Ventas Inc. (NYSE:VTR) saw its net income balloon in the first quarter ended March 31, 2012 to $90.6 million, an 85% increase over the previous year’s $49 million, thanks to pumped up revenue from favorable acquisitions.
“Ventas continues to reap the benefits from executing on our strategy of growing and diversifying our portfolio, increasing private pay and strengthening our balance sheet as we delivered outstanding first-quarter results,” Chief Executive Debra A. Cafaro said.
Ventas reported net income attributable to common stockholders for the quarter of $0.31 per diluted common share, which does not consider discontinued operations of $42.3 million. This represents a slight gain compared to a net income of $0.30 per diluted common share in the first quarter of 2011, resulting from Ventas’ 2011 acquisitions and a gain on the sale of real estate assets of $40.2 million, and is partially offset by higher merger-related expenses and deal costs, along with a loss on extinguishment of debt.
The REIT attributed its substantial first quarter growth to its 2011 acquisitions, which include that of Nationwide Health Properties, Inc., with properties managed by Atria Senior Living, Inc.; increased net operating income from Ventas’ seniors housing communities managed by Sunrise Senior Living, Inc. (NYSE:SRZ); and rental increases from the company’s triple-net lease portfolio.
These gains were partially offset by higher general and administrative expenses, higher total interest expense, and a substantial increase in weighted average diluted shares outstanding.
The company’s normalized funds from operations (FFO) for the quarter ended March 31 were $263.9 million, or $0.91 per diluted common share, a significant increase from the previous year’s $121 million, or $0.75 per diluted common share.
Revenue more than doubled to $573.7 million compared to $268.4 million in 2011.
Ventas’ private pay business now accounts for 80% of the portfolio’s revenues, and the company more than doubled the number of properties in its portfolio, along with expanding tenant operator relationships by four times.
Since the quarter ended, Ventas has agreed to buy 16 senior housing properties from a joint venture run by Sunrise and an institutional investor, for $362 million. The deal is expected to close this quarter and will be immediately accretive.
In early April, Ventas completed its acquisition of Cogdell Spencer Inc. and its portfolio of 72 medical office buildings, making Ventas the largest owner of MOBs in the U.S.
Ventas currently has about $1.9 billion of available borrowing capacity through its unsecured revolving credit facility, along with approximately $25 million in cash and cash equivalents. As of March 31, 2012, the company’s debt to total capitalization was approximately 28%.
Going forward, Ventas expects its 2012 normalized FFO per diluted share to range between $3.63 and $3.69, excluding the impact of possible future acquisitions, divestitures, and capital transactions; this does, however, consider the impact of the Cogdell acquisition.
View the earnings report here.
Written by Alyssa Gerace