Ventas, Inc. · NYSE:VTR
Ventas — Investor Presentation (January 2017)
58 slides from Ventas's investor presentation, January 2017
Slide 1: Investor Presentation January 2017
EXCELLENCE. SUSTAINED. INVESTOR PRESENTATION JANUARY 2017
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 & Market Introduction (4-22) Operational Excellence in Seniors Housing (23-29) The Hospital Growth Opportunity (30-35) Our Medical Office Building Platform (36-38) Our Life Science Platform (39-43) Post-Acute Portfolio (44-46) Closing (47) Appendix Definitions and SEC Reg. G
Slide 4: Ventas & Market Introduction
VENTAS & MARKET INTRODUCTION EXCELLENCE. SUSTAINED.
Slide 5: Ventas Investment Thesis
VENTAS INVESTMENT THESIS EXCELLENCE. SUSTAINED. We are the premier provider of capital to leading senior living and healthcare operators and research institutions Ventas is positioned at the intersection of two large and dynamic markets: healthcare and real estate • Each represents nearly 20% of U.S
Slide 6: Long-Term Sustainable Growth and Income with Financial Strength
LONG-TERM SUSTAINABLE GROWTH AND INCOME WITH FINANCIAL STRENGTH Annual FFO / Sh 2016(E) Norm. FFO / Annual Cash Dividend / Sh Growth since 20011 Sh Growth2 Growth since 20011 11% 4%-5% 8% TSR CAGR since Credit Rating Completed Spin-Off 12/31/19993 of SNFs in 2015 25% BBB+ >$4B Enterprise Value Leadi
Slide 7: Superior Long-Term Returns to Shareholders
SUPERIOR LONG-TERM RETURNS TO SHAREHOLDERS FROM HIGH- QUALITY DIVERSIFIED PORTFOLIO WITH LEADING OPERATORS 16% 13% 13% 11% TSR 9% 10% Performance – 8% 7% 5% Multiple Periods 1-Year 3-Year 10-Year VTR RMZ S&P 500 VTR: 16% 1-Year TSR S&P: 11% Performance RMZ: 8% December January February March April M
Slide 8: Normalized FFO per Share (Indexed to 2001)
OUR FORESIGHT AND INNOVATION CHANGED THE WAY REAL ESTATE INVESTORS THINK ABOUT HEALTHCARE; CHANGING THE WAY LEADING PROVIDERS / OPERATORS THINK ABOUT REAL ESTATE Execute Grow Platforms with Healthcare Real Estate Foresight Early Winning Operators 5.0 2 of 10 credit 4.5 upgrades during NORMALIZED FFO
Slide 9: Investing Across the Capital Structure in Diversified Asset Types
INVESTING ACROSS THE CAPITAL STRUCTURE IN DIVERSIFIED ASSET TYPES Senior MOBs Acute Care Life Science Post-Acute Housing NNN Lease Debt Investments Operating Real Estate Operator Equity Investment 8
Slide 10: Delivering Value to Shareholders and Meeting Customer Needs
DELIVERING VALUE TO SHAREHOLDERS AND MEETING CUSTOMER NEEDS • Largest national MOB business 96% on- • >7x investment growth ~5 years campus / affiliated with leading health • Significant multiple expansion since MOBs systems investment creates value • 92% occupancy • Stable, growing cash flows • ~$3
Slide 11: Consistent Outstanding Execution in 2016
CONSISTENT OUTSTANDING EXECUTION IN 20161 4%-5% Normalized FFO / >$600M Strategic Dispositions and Share Growth (Expected) Loan Repayments 6% Dividend / Share Increase2 $4M Annual Benefit from Positive Sunrise Agreement 5.7x-5.8x Year-End Net Debt / 7% Premium Value SNF Disposition to Adjusted EBITD
Slide 12: Diverse and High-Quality VTR Portfolio
DIVERSE AND HIGH-QUALITY VTR PORTFOLIO Q4 2017(E)1 Life Science Specialty Entry into Attractive Institutional-Quality Life Hospitals Science and Innovation Centers Associated with International Hospitals Leading Research Universities with $1.5B Life Loans Seniors Science Acquisition U.S. Acute 7%
Slide 13: Attractive and Dynamic Opportunities
ATTRACTIVE AND DYNAMIC OPPORTUNITIES VTR AT THE INTERSECTION OF HEALTHCARE AND REAL ESTATE • Large and growing aging population increases demand for healthcare and senior living products Healthcare 20% by • Senior population has immense spending power 20241 and wealth • Healthcare spending projected
