Ventas, Inc. News
Ventas Reports Ten Percent Rise in 2007 Normalized FFO Per Common Share to $2.69
Normalized FFO for the fourth quarter of 2007 rose 23 percent to
During the fourth quarter and year, the Company benefited from both internal growth and accretive acquisitions, offset by the Company's increase in outstanding shares and general and administrative costs, which are principally related to Ventas's acquisition of Sunrise Senior Living Real Estate Investment Trust ("Sunrise REIT") in 2007.
Weighted average diluted common shares outstanding in the fourth quarter of 2007 increased by 28.0 million shares to 133.7 million shares, from 105.7 million shares for the comparable period in 2006.
Normalized FFO for the three months and year ended
Funds Available for Distribution ("FAD") for the fourth quarter of 2007 rose 22 percent to
"As the top performing healthcare REIT in 2007, Ventas had another excellent year, highlighted by the successful completion of our important Sunrise REIT acquisition. We delivered 12 percent total return to shareholders, built a premier diversified portfolio of seniors housing and healthcare assets and continued to strengthen our high performing team," Ventas Chairman, President and Chief Executive Officer Debra A. Cafaro said. "Our assets are performing well and our balance sheet and liquidity position are strong, which should provide us with excellent opportunities going forward.
"We started 2008 on an outstanding note, with an investment grade credit rating from Standard & Poor's. This "BBB-" rating — our second — demonstrates the benefits of our financial discipline and our high quality diversified portfolio," Cafaro added. "Our investment grade rating should enhance our access to capital and decrease our borrowing costs, both of which should benefit our shareholders."
BOARD INCREASES QUARTERLY DIVIDEND BY EIGHT PERCENT
Ventas also said that its Board of Directors voted to increase the Company's first quarter 2008 dividend to $0.5125 per share, an increase of eight percent from the 2007 quarterly dividend of
"We are pleased to share our cash flow growth with our stockholders by increasing our dividend to an annualized rate of
SUNRISE PORTFOLIO
Total Portfolio
The Company's senior living operating portfolio contains 79 communities in
Ventas's partnership share of Net Operating Income after management fees ("NOI") was
72 Stabilized Communities
For the 72 stabilized Sunrise communities, Ventas's share of NOI was
Average occupancy of 93 percent and strong revenue performance for these 72 stabilized communities during the fourth quarter demonstrate the quality and strength of the Sunrise portfolio and the market for seniors housing.
Seven Communities in Lease-up
Ventas's Sunrise portfolio also contains seven recently developed communities that are in lease-up, including the Company's newly acquired Sunrise at Thorne Mills on Steeles senior living community in Vaughan, Ontario ("Steeles"). Ventas's share of NOI at the development assets was
GAAP NET INCOME
Net income available to common stockholders for the quarter ended
Net income available to common stockholders for the year ended
FOURTH QUARTER HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS — Ventas's 2007 normalized FFO growth per diluted common share of ten percent was the sixth consecutive year of double-digit growth. — Ventas was the only REIT in the top five performers of the MSCI US REIT Index for each of the one-, three-, five- and ten-year periods ended December 31, 2007. For the five-year period ended December 31, 2007, Ventas delivered a 39 percent compound annual total shareholder return (\"TSR\"), making it the third best performing REIT in the MSCI US REIT Index, which had an annualized TSR of 18 percent for the same period. — Ventas's investments for the year totaled approximately $2.2 billion, including the Sunrise REIT acquisition and over $150 million of MOB acquisitions. — Ventas's MOB portfolio now consists of over one million square feet, and the Company has existing partnerships with four quality MOB developer-operators. — During 2007, Ventas sold one hospital and 21 skilled nursing facilities to Kindred and received $175.0 million in total cash proceeds, representing a six percent capitalization rate on rent. — As previously announced, Ventas prevailed in a preliminary phase of its lawsuit against HCP, Inc. (\"HCP\") pending in the United States District Court for the Western District of Kentucky, when the Court denied HCP's motion to dismiss Ventas's lawsuit. The litigation arises from the Company's 2007 acquisition of Sunrise REIT. The parties have commenced