Ventas Comments on Full Year 2016 Expectations and Issues Preliminary 2017 Outlook

  • Expects to Achieve 2016 Normalized FFO per Share Approximating the
    High-End of Previous Guidance Range
  • Issues Preliminary 2017 Outlook
  • Same-Store Cash Flow Growth, Portfolio Enhancement and Financial
    Strength Expected to Continue in 2017

CHICAGO–(BUSINESS WIRE)–$VTR–Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”), in conjunction
with its presentation at the J.P. Morgan Healthcare Conference (the
“J.P. Morgan Conference”) today, announced that it expects to achieve
normalized Funds From Operations (“FFO”) per share for the full year
2016 approximating the high-end of its previously announced guidance
range of $4.10 to $4.13.

“Our diversified and advantaged portfolio continues to perform well and
we expect to achieve strong 2016 results, with 4 to 5 percent FFO per
share growth for the year,” Ventas Chairman and Chief Executive Officer
Debra A. Cafaro said. “In 2016, we exceeded our strategic disposition
targets and enhanced our financial position. We increased our dividend
by 6 percent and delivered 16 percent total shareholder return. As the
leading capital provider to high-quality senior living, healthcare and
life science research institutions, our aligned, cohesive team remains
focused on delivering value to shareholders and our leading operators.

“Our 2017 forecast reflects our continued strategic actions to create
short- and long-term shareholder value, including: disposition of nearly
$1 billion in assets, including substantially all of our skilled nursing
portfolio at a premium valuation; redeploying proceeds into investments
in high-quality hospitals and attractive life science and innovation
centers; and strengthening our balance sheet through longer debt
maturities,” concluded Ms. Cafaro. “While these actions will affect
year-over-year growth, we are confident that improving our portfolio
quality and asset mix while enhancing our credit profile are the right
steps for Ventas to continue our long track record of excellence and
leading market position.”

2016 Expectations

  • The Company expects normalized FFO per diluted share for the full year
    2016 to approximate the high-end of its previously announced guidance
    range of $4.10 to $4.13.
  • The Company’s full year 2016 same-store cash NOI growth is expected to
    be within its prior guidance of 2.5 to 3 percent. Individual segment
    same-store full year 2016 growth rates should remain within previously
    disclosed ranges.
  • Proceeds from accelerated dispositions and receipt of loan repayments
    in 2016 exceeded $600 million compared to prior guidance of $500
    million. Fourth quarter proceeds approached $350 million and included:

    • Asset sales of nearly $240 million at 7 percent cash and GAAP
      yields, resulting in a significant net gain.
    • Repayment of well-secured and structured loan investments
      previously made by the Company at par plus a premium (8 percent
      cash and GAAP yield).

    The Company’s full year 2016 guidance is based on a number of
    assumptions that are subject to change and many of which are outside the
    control of the Company. The Company has not completed its year-end
    financial and accounting procedures for the fiscal year-ended 2016 and
    the Company’s independent registered public accounting firm has not
    audited, reviewed, compiled or performed any procedures with respect to
    2016 results. If actual results for full year 2016 vary from these
    assumptions, the Company’s actual financial results may be materially
    different from its current estimated guidance. There can be no assurance
    that the Company will achieve these results. A reconciliation of the
    Company’s full year 2016 guidance is included in this press release.

    Preliminary 2017 Outlook

    Ventas’s 2017 forecast reflects the continued execution of its plan to
    create shareholder value including optimizing its portfolio through the
    strategic disposition of substantially all its skilled nursing
    portfolio; investing for future growth; and enhancing its financial
    profile and liquidity. In 2017, Ventas also expects to continue to grow
    its overall same-store cash NOI. The Company’s preliminary expectations
    for 2017 include:

    • 2017 normalized FFO per diluted share of $4.12 to $4.18.
    • Total Company full year 2017 same-store cash NOI growth of 1.5 to 2.5
      percent, with each segment expected to contribute positively to
      same-store cash NOI growth. Same-store reported GAAP growth from the
      portfolio is expected, as is typically the case, to be lower than
      same-store cash NOI growth due principally to the straight-lining
      impact of certain of the Company’s leases, and the impact of the
      extension of substantially all of the Company’s long-term acute care
      hospital leases with Kindred Healthcare, Inc.
    • Strategic dispositions to further optimize the portfolio and
      redeployment of capital into higher quality investments, with
      dispositions effected at a cost of capital that approximates the rate
      of new investments:

      • Strategic dispositions totaling $900 million, including $700
        million in proceeds in the second half of the year through the
        potential sale of 36 skilled nursing facilities owned by Ventas.
        If achieved the Company would realize a gain exceeding $600
        million. However, the Company does not control whether and when
        these assets will be sold; and
      • Redeployment of disposition proceeds into new investments
        exceeding $1 billion, mainly to expand the Company’s platforms
        with Ardent Health Services (“Ardent”) and Wexford Science +
        Technology, LLC (“Wexford”). These investments include providing
        $700 million in secured debt to fund Ardent’s acquisition of LHP
        Hospital Group, expected to close late in the first quarter of
        2017; and closing $300 million of new acquisitions, including
        high-quality life science and innovation centers operated by
        Wexford.