Slide 14: Demographics & Longevity Fueling Demand
DEMOGRAPHICS & LONGEVITY FUELING DEMAND Growing Population of …With Immense Wealth …And Increasing Care Healthcare Consumers… and Spending Power… Needs with Age 7x >$640K 5x More Healthcare Spending Faster Growth in 75+ Population1 Average 75+ Net Worth3 from Seniors5 10,000 73% 2.5x Boomers Turning
Slide 15: Life Science Industry Experiencing Continued Growth
LIFE SCIENCE INDUSTRY EXPERIENCING CONTINUED GROWTH Current Life Science Tenants 2014 R&D ($M) University Life Sciences Research Spending Drexel, Old Dominion, Universities & Research institutions have CAGR Wake Forest increased R&D spending IIT $38B +3.6% $88 $172 Penn State Duke $250 $6B +4.0% Cur
Slide 16: The Ventas Advantage
THE VENTAS ADVANTAGE ENSURING EXCELLENCE. SUSTAINED. OUR PEOPLE OUR PROCESSES PEOPLE OUR CULTURE ADVANTAGED REAL ADVANTAGE LEADING ESTATE ASSETS IN OPERATORS ATTRACTIVE PROPERTIES ACROSS THE PLATFORMS MARKETS SITES OF CARE 15
Slide 17: 2016 Expectations & Preliminary 2017 Outlook
2016 EXPECTATIONS & PRELIMINARY 2017 OUTLOOK1 2016 Expectations Preliminary 2017 Outlook • Approximating the high end of previously • Continued same-store NOI growth announced norm. FFO / share guidance • Strategic recycling of capital and range disposition of nearly all of skilled nursing • Same-st
Slide 18: Key 2017 Outlook Drivers
KEY 2017 OUTLOOK DRIVERS1 $4.12 to $4.18 2017 Normalized FFO Per Share Outlook 1.5% to 2.5% Same-Store Cash NOI Growth2 Carryover Impact of 2016 Acquisitions $1B 2017 Acquisitions at a 7%-8% GAAP Yield Funded Principally with $900M Disposition Proceeds at a 7%-8% GAAP Yield Carryover impact of 2016
Slide 19: A $1T Domestic Real Estate Market
A $1T DOMESTIC REAL ESTATE MARKET ASSETS SHOULD FLOW TO MOST EFFICIENT OWNERS Outpatient Facilities/ MOBs • Domestic market is large Life Science / Biotech Facilities and growing Post-Acute Facilities • Early stages of securitized 5% 10% public real estate 39% • Dynamic policy 15% environment Privat
Slide 20: Significant Runway for Growth
SIGNIFICANT RUNWAY FOR GROWTH EARLY INNINGS OF HEALTHCARE REIT OWNERSHIP PERCENTAGE OF REAL ESTATE OWNED BY REITS Successful Model for Separating Real Estate from Operating Business 50%-55% 40%-50% 20%-25% 12%-15% Healthcare Multifamily Malls Hotels Housing (Top 25)2 (Top 50)1 1. Based on number of
Slide 21: Healthcare Delivery Is Converging
HEALTHCARE DELIVERY IS CONVERGING REQUIRING SOLUTIONS ACROSS SITES OF CARE AND GEOGRAPHIES Leading operators consolidating + Care delivery increasingly interconnected Community- Hospitals + Based Dynamic policy environment Care = Post- Seniors Housing Acute Need for broad and deep Care CAPITAL AND R
Slide 22: Consolidation Is on the Horizon
CONSOLIDATION IS ON THE HORIZON WINNING OPERATORS WILL EMERGE MARKET SHARE OF TOP 10 OPERATORS Highly fragmented markets Benefits of scale and integration Dynamic policy environment Other 90% 90% 80% Operators Accelerating consolidation Winners will emerge Top 10 Consolidators will need capital 20%
Slide 23: Future Growth Prospects Are Bright
FUTURE GROWTH PROSPECTS ARE BRIGHT DRIVE OPERATIONAL BUILD ON CAPITALIZE ON EXPLORE NEW EXCELLENCE WITH ADVANTAGED HEALTHCARE MARKETS LEADING OPERATORS PLATFORMS WITHIN CONVERGENCE ASSET CLASSES MOBs and SHOP E.g., Hospitals, Life Real estate solutions New asset classes Science and across sites of c
Slide 24: Operational Excellence in Seniors Housing
OPERATIONAL EXCELLENCE IN SENIORS HOUSING EXCELLENCE. EXEMPLIFIED.