the discovery phase of the litigation. Portfolio and Performance Highlights — Ventas acquired an 80 percent interest in Steeles. The Steeles community contains 229 units, with capacity for 256 residents. Residents began moving in during September 2007, and the community is now home to 79 new residents and is approximately 31 percent occupied. It should produce positive NOI by the second half of 2008. The expected unlevered yield on stabilization should approximate 8 percent to 8.5 percent. — In January 2008, Ventas purchased one seniors housing community located in Texas for $5.1 million and leased it to an affiliate of Capital Senior Living Corporation. The asset contains 47 units. The lease provides Ventas with an initial cash yield of approximately 7.75 percent and an expected unlevered yield over the life of the lease of approximately 8.6 percent. — With these acquisitions and divestiture activity: — annualized revenue from Kindred represents approximately 27 percent of the Company's annualized total revenues; — annualized revenue from private-pay, non-government-reimbursed assets represents 69 percent of the Company's annualized total revenues, computed on the same pro forma basis; — annualized revenue from the Company's operating assets, where rent is paid directly from residents of the Company's operating seniors housing communities and MOB tenants, constitutes approximately 45 percent of its annualized total revenues, computed on the same pro forma basis; — assets leased to Kindred represent approximately 15 percent of the Company's total real estate assets (measured on a gross book value basis) on its consolidated balance sheet; and — annualized revenue for the above computations is determined by excluding the Company's partner's share in revenue in the numerator and the denominator. — The 203 skilled nursing facilities and hospitals leased by the Company to Kindred produced EBITDARM (earnings before interest, taxes, depreciation, amortization, rent and management fees) to actual cash rent coverage of 2.2 times for the trailing 12-month period ended September 30, 2007 (the latest date available). — Supplemental information regarding Ventas's portfolio of 520 seniors housing and healthcare assets is available on the Company's website under the \"For Investors\" section or at http://www.ventasreit.com/investors/supplemental.asp. Balance Sheet, Financing & Capital Markets — Ventas's equity market capitalization at December 31, 2007 was $6.0 billion, an increase from $4.5 billion at December 31, 2006. — In January 2008, Ventas raised $191.9 million through the issuance and sale of 4.5 million shares of its common stock at $42.78 per share, after deducting the underwriter's discount. — Also, in January 2008, Ventas increased to Cdn $105.0 million the borrowing capacity under its Canadian unsecured revolving credit facility (the \"Canadian Revolving Credit Facility\"), from $90.0 million. Ventas used the additional proceeds to pay off construction debt that was maturing on one of its Canadian Sunrise facilities. — In February 2008, Standard & Poor's upgraded Ventas's unsecured debt rating to BBB- from BB+, with a stable outlook. Ventas's unsecured debt is currently rated BBB- (stable) by Fitch, BBB- (stable) by Standard & Poor's and Ba1 (stable) by Moody's Investors Service. — Liquidity Updates — At February 13, 2008, the Company had substantially all of its $600.0 million unsecured U.S. revolving credit facility available and Cdn $14.1 million of undrawn availability under the Canadian Revolving Credit Facility and held $82.4 million in short-term cash investments. — The Company's debt to total capitalization at December 31, 2007 was approximately 36 percent. Additional News — Skilled nursing facilities received a 3.3 percent increase in Medicare reimbursement for fiscal year 2008. Long-term acute care hospitals (\"LTACs\") were the subject of favorable legislation passed in December 2007 that, among other things, suspends the 25-percent rule for freestanding LTACs for three years, limits future supply of LTACs and calls for further review of patient certification criteria for LTACs. The Centers for Medicare and Medicaid Services (CMS) recently proposed a three percent net rate increase for freestanding LTACs for fiscal year 2009, which begins July 1, 2008. — Julie M. Dreixler, 46, recently joined Ventas as Senior Vice President - Human Resources. Ms. Dreixler most recently was Vice President, Human Resources of Cardinal Health, Inc., and previously held human resources positions at Sara Lee Coffee & Tea, GE Capital, Citibank and Chicago Title and Trust Company.
VENTAS ISSUES 2008 NORMALIZED FFO AND FAD GUIDANCE
Ventas currently expects its 2008 normalized FFO to be between
The Company's normalized FFO and FAD guidance for all periods assumes that all of the Company's tenants, borrowers and managers continue to meet all of their obligations to the Company. In addition, the Company's normalized FFO and FAD guidance (and related U.S. generally accepted accounting principles ("GAAP") earnings projections) excludes (a) gains and losses on the sales of assets, (b) the impact of future, unannounced acquisitions, divestitures (including pursuant to tenant options to purchase) and capital transactions, (c) merger-related benefits, costs and expenses that are not capitalized under GAAP, including transitional expenses, amortization of fees related to acquisition financing and costs, gains and losses for foreign currency hedge agreements, and expenses relating to the Company's lawsuit against HCP, (d) the impact of any expenses related to asset impairment, the write-off of unamortized deferred financing fees, or additional costs, expenses or premiums incurred as a result of early debt retirement, (e) the non-cash effect of income tax benefits, and (f) dilution, if any, resulting from the Company's convertible notes.
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 provided on a schedule 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.
FOURTH QUARTER CONFERENCE CALL
Ventas will hold a conference call to discuss this earnings release on
Ventas expects to file its Form 10-K for the year ended
Ventas, Inc. is a leading healthcare real estate investment trust. At the date of this press release, Ventas owns 520 seniors housing and healthcare-related properties located in 43 states and two Canadian provinces. Its diverse portfolio includes 254 seniors housing communities, 197 skilled nursing facilities, 42 hospitals and 27 medical office and other properties. More information about Ventas can be found on its website at http://www.ventasreit.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 Ventas, Inc.'s ("Ventas" or the "Company") and its subsidiaries' expected future financial position, results of operations, cash flows, funds from operations, dividends and dividend plans, financing plans, business strategy, budgets, projected costs, capital expenditures, competitive positions, acquisitions, investment opportunities, 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 security holders must recognize that 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 depending on a variety of factors discussed in the Company's filings with the Securities and Exchange Commission. Factors that may affect the Company's plans or results include without limitation: (a) the ability and willingness of the Company's operators, tenants, borrowers, managers and other third parties, as applicable, to meet and/or perform the obligations under their various contractual arrangements with the Company; (b) the ability and willingness of Kindred Healthcare, Inc. (together with its subsidiaries, "Kindred"), Brookdale Living Communities, Inc. (together with its subsidiaries, "Brookdale") and Alterra Healthcare Corporation (together with its subsidiaries, "Alterra") to meet and/or perform their obligations to indemnify, defend and hold the Company harmless from and against various claims, litigation and liabilities under the Company's respective contractual arrangements with Kindred, Brookdale and Alterra; (c) the ability of the Company's operators, tenants, borrowers and managers, as applicable, 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; (d) the Company's success in implementing its business strategy and the Company's ability to identify, underwrite, finance, consummate and integrate diversifying acquisitions or investments, including those in different asset types and outside the
CONSOLIDATED BALANCE SHEETS As of December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and
December 31, 2006 (In thousands, except per share amounts) December 31, September 30, June 30, March 31, December 31, 2007 2007 2007 2007 2006 Assets Real estate investments: Land $572,092 $564,462 $551,463 $359,104 $357,804 Buildings and improve- ments 5,718,273 5,548,290 5,500,868 3,386,697 3,350,033 6,290,365 6,112,752 6,052,331 3,745,801 3,707,837 Accumulated depreciation (816,352) (765,598) (718,342) (692,402) (659,584) Net real estate property 5,474,013 5,347,154 5,333,989 3,053,399 3,048,253 Loans receivable, net 19,998 35,556 34,792 35,554 35,647 Net real estate investments 5,494,011 5,382,710 5,368,781 3,088,953 3,083,900 Cash and cash equivalents 28,334 28,573 30,138 - 1,246 Escrow deposits and restricted cash 54,077 89,807 99,058 80,039 80,039 Deferred financing costs, net 22,836 22,280 23,202 17,984 18,415 Notes receivable- related parties 2,092 2,144 2,126 2,484 2,466 Other 115,278 136,106 148,148 96,707 67,734 Total assets $5,716,628 $5,661,620 $5,671,453 $3,286,167 $3,253,800 Liabilities and stockholders' equity Liabilities: Senior notes payable and other debt $3,360,499 $3,267,705 $3,284,642 $2,370,418 $2,329,053 Deferred revenue 9,065 9,665 10,219 7,607 8,194 Accrued dividend - - - - 41,949 Accrued interest 20,790 46,752 21,157 45,696 19,929 Accounts payable and other accrued liabilities 173,576 152,753 140,493 122,155 114,012 Deferred income taxes 297,590 313,987 309,215 30,394 30,394 Total liabilities 3,861,520 3,790,862 3,765,726 2,576,270 2,543,531 Minority interest 31,454 26,781 26,622 983 393 Commitments and contingencies Stockholders' equity: Preferred stock, 10,000 shares authorized, unissued - - - - - Common stock, $0.25 par value; 133,651, 133,451, 133,366, 106,314 and 106,137 shares issued at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006, respectively 33,416 33,371 33,350 26,587 26,545 Capital in excess of par value 1,821,294 1,817,809 1,814,637 771,004 766,470 Accumulated other comprehensive income 17,416 6,652 9,482 914 1,037 Retained earnings (deficit) (47,846) (13,761) 21,636 (89,591) (84,176) Treasury stock, 14, 3, 0, 0 and 0 shares at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007 and December 31, 2006, respectively (626) (94) - - - Total stockholders' equity 1,823,654 1,843,977 1,879,105 708,914 709,876 Total liabilities and stockholders' equity $5,716,628 $5,661,620 $5,671,453 $3,286,167 $3,253,800 CONSOLIDATED STATEMENTS OF INCOME For the Three Months and Years Ended December 31, 2007 and 2006 (In thousands, except per share amounts) For the Three Months For the Year Ended Ended December 31, December 31, 2007 2006 2007 2006 Revenues: Rental income $124,611 $113,408 $483,985 $405,952 Resident fees and services 106,888 - 282,226 - Interest income from loans receivable 471 2,641 2,586 7,014 Interest and other income 583 1,888 2,994 2,886 Total revenues 232,553 117,937 771,791 415,852 Expenses: Interest 55,447 38,582 204,218 136,544 Depreciation and amortization 72,545 31,792 234,061 117,172 Property-level operating expenses 75,395 1,168 198,125 3,171 General, administrative and professional fees (including non- cash stock-based compensation expense of $1,891 and $810 for the three months ended 2007 and 2006, respectively, and $7,493 and $3,046 for the year ended 2007 and 2006, respectively) 11,506 6,679 36,425 26,136 Foreign currency gain (35) - (24,280) - Merger-related expenses 652 - 2,979 - Rent reset costs - - - 7,361 Reversal of contingent liability - - - (1,769) (Gain) loss on extinguishment of debt - - (88) 1,273 Total expenses 215,510 78,221 651,440 289,888 Income before income taxes, minority interest and discontinued operations 17,043 39,716 120,351 125,964 Income tax benefit 12,968 - 28,042 - Income before minority interest and discontinued operations 30,011 39,716 148,393 125,964 Minority interest, net of tax 610 - 1,698 - Income from continuing operations 29,401 39,716 146,695 125,964 Discontinued operations - 1,081 135,623 5,466 Net income 29,401 40,797 282,318 131,430 Preferred stock dividends and issuance costs - - 5,199 - Net income available to common stockholders $29,401 $40,797 $277,119 $131,430 Earnings per common share: Basic: Income from continuing operations applicable to common shares $0.22 $0.38 $1.15 $1.21 Discontinued operations - 0.01 1.11 0.05 Net income available to common stockholders $0.22 $0.39 $2.26 $1.26 Diluted: Income from continuing operations applicable to common shares $0.22 $0.38 $1.15 $1.20 Discontinued operations - 0.01 1.10 0.05 Net income available to common stockholders $0.22 $0.39 $2.25 $1.25 Weighted average shares used in computing earnings per common share: Basic 133,300 105,155 122,597 104,206 Diluted 133,685 105,667 123,012 104,731 Dividends declared per common share $0.475 $0.395 $1.90 $1.58 QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) 2006 2007 Quarters Fourth Fourth Third Second First Quarter Revenues: Rental income $124,611 $121,167 $120,057 $118,150 $113,408 Resident fees and services 106,888 103,938 71,400 - - Interest income from loans receivable 471 477 815 823 2,641 Interest and other income 583 712 1,450 249 1,888 Total revenues 232,553 226,294 193,722 119,222 117,937 Expenses: Interest 55,447 54,092 55,148 39,531 38,582 Depreciation and amortization 72,545 70,716 57,994 32,806 31,792 Property-level operating expenses 75,395 71,382 50,407 941 1,168 General, administrative and professional fees (including non-cash stock-based compensation expense of $1,891, $1,768, $1,820, $2,014 and $810, respectively) 11,506 9,315 8,023 7,581 6,679 Foreign currency (gain) loss (35) 116 (18,575) (5,786) - Merger-related expenses 652 1,535 792 - - Gain on extinguishment of debt - (88) - - - Total expenses 215,510 207,068 153,789 75,073 78,221 Income before income taxes, minority interest and discontinued operations 17,043 19,226 39,933 44,149 39,716 Income tax benefit 12,968 9,463 5,611 - - Income before minority interest and discontinued operations 30,011 28,689 45,544 44,149 39,716 Minority interest, net of tax 610 675 408 5 - Income from continuing operations 29,401 28,014 45,136 44,144 39,716 Discontinued operations - - 134,661 962 1,081 Net income 29,401 28,014 179,797 45,106 40,797 Preferred stock dividends and issuance costs - - 5,199 - - Net income available to common stockholders $29,401 $28,014 $174,598 $45,106 $40,797 Earnings per common share: Basic: Income from continuing operations applicable to common shares $0.22 $0.21 $0.34 $0.42 $0.38 Discontinued operations - - 1.15 0.01 0.01 Net income available to common stockholders $0.22 $0.21 $1.49 $0.43 $0.39 Diluted: Income from continuing operations applicable to common shares $0.22 $0.21 $0.34 $0.41 $0.38 Discontinued operations - - 1.14 0.01 0.01 Net income available to common stockholders $0.22 $0.21 $1.48 $0.42 $0.39 Shares used in computing earnings per common share: Basic 133,300 133,205 117,419 106,044 105,155 Diluted 133,685 133,503 117,825 106,775 105,667 Dividends declared per common share $0.475 $0.475 $0.475 $0.475 $0.395 CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2007 and 2006 (In thousands) 2007 2006 Cash flows from operating activities: Net income $282,318 $131,430 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization (including amounts in discontinued operations) 235,045 119,653 Amortization of deferred revenue and lease intangibles, net (9,819) (2,412) Other amortization expenses 2,456 3,253 Stock-based compensation 7,493 3,046 Straight-lining of rental income (17,311) (19,963) Gain on sale of assets (including amounts in discontinued operations) (129,478) - Net gain on sale of marketable equity securities (864) (1,379) Loss on extinguishment of debt - 1,273 Reversal of contingent liability - (1,769) Loss on bridge financing 2,550 - Income