Ventas, Inc. · NYSE:VTR
Ventas — NAREIT REITWorld 2014 Conference
45 slides from Ventas's conference presentation, November 2014
Slide 1: NAREIT REITWorld 2014 Conference
NAREIT REITWorld 2014 Conference November 2014
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 Investment Thesis (4) Ventas Fast Facts (5) Ventas Overview (6 – 18) Selected Recent Transactions (19 – 20) Portfolio Overview (21 – 31) Ventas Commitment (32) Appendices: Leadership Team (34) Industry Demographic & Demand Fundamentals (35 – 38) Financial Results & Informati
Slide 4: Ventas Investment Thesis
Ventas Investment Thesis Strong, Cohesive and Experienced Leadership Team Delivers: Growth: Normalized FFO Accretive Investments Same-Store NOI Cash Flows Dividends Tenant / Operators Strength: Balance Sheet with Excellent Liquidity Leadership and Decision Making Performance: Consistent Total Return
Slide 5: Ventas Fast Facts
Ventas Fast Facts Debt / Total Capitalization1 Weighted Average Cost of Growing Diversified Leading S&P 500 Company Debt1 Portfolio2 34% 3.6% >1,500 $30B+ Assets Enterprise Value Climbing the Credit Curve 2014 GRESB Global Sector 10-Years of Strong Annual Acquisitions Since 20111 Leader3 Dividend Gr
Slide 6: Ventas Overview
Ventas Overview 6
Slide 7: Company Overview
Company Overview $30B+ Leading S&P 500 Company Balanced and Diverse Portfolio – 1,468 Total Loans & Other Owned Properties1 U.S. Hospitals 3% 7% Seniors Housing Growing to Over NNN 26% 1,600 Incl. HCT MOBs 15% $1.9B NOI2 $2B+ 2015E NOI Post-Acute 19% Incl. HCT Sr. Housing Operating - Domestic Sr. Ho
Slide 8: Driving Shareholder Value Through Economic Cycles
Driving Shareholder Value Through Economic Cycles 2014E FFO / Share: $4.44 – 4.471 $4.50 $3.75 $3.00 Dividend Payout: 65%2 $2.25 $1.50 $0.75 $0.00 '00A '01A '02A '03A '04A '05A '06A '07A '08A '09A '10A '11A '12A '13A '14E 1. 2014 represents midpoint of updated 2014 guidance of $4.455/share, as discl
Slide 9: Strong Internal & External Growth
Strong Internal & External Growth Q3 2014 Performance – Record Earnings • Same-Store Cash Flow Growth – 3% • Normalized FFO Per Share – $1.12/share (8% growth) Increased • Cash FFO Per Share – $1.09/share (9% growth) 2014 Guidance • YTD 2014 YoY Cash Flow From Operations Growth – 10% Cash Flow From
Slide 10: Ventas Investment Thesis
Ventas Investment Thesis Compelling Demographics Accretive Investments Consistent ~$3.4B Invested Since 01/01/2013; ~$2.9B Pending Superior Low Cost of Capital 3.6% Weighted Average Cost of Debt1 Long-Term Prudent Balance Sheet Strategy Total 5.8x Net Debt to Adj. PF EBITDA1 Shareholder Leading Payo
Slide 11: Building on Our Legacy of Outperformance and Superior Execution
Building on Our Legacy of Outperformance and Superior Execution Ventas Is Well Positioned to Achieve Consistently Strong Normalized Cash FFO per Share Growth of 8% – 9% in 20141 Continued Same- Focus on Financial Internal & External 2014 Norm. FFO / Store NOI Growth Flexibility Investment Growth Sha
Slide 12: $1 Trillion U.S. Healthcare Real Estate Market
$1 Trillion U.S. Healthcare Real Estate Market1 Domestic Environment Remains Positive – Dynamic, Consolidating and Fragmented Sector with Significant Capital Needs 5% 10% Outpatient Facilities/MOBs 39% Hospitals 15% <15% Owned by Private Pay Seniors Housing Public REITs1 Post-Acute Facilities Life S
Slide 13: Strong Demand Drivers Continue to Drive Our Business Success
Strong Demand Drivers Continue to Drive Our Business Success • 75+ Cohort Is Growing 6x Faster Than the Rest of the Population • 75+ Households With $50,000+ Income Projected to Grow By 33% from 2012 – 20171 • 75+ Cohort Has an Average Net Worth of $678,0002 • Employment +1.2%3 and Home Prices +13%4
Slide 14: High-Quality Health System Affiliations
High-Quality Health System Affiliations Significant MOB Ownership With Leading Systems Expected to Meet Increased Demand • 79M Baby Boomers Medicare Eligible Starting in 2011 • 25M Newly Insured From ACA1 Increase MOB Demand by 60M Sq. Ft.2 and ~12% from Levels Prior to Healthcare Reform3 • Approxim
Slide 15: Investment Strategy – Ahead of the Curve
Investment Strategy – Ahead of the Curve Invest Where Ventas Has Competitive Advantage • MOB Internalization (via Lillibridge) • Expand Customer Relationships • Low Cost of Capital • Speed and Structuring Focus on Private Pay Domestic & International Expansion • Additional Runway for Growth and Dive
Slide 16: Prudent Capital Allocation with a Customer Focus
Prudent Capital Allocation with a Customer Focus Diversifying Customer Base and Growing Relationships Through Disciplined Investments with Top Operators – $1.5B YTD at ≤ 7% >85% Follow-On Investments YTD1,2 Holiday Retirement – 2 Deals • $800M invested in Q3 2013 $1.9Bn • Follow-on purchase of Canad
