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Borrowing Arrangements | 12 Months Ended
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Dec. 31, 2012
Debt Disclosure [Abstract] |
Borrowing Arrangements | Borrowing Arrangements The following is a summary of our senior notes payable and other debt as of December 31, 2012 and 2011:
| 2012 |  | 2011
| (In thousands)
Unsecured revolving credit facilities | $ | 540,727 |  |  | $ | 455,578 |
9% Senior Notes due 2012 | — |  |  | 82,433 |
8¼% Senior Notes due 2012 | — |  |  | 72,950 |
Unsecured term loan due 2013 | — |  |  | 200,000 |
6.25% Senior Notes due 2013 | 269,850 |  |  | 269,850 |
Unsecured term loan due 2015(1) | 130,336 |  |  | 126,875 |
3.125% Senior Notes due 2015 | 400,000 |  |  | 400,000 |
6% Senior Notes due 2015 | 234,420 |  |  | 234,420 |
6½% Senior Notes due 2016 | — |  |  | 200,000 |
Unsecured term loan due 2017(1) | 375,000 |  |  | 375,000 |
6¾% Senior Notes due 2017 | — |  |  | 225,000 |
Unsecured term loan due 2018 | 180,000 |  |  | — |
2.00% Senior Notes due 2018 | 700,000 |  |  | — |
4.00% Senior Notes due 2019 | 600,000 |  |  | — |
4.750% Senior Notes due 2021 | 700,000 |  |  | 700,000 |
4.25% Senior Notes due 2022 | 600,000 |  |  | — |
3.25% Senior Notes due 2022 | 500,000 |  |  | — |
6.90% Senior Notes due 2037 | 52,400 |  |  | 52,400 |
6.59% Senior Notes due 2038 | 22,973 |  |  | 22,973 |
Mortgage loans and other(2) | 2,880,609 |  |  | 2,762,964 |
Total | 8,186,315 |  |  | 6,180,443 |
Capital lease obligations | 142,412 |  |  | 143,006 |
Unamortized fair value adjustment | 111,623 |  |  | 144,923 |
Unamortized discounts | (26,704 | ) |  | (39,256 | )
Senior notes payable and other debt | $ | 8,413,646 |  |  | $ | 6,429,116 |
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(1) | These amounts represent in aggregate the approximate $500.0 million of borrowings outstanding under our unsecured term loan facility. Certain amounts included in the 2015 tranche are in the form of Canadian dollar borrowings.
(2) | Excludes debt related to real estate assets classified as held for sale as of December 31, 2012 and 2011, respectively. The total mortgage debt for these properties as of December 31, 2012 and 2011 was $23.2 million and $14.6 million, respectively, and is included in accounts payable and other liabilities on our Consolidated Balance Sheets.
Unsecured Revolving Credit Facility and Unsecured Term Loans We have $2.0 billion of aggregate borrowing capacity under our unsecured revolving credit facility, which may be increased to up to $2.5 billion at our option, subject to the satisfaction of certain conditions, and includes sublimits of (a) up to $200 million for letters of credit, (b) up to $200 million for swingline loans, (c) up to $250 million for loans in certain alternative currencies, and (d) up to 50% of the facility for certain negotiated rate loans. Borrowings under our unsecured revolving credit facility bear interest at a fluctuating rate per annum (based on the applicable LIBOR for Eurocurrency rate loans and the higher of (i) the federal funds rate plus 0.50%, (ii) the administrative agent’s prime rate and (iii) the applicable LIBOR plus 1.0% for base rate loans, plus, in each case, a spread based on our senior unsecured long-term debt ratings). We also pay a facility fee ranging from 15 to 45 basis points per annum (based on our senior unsecured long-term debt ratings) on the aggregate revolving commitments under our unsecured revolving credit facility. At December 31, 2012, the applicable spread was 110 basis points for Eurocurrency rate loans and 10 basis points for base rate loans, and the facility fee was 17.5 basis points. Borrowings under our unsecured revolving credit facility mature on October 16, 2015, but may be extended for an additional period of one year at our option, subject to the satisfaction of certain conditions. Our unsecured revolving credit facility imposes certain customary restrictions on us, including restrictions pertaining to: (i) liens; (ii) investments; (iii) the incurrence of additional indebtedness; (iv) mergers, sales of assets and dissolutions; (v) certain dividend, distribution and other payments; (vi) permitted businesses; (vii) transactions with affiliates; (viii) agreements limiting certain liens; and (ix) the maintenance of certain consolidated total leverage, secured debt leverage, unsecured leverage and fixed charge coverage ratios and minimum consolidated adjusted net worth, and contains customary events of default. At December 31, 2012, we had $540.7 million of borrowings outstanding, $5.9 million of outstanding letters of credit and $1.45 billion of available borrowing capacity under our unsecured revolving credit facility. We recognized a $2.4 million loss on