XML 21 R9.htm IDEA: XBRL DOCUMENT
v3.20.2

DESCRIPTION OF BUSINESS | 9 Months Ended
--- | ---
Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
DESCRIPTION OF BUSINESS | NOTE 1—DESCRIPTION OF BUSINESS Ventas, Inc. (together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us” or “our”), an S&P 500 company, is a real estate investment trust (“REIT”) with a highly diversified portfolio of senior housing, research and innovation, and healthcare properties located throughout the United States, Canada and the United Kingdom. As of September 30, 2020, we owned or managed through unconsolidated joint ventures approximately 1,200 properties (including properties classified as held for sale), consisting of senior housing communities, medical office buildings (“MOBs”), research and innovation centers, inpatient rehabilitation facilities (“IRFs”) and long-term acute care facilities (“LTACs”), and health systems. We also had 19 properties under development, including one property that is owned by an unconsolidated real estate entity. Our company was originally founded in 1983 and is headquartered in Chicago, Illinois. We primarily invest in senior housing, research and innovation, and healthcare properties through acquisitions and lease our properties to unaffiliated tenants or operate them through independent third-party managers. As of September 30, 2020, we leased a total of 377 properties (excluding properties within our office operations reportable business segment) to various healthcare operating companies under “triple-net” or “absolute-net” leases that obligate the tenants to pay all property-related expenses, including maintenance, utilities, repairs, taxes, insurance and capital expenditures. Our three largest tenants, Brookdale Senior Living Inc. (together with its subsidiaries, “Brookdale Senior Living”), Ardent Health Partners, LLC (together with its subsidiaries, “Ardent”) and Kindred Healthcare, LLC (together with its subsidiaries, “Kindred”) leased from us 121 properties (excluding seven properties managed by Brookdale Senior Living pursuant to long-term management agreements), 11 properties and 32 properties, respectively, as of September 30, 2020. As of September 30, 2020, pursuant to long-term management agreements, we engaged independent operators, such as Atria Senior Living, Inc. (“Atria”) and Sunrise Senior Living, LLC (together with its subsidiaries, “Sunrise”), to manage 439 senior housing communities for us. Through our Lillibridge Healthcare Services, Inc. subsidiary and our ownership interest in PMB Real Estate Services LLC, we also provide MOB management, leasing, marketing, facility development and advisory services to highly rated hospitals and health systems throughout the United States. In addition, from time to time, we make secured and non-mortgage loans and other investments relating to senior housing and healthcare operators or properties. COVID-19 Update The novel coronavirus (“COVID-19”) pandemic and actions taken to prevent its spread continue to affect our business in a number of differing ways. In our senior living operating portfolio, leading indicators in senior housing, including leads, tours and move-ins, showed consistent improvement from July through September, but occupancy continued to decline and operating costs related to COVID-19 remained elevated in the third quarter. Recent COVID-19 clinical trends remain dynamic and create significant uncertainty. Our NNN senior housing tenants’ performance has also been affected by COVID-19. While we received substantially all NNN senior housing rent we expected to receive in the third quarter, we have modified certain NNN senior housing leases to reset rent and have provided other modest financial accommodations to certain NNN senior housing tenants who need it as a result of COVID-19. The Company’s NNN healthcare tenants have benefitted from significant government financial support that was deployed early and has partially offset the direct financial impact of the pandemic. Substantially all expected rent was paid by the Company’s NNN healthcare tenants in the third quarter. Our office operations segment delivered steady performance in the third quarter, growing net operating income (“NOI”, which is defined as total revenues, excluding interest and other income, less property-level operating expenses and office building services costs) modestly compared to the second quarter. In the third quarter, we received 99% of contractual rents in the office segment. The federal government, as well as state and local governments, have implemented or announced programs to provide financial and other support to businesses affected by the COVID-19 pandemic, some of which have benefitted or could benefit our company, tenants, operators, borrowers and managers. In particular, in early September, the Department of Health and Human Services (“HHS”) announced that assisted living communities are eligible to apply for funding under the Phase II General Distribution allocation (“Phase II”) of the Public Health and Social Services Emergency Fund (the “Provider Relief Fund”) established pursuant to the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and the Paycheck Protection Program and Health Care Enhancement Act (the “PPPHCE Act”). Distributions under Phase II are expected to equal 2% of annual revenues from patient care, and to benefit the assisted living communities in the Company’s senior living operating business, as well as its NNN senior housing tenants. While the guidance from HHS is subject to change, under current guidance, distributions from the Provider Relief Fund are not subject to repayment, provided that the recipient uses the funds first for expenses attributable to COVID-19 and then for lost revenue attributable to COVID-19, and is able to attest to and comply with certain terms and conditions, including not using funds received from the Provider Relief Fund to reimburse expenses or losses that other sources are obligated to reimburse, providing detailed reporting to HHS, maintaining records in accordance with law and submitting to government audit and investigation. We have applied for approximately $35 million in grants under Phase II of the Provider Relief Fund on behalf of the assisted living communities in our senior living operating business. Although we have begun to receive amounts under some of those applications, there can be no assurance that all our applications will be approved or that additional funds will ultimately be received in full or in part. The Company continues to evaluate the terms, conditions and permitted uses associated with the grants, including the requirements and restrictions imposed by HHS, and is in the process of determining what portions of these grants the Company will be able to retain and use. Any funds that are ultimately received and retained by us are not expected to fully offset the losses incurred in the Company’s senior living operating portfolio that are attributable to COVID-19. We believe that substantially all our NNN senior housing tenants have also applied for funding under Phase II to partially mitigate the losses they have incurred as a direct result of COVID-19. HHS recently announced a new $20 billion Phase III General Distribution allocation (“Phase III”) of the Provider Relief Fund, which will be made available to all healthcare providers, including assisted living communities, who have previously received