      The Company’s 2017 preliminary outlook is based on a number of other
      assumptions that are subject to change and many of which are outside the
      control of the Company. If actual full year 2017 results vary from these
      assumptions, the Company’s actual financial results may be materially
      different from its current preliminary outlook. There can be no
      assurance that the Company will achieve these results. A reconciliation
      of the Company’s full year 2017 preliminary outlook to the Company’s
      projected 2017 GAAP earnings is included in this press release.

      Fourth Quarter and Full Year 2016 Release and
      Earnings Call

      Ventas expects to report final results for the fourth quarter and full
      year ended December 31, 2016 on Friday, February 10, 2016. The earnings
      conference call is scheduled for 10 a.m. Eastern Time on this date, and
      investors can access the conference call by calling (844) 776-7841 (or
      (661) 378-9542 for international callers). The participant passcode is
      “Ventas”. The conference call is being webcast live by NASDAQ OMX and
      can be accessed at the Company’s website at www.ventasreit.com.
      A replay of the webcast will be available following the call online, or
      by calling (855) 859-2056 (or (404) 537-3406 for international callers),
      passcode 50587913, beginning at approximately 2:00 p.m. Eastern Time and
      will remain for 36 days.

      J.P. Morgan Conference Presentation

      Today a presentation regarding the Company will be made by Company
      management at the J.P. Morgan Conference in San Francisco, California at
      12:00 p.m. pacific time. The presentation will be webcast and may be
      accessed through the Company’s website at www.ventasreit.com/investor-relations
      for a limited period of time following the event. A presentation
      containing supplemental information regarding today’s announcement,
      including quantitative reconciliations between each non-GAAP financial
      measure referenced in this release and its most directly comparable GAAP
      measure, in addition to any written materials relating to the Company’s
      meetings with certain investors at the J.P. Morgan Conference can be
      accessed at the Company’s website and will remain archived for a limited
      period of time at www.ventasreit.com/investor-relations.

      Ventas, Inc., an S&P 500 company, is a leading real estate investment
      trust. Its diverse portfolio of approximately 1,300 assets in the United
      States, Canada and the United Kingdom consists of seniors housing
      communities, medical office buildings, life science and innovation
      centers, skilled nursing facilities, specialty hospitals and general
      acute care hospitals. Through its Lillibridge subsidiary, Ventas
      provides management, leasing, marketing, facility development and
      advisory services to highly rated hospitals and health systems
      throughout the United States. More information about Ventas and
      Lillibridge can be found at www.ventasreit.com
      and www.lillibridge.com.

      Supplemental information regarding the Company can be found on the
      Company’s website under the “Investor Relations” section or at www.ventasreit.com/investor-relations/annual-reports—supplemental-information.
      A comprehensive listing of the Company’s properties is available at www.ventasreit.com/our-portfolio/properties-by-stateprovince.

      This press release includes 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.
      All
      statements regarding the Company’s or its tenants’, operators’,
      borrowers’ or managers’ expected future financial condition, results of
      operations, cash flows, funds from operations, dividends and dividend
      plans, financing opportunities and plans, capital markets transactions,
      business strategy, budgets, projected costs, operating metrics, capital
      expenditures, competitive positions, acquisitions, investment
      opportunities, dispositions, merger or acquisition integration, growth
      opportunities, expected lease income, continued qualification as a real
      estate investment trust (“REIT”), plans and objectives of management for
      future operations and statements that include words such as
      “anticipate,” “if,” “believe,” “plan,” “estimate,” “expect,” “intend,”
      “may,” “could,” “should,” “will” and other similar expressions are
      forward-looking statements.
      These forward-looking statements are
      inherently uncertain, and actual results may differ from the Company’s
      expectations.
      The Company does not undertake a duty to update
      these forward-looking statements, which speak only as of the date on
      which they are made.