extinguishment of debt for the year ended December 31, 2011, representing the write-off of unamortized deferred financing fees as a result of terminating our previous unsecured revolving credit facilities. In October 2012, we entered into a new $180.0 million unsecured term loan that matures in January 2018. Borrowings under the term loan bear interest at the applicable LIBOR plus a spread based on our senior unsecured long-term debt ratings (120 basis points at December 31, 2012). In August 2012, we prepaid in full our $200.0 million three-year unsecured term loan that was scheduled to mature in September 2013. The term loan was non-amortizing and bore interest at an all-in fixed rate of 4% per annum. In December 2011, we entered into a new $500.0 million unsecured term loan facility with a weighted average maturity of 4.5 years, initially priced at 125 basis points over LIBOR . The term loan facility consists of a three-year tranche and a five-year tranche and includes an accordion feature that permits us to expand our borrowing capacity to up to $900.0 million, subject to the satisfaction of certain conditions. Borrowings under the term loan facility may be made in U.S. dollars or Canadian dollars. Each of our existing term loans contains the same restrictive covenants as our unsecured revolving credit facility. Convertible Senior Notes In November 2011, we repaid in full $230.0 million principal amount outstanding of our 3 7/8% convertible senior notes due 2011 upon maturity. In accordance with the terms of the indenture governing the convertible notes, we paid the principal amount of the notes and accrued but unpaid interest thereon in cash and issued an aggregate of 943,714 shares of our common stock in settlement of the conversion value in excess of the principal amount. The conversion rate of the convertible notes had been subject to adjustment in certain circumstances, including the payment of certain quarterly dividends in excess of a reference amount. To the extent the market price of our common stock exceeded the conversion price, our earnings per share were diluted. The convertible notes had a minimal dilutive impact per share for the years ended December 31, 2011 and 2010. See “Note 15—Earnings Per Share.” Senior Notes As of December 31, 2012, we had outstanding $3.5 billion aggregate principal amount of senior notes issued by our subsidiaries, Ventas Realty and Ventas Capital Corporation (collectively, the “Ventas Issuers”), and approximately $580 million aggregate principal amount of senior notes that were issued by NHP and assumed by our subsidiary, Nationwide Health Properties, LLC (“NHP LLC”), as successor to NHP, in connection with the NHP acquisition. In February 2013, we repaid in full, at par, $270.0 million principal amount then outstanding of our 6.25% senior notes due 2013 upon maturity. In December 2012, we issued and sold $700.0 million aggregate principal amount of 2.00% senior notes due 2018, at a public offering price equal to 99.739% of par, for total proceeds of $698.2 million before the underwriting discount and expenses. In August 2012, we initially issued and sold $275.0 million aggregate principal amount of 3.25% senior notes due 2022 (the “2022 Notes”), at a public offering price equal to 99.027% of par, for total proceeds of $272.3 million before the underwriting discount and expenses. In December 2012, we issued and sold an additional $225.0 million principal amount of 2022 Notes, at a public offering price equal to 98.509% of par, for total proceeds of $221.6 million before the underwriting discount and expenses. In April 2012, we issued and sold $600.0 million aggregate principal amount of 4.00% senior notes due 2019, at a public offering price equal to 99.489% of par, for total proceeds of $596.9 million before the underwriting discount and expenses. In February 2012, we issued and sold $600.0 million aggregate principal amount of 4.25% senior notes due 2022, at a public offering price equal to 99.214% of par, for total proceeds of $595.3 million before the underwriting discount and expenses. During 2012, we repaid in full, at par, $155.4 million aggregate principal amount then outstanding of our 9% senior notes due 2012 and our 8.25% senior notes due 2012 upon maturity, and we redeemed (i) all $225.0 million principal amount then outstanding of our 6¾% senior notes due 2017 at a redemption price equal to 103.375% of par, plus accrued and unpaid interest to the redemption date, and (ii) all $200.0 million principal amount then outstanding of our 6½% senior notes due 2016 at a redemption price equal to 103.25% of par, plus accrued and unpaid interest to the redemption date, in each case pursuant to the terms of the applicable indenture governing the notes. As a result