Ventas, Inc. · NYSE:VTR
Ventas — Investor Presentation (September 2006)
35 slides from Ventas's investor presentation, September 2006
Slide 1: Ventas, Inc.
Ventas, Inc. September 2006 AVENTAS”
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements include, among others, statements of expectations, beliefs, future plans and strategies, anticipated results from operations and deve
Slide 3: Ventas Overview
Ventas Overview Largest owner of LTC and Senior Housing in the U.S. $6+ billion Enterprise Value $387 million EBITDA – TTM ended 6/30/2006 Owns 388 healthcare facilities in 42 states at 6/30/2006 Triple-net leases to providers of healthcare and senior housing Approximately 43,400 beds/un
Slide 4: Ventas Goals and Accomplishments
Ventas Goals and Accomplishments Strategic 2+ billion of acquisitions since Diversification 1/1/2004 $75 million investments closed YTD Senior Care $649 Million Acquisition Excellent FFO Normalized FFO/Share: Growth 2006 (E): $2.25 - $2.27 without reset or acquisitions 3 consecutive
Slide 5: Ventas Goals and Accomplishments
Ventas Goals and Accomplishments Dividend Growth 2006: $1.58 10% year-over-year growth Low payout ratio → future growth Equity Out- 5-year ending 12/31/2005 > 51% TSR Performance 1 Best performing Healthcare REIT over 12 months ending 6/30/2006 Strong Balance 35% Debt/Enterprise Va
Slide 6: Ventas Goals and Accomplishments
Ventas Goals and Accomplishments Excellent Primary Kindred Tenants Largest provider of LTC Brookdale/Alterra – IPO $4.8 billion equity market cap Largest operator of senior living “ Best Practices” Independent Board Corporate 99th percentile Institutional Governance Shareholder Ser
Slide 7: Ventas Outperformance
Ventas Outperformance VTR Total Shareholder Return 1 Ventas REIT Index (RMZ) Healthcare REIT Sector S&P 500 Total Return Index 45.0% 39.4% 40.0% 34.9% 35.0% 30.0% 26.8% 28.2% 25.4% 24.8% 25.0% 22.0% 23.4% 19.0% 20.0% 15.0% 10.9% 8.9% 10.0% 5.8% 5.0% 0.0% 3-Year Ann. 1-Year Ended YTD as of (07/ 31/ 2
Slide 8: High Quality Assets – Provident Acquisition
High Quality Assets – Provident Acquisition Brookdale Properties Alterra Properties Independent Living Facility Assisted Living Facility 8
Slide 9: High Quality Assets – Senior Care Acquisition
High Quality Assets – Senior Care Acquisition Outlook Pointe Property United Rehab Property Assisted Living Facility Skilled Nursing Facility Outlook Pointe at Ontario Jefferson Place Mansfield, OH Louisville, KY 9
Slide 10: High Quality Assets
High Quality Assets Health Care Group Property United Rehab Property CCRC Facility Rehabilitation Facility Las Villas Del Norte Highlands Regional Rehabilitation Center Escondido, CA El Paso, TX 10
Slide 11: Mergers & Acquisitions Achieve VTR Objectives
Mergers & Acquisitions Achieve VTR Provident AcquisitionObjectives – Closed Senior Care Acquisition – 6/7/05 Provident Senior Living Trust - $1.2 Announced 9/8/06 $649 million billion 7.75% initial cash yield 68 high end private pay facilities Excellent potential growth - 3-5% Experience
Slide 12: Senior Care Transaction Overview
Senior Care Transaction Overview VTR to acquire the U.S. senior housing and long-term care real estate assets of Senior Care, a Reichmann family controlled company The purchase price of $649 million will be funded from: $30 million of assumed debt $554 million debt issuance 1.7 million sha
Slide 13: Senior Care Transaction Rationale
Senior Care Transaction Rationale $0.04 per share cash accretion to 2007E VTR FFO Advances strategic goals: Diversification by asset class – Private pay grows from 44% to 47% of revenue 1 Diversification by tenant – Adds an important new relationship; Kindred drops from 51%to 46% of revenue
Slide 14: Senior Care Transaction Rationale (cont'd)
Senior Care Transaction Rationale (cont’d) Signals VTR ability to continue portfolio growth in a competitive acquisitions environment Initial rent coverage of 1.15x 1, security deposit of six months’ base rent ($25 million), and tenant with scale and cash flow Lease is fully recourse to Tenant
Slide 15: Diversified Portfolio of Owned Properties
Diversified Portfolio of Owned Properties 2 Pro Forma for Senior Care Acquisition 9 3 2 10 2 6 1 1 2 11 19 2 8 3 1 8 10 2 27 8 1 4 4 5 2 1 16 1 6 3 2 1 1 4 1 1 9 1 1 5 16 2 1 4 9 15 1 4 3 5 11 3 2 2 1 2 1 28 3 4 16 1 19 1 4 5 5 1 2 6 1 2 2 7 2 5 6 3 8 7 1 1 Nursing Facilities (Total: 218) 3 6 Hospit
Slide 16: Acquisition Improves Diversification
Acquisition Improves Diversification 1 Tenant Mix (% of Revenues) Asset Class Mix (% of Revenues) Pro Forma for Senior Care Pro Forma for Senior Care Acquisition Acquisition CSL TH I MOBs/ Personal Care Other 3% 1% 2% Genesis 6% 2% Summer. SN F 4% 35% SCRE Kindred 11% A LF/ ILF 46% 45% H ospitals 18
Slide 17: Growth and Diversification Strategy
Growth and Diversification Strategy Property types: Senior Housing and Healthcare related real estate Senior Housing and Skilled Nursing Hospitals and Specialty Care Facilities NNN Healthcare properties and Medical Office Buildings Possible strategic disposition of select Kindred assets
Slide 18: Positive Supply / Demand Fundamentals
Positive Supply / Demand Fundamentals – Limited Supply SNFs 16,000+ SNFs in US 106 average beds/facility 82% median occupancy Limits on new nursing home construction CON states High cost and long payback period limit new SNF construction Growing Demand 85+ population is fastest growing
Slide 19: Long Term Acute Care Industry Overview
Long Term Acute Care Industry Overview Overview $2.5 billion niche market Ventas is the largest owner of freestanding LTACs Total Ventas Market Ventas Owned Non-Ventas LTACs Owned LTACs 24% LTAC within Freestanding 76% Hospitals 47% 53% Total = 339 160 Freestanding Facilities 1 LTACs 1 (1) Sourc
Slide 20: Strength in Private Pay Seniors Housing
Strength in Private Pay Seniors Housing 1 Overview Approximately $65 billion spent annually in U.S. on private pay seniors housing Since 1999, ALF development down 80% and ILF development down 50% Occupancy and average daily rates increasing Current occupancy approximately 90% Improved mar
Slide 21: Medical Office Building Trends
Medical Office Building Trends The recent growth and interest in MOB real estate is being driven by increasing consumer preference for outpatient treatments, whose growth has far surpassed that of inpatient treatments since the late 1990’s Continued increases in medical technology, as well as th
Slide 22: Medical Office Building Trends (cont'd)
Medical Office Building Trends (cont’d) Construction of new medical office buildings and outpatient facilities is also increasing quickly MOB construction in 2005 vs. 2004 is up 44%, while outpatient facility construction over the same time period is up almost 36% With the growth in outpatient
Slide 23: MOB Market Continues to Have Strong Volumes and High Valuations
MOB Market Continues to Have Strong Volumes and High Valuations Overview Volumes driven by hospital asset monetization, and outpatient strategies Past 12 8% 23% 10% 59% Months REITs claiming a greater 1 Yr Ago 25% 20% 5% 50% share of the MOB market 2 Yrs Ago 10% 13% 7% 70% 0% 20% 40% 60% 80% 100