distributions from the Provider Relief Fund. Phase III is expected to be distributed (i) first, to ensure that eligible providers have received funding equal to at least 2% of their annual patient care revenues and (ii) second, to provide an additional payment that considers providers’ overall financial losses caused by the COVID-19 pandemic. The actual amount paid to providers will depend in part on how many providers apply in Phase III and will be determined after all applications have been received. While we have applied for funding under Phase III on behalf of the assisted living communities in our senior living operating business, there can be no assurance that we will receive funding under Phase III or the amount of any such funding. HHS and the Department of Defense (the “DOD”) have announced agreements with CVS and Walgreens to provide and administer COVID-19 vaccines to residents of long-term care facilities nationwide (including assisted living and independent living communities) with no out-of-pocket costs to residents or the communities where they live. HHS and DOD also announced a program for the delivery of COVID-19 rapid point-of-care diagnostic tests to certain qualified assisted living facilities. While we expect both of these programs to benefit our senior living operating portfolio, as well as our NNN senior housing tenants, there can be no assurance these programs will ultimately be implemented, will be implemented on the same terms as have been currently announced or will continue once implemented. Since the start of the COVID-19 pandemic, we have taken precautionary steps to increase liquidity and preserve financial flexibility in light of the resulting uncertainty. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations; Liquidity and Capital Resources; Recent Capital Conservation Actions.” As of November 5, 2020, we had approximately $3.2 billion in liquidity, including availability under our revolving credit facility and cash and cash equivalents on hand, with no borrowings outstanding under our commercial paper program and negligible near-term debt maturing. The trajectory and future impact of the COVID-19 pandemic remains highly uncertain. COVID-19 clinical trends have worsened in recent weeks; and multiple jurisdictions have recently imposed or are re-imposing heightened preventative measures. The extent of the COVID-19 pandemic’s continuing and ultimate effect on our operational and financial performance will depend on the clinical experience, which may differ considerably across regions and fluctuate over time, and on other future developments, including the ultimate duration, spread and intensity of the outbreak; the availability and effective distribution of testing and, eventually, a vaccine; the extent to which governments across the country impose or re-impose preventative restrictions and the extent and duration of any rollback of those restrictions; and the availability of government financial support to our business, tenants and operators. Due to these uncertainties, we are not able at this time to estimate the impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows, either in the short or long-term, but it could be material. We have not identified the COVID-19 pandemic, on its own, as a “triggering event” for purposes of evaluating impairment of real estate assets, goodwill and other intangibles, investments in unconsolidated entities and financial instruments. However, as of September 30, 2020, we considered the effect of the pandemic on certain of our assets (described below) and our ability to recover the respective carrying values of these assets. We applied our considerations to existing critical accounting policies that require us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities. We based our estimates on our experience and on assumptions we believe to be reasonable under the circumstances. As a result, we have recognized the following charges for the three and nine months ended September 30, 2020: •Adjustment to rental income: As of September 30, 2020, we concluded that it is probable we would not collect substantially all rents from certain tenants, primarily within our triple-net leased properties segment. As a result, we recognized adjustments to rental income of $20.3 million and $74.5 million for the three and nine months ended September 30, 2020. Rental payments from these tenants will be recognized in rental income when received. •Impairment of real estate assets: As of September 30, 2020, we compared our estimate of undiscounted cash flows, including a hypothetical terminal value, for certain real estate assets to the assets' respective carrying values. No impairment charges were recognized for the quarter ended September 30, 2020. During the quarter ended June 30, 2020 we recognized $108.8 million of impairments representing the difference between the assets' carrying value and the then estimated fair value of $192.8 million. The impaired assets, primarily senior housing communities, represent less than 1% of our consolidated net real estate property as of September 30, 2020. Impairments are recorded within depreciation and amortization in our Consolidated Statements of Income and are primarily related to our senior living operations reportable business segment. •Loss on financial instruments and impairment of unconsolidated entities: As of September 30, 2020, we concluded that credit losses exist within certain of our non-mortgage loans receivables and government-sponsored pooled loan investments. As a result, we recognized credit loss charges of $5.0 million and $34.7 million for the three and nine months ended September 30, 2020. No allowances are recorded within our portfolios of secured mortgage loans or marketable debt securities. In addition, during the quarter ended June 30, 2020 we recognized an impairment of $10.7 million in an equity investment in an unconsolidated entity. •Deferred tax asset valuation allowance: As of June 30, 2020, we concluded that it was not more likely than not that deferred tax assets (primarily US federal NOL carryforwards which begin to expire in 2032) would be realized based on our cumulative loss in recent years for certain of our taxable REIT subsidiaries. As a result, we recorded a valuation allowance of $56.4 million against these deferred tax assets on our Consolidated Balance Sheets with a corresponding charge to income tax benefit (expense) in our Consolidated Statements of Income for the quarter ended June 30, 2020. We maintained our conclusions regarding the realizability of deferred tax assets as of September 30, 2020.

X
- Definition The entire disclosure for the nature of an entity's business, major products or services, principal markets including location, and the relative importance of its operations in each business and the basis for the determination, including but not limited to, assets, revenues, or earnings. For an entity that has not commenced principal operations, disclosures about the risks and uncertainties related to the activities in which the entity is currently engaged and an understanding of what those activities are being directed toward. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=99393423&loc=d3e5967-108592 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI http://asc.fasb.org/topic&trid=2134479 + Details
Name: | us-gaap_NatureOfOperations
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration