Ventas Q4 Earnings Down 55% Lacking Last Year’s Litigation Boost

| February 15, 2013

Ventas Inc. (NYSE:VTR) saw its net income drop 55% to $86.3 million, or $0.29 per share, in the fourth quarter ended Dec. 31, 2012 compared to the previous year, when income was boosted by litigation gains.

Last year’s fourth quarter profits of $192.9 million, or $0.66 per share, benefited from $116.9 million in litigation proceeds. Absent those, 2012′s fourth quarter income is about 14% higher than the $76 million reported in the same period last year. 

Net income attributable to common stockholders for full-year 2012 was $362.8 million, or $1.23 per diluted common share, including discontinued operations of $57.2 million. That’s down slightly from 2011′s net income of $364.65 million, or $1.58 per diluted common share, including discontinued operations of $1.4 million. 

Ventas said the $1.7 million decrease in net income is primarily the result of the receipt of net litigation proceeds totaling $202.3 million from HCP, Inc. in 2011 and higher depreciation in 2012. 

Funds from operations (FFO) rose to $0.99 per diluted common share, up from $0.89 a share, in the quarter. Full-year FFO per diluted common share was $3.80, up 13% from the comparable 2011 period. 

Ventas attributed its substantial growth in 2012 normalized FFO to its $2.7 billion of investments made in the year, along with the full-year benefit of the REIT’s 2011 acquisitions, including Nationwide Health Properties, Inc. and the portfolio of senior living communities managed by Atria Senior Living, Inc. 

“The healthcare and senior housing investment market remains very active, and we continue to see significant opportunities from this $1 trillion market that is growing, highly fragmented, rapidly changing and consolidating. It is also supported by significant demographic demand,” said Ventas CEO Debra Cafaro during the earnings call with analysts, adding that “opportunities for external growth abound.” 

Revenue grew 17% to $660.7 million in the fourth quarter.

The REIT’s private pay senior housing portfolio’s annual total NOI was $386.6 million, while quarterly same-store NOI grew 6.2% and occupancy rose 360 basis points to 91.9% in the fourth quarter compared to the same period in 2011. 

Ventas’ debt to total capitalization as of Dec. 31 was approximately 31%. At the end of the year, the REIT had about $541 million of borrowings outstanding under its unsecured revolving credit facility and $68 million of cash and cash equivalents. 

Looking ahead, Ventas expects FFO to range between $3.99 and $4.07 per diluted share. 

View the fourth quarter earnings report

Written by Alyssa Gerace


Category: Finance and Development, REIT, Senior Housing

Comments (1)

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  1. Chris_Foley says:

    Key metrics for the future of the on-going business (not including the "bonus" from litigation) – the %'s are the best numbers to watch, then the gross dollar amounts:

    a) 2012′s fourth quarter income is about 14% higher than the $76 million reported in the same period last year.

    b) Funds from operations (FFO) rose to $0.99 per diluted common share, up from $0.89 a share, in the quarter. Full-year FFO per diluted common share was $3.80, up 13% from the comparable 2011 period.

    c) The REIT’s private pay senior housing portfolio’s annual total NOI was $386.6 million, while quarterly same-store NOI grew 6.2% and occupancy rose 360 basis points to 91.9% in the fourth quarter compared to the same period in 2011.

    Extremely strong results.
    Chris Foley
    Sr. V.P.
    Equity National Seniors Housing Brokerage & Advisors
    cfoley@Equity.net