Ventas, Inc. (VTR)

VTR 
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Ventas (VTR)

Q4 2011 Earnings Call

February 17, 2012 11:00 am ET

Executives

David J. Smith - Head of Investor Relations

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

Raymond J. Lewis - President

Richard A. Schweinhart - Chief Financial Officer and Executive Vice President

Todd W. Lillibridge - Chairman and Chief Executive Officer

Analysts

Michael Bilerman - Citigroup Inc, Research Division

Richard C. Anderson - BMO Capital Markets U.S.

Bryan Sekino - Barclays Capital, Research Division

Jeff Theiler - Green Street Advisors, Inc., Research Division

Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division

Dan Bernstein - Stifel, Nicolaus & Co., Inc., Research Division

Nicholas Yulico - Macquarie Research

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

Ross T. Nussbaum - UBS Investment Bank, Research Division

Thomas C. Truxillo - BofA Merrill Lynch, Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Ventas Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I'll now turn the call over to David Smith, Manager of Investor Relations and Capital Markets. You may proceed.

David J. Smith

Good morning, and welcome to the Ventas conference call to review the company's announcement today regarding its results for the quarter and year ended December 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 express 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, 2010, 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 A. Cafaro

Thanks, David, and good morning to all of our shareholders and other participants. We want to welcome you to Ventas' Year End 2011 Earnings Call.

Today, I'm pleased to share an overview of our outstanding 2011 achievements and our outlook for 2012. Ray Lewis will discuss our portfolio and investment activities and Rick Schweinhart will review our financial results for the year and the quarter. After our remarks, we'll be happy to take your questions.

The key take away for 2011 are growth, diversification, a fantastic balance sheet and a dedicated team working together to create shareholder value. These have been consistent themes for Ventas and we believe they remain the predicates for our sustained success.

In 2011, we closed over $11 billion in accretive acquisitions, including our investment in NHP and Atria. These deals made Ventas a $23 billion enterprise, increased our annualized NOI to over $1.4 billion, expanded our revenue base to over $2.4 billion, deliberately driving private pay revenues to nearly 80% of our business and dramatically improved our tenant mix.

Importantly, we improved Kindred Healthcare share of our annualized NOI to only 17% from more than twice that at year end 2010. During 2011, we also become the largest owner of private pay senior living, which is benefiting from excellent supply demand fundamentals and demographics. Even more amazingly, we achieved this growth in 2011 while actually strengthening our already best-in-class balance sheet, liquidity and credit profile.

Here are 2 of the most significant tangible results of our 2011 activities: our normalized FFO per share grew 17% for the year to $3.37 and our debt to enterprise value stood at an outstanding 29% at year end. Also, during 2011, all 3 credit rating agencies upgraded our corporate credit rating in recognition of our outstanding credit profile and enhanced reliability.

These important actions significantly lowered our cost of debt, giving us the opportunity to increase our liquidity and further stagger and extend our debt maturity.

To put this in context, for every $1 billion dollars in debt that we replaced at a 200 basis points savings in rate, our shareholders will enjoy $20 million in improved cash flow. We ended 2011 and entered 2012 with strong positive momentum. And we're energized about our opportunities for the year.

First, we announced our agreement to acquire MOB owner, Cogdell Spencer, on December 27. This accretive acquisition of 72 high-quality, 92% occupied medical office buildings will increase Ventas' MOB portfolio to 20 million square feet and the share of our NOI from this large and attractive asset class to 15%. We will be the largest owner of medical office buildings in the U.S., poised to partner with highly rated hospital systems who need capital to grow or consolidate.

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