Slide 17: Continued Opportunity to Improve Interest Rates
Continued Opportunity to Improve Interest Rates Improving Cash Flow From Active Balance Sheet Management • $276M of Mortgages Repaid at a Cash Rate of 6.1% YTD 20141 • 650M CAD Bond Raise at a Weighted Average of 3.5% Over 6.9 Years in Q3 20141 Approximately 5.8% $831M of 5.5% 5.6% 5.9% Fixed Rate $
Slide 18: Growth from Development and Redevelopment
Growth from Development and Redevelopment $200M+ of projects approved or under construction at yields 7% – 12% GROUND-UP MEDICAL OFFICE GROUND-UP SENIOR HOUSING STRATEGIC REDEVELOPMENT Facey Medical Office Atria Woodbriar Place Sunrise of Old Tappan Mission Hills, CA Cape Cod, MA Old Tappan, NJ COMP
Slide 19: HCT Transaction
HCT Transaction 19
Slide 20: HCT Transaction Rationale
HCT Transaction Rationale Consistent with Strategy to Acquire High- Quality Private Pay Assets Pro Forma Ventas + HCT1,2 Accretion and Cash Flow Growth Loans & Other 3% U.S. Hospitals Growing Customer Relationships 7% Seniors Housing NNN 24% Future Customer Expansion, Cash Flow MOBs Growth and Accre
Slide 21: Portfolio Overview
Portfolio Overview 21
Slide 22: Meeting Healthcare Real Estate Needs
Meeting Healthcare Real Estate Needs 1 *1. Includes Represents Q3 2014 reported asset count; includes assets held for sale. 141 assets acquired from HCT plus 2 land parcels; excluding HCT’s property acquisition pipeline. 22
Slide 23: Seniors Housing Overview
Seniors Housing Overview Seniors Housing Divided Equally Between Stable, Growing NNN and Higher Growth SHOP • Top 10 Seniors Housing Operators / Tenants Represent 88% of NOI • Largest Owner of Seniors Housing Properties1 Operating Portfolio Operating Portfolio (SHOP) (SHOP) • Best-in-Class (~$20K/Un
Slide 24: Continued SHOP Strength – High Quality, Private Pay
Continued SHOP Strength – High Quality, Private Pay • 270 Private Pay Seniors Housing Communities with 26,733 Units1 • Q3 2014 Same-Store Stabilized NOI Growth of 4.4% YoY2 • Q3 2014 Total Stabilized Occupancy 91.9% • 2014 Same-Store NOI Growth Guidance 4% – 5% YoY (in Local Currency) 2014 SHOP NOI
Slide 25: Superior U.S. Markets
Superior U.S. Markets 40% Higher Household Income vs. National Median 12% Lower Unemployment vs. National Average Median Household Unemployment1,2,3 $72,177 Income1,2,3 6.9% 6.6% $60,582 5.8% $51,579 United States MSA VTR United States MSA VTR ~1.6x Faster Median Home Value Growth vs. Nation 103% Hi
Slide 26: High Quality, Private Pay Assets
High Quality, Private Pay Assets 26
Slide 27: Lillibridge – Leading National Brand Serving Highly Rated Hospitals & Health Systems
Lillibridge – Leading National Brand Serving Highly Rated Hospitals & Health Systems • 25+ Years Experience in MOB Ownership, Management and Development Advisory • 366 Properties1 – 19M Square Feet1 in 28 States / D.C. • 96% On-Campus or Affiliated2 • 72 Hospital and Health System Relationships3 • S
Slide 28: High Quality MOB Assets
High Quality MOB Assets VENTAS®
Slide 29: Well Structured and Well Covered NNN Leases
Well Structured and Well Covered NNN Leases Stable, Secure Cash Flow with Compounding Growth • 2% – 3% Annual Estimated Same-Store Cash Growth for FY2014 • Approximately 70% Variable vs. 30% Fixed Escalators, Including CPI-Based Long Term NNN Leases Consolidated Portfolio 53% NOI1 (907 Assets) Opera
Slide 30: High-Quality Post-Acute Portfolio
High-Quality Post-Acute Portfolio FY 2015: Third Consecutive Year-Over-Year Rate Increases Medicare: SNFs +2.0% Other 35% LTACHs +1.1% Private Pay & Medicare 65% Medicaid: +/-1% LTACH Criteria Legislation: “…the passage of LTACH criteria legislation by Congress (vs. CMS) was Ventas Post-Acute the be
Slide 31: Sound and Effective Sustainability Practices
Sound and Effective Sustainability Practices GRESB 2014 Assessment Global Sector Leader Designated Green Star company Scoring: Ventas 74 Global Average 47 61 ENERGY STAR© 132 ENERGY STAR© Certified Properties Labels 11 Properties Built 4 LEED© Projects To LEED© Standards In Development 31 Note: Vent
Slide 32: Continued Superior Long-Term Returns
Ventas Commitment Continued Superior Long-Term Returns Ventas 1 283.7% MSCI US REIT Index1 124.1% S&P 500 Index1 118.1% Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Ventas S&P 500 MSCI U.S. REIT Index Source: Bloomberg for the 10-year period ended 09/30/2014. 32
Slide 33: Appendices
Appendices: Leadership Team; Supplemental Seniors Housing and MOB Industry Information; FFO Reconciliation, Including Non-Cash Items & Reg. G Compliance Note: For further information, please see www.ventasreit.com/investor-relations/financial-information/supplemental-information.