      The Company’s actual future results and trends may differ materially
      from expectations depending on a variety of factors discussed in the
      Company’s filings with the Securities and Exchange Commission.
      These
      factors include without limitation: (a) the ability and willingness of
      the Company’s tenants, operators, borrowers, managers and other third
      parties to satisfy their obligations under their respective contractual
      arrangements with the Company, including, in some cases, their
      obligations to indemnify, defend and hold harmless the Company from and
      against various claims, litigation and liabilities; (b) the ability of
      the Company’s tenants, operators, borrowers and managers to maintain the
      financial strength and liquidity necessary to satisfy their respective
      obligations and liabilities to third parties, including without
      limitation obligations under their existing credit facilities and other
      indebtedness; (c) the Company’s success in implementing its business
      strategy and the Company’s ability to identify, underwrite, finance,
      consummate and integrate diversifying acquisitions and investments; (d)
      macroeconomic conditions such as a disruption of or lack of access to
      the capital markets, changes in the debt rating on U.S. government
      securities, default or delay in payment by the United States of its
      obligations, and changes in the federal or state budgets resulting in
      the reduction or nonpayment of Medicare or Medicaid reimbursement rates;
      (e) the nature and extent of future competition, including new
      construction in the markets in which the Company’s seniors housing
      communities and medical office buildings (“MOBs”)
      are located;
      (f) the extent of future or pending healthcare reform and regulation,
      including cost containment measures and changes in reimbursement
      policies, procedures and rates; (g) increases in the Company’s borrowing
      costs as a result of changes in interest rates and other factors; (h)
      the ability of the Company’s tenants, operators and managers, as
      applicable, to comply with laws, rules and regulations in the operation
      of the Company’s properties, to deliver high-quality services, to
      attract and retain qualified personnel and to attract residents and
      patients; (i) changes in general economic conditions or economic
      conditions in the markets in which the Company may, from time to time,
      compete, and the effect of those changes on the Company’s revenues,
      earnings and funding sources; (j) the Company’s ability to pay down,
      refinance, restructure or extend its indebtedness as it becomes due; (k)
      the Company’s ability and willingness to maintain its qualification as a
      REIT in light of economic, market, legal, tax and other considerations;
      (l) final determination of the Company’s taxable net income for the year
      ending December 31, 2016; (m) the ability and willingness of the
      Company’s tenants to renew their leases with the Company upon expiration
      of the leases, the Company’s ability to reposition its properties on the
      same or better terms in the event of nonrenewal or in the event the
      Company exercises its right to replace an existing tenant, and
      obligations, including indemnification obligations, the Company may
      incur in connection with the replacement of an existing tenant; (n)
      risks associated with the Company’s senior living operating portfolio,
      such as factors that can cause volatility in the Company’s operating
      income and earnings generated by those properties, including without
      limitation national and regional economic conditions, costs of food,
      materials, energy, labor and services, employee benefit costs, insurance
      costs and professional and general liability claims, and the timely
      delivery of accurate property-level financial results for those
      properties; (o) changes in exchange rates for any foreign currency in
      which the Company may, from time to time, conduct business; (p)
      year-over-year changes in the Consumer Price Index or the UK Retail
      Price Index and the effect of those changes on the rent escalators
      contained in the Company’s leases and the Company’s earnings; (q) the
      Company’s ability and the ability of its tenants, operators, borrowers
      and managers to obtain and maintain adequate property, liability and
      other insurance from reputable, financially stable providers; (r) the
      impact of increased operating costs and uninsured professional liability
      claims on the Company’s liquidity, financial condition and results of
      operations or that of the Company’s tenants, operators, borrowers and
      managers, and the ability of the Company and the Company’s tenants,
      operators, borrowers and managers to accurately estimate the magnitude
      of those claims; (s) risks associated with the Company’s MOB portfolio
      and operations, including the Company’s ability to successfully design,
      develop and manage MOBs and to retain key personnel; (t) the ability of
      the hospitals on or near whose campuses the Company’s MOBs are located
      and their affiliated health systems to remain competitive and
      financially viable and to attract physicians and physician groups; (u)
      risks associated with the Company’s investments in joint ventures and
      unconsolidated entities, including its lack of sole decision-making
      authority and its reliance on its joint venture partners’ financial
      condition; (v) the Company’s ability to obtain the financial results
      expected from its development and redevelopment projects; (w) the impact
      of market or issuer events on the liquidity or value of the Company’s
      investments in marketable securities; (x) consolidation activity in the
      seniors housing and healthcare industries resulting in a change of
      control of, or a competitor’s investment in, one or more of the
      Company’s tenants, operators, borrowers or managers or significant
      changes in the senior management of the Company’s tenants, operators,
      borrowers or managers; (y) the impact of litigation or any financial,
      accounting, legal or regulatory issues that may affect the Company or
      its tenants, operators, borrowers or managers; and (z) changes in
      accounting principles, or their application or interpretation, and the
      Company’s ability to make estimates and the assumptions underlying the
      estimates, which could have an effect on the Company’s earnings.

