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Ventas Reports Eight Percent Increase in Third Quarter 2013 Normalized FFO to a Record $1.04 Per Diluted Share



  Ventas Reports Eight Percent Increase in Third Quarter 2013 Normalized FFO
  to a Record $1.04 Per Diluted Share

         Ventas Closes $1.3 Billion of Investments Since July 1, 2013

  COMPANY RAISES FULL YEAR 2013 NORMALIZED FFO PER DILUTED SHARE GUIDANCE TO
                                $4.12 TO $4.14

Business Wire

CHICAGO -- October 25, 2013

Ventas, Inc. (NYSE: VTR) (“Ventas” or the “Company”) said today that
normalized Funds From Operations (“FFO”) for the quarter ended September 30,
2013 increased eight percent to $307.2 million, from $284.9 million for the
comparable 2012 period. Normalized FFO per diluted common share was a record
$1.04 for the quarter ended September 30, 2013, an eight percent increase from
$0.96 for the comparable 2012 period. Weighted average diluted shares
outstanding for the quarter decreased by one percent to 295.2 million from
297.4 million in the third quarter of 2012.

“Ventas delivered another quarter of record results by accretively investing
capital, raising capital and managing our diverse, high-quality portfolio of
seniors housing and healthcare assets,” Ventas Chairman and Chief Executive
Officer Debra A. Cafaro said. “We also positioned Ventas to succeed in the
future by maintaining strong liquidity through a highly successful bond
issuance, by acquiring over a billion dollars in higher growth private pay
assets, and by completing favorable lease extensions with our valued tenant
Kindred Healthcare,” she added. “We are pleased to increase our full-year
outlook, reflecting the strength of our business model and execution.”

The growth in third quarter 2013 normalized FFO per diluted common share
compared to the third quarter of 2012 is due primarily to the Company’s 2012
and 2013 investments; net operating income increases in its high-quality
private pay seniors housing communities managed by Atria Senior Living, Inc.
(“Atria”) and Sunrise Senior Living, LLC (“Sunrise”), its triple-net lease
portfolio and its medical office building (“MOB”) segment; lower weighted
average interest rates; and a decrease in weighted average diluted shares
outstanding. These benefits were partially offset by higher debt balances,
asset sales and receipt of loan repayments.

Normalized FFO for the quarter ended September 30, 2013 excludes the net
expense (totaling $3.5 million, or $0.01 per diluted share) from
merger-related expenses and deal costs (including integration costs) and
amortization of other intangibles, partially offset by an income tax benefit
and net gains on extinguishment of debt. Normalized FFO for the quarter ended
September 30, 2012 excluded the net benefit (totaling $4.8 million, or $0.01
per diluted share) from an income tax benefit and net gains on extinguishment
of debt, partially offset by merger-related expenses and deal costs (including
integration costs) and amortization of other intangibles.

Normalized FFO for the nine months ended September 30, 2013 increased ten
percent to $907.1 million, from $826.6 million for the comparable 2012 period.
Normalized FFO per diluted common share was $3.08 for the nine months ended
September 30, 2013, a nine percent increase from $2.82 for the comparable 2012
period. Normalized FFO for the nine months ended September 30, 2013 excludes
the net expense (totaling $3.7 million, or $0.01 per diluted share) from
merger-related expenses and deal costs (including integration costs) and
amortization of other intangibles, offset by an income tax benefit and net
gains on extinguishment of debt. Normalized FFO for the nine months ended
September 30, 2012 excluded the net expense (totaling $86.1 million, or $0.30
per diluted share) from merger-related expenses and deal costs (including
integration costs), loss on extinguishment of debt and amortization of other
intangibles, offset by an income tax benefit.

Net income attributable to common stockholders for the quarter ended September
30, 2013 was $118.3 million, or $0.40 per diluted common share, including
discontinued operations of $(9.1) million. Net income attributable to common
stockholders for the quarter ended September 30, 2012 was $111.9 million, or
$0.38 per diluted common share, including discontinued operations of $(3.7)
million. This $6.4 million increase in net income attributable to common
stockholders in the third quarter of 2013 over the comparable prior-year
period is primarily the result of the increases described above for normalized
FFO and decreases in merger-related expenses and deal costs (including
integration costs), offset by year-over-year decreases in income tax benefits,
gains on extinguishment of debt and discontinued operations.

Net income attributable to common stockholders for the nine months ended
September 30, 2013 was $345.1 million, or $1.17 per diluted common share,
including discontinued operations of $(33.7) million. Net income attributable
to common stockholders for the nine months ended September 30, 2012 was $276.5
million, or $0.94 per diluted common share, including discontinued operations
of $70.1 million. This $68.5 million increase in net income attributable to
common stockholders for the nine months ended September 30, 2013 over the
comparable prior-year nine-month period is primarily the result of the
increases described above for normalized FFO, decreases in merger-related
expenses and deal costs (including integration costs), income tax benefit
increases and net gains on extinguishment of debt in 2013 compared to net
losses in 2012, partially offset by year-over-year changes in discontinued
operations.

FFO, as defined by the National Association of Real Estate Investment Trusts
(“NAREIT”), for the quarter ended September 30, 2013 increased five percent to
$303.7 million, from $289.7 million in the comparable 2012 period. NAREIT FFO
per diluted common share for the quarter ended September 30, 2013 increased
six percent to $1.03, from $0.97 in the third quarter of 2012.

NAREIT FFO for the nine months ended September 30, 2013 increased 22 percent
to $903.4 million, from $740.6 million in the comparable 2012 period. NAREIT
FFO per diluted common share for the nine months ended September 30, 2013
increased 21 percent to $3.06, from $2.52 in the nine months ended September
30, 2012.

PRIVATE PAY SENIORS HOUSING OPERATING PORTFOLIO

Third Quarter 2013 Same-Store Occupancy Rises 110 Basis Points and NOI Grows
6.2 Percent Year over Year Excluding 2012 Non-Recurring Item, 4.4 Percent As
Reported

At September 30, 2013, the Company’s seniors housing operating portfolio
included 235 communities managed by Sunrise and Atria, seven of which were
acquired in the third quarter of 2013: 140 seniors housing communities managed
by Atria and 95 seniors housing communities managed by Sunrise. Third quarter
2013 Net Operating Income (“NOI”) after management fees for this portfolio
totaled $114.7 million.

For the 212 private pay seniors housing communities owned by the Company for
the full third quarters of 2013 and 2012 (“same-store”), average unit
occupancy rose 110 basis points to 91.5 percent, NOI after management fees
grew 4.4 percent and REVPOR (revenue per occupied room) grew 3.6 percent in
the third quarter of 2013 compared to the third quarter of 2012. Same-store
NOI grew 6.2 percent in the third quarter of 2013 excluding a $1.7 million
real estate tax credit recorded in the third quarter of 2012.

