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Ventas (VTR)

Q2 2012 Earnings Call

July 26, 2012 10:00 am ET


Lori Wittman

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

Raymond J. Lewis - President

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

John D. Cobb - Chief Investment Officer and Senior Vice President


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

Jana Galan - BofA Merrill Lynch, Research Division

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

Ross T. Nussbaum - UBS Investment Bank, Research Division

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

Quentin Velleley - Citigroup Inc, Research Division

Nicholas Yulico - Macquarie Research

Philip J. Martin - Morningstar Inc., Research Division

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

Karin A. Ford - KeyBanc Capital Markets Inc., Research Division

Thomas C. Truxillo - BofA Merrill Lynch, Research Division



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» Ventas' CEO Discusses Q4 2011 Results - Earnings Call Transcript
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» Ventas' CEO Discusses Q2 2011 Results - Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the Second Quarter 2012 Ventas Earnings Conference Call. My name is Derek and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Ms. Lori Wittman, Vice President, Capital Market. Please proceed.

Lori Wittman

Thank you. Good morning, and welcome to the Ventas conference call to review the company's announcement today regarding its results for the quarter ended June 30, 2012.

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, 2011, 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 and expectations. Please note that the quantitative reconciliation 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

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

Debra A. Cafaro

Thanks, Lori, and good morning to all of our shareholders and other participants, and welcome to Ventas' Second Quarter 2012 Earnings Call. Today, I'm pleased to share an overview of our excellent second quarter results. Ray Lewis, will discuss our portfolio and investment activities, and Rick Schweinhart, will review our financial results in details. After our remarks, we'll be happy to take your questions.

The Ventas investment pieces continues to be a very positive story of growth and defense. There are extremely limited opportunities that provide investors with good internal and external growth and also, significant defensive characteristics. The value of that optionality cannot be overstated in today's global environment with significant sale risk and upside. Our second quarter results and outlook for the year provide an outstanding example of these valuable qualities working in tandem for our constituents.

Normalized FFO this quarter was excellent at $0.95 per share, up 19% from last year. And we maintain an outstanding balance sheet with 28% debt-to-enterprise value. We have also increased our guidance to $3.70 to $3.74 per share for the full year. If achieved at the midpoint, this would represent a 10% normalized FFO per share growth rate year-over-year.

First, let's talk about the growth side of Ventas. Growth at Ventas comes from excelling at our 3 key activities: Allocating capital, raising capital and managing our assets. Simply put, we focus on investing in the right asset at the right price and structure, continuing to improve our cost of capital and driving performance in our portfolio. We have a long track record of effectively executing all 3 activities.

Our external growth this quarter includes the completion of $1.2 billion in high-quality accretive acquisitions including Cogdell Spencer's MOB business and 16 new, high-quality, private pay Sunrise-managed senior living community. Those acquisitions are performing extremely well and we continue to see excellent opportunities to invest in performing health care and senior housing assets. And we have good visibility to completing over $300 million in additional acquisitions in the near-term, as well as investing about $100 million in a small but profitable development and redevelopment pipeline.

Our business model allows us to continue allocating capital flexibly across subsectors in different operating models and investment type as conditions warrant and opportunities arise. And of course, the $1 trillion health care and senior housing real estate market is huge, fragmented, growing and dynamic. It should provide many investment opportunities to Ventas for years to come.

Our internal growth has also been exceptional this quarter, particularly, in our senior housing operating segments. Our Atria- and Sunrise-managed assets are proving the benefits of our strategy, of buying the best assets in the best market operated by the best managers. These communities are delivering great results with same-store NOI growing 8% year-over-year before management fees. These high quality assets provide upside to our shareholders in a growing economy.

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