Slide 25: Ventas Seniors Housing Portfolio
VENTAS SENIORS HOUSING PORTFOLIO1 Specialty Seniors Hospitals Housing - • Outstanding SHOP assets in Operating International Hospitals advantaged markets + high-quality Loans 7% NNN leases U.S. Acute 1% Care Hospitals 6% 30% • ~50% SHOP / 50% NNN seniors 5% Skilled Nursing housing portfolio 1% 6% $2
Slide 26: Attractive SHOP Assets
ATTRACTIVE SHOP ASSETS VTR SHOP PORTFOLIO HAS HIGH-QUALITY ASSETS IN ATTRACTIVE LOCATIONS Industry Ventas SHOP1,2 benchmarks Median household income $77,176 $55,5512 Median home value $416,026 $192,4322 75+ population growth 11.8% 11.6%2 Building age 16 213 Note: Demographic figures reflect 3-mile r
Slide 27: SHOP Assets in Attractive Locations
SHOP ASSETS IN ATTRACTIVE LOCATIONS • >65% of SHOP NOI in high- barrier-to-entry coastal markets1 22% West Coast • Median home values 2.2x national NOI1 average • Median household income 1.4x national average 44% East Coast NOI1 • 3Q16 occupancy 100bps higher SHOP than NIC industry average2 Top 30 M
Slide 28: Ventas SHOP Strategy
VENTAS SHOP STRATEGY WE HAVE A FOCUSED SHOP PARTNERSHIP STRATEGY VTR SHOP1 VTR SHOP STRATEGY Focused on building scale All Others with winners driving operational excellence Offers partner for future growth and redevelopment 32% Reduces intra-portfolio Sunrise competition and portfolio 61% overlap A
Slide 29: National Scale Drives Efficiency
NATIONAL SCALE DRIVES EFFICIENCY EXAMPLE: ATRIA DRIVES EFFICIENCY THROUGH HR AND COST SAVINGS ROBUST PROCESSES FOCUSED ON ATTRACTING, SAVINGS REALIZED ACROSS DEVELOPING AND RETAINING TALENT CORPORATE AND LOCAL COSTS Growth 22% Insurance savings through VTR Opportunities aggregation Robust Transition
Slide 30: Sales and Marketing Opportunities
SALES AND MARKETING OPPORTUNITIES EXAMPLE: ATRIA SELLS VALUE PROPOSITION OF SENIORS HOUSING THROUGH MARKETING Assisted living 40-60% cheaper than re- Social Life creating benefits at home Dining Emergency Assistance High-cost market: New York, NY Exercise / Re-create benefits at home1: $12,011 Physi
Slide 31: The Hospital Growth Opportunity
THE HOSPITAL GROWTH OPPORTUNITY EXCELLENCE. FORWARD.