      Historical cost accounting for real estate assets implicitly assumes
      that the value of real estate assets diminishes predictably over time.
      However, since real estate values historically have risen or fallen with
      market conditions, many industry investors deem presentations of
      operating results for real estate companies that use historical cost
      accounting to be insufficient by themselves. For that reason, the
      Company considers FFO, normalized FFO, FAD and normalized FAD to be
      appropriate supplemental measures of operating performance of an equity
      REIT. In particular, the Company believes that normalized FFO is useful
      because it allows investors, analysts and Company management to compare
      the Company’s operating performance to the operating performance of
      other real estate companies and between periods on a consistent basis
      without having to account for differences caused by unanticipated items
      and other events such as transactions and litigation. In some cases, the
      Company provides information about identified non-cash components of FFO
      and normalized FFO because it allows investors, analysts and Company
      management to assess the impact of those items on the Company’s
      financial results.

      The Company uses the NAREIT definition of FFO. NAREIT defines FFO as 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-downs of depreciable real estate, plus real estate
      depreciation and amortization, and after adjustments for unconsolidated
      partnerships and joint ventures. Adjustments for unconsolidated
      partnerships and joint ventures will be calculated to reflect FFO on the
      same basis. The Company defines normalized FFO as FFO excluding the
      following income and expense items (which may be recurring in nature):
      (a) merger-related costs and expenses, including amortization of
      intangibles, transition and integration expenses, and deal costs and
      expenses, including expenses and recoveries relating to acquisition
      lawsuits; (b) the impact of any expenses related to asset impairment and
      valuation allowances, the write-off of unamortized deferred financing
      fees, or additional costs, expenses, discounts, make-whole payments,
      penalties or premiums incurred as a result of early retirement or
      payment of the Company’s debt; (c) the non-cash effect of income tax
      benefits or expenses and derivative transactions that have non-cash
      mark-to-market impacts on the Company’s income statement; (d) the
      financial impact of contingent consideration, severance-related costs
      and charitable donations made to the Ventas Charitable Foundation; (e)
      gains and losses for non-operational foreign currency hedge agreements
      and changes in the fair value of financial instruments; (f) gains and
      losses on non-real estate dispositions related to unconsolidated
      entities; and (g) expenses related to the re-audit and re-review in 2014
      of the Company’s historical financial statements and related matters.
      Normalized FAD represents normalized FFO excluding non-cash components,
      straight-line rental adjustments and deducting capital expenditures,
      including tenant allowances and leasing commissions. FAD represents
      normalized FAD after subtracting merger-related expenses, deal costs and
      re-audit costs.

      FFO, normalized FFO, FAD and normalized FAD presented herein may not be
      identical to those presented by other real estate companies due to the
      fact that not all real estate companies use the same definitions. FFO,
      normalized FFO, FAD and normalized FAD should not be considered as
      alternatives to net income or income from continuing operations (both
      determined in accordance with GAAP) as indicators of the Company’s
      financial performance or as alternatives to cash flow from operating
      activities (determined in accordance with GAAP) as measures of the
      Company’s liquidity, nor are they necessarily indicative of sufficient
      cash flow to fund all of the Company’s needs. The Company believes that
      income from continuing operations is the most comparable GAAP measure
      because it provides insight into the Company’s continuing operations.
      The Company believes that in order to facilitate a clear understanding
      of the consolidated historical operating results of the Company, FFO,
      normalized FFO, FAD and normalized FAD should be examined in conjunction
      with net income and income from continuing operations as presented
      elsewhere herein.

      The Company considers NOI and same-store cash NOI to be important
      supplemental measures to net income because they allow investors,
      analysts and Company management to assess the Company’s unlevered
      property-level operating results and to compare the Company’s operating
      results with the operating results of other real estate companies and
      between periods on a consistent basis. The Company defines NOI as total
      revenues, less interest and other income, property-level operating
      expenses and office building services costs (including amounts in
      discontinued operations). Cash receipts may differ due to straight-line
      recognition of certain rental income and the application of other GAAP
      policies. The Company defines same-store cash NOI as the NOI for
      properties owned, consolidated and operational for the full period in
      both comparison periods excluding the impact of non-cash items such as
      straight-line rent and the impact of exchange rate movements across the
      comparison periods. In certain cases, results for same-store cash NOI
      may be adjusted to reflect non-recurring items and the receipt of cash
      payments and fees not fully recognized as NOI in the period. Same-store
      cash NOI excludes assets intended for disposition and, for the seniors
      housing operating portfolio, those properties that transitioned
      operators after the start of the prior comparison period.

      The Company has not provided a reconciliation of its forecasted full
      year 2017 same-store cash NOI growth to its most directly comparable
      GAAP measure because the Company is unable to quantify certain amounts
      that would be required to be included in the comparable GAAP measure
      without unreasonable efforts.

      Contacts

      Ventas, Inc.
      Ryan K. Shannon
      (877) 4-VENTAS

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