of these redemptions, we recognized a total loss on extinguishment of debt of $39.7 million. In May 2011, we issued and sold $700.0 million aggregate principal amount of 4.750% senior notes due 2021, at a public offering price equal to 99.132% of par, for total proceeds of $693.9 million before the underwriting discount and expenses. During 2011, we repaid in full, at par, $339.0 million principal amount then outstanding of our 6.50% senior notes due 2011 upon maturity, and we redeemed $200.0 million principal amount outstanding of our 6½% senior notes due 2016 at a redemption price equal to 103.25% of par, plus accrued and unpaid interest to the redemption date, pursuant to the terms of the indenture governing the notes. As a result of this redemption, we recognized a loss on extinguishment of debt of $8.7 million. In November 2010, we issued and sold $400.0 million aggregate principal amount of 3.125% senior notes due 2015, at a public offering price equal to 99.528% of par, for total proceeds of $398.1 million before the underwriting discount and expenses. During 2010, we repaid in full, at par, $1.4 million principal amount outstanding of our 6¾% senior notes due 2010 upon maturity, and we redeemed (i) all $71.7 million principal amount then outstanding of our 6 5/8% senior notes due 2014 at a redemption price equal to 102.21% of par, plus accrued and unpaid interest to the redemption date, and (ii) all $142.7 million principal amount then outstanding of our 7 1/8% senior notes due 2015 at a redemption price equal to 103.56% of par, plus accrued and unpaid interest to the redemption date, in each case pursuant to the terms of the applicable indenture governing the notes. As a result of these redemptions, we recognized a total loss on extinguishment of debt of $8.9 million. All of the Ventas Issuers’ senior notes are unconditionally guaranteed by Ventas. The Ventas Issuers’ senior notes are part of our and the Ventas Issuers’ general unsecured obligations, ranking equal in right of payment with all of our and the Ventas Issuers’ existing and future senior obligations and ranking senior in right of payment to all of our and the Ventas Issuers’ existing and future subordinated indebtedness. However, the Ventas Issuers’ senior notes are effectively subordinated to our and the Ventas Issuers’ secured indebtedness, if any, to the extent of the value of the assets securing that indebtedness. The Ventas Issuers’ senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of our subsidiaries (other than the Ventas Issuers). NHP LLC’s senior notes are part of NHP LLC’s general unsecured obligations, ranking equal in right of payment with all of NHP LLC’s existing and future senior obligations and ranking senior to all of NHP LLC’s existing and future subordinated indebtedness. However, NHP LLC’s senior notes are effectively subordinated to NHP LLC’s secured indebtedness, if any, to the extent of the value of the assets securing that indebtedness. NHP LLC’s senior notes are also structurally subordinated to the preferred equity and indebtedness, whether secured or unsecured, of its subsidiaries. The Ventas Issuers may redeem each series of their senior notes and NHP LLC may redeem each series of its senior notes (other than our 6.90% senior notes due 2037 and our 6.59% senior notes due 2038), in whole at any time or in part from time to time, prior to maturity at the redemption prices set forth in the applicable indenture (which include, in many instances, a make-whole premium), plus, in each case, accrued and unpaid interest thereon to the redemption date. Our 6.90% senior notes due 2037 are subject to repurchase at the option of the holders, at par, on October 1 in each of the years 2017 and 2027, and our 6.59% senior notes due 2038 are subject to repurchase at the option of the holders, at par, on July 7 in each of the years 2013, 2018, 2023 and 2028. Mortgages At December 31, 2012, we had 244 mortgage loans outstanding in the aggregate principal amount of $2.9 billion and secured by 248 of our properties. Of these loans, 223 loans in the aggregate principal amount of $2.5 billion bear interest at fixed rates ranging from 4.0% to 8.6% per annum, and 21 loans in the aggregate principal amount of $438.0 million bear interest at variable rates ranging from 1.0% to 7.3% per annum as of December 31, 2012. At December 31, 2012, the weighted average annual rate on our fixed rate mortgage loans was 6.1%, and the weighted average annual rate on our variable rate mortgage loans was 1.9%. Our mortgage loans had a weighted average maturity of 5.6 years as of December 31, 2012. During 2012, we assumed mortgage debt of $380.3 million and repaid in full mortgage loans oustanding in the aggregate principal amount of $344.2 million, and recognized a gain on extinguishment of debt of $2.1 million in connection with these repayments. Scheduled Maturities of Borrowing Arrangements and Other Provisions As of December 31, 2012, our indebtedness (excluding capital lease obligations) had the following maturities:
| Principal Amount Due at Maturity |  | Unsecured Revolving Credit Facility(1) |  | Scheduled Periodic Amortization |  | Total Maturities
| (In thousands)
2013 (2) | $ | 501,029 |  |  | $ | — |  |  | $ | 52,198 |  |  | $ | 553,227 |
2014 | 291,708 |  |  | — |  |  | 47,960 |  |  | 339,668 |
2015 | 1,073,272 |  |  | 540,727 |  |  | 38,673 |  |  | 1,652,672 |
2016 | 410,917 |  |  | — |  |  | 31,601 |  |  | 442,518 |
2017 | 922,731 |  |  | — |  |  | 19,427 |  |  | 942,158 |
Thereafter(2)(3) | 4,098,227 |  |  | — |  |  | 157,845 |  |  | 4,256,072 |
Total maturities | $ | 7,297,884 |  |  | $ | 540,727 |  |  | $ | 347,704 |  |  | $ | 8,186,315 |
(1) | At December 31, 2012, we had $67.9 million of unrestricted cash and cash equivalents, for $472.8 million of net borrowings outstanding under our unsecured revolving credit facility.
(2) | Excludes debt related to one property classified as held for sale as of December 31, 2012. The total mortgage debt for this property as of December 31, 2012 was $23.2 million and is scheduled to mature in 2013.
(3) | Includes $52.4 million aggregate principal amount of our 6.90% senior notes due 2037 that are subject to repurchase, at the option of the holders, on October 1 in each of the years 2017 and 2027, and $23.0 million aggregate principal amount of our 6.59% senior notes due 2038 that are subject to repurchase, at the option of the holders, on July 7 in each of the years 2013, 2018, 2023 and 2028.
The instruments governing our outstanding indebtedness contain covenants that limit our ability and the ability of certain of our subsidiaries to, among other things: (i) incur debt; (ii) make certain dividends, distributions and investments; (iii) enter into certain transactions; and/or (iv) merge, consolidate or sell certain assets. The Ventas Issuers’ senior notes also require us and our subsidiaries to maintain total unencumbered assets of at least 150% of our unsecured debt. Our unsecured revolving credit facility and term loans also require us to maintain certain financial covenants pertaining to, among other things, our consolidated leverage, secured debt, fixed charge coverage and net worth. As of December 31, 2012, we were in compliance with all of these covenants. Derivatives and Hedging In the normal course of our business, we are exposed to the effects of interest rate movements on future cash flows under our variable rate debt obligations and foreign currency exchange rate movements on our senior living operations. We follow established risk management policies and procedures, including the use of derivative instruments, to mitigate these risks. For interest rate exposures, we use derivatives primarily to fix the rate on our variable rate debt and to manage the cost of our borrowing obligations. We do not use derivative instruments for trading or speculative purposes, and we have a policy of entering into contracts only with major financial institutions based upon their credit ratings and other factors. When considered together with the underlying exposure that the derivative is designed to hedge, we do not expect that the use of derivatives in this manner would have any material adverse effect on our future financial condition or results of operations. Capital Leases As of December 31, 2012, we leased eight seniors housing communities pursuant to arrangements that are accounted for as capital leases. Net assets held under capital leases and included in net real estate investments on our Consolidated Balance Sheets totaled $215.0 million and $224.7 million as of December 31, 2012 and 2011, respectively. In January 2013, we acquired these facilities for aggregate consideration of $145.0 million, thereby eliminating our capital lease obligation. Unamortized Fair Value Adjustment As of December 31, 2012, the unamortized fair value adjustment related to the long-term debt we assumed in connection with various acquisitions was $111.6 million and will be recognized as effective yield adjustments over the remaining term of the instruments. The estimated aggregate amortization of the fair value adjustment related to long-term debt (which is reflected as a reduction of interest expense) was $52.3 million for the year ended December 31, 2012 and for each of the next five years will be as follows: 2013—$34.1 million; 2014—$28.2 million; 2015—$15.6 million; 2016—$8.9 million; and 2017—$5.3 million.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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