Ventas, Inc. · NYSE:VTR
Ventas — NAREIT REITWeek 2014 Conference
51 slides from Ventas's conference presentation, June 2014
Slide 1: NAREIT REITWeek 2014 Conference
NAREIT REITWeek 2014 Conference June 2014
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, statements of ex
Slide 3: Table of Contents
Table of Contents Ventas Investment Thesis (4) Ventas Fast Facts (5) Ventas Overview (6 – 11) Portfolio Overview (12 – 31) Growth Strategy (32 – 38) Investment Summary (39) Appendices: Leadership Team (41) Seniors Housing and MOB Industry (42 – 44) Financial Results & Information (45 – 50) 3
Slide 4: Ventas Investment Thesis
Ventas Investment Thesis Strong, Cohesive and Experienced Leadership Team Will: Deliver: Consistent Superior Total Returns – 3,430% Since 12/31/19991 Provide: Growth and Defense Grow: Cash Flows and Dividend Maintain: Financial Strength with Excellent Liquidity Practice: Disciplined Capital Allocati
Slide 5: Ventas Fast Facts
Ventas Fast Facts Debt / Enterprise Value1 Weighted Average Cost of Growing Diversified Leading S&P 500 Company Debt1 Portfolio1 34% 3.7% 1,473 $29B Assets Enterprise Value1,2 Climbing the Credit Curve Sustainability Practices1 10-Years of Strong Annual Acquisitions Since 20111 Dividend Growth3 60 1
Slide 6: Ventas Overview
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Slide 7: Company Overview
Company Overview $29Bn Leading S&P 500 Company1 Balanced and Diverse Portfolio – 1,473 Total Other Owned Properties2 Loan Investments 2% 1% U.S. Hospitals 7% Seniors Housing Operating Assets 28% MOBs 16% $1.8Bn NOI3 SNF Seniors Housing 20% NNN 26% 1. Enterprise value as of 05/30/2014; balance sheet
Slide 8: Driving Shareholder Value Through Economic Cycles
Driving Shareholder Value Through Economic Cycles $4.50 2014E FFO / Share: $4.31 – 4.371 $3.75 $3.00 Dividend Payout: 67%2 $2.25 $1.50 $0.75 $0.00 '00A '01A '02A '03A '04A '05A '06A '07A '08A '09A '10A '11A '12A '13A '14E 1. Midpoint of reaffirmed guidance provided 04/25/2014 of $4.34/share. 2. Assu
Slide 9: Ventas Long-Term Outperformance
Ventas Long-Term Outperformance 13.5% Total Shareholder Return CAGR Over 10 Years1 Ventas TSR1 255.1% MSCI US REIT Index TSR1 120.0% S&P 500 Index TSR1 104.5% 03/31/04 03/31/05 03/31/06 03/31/07 03/31/08 03/31/09 03/31/10 03/31/11 03/31/12 03/31/13 03/31/14 1. Bloomberg for the 10-year period ended
Slide 10: Strong Internal & External Growth
Strong Internal & External Growth Q1 2014 Performance – Record Profits, Cash Flows and Earnings • Same Store Cash Flow Growth – 3.7% • Cash FFO Per Share – $1.06/share (7% growth) • Quarterly Cash Flow From Operations – +23.5% • Investments – $200+ million • Acquired Three U.K. Private Hospitals Und
Slide 11: Consistent Superior Long-Term Total Shareholder Returns
Core Strengths Raising Capital $5.5Bn Raised Since January 1, 2013 Consistent Superior Accretive Investments Long-Term Over $2Bn Invested Since January 1, 2013 Total Shareholder Managing Assets Returns +3.7% Q1 2014 YoY Cash Same-Store NOI1 1. Includes $20 million pre-paid rent on renewed 2015 Kindr
Slide 12: Portfolio Overview
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Slide 13: Scale and Diversification – Performance Across Economic Cycles
Scale and Diversification – Performance Across Economic Cycles Operating Model by NOI1,3 Tenant / Operator by NOI1 MOBs Atria Senior 16% All Other Living 24% 17% Emeritus Senior Living 1% MOB Seniors Housing Avamere Senior Living 16% Operating Assets NNN / Other 2% 28% 56% Holiday Retirement 3% Kind
Slide 14: VTR Portfolio – 95% Leading Tenants and Operators
VTR Portfolio – 95% Leading Tenants and Operators 14
Slide 15: Private Pay Focus & Balanced Portfolio Enhance Reliability
Private Pay Focus & Balanced Portfolio Enhance Reliability Pay Source by Revenue1 Geography by Revenue1 SNFs and U.S. Hospitals CA 14% 16% NY 8% TX 8% Other 41 States, D.C., Canada and U.K. 60% IL 5% FL 5% Private Pay 84% 1. Based on annualized first quarter revenue assuming all events occurred at t
