Ventas, Inc. · NYSE:VTR
Ventas — NAREIT REITweek June 2017
64 slides from Ventas's conference presentation, June 2017
Slide 1: Investor Presentation June 2017
EXCELLENCE. SUSTAINED. INVESTOR PRESENTATION JUNE 2017
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 Introduction (4-12) Healthcare Real Estate Market (13-22) Operational Excellence in Seniors Housing (23-30) Our Health System Portfolio (31-39) Our Medical Office Building Platform (40-43) Our Life Science Platform (44-49) Post-Acute Portfolio (50-52) Closing (53) Appendix D
Slide 4: Ventas Introduction
VENTAS INTRODUCTION EXCELLENCE. SUSTAINED.
Slide 5: Ventas Investment Thesis
VENTAS INVESTMENT THESIS EXCELLENCE. SUSTAINED. We are the premier provider of capital to leading senior living and healthcare operators and research institutions Ventas is positioned at the intersection of two large and dynamic markets: healthcare and real estate • Each represents nearly 20% of U.S
Slide 6: Long-Term Sustainable Growth and Income with Financial Strength
LONG-TERM SUSTAINABLE GROWTH AND INCOME WITH FINANCIAL STRENGTH Annual FFO / Sh Q1 2017 Cash Flow Annual Cash Dividend / Sh Growth since 20011 from Operations Growth2 Growth since 20011 11% 21% 8% TSR CAGR since Credit Rating SNF Exit4 12/31/19993 25% BBB+ ~$5B At ~7% Cap Rate Leading S&P 500 Best-I
Slide 7: Superior Long-Term Returns to Shareholders
SUPERIOR LONG-TERM RETURNS TO SHAREHOLDERS FROM HIGH- QUALITY DIVERSIFIED PORTFOLIO WITH LEADING OPERATORS 16% 13% 13% 11% TSR 9% 10% Performance – 8% 7% 5% Multiple Periods1 1-Year 3-Year 10-Year VTR RMZ S&P 500 VTR: 16% 1-Year TSR S&P: 11% Performance (2016) RMZ: 8% December January February March
Slide 8: Our Foresight and Innovation; Normalized FFO per Share Growth
OUR FORESIGHT AND INNOVATION CHANGED THE WAY REAL ESTATE INVESTORS THINK ABOUT HEALTHCARE; CHANGING THE WAY LEADING PROVIDERS / OPERATORS THINK ABOUT REAL ESTATE Execute Grow Platforms with Healthcare Real Estate Foresight Early Winning Operators 5.0 2 of 10 credit NORMALIZED FFO ($) / SHARE Growth
Slide 9: Delivering Value to Shareholders and Meeting Customer Needs
DELIVERING VALUE TO SHAREHOLDERS AND MEETING CUSTOMER NEEDS • Largest national MOB business 95% on-campus / • >7x investment growth ~5 years affiliated with leading health systems • Significant multiple expansion since investment MOBs • ~92% occupancy creates value • Stable, growing cash flows • ~$3
Slide 10: Consistent, Superior Growth & Income
CONSISTENT, SUPERIOR GROWTH & INCOME VTR 11% Norm. FFO / Share Growth1 HCP 5% HCN 4% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 VTR 8% Cash Dividend / Share HCN 3% Growth2 HCP 2% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1. C
Slide 11: Industry Leading Enterprise
INDUSTRY LEADING ENTERPRISE Advantaged Portfolio1 Differentiated Superior Metrics2 VTR HCN HCP 2016 Norm. FFO / Sh Growth 5% 4% 5% IRFs & LTACs Seniors 2016 Dividend 4 International Hospitals Housing - Growth3 6% 1% n/a Loans Operating 7% 7 Health Systems 1% SNF % NOI1,5,6 1% ~13% 0% 6% 5% 30% Skill
Slide 12: Consistent Outstanding Execution
CONSISTENT OUTSTANDING EXECUTION1 3.9% Q1 2017 Same-Store 7.1% Premium Value SNF Disposition to NOI Growth Facilitate Kindred SNF Exit On Track 6% Q1 2017 Dividend Growth2 Improved Liquidity through $3B Upsized and Extended Revolving Credit Facility 21% Q1 2017 Cash Flow From $3B Revenues Leading Ac
Slide 13: 2017 Guidance
2017 GUIDANCE1 2017 Guidance • Continued same-store NOI growth • Strategic recycling of capital and disposition of nearly all of skilled nursing portfolio at >$650M gain Highlights • Invest in future growth through new Wexford ground up developments • Drive an even stronger financial profile and liq
Slide 14: Healthcare Real Estate Market
HEALTHCARE REAL ESTATE MARKET EXCELLENCE. SUSTAINED.
Slide 15: Attractive and Dynamic Opportunities
ATTRACTIVE AND DYNAMIC OPPORTUNITIES VTR AT THE INTERSECTION OF HEALTHCARE AND REAL ESTATE • Large and growing aging population increases demand for healthcare and senior living products Healthcare 20% by • Senior population has immense spending power 20241 and wealth • Healthcare spending projected
Slide 16: Demographics & Longevity Fueling Demand
DEMOGRAPHICS & LONGEVITY FUELING DEMAND Growing Population of …With Immense Wealth …And Increasing Care Healthcare Consumers… and Spending Power… Needs with Age 7x >$640K 5x More Healthcare Spending Faster Growth in 75+ Population1 Average 75+ Net Worth3 from Seniors5 10,000 73% 2.5x Boomers Turning
Slide 17: A $1T Domestic Real Estate Market
A $1T DOMESTIC REAL ESTATE MARKET ASSETS SHOULD FLOW TO MOST EFFICIENT OWNERS Outpatient Facilities/ MOBs • Domestic market is large Life Science / Biotech Facilities and growing Post-Acute Facilities • Early stages of securitized 5% 10% public real estate 39% • Dynamic policy 15% environment Privat
Slide 18: Significant Runway for Growth
SIGNIFICANT RUNWAY FOR GROWTH EARLY INNINGS OF HEALTHCARE REIT OWNERSHIP PERCENTAGE OF REAL ESTATE OWNED BY REITS Successful Model for Separating Real Estate from Operating Business 50%-55% 40%-50% 20%-25% 12%-15% Healthcare Multifamily Malls Hotels Housing (Top 25)2 (Top 50)1 1. Based on number of
Slide 19: Consolidation Is on the Horizon
CONSOLIDATION IS ON THE HORIZON WINNING OPERATORS WILL EMERGE MARKET SHARE OF TOP 10 OPERATORS Highly fragmented markets Benefits of scale and integration Dynamic policy environment Other 90% 90% 80% Operators Accelerating consolidation Winners will emerge Top 10 Consolidators will need capital 20%
Slide 20: Healthcare Delivery Is Converging
HEALTHCARE DELIVERY IS CONVERGING REQUIRING SOLUTIONS ACROSS SITES OF CARE AND GEOGRAPHIES Leading operators consolidating + Care delivery increasingly interconnected Community- Health + Based Systems Dynamic policy environment Care = Post- Seniors Housing Acute Need for broad and deep Care CAPITAL
Slide 21: Investing Across the Capital Structure in Diversified Asset Types
INVESTING ACROSS THE CAPITAL STRUCTURE IN DIVERSIFIED ASSET TYPES Senior MOBs Acute Care Life Science Post-Acute Housing NNN Lease Debt Investments Operating Real Estate Operator Equity Investment 20
Slide 22: The Ventas Advantage
THE VENTAS ADVANTAGE ENSURING EXCELLENCE. SUSTAINED. OUR PEOPLE OUR PROCESSES PEOPLE OUR CULTURE ADVANTAGED REAL ADVANTAGE LEADING ESTATE ASSETS IN OPERATORS ATTRACTIVE PROPERTIES ACROSS THE PLATFORMS MARKETS SITES OF CARE 21
Slide 23: Future Growth Prospects Are Bright
FUTURE GROWTH PROSPECTS ARE BRIGHT DRIVE OPERATIONAL BUILD ON CAPITALIZE ON EXPLORE NEW EXCELLENCE WITH ADVANTAGED HEALTHCARE MARKETS LEADING OPERATORS PLATFORMS WITHIN CONVERGENCE ASSET CLASSES MOBs and SHOP E.g., Health Systems, Real estate solutions New asset classes Life Science and across sites
Slide 24: Operational Excellence in Seniors Housing
OPERATIONAL EXCELLENCE IN SENIORS HOUSING EXCELLENCE. EXEMPLIFIED.
Slide 25: Ventas Seniors Housing Portfolio
VENTAS SENIORS HOUSING PORTFOLIO1 Seniors IRFs & LTACs Housing - • Outstanding SHOP assets in Operating International Hospitals advantaged markets + high-quality Loans 7% NNN leases Health 1% 6% Systems 30% • ~50% SHOP / 50% NNN seniors 5% Skilled Nursing housing portfolio 1% 6% $2B Life • Tremendou
Slide 26: SHOP 2017 Guidance
SHOP 2017 GUIDANCE1 2017 Expectations • 70% equilibrium markets driving NOI growth • Annual in-place rate increases together with wage inflation • Accelerated pace of deliveries, driving mid- to high-single Overview digit NOI declines in non-equilibrium markets • A lower starting point going into Q2
Slide 27: Attractive SHOP Assets
ATTRACTIVE SHOP ASSETS VTR SHOP PORTFOLIO HAS HIGH-QUALITY ASSETS IN ATTRACTIVE LOCATIONS Industry Ventas SHOP1,2 benchmarks Median household income $77,121 $57,4622 Median home value $420,634 $197,9802 75+ population growth 11.8% 12.2%2 Building age 18 223 Note: Demographic figures reflect 3-mile r
Slide 28: SHOP Assets in Attractive Locations
SHOP ASSETS IN ATTRACTIVE LOCATIONS • >67% of SHOP NOI in high- 23% barrier-to-entry coastal markets1 West Coast NOI1 • Median home values 2.1x national average 44% • Median household income 1.3x East Coast national average NOI1 SHOP Top 30 MSAs Note: Data as of the second quarter ended 03/31/2017,
Slide 29: Ventas SHOP Strategy
VENTAS SHOP STRATEGY WE HAVE A FOCUSED SHOP PARTNERSHIP STRATEGY VTR SHOP1 VTR SHOP STRATEGY Focused on building scale All Others with winners driving operational excellence Offers partner for future growth and redevelopment 30% Reduces intra-portfolio Sunrise competition and portfolio 63% overlap A
Slide 30: National Scale Drives Efficiency
NATIONAL SCALE DRIVES EFFICIENCY EXAMPLE: ATRIA DRIVES EFFICIENCY THROUGH HR AND COST SAVINGS ROBUST PROCESSES FOCUSED ON ATTRACTING, SAVINGS REALIZED ACROSS DEVELOPING AND RETAINING TALENT CORPORATE AND LOCAL COSTS Growth 22% Insurance savings through VTR Opportunities aggregation Robust Transition
Slide 31: Sales and Marketing Opportunities
SALES AND MARKETING OPPORTUNITIES EXAMPLE: ATRIA SELLS VALUE PROPOSITION OF SENIORS HOUSING THROUGH MARKETING Assisted living 40-60% cheaper than re- Social Life creating benefits at home Dining Emergency Assistance High-cost market: New York, NY Exercise / Re-create benefits at home1: $12,011 Physi
Slide 32: Our Health System Portfolio
OUR HEALTH SYSTEM PORTFOLIO EXCELLENCE. FORWARD.
Slide 33: Ventas Health System Portfolio
VENTAS HEALTH SYSTEM PORTFOLIO1 Partnered with Winning Platform IRFs & LTACs International Hospitals • $3B revenues provider – Ardent Loans Seniors Health 7% 1% Housing - Systems • 6 states 6% Operating 5% 30% Skilled Nursing • ~40% average market share Life 1% 6% $2B • Leading top and bottom line S
Slide 34: Aging U.S. Population with Increased Medical Needs
AGING U.S. POPULATION WITH INCREASED MEDICAL NEEDS Aging Population (65+ Population, Ms) With Higher Healthcare Spending Per Year 77.3 $34,783 72.8 65.1 56.0 47.7 $15,857 $8,370 $3,628 $4,422 2015 2020 2025 2030 2035 0-18 19-44 45-64 65-84 85+ 3.5x Faster Growth in 65+ Population 2015-2035 Source: B
Slide 35: Aging Population Supports Health System Volumes
AGING POPULATION SUPPORTS HEALTH SYSTEM VOLUMES Source: FAHPOLICY.ORG. 34
Slide 36: Debunking the Myths of Hospitals
DEBUNKING THE MYTHS OF “HOSPITALS” Debunked… …Myths $1T spent in hospital; 6% growth p.a. Medically complex cases will always require resources and technology of a hospital setting Acute care hospitals are “dinosaurs” Demographic wave of 65+ will increase acute care utilization significantly
Slide 37: Role of Hospitals Is Changing
ROLE OF HOSPITALS IS CHANGING FROM ... TO ... Independent physicians EMPLOYED PHYSICIANS HIGHER ACUITY General acute care WITH CENTERS OF EXCELLENCE VALUE-BASED AND BUNDLED Fee-for-service PAYMENTS NETWORK OF SITES OPERATED BY Stand-alone hospital HOSPITAL PROVIDER (MOBs, OUTPATIENT, EMERGENCY DEPAR
Slide 38: Defining a Strong Health System