Slide 24: Brookdale Senior Living Inc. (NYSE: BKD)
Brookdale Senior Living Inc. (NYSE: BKD) Overview $4.8 billion equity market capitalization Largest operator of senior living facilities in U.S. – recent acquisition of ACR Positive inflection point in operations Public company status has enhanced BKD’s access to capital and increased its tr
Slide 25: Brookdale is Strong Tenant
Brookdale is Strong Tenant Stock Price and Equity Value Performance – since IPO Equity Value $6,000 $65.00 Stock Price $4,808 $5,000 $55.00 $4,000 $3,713 (Price per BKD Share) $45.00 ($ in millions) $47.60 $44.95 $3,000 $1,996 $35.00 $2,000 $1,233 $30.75 $25.00 $1,000 $19.00 $0 $15.00 11/ 21/ 2005 (
Slide 26: Kindred Reset Right
Kindred Reset Right Ventas option to increase Kindred’s rent to “market” Upside to Ventas/Ventas believes significant value for VTR shareholders Reset notice given on May 9, 2006 /Appraisers Appointed August 8, 2006 Ventas proposed rent increase of $111 million Kindred strongly disagrees –
Slide 27: Ventas Rent is Reliable
Ventas Rent is Reliable Performance Summary of Master Leases 1 Pooled multi-facility Master Leases: Best structure (1) Trailing Twelve Months EBITDARM and EBITDAR for the period ended March 31, 2006 (the latest available data) to the Company’s Trailing Twelve Months cash rental revenue (2) EBITDAR
Slide 28: Kindred Overview
Kindred Overview Principal Tenant is Financially Healthy (NYSE: KND) Excellent “Quality Mix” Higher Margin Hospital Business SNF Payor Mix 2 LTAC Payor Mix 2 Private and Other Private and 19% Medicare Other 34% 29% Medicare Medicaid 62% 9% Medicaid (1) Includes nursing home, hospital, and pharmacy r
Slide 29: Kindred is Expected to have Strong Cash Flow
Kindred Overview (cont’d) 2007 Pro Forma EBITDAR and Second Quarter 2006 Highlights Rent 1 ($ Millions) Q2 SNF Occupancy 87.3% 2 800 Up 200 bps year-over-year; up 80bps sequentially 618 600 LTAC and SNF Revenues up Overall Margins Improved 400 370 EBITDAR > $150 million 2 18% growth year
Slide 30: Reimbursement Outlook
Reimbursement Outlook Medicare for SNFs 3.1% proposed cost of living increase – FY 2007 Flat Medicare dollars for FY 2006 RUGs refinement effective 1/1/2006 – positive for operators Medicaid for SNFs Medicaid rates up YoY Operators predict 2% -3% increase in 2006 LTACs FY 2007 Medicare R
Slide 31: Ventas Accomplishments and Highlights
Ventas Accomplishments and Highlights Growth and Diversification strategy underway $2+ billion of acquisitions since 1/1/2004 Senior Care $649 million announced acquisition: 455 diverse assets 2006 (E) – 8% projected growth without acquisitions or reset rent Dividend growth – $1.58 = 10% ye
Slide 32: SEC Reg. G Compliance
SEC Reg. G Compliance AVENTAS”
Slide 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures Yearly Funds from Operations (FFO) per Share New 2006 Old 2006 2005 2004 2003 2002 Guidance Guidance Net Income per Diluted Share $1.16 - $1.18 $1.14 - $1.16 $1.36 $1.43 $2.03 $0.93 Excluding Depreciation on Real Estate Assets 1.08 - 1.08 1.08 - 1.08 0.92 0.58 0.52 0.60 R
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures Quarterly EBITDA 1 ($ in ’000s) For the Quarter Ended 6/30/2006 Pro Forma Net Income for the TTM Ended March 31, 2006 $131,801 Add Back: Pro Forma Interest 138,946 Pro Forma Depreciation 117,647 Net Gain on Real Estate Disposals (5,114) Loss on Extinguishment of Debt 2,64
Slide 35: Ventas, Inc.
Ventas, Inc. September 2006 AVENTAS”