Slide 16: Meeting Healthcare Real Estate Needs
Meeting Healthcare Real Estate Needs * Property counts as of first quarter ended 03/31/2014; excludes sold assets and assets intended for disposition. 16
Slide 17: Strong Demand Drivers Continue to Drive Our Business Success
Strong Demand Drivers Continue to Drive Our Business Success • The 75+ Cohort Is Growing 6x Faster Than the Rest of the Population • 75+ Households With $50,000+ Income Projected to Grow By 33% from 2012 – 20171 • 75+ Cohort Has an Average Net Worth of $678,0002 • Employment +1.2%3 and Home Prices +
Slide 18: Seniors Housing Overview
Seniors Housing Overview Seniors Housing Divided Equally Between Stable, Growing NNN and Higher Growth SHOP Atria & Sunrise SHOP (Atria & Sunrise Operating Operating Portfolio) Portfolio 51% Best-in-Class Outstanding Care Providers Major Metro Markets Higher Growth 713 Assets, 54% of NOI1 Apartment-
Slide 19: Continued SHOP Strength – High Quality, Private Pay
Continued SHOP Strength – High Quality, Private Pay • 237 Private Pay Seniors Housing Communities with 24,543 Units1 • Q1 2014 Same-Store NOI Growth of 5.5% QoQ and 4.6% YoY1 • Q1 2014 Total Stabilized Occupancy of 91% • 2014 Total NOI Guidance $488 Million – $500 Million • 2014 Same-Store NOI Growt
Slide 20: Ventas U.S. Seniors Housing Communities Outperform Market
Ventas U.S. Seniors Housing Communities Outperform Market1,2 Projected Net Positive U.S. Seniors Housing Absorption REVPOR3 Occupancy3 $5,455 $5,553 91.4% 91.3% $5,468 90.6% 89.8% 89.8% 89.6% $3,775 $3,787 $3,831 Q3 2013 Q4 2013 Q1 2014 Q3 2013 Q4 2013 Q1 2014 VTR Seniors Housing NIC Top 100 MSAs Op
Slide 21: U.S. Seniors Housing Communities Positive Fundamentals
U.S. Seniors Housing Communities Positive Fundamentals 144% Growth in 75+ Cohort by 20401 With Minimal New Supply 18M Seniors over the age of 75 in 20121 551K Total seniors housing units in 1Q14 including 23,000 under construction2 1. Source: U.S. Census Bureau. 2. Source: NIC Map. Primary and secon
Slide 22: VTR SHOP Assets Located in Superior Markets
VTR SHOP Assets Located in Superior Markets 51% Higher Household Income vs. National Median 11% Lower Unemployment vs. National Average Median Household Unemployment1,2,3 Income1,2,3 $77,848 7% 7% $63,056 6% $51,579 United States MSA VTR United States MSA VTR 2x Faster Median Home Value Growth vs. N
Slide 23: High Quality, Private Pay Assets
High Quality, Private Pay Assets 23
Slide 24: Lillibridge – Leading National Brand Serving Highly Rated Hospitals & Health Systems
Lillibridge – Leading National Brand Serving Highly Rated Hospitals & Health Systems • 25+ Years Experience in MOB Ownership, Management and Development Advisory • 408 Properties1 • 21M Square Feet1 – 29 States / D.C. • 96% On-Campus or Affiliated2 • 70+ Hospital and Health System Relationships3 • S
Slide 25: High-Quality Health System Affiliations
High-Quality Health System Affiliations Significant MOB Ownership With Leading Systems Expected to Meet Increased Demand • 79M Baby Boomers Medicare Eligible Starting in 2011 • 25M Newly Insured From ACA1 Increase MOB Demand by 60M Sq. Ft.2 • Healthcare Policy Drive to Treat Patients in Low Cost Set
Slide 26: Leading MOB Platform
Leading MOB Platform >80% MOB NOI With “A” Credit Rating + HCA1 Consolidated by Health System Affiliation NOI2 Solid Growth in MOB Portfolio and Profits3 350 $350 329 327 327 320 321 321 321 313 Providence Ascension Health & 300 $300 Health Services 13% 5% 249 250 250 235 $250 HCA 5% Health System A
Slide 27: High Quality On-Campus MOB Assets
High Quality On-Campus MOB Assets 27
Slide 28: Well Structured and Well Covered NNN Leases
Well Structured and Well Covered NNN Leases Stable, Secure Cash Flow with Compounding Growth • 2% – 3% Annual Estimated Same-Store Cash Growth for FY2014 • Approximately 70% Variable vs. 30% Fixed Escalators, Including CPI-Based Long Term NNN Leases Consolidated Portfolio 54% NOI1 (907 Assets) Opera