tax benefit (28,042) - Other 222 488 Changes in operating assets and liabilities: Decrease (increase) in other assets 45,712 (41,684) (Decrease) increase in accrued interest (4,906) 5,511 Increase in other liabilities 14,434 41,420 Net cash provided by operating activities 399,810 238,867 Cash flows from investing activities: Net investment in real estate property (1,348,354) (490,311) Investment in loans receivable - (191,068) Proceeds from real estate disposals 157,400 - Proceeds from sale of securities 7,773 - Proceeds from loans receivable 15,803 195,411 Capital expenditures (6,372) (368) Escrow funds returned from an Internal Revenue Code Section 1031 exchange - 9,902 Other 374 (5,540) Net cash used in investing activities (1,173,376) (481,974) Cash flows from financing activities: Net change in borrowings under unsecured revolving credit facility 92,300 57,000 Net change in borrowings under secured revolving credit facility - (89,200) Net change in borrowings under Canadian credit facility 84,286 - Issuance of bridge financing 1,230,000 - Repayment of bridge financing (1,230,000) - Proceeds from debt 53,832 449,005 Repayment of debt (184,613) (16,084) Debt and preferred stock issuance costs (4,300) - Payment of deferred financing costs (7,856) (4,876) Issuance of common stock 1,047,318 831 Cash distribution to preferred stockholders (3,449) - Cash distribution to common stockholders (282,739) (160,598) Other 10,870 6,634 Net cash provided by financing activities 805,649 242,712 Net increase (decrease) in cash and cash equivalents 32,083 (395) Effect of foreign currency translation on cash and cash equivalents (4,995) - Cash and cash equivalents at beginning of period 1,246 1,641 Cash and cash equivalents at end of period $28,334 $1,246 QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) 2006 2007 Quarters Fourth Fourth Third Second First Quarter Cash flows from operating activities: Net income $29,401 $28,014 $179,797 $45,106 $40,797 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization (including amounts in discontinued operations) 72,544 70,716 58,352 33,433 32,421 Amortization of deferred revenue and lease intangibles, net (3,190) (3,027) (2,998) (604) (603) Other amortization expenses 475 322 549 1,110 933 Stock-based compensation 1,891 1,768 1,820 2,014 768 Straight-lining of rental income (4,379) (4,326) (4,337) (4,269) (5,228) Gain on sale of assets (including amounts in discontinued operations) - - (129,478) - - Net gain on sale of marketable equity securities - - (864) - (1,379) Loss on bridge financing - - 2,550 - - Income tax benefit (12,968) (9,463) (5,611) - - Realized gain on foreign currency hedge - - 5,786 - - Unrealized gain on foreign currency hedge - - - (5,786) - Other (264) 463 (11) 34 (276) Changes in operating assets and liabilities: Decrease (increase) in other assets 29,386 25,972 6,931 (16,577) (22,863) (Decrease) increase in accrued interest (27,534) 25,125 (28,245) 25,748 (15,531) (Decrease) increase in other liabilities (33,525) 46,570 (6,542) 7,931 31,445 Net cash provided by operating activities 51,837 182,134 77,699 88,140 60,484 Cash flows from investing activities: Net investment in real estate property (54,604) (72,835) (1,190,564) (30,351) (426,278) Investment in loans receivable - - - - (34,219) Proceeds from real estate disposals - - 157,400 - - Proceeds from sale of securities - - 2,701 5,072 - Proceeds from loans receivable (525) 643 15,575 110 191,167 Capital expenditures (2,928) (2,242) (1,166) (36) (89) Other 52 (18) 358 (18) 52 Net cash used in investing activities (58,005) (74,452) (1,015,696) (25,223) (269,367) Cash flows from financing activities: Net change in borrowings under unsecured revolving credit facility 45,900 (109,800) 4,700 151,500 (15,300) Net change in borrowings under Canadian credit facility 127 84,159 - - - Issuance of bridge financing - - 1,230,000 - - Repayment of