THIRD QUARTER HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS

Investments and Dispositions

  * Since July 1, 2013, Ventas invested $1.3 billion, principally in private
    pay seniors housing communities and MOBs. Highlights of the investments
    are:

(1) The expected first-year NOI yield is 7.3 percent.

(2) Of the $1.3 billion invested, approximately $360 million was invested in
seniors housing operating investments, transitioned to Atria at the time of
closing; just under $800 million was invested in independent living triple-net
leases with a new tenant; and approximately $120 million was invested in MOBs.

(3) The eight Atria-managed senior living communities contain 940 independent
and assisted living units, are 91 percent occupied and are located primarily
in the top 31 Metropolitan Statistical Areas (MSAs).

(4) The triple-net independent living portfolio consists of 26 communities
with 3,138 apartment-like units and is 94 percent occupied.

(5) The eight MOBs contain 427,870 square feet, are located on the campuses of
A-rated hospital systems and are 90 percent occupied.

  * During the quarter, Ventas sold assets and received final repayments on
    outstanding loans totaling $81.5 million.

Liquidity, Capital Raising, Ratings and Balance Sheet

  * In September 2013, Ventas issued and sold $850 million aggregate principal
    amount of senior notes with a weighted average interest rate of 3.0
    percent and a weighted average initial maturity of 12.5 years and used the
    proceeds to repay amounts outstanding under the Company’s unsecured
    revolving credit facility bearing interest at LIBOR plus 110 basis points.
    These transactions took advantage of low interest rates, expanded the
    Company’s liquidity, improved its ratio of fixed to floating rate debt,
    and extended its weighted average maturity.
  * Since July 1, 2013, the Company received aggregate proceeds of
    approximately $51.6 million from sales of its common stock under its
    previously established “at-the-market” equity offering program (ATM). Of
    that amount, $27.9 million was raised in the fourth quarter.
  * Moody’s Investors Service (“Moody’s”) raised its rating on the Company’s
    senior unsecured debt to Baa1 (stable) in August 2013. Ventas’s senior
    unsecured debt is currently rated BBB+ (stable) by Fitch Ratings, Baa1
    (stable) by Moody’s and BBB (positive) by Standard & Poor’s Rating
    Services.
  * The Company’s current debt to total capitalization is 32 percent. The
    Company’s fixed charge coverage ratio was 4.3x in the third quarter of
    2013 and net debt to Adjusted Pro Forma EBITDA at September 30, 2013 was
    5.6x.
  * At September 30, 2013, the Company had $448.0 million of borrowings
    outstanding under its $2 billion unsecured revolving credit facility and
    $54.7 million of cash and cash equivalents. Currently, it has $429 million
    in borrowings outstanding under its unsecured revolving credit facility
    and approximately $62.8 million of cash and cash equivalents.

PORTFOLIO UPDATE AND ADDITIONAL INFORMATION

  * The Company owned 1,300 properties for the full third quarters of 2013 and
    2012 (“same-store”). Cash NOI growth for the Company’s total same-store
    portfolio equaled 4.2 percent in the third quarter of 2013 compared to the
    third quarter of 2012, excluding $4.5 million of out of period cash
    receipts in the 2012 period, and 2.8 percent on an as-reported basis.
  * As previously announced, Ventas entered into favorable agreements with
    Kindred Healthcare, Inc. (NYSE: KND) (“Kindred”) to extend the leases with
    respect to 48 of the 108 licensed healthcare assets whose current lease
    term was scheduled to expire on April 30, 2015 (the “2015 Renewal
    Assets”). Annual rent on those 48 healthcare assets leased to Kindred will
    increase by $15 million on the then current escalated rent on October 1,
    2014. Including that increase, 67 percent of the total current rent on the
    108 healthcare assets has been replaced. In addition, (1) the expiration
    date of the lease for the 60 remaining healthcare assets was accelerated
    to September 30, 2014, and Ventas has already launched the re-marketing
    process for those assets; and (2) Ventas received a payment of $20 million
    from Kindred that will be recognized as rent over the life of the new and
    renewed leases. The 2015 Renewal Assets consist of 86 skilled nursing
    facilities (“SNFs”) and 22 long-term acute care hospitals (“LTACs”).

                                                              
                                                               Contractual
(dollars in millions)                              Cash Rent   Rent Increase
                                                                             
Facilities                                         2013        October 1, 2014
                                                                             
Renewed (26 SNFs and 22 LTACs)                     $  78       $      15
60 SNFs                                            60          N/A
Total                                              $  138      N/A
Total Rent Renewed as a Percentage of Total 2013               67           %
Cash Rent

  * Ventas was named by Modern Healthcare to its list of Healthcare’s Hottest
    40 Of The Industry’s Fastest-Growing Firms in September 2013.
  * 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/financial-information/supplemental-information.

VENTAS RAISES 2013 NORMALIZED FFO PER DILUTED SHARE GUIDANCE TO $4.12 TO $4.14

Ventas currently expects its 2013 normalized FFO per diluted share to range
between $4.12 and $4.14, improving its previously announced 2013 guidance of
between $4.06 and $4.10 per diluted share, assuming that the Company’s
weighted average diluted shares outstanding for the year approximate 295.2
million. The midpoint of the Company’s improved guidance range constitutes
approximately eleven percent per share growth in 2013, excluding non-cash
items from normalized FFO (projected to be $0.14 per diluted share), computed
consistent with prior periods, and nearly nine percent on an as-reported
basis. A reconciliation of the Company’s guidance, and the non-cash items, to
the Company’s projected GAAP earnings is included elsewhere in this press
release.

The Company expects full year 2013 NOI from its 236 Atria- and Sunrise-managed
seniors housing communities, including 15 communities acquired year to date,
to range between $447 million to $451 million. For the 195 communities owned
by the Company for both the full year 2013 and 2012, the Company expects
same-store NOI growth to range from five to six percent.

The Company’s normalized FFO guidance (and related GAAP earnings projections)
for all periods assumes, with certain immaterial exceptions, that all of the
Company’s tenants and borrowers continue to meet all of their obligations to
the Company. In addition, the Company’s normalized FFO guidance excludes,
other than as specifically stated, (a) net gains on the sales of real property
assets, including gain on re-measurement of equity method investments, (b)
merger-related costs and expenses, including amortization of intangibles and
transition and integration expenses, and deal costs and expenses, (c) 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, (d) 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, and
(e) the impact of future unannounced acquisitions or divestitures (including
pursuant to tenant options to purchase) and capital transactions.

The Company’s guidance 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 results vary from these assumptions, the Company’s expectations may
change. There can be no assurances that the Company will achieve these
results. The Company may from time to time update its publicly announced
guidance, but it is not obligated to do so.