DEFINING A STRONG HEALTH SYSTEM MORE THAN ATTRACTIVE REAL ESTATE, PLATFORMS AND POSITIONS MATTER LOCAL MARKET SHARE PAYER / PROVIDER LEVERAGE DEMOGRAPHIC TRENDS COST EFFICIENCY AND SCALE SOURCE OF EBITDA : REAL ESTATE VS. MANAGED CARE QUALITY OUTCOMES REGULATORY/RATE ENVIRONMENT ECONOMIC INDICATORS
Slide 39: Ardent in Amarillo: A Case Study of a Strong Health System
ARDENT IN AMARILLO: A CASE STUDY OF A STRONG HEALTH SYSTEM SIGNIFICANT MARKET PRESENCE ACROSS MULTIPLE SITES OF CARE Regional / County, 9% >50% BSA Health Market NW Texas System - Share 40% Ardent 51% Hospital ~$550M Inpatient Hospital 4 ~40% Revenue Walls ~40% Outpatient / (100%) Other Facilities 6
Slide 40: Case Study: Ardent Compares Favorably to Public Hospital Operators
CASE STUDY: ARDENT COMPARES FAVORABLY TO LEADING PUBLIC HOSPITAL OPERATORS Ardent vs. Leading Public Hospital Provider1 Admissions Better Operating Adjusted Admissions Performance (Outpatient + Inpatient) Better ER Visit Better Financial Net Revenue Similar Performance EBITDA Better Market
Slide 41: Our Medical Office Building Platform
OUR MEDICAL OFFICE BUILDING PLATFORM EXCELLENCE. ESTABLISHED.
Slide 42: Ventas Medical Office Portfolio
VENTAS MEDICAL OFFICE PORTFOLIO1 • Top platform IRFs & LTACs International Hospitals • 400+ customers Loans Seniors 7% Housing - Health 6% 1% Operating • ~92% total occupancy Systems 30% Skilled Nursing 5% • 95% affiliated or on campus Life 1% 6% $2B Science NOI • 85% of affiliations are investment-
Slide 43: Lillibridge National MOB Footprint
LILLIBRIDGE NATIONAL MOB FOOTPRINT Properties 1-5 Corporate Headquarters 6-10 Regional Office Top 10 Tenant by NOI >20M Square Foot VTR MOB Portfolio1 11-19 20+ 39 1. Consolidated and unconsolidated square feet.
Slide 44: Secular Trends Attractive
SECULAR TRENDS ATTRACTIVE INCREASING POPULATION, INCREASING VISITS, INCREASING SPEND INCREASING GROWING HIGHER POPULATION PHYSICIAN VISITS SPENDING Seniors 65+ spend 5x more per person4 10,000 2.5x $6,000 New seniors eligible for Number of visits 65+ cohort $5,200 $4,000 Medicare daily1 makes to phy
Slide 45: Our Life Science Platform
OUR LIFE SCIENCE PLATFORM EXCELLENCE. SUSTAINED.
Slide 46: Ventas Life Science Portfolio
VENTAS LIFE SCIENCE PORTFOLIO1 • 6% pro forma 2017 VTR NOI • >75% of revenue from excellent credit tenants2 IRFs & LTACs −12 universities with avg. Aa2 International Hospitals Loans Seniors rating 7% Housing - Health 6% 1% Operating −Investment grade companies Systems Skilled Nursing 5% 30% −Public
Slide 47: High-Quality Operating Portfolio with Institutional-Quality Tenants
HIGH-QUALITY OPERATING PORTFOLIO WITH INSTITUTIONAL-QUALITY TENANTS Class-A Operating Properties1 Excellent Amenities for Tenants 4.4 million square feet of purpose- built real estate with average age of 6 years Located campuses on or contiguous to major 14 LEED-certified buildings High-qualit
Slide 48: Additional Growth from Near-Term Development Properties
ADDITIONAL GROWTH FROM NEAR-TERM DEVELOPMENT PROPERTIES W.F. Innovation Quarter The Chesterfield 3675 Market 4220 Duncan – Bailey Power Plant Property Duke Wake Forest UPenn Washington University University (Durham, NC) (Winston Salem, NC) (Philadelphia, PA) (St. Louis, MO) Endowment1 $7.3 billion $
Slide 49: Enhances Relationships with Leading Universities and Research Companies
ENHANCES VENTAS’S RELATIONSHIPS WITH LEADING UNIVERSITIES, ACADEMIC MEDICAL CENTERS AND RESEARCH COMPANIES Geographic Presence and University Affiliations Key Highlights for Leading Tenants MSA with Lillibridge Relationships with 12 top research universities that presence account for ~11% of all u
Slide 50: Life Science Industry Experiencing Continued Growth
LIFE SCIENCE INDUSTRY EXPERIENCING CONTINUED GROWTH Current Life Science Tenants 2014 R&D ($M) University Life Sciences Research Spending Drexel, Old Dominion, Wake Forest Universities & Research institutions have CAGR Brown $172 increased R&D spending IIT $38B +3.6% $88 $141 Duke Penn State $868 $6
Slide 51: Post-Acute Portfolio
POST-ACUTE PORTFOLIO EXCELLENCE. EVOLVED.