bridge financing - - (1,230,000) - - Proceeds from debt 44,422 1,095 8,315 - 225,400 Repayment of debt (40,838) (12,059) (14,446) (117,270) (3,087) Debt and preferred stock issuance costs - - (4,300) - - Payment of deferred financing costs (2,322) (131) (4,991) (412) (1,122) Issuance of common stock 1,589 (250) 1,045,979 - - Cash distributions to preferred stockholders - - (3,449) - - Cash distributions to common stockholders (63,486) (63,411) (63,371) (92,471) - Other 11,165 2,099 3,116 (5,510) 2,303 Net cash (used in) provided by financing activities (3,443) (98,298) 971,553 (64,163) 208,194 Net (decrease) increase in cash and cash equivalents (9,611) 9,384 33,556 (1,246) (689) Effect of foreign currency translation on cash and cash equivalents 9,372 (10,949) (3,418) - - Cash and cash equivalents at beginning of period 28,573 30,138 - 1,246 1,935 Cash and cash equivalents at end of period $28,334 $28,573 $30,138 $- $1,246 FUNDS FROM OPERATIONS, NORMALIZED FFO AND FUNDS AVAILABLE FOR DISTRIBUTION (In thousands, except per share amounts) 2006 2007 Quarters Fourth Fourth Third Second First Quarter Net income available to common stockholders $29,401 $28,014 $174,598 $45,106 $40,797 Adjustments: Depreciation and amortization on real estate assets 72,367 70,549 57,827 32,209 31,172 Depreciation on real estate assets related to minority interest (1,391) (1,420) (938) - - Discontinued operations: Gain on sale of real estate assets - - (129,478) - - Depreciation and amortization on real estate assets - - 203 609 612 FFO 100,377 97,143 102,212 77,924 72,581 Gain on foreign currency hedge - - (18,528) (5,786) - Preferred stock issuance costs - - 1,750 - - Bridge loan fee - - 2,550 - - Merger-related expenses 652 1,535 792 - - Gain on sale of securities - - (864) - (1,379) Income tax benefit (13,342) (9,897) (5,856) - - Gain on extinguishment of debt - (88) - - - Normalized FFO 87,687 88,693 82,056 72,138 71,202 Straight-lining of rental income (4,379) (4,326) (4,337) (4,269) (5,228) Capital expenditures (2,927) (2,243) (1,166) (36) (89) FAD $80,381 $82,124 $76,553 $67,833 $65,885 Per diluted share: Net income available to common stockholders $0.22 $0.21 $1.48 $0.42 $0.39 Adjustments: Depreciation and amortization on real estate assets 0.54 0.53 0.49 0.31 0.30 Depreciation on real estate assets related to minority interest (0.01) (0.01) (0.01) - - Discontinued operations: Gain on sale of real estate assets - - (1.10) - - Depreciation and amortization on real estate assets - - - 0.01 0.01 FFO 0.75 0.73 0.87 0.73 0.69 Gain on foreign currency hedge - - (0.16) (0.05) - Preferred stock issuance costs - - 0.01 - - Bridge loan fee - - 0.02 - - Merger-related expenses 0.00 0.01 0.01 - - Gain on sale of securities - - (0.01) - (0.01) Income tax benefit (0.10) (0.07) (0.05) - - Gain on extinguishment of debt - - - - - Normalized FFO 0.66 0.66 0.70 0.68 0.67 Straight-lining of rental income (0.03) (0.03) (0.04) (0.04) (0.05) Capital expenditures (0.02) (0.02) (0.01) (0.00) (0.00) FAD $0.60 $0.62 $0.65 $0.64 $0.62
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 FAD appropriate measures of performance of an equity REIT. 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 property, 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. FAD represents normalized FFO excluding straight-line rental adjustments and capital expenditures.
FFO and FAD presented herein are not necessarily comparable to FFO and FAD presented by other real estate companies due to the fact that not all real estate companies use the same definitions. Neither FFO nor FAD should be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of the Company's financial performance or as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is FFO or FAD 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 FAD should be examined in conjunction with net income as presented elsewhere in this press release.