Slide 29: Ventas Seniors Housing Triple Net Portfolio – Benefits from Brookdale / Emeritus Merger
Ventas Seniors Housing Triple Net Portfolio – Benefits from Brookdale / Emeritus Merger • Brookdale is an Industry Leader VTR Portfolio Snapshot (BKD-ESC)1 Average • Strategic and Accretive Transaction Assets NOI Lease Term 11/02/2020 Brookdale 151 $163M • Expanded and Accelerated (6.6 Years) Redeve
Slide 30: Successful 2014 Re-Leasing
Successful 2014 Re-Leasing 108 Assets 103 Assets Leased 5 Assets to Be Sold 48 Assets to be 40 Assets 3 Asset Sale 1 Assets Under Retained by Transitioned to New Closed Contract for Sale Kindred Tenants 15 Assets to be Transitioned to New 1 Asset for Sale Tenants • 108 Assets: 2015 Rent Replaced • O
Slide 31: Improving Reimbursement
Improving Reimbursement Projected 2015 YoY Rate Growth1 – Third Consecutive Year of Increases Medicare: SNFs 2.0%1 Medicaid: +/- 1% LTACHs 0.8%1 LTACH Criteria Legislation: “…the passage of LTACH criteria legislation by Congress (vs. CMS) was the best case scenario for the industry” -UBS, January 15
Slide 32: Growth Strategy
Growth Strategy 32
Slide 33: Building on Our Legacy of Outperformance and Superior Execution
Building on Our Legacy of Outperformance and Superior Execution Ventas Is Well Positioned to Achieve Consistently Strong Normalized FFO per Share Growth of 5.5% – 7.0% in 2014 (Excl. Unannounced Acquisitions and Non-Cash Items)1 Continued Same- Focus on Financial Internal & External 2014 Norm. FFO /
Slide 34: Top REIT Balance Sheet and Strong Liquidity
Top REIT Balance Sheet and Strong Liquidity Debt / Enterprise Value1 Fixed Charge Coverage1 34% 4.6x Unencumbered NOI as a Percent of Total NOI2 2014E Cash Flow From Operations 79% $1.3B 1. Data per Q1 2014 press release dated 04/25/2014. 2. Based on annualized first quarter NOI assuming all events
Slide 35: Internal Growth from Productive Assets and Low Cost of Capital
Internal Growth from Productive Assets and Low Cost of Capital Portfolio Same-Store NOI Growth 2014E1 • SHOP 4% – 6% • NNN 2% – 3% • MOBs 3% – 4% Recycling Capital • Over $350 Million of Asset Sales and Loan Repayments in 2013 Anticipate Improving Cash Flow From Lower Interest Rates Approximately $1
Slide 36: Growth from Development and Redevelopment
Growth from Development and Redevelopment Over $200M of projects approved or under construction, approximately $200M in the near-term pipeline; yields 7% – 12% GROUND-UP MEDICAL OFFICE GROUND-UP SENIOR HOUSING STRATEGIC REDEVELOPMENT Facey Medical Office Atria Woodbriar Place Sunrise of Old Tappan M
Slide 37: $1 Trillion Healthcare Real Estate Market
$1 Trillion Healthcare Real Estate Market1 External Environment Remains Positive – Dynamic, Consolidating and Fragmented Sector with Significant Capital Needs 5% 10% Outpatient facilities/MOBs 39% Hospitals 15% 12% Owned by Private pay seniors housing Public REITs Skilled nursing facilities Life sci
Slide 38: Consistent, Targeted External Growth Strategy
Consistent, Targeted External Growth Strategy • Closed $1.9 Billion During FY2013 and Almost $22 Billion Since 20001 • High Quality Assets Consistent With Investment Strategy • Acquired Three U.K. Private Hospitals Spire, 2nd Largest U.K. Private Strong Market Share Hospital Operator >2x Rent
Slide 39: Ventas Investment Thesis
Ventas Investment Thesis Strong, Cohesive and Experienced Leadership Team Will: Deliver: Consistent Superior Total Returns – 3,430% Since 12/31/19991 Provide: Growth and Defense Grow: Cash Flows and Dividend Maintain: Financial Strength with Excellent Liquidity Practice: Disciplined Capital Allocati
Slide 40: Appendices
Appendices: Leadership Team; Supplemental Seniors Housing and MOB Industry Information; FFO Reconciliation, Including Non-Cash Items & Reg. G Compliance Note: For further information, please see www.ventasreit.com/investor-relations/financial-information/supplemental-information.
