Ventas, Inc. (VTR)

VTR 
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Industry: Consumer Services
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Ventas (VTR)

Q1 2011 Earnings Call

May 05, 2011 10:00 am ET

Executives

Raymond Lewis - President

David Smith - SVP and CFO

Debra Cafaro - Chairman, Chief Executive Officer, Member of Investment Committee and Member of Executive Committee

Richard Schweinhart - Chief Financial Officer and Executive Vice President

Analysts

Jonathan Habermann - Goldman Sachs Group Inc.

Daniel Cooney - Keefe, Bruyette, & Woods, Inc.

Jerry Doctrow - Stifel, Nicolaus & Co., Inc.

Jeffrey Spector - BofA Merrill Lynch

Karin Ford - KeyBanc Capital Markets Inc.

Robert Mains - Morgan Keegan & Company, Inc.

Thomas Truxillo - BofA Merrill Lynch

Richard Anderson - BMO Capital Markets U.S.

James Milam - Sandler O'Neill + Partners, L.P.

Bryan Sekino - Barclays Capital

Michael Bilerman - Citigroup Inc

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Ventas First Quarter 2011 Earnings Conference Call. My name is Maria, and I will be your operator today. [Operator Instructions] I would now like to turn the conference over to Mr. David Smith, Manager, Investor Relations & Capital Markets. Please proceed.

David Smith

Good morning, and welcome to the Ventas conference call to review the company's announcement today regarding its results for the quarter ended March 31, 2011.

As we start, let me express that all projections and predictions and certain other statements to be made during this conference call may be considered forward-looking statements within the meaning of the federal securities laws. These projections, predictions and statements are based on management's current beliefs as well as on a number of assumptions concerning future events.

The forward-looking statements are subject to many risks, uncertainties and contingencies, and stockholders and others should recognize that actual results may differ materially from the company's expectations, whether expressed or implied.

We refer you to the company's reports filed with the Securities and Exchange Commission, including the company's annual report on Form 10-K for the year ended December 31, 2009, and the company's other reports filed periodically with the SEC, for a discussion of these forward-looking statements and other factors that could affect these forward-looking statements.

Many of these factors are beyond the control of the company and its management. The information being provided today is as of this date only, and Ventas expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations. Please note that quantitative reconciliations between each non-GAAP financial measure contained in this presentation and its most directly comparable GAAP measure as well as the company's supplemental disclosure schedule are available in the Investor Relations section of our website at www.ventasreit.com.

I will now turn the call over to Debra A. Cafaro, Chairman and CEO of the company.

Debra Cafaro

Thanks, David, and good morning to all of our shareholders and participants, and welcome to our first quarter 2011 earnings call.

Today, I'll provide a brief recap of the quarter and discuss our pending transactions and strategy. Our President, Ray Lewis, will provide an overview of our portfolio performance and investment outlook; and our CFO Rick Schweinhart will end our prepared remarks with a detailed review of our quarterly financial results. After that, we'll be delighted to take your questions.

Ventas had exciting and productive first quarter with normalized FFO per share, up 12% year-over-year, with growth in occupancy and NOI in our private pay Sunrise-managed communities and cash flow from operations, up over 13% from our diversified portfolio of senior living, hospital and skilled nursing assets. Most importantly, during the quarter, we announced our highly strategic $7.4 billion acquisition of Nationwide Health Properties, a well-respected, diversified healthcare REIT with a successful 25-year history. We expect the NHP acquisition to be immediately accretive to 2011 earnings per share, and we continue to expect a third quarter 2011 closing.

Separately, NHP announced earlier today excellent quarterly earnings and $600 million in year-to-date acquisition volume at a blended initial cash yield of 8%. We are working hand-in-glove with our colleagues at NHP to run through the finish line and execute on our strategic vision of creating the leading diversified healthcare REIT that will continue to deliver superior value for shareholders. NHP CEO, Doug Pasquale, and his team are doing an incredible job working for our collective constituents.

As an update on our pending $3.1 billion acquisition of 118 high-quality private pay senior living communities operated by Atria Senior Living Group, we expect to close that transaction shortly. Atria is the fourth largest operator of assisted living in the U.S., and our acquired assets are located principally in attractive barrier-to-entry coastal markets with affluent demographics. The Atria assets continue to perform well, and we look forward to integrating these exceptional properties into our portfolio and working with the dedicated and experienced Atria's senior management team.

We are enthusiastic about our strategy and our positioning for the future. In just 3 quarters, since June 30, 2010, we have expanded and reshaped Ventas to deliver another decade of excellence for our shareholders. After our acquisition of the Lillibridge Medical Office Building business on July 1, 2010, and following completion of our pending Atria and NHP acquisitions, we will be a better, faster-growing and more reliable and diversified enterprise, with an enhanced cost of capital advantage and multiple avenues to exploit the $1 trillion fragmented universe of healthcare and senior housing real estate.

We continue as a management team to look forward and to try to stay one step ahead of the rapidly evolving external environment as we make decisions and allocate capital on your behalf.

I think it's worth taking a moment to explain what we expect Ventas to look like compared to just 3 quarters ago at June 30, 2010.

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