Slide 32: Ventas Acute Care Hospital Portfolio
VENTAS ACUTE CARE HOSPITAL PORTFOLIO1 • Ardent-LHP business model well positioned for post-ACA environment Specialty Hospitals −1/3 Ardent + 1/4 LHP Medicaid International Hospitals expansion states Loans Seniors U.S. Acute 7% Care Hospitals 1% Housing - • ~3x EBITDARM coverage (operator cash 6% Ope
Slide 33: Demographic Fundamentals
DEMOGRAPHIC FUNDAMENTALS SUPPLY CONSTRAINED AND UTILIZATION INCREASING U.S. NUMBER OF HOSPITAL BEDS (000s) DAILY VOLUMES (000s)1 900 1,050 1,043 872 1,000 985 973 850 950 929 824 900 802 805 849 796 850 800 787 809 800 750 50 0 0 1995 2000 2005 2010 2015 2020F 1995 2000 2005 2010 2015F 2020F Source:
Slide 34: Hospitals Are Evolving
HOSPITALS ARE EVOLVING HOSPITALS remain the NERVE CENTER of healthcare delivery SHORTER HIGHER HIGHEST LENGTHS OF STAY VOLUMES ACUITY CARE 33
Slide 35: Market Consolidation Results in Better Margins and Credit
MARKET CONSOLIDATION RESULTS IN BETTER MARGINS AND CREDIT HOSPITALS INCREASINGLY CONSOLIDATED HOSPITALS ... AND HAVE BETTER CONSOLIDATING HAVE STRONGER MARGINS... CREDIT 100 8% MHS 15 Unaffiliated % of Community Hospitals 35% hospitals Non-MHS 40% 50% 6% 12 Total Margin1 (%) Log Revenue ($M) 62% 6.3
Slide 36: Capital Source to Providers to Help Them Grow, Consolidate
CAPITAL SOURCE TO PROVIDERS TO HELP THEM GROW, CONSOLIDATE AND SERVE PATIENTS CONSOLIDATION OPPORTUNITIES GREATER THAN EVER / VTR FINANCIAL STRENGTH, KNOWLEDGE AND RELATIONSHIPS CREATE ADVANTAGE Non- State and government, GROWTH OPPORTUNITIES local government tax-exempt Public companies looking to s
Slide 37: Our Medical Office Building Platform
OUR MEDICAL OFFICE BUILDING PLATFORM EXCELLENCE. ESTABLISHED.
Slide 38: Ventas Medical Office Portfolio
VENTAS MEDICAL OFFICE PORTFOLIO1 • Top platform Specialty International Hospitals Hospitals • 400+ customers Loans Seniors 7% Housing - U.S. Acute 6% 1% Operating • ~92% total occupancy Care Hospitals 30% Skilled Nursing 5% • 96% affiliated or on campus Life 1% 6% $2B Science NOI • 85% of affiliatio
Slide 39: Secular Trends Attractive
SECULAR TRENDS ATTRACTIVE INCREASING POPULATION, INCREASING VISITS, INCREASING SPEND INCREASING GROWING HIGHER POPULATION PHYSICIAN VISITS SPENDING Seniors 65+ spend 5x more per person4 10,000 2.5x $6,000 New seniors eligible for Number of visits 65+ cohort $5,200 $4,000 Medicare daily1 makes to phy
Slide 40: Our Life Science Platform
OUR LIFE SCIENCE PLATFORM EXCELLENCE. SUSTAINED.
Slide 41: Ventas Life Science Portfolio
VENTAS LIFE SCIENCE PORTFOLIO1 • 6% pro forma 2017 VTR NOI Specialty • 73% of revenue from excellent Hospitals credit tenants International Hospitals Loans Seniors −11 universities with avg. Aa2 7% U.S. Acute 1% Housing - rating Care Hospitals 6% Operating Skilled Nursing 5% 30% −Investment grade co
Slide 42: High-Quality Operating Portfolio with Institutional-Quality Tenants
HIGH-QUALITY OPERATING PORTFOLIO WITH INSTITUTIONAL-QUALITY TENANTS Class-A Operating Properties Excellent Amenities for Tenants 4.1 million square feet of purpose- built real estate with average age of 6 years Located campuses on or contiguous to major 13 LEED-certified buildings High-quality
Slide 43: Additional Growth from Near-Term Development Properties
ADDITIONAL GROWTH FROM NEAR-TERM DEVELOPMENT PROPERTIES W.F. Innovation Quarter – The Chesterfield Bailey Power Plant Property Duke Wake Forest University (Durham, NC) (Winston Salem, NC) Endowment1 $7.3 billion $1.2 billion Life sciences R&D spend2 $868 million $172 million Location On-campus Adjac
Slide 44: Enhances Relationships with Leading Universities and Research Companies
ENHANCES VENTAS’S RELATIONSHIPS WITH LEADING UNIVERSITIES, ACADEMIC MEDICAL CENTERS AND RESEARCH COMPANIES Geographic Presence and University Affiliations Key Highlights for Leading Tenants MSA with Lillibridge Relationships with 11 top research universities that presence account for 10% of all un
Slide 45: Post-Acute Portfolio
POST-ACUTE PORTFOLIO EXCELLENCE. EVOLVED.