Slide 34: Strong, Cohesive and Experienced Leadership Team
Strong, Cohesive and Experienced Leadership Team Name Title Tenure Chairman of the Board and Debra A. Cafaro 15 Chief Executive Officer Raymond J. Lewis President 11 Executive Vice President, Medical Property Operations; Todd W. Lillibridge President and Chief Executive Officer, Lillibridge Healthca
Slide 35: Strong Demographic Trends & Fundamentals Support Growth
Strong Demographic Trends & Fundamentals Support Growth for Seniors Housing & MOBs Seniors Housing Supply & Demand Forecast1 Employment Versus Seniors Housing Occupancy2 (Primary Markets: Q1 2006 – Q3 2015P) 96.0% 93.0% Employment Occupancy, Map31(A) 95.0% 92.0% Occupancy Calc 94.0% 91.0% Employment
Slide 36: Strong Demographic Trends & Fundamentals (Cont’d)
Strong Demographic Trends & Fundamentals Support Growth for Seniors Housing & MOBs (Cont’d) Number of Individuals 65+ Will Grow 5x Faster Than Total Population1 There are roughly 79M baby boomers in the U.S today that just recently began reaching the age of 65 in 2011. As such, between 2010 and 2030
Slide 37: Strong Demographic Trends & Fundamentals (Cont’d)
Strong Demographic Trends & Fundamentals Support Growth for Seniors Housing & MOBs (Cont’d) Americans are Spending Over $3T on Healthcare; Equivalent to 18%of Total GDP1 The healthcare sector is now the fastest growing segment of the U.S. economy with expenditures expected to grow 6% per annum and a
Slide 38: Healthcare Spending Growth Fuels Demand for Ventas Assets
Healthcare Spending Growth Fuels Demand for Ventas Assets Healthcare is 18% of GDP and is Expected to Reach 20% by 20221 38 1. Source: CMS, Office of the Actuary. Health spending projections were based on the National Health Expenditures released in November 2013; The projections include impacts of
Slide 39: Non-GAAP Financial Measures
Non-GAAP Financial Measures Funds From Operations (FFO) Reconciliation, Including & Excluding Non-Cash Items1,2 ($ in 000s, except per share amounts) 1. The Company’s guidance constitutes forward-looking statements within the meaning of the federal securities laws and is based on a number of assumpt
Slide 40: Non-GAAP Financial Measures
Non-GAAP Financial Measures Nine Months Ended September 30, 2014 and 2013 Normalized FFO ($ in 000s, except per share amounts) 1. Per share amounts may not add due to rounding. 40
Slide 41: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Pro Forma1 EBITDA and Net Debt to Adjusted Pro Forma1 EBITDA ($ in 000s, except per share amounts) 1. The following information considers the pro forma effect on net income, interest, depreciation and merger-related expenses and deal costs of the Company’s invest
Slide 42: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Pro Forma1 EBITDA and Fixed Charge Coverage Ratio ($ in 000s, except per share amounts) 1. The following information considers the pro forma effect on net income, interest and depreciation of the Company’s investments and other capital transactions that were comp
Slide 43: Non-GAAP Financial Measures
Non-GAAP Financial Measures NOI Reconciliation by Segment1,2 ($ in 000s, except per share amounts) 43 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.
Slide 44: Non-GAAP Financial Measures
Non-GAAP Financial Measures NOI Reconciliation by Segment1,2 (Cont’d) ($ in 000s, except per share amounts) 44 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.
Slide 45: NAREIT REITWorld 2014 Conference
NAREIT REITWorld 2014 Conference November 2014