Ventas, Inc. — 2021 Form 10-K
Reporting period: Year ended December 31, 2021. Although the request identifies 2021 Q4, this filing reports full-year results; it does not provide a clear standalone Q4 summary in the supplied text.
Business context
Ventas is a healthcare-focused REIT with approximately 1,200 properties or investments across the U.S., Canada and the U.K. Its three segments are triple-net leased properties, senior living operations (SHOP) and office operations. At year-end, senior housing accounted for 67.9% of real estate investment cost and 68.0% of revenues.
Key financial metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Total revenue | $3.828 billion | $3.795 billion | +0.9% |
| Segment NOI | $1.725 billion | $1.848 billion | -6.7% |
| Net income attributable to common stockholders | $49.0 million | $439.1 million | -88.8% |
| Diluted EPS attributable to common stockholders | $0.13 | $1.17 | Down |
| FFO attributable to common stockholders | $1.023 billion | $1.269 billion | -19.4% |
| Normalized FFO attributable to common stockholders | $1.119 billion | $1.250 billion | -10.5% |
| Cash provided by operating activities | $1.026 billion | $1.450 billion | -29.2% |
Senior living operations NOI fell 14.9% to $458.3 million; same-store SHOP NOI fell 21.7%. SHOP average occupancy was 78.5%, compared with 81.7%, and average monthly revenue per occupied room was $4,487, versus $4,766. Triple-net NOI declined 5.1% to $638.5 million, while office NOI declined 1.0% to $543.9 million. Same-store NOI increased 7.3% in triple-net and 4.6% in office.
Interest expense declined 6.3% to $440.1 million; the reported weighted-average effective interest rate was 3.6%, versus 3.5%. The filing does not provide a conventional operating-profit margin; segment NOI was approximately 45.0% of revenue, compared with 48.7% in 2020.
At year-end, total debt principal was approximately $12.1 billion, including $11.0 billion fixed-rate and $1.1 billion variable-rate debt. Cash and cash equivalents were $149.7 million; management reported approximately $2.5 billion of liquidity, including revolving-facility availability. The company was in compliance with debt covenants. A 100-basis-point increase in variable borrowing rates was estimated to add approximately $10.4 million to annualized interest expense.
Material changes and unusual items
- Acquired New Senior Investment Group in September for approximately $2.3 billion, adding more than 100 independent-living properties. Funding included approximately $1.1 billion cash, $482.5 million assumed mortgage debt and 13.3 million Ventas shares.
- Sold 65 properties for aggregate consideration of $859.7 million and recognized $218.8 million in disposition gains. Real estate impairments were $219.4 million.
- Redeemed several senior-note issues early; 2021 debt-extinguishment losses totaled $59.3 million, including $56.4 million related to specified note redemptions.
- Issued $626.4 million of common stock through its ATM program and issued shares valued at $751.2 million for the New Senior acquisition.
- Received $15.4 million of Provider Relief Fund grants in 2021, compared with $35.1 million in 2020. A further $34.0 million was received after year-end and expected to be recognized in 2022.
- Recognized $13.1 million of income related to the Kindred transaction and $16.6 million gain from redemption of Ardent notes. Natural-disaster expenses were $10.2 million.
Outlook, commentary and risks
Management said senior-housing occupancy improved beginning in Q2 2021 and through year-end, but labor shortages and wage inflation weighed on SHOP NOI. Management could not estimate the pandemic’s ultimate financial impact and stated that relief grants were not expected to offset all related losses. It believed available liquidity was sufficient for expected needs over the next 12 months, subject to continued access to capital markets. The filing provides no specific operating or earnings forecast. Ventas declared $1.80 per share in dividends for 2021 and said it intended to distribute at least 100% of 2022 taxable net income after applicable NOLs; future dividends remain subject to Board decisions.
Principal risks include continuing COVID-19 effects, senior-housing occupancy and labor costs, inflation and higher interest rates, significant debt and capital-market dependence, reliance on major tenants and third-party managers, healthcare regulation and reimbursement, and execution of acquisitions and development projects. KPMG issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Whether SHOP occupancy recovery and labor-cost trends improve enough to restore segment NOI.
- New Senior integration, acquisition economics and the performance of the acquired communities.
- Tenant and operator credit, especially Brookdale, Ardent and Kindred, and the 2025 concentration of triple-net lease expirations.
- Debt maturities, variable-rate exposure, refinancing costs and continued access to liquidity and capital markets.
- Cash available for dividends and the extent to which reported earnings and FFO reflect impairments, disposition gains, relief grants and other unusual items.