THIRD QUARTER CONFERENCE CALL

Ventas will hold a conference call to discuss this earnings release today at
10:00 a.m. Eastern Time (9:00 a.m. Central Time). The dial-in number for the
conference call is (877) 415-3177. 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 call will be
available at the Company’s website, or by calling (888) 286-8010, passcode
61761463, beginning at approximately 2:00 p.m. Eastern Time and will remain
for 28 days.

Ventas, Inc., an S&P 500 company, is a leading real estate investment trust.
Its diverse portfolio of nearly 1,500 assets in 47 states (including the
District of Columbia) and two Canadian provinces consists of seniors housing
communities, skilled nursing facilities, hospitals, medical office buildings
and other properties. 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.

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 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,
including investments in different asset types and outside the United States;
(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 budget resulting in the reduction or nonpayment of
Medicare or Medicaid reimbursement rates; (e) the nature and extent of future
competition; (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 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, 2013; (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 U.S. and
Canadian currency exchange rates; (p) year-over-year changes in the Consumer
Price Index and the effect of those changes on the rent escalators contained
in the Company’s leases, including the rent escalators for two of the
Company’s master lease agreements with Kindred, 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, to accurately estimate its costs
in fixed fee-for-service projects 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) the Company’s ability to
build, maintain and expand its relationships with existing and prospective
hospital and health system clients; (v) 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; (w) the impact of market or issuer events on
the liquidity or value of the Company’s investments in marketable securities;
(x) merger and acquisition activity in the healthcare industry resulting in a
change of control of 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; and (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. Many of
these factors are beyond the control of the Company and its management.

 
CONSOLIDATED BALANCE SHEETS
As of September 30, 2013, June 30, 2013, March 31, 2013, December 31, 2012 and September 30, 2012
(In thousands, except per share amounts)
                                                                                    
                 September 30,    June 30,         March 31,        December 31,     September 30,
                 2013             2013             2013             2012             2012
                                                                                      
Assets
Real estate
investments:
Land and         $ 1,856,739      $ 1,783,664      $ 1,764,208      $ 1,772,417      $ 1,754,826
improvements
Buildings and    18,383,075       17,238,843       16,977,860       16,920,821       16,552,534
improvements
Construction     79,172           99,947           72,714           70,665           93,992
in progress
Acquired lease   1,012,163        990,548          984,023          981,704          965,500       
intangibles
                 21,331,149       20,113,002       19,798,805       19,745,607       19,366,852
Accumulated
depreciation     (3,156,206   )   (2,977,154   )   (2,803,068   )   (2,634,075   )   (2,447,175   )
and
amortization
Net real
estate           18,174,943       17,135,848       16,995,737       17,111,532       16,919,677
property
Secured loans
receivable and   400,889          470,441          490,107          635,002          215,775
investments,
net
Investments in
unconsolidated   91,531           93,155           94,257           95,409           90,992        
entities
Net real
estate           18,667,363       17,699,444       17,580,101       17,841,943       17,226,444
investments
Cash and cash    54,672           62,421           57,690           67,908           58,530
equivalents
Escrow
deposits and     98,200           94,492           99,225           105,913          76,908
restricted
cash
Deferred
financing        55,242           50,821           54,079           42,551           25,426
costs, net
Other assets     1,003,881        889,404          915,826          921,685          1,053,591     
Total assets     $ 19,879,358     $ 18,796,582     $ 18,706,921     $ 18,980,000     $ 18,440,899  
                                                                                      
Liabilities
and equity
Liabilities:
Senior notes
payable and      $ 9,413,318      $ 8,420,073      $ 8,295,908      $ 8,413,646      $ 7,494,774
other debt
Accrued          62,176           50,860           58,086           47,565           56,326
interest
Accounts
payable and      1,019,166        887,314          910,692          995,156          1,049,043
other
liabilities
Deferred         248,369          247,591          261,122          259,715          265,116       
income taxes
Total            10,743,029       9,605,838        9,525,808        9,716,082        8,865,259
liabilities
                                                                                      
Redeemable OP
unitholder and   171,921          184,217          194,302          174,555          113,908
noncontrolling
interests
                                                                                      
Commitments
and
contingencies
                                                                                      
Equity:
Ventas
stockholders'
equity:
Preferred
stock, $1.00
par value;       —                —                —                —                —
10,000 shares
authorized,
unissued
Common stock,
$0.25 par
value;
297,328;
296,940;
295,823;
295,565 and
295,534 shares
issued at        74,345           74,248           73,969           73,904           73,896
September 30,
2013, June 30,
2013, March
31, 2013,
December 31,
2012 and
September 30,
2012,
respectively
Capital in
excess of par    10,032,285       9,996,095        9,904,694        9,920,962        9,941,030
value
Accumulated
other            21,293           19,752           21,828           23,354           23,626
comprehensive
income
Retained
earnings         (1,021,628   )   (943,384     )   (861,434     )   (777,927     )   (680,888     )
(deficit)
Treasury
stock, 3,699;
3,698; 3,736;
3,699 and 0
shares at
September 30,
2013, June 30,   (221,203     )   (221,129     )   (223,709     )   (221,165     )   —             
2013, March
31, 2013,
December 31,
2012, and
September 30,
2012,
respectively
Total Ventas
stockholders'    8,885,092        8,925,582        8,915,348        9,019,128        9,357,664
equity
Noncontrolling   79,316           80,945           71,463           70,235           104,068       
interest
Total equity     8,964,408        9,006,527        8,986,811        9,089,363        9,461,732     
Total
liabilities      $ 19,879,358     $ 18,796,582     $ 18,706,921     $ 18,980,000     $ 18,440,899  
and equity

 
CONSOLIDATED STATEMENTS OF INCOME
For the three and nine months ended September 30, 2013 and 2012
(In thousands, except per share amounts)
                                                                  
                         For the Three Months        For the Nine Months
                         Ended September 30,         Ended September 30,
                                                                    
                         2013          2012          2013          2012
Revenues:
Rental income:
Triple-net leased        $ 219,170     $ 207,372     $ 645,719     $ 613,939
Medical office           115,444       100,814       337,536       253,889    
buildings
                         334,614       308,186       983,255       867,828
Resident fees and        359,112       316,560       1,039,876     905,190
services
Medical office
building and other       4,146         4,544         11,331        16,791
services revenue
Income from loans and    14,448        9,035         45,284        25,223
investments
Interest and other       66            330           1,901         442        
income
Total revenues           712,386       638,655       2,081,647     1,815,474
                                                                    
