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Ventas Reports 19 Percent Increase In Second Quarter 2012 Normalized FFO To $0.95 Per Diluted Share

Net Debt to Adjusted Pro Forma EBITDA

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 completed during the three months ended June 30, 2012, as if the transactions had been consummated as of the beginning of the period. The following table illustrates net debt to pro forma earnings before interest, taxes, depreciation and amortization (including non-cash stock-based compensation expense), excluding loss on extinguishment of debt, net litigation proceeds, merger-related expenses and deal costs, gains or losses on sales of real property assets and changes in the fair value of financial instruments (including amounts in discontinued operations) (“Adjusted Pro Forma EBITDA”) (dollars in thousands):

 
Net income attributable to common stockholders $ 74,025
Pro forma adjustments for current period investments, capital
transactions and dispositions   5,224  
Pro forma net income for the three months ended
June 30, 2012 $ 79,249
Add back:
Pro forma interest (including discontinued operations) 74,089
Pro forma depreciation and amortization (including discontinued operations) 204,013
Stock-based compensation 6,252
Loss on extinguishment of debt 9,989
Gain on real estate dispositions, net (38,558 )
Income tax benefit (including discontinued operations) (5,166 )
Change in fair value of financial instruments 60
Other taxes 876
Merger-related expenses and deal costs   36,668  
Adjusted Pro Forma EBITDA $ 367,472  
Adjusted Pro Forma EBITDA annualized $ 1,469,888  
 
 
As of June 30, 2012:
Debt $ 7,204,727
Cash, including cash escrows pertaining to debt   (66,610 )
Net debt $ 7,138,117  
 
Net debt to Adjusted Pro Forma EBITDA   4.9   x

       
 
Non-GAAP Financial Measures Reconciliation
(In thousands, except per share amounts)
 
For the Six Months
Ended June 30,
2012 2011
 
Net income attributable to common stockholders $ 164,651 $ 68,660
Adjustments:
Depreciation and amortization on real estate assets 349,702 128,901
Depreciation on real estate assets related to noncontrolling interest (3,847 ) (414 )
Depreciation on real estate assets related to unconsolidated entities 4,306 1,966
Discontinued operations:
Gain on real estate dispositions, net (78,791 ) -
Depreciation and amortization on real estate assets   14,800     2,444  
FFO 450,821 201,557
Merger-related expenses and deal costs 44,649 62,256
Litigation proceeds, net - -
Loss on extinguishment of debt 39,533 16,526
Income tax expense (benefit) 6,139 (9,406 )
Change in fair value of financial instruments 93 (8,887 )
Amortization of other intangibles   511     511  
Normalized FFO $ 541,746   $ 262,557  
 
Per diluted share (1) :
Net income attributable to common stockholders $ 0.56 $ 0.40
Adjustments:
Depreciation and amortization on real estate assets 1.20 0.76
Depreciation on real estate assets related to noncontrolling interest (0.01 ) (0.00 )
Depreciation on real estate assets related to unconsolidated entities 0.01 0.01
Discontinued operations:
Gain on real estate dispositions, net (0.27 ) -
Depreciation and amortization on real estate assets   0.05     0.01  
FFO 1.55 1.19
Merger-related expenses and deal costs 0.15 0.37
Litigation proceeds, net - -
Loss on extinguishment of debt 0.14 0.10
Income tax expense (benefit) 0.02 (0.06 )
Change in fair value of financial instruments 0.00 (0.05 )
Amortization of other intangibles   0.00     0.00  
Normalized FFO $ 1.86   $ 1.54  
 
(1) Per share amounts may not add due to rounding.
 

             
Non-GAAP Financial Measures Reconciliation
NOI Reconciliation by Segment
(In thousands)
 
2012 Quarters 2011 Quarters
Second First Fourth Third Second
Revenues
 
Triple-Net
Triple-Net Rental Income $ 207,898 $ 207,128 $ 206,109 $ 204,554 $ 116,150
 
Medical Office Buildings
Medical Office - Stabilized 80,335 56,251 53,826 51,992 20,280
Medical Office - Lease up   9,339   8,258   6,543   6,167   3,478
Total Medical Office Buildings - Rental Income   89,674   64,509   60,369   58,159   23,758
Total Rental Income 297,572 271,637 266,478 262,713 139,908
 
Medical Office Building Services Revenue   5,529   4,499   9,313   8,162   9,822
Total Medical Office Buildings - Revenue 95,203 69,008 69,682 66,321 33,580
 
Triple-Net Services Revenue   1,110   1,109   1,108   1,109   -
Total Medical Office Building and Other Services Revenue 6,639 5,608 10,421 9,271 9,822
 
Seniors Housing Operating
Seniors Housing - Stabilized 283,214 271,396 264,860 265,649 194,015
Seniors Housing - Lease up 19,491 13,078 11,866 7,410 6,025
Seniors Housing - Other   1,315   1,321   1,266   1,235   1,267
Total Resident Fees and Services 304,020 285,795 277,992 274,294 201,307
 
Non-Segment Income from Loans and Investments   8,152   8,036   9,867   10,072   8,391
Total Revenues, excluding Interest and Other Income 616,383 571,076 564,758 556,350 359,428
 
Property-Level Operating Expenses
 
Medical Office Buildings
Medical Office - Stabilized 26,401 17,845 17,648 17,645 6,820
Medical Office - Lease up   3,445   3,053   2,505   2,426   1,458
Total Medical Office Buildings 29,846 20,898 20,153 20,071 8,278
 
Seniors Housing Operating
Seniors Housing - Stabilized 192,640 184,748 177,890 179,983 129,901
Seniors Housing - Lease up 13,786 9,795 9,803 6,218 4,825
Seniors Housing - Other   1,122   1,123   1,097   1,155   1,168
Total Seniors Housing   207,548   195,666   188,790   187,356   135,894
Total Property-Level Operating Expenses 237,394 216,564 208,943 207,427 144,172
 
Medical Office Building Services Costs 3,839 2,988 7,245 6,347 7,954
 
Net Operating Income
 
Triple-Net
Triple-Net Properties 207,898 207,128 206,109 204,554 116,150
Triple-Net Services Revenue   1,110   1,109   1,108   1,109   -
Total Triple-Net 209,008 208,237 207,217 205,663 116,150
 
Medical Office Buildings
Medical Office - Stabilized 53,934 38,406 36,178 34,347 13,460
Medical Office - Lease up 5,894 5,205 4,038 3,741 2,020
Medical Office Buildings Services   1,690   1,511   2,068   1,815   1,868
Total Medical Office Buildings 61,518 45,122 42,284 39,903 17,348
 
Seniors Housing Operating
Seniors Housing - Stabilized 90,574 86,648 86,970 85,666 64,114
Seniors Housing - Lease up 5,705 3,283 2,063 1,192 1,200
Seniors Housing - Other   193   198   169   80   99
Total Seniors Housing 96,472 90,129 89,202 86,938 65,413
Non-Segment   8,152   8,036   9,867   10,072   8,391
Net Operating Income $ 375,150 $ 351,524 $ 348,570 $ 342,576 $ 207,302
 
Note: Amounts above are adjusted to exclude discontinued operations for all periods presented.
 

The Company believes that NOI provides useful information because those disclosures allow investors, analysts and Company management to measure unlevered property-level operating results and to compare the Company’s operating results to the operating results of other real estate companies and between periods on a consistent basis. Those terms are commonly used in evaluating results of real estate companies. The Company defines NOI as total revenues, excluding interest and other income, less property-level operating expenses and medical office building services costs (including amounts in discontinued operations).

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