Slide 41: Strong, Cohesive and Experienced Leadership Team
Strong, Cohesive and Experienced Leadership Team Name Title Tenure Chairman of the Board and Debra A. Cafaro 15 Chief Executive Officer Raymond J. Lewis President 11 Executive Vice President, Medical Property Todd W. Lillibridge Operations; President and Chief Executive Officer, 311 Lillibridge Heal
Slide 42: Strong Seniors Housing Supply and Demand Fundamentals
Strong Seniors Housing Supply and Demand Fundamentals Occupancy by Campus Type: Primary Markets 4Q’05 – 1Q’141 Employment Versus Seniors Housing Occupancy2 96.0% 93.0% Employment Occupancy, Map31(A) 95.0% 92.0% Occupancy Calc 94.0% 91.0% Employment Occupancy 93.0% 90.0% 92.0% 89.0% 91.0% 88.0% 90.0%
Slide 43: Strong Demographic Trends and Fundamentals Support Growth for Seniors Housing and MOBs
Strong Demographic Trends and Fundamentals Support Growth for Seniors Housing and MOBs National Health Expenditures (trillions)1 U.S. Supply and Demand Trends (MOB)2 10-Year Volume Change by Site of Care3 Historical and Projected NOI Growth4 8% 3,500 Volumes (millions) 3,000 6% 2,500 2,000 4% 1,500
Slide 44: Healthcare Spending Growth Fuels Demand for Ventas Assets
Healthcare Spending Growth Fuels Demand for Ventas Assets Healthcare is 18% of GDP and is Expected to Reach 20% by 20221 1. Source: CMS, Office of the Actuary. Health spending projections were based on the National Health Expenditures released in November 2013; The projections include impacts of the
Slide 45: Non-GAAP Financial Measures
Non-GAAP Financial Measures Funds From Operations (FFO) Reconciliation, Including Non-Cash Items1 ($ in 000s, except per share amounts) 1. 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 Comp
Slide 46: Non-GAAP Financial Measures
Non-GAAP Financial Measures Three Months Ended March 31, 2014 and 2013 Norm. Funds from Operations (FFO) ($ in 000s, except per share amounts) 1. Per share amounts may not add due to rounding. 46
Slide 47: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Pro Forma1 EBITDA and Net Debt to Adjusted Pro Forma1 EBITDA ($ in 000s, except per share amounts) 1. The following information considers the pro forma effect on net income, interest and depreciation of the Company’s investments and other capital transactions tha
Slide 48: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Pro Forma1 EBITDA and Fixed Charge Coverage Ratio ($ in 000s, except per share amounts) 1. 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 comp
Slide 49: Non-GAAP Financial Measures
Non-GAAP Financial Measures NOI Reconciliation by Segment ($ in 000s, except per share amounts) 49
Slide 50: Non-GAAP Financial Measures
Non-GAAP Financial Measures NOI Reconciliation by Segment (Cont’d) ($ in 000s, except per share amounts) 1. Amounts above are adjusted to exclude discontinued operations for all periods presented. 2. Amounts above are not restated for changes between categories from quarter to quarter. 50
Slide 51: NAREIT REITWeek 2014 Conference
NAREIT REITWeek 2014 Conference June 2014