Expenses:
Interest                 84,089        74,037        245,622       214,028
Depreciation and         177,710       188,540       528,180       534,792
amortization
Property-level
operating expenses:
Senior living            244,316       216,306       706,561       618,471
Medical office           40,796        36,144        115,738       86,468     
buildings
                         285,112       252,450       822,299       704,939
Medical office
building services        1,651         1,487         4,957         8,314
costs
General,
administrative and       28,659        26,867        84,760        75,488
professional fees
(Gain) loss on
extinguishment of        (189      )   (1,194    )   (909      )   38,339
debt, net
Merger-related
expenses and deal        6,208         4,917         17,137        49,566
costs
Other                    4,353         1,966         13,325        5,052      
Total expenses           587,593       549,070       1,715,371     1,630,518  
                                                                    
Income before
income/loss from
unconsolidated
entities, income         124,793       89,585        366,276       184,956
taxes, discontinued
operations and
noncontrolling
interest
Income from
unconsolidated           110           17,074        533           17,905
entities
Income tax benefit       2,780         8,886         13,100        2,727      
Income from continuing   127,683       115,545       379,909       205,588
operations
Discontinued             (9,084    )   (3,724    )   (33,679   )   70,061     
operations
Net income               118,599       111,821       346,230       275,649
Net income (loss)
attributable to          303           (61       )   1,161         (884      )
noncontrolling
interest
Net income
attributable to common   $ 118,296     $ 111,882     $ 345,069     $ 276,533  
stockholders
                                                                    
Earnings per common
share:
Basic:
Income from continuing
operations
attributable to
common stockholders      $ 0.43        $ 0.39        $ 1.30        $ 0.71
Discontinued             (0.03     )   (0.01     )   (0.12     )   0.24       
operations
Net income
attributable to common   $ 0.40        $ 0.38        $ 1.18        $ 0.95     
stockholders
Diluted:
Income from continuing
operations
attributable to
common stockholders      $ 0.43        $ 0.39        $ 1.28        $ 0.70
Discontinued             (0.03     )   (0.01     )   (0.11     )   0.24       
operations
Net income
attributable to common   $ 0.40        $ 0.38        $ 1.17        $ 0.94     
stockholders
                                                                    
Weighted average
shares used in
computing earnings per
common share:
Basic                    292,818       294,928       292,308       291,177
Diluted                  295,190       297,407       294,788       293,622
                                                                    
Dividends declared per   $ 0.67        $ 0.62        $ 2.01        $ 1.86
common share

 
QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
                                                                        
                 2013 Quarters                             2012 Quarters
                 Third         Second        First         Fourth        Third
                                                                          
Revenues:
Rental income:
Triple-net       $ 219,170     $ 213,634     $ 212,915     $ 206,966     $ 207,372
leased
Medical office   115,444       110,946       111,146       108,951       100,814    
buildings
                 334,614       324,580       324,061       315,917       308,186
Resident fees    359,112       341,594       339,170       321,933       316,560
and services
Medical office
building and     4,146         3,537         3,648         3,950         4,544
other services
revenue
Income from
loans and        14,448        14,733        16,103        14,690        9,035
investments
Interest and     66            797           1,038         665           330        
other income
Total revenues   712,386       685,241       684,020       657,155       638,655
                                                                          
Expenses:
Interest         84,089        82,568        78,965        75,850        74,037
Depreciation
and              177,710       172,192       178,278       182,157       188,540
amortization
Property-level
operating
expenses:
Senior living    244,316       231,337       230,908       222,551       216,306
Medical office   40,796        38,401        36,541        39,684        36,144     
buildings
                 285,112       269,738       267,449       262,235       252,450
Medical office
building         1,651         1,667         1,639         1,569         1,487
services costs
General,
administrative
and              28,659        27,327        28,774        23,022        26,867
professional
fees
Gain on
extinguishment   (189      )   (720      )   —             (699      )   (1,194    )
of debt, net
Merger-related
expenses and     6,208         6,667         4,262         13,617        4,917
deal costs
Other            4,353         4,385         4,587         1,887         1,966      
Total expenses   587,593       563,824       563,954       559,638       549,070    
                                                                          
Income before
income/loss
from
unconsolidated
entities,        124,793       121,417       120,066       97,517        89,585
income taxes,
discontinued
operations and
noncontrolling
interest
Income (loss)
from             110           (506      )   929           249           17,074
unconsolidated
entities
Income tax
benefit          2,780         12,064        (1,744    )   3,555         8,886      
(expense)
Income from
continuing       127,683       132,975       119,251       101,321       115,545
operations
Discontinued     (9,084    )   (18,442   )   (6,153    )   (15,195   )   (3,724    )
operations
Net income       118,599       114,533       113,098       86,126        111,821
Net income
(loss)
attributable     303           (47       )   905           (141      )   (61       )
to
noncontrolling
interest
Net income
attributable     $ 118,296     $ 114,580     $ 112,193     $ 86,267      $ 111,882  
to common
stockholders
                                                                          
Earnings per
common share:
Basic:
Income from
continuing
operations
attributable
to
common           $ 0.43        $ 0.45        $ 0.40        $ 0.34        $ 0.39
stockholders
Discontinued     (0.03     )   (0.06     )   (0.02     )   (0.05     )   (0.01     )
operations
Net income
attributable     $ 0.40        $ 0.39        $ 0.38        $ 0.29        $ 0.38     
to common
stockholders
Diluted:
Income from
continuing
operations
attributable
to
common           $ 0.43        $ 0.45        $ 0.40        $ 0.34        $ 0.39
stockholders
Discontinued     (0.03     )   (0.06     )   (0.02     )   (0.05     )   (0.01     )
operations
Net income
attributable     $ 0.40        $ 0.39        $ 0.38        $ 0.29        $ 0.38     
to common
stockholders
                                                                          
Weighted
average shares
used in
computing
earnings per
common share:
Basic            292,818       292,635       291,455       294,704       294,928
Diluted          295,190       295,123       293,924       297,089       297,407