Slide 52: Pro Forma Ventas Post-Acute Portfolio
PRO FORMA VENTAS POST-ACUTE PORTFOLIO1 IRFs & LTACs • 1% SNFs post-sale – successful de- International Hospitals emphasis of SNF starting with CCP 7% Loans Seniors spin off Health Housing - Systems 6% 1% Operating • Strong 1.8x Q4 IRF & LTAC Skilled 30% EBITDARM coverage (operator cash 5% Nursing fl
Slide 53: Kindred Healthcare
KINDRED HEALTHCARE Diverse Business Mix Impact of LTAC Patient Criteria3 12% • “…we remain confident that VTR = 30/82 KND LTACs LTAC 35% our mitigation strategies will ~$50M offset at least half of the KND expected run-rate impact of Impact Rehab2 24% LTAC patient criteria by year- 88% SNF end…” Ben
Slide 54: Summary
SUMMARY Ventas is an S&P 500 diversified provider of capital to leading senior living and healthcare operators and research institutions. Ventas has a long and successful history of outperformance, stability, growth and income with a strong balance sheet. Massive, fragmented healthcare real estate m
Slide 55: Excellence. Sustained.
EXCELLENCE. SUSTAINED. 1 Welcome Overviewv9.ppt 54
Slide 56: Definitions and SEC Reg. G Compliance
DEFINITIONS AND SEC REG. G COMPLIANCE
Slide 57: Definition of Terms
DEFINITION OF TERMS NAREIT Funds from Operations (“FFO”) Net income attributable to common stockholders (computed in accordance with GAAP) excluding gains (or losses) from sales of real estate property, including gain (or loss) on re-measurement of equity method investments and impairment write-down
Slide 58: Definition of Terms (Cont'd)
DEFINITION OF TERMS (CONT’D) Seniors Housing Operating Portfolio (“SHOP”) In our senior living operations segment, we invest in seniors housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities pursuant to lon
Slide 59: 2017 Guidance
2017 GUIDANCE1,2,3 INCOME, FFO & FAD ATTRIBUTABLE TO COMMON SHAREHOLDERS 1. The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of
Slide 60: FFO and FAD Reconciliation Including Comparable Earnings
NON-GAAP FINANCIAL MEASURES FFO AND FAD RECONCILIATION INCLUDING COMPARABLE EARNINGS ($ IN 000S, EXCEPT PER SHARE AMOUNTS)1 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 Company’s weight
Slide 61: Non-GAAP Financial Measures: Normalized FFO
NON-GAAP FINANCIAL MEASURES NORMALIZED FFO ($ IN 000S, EXCEPT PER SHARE AMOUNTS) 1. Per share amounts may not add due to rounding. 60
Slide 62: Adjusted Pro Forma EBITDA and Net Debt to Adjusted Pro Forma EBITDA
NON-GAAP FINANCIAL MEASURES ADJUSTED PRO FORMA1 EBITDA AND NET DEBT TO ADJUSTED PRO FORMA1 EBITDA ($ IN 000S) 1. The following information considers the pro forma effect on net income, interest and depreciation and amortization of the Com pany’s investments and other capital transactions that were c
Slide 63: NOI Reconciliation by Segment
NON-GAAP FINANCIAL MEASURES NOI RECONCILIATION BY SEGMENT1,2 ($ IN 000S) 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. 62
Slide 64: Same-Store Cash NOI Guidance
NON-GAAP FINANCIAL MEASURES SAME-STORE CASH NOI GUIDANCE1,2 ($ IN 000S) 1. The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumptions that are subject to change and many of which are outside the control of t