing - Other 198 127 193 198 169
Total Seniors Housing 99,418 100,270 96,472 90,129 89,202
Non-Segment 14,690 9,035 8,152 8,036 9,867
Net Operating Income$395,678$386,698$373,429$349,163$346,404
Note: Amounts above are adjusted to exclude discontinued operations for all periods presented.

Non-GAAP Financial Measures Reconciliation
Annual NOI

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). The following is a reconciliation of NOI to net income (including amounts in discontinued operations) for the years ended December 31, 2012 and 2011 (in thousands):

20122011
Net income $ 361,775 $ 363,261
Adjustments:
Interest and other income (including amounts in discontinued operations) (6,158 ) (1,217 )
Interest (including amounts in discontinued operations) 302,031 242,057
Depreciation and amortization (including amounts in discontinued operations) 764,774 459,704

General, administrative and professional fees (including amounts in discontinued operations)

98,813 74,537
Loss on extinguishment of debt, net 37,640 27,604
Litigation proceeds, net (202,259 )
Merger-related expenses and deal costs 63,183 153,923
Other (including amounts in discontinued operations) 8,842 8,653
(Income) loss from unconsolidated entities (18,154 ) 52

Income tax benefit (including amounts in discontinued operations)

(6,286 ) (31,137 )
Gain on real estate dispositions, net (80,952 )
NOI (including amounts in discontinued operations) 1,525,508 1,095,178
Discontinued operations (20,540 ) (27,017 )
NOI (excluding amounts in discontinued operations) $ 1,504,968 $ 1,068,161

Non-GAAP Financial Measure Reconciliation
Same-Store Total Portfolio NOI
(Dollars in thousands)
For the Years Ended
December 31,
20122011
Net Operating Income$1,504,968$1,068,161
Less:
NOI Not Included in Same-Store 771,165 364,831
Straight-Lining of Rental Income 24,042 14,885
Non-Cash Rental Income 18,718 13,915
813,925 393,631
Same-Store Cash NOI $ 691,043 $ 674,530
Pro Forma NOI with Management Fee Adjustment (31,187 ) (17,392 )
Same-Store NOI with Management Fee Adjustment $ 722,230 $ 691,922
Percentage Increase 4.4 %
Non-GAAP Financial Measure Reconciliation
Same-Store Seniors Housing Operating Portfolio NOI
(Dollars in thousands)
For the Years Ended
December 31,
20122011
Net Operating Income$99,418$89,202
Less:
NOI Not Included in Same-Store 8,793 428
Same-Store NOI $ 90,625 $ 88,774
Management Fee Adjustment (16,642 ) (12,246 )
Same-Store NOI with Management Fee Adjustment $ 107,267 $ 101,020
Percentage Increase 6.2 %

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Contacts:

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