 
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2013 and 2012
(In thousands)
                                                   2013           2012
Cash flows from operating activities:
Net income                                         $  346,230     $  275,649
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization (including amounts   569,325        563,027
in discontinued operations)
Amortization of deferred revenue and lease         (11,159    )   (12,965    )
intangibles, net
Other non-cash amortization                        (13,376    )   (31,326    )
Stock-based compensation                           15,010         16,529
Straight-lining of rental income, net              (21,165    )   (16,712    )
(Gain) loss on extinguishment of debt, net         (1,062     )   38,339
Gain on real estate dispositions, net (including   (2,241     )   (79,148    )
amounts in discontinued operations)
(Gain) loss on real estate loan investments        (3,598     )   559
Gain on sale of marketable debt securities         (856       )   —
Income tax benefit (including amounts in           (13,100    )   (2,731     )
discontinued operations)
Loss (income) from unconsolidated entities         707            (1,260     )
Gain on re-measurement of equity interest upon     (1,241     )   (16,645    )
acquisition, net
Other                                              6,133          6,472
Changes in operating assets and liabilities:
Increase in other assets                           (28,132    )   (11,930    )
Increase in accrued interest                       14,624         18,730
Decrease in accounts payable and other             (20,670    )   (37,269    )
liabilities
Net cash provided by operating activities          835,429        709,319
Cash flows from investing activities:
Net investment in real estate property             (1,358,766 )   (1,154,912 )
Purchase of noncontrolling interest                (7,895     )   (3,934     )
Investment in loans receivable and other           (34,717    )   (30,523    )
Proceeds from real estate disposals                29,191         75,145
Proceeds from loans receivable                     299,156        34,817
Proceeds from sale or maturity of marketable       5,493          —
securities
Funds held in escrow for future development        15,189         —
expenditures
Development project expenditures                   (74,707    )   (90,119    )
Capital expenditures                               (50,634    )   (42,270    )
Other                                              (411       )   (2,110     )
Net cash used in investing activities              (1,178,101 )   (1,213,906 )
Cash flows from financing activities:
Net change in borrowings under revolving credit    (92,586    )   248,921
facility
Proceeds from debt                                 1,766,844      1,568,382
Repayment of debt                                  (840,532   )   (1,103,000 )
Payment of deferred financing costs                (19,977    )   (4,257     )
Issuance of common stock, net                      106,002        342,469
Cash distribution to common stockholders           (588,770   )   (545,240   )
Cash distribution to redeemable OP unitholders     (3,479     )   (3,358     )
Purchases of redeemable OP units                   (317       )   (1,760     )
Contributions from noncontrolling interest         2,094          —
Distributions to noncontrolling interest           (7,614     )   (4,035     )
Other                                              7,830          19,130      
Net cash provided by financing activities          329,495        517,252     
Net (decrease) increase in cash and cash           (13,177    )   12,665
equivalents
Effect of foreign currency translation on cash     (59        )   58
and cash equivalents
Cash and cash equivalents at beginning of period   67,908         45,807      
Cash and cash equivalents at end of period         $  54,672      $  58,530   
                                                                   
Supplemental schedule of non-cash activities:
Assets and liabilities assumed from
acquisitions:
Real estate investments                            $  221,447     $  497,755
Utilization of funds held for an Internal          —              (134,003   )
Revenue Code Section 1031 exchange
Other assets acquired                              6,526          99,889
Debt assumed                                       183,848        367,902
Other liabilities                                  27,583         60,684
Deferred income tax liability                      4,849          4,299
Noncontrolling interests                           11,693         26,430
Equity issued                                      —              4,326
Debt transferred on the sale of assets             —              14,535

 
QUARTERLY CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
                                                                          
                  2013 Quarters                              2012 Quarters
                  Third          Second        First         Fourth        Third
Cash flows from
operating
activities:
Net income        $  118,599     $ 114,533     $ 113,098     $  86,126     $ 111,821
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Depreciation
and
amortization
(including        188,393        193,989       186,943       201,748       196,622
amounts in
discontinued
operations)
Amortization of
deferred
revenue and       (4,156     )   (3,693    )   (3,310    )   (4,153    )   (4,136    )
lease
intangibles,
net
Other non-cash    (3,975     )   (4,072    )   (5,329    )   (8,617    )   (10,141   )
amortization
Stock-based       4,210          5,138         5,662         4,255         5,443
compensation
Straight-lining
of rental         (6,835     )   (6,465    )   (7,865    )   (7,330    )   (6,242    )
income, net
Gain on
extinguishment    (189       )   (873      )   —             (699      )   (1,194    )
of debt, net
Gain on real
estate
dispositions,
net (including    (46        )   (1,718    )   (477      )   (1,804    )   (357      )
amounts in
discontinued
operations)
Gain on real
estate loan       (2,499     )   (759      )   (340      )   (5,789    )   —
investments
Gain on sale of
marketable debt   —              (856      )   —             —             —
securities
Income tax
(benefit)
expense
(including        (2,780     )   (12,064   )   1,744         (3,555    )   (8,869    )
amounts in
discontinued
operations)
(Income) loss
from              (111       )   506           312           (249      )   (429      )
unconsolidated
entities
Gain on
re-measurement
of equity         —              —             (1,241    )   —             (16,645   )
interest upon
acquisition,
net
Other             2,261          967           2,905         3,942         482
Changes in
operating
assets and
liabilities:
(Increase)
decrease in       (11,717    )   (5,956    )   (10,459   )   15,686        (12,791   )
other assets
Increase
(decrease) in     11,309         (7,215    )   10,530        (8,761    )   8,471
accrued
interest
Increase
(decrease) in
accounts          35,277         5,921         (61,868   )   12,697        (13,524   )
payable and
other
liabilities
Net cash
provided by       327,741        277,383       230,305       283,497       248,511
operating
activities
Cash flows from
investing
activities:
Net investment
in real estate    (1,075,144 )   (227,447  )   (56,175   )   (298,153  )   (255,508  )
property
Purchase of
private           —              —             —             (276,419  )   —
investment
funds
Purchase of
noncontrolling    (1,771     )   (2,938    )   (3,186    )   —             —
interest
Investment in
loans             (2,385     )   (29,543   )   (2,789    )   (422,035  )   (3,263    )
receivable and
other
Proceeds from
real estate       4,901          13,040        11,250        73,900        66,298
disposals
Proceeds from
loans             81,113         71,649        146,394       8,402         1,594
receivable
Proceeds from
sale or
maturity of       —              5,493         —             37,500        —
marketable
securities
Funds held in
escrow for
future            3,373          6,376         5,440         (28,050   )   —
development
expenditures
Development
project           (26,423    )   (26,696   )   (21,588   )   (23,883   )   (29,558   )
expenditures
Capital           (18,175    )   (12,664   )   (19,795   )   (27,160   )   (18,458   )
expenditures
Other             —              (333      )   (78       )   115           40         
Net cash (used
in) provided by   (1,034,511 )   (203,063  )   59,473        (955,783  )   (238,855  )
investing
activities
Cash flows from
financing
activities:
Net change in
borrowings        188,340        94,990        (375,916  )   (163,983  )   337,575
under revolving
credit facility
Proceeds from     848,389        1,584         916,871       1,142,023     299,067
debt
Repayment of      (155,014   )   (49,725   )   (635,793  )   (90,023   )   (457,278  )
debt
Payment of
deferred          (6,980     )   811           (13,808   )   (19,513   )   (1,277    )
financing costs
Issuance of
common stock,     23,618         77,334        5,050         —             —
net
Cash
distribution to   (196,540   )   (196,530  )   (195,700  )   (183,306  )   (183,283  )
common
stockholders
Cash
distribution to   (1,166     )   (1,162    )   (1,151    )   (1,088    )   (1,117    )
redeemable OP
unitholders
Purchases of
redeemable OP     (109       )   (100      )   (108      )   (2,841    )   (1,149    )
units
Contributions
from              —              2,094         —             —             —
noncontrolling
interest
Distributions
to                (2,569     )   (3,595    )   (1,450    )   (1,180    )   (1,128    )
noncontrolling
interest
Other             1,022          4,750         2,058         1,573         4,621      
Net cash
provided by
(used in)         698,991        (69,549   )   (299,947  )   681,662       (3,969    )
financing
activities
Net (decrease)
increase in       (7,779     )   4,771         (10,169   )   9,376         5,687
cash and cash
equivalents
Effect of
foreign
currency          30             (40       )   (49       )   2             40
translation on
cash and cash
equivalents
Cash and cash
equivalents at    62,421         57,690        67,908        58,530        52,803     
beginning of
period
Cash and cash
equivalents at    $  54,672      $ 62,421      $ 57,690      $  67,908     $ 58,530   
end of period
                                                                            
Supplemental
schedule of
non-cash
activities:
Assets and
liabilities
assumed from
acquisitions:
Real estate       $  131,427     $ 81,181      $ 8,839       $  84,939     $ 132,872
investments
Other assets      3,964          1,894         668           (22,159   )   18,380
acquired
Debt assumed      115,246        68,602        —             44,923        117,539
Other             17,090         4,071         6,422         9,707         34,045
liabilities
Deferred income   3,055          262           1,532         —             (1,596    )
tax liability
Noncontrolling    —              10,140        1,553         8,150         1,264
interests

                                                                                                                                       
NON-GAAP FINANCIAL MEASURES RECONCILIATION
Funds From Operations (FFO) Including and Excluding Non-Cash Items^1
(Dollars in thousands, except per share amounts)
                                                                                                                                         
                                                                                                        Tentative Estimates
                                                                                                        Preliminary and
                                                                                                        Subject to Change               YOY
                  2012                                        2013                                      FY2013 - Guidance               Growth
                                                                                                                                        ^2
                  Q3            Q4            FY              Q1            Q2            Q3            Low             High            '12-'13E
Net income
attributable to   $ 111,882     $ 86,267      $ 362,800       $ 112,193     $ 114,580     $ 118,296     $ 449,088       $ 460,091
common
stockholders
Net income
attributable to
common            $ 0.38        $ 0.29        $ 1.23          $ 0.38        $ 0.39        $ 0.40        $ 1.52          $ 1.56
stockholders
per share
                                                                                                                                         
Adjustments:
Depreciation
and
amortization on   187,288       180,889       712,526         177,000       170,776       176,263       726,540         721,540
real estate
assets
Depreciation on
real estate
assets related
to
noncontrolling    (2,221    )   (2,435    )   (8,503      )   (2,502    )   (2,617    )   (2,719    )   (10,015     )   (11,015     )
interest
Depreciation on
real estate
assets related
to
unconsolidated    1,700         1,510         7,516           1,646         1,622         1,634         6,652           6,152
entities
Gain on
re-measurement
of equity
interest upon
acquisition,      (16,645   )   —             (16,645     )   (1,241    )   —             —             (1,241      )   (1,241      )
net
Discontinued
operations:
Gain on real
estate            (357      )   (1,804    )   (80,952     )   (477      )   (1,718    )   (488      )   (3,184      )   (2,184      )
dispositions,
net
Depreciation
and
amortization on   8,082         19,590        47,825          8,665         21,798        10,682        41,145          41,145       
real estate
assets
Subtotal: FFO     177,847       197,750       661,767         183,091       189,861       185,372       759,897         754,397
add-backs
Subtotal: FFO
add-backs per     $ 0.60        $ 0.67        $ 2.25          $ 0.62        $ 0.64        $ 0.63        $ 2.57          $ 2.56           
share
FFO               $ 289,729     $ 284,017     $ 1,024,567     $ 295,284     $ 304,441     $ 303,668     $ 1,208,985     $ 1,214,488     18   %
FFO per share     $ 0.97        $ 0.96        $ 3.48          $ 1.00        $ 1.03        $ 1.03        $ 4.10          $ 4.11          18   %
                                                                                                                                         
Adjustments:
Merger-related
expenses and      4,917         13,617        63,183          4,262         6,592         6,209         17,200          21,200
deal costs
Income tax
(benefit)         (8,870    )   (3,555    )   (6,286      )   1,744         (12,064   )   (2,780    )   (11,000     )   (13,000     )
expense
(Gain) loss on
extinguishment    (1,194    )   (699      )   37,640          —             (873      )   (189      )   —               (2,000      )
of debt
Change in fair
value of          58            (52       )   99              25            —             —             25              25
financial
instruments
Amortization of
other             256           255           1,022           256           255           256           822             1,222        
intangibles
Subtotal:
normalized FFO    (4,833    )   9,566         95,658          6,287         (6,090    )   3,496         7,047           7,447
add-backs
Subtotal:
normalized FFO    $ (0.02   )   $ 0.03        $ 0.32          $ 0.02        $ (0.02   )   $ 0.01        $ 0.02          $ 0.03           
add-backs per
share
Normalized FFO    $ 284,896     $ 293,583     $ 1,120,225     $ 301,571     $ 298,351     $ 307,164     $ 1,216,032     $ 1,221,935     9    %
Normalized FFO    $ 0.96        $ 0.99        $ 3.80          $ 1.03        $ 1.01        $ 1.04        $ 4.12          $ 4.14          9    %
per share
                                                                                                                                         
Non-cash items
included in
normalized FFO:
Amortization of
deferred
revenue and
lease
intangibles,      (4,136    )   (4,153    )   (17,118     )   (3,310    )   (3,693    )   (4,156    )   (15,590     )   (15,590     )
net
Other non-cash
amortization,
including fair
market
value of debt     (10,141   )   (8,617    )   (39,943     )   (5,329    )   (4,072    )   (3,975    )   (16,274     )   (17,274     )
Stock-based       5,443         4,255         20,784          5,662         5,138         4,210         19,797          21,797
compensation
Straight-lining
of rental         (6,242    )   (7,330    )   (24,042     )   (7,865    )   (6,465    )   (6,835    )   (30,363     )   (30,863     )
income, net
Subtotal:
non-cash items    (15,076   )   (15,845   )   (60,319     )   (10,842   )   (9,092    )   (10,756   )   (42,430     )   (41,930     )
included in
normalized FFO
Subtotal:
normalized FFO    $ (0.05   )   $ (0.05   )   $ (0.20     )   $ (0.04   )   $ (0.03   )   $ (0.04   )   $ (0.14     )   $ (0.14     )    
add-backs per
share
Normalized FFO,
excluding         $ 269,820     $ 277,738     $ 1,059,906     $ 290,729     $ 289,259     $ 296,408     $ 1,173,602     $ 1,180,005     11   %
non-cash items
Normalized FFO,
excluding         $ 0.91        $ 0.93        $ 3.60          $ 0.99        $ 0.98        $ 1.00        $ 3.98          $ 4.00          11   %
non-cash items
per share
Weighted
average diluted   297,407       297,089       294,488         293,924       295,123       295,190       295,154         295,154
shares
                                                                                                                                         
 
^1 Totals and per share amounts may not add due to rounding. Per share quarterly amounts may not add to annual per share amounts due to changes
in the Company’s weighted average diluted share count, if any.
^2 2012-2013E growth assumes the midpoint of 2013 guidance.
 