Slide 46: Pro Forma Ventas Post-Acute Portfolio
PRO FORMA VENTAS POST-ACUTE PORTFOLIO1 Specialty Hospitals • 1% SNFs post-sale – successful de- emphasis of SNF starting with CCP International Hospitals 7% spin off Loans Seniors U.S. Acute Housing - Care Hospitals 1% Operating • Strong 2x Q3 specialty hospital 6% Skilled 30% EBITDARM coverage (ope
Slide 47: Kindred Healthcare
KINDRED HEALTHCARE Diverse Business Mix Impact of LTAC Criteria4 2% VTR = 31/82 12% KND LTACs ~$50M • KND ~$50M end of 2017 KND LTAC 38% Impact run-rate EBITDARM impact KND Mitigated Run-Rate Impact • ~0.1x-0.2x5 impact to VTR (End of 2017) 85% SNF 23% specialty hospital Impact Expected to Rehab2 Im
Slide 48: Summary
SUMMARY Ventas is an S&P 500 diversified provider of capital to leading senior living and healthcare operators and research institutions. Ventas has a long and successful history of outperformance, stability, growth and income with a strong balance sheet. Massive, fragmented healthcare real estate m
Slide 49: Excellence. Sustained.
EXCELLENCE. SUSTAINED. 1 Welcome Overviewv9.ppt 48
Slide 50: Definitions and SEC Reg. G Compliance
DEFINITIONS AND SEC REG. G COMPLIANCE
Slide 51: Definition of Terms
DEFINITION OF TERMS NAREIT Funds from Operations (“FFO”) Net income attributable to common stockholders (computed in accordance with GAAP) excluding gains (or losses) from sales of real estate property, including gain (or loss) on re-measurement of equity method investments and impairment write-down
Slide 52: Definition of Terms (Cont'd)
DEFINITION OF TERMS (CONT’D) Seniors Housing Operating Portfolio (“SHOP”) In our senior living operations segment, we invest in seniors housing communities throughout the United States and Canada and engage independent operators, such as Atria and Sunrise, to manage those communities pursuant to lon
Slide 53: 2016 Guidance & Preliminary 2017 Outlook
2016 GUIDANCE & PRELIMINARY 2017 OUTLOOK1,2,3 EPS, FFO & FAD GUIDANCE ATTRIBUTABLE TO COMMON SHAREHOLDERS Tentative / Preliminary & Subject to Change 2016 Guidance Preliminary 2017 Outlook FY2017 - Preliminary FY2016 - Guidance 2016 - Per Share 2017 - Per Share Outlook Low High Low High Low High Low
Slide 54: FFO and FAD Reconciliation Including Comparable Earnings
NON-GAAP FINANCIAL MEASURES FFO AND FAD RECONCILIATION INCLUDING COMPARABLE EARNINGS ($ IN 000S, EXCEPT PER SHARE AMOUNTS)1,2 1. Totals and per share amounts may not add due to rounding. Per share quarterly amounts may not add to annual per share amounts due to material changes in the Company’s weig
Slide 55: Non-GAAP Financial Measures: Normalized FFO
NON-GAAP FINANCIAL MEASURES NORMALIZED FFO ($ IN 000S, EXCEPT PER SHARE AMOUNTS) 1. Per share amounts may not add due to rounding. 54
Slide 56: Adjusted Pro Forma EBITDA and Net Debt to Adjusted Pro Forma EBITDA
NON-GAAP FINANCIAL MEASURES ADJUSTED PRO FORMA1 EBITDA AND NET DEBT TO ADJUSTED PRO FORMA1 EBITDA ($ IN 000S) 1. The following information considers the pro forma effect on net income, interest and depreciation and amortization of the Com pany’s investments and other capital transactions that were c
Slide 57: NOI Reconciliation by Segment
NON-GAAP FINANCIAL MEASURES NOI RECONCILIATION BY SEGMENT1,2 ($ IN 000S) 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. 56
Slide 58: NOI Reconciliation by Segment (Cont'd)
NON-GAAP FINANCIAL MEASURES NOI RECONCILIATION BY SEGMENT (CONT’D)1,2 ($ IN 000S) 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. 57