Normalized FFO and FAD Guidance for the Year Ending
The following table illustrates the Company's normalized FFO and FAD guidance per diluted common share for the year ending December 31, 2008:
GUIDANCE For the Year Ending December 31, 2008 Net income available to common stockholders $1.36 - $1.43 Depreciation and amortization on real estate assets and depreciation related to minority interest 1.70 - 1.70 FFO 3.06 - 3.13 Income tax benefit, gain/loss on foreign currency, and merger-related expenses, net (0.31) - (0.31) Normalized FFO 2.75 - 2.82 Straight-lining of rental income and capital expenditures (0.19) - (0.19) FAD $2.56 - $2.63
Net Debt to Pro Forma EBITDA
The following pro forma information considers the effect on net income, interest and depreciation of the Company's investments and other capital transactions that were completed during the year ended
Pro forma net income for the twelve months ended December 31, 2007 $267,832 Add back: Pro forma interest (including discontinued operations) 228,248 Pro forma depreciation and amortization (including discontinued operations) 291,604 Stock-based compensation 7,493 Gain on extinguishment of debt (88) Pro forma income tax benefit (54,592) Pro forma minority interest 2,374 Net gain on real estate disposals (129,478) Other taxes 1,489 Pro forma EBITDA $614,882 As of December 31, 2007: Debt $3,360,499 Cash (37,155) Net debt $3,323,344 Net debt to pro forma EBITDA 5.4 x
The Company considers EBITDA a profitability measure which indicates the Company's ability to service debt. The Company considers the net debt to pro forma EBITDA ratio a useful measure to evaluate the Company's ability to pay its indebtedness. EBITDA presented herein is not necessarily comparable to EBITDA presented by other companies due to the fact that not all companies use the same definition. EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of the Company's financial performance or as an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is EBITDA 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, EBITDA should be examined in conjunction with net income as presented elsewhere in this press release.
Scheduled Maturities of Borrowing Arrangements The Company's indebtedness has the following maturities (in thousands): As of December 31, 2007 2008 $193,101 2009 605,762 2010 282,138 2011 303,191 2012 527,221 Thereafter 1,436,263 Total maturities 3,347,676 Unamortized fair value adjustment 19,669 Unamortized discounts (6,846) Senior notes payable and other debt $3,360,499
Sunrise's pro rata share of total maturities is approximately
Non-GAAP Financial Measures Reconciliation (In thousands, except per share amounts) For the Year Ended December 31, 2007 2006 Net income available to common stockholders $277,119 $131,430 Adjustments: Depreciation and amortization on real estate assets 232,952 115,788 Depreciation on real estate assets related to minority interest (3,749) - Discontinued operations: Gain on sale of real estate assets (129,478) - Depreciation and amortization on real estate assets 812 2,450 FFO 377,656 249,668 Gain on foreign currency hedge (24,314) - Preferred stock issuance costs 1,750 - Bridge loan fee 2,550 - Merger-related expenses 2,979 - Gain on sale of securities (864) (1,379) Income tax benefit (29,095) - Rent reset costs - 7,361 Reversal of contingent liability - (1,769) (Gain) loss on extinguishment of debt (88) 1,273 Normalized FFO 330,574 255,154 Straight-lining of rental income (17,311) (19,963) Capital expenditures (6,372) (368) FAD $306,891 $234,823 Per diluted share: Net income available to common stockholders $2.25 $1.25 Adjustments: Depreciation and amortization on real estate assets 1.89 1.11 Depreciation on real estate assets related to minority interest (0.03) - Discontinued operations: Gain on sale of real estate assets (1.05) - Depreciation and amortization on real estate assets 0.01 0.02 FFO 3.07 2.38 Gain on foreign currency hedge (0.20) - Preferred stock issuance costs 0.01 - Bridge loan fee 0.02 - Merger-related expenses 0.02 - Gain on sale of securities (0.01) (0.01) Income tax benefit (0.24) - Rent reset costs - 0.07 Reversal of contingent liability - (0.02) Loss on extinguishment of debt - 0.01 Normalized FFO 2.69 2.44 Straight-lining of rental income (0.14) (0.19) Capital expenditures (0.05) - FAD $2.49 $2.25 Contacts: Debra A. Cafaro Chairman, President and CEO or Richard A. Schweinhart Executive Vice President and CFO (502) 357-9000
SOURCE Ventas, Inc.
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