Historical cost accounting for real estate assets implicitly assumes that the
value of real estate assets diminishes predictably over time. Since real
estate values instead have historically risen or fallen with market
conditions, many industry investors have considered presentations of operating
results for real estate companies that use historical cost accounting to be
insufficient by themselves. To overcome this problem, the Company considers
FFO and normalized FFO appropriate measures of operating performance of an
equity REIT. Moreover, the Company believes that normalized FFO provides
useful information 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
such as transactions and litigation.

The Company uses the NAREIT definition of FFO. NAREIT defines FFO as net
income, computed in accordance with GAAP, excluding gains (or losses) from
sales of real estate property, including gain 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) net gains on
the sales of real property assets, including gain on re-measurement of equity
method investments; (b) merger-related costs and expenses, including
amortization of intangibles and transition and integration expenses, and deal
costs and expenses, including expenses and recoveries relating to acquisition
lawsuits; (c) 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; (d) 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; (e) except as specifically stated in the case of
guidance, the impact of future acquisitions or divestitures (including
pursuant to tenant options to purchase) and capital transactions; (f) the
financial impact of contingent consideration; (g) charitable donations made to
the Ventas Charitable Foundation; and (h) gains and losses for non-operational
foreign currency hedge agreements and changes in the fair value of financial
instruments.

FFO and normalized FFO presented herein may not be identical to FFO and
normalized FFO presented by other real estate companies due to the fact that
not all real estate companies use the same definitions. FFO and normalized FFO
should not be considered as alternatives to net income (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 FFO and
normalized FFO necessarily indicative of sufficient cash flow to fund all of
the Company’s needs. The Company believes that in order to facilitate a clear
understanding of the consolidated historical operating results of the Company,
FFO and normalized FFO should be examined in conjunction with net income as
presented elsewhere herein.

                  NON-GAAP FINANCIAL MEASURES RECONCILIATION
                    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 September 30,
2013, 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 gains or losses on extinguishment of debt,
merger-related expenses and deal costs, net gains on real estate activity 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                 $ 118,296
Pro forma adjustments for current period investments, capital
transactions and dispositions                                  10,893       
Pro forma net income for the three months ended September 30,  129,189
2013
Add back:
Pro forma interest                                             91,375
Pro forma depreciation and amortization                        190,139
Stock-based compensation                                       4,210
Gain on real estate dispositions, net                          (488        )
Gain on extinguishment of debt, net                            (189        )
Income tax benefit                                             (2,780      )
Other taxes                                                    1,318
Pro forma merger-related expenses and deal costs               3,466        
Adjusted Pro Forma EBITDA                                      $ 416,240    
                                                                              
Adjusted Pro Forma EBITDA annualized                           $ 1,664,960  
                                                                              
                                                                              
As of September 30, 2013:
Debt                                                           $ 9,413,318
Cash, including cash escrows pertaining to debt                (86,352     )
Net debt                                                       $ 9,326,966  
                                                                              
Net debt to Adjusted Pro Forma EBITDA                          5.6           x
                                                                              

                  NON-GAAP FINANCIAL MEASURES RECONCILIATION
          Adjusted Pro Forma EBITDA and Fixed Charge Coverage Ratio

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 trailing twelve months ended
September 30, 2013, as if the transactions had been consummated as of the
beginning of the period. The following table illustrates Adjusted Pro Forma
EBITDA and fixed charge coverage ratio (dollars in thousands):

Net income attributable to common stockholders                 $ 431,336
Pro forma adjustments for current period investments,
capital
transactions and dispositions                                  92,475       
Pro forma net income                                           523,811
Add back:
Pro forma interest                                             326,628
Pro forma depreciation and amortization                        771,042
Stock-based compensation                                       19,265
Gain on real estate dispositions, net                          (4,487      )
Gain on extinguishment of debt, net                            (1,761      )
Gain on re-measurement of equity interest upon acquisition,    (1,241      )
net
Income tax benefit                                             (16,655     )
Other taxes                                                    4,455
Pro forma merger-related expenses and deal costs               25,776       
Adjusted Pro Forma EBITDA                                      $ 1,646,833  
                                                                              
Adjusted Pro Forma Fixed Charges:
Adjusted interest                                              $ 305,193
Scheduled principal debt payments                              52,061
Non-cash amortization and pro forma adjustments                26,349       
Total pro forma fixed charges                                  $ 383,603    
                                                                              
Adjusted Pro Forma Fixed Charge Coverage Ratio                 4.3           x

 
NON-GAAP FINANCIAL MEASURES RECONCILIATION
FFO and Normalized FFO
(In thousands, except per share amounts)
                                                                  
                                                     For the Nine Months
                                                     Ended September 30,
                                                     2013          2012
                                                                    
Net income attributable to common stockholders       $ 345,069     $ 276,533
Adjustments:
Depreciation and amortization on real estate         524,039       531,637
assets
Depreciation on real estate assets related to        (7,838    )   (6,068    )
noncontrolling interest
Depreciation on real estate assets related to        4,902         6,006
unconsolidated entities
Gain on re-measurement of equity interest upon       (1,241    )   (16,645   )
acquisition, net
Discontinued operations:
Gain on real estate dispositions, net                (2,683    )   (79,148   )
Depreciation and amortization on real estate         41,145        28,235     
assets
FFO                                                  903,393       740,550
Merger-related expenses and deal costs               17,063        49,566
Income tax benefit                                   (13,100   )   (2,731    )
(Gain) loss on extinguishment of debt, net           (1,062    )   38,339
Change in fair value of financial instruments        25            151
Amortization of other intangibles                    767           767        
Normalized FFO                                       $ 907,086     $ 826,642  
                                                                    
Per diluted share ^1:
Net income attributable to common stockholders       $ 1.17        $ 0.94
Adjustments:
Depreciation and amortization on real estate         1.78          1.81
assets
Depreciation on real estate assets related to        (0.03     )   (0.02     )
noncontrolling interest
Depreciation on real estate assets related to        0.02          0.02
unconsolidated entities
Gain on re-measurement of equity interest upon       0.00          (0.06     )
acquisition, net
Discontinued operations:
Gain on real estate dispositions, net                (0.01     )   (0.27     )
Depreciation and amortization on real estate         0.14          0.10       
assets
FFO                                                  3.06          2.52
Merger-related expenses and deal costs               0.06          0.17
Income tax benefit                                   (0.04     )   (0.01     )
(Gain) loss on extinguishment of debt, net           (0.00     )   0.13
Change in fair value of financial instruments        0.00          0.00
Amortization of other intangibles                    0.00          0.00       
Normalized FFO                                       $ 3.08        $ 2.82     
                                                                    
^1 Per share amounts may not add due to rounding.

 
NON-GAAP FINANCIAL MEASURES RECONCILIATION
NOI by Segment ^1
(In thousands)
                                                          
                 2013 Quarters                             2012 Quarters
                 Third         Second        First         Fourth        Third
Revenues
                                                                          
Triple-Net
Triple-Net       $ 219,170     $ 213,634     $ 212,915     $ 206,966     $ 207,372
Rental Income
                                                                          
Medical Office
Buildings
Medical Office   108,083       104,889       105,167       102,895       95,314
- Stabilized
Medical Office   7,361         6,057         5,979         6,056         5,500
- Lease up
Total Medical
Office           115,444       110,946       111,146       108,951       100,814
Buildings -
Rental Income
Total Rental     334,614       324,580       324,061       315,917       308,186
Income
                                                                          
Medical Office
Building         2,530         2,159         2,537         2,840         3,434
Services
Revenue
Total Medical
Office           117,974       113,105       113,683       111,791       104,248
Buildings -
Revenue
                                                                          
Triple-Net
Services         1,116         1,115         1,111         1,110         1,110
Revenue
Non-Segment
Services         500           263           —             —             —
Revenue
Total Medical
Office
Building and     4,146         4,146         3,648         3,950         4,544
Other Services
Revenue
                                                                          
Seniors
Housing
Operating
Seniors
Housing -        355,294       338,244       335,873       318,761       313,289
Stabilized
Seniors
Housing -        3,152         2,624         2,556         2,431         2,530
Lease up
Seniors
Housing -        666           726           741           741           741
Other
Total Resident
Fees and         359,112       341,594       339,170       321,933       316,560
Services
                                                                          
Non-Segment
Income from      14,448        14,733        16,103        14,690        9,035
Loans and
Investments
Total
Revenues,
excluding        712,320       684,444       682,982       656,490       638,325
Interest and
Other Income
                                                                          
Property-Level
Operating
Expenses
                                                                          
Medical Office
Buildings
Medical Office   37,902        36,177        34,620        37,446        33,978
- Stabilized
Medical Office   2,894         2,224         1,921         2,238         2,166
- Lease up
Total Medical
Office           40,796        38,401        36,541        39,684        36,144
Buildings
                                                                          
Seniors
Housing
Operating
Seniors
Housing -        241,319       228,776       228,396       219,887       213,829
Stabilized
Seniors
Housing -        2,392         1,946         1,898         2,084         1,848
Lease up
Seniors
Housing -        605           615           614           580           629
Other
Total Seniors    244,316       231,337       230,908       222,551       216,306
Housing
Total
Property-Level   285,112       269,738       267,449       262,235       252,450
Operating
Expenses
                                                                          
Medical Office
Building         1,651         1,667         1,639         1,569         1,487
Services Costs
                                                                          
Net Operating
Income
                                                                          
Triple-Net
Triple-Net       219,170       213,634       212,915       206,966       207,372
Properties
Triple-Net
Services         1,116         1,115         1,111         1,110         1,110
Revenue
Total            220,286       214,749       214,026       208,076       208,482
Triple-Net
                                                                          
Medical Office
Buildings
Medical Office   70,181        68,712        70,547        65,449        61,336
- Stabilized
Medical Office   4,467         3,833         4,058         3,818         3,334
- Lease up
Medical Office
Buildings        879           492           898           1,271         1,947
Services
Total Medical
Office           75,527        73,037        75,503        70,538        66,617
Buildings
                                                                          
Seniors
Housing
Operating
Seniors
Housing -        113,975       109,468       107,477       98,874        99,460
Stabilized
Seniors
Housing -        760           678           658           347           682
Lease up
Seniors
Housing -        61            111           127           161           112
Other
Total Seniors    114,796       110,257       108,262       99,382        100,254
Housing
Non-Segment      14,948        14,996        16,103        14,690        9,035
Net Operating    $ 425,557     $ 413,039     $ 413,894     $ 392,686     $ 384,388
Income
                                                                          
^1 Amounts above are adjusted to exclude discontinued operations for all periods
presented.

                                                                      
NON-GAAP FINANCIAL MEASURES RECONCILIATION
(Dollars in thousands)
                                                   
Total Same-Store Portfolio NOI
                                                    For the Three Months Ended
                                                    September 30,
                                                    2013           2012
                                                                      
Net Operating Income                                $  425,557     $ 384,388
                                                                      
Less:
NOI Not Included in Same-Store                      33,390         8,296
Straight-Lining of Rental Income, Excluding         6,842          6,135
Discontinued Operations
Non-Cash Rental Income                              3,170          3,810
                                                                      
Non-Segment NOI                                     14,947         9,035      
                                                    58,349         27,276     
Same-Store Cash NOI as Reported                     $  367,208     $ 357,112  
                                                                      
Percentage Increase                                                2.8       %
                                                                      
Excluding Out of Period Cash Receipts               —              (4,544    )
                                                                      
Same-Store Cash NOI                                 $  367,208     $ 352,568  
                                                                      
Percentage Increase                                                4.2       %
                                                                      
Seniors Housing Operating Portfolio Same-Store NOI
                                                    For the Three Months Ended
                                                    September 30,
                                                    2013           2012
                                                                      
Net Operating Income                                $  114,796     $ 100,254
                                                                      
Less:
NOI Not Included in Same-Store                      10,213         111        
Same-Store NOI as Reported                          $  104,583     $ 100,143  
                                                                      
Percentage Increase                                                4.4       %
                                                                      
Excluding Real Estate Tax Credit                    —              (1,653    )
                                                                      
Same-Store NOI                                      $  104,583     $ 98,490   
                                                                      
Percentage Increase                                                6.2       %

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Contact:

Ventas, Inc.
Lori B. Wittman, (877) 4-VENTAS
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